A letter of credit is a Bank direct undertaking to the supplier to pay. In contrast in Bank Guarantee, the bank pays only when the buyer is unable or unwilling to pay. In case of LC the liability solely rests on the bank so a LC is less risky for the merchant but more risky for the bank.

For detail please refer http://www.castleconsultants.in/pdf/LCAndBGComparisionCastle.pdf

A letter of credit can also be defined as an obligation given to a bank so that a criteria can be followed before payment is made. As soon as the terms from both parties have been confirmed and completed, it is now the bank’s role to transfer the funds.A letter of credit ensures payment for performed services

Just like a line of credit, a bank guarantee is being used to insure a sum of money to its beneficiary. It is actually a type of guarantee wherein a bank or another lending organization makes the promise to repay their debtor’s liabilities in the event that he is unable to do so.

Standby letter of credit

http://articles.economictimes.indiatimes.com/2014-02-11/news/47235798_1_indian-bank-india-bank-leading-private-bank