Even though most people get the letter of credit, the Double confirmation on LC acts as an additional guarantee to it. This is obtained from the borrower from the second bank.
The second letter so provided guarantees that the second bank will pay the full amount to the seller during transactions if the first bank is unable to do so.
The borrowers need to get this second letter of credit, in case the seller has doubts about the creditworthiness of the bank issuing the first payment. Also, once a confirmed letter of credit is received, it reduces the risk of default issues for sellers.
At Alliance Digital Corporation Banque
, we help you in providing the double confirmation on LC which are most commonly used to carry out international trade. These are negotiable instruments. The letter of credit eliminates the need to request an advance payment. This allows the buyer to make the complete payment at the time of delivery.
Sometimes, the seller usually requires a second letter of credit, which should be backed by more than one bank, in the case of both national and international trades. On receiving the second letter, the first one is qualified and confirmed by the buyer.