What is Margin held on letter of credit?

Answer 1

letter of credit - credit given by bankers for the purpose of making payment to our suppliers - lc to be opened against our purchases minimum of 30 days & maximum of 180 days - margin money (min 10% max 30%) to be deposited by us. The bankers will release payment to our suppliers on behalf of us. At the time of maturity of lc, the amount which has been paid by banker to be returned to them with interest and margin money which we have deposited at the time of opening lc will be refunded by bank with interest and we can open new lc to the new supplier or existing supplier against our purchase