Increasing an LC Amount – Is a Revised Proforma Invoice Required?

Introduction

When an applicant requests an amendment to increase the value of a documentary credit, banks often require supporting commercial documents to justify the amendment. But what if the beneficiary refuses to issue a revised proforma invoice or to indicate that the invoice has been revised? Is the issuing bank still able to process the amendment?

The following Q&A discusses this practical issue.

Question

Dear Mr. Old Man,

I hope this message finds you well.

I am Sanju Budhathoki from Nepal, and I am writing to seek your guidance regarding the documentation required when amending a Letter of Credit (LC).

When an amendment is requested to increase the LC amount, our bank normally asks the applicant to provide either a revised proforma invoice or a new proforma invoice with a different number and/or date reflecting the revised value.

In the present case, however, the beneficiary has declined to issue a proforma invoice indicating that it is “Revised” or to change the proforma invoice number or date. They are unwilling to provide any document that expressly reflects the revision.

Under these circumstances, could you please advise on the appropriate procedure and the supporting documentation that should be obtained before proceeding with the LC amendment?

Your guidance would be greatly appreciated.

Thank you in advance.

Best regards,

Sanju Budhathoki
_____

Answer

Dear Sanju,

Thank you for your question.

When an applicant requests the issuance of a documentary credit, the issuing bank normally requires supporting commercial documents, such as a sales contract or a proforma invoice, in addition to the LC application. These documents provide the commercial basis for issuing the credit.

The same principle generally applies when an amendment is requested. If the amendment involves increasing the LC amount, the applicant should normally provide documentary evidence supporting the increase, such as:

• an addendum to the sales contract;
• a revised or supplementary proforma invoice; or
• another commercial document evidencing the parties’ agreement to increase the contract value.

The document does not necessarily have to be marked “Revised” or bear a different proforma invoice number or date. What is important is that it clearly supports the commercial change underlying the requested amendment and satisfies the issuing bank’s internal requirements.

On the other hand, if the amendment merely changes certain LC terms and conditions (for example, the latest shipment date, expiry date, or description of documents required), a contract addendum or revised proforma invoice may not be necessary, depending on the nature of the amendment and the issuing bank’s procedures.

If the applicant is unable to provide supporting commercial documentation, the issuing bank may request an explanation for the absence of such documents and determine whether the explanation is acceptable under its internal policies, regulatory requirements, and compliance procedures.

Ultimately, the issuance of an LC amendment is at the issuing bank’s discretion. If the applicant fails to provide the documents or explanations required by the bank, the bank is entitled to decline the amendment request.

Therefore, you should always follow your bank’s internal regulations and procedures, as these may impose documentation requirements beyond those prescribed by UCP 600.

Best regards,

Mr. Old Man