Letter of Credit

A letter of Credit (LC), issued at the request of importer, is a written commitment by issuing bank to beneficiary (exporter) that payment will be made to beneficiary provided that the terms and conditions stated in the LC have been met, as evidenced by the presentation of specified documents.

Salient Features

• Underlying Shariah contract is Wakalah (Surety ship)
• Non-funded facility
• LC is retired through either:
  • Murabahah Post Import (MPI)/ DMF or any other available mode of financing (by making payment), or
  • Acceptance for usance LC (by creating Acceptance liability), or
  • Cash payment from customer.

Bank Guarantee

Bank Guarantee (BG) covers an agreement by the bank to pay another party (the beneficiary) if the bank’s customer (the principal or applicant) defaults in his debt or obligation (a job contract) to the beneficiary. EBL will also provide Bank Guarantee facility under Kafalah contract of Shariah.

Salient Features

• Underlying Shariah contract is Kafalah.
• Non-funded facility