Letters of Credit

Letters of Credit

Letters of Credit are used to mitigate the various risks inherent in international Trade. It is a commitment by a bank on behalf of the importer that payment will be made to the exporter provided that the terms in the Letter of Credit have been met.

Types of Letters of Credit

Collateral: 100% cash cover or security acceptable to the Bank. Stock finance can be arranged once the shipment arrives in Kenya to cater for the settlement of the Letter of Credit.

  • Tenure LC – Seller is financing the purchase by allowing the buyer a grace period for payment.
  • Sight LC – Payment payable on sight/receipt of compliant documents.

Requirements:

  • Operate an account with Jamii Bora Bank.
  • Invoices indicating terms of payment.
  • Marine insurance cover if not covered by supplier/exporter.
  • Import declaration form (IDF).
  • Completed application form-provided by Jamii Bora Bank

Fees:

  • Application and issue – 1.00% per quarter.
  • Swift Message – Kes. 5,000.00.
  • Acceptance of Documents – 0.50% per quarter.
  • Retirement/Settlement – 0.50% per quarter.
  • Amendment – Kes. 2,000.00 per amendment.
  • Confirmation – As per confirming/Correspondent Bank.
  • Advising – Kes. 2,000.00.
  • Documents Handling – 0.25% per set.
  • Courier Charges – Kes. 1,500.00 Local or as per courier Co. foreign.
  • Advising Amendment – Kes. 1,500.00 per amendment.
  • Confirmation – 0.5% per quarter. Min Kes. 3,000.00.
  • Documents Handling – 0.25% of invoice value per set.
  • Postage/Courier – Kes. 1,500 Local or as per courier Co.

Documentary Collections-Imports and Exports

A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of payment to the exporter’s bank (remitting bank), which sends documents to the importer’s bank (collecting bank), along with instructions for payment. Funds are received from the importer and remitted to the exporter through the banks in exchange for the documents.

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