September 22, 2026

Before the LC: What Your Bank Needs to Open It

Two hands passing a single sheet of paper between them in an office, representing the proforma invoice that starts an import

Most importers think of the letter of credit as the first step. It is not. Before a bank will open one, it wants a small package of documents, and the one that starts everything is a piece of paper your supplier writes.

Get that document right and the rest of the process moves. Get it wrong, or leave things off it, and you will be going back to your supplier for a corrected version while your shipping window closes.

The proforma invoice

A proforma invoice, usually just called a PI, is not a bill. It is a formal offer from the supplier, setting out what they will sell you, at what price, on what terms, and for how long the offer stands.

It typically carries the description of the goods, quantity, unit price and total, the trade term such as FOB or CIF, the port of loading and destination, the currency, payment terms, packing and delivery lead time, the supplier's bank details and a validity date.

Your bank cares about it for a specific reason. Under Bangladesh Bank's foreign exchange guidelines, the bank must see documentary evidence that a firm order has been placed and accepted before opening a credit, and must ensure that each credit contains the full description of the goods along with the unit price. The PI is where both of those come from.

That has a practical consequence people miss: a PI with a lump sum and a vague description is not just untidy, it is unusable. The unit price has to be there.

Or an indent, if you buy through an agent

Bangladesh's import procedure recognises two versions of that document.

You can submit a proforma invoice obtained directly from the foreign supplier, or an indent issued by a local indentor, meaning a registered indenting agent who represents the overseas supplier here and earns a commission from them rather than buying and reselling.

Either is acceptable. Which one you have affects one thing worth knowing about, covered below.

What actually goes to the bank

The import procedure sets out what an importer submits to the nominated bank along with the LC Authorisation form, usually called the LCA form:

The LC application form, signed by you
The indent or the proforma invoice, as the case may be
The insurance cover note

Note the third one. Your cargo insurance is not something to arrange later when the goods are about to sail. The cover note goes in with the application.

Private sector importers also have to provide a valid membership certificate from a registered chamber of commerce or relevant trade association, a renewed Import Registration Certificate for the current financial year, a declaration about income tax, and proof of a TIN.

None of this is difficult. All of it takes time if you start assembling it the week you want the LC opened.

The supplier check that can delay you

Here is the part that catches importers dealing with a new supplier.

Bangladesh Bank's guidelines require the bank to obtain a confidential report on the exporter where the value of the credit exceeds a stated threshold: BDT 5 lakh where the PI comes direct from the foreign supplier, and BDT 10 lakh where it is an indent issued by a local agent. The bank has to obtain that report itself, and a report supplied by the importer is not acceptable. Once obtained, it can stay valid for up to twelve months, and a report on the same supplier can serve other importers within that period.

Two practical points follow. First, a first-time supplier can add days to your timeline while the report is arranged, so tell your bank early rather than at submission. Second, if your bank has recently checked that same supplier for another customer, the report may already exist.

These thresholds come from published guidelines and can be revised by circular, so confirm the current figures with your own bank rather than assuming.

The clock starts earlier than you think

Two timing rules matter, and both run from the paperwork rather than from the goods.

The LC has to be opened within the period prescribed in the current Import Policy Order after the LCA form is issued or registered. And shipment must be made within nine months from the date the bank issues the LCA form for most goods, or seventeen months for machinery and spare parts, unless something else is specified.

Those windows are generous for a normal order and tight for anything involving tooling, a long production queue or a factory shutdown. If your Chinese New Year planning puts production months out, check the dates rather than assuming there is room.

Policy orders are periodically reissued, so treat those periods as the current published position and confirm with your bank.

What to check on the PI before you hand it over

This is a ten-minute review that prevents most of the problems that show up later.

Goods description. It flows into the LC and, eventually, into your customs declaration. Vague here means inconsistent later, which is exactly what invites the scrutiny described in our guide to how customs values your goods
Unit price, not just a total. Required, and the basis of everything downstream
The trade term and the ports. FOB Shenzhen and CIF Chattogram are different deals with different costs
Currency. Stated explicitly, because the taka cost is settled later and the rate moves
Validity date. A PI that expires before your LC opens is worthless, and suppliers often give short validity on quoted prices
HS code, where your supplier can give it. Useful for checking the duty you will actually pay, using our guide to finding your HS code
Bank details. Confirm them through a channel other than the same email thread. Payment redirection fraud starts here
Partial shipment and transhipment. If either might happen, it needs to be permitted in the credit, not discovered at document stage

The description on the PI eventually has to agree with the description on the commercial invoice and every other document. Our guide to how a letter of credit works explains why a mismatch at that stage is expensive.

The short version

The PI or indent is the cheapest document to fix and the most expensive to get wrong, because everything after it inherits whatever it says.

Ask your supplier for a complete one, check it against the list above before it goes to your bank, and start assembling the surrounding paperwork, insurance cover note included, before you need it rather than in the week you want the credit opened.

Requirements, thresholds and time limits are set by the Import Policy Order and Bangladesh Bank guidelines and are revised from time to time. Confirm the current position with your nominated bank before relying on any specific figure here.

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