The LC Process in Bangladesh: The Complete Guide (and How to Skip It)

Are you trying to open a Letter of Credit (LC) but getting stuck at the bank?

For decades, the Letter of Credit (LC) has been the standard method for importing goods into Bangladesh. Whether you are bringing industrial machinery from China or raw materials from India, the government traditionally mandates an LC for commercial imports.

However, in 2025-2026, the reality has changed.

The Dollar Crisis: Banks are reluctant to open LCs for small importers.
High Margins: You are often asked to deposit 100% cash margin upfront.
Paperwork Nightmares: One missing seal on a Proforma Invoice can delay your shipment by weeks.

If you are a large corporate house, you might have a dedicated team for this. But if you are an SME or a new entrepreneur, the LC process can paralyze your business.

The Good News: You don’t always need an LC.

Total Import Solution offers a legal, simplified “Door-to-Door” service that allows you to import without the banking headaches.

In this guide, we will explain the traditional LC process step-by-step (for those who need it) and then reveal the modern alternative that is saving Bangladeshi businessmen millions in time and money.

What is a Letter of Credit (LC)?

An LC is a financial guarantee from a bank. It tells your foreign supplier: “If you ship the goods and provide the correct documents, our bank will pay you.”

It protects the buyer (you) from not receiving goods, and the seller from not getting paid.

Part 1: The Traditional LC Opening Process (Step-by-Step)

If you choose to go the traditional route, here is the roadmap you must follow.

Step 1: Obtain Necessary Licenses

Before you even visit the bank, you must have these valid documents:

Trade License: Up-to-date.
TIN Certificate: Tax Identification Number.
VAT Registration Certificate (BIN).
IRC (Import Registration Certificate): Issued by CCI&E. This is mandatory for opening an LC.
Chamber of Commerce Membership: Membership proof from your local business group.

Step 2: Get the Proforma Invoice (PI)

Contact your supplier (e.g., on Alibaba) and ask for a Proforma Invoice.

Must Include: HS Code, Country of Origin, Payment Terms (Site/Deferred), and Incoterms (FOB/C&F).

Step 3: LCA Form & Insurance

LCA Form: Fill out the Letter of Credit Authorization Form.
Insurance Cover Note: You must buy marine insurance from a Bangladeshi insurance company before opening the LC.

Step 4: Submit to Bank & Pay Margin

Submit all documents to your bank.

The Margin Issue: Due to the current economic situation, banks may ask you to deposit 100% of the import value in cash before they open the LC.
Note: Banks prioritize large clients for Dollar endorsements. Small importers often face rejection here.

Step 5: LC Transmission

Once approved, your bank sends the LC via SWIFT to the supplier’s bank in China/Abroad.

Step 6: Shipment & Document Release

The supplier ships the goods and sends the shipping documents (Bill of Lading, Invoice, Packing List) to your bank. You must go to the bank, pay the remaining amount (plus bank charges), and collect these documents.

Step 7: Customs Clearance (C&F)

You hire a C&F agent at Chittagong Port or Dhaka Airport. They submit the documents, assess the duty, and release the goods.

Part 2: The Problems with LCs in 2026

Why are smart importers moving away from LCs?

Dollar Shortage: Banks are delaying payments to foreign suppliers, causing suppliers to stop shipping to Bangladesh.
Hidden Costs: Bank commissions, SWIFT charges, Insurance premiums, and C&F fees add up.
Rigidity: If you want to change your order quantity slightly, you have to amend the whole LC (which costs money).

Part 3: The Better Alternative – Import Without LC

What if you could skip the Bank, the IRC, and the C&F Agent?

With Total Import Solution, you can.

We offer a “Door-to-Door” (All-in-One) service. Legally, we act as the importer of record using our bulk licenses, while you remain the ultimate owner of the goods.

How It Works (The Easy Way)

Select Product: You choose your product from Alibaba/Supplier.
Get Rate: We give you a flat rate per KG or CBM (e.g., Tk. XXX per KG).
Payment: You pay us in Bangladeshi Taka (BDT). No need for dollars.
We Handle Everything:
- We pay the supplier abroad.
- We ship the goods.
- We handle the LC and Customs internally.
- We deliver to your warehouse.

Comparison: Traditional LC vs. Total Import Solution

Feature	Traditional LC Process	Total Import Solution (Door-to-Door)
IRC License	Required (Costly to maintain)	Not Required
Payment Currency	USD (Hard to manage)	BDT (Easy Bank Transfer/Cash)
Customs Duty	Unpredictable (Bribes/Fines possible)	Included in the rate (Fixed cost)
Time to Start	1-2 Months (To get licenses)	Immediate (Start today)
Best For	Huge Industrial Factories	SMEs, Commercial Importers, Online Sellers

When Should You Use Which?

Use a Traditional LC If: You are importing massive volumes (e.g., 10 Containers of raw cotton) and have a dedicated finance department to handle bank regulations.
Use Total Import Solution If: You are importing machinery, spare parts, electronics, or commercial goods (LCL or FCL) and want to focus on business, not paperwork.

Frequently Asked Questions (FAQ)

Q: Is it legal to import without an LC?

A: Yes, via a registered logistics company like ours. We open the LC or use valid banking channels under our company name for the consignment, so the government gets its tax, and you get your goods hassle-free.

Q: What is the current LC margin in 2026?

A: It varies by product. For luxury goods, it can be 100%. For industrial raw materials, it might be lower. However, banks often demand high margins from small businesses regardless of the law to reduce their risk.

Q: Can I open an LC for Alibaba purchases?

A: Technically yes, but most Alibaba sellers do not want to accept LCs for small orders (under $50,000) because the paperwork is too heavy for them. They prefer TT (Telegraphic Transfer), which Total Import Solution can facilitate for you.

Stop Letting Banking Rules Slow You Down

The market won’t wait for your bank approval. Your competitors are already selling.

Switch to the modern way of importing.

📞 Contact Total Import Solution

Get a quote today and skip the LC headache.

WhatsApp / Call: +8801717954302
Email: totalimportbd@gmail.com
Website: totalimportsolution.com
Office: Dhanmondi, Dhaka.

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The LC Process in Bangladesh