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Letters of credit

Our strong corresponding banking relationships at various payment gateways of the world provide ease in international trade transactions. We issue and accept bills under Letters of Credit (LC) facility. We also provide bills discounting and negotiation facilities to our clientele.

Guarantees

We issue bid bond, performance, tender, customs, counter and financial guarantees as per the needs of the customers to execute their contracts and commitments.


Frequently Asked Questions


Trade Finance Services 

1. Where do we get services for Trade related transaction?

Trade Services can be availed from all NMB Branches.  


2. How do we start banking transaction related to Trade Finance?

Branch or designated Relationship manager will guide you for full process.


3. Do we need to have credit line facility with your bank?

Yes, you need to have funded and non-funded credit line facility prior to Trade related Transaction. 


4. Is Trade service of your bank centralized or decentralized?

Yes, we have centralized Trade Finance Department located at Head Office, Babarmahal, Kathmandu, Nepal which looks after the trade services request of overall branches of the country.


5. How do we contact them?

You can contact by Telephone (Contact No. 977-1-5346160) or via email address (trade.finance@nmb.com.np) or SWIFT (NMBBNPKA). 


6. What is the customer hour for Trade transaction?

Same as regular banking hours


7. Is original request/application required for Trade transaction?

Yes, original is required to submit at Bank’s counter.


8. Can we send request by email/Fax? 

Yes, request can be sent via email/fax after original Email/Fax Indemnity is provided to the Bank. However, original has to be submitted to the Bank by next working day.


9. What are the charges/fees/commission for Trade Services? 

Our charges/fees/commission for the services (Standard Tariff of Charges) are published on the website and you may also contact nearest branch for details of charges.  


10. Are charges to be deposited into account prior to initiation of the services? 

Yes, charges and margin are to be availed in the respective customer’s account prior to the initiation of the services as the same are to be obtained upfront at the time of transaction initiation. 


Bank Guarantee 

1. What documents are required for issuance of Bank Guarantee?

Documents are variable as per the types of Bank Guarantee. Normally, below mentioned documents are required; 

  • Guarantee application
  • Guarantee indemnity
  • Format of guarantee as per beneficiary request (if any) 
  • Beneficiary’s request letter or similar kind.
  • Legal documents (Valid Firm registration, PAN, Latest Tax Clearance Certificate, Exim code certificate (if applicable), Citizenship of authorized signatory (ies), Board minute, authority letter etc.).


2. Can you issue the guarantee on beneficiary's format?

Yes, we can issue the guarantee on beneficiary format after completion of internal process. Format must be duly signed and stamped by the authorized person.


3. Can you issue the guarantee at the request of Joint Venture firm?

Yes, we do issue Guarantee for Joint Venture firm after obtaining all the required documents.


4. How can beneficiary verify the bank guarantee?

Beneficiary can verify the bank guarantee through our website https://nmb.com.np Click on "Bank Guarantee" at the footer of the website or through email verification at our email address (trade.finance@nmb.com.np).


5. Can we release the bid guarantee before its expiry?

Yes, we can if the applicant can furnish the original release letter from the beneficiary along with their confirmation.


6. Which documents are required to release Bank Guarantee prior to its expiry?

We require original release letter from the beneficiary along with their confirmation.


7. How beneficiary can submits the claim? 

Beneficiary can submit the original claim letter along with original issued Bank Guarantee letter as per Guarantee terms to our Trade Finance Counter located at Head office Babarmahal, Kathmandu within the banking hours on or before its expiry date. Claim/demand must not exceed the Guarantee amount. 


8. When does applicant settle the claim/demand amount?

Claim/demand amount must be settled within 7 working days from the date of receipt of claim/demand (i.e., as guided by prevailing NRB directives/guidelines). 


9. Do Bank issue duplicate bank Guarantee if incase of misplacement of original one?

Yes, we do. You need to contact with your designated Relationship Manager/Branch Manager. 


10. Do Bank issue International Bank Guarantee?  

Yes, we do, you need to contact International Banking Department / Trade Finance Department. 


Letter of Credit/ DAP/ DAA   

1. Who can open LC from your bank?

The client who has credit line facility (Funded and non-funded limit) at NMB Bank. You can visit our nearest branch or related business unit/department to have full information for credit line facility.  


