Bankwise Letter of Comfort / Undertaking Charges

To Avail Buyer’s / Supplier’s Credit: E: sanjaymandavia@gmail.com, M: +919825560186

Below given are Letter of Undertaking (LOU) / Letter of Comfort (LOC) charges:       These charges detail information is as provided by respective bank’s website. These rates may vary from customer to customer, based on their negotiation with bank.

HDFC Bank

Guarantee Issuance: 1.8% p.a. or min 500

* Source: www.hdfcbank.com

Axis Bank

Buyers’ Credit against existing FB/NFB limits:

Arrangement of Buyers’ Credit, Issuance of a Guarantee/LOU/LOC, Payment to Supplier, Receipt of funding in Nostro :  2.50% p.a. subject to a minimum of Rs.1000/- or as per existing sanction terms for importer plus Swift charges as applicable/ actual courier charge

* Source: www.axisbank.com

State Bank of Hyderabad

Letters of Comfort – Service Charges

  • Backed by 100 % discharge of liability (Viz., cash margin, sanctioned term loan, guarantee of First Class bank, 100 % lien on drawing power) : – 0.6875 % p.a.
  • Others                         –  2.75 % p.a

Minimum charges for 3 months will be recovered

* Source: www.sbhyd.com 

Syndicate Bank

Other than Performance Guarantees: 100/- + 3.00% p.a.

* Source: www.syndicatebank.in

Allahabad Bank

Letter of Comfort in lieu of Letter of Credit or Buyers’ Credit or Standby L/C: @ 3% P.A. with minimum for 2 Quarters.

* Source: www.allahabadbank.com

State Bank of India (SBI)

As per existing customer, LOU / LOC charges of SBI is 2.10% p.a. Detail pricing on SBI website is not available.

Canara Bank

Guarantee issued including for availment of Buyer’s credit: 0.55% per quarter or part thereof for the specified period of liability calculated on the amount of liability under such guarantees at the beginning of every quarter.

* Source: www.canarabank.com

UCO Bank

Other Guarantees (Including issuance of letter of comfort for buyer’s credit: Rs.170 + 3.30% p.a. (Min. 170 + 1.65% charges for 2 quarters)

* Source: www.ucobank.com

Bank of Baroda (BOB)Letter of Comfort issued for availing Buyer’s Credit

2.4 (d) Letter of Comfort issued for availing Buyer’s Credit
Rating Upto One year
Raw Material &Capital Goods
Above One Year
( Capital Goods)
AAA 1.00 p.a 1.50 p.a
AA 1.00 p.a 1.50 p.a
A 1.50 p.a 2.00 p.a
BBB 2.25 p.a 2.50 p.a
Below BBB & Unrated 2.50 p.a 3.00 p.a

* Source: www.bankofbaroda.com

Punjab National Bank (PNB): Incase buyers credit is taken from non PNB branches cost goes up by 0.60% on per annum basis.

  • Buyer’s Credit availed with PNB branches – 0.25% p.m. for specified period of liability with   s min. of 0.40%, subject to min. of Rs.1000/- per guarantee
  • Buyer’s credit availed with other banks      – 0.30% p.m. for specified period of liability with a min. of 0.50%, subject to min. of Rs.1000/- per guarantee

* Source: www.pnbindia.in

Vijaya Bank

List of services charges does not specifically mention lou charges. Thus assuming All other guarantees will become applicable :

0.1685% per month for the specified period of liability plus additional 3 months, subject to a minimum of 0.2809%.

Source: www.vijayabank.com

Dena Bank

Letter of Comfort / Letter of undertaking / Letter of Guarantee etc for Buyers Credit Charges : 0.15% p.m. ( Min. 0.25%)

Source: www.denabank.com

Other Bank charges which will be updated shortly are: Bank of India (BOI), Oriental Bank of Commerce (OBC), Indian Overseas Bank (IOB), ICICI Bank, IDBI Bank, Yes Bank, Indusind Bank, & Union Bank of India (UBI)

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4 thoughts on “Bankwise Letter of Comfort / Undertaking Charges”

  1. Can you provide LoU charges for Indian Overseas Bank? I am planning to avail Buyers credit and wants to calculate total costing.

    1. Pls elloborate me the total charges with bifurcation for availing buyers credit ie libor + Lou/loc+ = ? With an example

  2. Why is LOU issuing charges higher than the regular usance charges charged by bank. We avail buyers credit under the usance period sanction by the indian bank, hence why should there be discremination.

  3. Plz suggest any bank (PSU and Private) which gives buyers credit facility and their charges are lowest, we ready for give 100% Cash Margin.

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