Letter of Credit
A vendor sometimes asks the customer to pay him through a documentary credit known as a Letter of Credit. This is a document issued by Meethaq to the seller (third party) undertaking that if the given documents showing certain goods needed by the customer are received in the agreed condition, the price of the goods will be paid.
If the transaction is financed entirely by the customer, the LC is based on Wakala (LC Wakala), and when it is financed entirely by Meethaq, the LC is based on Murabaha (LC Murabaha). In other cases where it is financed jointly by Meethaq and the customer, the LC is based on Musharaka (LC Musharaka). Besides this sort of LC, Meethaq also provides export bill collection facility for exporters.
As mentioned above, Meethaq offers a wide range of Shari’a compliant products to SMEs for fulfilling their day-to-day business requirements. In addition Meethaq offers a complete package for supporting SMEs to successfully execute various contracts awarded from ministries, public sector entities and large corporates. The financing facilities are offered to SMEs against assignment of receivables of a specific contract on a case to case basis.
- World-class Shari’a compliant solutions.
- Financing up to 80% of the good’s value.
- Competitive rates, lower payments and longer financing tenure as per the cash flow of the contract.
- Easy, convenient and quick approval process with minimal documentation.
- Flexibility to avail and service the finance through the largest integrated branch network offered by Meethaq in Oman.
What is a letter of credit?
Letter of credit is a document issued by a financial institution which normally provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back or revolving but is most commonly irrevocable / confirmed) to a beneficiary against complying documents as stated in the letter of credit.
What are the letters of credit provided by Meethaq?
Meethaq provides funded (where the customer needs funds to pay for the imported goods) and non-funded (where the customer wishes to utilize its own funds for purchase of goods) letters of credit. In addition, Meethaq also provides export bill collection facility for exporters.
What are the requirements?
- Financing Request.
- Letter of Credit Form.
- Copies of CR documents.
- ID copies of owners.
- Brief Profile of the Company/Business.
- Last three years audited/unaudited financial reports.
- Details of contracts already executed and in the pipeline.
- Quotation of assets to be purchased.
- Open company’s account in Meethaq.
- Last one year bank statements.
Visit your nearest branch or contact us at
smemeethaq[a]bankmuscat.com for further details.