Document background
The Inland Letter of Credit is a crucial financial instrument used in domestic trade transactions within Hong Kong. It provides a secure payment mechanism where an issuing bank guarantees payment to a seller (beneficiary) on behalf of a buyer (applicant), subject to the presentation of specified documents. This document type is particularly useful when parties seek additional security in domestic trade transactions but want to avoid the complexities of international trade finance. The Inland Letter of Credit must comply with Hong Kong banking regulations and is typically used for high-value domestic transactions or when parties have not established long-term trading relationships. It offers protection to both buyers and sellers by ensuring that payment will be made only upon strict compliance with the documented terms and conditions.
