Usance Payable at Sight Letter of Credit (UPAS LC) & Usance Payable at Usance Letter of Credit (UPAU LC)

• UPAS LC refers to a type of Letter of Credit (“LC”) where Financing Bank makes advance payment on behalf of the Issuing Bank (Bank of China (Hong Kong) Limited Jakarta Branch) at the request of Bank’s customer (Importer) under usance LC and levy charges of certain amount of interest, so the Exporter will get their payments at sight while the Importer may have tenor and make payment on maturity date.
• UPAU LC refers to a type of LC where Financing Bank makes advance payment on behalf of the Issuing Bank (Bank of China (Hong Kong) Limited Jakarta Branch) at the request of Bank’s customer (Importer) under usance LC and levy charges of certain amount of interest, so the Exporter will get their payments at usance tenor but earlier than its original maturity date while the Importer can make payment on original maturity date.

Short-term financing (non-cash loan) for the Importers conducting trade transactions under LC.

1. Improves Cash Flow
   As Importer, you can use financing from Bank of China (Hong Kong) Limited Jakarta Branch (“Bank”) to import and subsequent sell that imported goods, and the proceeds from the sale of goods are used to repay Bank’s financing / loans, which can reduce the occupying of your own funds to complete the trade and earn profits.
2. Improves Bargaining Power
   At the stage of signing the sales contract, you, as Importer, can change the payment terms from usance basis to sight basis / shorter tenor to accommodate exporter’s need, or shorten the payment terms to improve Importer’s bargaining power over the Exporter.

1. Importer / Buyer (Customer) may subject to fines and/or penalties for late payment of obligation to the Bank if the Bank is unable to collect the payment for UPAS LC / UPAU LC settlement on the maturity date, as similar with Usance LC scheme.
2. The transaction shall be proceeded subject to the fund and rate availability from financing bank prior opening UPAS LC / UPAU LC.

1. Customer who conducts import or purchase under LC on usance basis but seller wishes to receive payment at sight or earlier
2. Customer with good business operation, proven business needs, normal credit standing, normal financial status, and whose management and shareholder has good reputation.
3. Customer who has experience in trade business with no bad record.
4. Customer who has a clear source(s)of fund to repay the loan (the repayment ability is acceptable to the bank).

1. The Customer must have UPAS LC / UPAU LC Facility before utilize UPAS LC / UPAU LC product.
2. The Customer submits the UPAS LC / UPAU LC request by submitting Application for Irrevocable Documentary Credit (Application Form) along with the required trade documents to the Bank.
3. Bank will check Customer’s credit limit, trade documents whether already comply with the terms and conditions, and pricing agreed.
4. Bank processes the UPAS LC / UPAU LC Issuance and advise to Seller’s Bank.
5. After receive document presentation from the Seller’s Bank, Bank notifies Customer and seek acceptance to pay on maturity date.
6. Bank sends Reimbursement Authorization (RA) to Financing Bank based on accepted documents.
7. Financing Bank makes UPAS LC / UPAU LC payment to seller (beneficiary) earlier after beneficiary bank claim such amount.
8. On UPAS LC / UPAU LC maturity date, Bank will process the settlement by debiting the fund from Customer’s account, then make repayment to Financing Bank.

Click <<here>> to know more about UPAS LC & UPAU LC procedures & charges.