Russia's Sberbank has introduced a new digital service to streamline letter of credit (L/C) settlements in real estate transactions.

The bank has established the service by linking digitally with Russia's federal service for state registration, cadastre and cartography (Rosreestr), the state agency responsible for the management of Russia's land registry.

Electronic interaction

Sberbank says it has established a channel for electronic interaction between the bank and Rosreestr for L/C settlements of real estate transactions.

For typical transactions without additional conditions in the settlement, the bank can use this channel to independently obtain information on the transfer of ownership rights to the buyer or a record of an equity participation agreement.

Benefits

This means that the parties to the transaction no longer need to visit the bank and bring supporting documents to settle the L/C.

The new solution aims to significantly accelerate the process of paying funds to the recipient, as well as fully eliminating the risk of dishonest conduct by parties to the transaction.

Growing L/C popularity

In 2021 Sberbank says 237,000 of its clients used an L/C to purchase real estate while the demand for L/Cs has increased by a factor of 1.5 to two every year over the last five years.

The bank has already implemented a remote L/C service for settlements between individuals on the Sberbank online mobile app.

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