What Is Unconfirmed Letter Of Credit?

A letter of Credit is basically a document that is used by financial institutions. This document provides an irrevocable payment undertaking by the financial institutions to a beneficiary against complying documents as stated in the Letter of Credit. It is a very important document especially in terms of procurement of goods and services at international level. It provides the buyer a security that the goods will be good and the seller the guarantee, that the payment will be made when shipment is  received.

Now a letter of credit has many types such as Revocable, Confirmed, unconfirmed, transferable etc.

The Unconfirmed letter of Credit is basically not guaranteed or confirmed by any bank apart from the bank that actually opened it. The advising bank, in this case, only informs the beneficiary about the terms and conditions of the Letter of Credit.