Law Summary

Amendment of Previous Provisions

• Explanation: This section amends the existing rules regarding the handling of expired Letters of Credit (L/Cs) as previously stated in Circular No. 1029.
• Key Definitions:
  • Expired Letters of Credit (L/Cs): Financial instruments that have surpassed their validity period without being utilized for shipment.

Revalidation of Expired Letters of Credit

• Explanation: Authorized agent banks are allowed to revalidate expired L/Cs under specific conditions outlined in the amended provisions.
• Key Requirements:
  • Revalidation is permitted up to a cumulative period of 360 days from the date of the original L/C opening.
  • No shipment must have been effected prior to revalidation.
  • The extension must occur within 30 days from the last expiry date of the L/C.

Conditions for Extension Beyond Thirty Days

• Explanation: Any extension of the L/Cs that exceeds the 30-day period from the expiry date must obtain prior approval from the Central Bank.
• Important Procedures:
  • Extensions beyond the 30-day limit are contingent upon receiving explicit approval from the Central Bank, ensuring regulatory oversight in these transactions.

Effective Date

• Explanation: The provisions outlined in this circular become effective immediately upon adoption.
• Adoption Date: October 15, 1991.

Key Takeaways

• Authorized agent banks may extend expired L/Cs for up to 360 days under specific conditions.
• Extensions must be requested within 30 days of expiry, with any longer extensions requiring Central Bank approval.
• The circular took effect immediately upon adoption, providing immediate guidance on the treatment of expired L/Cs.