Introduction
Confirmation of L/C is the first payment obligation undertaken independently by Bank of China for the beneficiary beyond the issuing bank.
Functions
Undertaking the credit risks of the issuing bank for the exporter so as to help exporter receive payments in advance upon complying presentation; it can be divided into two forms: open confirmation and silent confirmation.
Features
1. Reduction of risks and acceleration of the capital turnover. Confirmation of L/C can help exporters prevent the risks from the issuing bank, the country risk of issuing bank and the foreign exchange control risks.
2. Double guarantee. Apart from the conditional payment undertaking made by the issuing bank, the exporters can get additional conditional payment undertaking from Bank of China, placing the exporters under double payment guarantee.
3. Payment collection guarantee. The exporters upon presentation that comply with the L/C’s requirements and approval of the Bank, can gain the non-recourse payments or payments promises.
Charges
2‰ of the confirmed amount, with minimum of RMB500, charged quarterly. The fee will rise subject to the degree of risks of the relevant countries or banks.
Target Customers
1. Exporters who wish to obtain payment confirmation from a bank other than the issuing bank;
2. Exporters who wish to obtain non-recourse funds after presentation of documents even if the issuing bank has a good credit standing.
Application Qualifications
I. Basic requirements
1. Legally approved and registered with annually checked business license and other documents effectively proving its legal status and business scope;
2. Having a loan card;
3. Having an account opening permit and having opened a settlement account at Bank of China;
4. Having the export and import operation qualifications;
5. No blemished credit records in Bank of China and/or other financial institutions.
II. The issuing bank is a financial institution granted with credit and having a good credit standing.
Process
1. Bank of China provides confirmation upon the request of the issuing bank or exporter (beneficiary) when advising the L/C;
2. The exporter presents the complying documents to Bank of China and Bank of China makes non-recourse payments or irrevocable payments promises to the exporter after examination and approval;
3. Bank of China mails the documents to the foreign issuing bank to claim reimbursement and will confirm the payment after the foreign payment received.
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