Letter of Credit Request (Kenya)
LETTER OF CREDIT REQUEST
To: [Issuing Bank Name] [Bank Branch] SWIFT/BIC: [Issuing Bank SWIFT] Date: [Request Date] From: [Applicant Name] [Applicant Address] BRS No.: [Applicant BRS Number] | KRA PIN: [Applicant KRA PIN] Dear Sir/Madam, We hereby request you to open an irrevocable documentary letter of credit on the following terms and conditions under the Uniform Customs and Practice for Documentary Credits (UCP 600), ICC Publication No. 600, and in compliance with the National Payment System Act No. 39 of 2011 and the CBK Prudential Guideline CBK/PG/22 on Trade Finance.
1. Applicant and Beneficiary
Applicant: Name: [Applicant Name] Address: [Applicant Address] BRS No.: [Applicant BRS Number] KRA PIN: [Applicant KRA PIN] Authorised Signatory: [Authorised Signatory] Beneficiary: Name: [Beneficiary Name] Address: [Beneficiary Address] Beneficiary's Bank: [Beneficiary Bank] Advising Bank: [Advising Bank]
2. Credit Amount and Currency
2.1 Credit Amount: [Credit Amount] ([Credit Currency]) 2.2 Tolerance: [Tolerance Percentage] (plus or minus) on the credit amount, as permitted under UCP 600 Article 30. 2.3 Credit Type: Irrevocable Documentary Letter of Credit. 2.4 Payment Terms: At sight — payable against presentation of complying documents.
3. Goods Description and Trade Terms
3.1 Description of Goods: [Goods Description] 3.2 HS Tariff Code (KRA): [HS Tariff Code] 3.3 Incoterms 2020 Trade Term: [Incoterms Trade Term] 3.4 The goods description is consistent with the proforma invoice and the Import Declaration Form (IDF) filed with the Kenya Revenue Authority (KRA) on the iCMS customs platform.
4. Shipment and Expiry Terms
4.1 Latest Shipment Date: [Latest Shipment Date] 4.2 Port of Loading: [Port of Loading] 4.3 Port of Discharge: [Port of Discharge] 4.4 LC Expiry Date: [LC Expiry Date] (at the counters of the Advising Bank or the Issuing Bank, as applicable) 4.5 Partial Shipments: [Partial Shipments] 4.6 Transhipment: [Transhipment] 4.7 Presentation Period: Documents must be presented within 21 days after the date of shipment but within the validity of the credit, as per UCP 600 Article 14(c).
5. Required Documents
Payment shall be made against presentation of the following documents in the form and number specified: [Required Documents] All documents must be consistent with each other and with the credit terms under UCP 600. Documents relating to goods regulated under the Standards Act (Cap. 496) must include a pre-shipment inspection certificate from a KEBS-accredited inspection body.
6. Bank Charges and Collateral
6.1 Bank Charges: All banking charges and commissions of the Issuing Bank within Kenya shall be for the account of the Applicant. Bank charges outside Kenya shall be for the account of: [Bank Charges Allocation]. 6.2 Collateral: The Applicant confirms that collateral or margin deposit has been provided to the Issuing Bank in accordance with the Bank's requirements and CBK Prudential Guideline CBK/PG/22. 6.3 Reimbursement: The Applicant irrevocably undertakes to reimburse the Issuing Bank for all payments made under the credit together with all commissions, charges, and expenses in accordance with the Bank's trade finance terms and conditions.
7. Declaration and Authorisation
The Applicant confirms that: (a) This request relates to a genuine underlying commercial transaction; (b) The Applicant has filed or will file an Import Declaration Form (IDF) with the Kenya Revenue Authority (KRA) on the iCMS platform; (c) The Applicant authorises the Issuing Bank to debit its accounts for all amounts payable under the credit; (d) This request is submitted in compliance with the Anti-Money Laundering provisions of the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA); (e) The authorised signatory is duly authorised under a board resolution adopted in accordance with Section 159 of the Companies Act No. 17 of 2015. Signed by: [Authorised Signatory] For and on behalf of: [Applicant Name] Date: [Request Date]
Authorised Signatory (Applicant)
________________
Signature
Bank Officer (Issuing Bank)
________________
Signature
What Is a Letter of Credit Request (Kenya)?