2. What documents are required for LC issuance?

Upon approval of the credit limit and security documentation, the following documents are required:

  • Duly signed and stamped LC application
  • Duly signed and stamped Bi.Bi.Ni. 3 (For FCY) / Bi.Bi.Ni. 3GA (For INR)
  • Duly signed  and stamped Proforma Invoice (PI) along with soft copy of the PI
  • Duly signed and stamped additional terms and conditions – if any.
  • Valid registration document, Valid exim code certificate, PAN, latest tax clearance certificate, MOA, AOA, Board Minute/authority 
  • Government/competent authority’s approval (if applicable)
  • Indemnity and/or declaration letter if required


3. What details are required in Proforma Invoice (PI) / Sales contract / Indent?

Following information (but not limited to) must be mentioned in the PI:

  • Goods name, brand name and model no. (if applicable)
  • Country of origin
  • Unit price, quantity and total value
  • Incoterms
  • Payment terms (Sight/usance/ mixed payment/deferred payment)
  • Harmonic code (8 Digit)  as prescribed by the Department of Customs, which can also be accessed through website - www.customs.gov.np
  • Applicant and Beneficiary’s name, address, email address and telephone no. 
  • Applicant’s Exim code number.


4. Is there any other requirement for LC issuance?

Besides above mentioned documents, the following requirements are to be met for the LC Issuance:

  • Sufficient LC Limit for submitted application
  • Sufficient balance for charges and margin
  • Indemnity letter and/or declaration if required


5. What is incoterms?

Widely used terms of sale which specify who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance and other logistical activities. Current applicable incoterms as per 2020, there are 11 sets of internationally recognized commercial terms which define the responsibilities of sellers and buyers.


6. What is harmonic code?

Eight (8) Digit numeric code determined by Customs office to identify the goods and Customs tariff rate. The harmonic code should be mentioned as per the Customs tariff book published by Customs Office which can be accessed through website - www.customs.gov.np. 


7. What is BCI Report and when it is required? 

  • BCI (Beneficiary Credibility Information) is the detailed report of Beneficiary’s credit standing mentioning satisfactory credit rating or similar wording. It is required for LC whose payment equals to or above USD 50,000.00 or equivalent is to be made in sight basis. 
  • BCI will remain valid for one year from the date of its issuance by the beneficiary bank.


8. What kind of goods can be imported from third country? 

All goods listed under OGL Item (open General Items) can be imported, i.e. all those items which do not require any prior approval from any government authorities and not restricted by the government. 


9. What are the payment mode to import Goods in Nepal?

The following are the payment modes utilized for the import of goods in Nepal:

  • 100 percent advance payment
  • Letter of credit (LC)
  • Collection Basis (Document Against Payment-DAP / Document Against Acceptance-DAA)


10. What are the provision for importing goods from India in FCY currency?

In order to import goods in FCY currency, i.e. other than INR, the following provisions are to be fulfilled:

  • Applicant must be industry/ manufacturer 
  • Beneficiary must be industry/ manufacturer or the Sole agent of the manufacturer
  • Only selected items which are allowed by NRB.
  • HS code and goods description should be as per NRB circular.
  • If freight and insurance are incorporated in PI of FCY, even though LC is opened in FCY currency, freight and insurance will be paid in equivalent INR.


11. How do we amend/change terms and condition/clause in LC?

LC can be amended/changed by submitting below mentioned documents:

  • Duly signed and stamped LC amendment application
  • Duly signed and stamped Bi.Bi.Ni 3/3(Ga) (if applicable)
  • Duly signed  and stamped  Proforma Invoice along with soft copy (if applicable)
  • Duly signed and stamped by additional terms and conditions – if applicable
  • Valid registration document (including Exim code) –updated  documents
  • Government/competent authority’s approval (if applicable)
  • Indemnity and/or declaration letter if required


12. How can we cancel/close LC?

LC can be cancelled/closed prior to expiry date by submitting following documents and getting confirmation from LC advising bank:

  • LC Amendment Application by stating closure of LC
  • Bi Bi Ni 3/3(Ga) (Not required for NPR LC)
  • Indemnity letter (if applicable)

Further, LC can be cancelled/closed after 15 days of its expiry whether shipment is made or not under the mentioned LC. 


13. How do we know whether original documents have been received from beneficiary bank?

If original documents have been dispatched by the beneficiary through their bank, same can be tracked by obtaining the tracking number from the beneficiary. Further, you can also contact Trade Finance Department. Further, Trade Finance Department will send the intimation letter regarding the receipt of documents within 5 working days following the day of receipt of original document to respective customer / Relationship Manager. 


14. Is Beneficiary allowed to send the original documents directly to the bank?

No, the original documents must be sent through Beneficiary bank to LC Issuing bank. Further, the original documents must be received by the LC issuing bank within 60 days from the date of shipment, else same needs to be reported to NRB as per NRB regulations.


15. What is your timing for receiving LC document through Courier Services?

We accept the documents received in all working days between 9:45 AM to 2:00 PM (Sunday to Thursday) and 9:45 AM to 1:00 PM (Friday).


16. What is clean and discrepant documents?

The documents which comply all the terms and conditions of LC is termed as Clean Documents and the documents which do not comply the terms and conditions of LC and UCPDC 600 is termed as Discrepant Documents. 


