An Operative Letter of Credit is a fundamental trade finance instrument used extensively in Malaysian international trade transactions. This document is typically employed when businesses need a secure payment method for cross-border transactions, providing assurance to sellers about payment and to buyers about delivery conditions. The document must comply with Malaysian banking regulations, including both conventional and Islamic banking requirements, while adhering to international standards like UCP 600. It contains critical information such as payment terms, document requirements, and shipping conditions, serving as a primary method of reducing risk in international trade. The document is particularly relevant in Malaysia's dual banking system, where both conventional and Islamic (Shariah-compliant) versions are commonly used.
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1. Letter Reference Number and Date: Unique identification number of the LC and issuance date
2. Bank Details: Full details of the issuing bank including address and SWIFT code
3. Beneficiary Information: Complete name and address of the party receiving payment under the LC
4. Applicant Information: Complete name and address of the party requesting the LC
5. LC Amount and Currency: The specific amount and currency of the credit
6. Validity and Expiry: Date and place of expiry of the LC
7. Shipment Terms: Latest shipment date and delivery terms
8. Payment Terms: Specification of when and how payment will be made (at sight, deferred, etc.)
9. Required Documents: Detailed list of documents required for presentation
10. Governing Rules: Reference to UCP 600 and any other applicable rules
11. Special Conditions: Any specific conditions or requirements for the LC
1. Confirmation Instructions: Used when the LC needs to be confirmed by another bank
2. Transferability Clause: Include when the LC is transferable to another beneficiary
3. Revolving Terms: Required for revolving LCs specifying reinstatement terms
4. Red Clause Provisions: Used when advance payment facilities are included
5. Back-to-Back Provisions: Needed when the LC is part of a back-to-back arrangement
6. Islamic Banking Compliance: Required when the LC must comply with Shariah principles
7. Standby Provisions: Include when the LC functions as a standby credit
1. Document Requirements Schedule: Detailed specifications for each required document
2. Commercial Invoice Requirements: Specific requirements and format for commercial invoices
3. Transport Document Requirements: Detailed requirements for bills of lading or other transport documents
4. Insurance Document Requirements: Specifications for insurance certificates or policies
5. Bank Contact Details: Complete list of relevant banking coordinates and contact information
6. Fee Schedule: Breakdown of all applicable banking charges and fees
7. Sanctions Compliance Checklist: List of compliance requirements regarding international sanctions
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Import/Export
Retail
Wholesale
Commodities Trading
Agriculture
Mining
Oil and Gas
Textiles
Electronics
Construction
Shipping and Logistics
Relevant Teams
Trade Finance
International Banking
Credit Operations
Risk Management
Compliance
Treasury
Import Operations
Export Operations
Documentary Credits
Financial Control
Legal
Supply Chain
Procurement
Corporate Banking
Relevant Roles
Trade Finance Manager
International Banking Officer
Letter of Credit Specialist
Trade Operations Manager
Credit Risk Officer
Compliance Officer
Treasury Manager
Import Manager
Export Manager
Documentary Credits Specialist
Trade Finance Consultant
Banking Relationship Manager
Chief Financial Officer
Finance Director
International Trade Specialist
Supply Chain Manager
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