A Letter of Credit (LC) is a crucial financial tool in global trade that ensures a secure exchange of goods and payments between international buyers and sellers. Functioning as a guarantee from the buyer’s bank, the LC assures the seller of payment upon meeting specified conditions, including delivering goods and providing necessary documents. This system offers protection to both parties by reducing risks linked to non-payment and non-delivery, playing a vital role in enabling reliable cross-border transactions.
Nepal Rastra Bank has taken steps to streamline import processes, aiming to simplify trade activities. In a recent comprehensive announcement, the central bank has increased the limit for Letters of Credit (LCs) used for importing goods.