KARACHI: Letters of credit (LC) for importable consignments are now subject to 10% commission demands from foreign banks, banking insiders revealed on Saturday.
They claimed that the action was taken as the nation struggled with economic problems, which reduced the confidence of international financial organizations in its banking sector.
The depreciation of the rupee has increased the commercial risks associated with the nation, along with problems with the country’s foreign exchange reserves and debt servicing.
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 was quoted as saying in Dawn.
He claimed that since Pakistani banks had generally lost their trust, international banks had been earning greatly from approving domestic LCs for more than a year.
Following the conclusion of a $3 billion loan agreement with the International Monetary Fund in June, Pakistan relaxed import restrictions. However, experts claimed that the IMF’s instructions to liberalize imports and maintain a stable currency exchange rate under the short-term accord backfired, worsening the nation’s economic problems.
