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Operative Letter Of Credit for Pakistan

Operative Letter Of Credit Template for Pakistan

An Operative Letter of Credit is a crucial trade finance instrument used in Pakistani international trade transactions, governed by both local banking regulations and international UCP 600 rules. This document represents a bank's irrevocable commitment to pay the beneficiary (seller) a specified amount upon presentation of compliant documents, providing security and payment assurance in international trade. The document operates within Pakistan's legal framework, particularly under the oversight of the State Bank of Pakistan, while adhering to international banking practices and standards.

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What is a Operative Letter Of Credit?

The Operative Letter of Credit serves as a fundamental instrument in international trade finance, providing payment security and risk mitigation for cross-border transactions in Pakistan. This document is typically used when businesses engage in international trade where direct payment terms are not practical or desired. The LC represents an irrevocable commitment by a bank to pay the beneficiary upon presentation of specified documents, making it a crucial tool for both importers and exporters. In Pakistan, these instruments are regulated by the State Bank of Pakistan and must comply with both domestic banking laws and international UCP 600 guidelines. The document includes detailed specifications about payment terms, shipping requirements, document presentation, and validity periods, making it an essential tool for facilitating secure international trade transactions.

What sections should be included in a Operative Letter Of Credit?

1. Letter Reference and Date: Unique LC number, date of issuance, and bank reference details

2. Bank Details: Full details of the issuing bank including branch and contact information

3. Beneficiary Information: Complete name and address of the beneficiary (seller/exporter)

4. Applicant Information: Complete name and address of the applicant (buyer/importer)

5. Credit Amount and Currency: Specification of the LC amount and currency of payment

6. Form of Credit: Specification that this is an irrevocable documentary credit

7. Expiry Details: Expiry date and place for presentation of documents

8. Payment Terms: Method and timing of payment (sight, deferred, acceptance, or negotiation)

9. Shipment Details: Latest shipment date, port of loading/discharge, and partial shipment/transshipment conditions

10. Document Requirements: List of required documents for LC negotiation

11. Goods Description: Detailed description of goods, quantity, unit price, and trade terms

12. Special Conditions: Any specific conditions or requirements for the LC

What sections are optional to include in a Operative Letter Of Credit?

1. Transferability Clause: Include when the LC needs to be transferable to a second beneficiary

2. Red Clause: Include when advance payment facility is to be provided to the beneficiary

3. Revolving Credit Terms: Include for LCs that automatically renew for a specified number of times

4. Back-to-Back Provisions: Include when the LC may be used as collateral for another LC

5. Confirmation Instructions: Include when confirmation from another bank is required

6. Green Clause: Include when storage facilities and advance payment are required

What schedules should be included in a Operative Letter Of Credit?

1. Schedule A - Document Checklist: Detailed checklist of all required documents with specific requirements for each

2. Schedule B - Standard Banking Forms: Collection of required banking forms for LC processing

3. Schedule C - Shipping Terms: Detailed shipping instructions and requirements

4. Appendix 1 - Fee Schedule: Breakdown of all applicable banking charges and fees

5. Appendix 2 - Amendment Procedure: Standard procedures for requesting and processing LC amendments

6. Appendix 3 - Discrepancy Handling: Procedures for handling document discrepancies and resolution process

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Pakistan

Publisher

Genie AI

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions








































Clauses




















Relevant Industries

Banking and Financial Services

International Trade

Import/Export

Manufacturing

Commodity Trading

Retail

Agriculture

Textiles

Electronics

Automotive

Energy

Mining

Pharmaceuticals

Consumer Goods

Relevant Teams

Trade Finance

International Banking

Documentary Credits

Risk Management

Compliance

Treasury

Corporate Banking

Legal

Operations

Supply Chain

Procurement

Finance

Relevant Roles

Trade Finance Manager

Import Manager

Export Manager

Letter of Credit Specialist

International Banking Officer

Trade Operations Manager

Compliance Officer

Documentary Credit Manager

Chief Financial Officer

Treasury Manager

Banking Relationship Manager

Trade Finance Analyst

Risk Management Officer

Supply Chain Manager

Procurement Manager

Industries








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Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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