Pakistani banks are not entertaining customers with import transactions amid dollar shortage; informed sources told Dispatch News Desk on Tuesday.
Rumours were rife that all commercial banks are turning away Letters of Credit after running out of greenback, USD, in a ‘horrible’ economic backdrop.
The situation paints a gloomy picture of the economy as the default sword hangs over cash strapped nation.
As some social media users took to the microblogging platform to share the ordeal, Banks are yet to respond to the dilemma, which gives a bigger picture of the sinking economy as the country’s top leaders are also desperately approaching global lenders and friendly nations to beef up country’s foreign exchange reserves.
Amid the problematic situation, the country’s central bank and other government officials remained tight-lipped about the issue as there is no official word on LCs being declined by all banks.
As government and institutions are yet to respond, social media got the air of what is happening in the finance market; check some of the reactions here:
Opened lc payments not being cleared , goods ordered on contract not being cleared from port as documents not being retired by banks , it means we have already defaulted
— Ali Waqar (@AliWaqar82) January 10, 2023
https://twitter.com/AbdulRehman0292/status/1612082536766738435
Say bye bye to samosas and parathas because Pakistan imports edible oils after default no foreign banks will lend you LC for any imports. No food too no nothing because no fuel to transport comedies. Even you are willing to pay crazy amounts there will be nothing available to buy
— Hayat (@hayat_taym) January 8, 2023
https://twitter.com/Ahmed_Naeem62/status/1612575200016584704
https://twitter.com/ZubairKhanPK/status/1612691294169473031
Here’s how Letters of credit or LCs work
A letter of credit, also known as LC, is a letter/document from a bank assuring that a buyer’s payment to a seller will be received on time and for the correct amount.
The document is crucial in international dealings as if the buyer is unable to make a payment on the purchase; the bank will be responsible for covering the said amount of the purchase.
It is also a bank’s written assurance to pay to the exporter, ensuring the agreed value of the consignment on behalf of the foreign importer, provided that the exporter has complied with all the terms and conditions of the Letter of credit.
People mostly approach banks for LCs for imports of goods as it is a prerequisite in international trade to safeguard the interests of both exporter and importer.
