A Letter of Credit Limit is a crucial trade finance instrument in Saudi Arabia's banking sector, used to establish a pre-approved credit facility for issuing Letters of Credit. This document is typically required when companies engage in regular international trade transactions and need a standing arrangement with their bank for LC issuance. The Letter of Credit Limit document specifies the maximum amount up to which the bank will issue LCs, validity period, and key terms and conditions. It must comply with Saudi Arabian banking regulations, SAMA guidelines, and Shariah principles, making it distinct from conventional LC facilities in non-Islamic jurisdictions. The document serves as a master agreement that streamlines the process of obtaining individual Letters of Credit within the approved limit, reducing the time and documentation required for each transaction.
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1. Bank Details and Reference: Bank's letterhead, reference number, and date of issuance
2. Customer Information: Full legal name and address of the customer/beneficiary
3. Greeting and Subject Line: Formal greeting and clear subject indicating Letter of Credit Facility
4. Facility Amount: Total LC limit amount and currency specification
5. Validity Period: Start and end dates of the LC facility
6. Purpose and Types of LC: Permitted types of LCs (sight, usance, etc.) and their intended use
7. Key Terms and Conditions: Essential conditions including fees, margins, and documentation requirements
8. Security Requirements: Required collateral, margins, and other security arrangements
9. Compliance Statement: Statement of compliance with Shariah principles and applicable regulations
10. Authorization and Signature: Bank's authorized signatories and official stamps
1. Multiple Currency Provisions: Include when the LC facility is available in multiple currencies, specifying conversion rates and limits
2. Special Industry Requirements: Add when the customer operates in regulated industries requiring specific LC conditions
3. Revolving vs Non-revolving Terms: Include when specifying whether the facility is revolving or non-revolving
4. Sub-limit Structure: Add when the facility includes various sub-limits for different types of LCs or other trade facilities
5. Related Facility References: Include when the LC facility is part of a larger banking facility arrangement
1. Schedule 1: Fees and Charges: Detailed breakdown of all applicable fees, charges, and commission rates
2. Schedule 2: Standard Terms and Conditions: Bank's standard terms and conditions for LC facilities
3. Schedule 3: Documentation Requirements: List of required documents for LC issuance and amendments
4. Appendix A: Facility Operation Guidelines: Operational procedures for utilizing the LC facility
5. Appendix B: Specimen Signatures: Authorized signatures for LC-related instructions and amendments
Relevant legal definitions
Clauses
Relevant Industries
International Trade
Manufacturing
Import/Export
Retail
Construction
Oil & Gas
Mining
Agriculture
Telecommunications
Healthcare
Automotive
Industrial Equipment
Consumer Goods
Chemical Industry
Textile Industry
Relevant Teams
Finance
Treasury
International Trade
Legal
Compliance
Risk Management
Procurement
Supply Chain
Commercial Operations
Banking Operations
Credit Administration
Trade Operations
Relevant Roles
Chief Financial Officer
Treasury Manager
Trade Finance Manager
Finance Director
Import/Export Manager
Banking Relationship Manager
Credit Manager
Compliance Officer
Legal Counsel
Risk Manager
Financial Controller
Supply Chain Manager
Procurement Director
Commercial Director
Banking Operations Manager
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