Structure of a Foreign B2B LC
Message Header
The message header of a B2B LC contains the name, address and SWIFT code of both the sending bank and the receiving/advising bank. This ensures authenticated and secure transmission through the SWIFT system.
Message Text and Credit Type
Form of Documentary Credit
The credit is issued as an Irrevocable Documentary Credit, meaning it cannot be amended or cancelled without the consent of all parties involved.
Applicable Rules
The B2B LC is governed by UCP 600 (ICC Publication), which standardizes documentary credit practices worldwide.
Key Parties Involved in the B2B LC
Applicant Bank
The issuing bank (e.g., Trust Bank Limited, Uttara Corporate Branch) opens the Back‑to‑Back LC on behalf of the exporter.
Applicant (Exporter)
The exporter (e.g., a garments or manufacturing company) who holds the export L/C and requires raw materials to fulfill export obligations.
Beneficiary
The overseas supplier (e.g., a foreign trading corporation) who supplies goods under the Back‑to‑Back LC.
Advising / Negotiating Bank
Usually a foreign bank located in the supplier’s country (e.g., Bank of China) that advises and negotiates documents under the LC.
Credit Amount, Currency and Payment Terms
Currency and Amount
The B2B LC specifies the currency and total credit amount, which must be within the value limits of the parent export LC.
Payment Terms
Payment may be available by:
- Deferred payment
- Usance drafts (e.g., 90 days from date of acceptance)
The maturity date is calculated from the date of acceptance of documents.
Shipment and Delivery Terms
Shipment Conditions
Partial Shipment and Transshipment
Partial shipment and transshipment are allowed unless specifically restricted in the LC.
Ports of Loading and Discharge
Goods may be shipped from any port/airport in the exporting country to the designated port or airport in Bangladesh.
Latest Date of Shipment
The LC clearly states the final shipment deadline, which must be strictly complied with to avoid discrepancies.
Description of Goods
Goods Specification
The LC includes a detailed description of goods such as:
- Commodity type
- HS Code
- Quantity and unit price
All specifications must strictly match the Proforma Invoice.
Incoterms
The delivery terms (e.g., CNF/C&F – Incoterms) define responsibilities for freight and insurance.
Documents Required Under the B2B LC
Mandatory Shipping and Commercial Documents
Commercial Invoice
Must:
- Be item‑wise
- Mention quantity and value clearly
- Bear the LC number and export LC reference
Packing List
Multiple copies of a detailed packing list are required.
Bill of Lading
A full set of clean “shipped on board” Bills of Lading must:
- Be freight prepaid
- Be made out or endorsed to the order of the issuing bank
- Indicate package and quantity clearly
Certificates and Declarations
Certificate of Origin
Issued by the Chamber of Commerce of the exporting country, confirming the country of origin of goods.
Beneficiary’s Certificates
Certificates confirming:
- Shipment strictly as per Proforma Invoice
- Timely dispatch of non‑negotiable documents to the applicant
- Compliance with LC terms and specifications
Pre‑Shipment Inspection Certificate
Issued by or on behalf of the supplier as required by the LC.
Special Conditions and Compliance Requirements
Discrepancy Handling
Documents with discrepancies must not be negotiated without prior written approval of the LC opening bank. Charges may be deducted for presentation of discrepant documents.
Shipment Restrictions
Shipment or transshipment by:
- Israeli flag vessels
- UN‑sanctioned country vessels
is strictly prohibited and must be certified accordingly.
Insurance Arrangement
Insurance coverage is arranged by the LC opener and shipment advice must be sent to the nominated insurance company immediately after shipment.
Presentation and Negotiation Rules
Period for Presentation
Documents must be presented within a specified number of days after shipment and within the LC validity period.
Courier and Notification Requirements
Negotiating banks must:
- Inform the opening bank prior to negotiation
- Send documents through internationally reputed courier services
- Provide SWIFT/FAX confirmation as stipulated
Charges and Banking Fees
Bank Charges
All banking charges outside Bangladesh, including reimbursement charges, are borne by the beneficiary, unless otherwise stated.
Deduction of Charges
Specific charges (e.g., document discrepancy fees or payment instruction charges) may be deducted from proceeds.
Legal Status of the Credit
Operative Credit Instrument
The Foreign B2B LC is an operative credit instrument and no separate mail confirmation is required.
Governing Law
All matters are governed by UCP 600 and banks reserve rights as per Article 16(c) for handling discrepant documents.
