LC discounting is a credit facility offered by various banks and financial institutions. In this process, the financial institution purchases bills or documents from exporters and provides a loan after letter of credit discounting details the bill amount. For example, reducing the applicable charges.

1. LC Discounting India
LC discounting is a credit facility offered by various banks and financial institutions.
In this process, the financial institution purchases bills or documents from exporters
and provides a loan after letter of credit discounting details the bill amount. For
example, reducing the applicable charges.
What is LC Discounting India?
LC discounting is a main method of financing in international trade that is also known
as documentary credit.
Generally, it is a guarantee provided by a financial institution to pay sellers on behalf
of buyers in case of default on their part. Letter of Credit discounting acts as financial
security for businesses involved in export and import or both in some cases.
LC discounting is a typical funding option as lending institutions follow a necessary
verification process to confirm the authenticity of both the parties. Also, the chance of
manipulating the what is letter of credit discounting rate is minimal as only the
prevailing rates apply to a Letter of Credit.
Types of LC Discounting India
The following are the 5 types of letter of credit available in India:
● Revocable: It can be changed or cancelled by a banking institution at any time
and for any reason. It cannot be transferred to a third party.
● Irrevocable: This type of LC can only be changed or cancelled if all concerned
parties agree to it.
● Transferable: A transferable LC can be transferred from one beneficiary to
another.

2. ● Confirmed: A confirmed irrevocable LC is more secure as it is backed by
guarantee.
● Unconfirmed: Letter of credit reaches the beneficiary with only the issuing
bank's payment undertaking, without any confirmation added by another
lender.