Definition of Documentary credit:
International trade procedure in which the credit worthiness of an importer is substituted by the guaranty of a bank for a specific transaction. Under documentary credit arrangement (also called letter of credit arrangement) a bank (usually in the importers country) undertakes to pay for a shipment, provided the exporter submits the required documents (such as a clean bill of lading, certificate of insurance, certificate of origin) within a specified period. In the US this arrangement is called commercial letter of credit..
Meaning of Documentary credit & Documentary credit Definition