A Letter of Credit Request in Kenya is a formal written application submitted by an importer (applicant) to a Central Bank of Kenya (CBK)-licensed commercial bank, directing that bank to issue a documentary letter of credit in favour of a named overseas supplier (beneficiary), on terms set out in the application, under the Bills of Exchange Act (Cap. 27) and the Uniform Customs and Practice for Documentary Credits (UCP 600) published by the International Chamber of Commerce (ICC).
The Letter of Credit Request is the foundational document in the documentary credit cycle — it triggers the bank's credit assessment process and, once approved, forms the basis for the Letter of Credit issued by the bank. Kenyan commercial banks including Kenya Commercial Bank (KCB), Equity Bank, Co-operative Bank of Kenya, and Standard Chartered Bank Kenya use standardised LC application forms, but the information required is the same across all CBK-regulated institutions and must satisfy the CBK Prudential Guideline CBK/PG/22 on Trade Finance.
Under the Banking Act (Cap. 488) and CBK's Credit Risk Management Guidelines, a Kenyan bank receiving a Letter of Credit Request must conduct a credit assessment of the applicant, confirm that the proposed transaction is a genuine underlying trade transaction, verify the identity of the beneficiary, and assess whether the applicant has sufficient credit facilities or margin deposits to support the contingent liability. The bank then registers the LC in its off-balance sheet records as required by CBK's Prudential Returns framework.
The Letter of Credit Request also triggers Kenya Revenue Authority (KRA) import procedures — the applicant must file an Import Declaration Form (IDF) on the KRA iCMS customs platform and reference the LC number once issued. For goods subject to Kenya Bureau of Standards (KEBS) import inspection under the Standards Act (Cap. 496), the LC request should specify the requirement for a pre-shipment inspection certificate from a KEBS-accredited inspection body.
A Letter of Credit Request should be distinguished from a Bank Guarantee Application — the latter is used when the applicant requires a guarantee instrument (a secondary obligation) rather than a documentary credit (a primary payment obligation). Kenyan importers who wish to pay after delivery rather than against documents may find a Demand Guarantee or a Standby Letter of Credit more appropriate, both of which are issued under separate application forms by Kenyan banks, though the Legal basis remains the Bills of Exchange Act (Cap. 27) and the International Standby Practices (ISP98) for standby instruments. Under Kenya law, Section 3 of the Companies Act 2015 (No. 17 of 2015) and Section 2 of the Law of Contract Act (Cap 23) govern the core requirements for this type of document.
The legal framework governing the Letter of Credit Request (Kenya) in Kenya draws on several key statutes and regulatory bodies. Under the Central Bank of Kenya Act (Cap. 491), the Central Bank of Kenya (CBK) regulates banking. The Capital Markets Authority (CMA) regulates securities under the Capital Markets Act (Cap. 485A). Section 84 of the Bills of Exchange Act (Cap. 27) governs promissory notes. The Kenya Revenue Authority (KRA) administers tax obligations. The Microfinance Act No. 19 of 2006 regulates microfinance institutions. The Hire Purchase Act (Cap. 507) governs credit sale agreements. Parties executing a Letter of Credit Request (Kenya) in Kenya should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Bills of Exchange Act (Cap. 27) sets the foundational requirements.
When Do You Need a Letter of Credit Request (Kenya)?
A Letter of Credit Request in Kenya is required whenever a Kenyan importer needs a CBK-licensed bank to issue a documentary letter of credit on its behalf, and the bank requires a formal written application before doing so.
A Letter of Credit Request is needed when a Kenyan company signs a sale contract with a foreign supplier that stipulates payment by irrevocable documentary letter of credit. The Kenyan buyer cannot instruct a bank to open an LC without submitting a formal request; without it, the supplier will not ship the goods, and the underlying trade contract will be in breach.
A Letter of Credit Request is required when a Kenyan SME applies for trade finance facilities from its bank for the first time. The bank's trade finance department uses the request to assess the applicant's credit risk under the Banking Act (Cap. 488), register the facility on the CBK Credit Reference Bureau (CRB) system under the Banking (Credit Reference Bureau) Regulations 2013, and determine the margin deposit or collateral required.
A Letter of Credit Request is needed when a Kenyan manufacturer imports raw materials or inputs under a government-supported import substitution programme administered by the Kenya Investment Authority (KenInvest). KenInvest-supportd transactions involving the Industrial and Commercial Development Corporation (ICDC) may require a formal LC application to qualify for concessional trade finance rates.
A Letter of Credit Request is required when a public entity or State corporation procures goods from an international supplier under a contract approved by the National Treasury under the Public Finance Management Act No. 18 of 2012. The Integrated Financial Management Information System (IFMIS) records the commitment once the bank issues the LC, making the formal LC request essential for accounting and audit purposes.
