The Letter of Credit can be issued under Wakalah contract (agency relationship) or Murabahah Contract (Cost Plus).

Under Wakalah concept, upon received all the shipping documents customer in order to collect the documents instruct KFH Malaysia to Debit their current account for settlement hence payment to its supplier.

• Wakalah Contract (WLC)
  • KFH Malaysia is appointed to act as an agent on behalf of the Buyer/Applicant
  • Buyer/Applicant will place deposit to the full amount of goods to be purchased
  • KFH Malaysia establishes the Letter of Credit and remits the payment to the Seller/Beneficiary utilizing the customers' deposit

Whereas under Murabahah concept, upon receiving shipping documents the goods purchased can be financed under the Murabahah contract (cost plus).

• Murabahah Contract (MLC)
  • KFH Malaysia will act as the financier for the Buyer/Applicant for the purchase of the goods
  • KFH Malaysia will establish the Letter of Credit and purchase the goods from the Seller/Beneficiary by utilizing customer's limit or banking facility with the bank
  • Under this contract, KFH Malaysia will then sell the goods to the Buyer/Applicant at a sale price comprising its cost and a profit margin
  • Buyer/Applicant is given a deferred payment term for the settlement of the purchase