Significance of Counter Standby in International Trading

A counter standby letter of credit is a kind of standby letter of credit that promises the bank to make the payment to the seller by the buyer. It is a type of financial instrument that is used during international trade transaction.   

In this article, you will know about counter standby. So let's continue. 

The beneficiary of the counter standby is generally from another bank that is compelled to delivering such local undertakings assisted by counter standby. Counter standby is used in commercial trading, especially in international transaction, where financial instrument like standby letter of credit is delivered by a foreign bank. The document is composed of integrated notes with a drafting tip and an important explanation.

Counter Standby

Why Do We Have Standby Letters of Credit?

The standby letter of credit originates from the banking department which prevents the credit institution from thinking assurance obligations of the party. To bypass this banking rule, the financial institution has developed standby letters of credit that are based on the practice and uniform customs for the documentary. the international chamber of commerce added some rules to regulate a standby letter of credit. The rules are being protected and adopted, although multiple standby letter of credit continues to depend on the established rule.     

What Is the Purpose of The Counter Standby Letter of Credit?

The counter standby letter of credit accomplish the same purpose as bank assurance: It can be payable upon the first demand and with no other objection.  If it is up to the seller who plans whether he may accept counter standby letters of credit.
 

Is Standby Letter of Credits the Subject of Trading?

There is no public area for the trading of counter standby letters of credit. The letter can be transferred when assigned a separate transaction. These financial instruments are not trading units  and therefore are not liable to lose rules and regulation of the exchange and security commission.

Consult with a well-known financial consultant

RNR Trade Corporation Company Limited (RNR) is one of the leading company that will provide financial services. The company has been in this field for about 20 years. The employee in the company provides customized service to the consumer. Stand by letter of credit, bank guarantee, document collection, tender standby, and counter standby are some of the important services they offer to their clients. You can click the link i.e  rnrtradecorp.com for more knowledge about international trading.

Location: Thailand

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