17. By when the clean documents should be released?

Clean documents must be released within 5 working days following the day of document receipt date and in case of loan booking, the request for loan must be provided within the mentioned date. 


18. By when the discrepant documents should be released?

There is no hard and fast rule for the release of discrepant documents. The documents will be released upon receipt of acceptance of the documents in writing along with loan booking request (if applicable) and sufficient balance in the account.

However, if there is no any response either acceptance or rejection till 60 days of document receipt date, then the documents will be returned to presenting bank, i.e. Beneficiary’s bank.


19. Can we get original documents including Bi.Bi.Ni. without settlement/acceptance of documents?

No, documents along with Bi.Bi.Ni. can be delivered only upon settlement/acceptance of the documents. 


20. Can we release the goods from Customs Office/Kolkata/Vishakhapatnam on copy documents basis even though original documents are not received from Beneficiary Bank?

Yes, the same is possible in case of Road or Air Shipment, however, in case of sea shipment, 3rd original Bill of Lading must be provided. In order to do so, there should be sufficient fund/limit in the account along with the submission of following documents:

  • Duly signed original Indemnity letter for delivery Order issuance 
  • Original Trust Receipt Form (if applicable)
  • Letter for clearing agent (to clear goods at Kolkata port)
  • Two sets of copy documents as per LC under field 46A and in case of sea shipment, 3rd original BL. Documents presented must indicate LC No.
  • LC copy along with any amendment copy 


21. Will my supplier receive payment after settlement of copy document?

No, the supplier must present the original set of documents as per LC terms to the issuing Bank through their Bank. Upon receipt of the original documents, the Bank shall remit the payment within 5 working days following the day of receipt of documents after examination under Sight LC (and on due date in case of Usance LC) with intimation to your good company.


22. What will happen if original documents are not received at LC issuing bank after release of goods on copy documents basis?

Original documents must be presented at LC issuing Bank within 45 days from the issuance of Delivery Order (i.e. settlement/acceptance through copy documents) as per prevailing NRB guidelines, else same shall be reported to NRB. 


23. What is the maximum limit of Import through DAP/DAA?

The maximum limit of DAP and DAA shall be USD 50,000.00 or equivalent (i.e., as per the prevailing NRB regulation). Same can be accessed through NRB website - https://www.nrb.org.np/departments/fxm.


24. What documents are required under DAP/DAA?

The following documents (but not limited to) must be presented by the Beneficiary through their bank to our bank in order to import the goods under DAP/DAA:

  • Beneficiary Bank’s Covering letter indicating the terms of payment
  • Bill of exchange
  • Commercial Invoice mentioning the goods description, quantity, unit price, total amount, Incoterms, HS Code, Country of Origin
  • HS code and goods description should be as per NRB circular.
  • Packing list/Weight list
  • Certificate of Origin
  • Transport documents
  • Insurance policy (As determined by the Incoterms)


25. Can we import goods from India in FCY under DAP/DAA?

No, goods can be imported in INR only from India.


26. How do we know receipt of original document from beneficiary’s bank under DAP/DAA?

If original documents have been dispatched by the beneficiary through their bank, same can be tracked by obtaining the tracking number from the beneficiary. Further, upon receipt of original document from the beneficiary’s bank, we shall forward the intimation letter to the applicant / Relationship Manager by email.


27. What should I do after Bank receives the DAP/DAA document from the beneficiary bank? 

Once NMB receives the DAP/DAA document from the beneficiary’s bank, we forward the intimation letter to the applicant through their respective Relationship Manager (RM). The applicant should then do the followings:

  • If applicable, obtain the approval to import the goods from concerned government entity (Department of food technology and quality control, Department of drug administration, etc.)
  • Provide the insurance policy (determined as per the incoterms).
  • Provide us the settlement request as per our bank’s format along with the request for Trust Receipt loan (if applicable).
  • Maintain the required balance for settlement purpose.


28. What documents are required for payment of Documents under LC/DAP/DAA?

Upon receipt of original documents in the Bank from beneficiary’s bank, the following documents must be submitted:

  • Acceptance Request as per Bank’s standard format.
  • TR request as per Bank’s standard format, if applicable.
  • Sufficient limit/balance.


29. How do we know due date of Usance documents?

The due date of Usance documents is sent to respective Relationship Manager on weekly basis who shall intimate to your good company. Further, in case of copy documents release, the due date will be mentioned in intimation letter. Also, the same can be seen in your Liability Report which can be provided by Relationship Manager on demand.


