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.
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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
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
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
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
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