A Letter of Credit Request is needed when a Kenyan exporter agrees to supply goods to a domestic buyer who wishes to finance payment through an internal or domestic letter of credit — a less common but legally valid instrument under Kenyan banking practice, used in large construction or infrastructure contracts where the contractor requires guaranteed payment from a project owner. Under Kenya law, Section 3 of the Companies Act 2015 (No. 17 of 2015) and Section 2 of the Law of Contract Act (Cap 23) govern the core requirements for this type of document.
What to Include in Your Letter of Credit Request (Kenya)
A valid Letter of Credit Request in Kenya must contain the following essential elements to enable the bank to issue a complying documentary credit under UCP 600 and CBK trade finance regulations.
Applicant Details: Full legal name, Business Registration Service (BRS) registration number issued via the eCitizen portal, Kenya Revenue Authority (KRA) PIN, registered address, and the name of the authorised signatory submitting the request. Corporate applicants must provide a board resolution or authorisation letter confirming the signatory's authority under the company's constitution or under Section 159 of the Companies Act No. 17 of 2015.
Beneficiary Details: Full legal name, address, country, and bank details (bank name, branch, SWIFT/BIC code) of the overseas supplier in whose favour the LC is to be issued. The applicant must confirm the beneficiary's identity and provide the underlying proforma invoice or sale contract referencing the beneficiary's entity details.
Credit Amount and Currency: The maximum amount of the documentary credit in the agreed currency (USD, EUR, GBP, or KES), with any tolerance percentage authorised under UCP 600 Article 30. Kenyan banks require the amount to match the proforma invoice or sale contract value and will not issue credits for amounts materially exceeding the documented trade value.
Goods Description and Trade Terms: A precise description of the goods to be imported, the HS (Harmonised System) tariff code for KRA customs classification, and the Incoterms 2020 trade term (CIF, FOB, CFR, DDP). The goods description must be consistent with the proforma invoice and the Import Declaration Form (IDF) filed with KRA.
Document Requirements: The applicant specifies each document the beneficiary must present to obtain payment, including the commercial invoice, transport document (bill of lading or airway bill), certificate of origin, insurance certificate, packing list, and any regulatory documents such as a KEBS pre-shipment inspection certificate under the Standards Act (Cap. 496) or a KEPHIS phytosanitary certificate for agricultural goods.
Shipment and Expiry Terms: The latest date for shipment, the port or place of loading, the port of discharge (e.g., Port of Mombasa via Kenya Ports Authority), whether partial shipments and transhipments are permitted, the presentation period after shipment, and the expiry date and place of the credit — all required fields under UCP 600 Articles 6, 14, and 31.
Collateral or Margin Deposit: The applicant confirms the collateral or margin deposit offered to secure the bank's contingent liability — cash margin, fixed deposit, property charge, or existing credit facility headroom. This element is reviewed by the bank's credit committee under CBK Prudential Guideline CBK/PG/22.
Bank Charges Allocation: Whether bank charges outside Kenya are for the account of the applicant or beneficiary, and confirmation that the applicant accepts the issuing bank's LC issuance commission and document examination fees in accordance with the bank's published tariff.
The forms-legal.com Letter of Credit Request template for Kenya covers all eight elements above and includes the standard indemnity clause by which the applicant agrees to reimburse the issuing bank for any payment made under the credit in accordance with the bank's trade finance terms and conditions. Under Kenya law, Section 3 of the Companies Act 2015 (No. 17 of 2015) and Section 2 of the Law of Contract Act (Cap 23) govern the core requirements for this type of document.
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note = {Free legal document template}
}Frequently Asked Questions
A CBK-licensed Kenyan bank requires a completed Letter of Credit Request containing: the applicant's full legal name, BRS registration number, and KRA PIN; the beneficiary's name, address, and bank SWIFT code; the credit amount and currency; the goods description with HS tariff code for KRA customs; the Incoterms 2020 trade term; the list of required documents (invoice, bill of lading, insurance certificate, certificate of origin, and any KEBS or KEPHIS certificates for regulated goods); the latest shipment date and expiry date; and confirmation of the collateral or margin deposit offered. The bank also requires a copy of the underlying proforma invoice or sale contract and, for corporate applicants, a board resolution authorising the LC application under Section 159 of the Companies Act No. 17 of 2015. Incomplete applications are returned unpaid, which can delay shipment and put the trade contract in breach.
