What is re-financing in Letter of Credit settlement



What is re-financing in Letter of Credit settlement..

Answer / Atul Kumar Gupta

Re-financing in the context of a Letter of Credit (LC) refers to the process where an issuing bank transfers its rights and obligations under the LC to another bank, known as the refinancing bank. This allows the original bank to free up funds or reduce exposure to certain risks associated with the LC. The new bank then assumes the responsibilities and guarantees stipulated in the original LC.

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