Import LC is used for import of goods from other countries. It could either be a sight LC (payable immediately) or deferred LC (payable at a specific date in the future).
Import LC is opened by the bank on behalf of its customer for the import of raw materials, capital machinery, consumer goods, food, chemicals, vehicles, etc. Margin is collected from the customer and kept in a separate account. On receipt of documents from the negotiating bank, payment is made by debiting the PAD account in the customer’s name for sight LCs or sending an acceptance, undertaking to pay at a later date (for usance LCs).