Answer / Chandra Dev Pankaj

A letter of credit (LC) is a financial instrument issued by a bank at the request of a buyer to guarantee payment for goods or services. It provides security to the seller, ensuring that they will receive payment upon fulfillment of specific conditions outlined in the LC. The seller can present the LC to their own bank, which will then verify its authenticity and release the funds. Letters of credit are commonly used in international trade as a means to mitigate risk between buyers and sellers.

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