Letters of Credit
Overview Regular L/Cs MULOCs Additional Information



Calling Officers
(212) 441-6700


What is a Letter of Credit?

A letter of credit (L/C) is a credit instrument, issued by a financial institution, guaranteeing payment on behalf of its customer to a beneficiary, normally to a third party but sometimes to the institution’s customer, for a stated period of time and when certain conditions are met.  An FHLBNY L/C substitutes the issuing institution’s (FHLBNY member-lender’s) credit for the credit of the FHLBNY.

The FHLBNY's L/C process:


The FHLBNY issues two types of L/Cs:  Irrevocable Standby or Irrevocable Direct Pay.

Irrevocable Standby L/C:

Provides that the FHLBNY pay out to the beneficiary in the event of a member's default or failure to perform under a contract or other agreement between parties.

Irrevocable Direct Pay L/C:

Permits the beneficiary to look directly to the FHLBNY for payment of a member’s obligation.  It cannot be cancelled before a specific date without the agreement of all parties involved.




Calling Officers
(212) 441-6700


General Terms and Conditions of Use | Privacy Policy | Forward-Looking Statements
Our friendly lawyers have asked us to tell you that visitors remaining in session with this site IMPLICITLY CONSENT to our General Terms and Conditions of Use and our Privacy Policy, and ACKNOWLEDGE our Cautionary Language Regarding Forward-Looking Statements. Please exit this session if you do not agree with the foregoing.
© Federal Home Loan Bank of New York. All rights reserved. Site Best viewed in Internet Explorer 7.0+ browser.