Business Banking

Foreign Trade - Documentary Credit

What are documentary credits and how they work for you?

Documentary credit – the payment method that provides the maximum protection to the parties involved

Documentary credit is an irrevocable commitment on the part of the importer’s bank, to pay the exporter within a defined and agreed upon time period.

The above is subject to the presentation of documents that are compatible with the terms of credit, by the exporter.

It is customary to work within the framework of documentary credit when the level of trust between the parties is low – unfamiliarity, the first transaction, etc.

This payment method maintains the separation principle – goods against payment.

Neither party to the transaction holds both simultaneously.


Three principles underlying the Bank's involvement in documentary credit:

  1. The independence principle – the credit is separate from the basic transaction.
  2. The Bank deals with the documents and not the merchandise.
  3. The matching principle – the documents received are matched with the credit terms


With export documentary credit, we can perform a preliminary check of the documents for you to ensure full compatibility with the credit terms.

With import documentary credit, we will adapt the contents and wording to suit your needs.


Exporter, if you plan to receive a future payment as part of a documentary credit, ask us about the possibility of “discounting” the documents so that you can receive the payment in cash.


Adding “ratification” to export documentary credit

Would you like to have our commitment in addition to the commitment of the bank opening the credit? Contact us to look into the possibility.

Note that adding “ratification” to banks in many countries, some of which are rated even lower than investment rating, Discount Bank has engaged with the IFC (International Finance Corporation) from the World Bank Group and the EBRD (European Bank for Reconstruction Development).

These international bodies provide us with insurance for business transactions of this type.