The State Bank of Pakistan (SBP) has amended the rules, allowing banks to issue financial instruments and standby letters of credit (LCs) at the time of import contract registration to facilitate imports of crude oil, petroleum products, and liquefied natural gas (LNG). The central bank said the decision was taken in view of the prevailing geopolitical situation to ensure timely energy imports and reduce procedural delays. Under the revised framework, authorised dealers can now issue financial instruments for crude oil and petroleum product imports at the contract registration stage, a move aimed at speeding up documentation and transaction processing.
Banks have also been permitted to issue standby letters of credit for imports of crude oil, petroleum products and liquefied natural gas, expanding financing options for importers. The changes have been introduced through amendments to provisions related to imports under the Pakistan Single Window and guarantees for non-residents in the Foreign Exchange Manual. According to the SBP, authorised dealers will process import transactions through electronic data interchange with the Pakistan Single Window system, with financial instruments issued after fulfilment of requirements such as advance payments, letters of credit or shipping documentation.
The revised mechanism also allows issuance of financial instruments for oil refineries and marketing companies upon registration of import contracts, while payments must be made against shipping documents in line with agreed terms. For open account imports, banks will issue instruments after receiving declarations through the Pakistan Single Window system. The central bank directed that the validity of financial instruments must align with underlying contracts or financing arrangements, including letters of credit and advance payments.
It also set conditions for issuing guarantees and similar instruments involving non-residents, requiring prior approval in cases that may lead to foreign currency or rupee payments abroad. Applications for guarantees related to foreign borrowing or overseas investment will be submitted to the Exchange Policy Department of the SBP, while other cases will be handled by the Foreign Exchange Operations Department of the SBP-Banking Services Corporation. Banks have been instructed to provide full details of proposed guarantees, including amount, purpose, validity and potential invocation scenarios, and to report any invoked guarantees within one week.
The central bank clarified that trade-related instruments used for imports, including standby letters of credit for crude oil, petroleum products and liquefied natural gas, will not be subject to these restrictions. The measures are aimed at ensuring uninterrupted energy supplies and improving the efficiency of import processes amid global market uncertainties.