A letter issued by a bank to another bank (typically in a different country) to serve as a guarantee for payments made to a specified person under specified conditions.
- By way of illustration, take a case in which the customer requests the bank, or other institution, to issue a letter of credit or guarantee to back his purchase of goods.
- A letter of credit is issued by a bank and guarantees payment to the exporter at a specified time, generally, thirty, sixty, or ninety days, on behalf of the importer.
- The Government provided a guarantee for banks' deposit and other claims, such as borrowing, guarantee and letters of credit issued by the banks.
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Syllabification: let·ter of cred·it
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