Amendment of letter of Credit

Amendment of letter of Credit

Amendment of L/C means modification or addition/deletion of any point/term of L/C which has already been advised. Question of amendment of L/C arises due to incorporation of terms outside the contract between buyer and seller and also due to emergence of new circumstances. If the beneficiary is unable to comply with any term/condition stipulated in the L/C or require additional clause, he advises importer to request issuing Bank for amendment of the L/C. Bank makes amendment of the L/C within the frame work of existing rules as per written request of the L/C applicant. In irrevocable letter of credit such amendment is effective if all the parties interest involved in the L/C agree to it.

Usually LC is amended for the following requirements:

(a)    Extension of validity of credit.

(b)   Change of price/unit price. L/C value Increase/Decrease.

(c)    Change of documentary requirement.

(d)   Extension of Shipment date

Regarding amendment, the following points are to be note very carefully by the issuing bank.

(a)    Amendment of L/C should be advised through L/C advising bank.

(b)   Instruction of amendment should be complete and precise.

(c)    Partial acceptance of amendment is not effective without agreement of all parties whose interest is involved.

Amendment of L/C means opening of new L/C (in legal sense). Therefore rules and regulation applied for opening of L/C are also applicable for amendment of L/C.

Commission and charges are to be recovered at prescribed/arranged rate for amendment of the L/C before effecting the amendment. Recovery of charges is to be recorded in the L/C file and L/C opening register/amendment register. If the L/C value increase the increasing liability voucher must be passed or L/C value decrease, the decreasing liability voucher must be passed and booth are posted in the liability register in the receptive L/C if amendment is extension of validity of credit

The voucher to be passed:

Dr. Party A/C 

Cr. F.C.C. Charges.

Cr. Handling Charge.

Dr. Party’s A/C

Cr. Income A/C commission, Postage/Telex, VAT (If the L/C value increase)

Cr. F.C.C (if any)

Model of Amendment Register:

Date	L/C No.	Applicant	Commission & Charge	Short Description Amendment	Remarks
1	2	3	4	5	6

Precedes of L/C amendment:

Importer submits a request letter to amend the L/C to the L/C opening Bank.

	(2) Amendment (Type Banks Printed format)

 

Amendment is to be type in the Banks printed format. The copies of the amendment must be dispatched to all concerned as done on dispatching the L/C. Each and every amendment of L/C must be noted be noted in the respective L/C file and copies of each amendment be kept in the L/C file chronologically/ (Date Wise).