SBLC / BG Questions & Answers (Q & A)

SBLC MADE SIMPLE: WHAT EVERY BUYER AND SELLER SHOULD KNOW

Q1: Who is the applicant of an SBLC / BG?

A:
The applicant is the buyer who requests their bank (Issuing Bank) to issue an SBLC as a financial guarantee in favor of the seller.

In simple terms:
If the buyer is unable to fulfill payment, the bank provides assurance to the seller.

Q2: What is the difference between Issuing Bank and Receiving Bank?

A:
Issuing Bank
→ The buyer’s bank
→ Issues the SBLC
→ Responsible for making payment if a valid claim is made

Receiving Bank (Advising Bank)
→ The seller’s bank
→ Receives and verifies the SBLC
→ Handles the claim process on behalf of the seller

In simple terms:
Issuing Bank = Provides the guarantee & pays
Receiving Bank = Receives and verifies

Q3: How much margin or collateral is required?

A:
It depends on the financial profile of the applicant and the bank’s assessment:

• 10% – 30% → Strong financial profile
• 30% – 50% → Moderate profile
• 50% – 100% → Higher risk profile

Important note:
The margin represents the buyer’s financial commitment, even though the total obligation may be higher.

Q4: What happens when an SBLC is claimed?

A:
The seller submits a claim through the Receiving Bank
The Receiving Bank reviews and forwards it to the Issuing Bank
If the documents are compliant:
The Issuing Bank will make payment to the seller

Q5: Must the claim follow the invoice amount?

A:
Not necessarily. It depends on the terms stated in the SBLC:

• Some are based on supporting documents (invoice, BL)
• Some are based on a maximum available amount
• Some allow more flexibility depending on the agreement structure

In simple terms:
The claim amount depends on the SBLC terms, not only the invoice

Q6: What happens if the buyer does not proceed with the purchase?

A:
If the buyer does not proceed as agreed:

• The seller may submit a claim
• The Issuing Bank will honor the guarantee
• The buyer will need to settle the obligation with the bank

Q7: Is the SBLC cancelled if the buyer withdraws?

A:
No

The SBLC remains valid until:

• It expires, or
• It is utilized (claimed)

Q8: What happens after the bank makes payment?

A:

• The Issuing Bank has paid the seller
• The buyer is required to settle the amount with the bank

This is part of the financial commitment agreed with the bank

Q9: Does the bank consider issues between buyer and seller?

A:
No

The bank only checks:

• Documents
• Compliance with the SBLC terms

The bank does not get involved in commercial matters

Q10: Is SBLC safe to use?

A:
Yes, when properly structured

SBLC:

• Provides confidence to the seller
• Supports the buyer in executing transactions
• Operates within an internationally recognized banking system

Q11: What should be ensured before using SBLC?

A:
Make sure:

• The transaction structure is clear
• The SBLC terms are fully understood
• All processes follow proper banking procedures

SUMMARY

An SBLC is:

• A bank-backed guarantee
• A tool to facilitate international trade
• A structured mechanism that supports both parties

CLOSING
An SBLC is not just a document, but a financial structure that helps ensure transactions are conducted in a secure and organized manner.

CONTACT US FOR ASSISTANCE:

WhatsApp:
(Mr. Saif)
http://www.wasap.my/60105375779/OilPetroleum

(Ms. Nur)
http://www.wasap.my/601129291396/OilPetroleum

(Ms. Far)
http://www.wasap.my/601153594949/OilPetroleum

Email:
gngroup.sb@gmail.com
admin@gngroupsupplies.com
sales.gngroupsb@gmail.com

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