Parties to a letter of credit:

The original parties:

 Buyer or importer - he procures the letter of credit and obliges himself to
reimburse the issuing bank upon receipt of the document of title from
the seller.
 Issuing bank – the bank which issue the letter of credit and undertakes to
pay the seller upon receipt of the draft/documents of title, and to
surrender the documents of title to the buyer upon reimbursement.
 Seller/Beneficiary /exporter - he ships the goods to the buyer and
delivers the documents of title to the issuing bank recover payment.
Other parties may include:

 Advising or notifying bank - Takes responsibility to communicate with

necessary parties under letter of credit and other required authorities.
The advising bank is the party who sends documents under Letter of
Credit to opening bank.
 Confirming Bank - As a party of letter of credit confirms and guarantee to
undertake the responsibility of payment or negotiation acceptance under
the credit.
 Paying Bank - The paying bank may be the issuing bank, the confirming
bank or the notifying bank.
 Negotiating bank – One who negotiates documents delivered to bank by
beneficiary of LC. Negotiating bank is the bank who verifies documents
and confirms the terms and conditions under LC on behalf of beneficiary
to avoid discrepancies