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Standby Letter Of Credit Template for Indonesia

A Standby Letter of Credit (SBLC) under Indonesian law is a bank-issued financial instrument that serves as a guarantee of payment or performance. Governed by Indonesian banking regulations and international banking practices, this document provides a commitment from a bank to pay a specified sum to a beneficiary if the applicant fails to meet certain obligations. The document must comply with Bank Indonesia regulations, particularly Regulation No. 5/11/PBI/2003, while also adhering to international standards such as UCP 600 or ISP98. It includes specific provisions for drawing conditions, validity periods, and dispute resolution mechanisms under Indonesian jurisdiction.

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What is a Standby Letter Of Credit?

The Standby Letter of Credit is a fundamental banking instrument used in Indonesian and international commerce to provide financial security and risk mitigation. This document is particularly valuable when parties seek a reliable payment guarantee or performance security in commercial transactions. The SBLC serves as a contingent obligation where the issuing bank commits to pay the beneficiary upon presentation of compliant documents evidencing the applicant's default or non-performance. Under Indonesian law, these instruments are regulated by Bank Indonesia and must comply with both local banking regulations and international banking practices such as UCP 600 or ISP98. The document is commonly used in various scenarios including bid securities, performance guarantees, advance payment guarantees, and financial obligations, making it a versatile tool in international trade and domestic commercial transactions.

What sections should be included in a Standby Letter Of Credit?

1. Issuing Bank Details: Complete details of the bank issuing the SBLC, including name, address, SWIFT code, and reference numbers

2. Beneficiary Details: Full name and address of the beneficiary who can make a claim under the SBLC

3. Applicant Details: Complete information about the party requesting the SBLC, including name, address, and registration details

4. Credit Amount and Currency: Specific amount and currency of the SBLC, including both numerical and written forms

5. Effective Date and Expiry: Clear statement of when the SBLC becomes effective and its expiration date/conditions

6. Drawing Terms and Conditions: Detailed conditions under which the beneficiary can make a claim, including required documentation

7. Form of Demand: Specific format and requirements for making a demand under the SBLC

8. Governing Law and Jurisdiction: Statement that Indonesian law governs the SBLC and specification of jurisdiction for disputes

9. Reference to International Rules: Reference to applicable international rules (UCP 600 or ISP98) governing the SBLC

What sections are optional to include in a Standby Letter Of Credit?

1. Transferability Clause: Optional section specifying whether the SBLC can be transferred and under what conditions

2. Reduction Clause: Optional provision for automatic reduction of the SBLC amount under specific circumstances

3. Multiple Drawing Provisions: Optional section allowing for multiple drawings if permitted under the SBLC

4. Language Provision: Optional clause specifying controlling language if SBLC is issued in multiple languages

5. Force Majeure Clause: Optional provision addressing extraordinary circumstances that might affect the SBLC

6. Anti-Money Laundering Compliance: Optional section addressing compliance with AML regulations, particularly relevant for international transactions

What schedules should be included in a Standby Letter Of Credit?

1. Schedule A - Form of Demand: Template for the standard form of demand to be used when making a claim under the SBLC

2. Schedule B - Required Documents: List of all documents required to be presented with any demand under the SBLC

3. Schedule C - Authorized Signatories: List of persons authorized to sign demands or other communications under the SBLC

4. Appendix 1 - Underlying Transaction Details: Summary of the underlying transaction or obligation that the SBLC is supporting

5. Appendix 2 - Fee Schedule: Details of all applicable fees, charges, and commission related to the SBLC

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Document Type

Letter of Credit

Cost

Free to use

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