Document background
The Reverse Letter of Credit is a crucial financial instrument in Indonesian government procurement and large-scale commercial transactions. It is primarily used when government entities or state-owned enterprises need to provide payment security to suppliers, particularly in international trade scenarios. This document type is governed by Indonesian banking laws and regulations, including Bank Indonesia directives and the Indonesian Civil Code, while also adhering to international banking standards (UCP 600). The Reverse L/C structure is particularly valuable in situations where the buyer's creditworthiness needs to be enhanced through bank backing, commonly seen in major infrastructure projects, defense contracts, or large-scale government purchases. The document details payment terms, documentary requirements, validity periods, and bank obligations, providing a secure payment mechanism that protects both buyer and seller interests.
