What is Bg, Lc?

Question

What is Bg, Lc?

Accepted Answer

Bg stands for Bank Guarantee and Lc stands for Letter of Credit.

Bank Guarantee (Bg) is a commitment by a bank to pay a specified amount to a beneficiary if the applicant fails to fulfill their obligations.
Letter of Credit (Lc) is a financial instrument issued by a bank on behalf of a buyer, guaranteeing payment to the seller upon meeting certain conditions.
Bg and Lc are commonly used in international trade to provide assurance to parties involved in transactions.
Bg and Lc help mitigate risks and build trust between buyers and sellers in cross-border trade.
For example, a seller may request a Letter of Credit from the buyer's bank to ensure payment upon successful delivery of goods.
Similarly, a buyer may request a Bank Guarantee from their bank to assure the seller that payment will be made.
Bg and Lc terms and conditions are typically negotiated between the parties and specified in the respective documents.

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