A standby L/C is a lot like a bank guarantee. It is a form of security that is used only when the applicant claims that the beneficiary is in default.
What sets a standby L/C apart from a regular bank guarantee is that additional trade or other documents may be required when submitting a claim on the L/C. It may also be governed by different regulations. Standby L/Cs are very commonly used in the United States.
To find out more, please contact our advisers.