30. Is there any additional document required on due date for payment of Usance LC/DAA?

The TR request form, if applicable, should be presented on due date. Further, in case of DAA, the following documents must be presented in addition:

  • Original Bi.Bi.Ni. endorsed by the Customs Office
  • Pragyapanpatra and Custom Duty Paid Receipt


31. What is the process for statutory margin refund/release?

In order to get the refund of statutory margin, the following documents must be presented at bank counter:

  • Original Bi.Bi.Ni. endorsed by the Customs Office subject to the verification of Customs Official signature (i.e., signed in the Bi.Bi.Ni documents) 
  • Original Pragyapanpatra and Custom Duty Paid Receipt which shall be returned to you upon endorsement by the bank


32. Can we make payment under LC/DAP/DAA directly to Beneficiary?

No, Nepalese banks cannot make payment under LC/DAP/DAA directly to the beneficiary. As per NRB prevailing guidelines, the documents must be presented through beneficiary bank to buyer’s bank and the payment should be made to the beneficiary bank which afterwards credit the supplier’s account. 


33. Can I release the goods based on document received through beneficiary directly in my email (Copy documents) under DAP/DAA?

No, goods under DAP/DAA cannot be released with copy documents directly received by the applicant.


34. What should I do if the document received by your bank is not according to the regulatory requirements (Imported goods is of restricted items/exceeds the limit of DAP/DAA)?

In such case, the applicant should instruct NMB to return the said document to the beneficiary’s bank. 


35. Does the letter of Credit (LC) cover the quality of goods? And should I pay for the imported goods if the received goods is not as per LC?

The Bank does not deal with the quality of physical goods and services received. Bank only deal with the document and upon receipt of credit complying documents, applicant needs to make the payment for the imported goods as per the LC terms regardless of quality of goods received. 


36. What will happen if the document has been presented after the LC is expired and shipment has been done after the latest date of shipment?

If the original document has been presented after the LC is expired or shipment is made after latest date of shipment, the applicant should provide LC amendment request to extend the validity and expiry of the credit prior to settlement of the LC.


Advance Payment (TT) 

1. Do we need to have credit line facility with your bank for Advance Payment (TT)?

No, Credit line is not required for Advance Payment (TT) transaction until you do not require any kind of credit line facilities.  


2. What is the amount limit for Advance Payment (TT)?

Advance Payment (TT) limit as per NRB prevailing guidelines is limited to USD 35,000.00 or its equivalent for FCY transactions and INR 30,000,000.00 for INR transactions. 


3. What documents are required to issue Advance Payment (TT)?

Documents are variable as per type of transaction. Normally below mentioned documents are required;

  • Duly signed and stamped Advance Payment (TT) application
  • Duly signed and stamped BIBNI form 3 (Ka) / 3 (Kha) (if applicable)
  • Duly signed  and stamped Proforma Invoice (PI) along with soft copy of the PI
  • Government/competent authority’s approval (if applicable)
  • Indemnity and/or declaration letter if required
  • Valid registration document, Valid exim code certificate, PAN, latest tax clearance certificate, MOA, AOA, Board Minute/authority 


4. What details are required in Proforma Invoice (PI) for Advance Payment (TT)?

Following information (but not limited to) must be mentioned in the PI:

  • Goods name, brand name and model no. (if applicable)
  • Country of origin
  • Unit price, quantity and total value
  • Incoterms
  • Customs Entry Point 
  • Payment terms
  • Harmonic code (8 Digit)  as prescribed by the Department of Customs, which can also be accessed through website - www.customs.gov.np
  • Applicant and Beneficiary’s name, address, email address and telephone no. 
  • Applicant’s Exim code number.


5. How can we mention HS code?

Eight (8) Digit numeric code determined by Customs office to identify the goods and Customs tariff rate. The harmonic code should be mentioned as per the Customs tariff book published by Customs Office which can be accessed through website - www.customs.gov.np. 


6. Is advance (TT) allowed after shipment?

No, it is not allowed as per NRB regulations. 


7. Which documents are required for statutory margin release/refund under Advance Payment (TT)?

In order to get the refund of statutory margin, the following documents must be presented at bank counter:

  • Original Bi.Bi.Ni. endorsed by the Customs Office subject to the verification of Customs Official signature (i.e., signed in the Bi.Bi.Ni documents) 
  • Original Pragyapanpatra and Custom Duty Paid Receipt which shall be returned to you upon endorsement by the bank
  • Related transport documents 


8. Can advance payment (TT) be made for LC?

No, Advance payment (TT) for LC cannot be made due to NRB regulatory requirements (i.e., multiple payment mode can’t be used for same/single transaction). 


9. Can we make FCY advance payment (TT) in India?

No, we are not allowed to make FCY advance payment (TT) in India.


10. Are we allowed to make advance Payment (TT) with two different payment mode?

No, we can make Advance Payment (TT) in only one payment mode. 


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