In order to provide relief to the power sector consumers and increase liquidity in the system, Coal India Limited (CIL) has allowed the facility of Usance Letter of Credit to power sector consumers for payment of coal instead of cash advance for the Fuel Supply Agreements.
A usance letter of credit is a specific type of letter of credit that allows a predetermined credit period to the buyer i.e. the importer.
In common business usage, a usance letter of credit is also known as a deffered letter of credit.Usance applies to many items purchased on credit. For example, a company that purchases materials from a supplier will receive the goods today. The bill will be delivered today, but the company might have up to 30 days to pay it. The 30 days represents the usance for the sale.
Source : All India Radio