Procedures of Amendment of a Letter of Credit
Amendment to L/C
After the opening of L/C sometimes alteration/amendments to the original terms and conditions become necessary. These amendments involve changes in (i) unit price, (ii) extension of validity of the L/C, (iii) Documentary requirements etc.
Such amendments can be effected only if all the parties concerned are agreeable i.e. the beneficiary, the importer, the issuing bank and the advising bank. For any amendment, the importer must request the opening bank in writing duly supported by revised indent / proforma invoice etc. where necessary. The opening bank will then advise the required amendment to the advising bank by cable/telex/SWIFT/post, as instructed by the importer. All amendments should be noted in the L/C file and L/C opening register. L/C amendment commission including SWIFT/Post should be charged to the client’s account.
In case of increase in L/C value, it should be ensured that the balance available in the LCA form is sufficient to cover the increased L/C amount. If not value of LCA form should be enhanced to cover the increased amount of L/C. Insurance documents should also be obtained for enhanced amount.
Issuing Bank will pass the following voucher at the time of opening Cash L/C:
a) Passing of Contra Liability Voucher:
Dr. Customers liability for L/C (Cash) (Foreign/Local) Tk.
Cr. Bankers Liability for L/C (Cash) (Foreign/Local) Tk.
Dr. Party’s A/C Tk.
Cr. Sundry Deposit A/C –Margin on L/C (Cash) Tk.
Cr. Income A/C – Commission on L/C (Cash) Tk.
Cr. Income A/C –SWIFT/Telex/Courier Service etc. Tk.
Cr. Others, Stamp if any Tk.
1) Taka Amount for contra voucher shall be determined by multiplying the L/C value at B.C Selling rate on the date.of L/c opening.
2) Separate liability voucher should be passed for Foreign and Local L/C.
3) Actual liability voucher may be passed by rounding up the amount in thousand
for balancing purpose.
4) Margin amount shall be retained by the branch in taka amount only.
Advising Bank will advise the L/C to the beneficiary. Then beneficiary will export the goods and submit the Export documents to the negotiating Bank. Negotiating Bank then will send the Export document to the issuing Bank.
Upon receipt of Import documents issuing Bank will scrutinize the documents as per L/C terms & inform to the importer to release the documents if it is OK. If documents are discrepant, Bank will intimate the same to the negotiating bank within 5 working days. Bank will hold the documents at negotiating bank’s risk asking their disposal instruction mentioning UCPDC article reference.
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