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:
IR. Zaki
http://www.wasap.my/60192297179/OilPetroleum
.
(Mr. Saif)
http://www.wasap.my/60105375779/OilPetroleum
.
(Ms. Nur)
http://www.wasap.my/601129291396/OilPetroleum
.
Email:
gngroup.sb@gmail.com
admin@gngroupsupplies.com
sales.gngroupsb@gmail.com
.
Website:
https://www.gngroupsupplies.com/
https://gngroupsupplies.blogspot.com/