Foreign banks seeking 10pc commission to endorse letters of credit

Foreign banks are now demanding a 10 per cent commission to endorse letters of credit (LC) for importable consignments, banking insiders revealed on Saturday. They said the move came as the country grapples with economic challenges, diminishing the confidence of global financial institutions in its banking system. The rupee’s depreciation, coupled with foreign exchange reserves and debt servicing issues, has elevated the business risks associated with the country. Letters of credit issued by Pakistani banks were no longer deemed credible by international exporters, banking professionals claimed, adding that such LCs required an endorsement from globally recognised foreign banks. “Growing risks and deteriorating economic situation has weakened the country’s image abroad. The cost is too high, as foreign banks are now asking for 10pc as commission on each consignment,” a senior banker said. He said foreign banks had been profiting significantly from endorsing domestic LCs for over a year now, as banks in Pakistan had generally lost credibility.