Q&A Uncategorized A CASE REGARDING CUMULATIVE REVOLVING LC By Mr Old Man Posted on October 4, 2016 2 min read 0 0 2,462 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Hey Mr. Old Man, Could you please help me in clarifying the answer of the following question: A credit is issued for the amount of USD15,000 and is stated to revolve monthly on an automatic and cumulative basis. The credit has a 9 months validity period. The following drawings are made in the first 5 months: January – USD12,500 February – USD16,000 March – USD10,750 April – USD13,800 May – USD15,000 How much is available to be drawn in June? Expecting your prompt response as always. Regards, Rashed ———— ANSWER Hi Rashed, It is understood that the unutilized sums in a cumulative revolving L/C can be added to the upcoming drawings until the LC expires. As the L/C revolves monthly for a validity period of 9 months, the maximum amount available to be drawn in June is USD21,950 Note: Maximum amount that can be drawn for six months is USD90,000 (= USD15,000 x 6). However, the total amount drawn for the last 5 months was USD68,050 (= 12,500 + 16,000 + 10,750 + 13,800 + 15,000). So, the maximum amount available to be drawn in June is USD21,950 (= USD90,000 – USD68,050). I am not good at calculation. Please check again! Kind regards, Mr. Old Man