Guides · Letters of credit
An LC gets your supplier paid. It does not get your consignment declared.
Shafiq Traders · Updated 14 September 2026
A letter of credit is your bank's promise to pay your supplier once the documents presented match what the LC calls for. It runs on the ICC's UCP 600 rules, and it is examined against paper, not against your goods. It calls for the same core documents customs eventually sees — invoice, packing list, bill of lading, often a certificate of origin and an insurance certificate — but the wording on the LC and the wording on the invoice have to describe the same goods. When they diverge, your bank can raise a discrepancy, and we cannot file a declaration that reconciles a description the LC does not recognise with one the invoice does.
What a letter of credit actually promises
A letter of credit is your bank's promise to pay your supplier, provided the documents presented match what the LC calls for, letter for letter. It is examined against paper, not against your goods — nobody checking an LC at the bank has seen the containers. That examination follows the ICC's Uniform Customs and Practice for Documentary Credits, UCP 600, which almost every LC issued out of Pakistan is written subject to.
The LC used to travel to customs as a separate Electronic Import Form before a Goods Declaration could be filed against it. Pakistan Single Window has retired that step for banking-instrument transactions: once your bank establishes the LC, it shares that financial instrument with PSW electronically, and we file against it directly. You should not need a second trip to your bank for a form.
What an LC calls for, and who has to produce it
| Document | What it shows the bank | Who produces it |
|---|---|---|
| Commercial invoice | The value and description of the goods, on the LC's terms | Your supplier |
| Packing list | Quantities, weights and marks matching the invoice | Your supplier |
| Bill of lading or airway bill | That the goods were shipped, and title to them | The carrier |
| Certificate of origin | Where the goods were made, if the LC asks for one | A chamber of commerce |
| Insurance certificate | Cover on the cargo, where the LC requires it | The insurer |
| Bill of exchange or draft | The payment instruction drawn against the LC | Your supplier |
The mismatch we see: the LC describes one thing, the invoice another
An LC is drafted by your bank from your application, often weeks before the goods ship. The invoice is drafted by your supplier, from their own stock description or product code. Nobody sits the two side by side until the documents land on a desk together, and by then the wording has usually drifted — "PVC compound" on the LC against "PVC resin, grade X" on the invoice, or a model number that appears on one and not the other.
That is a problem for your bank before it is a problem for us: a document that does not match the LC's wording is a discrepancy, and the bank can refuse to honour it or pay under reserve until it is sorted out. It becomes our problem too, because a Goods Declaration is written from the invoice and the packing list, and if the description in the file cannot be reconciled with what the LC says was bought, we are filing from documents that already disagree with each other before we reach the terminal.
The fix is not clever drafting. It is telling your supplier, before the invoice is issued, to use the exact wording the LC uses — not a close paraphrase, the same words.
A value the bank will not process, before customs ever sees it
The Directorate General of Customs Valuation issues valuation rulings under Section 25A of the Customs Act, setting a benchmark value for goods where under-invoicing has been a recurring problem. A declared value sitting well under that benchmark is not only a customs question. Banks are cautious about processing a letter of credit, or the documents under one, against a value they can see is out of line with a published ruling, because it looks like the kind of understatement the foreign exchange regulations hold them accountable for.
We have seen this stop a solar shipment before the LC was even opened. Check the applicable ruling against your invoice value before you ask your bank to establish the LC, not after.
Your bank's requirements are not ours to move. We can tell you where an LC and an invoice are going to disagree before your bank finds it, but we do not issue the LC, and we cannot waive a discrepancy your bank has decided to hold against you. That decision sits with them.
Questions
What importers ask about letters of credit
Contact
Tell us what is coming.
Give us the product, the port and roughly when the vessel is due, and we will tell you what the clearance involves and what it will cost.