Letters of Credit

A Letter of Credit (LC) is an undertaking issued by the Bank (issuing Bank) for the account of the buyer (the applicant) to pay the beneficiary (seller), provided that the terms of the LC are complied with. It is used to facilitate importation/exportation of goods and services, and also facilitate local trade.

Sight Letters of Credit – Customers who deal in import business and are only able to get sight LCs from their suppliers. Here payment is done on presentation/sight of compliant documents.

Usance Letters of Credit – Customers who deal in import business and are able to arrange for supplier credit can be offered Usance Letters of Credit instead of Sight Letters of Credit. Here payment is done at an agreed future date

Product Features

  • Denominated in both local and foreign currency
  • Non Fund based facility
  • Must be secured by either cash or collateral unless covered under collateral management
  • Attracts fees and commission as per tariff
  • Maximum LC period of one year


  • No interest charged
  • Quality of products and price guaranteed by an independent pre-shipment inspection company
  • Easy Access to other credit products like Pre Shipment Finance and structured Finance
  • Payment is guaranteed by both issuing and confirming bank as long as compliant documents are presented
  • Mitigates buyers/country risk and can allow multiple shipments
  • Ensures delivery is done within schedule and payment date is fixed


  • Completed LC application form
  • Valid pro forma invoice from the seller or provider of the service.
  • Financial card
  • Contribution of 10% of invoice amount as part of security for Sight LC.
  • Insurance cover for shipment if not covered under invoice amount
  • Other requirements similar to Commercial/Corporate loans
  • Possession of relevant trading/import business experience