The Letter of Credit (LC) is a fundamental instrument in international trade finance, particularly crucial in the Indonesian market where cross-border transactions require secure payment mechanisms. Used when businesses need a guaranteed payment method for international trade, the LC serves as a bank-issued undertaking to pay the seller upon presentation of specified documents. The document operates under Indonesian banking regulations, including Bank Indonesia Regulation No. 18/2/PBI/2016, while also adhering to international standards set by UCP 600. It typically includes details of the transaction, payment terms, required documents, and shipping specifications, providing security to both importers and exporters by ensuring that payment will be made only when contractual conditions are met.
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1. Letter Details: Basic information including LC number, date of issuance, and expiry date
2. Issuing Bank Details: Complete name and address of the issuing bank
3. Applicant Details: Full name and address of the buyer/importer requesting the LC
4. Beneficiary Details: Full name and address of the seller/exporter who will receive payment
5. Currency and Amount: Specification of the credit amount and currency
6. Credit Availability: Terms of when and how the credit is available (sight, deferred payment, acceptance, or negotiation)
7. Shipment Terms: Details of shipment including latest shipment date, partial shipments, and transhipment conditions
8. Document Requirements: List of required documents for LC settlement (commercial invoice, transport documents, insurance documents, etc.)
9. Goods Description: Detailed description of the goods being traded
10. Payment Terms: Specific conditions and timeline for payment
11. Bank Charges: Allocation of banking charges between parties
1. Advising Bank Details: Details of the intermediary bank, used when there's a bank in the beneficiary's country acting as an advisor
2. Confirming Bank Details: Details of the confirming bank, included when additional bank guarantee is required
3. Transfer Conditions: Include when the LC is transferable to a second beneficiary
4. Special Instructions: Any additional instructions or conditions specific to the transaction
5. Red Clause Provisions: Include when advance payment to the beneficiary is allowed
6. Green Clause Provisions: Include when warehouse storage provisions are required
7. Back-to-Back Provisions: Include when the LC supports a back-to-back LC arrangement
1. Schedule A - Document Checklist: Detailed checklist of all required documents and their specifications
2. Schedule B - Goods Specification: Detailed technical specifications of the goods
3. Schedule C - Shipping Schedule: Detailed timeline for shipment and delivery
4. Appendix 1 - UCP 600 References: Relevant UCP 600 articles applicable to this LC
5. Appendix 2 - Bank's Standard Terms: Standard terms and conditions of the issuing bank
6. Appendix 3 - Amendment Format: Standard format for future amendments to the LC
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
International Trade
Manufacturing
Retail
Agriculture
Mining
Textiles
Electronics
Automotive
Chemical Industry
Consumer Goods
Commodities Trading
Logistics & Supply Chain
Marine Transport
Import/Export
Relevant Teams
Finance
International Trade
Treasury
Legal
Compliance
Risk Management
Banking Operations
Trade Operations
Supply Chain
Procurement
Documentary Credits
Corporate Banking
Relevant Roles
Trade Finance Manager
International Trade Specialist
Finance Director
Treasury Manager
Import/Export Manager
Documentary Credit Specialist
Compliance Officer
Banking Operations Manager
Chief Financial Officer
Trade Operations Officer
Risk Manager
Corporate Banking Manager
Supply Chain Manager
Procurement Manager
Legal Counsel
Credit Analyst
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