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The Loan Confirmation Letter is a crucial document in Pakistani banking practice, issued after the initial loan application approval but before the final loan agreement execution. It serves as an official communication from the financial institution to the borrower, confirming the approved loan terms and conditions. This document is required by Pakistani banking regulations and follows guidelines set by the State Bank of Pakistan, often serving as a precursor to the detailed loan agreement. The letter typically includes key information such as loan amount, interest rate, tenure, security requirements, and disbursement conditions. It's particularly important in Pakistan's legal framework as it creates a binding commitment subject to conditions precedent and helps ensure transparency in banking transactions. The Loan Confirmation Letter is widely used across various sectors, from corporate finance to small business lending, and must comply with both conventional and Islamic banking principles where applicable.

1. Letter Header: Bank's letterhead, date, reference number, and recipient's address

2. Subject Line: Clear identification of the letter's purpose - Confirmation of Loan Facility

3. Salutation: Formal greeting to the borrower

4. Reference to Application: Reference to the borrower's loan application and any previous correspondence

5. Confirmation of Approval: Clear statement confirming the loan approval

6. Key Loan Terms: Essential details including loan amount, interest rate, tenure, and repayment schedule

7. Security Details: Description of any collateral or security required

8. Disbursement Process: Information about how and when the loan will be disbursed

9. Key Conditions: Any important conditions that must be met before disbursement

10. Acceptance Instructions: Instructions for accepting the loan offer and next steps

11. Closing: Standard letter closing with authorized signatory details