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The Line of Credit Letter is a crucial financial document used in Indonesian banking practice when a financial institution agrees to provide a revolving credit facility to a borrower. This document is typically issued following credit approval and prior to the execution of detailed facility agreements. It outlines the fundamental terms of the credit arrangement, including the approved limit, purpose, interest rates, validity period, and security requirements. Under Indonesian law, particularly the banking regulations supervised by the Financial Services Authority (OJK), this document serves as a formal commitment from the bank and a preliminary agreement that binds both parties. The letter is commonly used for working capital financing, business expansion, or ongoing operational needs, providing borrowers with flexible access to funds while ensuring compliance with Indonesian banking regulations and risk management requirements.

1. Letter Header and Date: Bank's letterhead, recipient's details, and date of issuance

2. Reference Number: Unique identification number for the credit facility

3. Facility Overview: Brief introduction stating the purpose of the letter and confirmation of credit approval

4. Borrower Details: Full legal name and address of the borrower

5. Facility Terms: Key terms including facility amount, type, purpose, and validity period

6. Interest and Fees: Applicable interest rates, calculation method, and associated fees

7. Drawdown Conditions: Requirements and procedures for accessing the credit facility

8. Repayment Terms: Terms for repayment including minimum payments and payment schedule

9. Security Requirements: Details of any required collateral or security arrangements

10. Covenants: Key undertakings and obligations of the borrower

11. Default Provisions: Circumstances constituting default and consequences

12. Bank's Rights: Statement of the bank's rights regarding the facility

13. Closing and Signature: Formal closing, authorized signatures, and acceptance provision