Letter of Credit

A Letter of Credit, simply defined, is a written instrument issued by a bank at the request of its customer, the Importer (Buyer), whereby the bank promises to pay the Exporter (Beneficiary) for goods or services, provided that the Exporter presents all documents called for, exactly as stipulated in the Letter of Credit, and meet all other terms and conditions set out in the letter of Credit. A Letter of Credit is also commonly referred to as a Documentary Credit.

A "Letter of Credit" is used as an instrument for settlement of payment arising out of commercial transactions like sales/purchases in national/international trade. We issue every types of LC as per the requirement of our customers. The common types are as under:

1Time/Usance LC
6Back to Back LC
2Differed/Mixed Payment LC
7Advance Payment LC
3Revolving LC
8Discounting LC
4Confirmed LC
9Sight LC
5Transferable LC


Documents required for issuing a Letter of Credit- 

Before issuing a LC, you will require to have approved credit limits sanctioned by the bank. Moreover, imports and exports transactions that involve foreign currencies are subject to Central Bank (NRB)'s foreign exchange regulations and other International rules like UCPDC 600, URR etc. We will require you to submit the following documents along with the LC Application form for issuing a Letter of Credit:

Proforma Invoice/Sales contract/Indent containing at least-Harmonic code (in eight digits) of the goods to be imported
Country of Origin
Delivery and Payment terms and various other details like rate, quantity, total value, shipment country etc. (wherever applicable)
Bi.Bi.Ni. Form No. 3 (Mandatory as per NRB) with LC Application Form.

Other documents required are:

  • Firm/Company Registration Certificate.
  • PAN Certificate.
  • Board minute (if applicable).
  • MOA (Memorandum of Association).
  • AOA (Article of Association).
  • Citizenship.
  • Latest Tax Clearance Certificate.


There are various other NRB provisions regarding import/export of goods from India and other third countries. We will help you to know these provisions so as to make you feel at ease while conducting import/export business.


For further information, please contact:

TRADE FINANCE

Mega Bank Nepal Limited

New Baneshwor Chowk, Kathmandu

Phone: 977-1-4485480, 977-1-4487071/72

Email: tradefinance@megabank.com.np