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How To Prepare and Check Letter of Credit Documents - Buyer's Credit & Supplier's Credit
How To Prepare and Check Letter of Credit Documents - Buyer's Credit & Supplier's Credit
To check if documents are compliant, banks examine the required documents based on:
A generic checklist is given below to assist parties involved in the transaction in preparing compliant
documents. Kindly note the below checklist is only illustrative and not exhaustive.
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Initial Scrutiny
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Invoice
1. It should be made out by the beneficiary or other authorized person(s) as stipulated in the LC.
2. It should unless otherwise specified be made out in the name of the applicant.
3. Description of goods specified must correspond with the description in the LC.
4. The quantity of goods, unit prices, delivery terms etc. must correspond with the LC terms and be
consistent with other relative documents.
5. It should be drawn in the same currency of LC, unless otherwise specified.
6. It should not include any charges which are not permitted by LC. As per the stipulations of LC, the
gross value of invoice should not exceed the credit amount.
7. It should show deduction towards agency commission payable etc. as applicable.
8. Arithmetical calculations should be accurate, (compare unit price and quantity).
9. The final amount of invoice or the percentage of drawing as permitted in LC should correspond with
the draft amount.
10. If partial shipments are effected, amount of drawings should correspond to proportionate quantities
shipped (where only quantity is mentioned without unit prices etc.)
11. Invoice being a ‘documents of contents’, the details stated therein must correspond/be consistent
with details appearing on all other documents.
12. It must confirm to facts like IEC No. and ITC(HS) classification No. etc. as stipulated in the LC.
13. If invoice is issued for an amount in excess of the amount permitted by credit (when not specifically
prohibited by terms of LC), the nominated bank or the issuing bank has the option to accept a com‐
mercial invoice issued for an amount in excess of amount permitted by the credit, and its decision
will be binding upon all the parties, provided the bank in question has not honoured or negotiated
for an amount in excess of that permitted by the credit as per Article 18(b) of UCP 600.
Bill of Lading
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self). Similarly, transport documents marked as Original, Duplicate, Triplicate etc. are all to be
treated as originals.
12. Meet all other stipulations of the credit.
13. Must indicate whether ‘Freight Prepaid’ or ‘Freight Payable’.
14. Must bear the number of the LC.
Other aspects of BL
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Insurance Document
Other Documents
A letter of credit may call for variety of other documents like Health Certificate, Pre-shipment Inspection
Certificate, Packing List, Shipping Company’s Certificate, Beneficiary’s declarations / undertaking etc.
Whenever such documents are called for under LC, the following aspects must be checked in the
documents.
1. Whether issued by the person or authority specified in the credit or authorized to issue. If no specific
mention is made regarding issuer of the document, Bank can accept document issued by any person
provided their data content is not inconsistent with any other stipulated document presented.
2. Whether dated and signed by the person/authority concerned.
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Certificate of Origin
1. It must be issued and signed by an independent authority such as a Chamber of Commerce etc. indi‐
cating the origin of goods, as per LC stipulations.
2. The country of origin certified must be as per LC requirement and consistent with the declaration
given by the beneficiary in the invoice/other documents.
3. It must indicate the description of goods and should be consistent with other documents.
4. Details appearing in the Certificate of Origin must be consistent with the details appearing in the
other documents.
1. Signed as required by UCP 600 article 24, noting that if an agent signs on behalf of a carrier, the agent
must be named and indicate the capacity in which it is signing i.e., ABC Co. as agent for the carrier,
XYZ Co.
2. Appear to indicate the name of the carrier.
3. Indicate the place of shipment and the place of destination stated in the documentary credit.
4. Indicate receipt of the goods by signature, stamp or notation.
5. Goods description does not conflict with the documentary credit.
6. Indication of freight payment is in accordance with the requirements of the documentary credit.
7. If the document does not state the number of originals, the number presented will be taken as the full
set.
8. Road transport documents must appear to be the original for consignor or shipper.
9. Rail transport documents marked ‘duplicate’ will be accepted as originals.
10. Rail or inland waterway transport documents do not need to be marked as original in order to be ac‐
cepted as original.
11. Data is not to conflict with that shown in any other document.
12. Otherwise meets the requirements of article 24
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