Details About Letter of Credit

I am not a transactions expert, but since there are no replies so far I will try.

Your sentence, "How [is] the trans[ac]tion made between Buyer to bank and from bank to supplier?" shows that you already understand the basic idea. For an overseas purchase, you deposit or otherwise set aside the necessary funds; the letter of credit verifies this. When the goods are shipped, the funds are transferred. (The exact timing of the transfer might vary from this, but it is the basic idea. It is much like a cashier's check or escrow account, if you are familiar with those terms.)

There may be sharia banking practices that do much the same thing to ensure that the supplier will be paid. Your banker can assist you with an explanation that will account for these details better than these brief remarks. Best wishes for success with this business.