The LC Letter of Credit is a fundamental instrument in international trade finance, particularly crucial in the Indonesian context where it helps facilitate the country's significant import-export activities. This document type is commonly used when parties seek a secure payment method in international trade transactions, providing assurance to sellers of receiving payment and to buyers of receiving goods as specified. The Letter of Credit, governed by Indonesian law and regulations including Bank Indonesia Regulation No. 5/11/PBI/2003, incorporates both local regulatory requirements and international banking practices (UCP 600). It's particularly relevant for transactions where parties seek to mitigate commercial risks, ensure compliance with foreign exchange regulations, and maintain standardized international trade practices. The document specifies payment terms, document requirements, and conditions that must be met for payment release, making it an essential tool for businesses engaged in cross-border trade with Indonesian counterparties.
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1. LC Number and Date: Unique identification number and issuance date of the Letter of Credit
2. Form of Credit: Specification of whether the LC is irrevocable or revocable (though most modern LCs are irrevocable)
3. Applicant Details: Complete name and address of the party requesting the LC (usually the buyer/importer)
4. Beneficiary Details: Complete name and address of the party in whose favor the LC is issued (usually the seller/exporter)
5. Issuing Bank Details: Name and address of the bank issuing the LC
6. Amount and Currency: The credit amount and currency, including whether any tolerance is permitted
7. Expiry Date and Place: The last date for presentation of documents and location where documents must be presented
8. Shipment Terms: Latest shipment date and shipment details including port of loading and discharge
9. Document Requirements: List of required documents for LC payment (e.g., commercial invoice, transport documents, insurance)
10. Payment Terms: Specification of when and how payment will be made (sight, deferred payment, acceptance, or negotiation)
1. Advising Bank Details: Used when a second bank is involved in advising the LC to the beneficiary
2. Confirming Bank Details: Included when a confirming bank adds its confirmation to the LC
3. Transferability Clause: Added when the LC needs to be transferable to a second beneficiary
4. Partial Shipment/Transhipment: Included to specify whether partial shipments or transhipments are allowed
5. Additional Conditions: Any special conditions or requirements specific to the trade transaction
6. Red Clause Provisions: Used when advance payment facilities are to be provided to the beneficiary
7. Back-to-Back Provisions: Included when the LC is part of a back-to-back LC arrangement
1. Document Presentation Schedule: Detailed checklist of required documents and presentation timeline
2. Bank Charges Schedule: Breakdown of various bank charges and party responsible for payment
3. Goods Description Schedule: Detailed description of goods, including specifications and quantity
4. INCOTERMS Schedule: Detailed explanation of applicable INCOTERMS and related obligations
5. Amendment Form: Standard format for requesting amendments to the LC
6. Document Review Checklist: Standard checklist for document examination under UCP 600
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Agriculture and Commodities
Retail
Energy and Resources
Textiles and Garments
Electronics and Technology
Shipping and Logistics
Insurance
Relevant Teams
Trade Finance
International Banking
Treasury
Legal
Compliance
Risk Management
Operations
Supply Chain
Procurement
Finance
International Sales
Documentary Credits
Relevant Roles
Trade Finance Manager
Import Manager
Export Manager
Documentary Credits Specialist
International Banking Officer
Trade Operations Manager
Compliance Officer
Financial Controller
Treasury Manager
Supply Chain Manager
International Sales Manager
Procurement Manager
Banking Relationship Manager
Chief Financial Officer
International Trade Specialist
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