Plenty of buyers claim to have letter-of-credit facilities. Fewer actually have an approved bank credit line behind that claim — here is how to tell the difference before quoting.
An LC facility is a pre-approved credit line a bank extends to an importer, letting it open letters of credit up to a set limit without pledging the full cash value each time. Having one signals real financial standing — a bank has already underwritten that buyer’s ability to pay. The problem for a new exporter is that “we work on LC” is a phrase used just as often by brokers and buyers whose actual facility is small, expired, or simply does not exist, as it is by genuinely qualified importers, and there is no way to tell the two apart from a WhatsApp message and a company logo alone.
A buyer with a real, adequate facility will not hesitate to have their bank issue a pro-forma LC draft or a banker’s reference letter once grade and quantity are agreed — doing so costs them nothing and is routine for a bank that already knows the client. A Ready, Willing and Able (RWA) letter or bank comfort letter, issued directly by the buyer’s bank rather than drafted by the buyer itself, is a further and stronger signal, since it commits the bank’s own name to the claim rather than the buyer’s.
| Signal | What it suggests |
|---|---|
| Buyer's bank issues a draft LC or comfort letter on request | Genuine, adequate facility — low risk |
| Buyer promises an LC but repeatedly delays opening it | Facility may be smaller than claimed, or exhausted |
| Buyer asks the exporter to draft the LC wording themselves | Unusual — legitimate buyers' banks issue their own standard wording |
| Buyer has a documented history of past LC-paid shipments | Strongest available proof; verifiable via customs shipment records |
The single most concrete evidence of a real LC facility is not anything the buyer says but a documented pattern of past shipments actually cleared and paid for — a customs import record showing the same named consignee receiving HS 10063020 basmati rice repeatedly, at consistent or growing volumes, over time. A buyer who has been importing container loads every month for two years has, by definition, been paying for them somehow, and that track record is a far stronger signal than any single message claiming LC readiness.
Not every serious buyer starts with an established facility — a growing wholesaler or a first-time private-label brand owner may be entirely legitimate while still working through their bank’s approval process. In that case, a smaller opening order on TT advance terms, sized to limit exposure on both sides, is often the more honest path than pretending an LC facility exists when it does not, and it gives both parties a real shipment history to point to the next time an LC actually is opened.
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Ask the buyer's bank to issue a draft LC or a banker's reference/comfort letter directly, and cross-check against any documented history of past shipments on that buyer's customs record — both are stronger evidence than a verbal or written claim alone.
Treat repeated delay as a signal the facility may be smaller than claimed or currently exhausted, and consider a smaller trial order on TT advance terms instead of continuing to wait on an LC that may not materialise.
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