Question:
Which of the following is not a letter of credit?
Which of the following is not a letter of credit?
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A \textbf{letter of credit} ensures payment security in international trade, whereas an \textbf{overdraft} is a loan facility allowing withdrawals beyond available balance.
Updated On: Oct 28, 2025
- Cheque
- Bank draft
- Overdraft
- Promissory note
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The Correct Option is C
Solution and Explanation
A letter of credit is a financial instrument issued by a bank guaranteeing that a buyer’s payment to a seller will be received on time. However, an overdraft is a facility that allows an account holder to withdraw more money than is available in their account, making it different from a letter of credit.
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