LOC : Lines of Credit
It is an innovative funding mechanism for the import of goods and services on deferred payment terms. LOC is an arrangement of a financing institution or bank of one country with another institution or bank or agent to support the export of goods and services so as to enable the importers to import on deferred payment terms. This may be backed by a guarantee furnished by the institution or bank in the importing country.
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LOC : Lines of Credit
The LOC helps the exporters to get payment immediately as soon as the goods are shipped, since, the funds would be paid out of the pool account with the financing agency and it would be debited to the account of the borrower agency or importer whose contract for availing the facility is already approved by the financing agency on the recommendation of the oversease institution. it acts a conduct of financing which is for a certain period and on certain terms for the required goods to be imported. The greatest advantage is that it saves a lot of time and money on mutual verification of bonafides, souces of finance etc. It serves as a source of forex.
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