1. Deposit and related fees collected by the issuing bank
When an importer opens a documentary L/C and submits the required documents, he/she must deposit a deposit in accordance with the regulations.
The deposit amount = the amount of the L/C x the exchange rate slightly higher than the market (for example, when the USD/RMB exchange rate is 6.7, the bank deposits a deposit at an exchange rate slightly higher than 6.7, such as 6.9)
(1) L/C handling fee = the amount of the L/C x the exchange rate on the day of issuance x 1‰ (L/C of 3 months or less)
LIC handling fee = the amount of the L/C x the exchange rate on the day of issuance x 1.25‰ (L/C of 4 months)
L/C handling fee = the amount of the L/C x the exchange rate on the day of issuance x 1.5‰ (L/C of 5 months)
For each month the L/C date is extended, the handling fee ratio increases by 0.25‰.
(2) LC postage: 400 yuan/transaction (Agricultural Bank of China)
2. General methods for issuing banks to collect security deposits
(1) If the applicant has business dealings with the issuing bank and has good credit, or has completed mortgage or pledge procedures, or has other financial institutions or strong companies to guarantee it, the issuing bank will not collect security deposits.
(2) If the applicant has business dealings with the issuing bank, but the account balance is limited, or has a bad record or poor credit, or is applying for a letter of credit for the first time and has no guarantee, collateral or pledge, the issuing bank will collect the full amount of security deposit.
(3) If the applicant’s account balance or collateral or pledge at the issuing bank is less than the amount of the letter of credit, or the guarantor is unwilling to guarantee the full amount, etc., the issuing bank will collect a certain percentage of security deposit.
In short, the proportion of security deposit paid to the bank is determined by the importer’s credit line at the bank. Generally, the higher the credit line, the lower the proportion of security deposit paid.