The Divisible Letter of Credit is a crucial financial instrument in international trade, particularly relevant under Pakistani jurisdiction where it must comply with both local banking regulations and international standards such as UCP 600. This document type is typically used when transactions require staged or multiple payments, such as in large manufacturing orders, construction projects, or ongoing supply arrangements. It provides flexibility by allowing the beneficiary to draw down the credit in portions while maintaining security for all parties involved. The document specifies all terms, conditions, and documentation requirements for each drawing, ensuring compliance with Pakistani foreign exchange regulations and international banking practices. It's particularly valuable in situations where delivery and payment need to be structured in phases or where multiple shipments are involved.
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1. Letter Header and Reference: Bank letterhead, LC number, date, and reference information
2. Applicant Details: Full name and address of the party requesting the Letter of Credit
3. Beneficiary Details: Full name and address of the party in whose favor the LC is issued
4. Currency and Amount: Total value of the LC and currency denomination
5. Divisibility Terms: Specific terms regarding how the LC can be divided and drawn upon
6. Availability and Expiry: Where and how the credit is available, expiry date and place
7. Partial Shipment/Drawing Terms: Detailed conditions for partial shipments and corresponding drawings
8. Required Documents: List of documents required for each drawing under the LC
9. Special Conditions: Any specific conditions or requirements for the LC
10. Governing Law and UCP Reference: Reference to Pakistani law and UCP 600 applicability
1. Transferability Clause: Include when the LC needs to be transferable to other beneficiaries
2. Red Clause: Include when advance payment facility is required
3. Revolving Terms: Include when the LC needs to automatically reinstate after each drawing
4. Back-to-Back Provisions: Include when the LC can be used as collateral for another LC
5. Confirmation Instructions: Include when confirmation from another bank is required
6. Green Clause: Include when storage facility provisions are needed
1. Schedule A - Drawing Schedule: Detailed schedule showing maximum amounts and timing for each partial drawing
2. Schedule B - Document Requirements: Specific documentation requirements for each type of drawing
3. Schedule C - Shipping Terms: Detailed shipping requirements and schedule if applicable
4. Appendix 1 - Fee Structure: Breakdown of banking charges and fees for each drawing
5. Appendix 2 - Amendment Procedures: Procedures for requesting and processing amendments to the LC
6. Appendix 3 - Standard Forms: Template forms for drawing requests and required declarations
Authors
Relevant legal definitions
Clauses
Relevant Industries
International Trade
Banking and Financial Services
Manufacturing
Import/Export
Commodities Trading
Retail
Agriculture
Construction
Energy
Textile Industry
Automotive
Relevant Teams
Trade Finance
International Banking
Treasury
Legal
Compliance
Risk Management
Operations
Credit Administration
Finance
Procurement
Supply Chain
Relevant Roles
Trade Finance Manager
Import/Export Manager
Chief Financial Officer
Treasury Manager
Credit Manager
Banking Operations Manager
International Trade Specialist
Compliance Officer
Financial Controller
Documentary Credits Specialist
Risk Manager
Supply Chain Manager
Procurement Manager
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