Letters of Credit

A Letter Of Credit is a document issued by a bank on the instructions of the applicant, undertaking to pay the beneficiary or accept and pay drafts drawn by the beneficiary against stipulated documents, provided the terms and conditions of the credit are complied with.

You should not have difficulties in making payments for trade transactions
The GTBank Letters of Credit service is flexible and offers a wide range of services to suit our customer’s business needs.
Initiate Letter of Credit transactions on-line!
Guaranty Trust Bank offers customer's the unique opportunity to initiate online transactions for their Form M approval and Letter of Credit.

To use this service you should:
• Sign a Power of Attorney for the Form M and Letter of Credit.
• Download the relevant application form below, complete it and send to any of our branches.
• Fax your Pro-Forma Invoice and Insurance Certificate to Guaranty Trust Bank on (01) Phone No.

There are different types of LCs? The various LCs include:

Unconfirmed Inoperative LC which can be established to show intent to your supplier. The LC can be amended by adding confirmation at a later date when funds are available or the supplier is ready to ship.

Unconfirmed Cash backed LC.

Unconfirmed Irrevocable Term Letter of Credit (ITLC) allows for deferred payment after bill of lading date.

Unconfirmed Site Operative Credit where payments are made when documents are sight by collecting bank

Confirmed Cashed Backed LC

A sight LC - means that payment is due upon presentation of Credit Compliant documents.

An ITLC (Irrevocable Term Letter of Credit) is a tenured Letter of Credit. It is a deferred payment undertaken of the issuing bank to pay at a predetermined future date.

Operative and Inoperative LC
With an Inoperative LC, the beneficiary of the LC is not expected to ship until the LC is made operative.

However, an operative LC is an LC that has the payment undertaken of the issuing bank to pay. The beneficiary is allowed to perform/ship on the LC.

Expiry Date of an LC
The maximum initial tenor of an LC is 6 months; It can then be extended subsequently.

Part shipment
Part shipment means that goods can be shipped partly and not all at a time i.e. shipment can occur in parts or bits.

Documentations required in opening a Letter of Credit
Pro-Forma Invoice.
Insurance Certificate.

A current license issued in the name of the importer by the Certificate of registration of business premises.

Completed Letter of Credit Application Form.

Proforma Invoice
A Proforma Invoice should not be more than 3 months old. Except where it is clearly stated on the Proforma Invoice that it is valid for a longer period of time.

What is the difference between the country of origin and the country of supply?
The country of origin is where the goods are manufactured while the country of supply determines where inspection of goods will be carried out.

A revised Proforrma Invoice and insurance certificate showing change in the country of supply.

Harmonized System Code (HS Code) is used to determine the duty payable on imported goods.

Why must the bank retain original documents?
It is a requirement from The Bank of Sierra Leone that original shipping documents be retained in the transaction file as evidence of utilization of funds by the bank/customer.

Regulatory documents required for clearing imported goods
Clean-on-board ocean bill of lading (for sea freight) or Airway bill (for airfreight).
Attested final invoice sealed by inspection agents.
Packing list.
For consumable goods:
Certificate of analysis
Certificate of radioactivity.
The importance of an attested invoice is that evidence that preshipment inspection agents have inspected the goods. After inspection, the security label signed by an authorized signatory of the inspection agent is affixed on the invoice.

Shipping Documents or third party are documents made by the beneficiary. They are used by the customer to clear the goods after being endorsed by the bank
These Include:
a)Bill of Lading,
b)Invoice,
c)Packing list
d)Exchange Control Documents (ECD) is evidence that the goods have been cleared from the port. They are issued at different stages of clearing from the port e.g. Tally sheet, Single goods, e)Declaration Form etc.

The consequence of not submitting an Exchange Control Documents (ECD)
Bank Of Sierra Leone mandates that we submit a list of customers who, after 3 months of negotiation, defaults in the submission of Exchange Control Documents.