Trust and confidence are crucial when it comes to dealing with international trade transactions. To fulfill this purpose, necessary trade finance tools are used that further facilitate smooth transactions by mitigating any potential risks. These instruments help businesses proceed confidently with their deal by acting as a safety net for both imports and exports.
Amongst all the instruments that are there to facilitate smooth operations, SBLC is also one of them. SBLC is used in cross-border trade by offering security and mitigating risks that are associated with non-performance by assuring that their obligations are securely backed by trusted trade finance companies such as UOB Global Capital.
Understanding SBLC
SBLC provides a payment guarantee since it gives assurance to the beneficiary regarding payment on behalf of the buyer in case the buyer fails to pay or defaults. With such protection and assurance provided by SBLC, it offers a sense of security and comfort to the sellers and protects them from any financial loss knowing that they are backed by a trade finance tool. This way trust is built between parties that have a weak foundation of confidence due to the new relationship between the two.
Issuance Process of SBLC by UOB Global Capital
There are quite a few steps involved in the issuance process of SBLC by UOB. In this blog, we will have a look into all the steps in detail from initial request to final drafting.
Initial Request and Assessment
This step begins with the client submitting a request for the issuance of SBLC along with required details such as the purpose it is needed for, transaction details, name of the parties involved, and duration of validity of SBLC along with supporting documents to further process the SBLC request.
Then a verification of the provided documents is done to get an insight into accuracy and completeness to ensure that all the available documents are there to proceed further with the issuance. With this, the risk assessment is also done by analyzing the client’s financial statements, credibility, and the overall potential risk associated with the transaction.
Drafting the SBLC
Once the evaluation of potential risk is done then the drafting of SBLC takes place in which necessary terms and conditions are mentioned to avoid any misunderstanding between the parties. Once the draft is prepared it is then reviewed by the client to make any necessary adjustments if needed. SBLC is then reviewed to make sure that it complies with the regulatory requirements.
Issuance of the SBLC
After the draft is reviewed by the client and is according to the required terms and conditions it is then proceeded further for the finalization of the SBLC. The execution of SBLC takes place with all the necessary details and it is then officially issued to the beneficiary. This phase is crucial since it ensures that the instrument provided is legally sound and has the agreed-upon terms and conditions.
Strengthening Global Trade with UOB Global Capital
UOB Global Capital provides trade finance services that are reliable. With a team of finance experts who ensure that they tailor the instrument according to your specific trade finance needs to enable smooth and secure trade transactions across borders.
