Which of the following best defines the term ‘Letter of Credit’ as used frequently in bank transactions ?

A An order from a bank to another bank abroad authorizing the payment of a particular amount to a person named in the letter
B An unconditional undertaking given by a bank ensuing the payment of a particular amount to the drawee at a given date
C Letter by a bank to a person starting the terms and conditions of the loan sanctioned to him by the bank
D Statement showing outstanding deposits and credits of a bank for a particular period
Answer & Explanation
Option: [A]

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