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Cumulative Revolving Letter Of Credit for India

Cumulative Revolving Letter Of Credit Template for India

A Cumulative Revolving Letter of Credit is a specialized financial instrument governed by Indian banking laws and international trade practices. This document establishes a renewable credit facility where unused portions of the credit limit from one period can be carried forward and added to the next period's limit. The document includes comprehensive terms for credit utilization, document requirements, and banking procedures, while ensuring compliance with Indian banking regulations, particularly the Banking Regulation Act, 1949, and FEMA guidelines. It serves as a crucial trade finance instrument that provides flexibility and continued financial support for recurring international trade transactions.

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Cumulative Revolving Letter Of Credit

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What is a Cumulative Revolving Letter Of Credit?

The Cumulative Revolving Letter of Credit is a sophisticated banking instrument designed to facilitate recurring international trade transactions under Indian jurisdiction. It is particularly useful when parties engage in regular, ongoing trade relationships requiring consistent financial support. This document type allows for the unused portion of the credit limit to be carried forward and added to the next period's limit, providing greater flexibility in trade financing. The document must comply with Indian banking regulations, including the Banking Regulation Act, 1949, FEMA guidelines, and RBI directives, while also adhering to international banking practices such as UCP 600. It typically includes detailed provisions for credit utilization, document requirements, revolving mechanisms, and banking procedures, making it essential for businesses engaged in regular import/export activities requiring structured financing solutions.

What sections should be included in a Cumulative Revolving Letter Of Credit?

1. Parties: Identification of all parties involved: Issuing Bank, Applicant (Buyer), Beneficiary (Seller), and any Advising/Confirming Banks

2. Background: Context of the trade relationship and purpose of the Letter of Credit

3. Definitions: Definitions of key terms used throughout the document

4. Credit Amount and Type: Specification of the credit amount, currency, and nature of the revolving credit facility

5. Revolving Terms: Details of how the credit revolves, reinstatement conditions, and cumulative nature of the facility

6. Validity Period: Duration of the L/C, including issuance date, expiry date, and conditions for renewal

7. Documents Required: List of documents required for presentation and their specifications

8. Shipment Terms: Details of shipment requirements, partial shipments, and transshipment conditions

9. Payment Terms: Payment conditions, sight/usance period, and negotiation terms

10. Bank Charges: Allocation of banking charges and commission among parties

11. Governing Law and Jurisdiction: Applicable law and jurisdiction for dispute resolution

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

1. Confirmation Instructions: Required when confirmation by another bank is requested

2. Transfer Provisions: Included when the L/C needs to be transferable to second beneficiaries

3. Back-to-Back Arrangements: Needed when the L/C will be used as security for another L/C

4. Green Clause Provisions: Include when advance payment facilities are required

5. Red Clause Provisions: Required when pre-shipment finance is to be provided

6. Force Majeure: Optional detailed provisions for extraordinary circumstances

7. Sanctions Clause: Required when dealing with international trade involving sensitive jurisdictions

What schedules should be included in a Cumulative Revolving Letter Of Credit?

1. Schedule A - Credit Facility Details: Detailed terms of the revolving credit facility, including reinstatement schedule

2. Schedule B - Document Requirements: Comprehensive list of required documents and their specifications

3. Schedule C - Goods Description: Detailed description of the goods covered under the L/C

4. Schedule D - Fee Structure: Detailed breakdown of all applicable fees and charges

5. Appendix 1 - Standard Forms: Templates for amendment requests, presentation notices, and other standard communications

6. Appendix 2 - Operating Procedures: Step-by-step procedures for utilizing the L/C facility

7. Appendix 3 - Authorized Signatories: List of authorized signatories for all parties with specimen signatures

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 | Serial Founder & Legal AI Author

Jurisdiction

India

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions





































Clauses



































Relevant Industries

Banking & Financial Services

International Trade

Manufacturing

Import/Export

Retail

Commodities Trading

Textile Industry

Agricultural Products

Heavy Industries

Shipping & Logistics

Relevant Teams

Treasury

International Trade Finance

Legal

Risk Management

Compliance

Trade Operations

Credit Control

Supply Chain

Procurement

Finance

Banking Operations

Relevant Roles

Trade Finance Manager

International Banking Officer

Chief Financial Officer

Import/Export Manager

Treasury Manager

Credit Risk Officer

Documentary Credits Specialist

International Trade Compliance Officer

Banking Relationship Manager

Finance Director

Supply Chain Manager

Procurement Manager

Legal Counsel

Trade Operations Manager

Industries








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