Recommendations to minimize the risk of international payment through L/C for commercial banks in Vietnam

Abstract

Since Vietnam participated into international economic integration, international trade activities have been supported with favorable conditions to boost business relationship development between domestic and foreign businesses. One of the favorable conditions is the evolution and development of international payment activities being provided by commercial banks in Vietnam. There is a variety of international payment operations being provided to customers. L/C is one of the international payment operations and is popularly used by exporter and importer because of its own benefits offering for them. Thus, L/C is a payment service being provided at most by commercial banks in Vietnam. Moreover, besides of L/C’s benefits, commercial banks in Vietnam can be exposed to its unexpected risks causing bad and unforeseeable consequences. This is a reason why this study concentrates on researching L/C’s risks that commercial banks in Vietnam can be exposed when providing this service to customers and proposing recommendations to minimize L/C’s risks for commercial banks in Vietnam.