The Letter of Credit Limit agreement serves as a master facility document between a bank and its customer in Pakistan, establishing the framework for future Letter of Credit issuances. This document becomes necessary when a company regularly engages in international trade and requires a pre-approved credit facility for Letters of Credit. It outlines the maximum limit up to which LCs can be issued, security requirements, margins, and compliance requirements under Pakistani law. The agreement must conform to State Bank of Pakistan regulations, particularly the Prudential Regulations for Corporate/Commercial Banking and Foreign Exchange Manual. It includes specific provisions for documentation, monitoring, and reporting as required by Pakistani banking regulations while incorporating international banking practices under UCP 600.

1. Parties: Identification of the issuing bank and the customer (applicant) with full legal names and addresses

2. Background: Brief context of the relationship and purpose of the LC facility

3. Definitions: Key terms used throughout the agreement including technical banking and trade finance terminology

4. Facility Details: Specific details of the LC limit, including amount, validity period, and types of LCs permitted

5. Conditions Precedent: Prerequisites that must be satisfied before the facility becomes available

6. Security Arrangements: Details of collateral, margins, and other security requirements

7. Fees and Charges: All applicable fees, commissions, and charges for LC issuance and amendments

8. Customer Obligations: Key responsibilities and undertakings of the customer

9. Bank's Rights and Obligations: Scope of bank's commitments and rights under the facility

10. Representations and Warranties: Standard declarations about the customer's legal status and capacity

11. Events of Default: Circumstances that constitute default and their consequences

12. Termination: Conditions and process for facility termination

13. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction