The Business Letter of Credit is a crucial trade finance instrument used in Indonesian international commerce to mitigate payment risks between traders. When an Indonesian importer needs to purchase goods from an overseas supplier, or when an Indonesian exporter is selling goods internationally, this document provides payment security for both parties. The Letter of Credit, issued under Indonesian banking regulations and international UCP 600 rules, contains specific terms including payment conditions, shipping requirements, and document presentation guidelines. It's particularly valuable when parties don't have established trading relationships or when dealing with high-value transactions. The document must comply with Bank Indonesia regulations, particularly regulation No. 18/10/PBI/2016, while also adhering to international banking standards.
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1. Letter Header: Bank's letterhead, reference number, date, and contact information
2. Beneficiary Details: Full name and address of the party receiving the Letter of Credit
3. Applicant Details: Full name and address of the party requesting the Letter of Credit
4. Credit Number: Unique identification number of the Letter of Credit
5. Currency and Amount: Specified currency and maximum amount of the credit
6. Expiry Date: Date and place of expiry of the Letter of Credit
7. Shipment Terms: Latest shipment date and delivery terms using INCOTERMS
8. Document Requirements: List of required documents for presentation (invoices, transport documents, etc.)
9. Payment Terms: Specification of when and how payment will be made
10. Governing Law: Statement that Indonesian law governs the Letter of Credit
11. Authorization: Authorized bank signatures and stamps
1. Partial Shipments: Include when specifying whether partial shipments are allowed or prohibited
2. Transhipment: Include when specifying whether transhipment is allowed or prohibited
3. Transfer Conditions: Include when the Letter of Credit is transferable
4. Special Conditions: Include when there are additional requirements or conditions specific to the transaction
5. Insurance Requirements: Include when specific insurance coverage needs to be specified
6. Confirmation Instructions: Include when confirmation by another bank is requested
7. Back-to-Back Provisions: Include when the Letter of Credit is part of a back-to-back arrangement
1. Schedule A - Description of Goods: Detailed specification of the goods being traded
2. Schedule B - Document Checklist: Comprehensive list of required documents with specific format requirements
3. Schedule C - Bank's Standard Terms: Standard terms and conditions of the issuing bank
4. Appendix 1 - Fee Schedule: Breakdown of all applicable banking charges and fees
5. Appendix 2 - Presentation Schedule: Timeline and process for document presentation
Authors
Relevant legal definitions
Clauses
Relevant Industries
International Trade
Banking and Finance
Manufacturing
Import/Export
Retail
Commodities
Agriculture
Mining
Textiles
Electronics
Automotive
Chemical Industry
Consumer Goods
Relevant Teams
Finance
Treasury
International Trade
Procurement
Supply Chain
Trade Operations
Risk Management
Legal
Banking Operations
Commercial Banking
Documentary Credits
Trade Finance
Relevant Roles
Trade Finance Manager
Import Manager
Export Manager
Chief Financial Officer
Treasury Manager
Banking Relations Manager
International Trade Specialist
Documentary Credits Officer
Finance Director
Procurement Manager
Supply Chain Manager
Commercial Banking Officer
Credit Risk Manager
Trade Operations Manager
International Business Development Manager
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