The time for a CBK-licensed Kenyan bank to open a documentary letter of credit after receiving a complete Letter of Credit Request depends on whether the applicant has an existing trade finance facility or is applying for a new facility. Where an approved LC facility exists and the request is within the approved limit, Kenyan banks such as KCB, Equity Bank, and Standard Chartered Bank Kenya typically issue the LC within 1 to 3 business days via SWIFT MT700 transmission to the advising bank. Where a new credit assessment is required under CBK Prudential Guideline CBK/PG/22, the bank's credit committee must approve the facility, which typically takes 5 to 15 business days depending on the value and complexity of the transaction. Applications that involve first-time importers, goods subject to KEBS import inspection under the Standards Act (Cap. 496), or KRA-sensitive commodities may take longer due to additional due diligence. The applicant should submit the request well before the shipment deadline specified in the sale contract.
A Kenyan SME without an existing trade finance facility can apply for a letter of credit, but the issuing bank will require adequate collateral or a 100% cash margin deposit to secure the contingent liability under CBK Credit Risk Management Guidelines. The bank will conduct a credit assessment under the Banking Act (Cap. 488) and register the applicant on the Credit Reference Bureau (CRB) system under the Banking (Credit Reference Bureau) Regulations 2013 before issuing the LC. SMEs that lack sufficient collateral may access trade finance support through the Kenya Export Promotion and Branding Agency (KEPROBA) for export transactions, the Development Bank of Kenya (DBK) for qualifying import substitution transactions, or the MSME Credit Guarantee Scheme administered by the Ministry of Trade. The Kenya Bankers Association (KBA) also offers guidance to SMEs on trade finance product options. A first-time LC applicant should engage the bank's trade finance desk at least 4 to 6 weeks before the required shipment date to allow sufficient time for credit approval.
When a Kenyan importer opens a letter of credit, the Kenya Revenue Authority (KRA) Customs and Border Control requires the importer to file an Import Declaration Form (IDF) on the KRA iCMS (Integrated Customs Management System) platform before the goods arrive. The IDF must include the HS tariff code, the supplier's details, the country of origin, the port of discharge (typically Port of Mombasa via Kenya Ports Authority or JKIA), the import value in KES, and the LC reference number once the bank has issued the credit. KRA uses the IDF to pre-classify the goods and calculate import duties, VAT at 16% under the Value Added Tax Act No. 35 of 2013, and excise duty where applicable under the Excise Duty Act No. 23 of 2015. Goods subject to KEBS mandatory standards under the Standards Act (Cap. 496) require a pre-shipment inspection certificate from a KEBS-accredited inspection body in the country of export before the LC is issued, as the inspection certificate is typically a required document under the credit terms.
A CBK-licensed Kenyan bank may decline a Letter of Credit Request if the applicant fails the bank's credit assessment under the Banking Act (Cap. 488), lacks adequate collateral or margin deposit, has an adverse record on the Credit Reference Bureau (CRB) under the Banking (Credit Reference Bureau) Regulations 2013, or if the proposed transaction raises concerns under the Proceeds of Crime and Anti-Money Laundering Act No. 9 of 2009 (POCAMLA) or the Counter-Trafficking in Persons Act No. 8 of 2010. The bank must give the applicant written notice of the refusal and, under the CBK Customer Service Charter, provide the reason for refusal within a reasonable time. The applicant may approach another CBK-licensed bank, provide additional collateral, or seek trade finance support through the Development Bank of Kenya (DBK). A dispute about an unjustified refusal may be escalated to the CBK Banking Sector Ombudsman or the Kenya Bankers Association (KBA) mediation mechanism before seeking recourse through the Kenyan courts.
A Letter of Credit Request submitted to a Kenyan commercial bank does not require notarisation or independent witnesses to be valid — it is a bank application form rather than a deed or statutory declaration. However, corporate applicants must attach a certified copy of a board resolution authorising the signatory to submit the LC request and bind the company, as required under Section 159 of the Companies Act No. 17 of 2015 and the bank's Know Your Customer (KYC) documentation standards under the Anti-Money Laundering regulations. Individual applicants must provide a copy of their National Identity Card (NIC) and KRA PIN certificate. Where the LC request is submitted electronically through the bank's trade finance portal, the digital signature or login credentials of the authorised signatory serve as the authenticated execution. Kenyan banks retain the original application and supporting documents as part of the trade finance file for inspection by CBK examiners under the Central Bank of Kenya Act (Cap. 491) examination powers.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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