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SBLC As Collateral for Indonesia

SBLC As Collateral Template for Indonesia

This agreement governs the arrangement where a Standby Letter of Credit (SBLC) is used as collateral security under Indonesian law. The document establishes the terms and conditions under which the SBLC is issued, maintained, and potentially drawn upon, while complying with Indonesian banking regulations and security laws. It addresses key aspects such as collateral requirements, drawing conditions, party obligations, and enforcement mechanisms, all within the framework of Indonesian civil law and banking regulations, including compliance with Bank Indonesia and OJK (Financial Services Authority) requirements.

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What is a SBLC As Collateral?

The SBLC as Collateral agreement is utilized when a party requires a standby letter of credit to serve as security for financial obligations in Indonesia. This document is particularly relevant for cross-border transactions, project financing, or large commercial arrangements where traditional forms of security may be insufficient or impractical. The agreement must comply with Indonesian banking regulations, particularly Law No. 7 of 1992 on Banking (as amended) and relevant Bank Indonesia regulations. It details the SBLC's terms, collateral arrangements, drawing conditions, and enforcement mechanisms, while ensuring compliance with both local and international banking practices. The document is crucial for establishing clear rights and obligations of all parties involved, including the issuing bank, applicant, and beneficiary, while providing a robust security structure that can be enforced under Indonesian law.

What sections should be included in a SBLC As Collateral?

1. Parties: Identification of all parties to the agreement including the bank issuing the SBLC, the applicant, and the beneficiary

2. Background: Context of the transaction, purpose of the SBLC, and relationship between the parties

3. Definitions: Definitions of key terms used throughout the agreement

4. SBLC Details: Specific details of the SBLC including amount, validity period, and purpose

5. Collateral Arrangements: Details of the collateral being provided, including type, value, and maintenance requirements

6. Rights and Obligations: Detailed responsibilities and rights of each party under the agreement

7. Representations and Warranties: Statements of fact and assurances provided by the parties

8. Security Interest: Creation and perfection of security interest in the collateral

9. Drawing Conditions: Circumstances and procedures under which the SBLC can be drawn

10. Fees and Costs: All fees, charges, and costs associated with the SBLC and collateral arrangement

11. Events of Default: Circumstances constituting default and consequences thereof

12. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes

13. Notices: Process and requirements for formal communications between parties

14. Execution: Signature blocks and execution requirements

What sections are optional to include in a SBLC As Collateral?

1. Multiple Beneficiary Provisions: Required when the SBLC has multiple beneficiaries, detailing their respective rights and priorities

2. Currency Provisions: Required for cross-border transactions involving multiple currencies

3. Step-In Rights: Optional provisions allowing beneficiary to take control of collateral under specific circumstances

4. Insurance Requirements: Required when the collateral must be insured

5. Tax Provisions: Required when there are specific tax implications or requirements

6. Regulatory Compliance: Additional provisions required for compliance with specific regulatory requirements

7. Force Majeure: Optional provisions dealing with unforeseen circumstances affecting performance

8. Assignment and Transfer: Required when rights under the SBLC may be assigned or transferred

What schedules should be included in a SBLC As Collateral?

1. Schedule 1 - Form of SBLC: The approved form and format of the Standby Letter of Credit

2. Schedule 2 - Collateral Description: Detailed description and valuation of the collateral assets

3. Schedule 3 - Drawing Procedures: Detailed procedures and requirements for drawing under the SBLC

4. Schedule 4 - Fee Schedule: Detailed breakdown of all fees and charges

5. Schedule 5 - Required Documents: List of all documents required for SBLC issuance and collateral perfection

6. Appendix A - Form of Draw Request: Standard form for making draws under the SBLC

7. Appendix B - Specimen Signatures: Authorized signatures for all relevant parties

8. Appendix C - Compliance Certificates: Forms of various compliance certificates required under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Indonesia

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions















































Clauses



































Relevant Industries

Banking & Financial Services

International Trade

Construction & Infrastructure

Manufacturing

Energy & Resources

Real Estate & Property Development

Telecommunications

Import/Export

Retail & Consumer Goods

Transportation & Logistics

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Banking

Trade Finance

Credit Administration

Commercial Operations

Project Finance

Relevant Roles

Chief Financial Officer

Treasury Manager

Finance Director

Legal Counsel

Corporate Banking Manager

Trade Finance Manager

Risk Manager

Compliance Officer

Credit Manager

Company Secretary

Commercial Director

Project Finance Manager

Security Trustee

Corporate Finance Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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