Bank of Moscow will open a Letter of credit in favour of a foreign supplier with payment by instalments extended from 30 days to 2 years. The Letter of credit is confirmed and executed by the first class foreign bank. Here the limits for documentary operations foreign banks grant to Bank of Moscow are used.
To protect the interests of exporters it is common international practice for the designated bank to provide discounting of documents under letters of credit with payment by instalments. In this case the authorized bank pays the documents presented by the supplier under the Letter of credit immediately after their presentation, not waiting for the maturity date. At the same time the obligation of Bank of Moscow to transfer the funds to the designated bank in payment under the Letter of credit becomes due and payable only on maturity in view of the extension period granted. Thus, for the supplier a contract with payment by instalments turns into an on sale with instant payment, and the Russian buyer has an actual extension of payment.
The work on granting the credit product is carried out by the Department of trade financing, which also participates in the development of the payment clause of the import contract with due allowance of particular transaction specifics: A.E. Musiyko, ext. 4217; T.S. Alekseyeva, ext. 4569.
