The Line of Credit Letter is a crucial financial instrument in Saudi Arabia's banking sector, used when businesses require flexible access to financing for their operational needs. This document is issued by Saudi banks to establish a revolving credit facility, typically for working capital purposes, while ensuring compliance with both Saudi banking regulations and Islamic finance principles. The letter details the maximum credit limit, profit rate structure, security requirements, and key conditions for maintaining the facility. It's particularly important in the Saudi Arabian context as it must balance conventional banking practices with Shariah compliance requirements, making it distinct from conventional credit facilities in non-Islamic jurisdictions. The document serves as the primary reference point for both the bank and the business regarding their rights and obligations under the credit facility.
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1. Bank Details and Letter Reference: Full name and address of the issuing bank, date, and reference number
2. Recipient Details: Full name and address of the recipient/customer
3. Credit Facility Details: Specification of the credit limit, type of facility, and purpose
4. Term and Validity: Duration of the facility and expiry conditions
5. Profit Rate and Fees: Shariah-compliant profit rate structure and applicable fees
6. Security Requirements: Details of required collateral or security
7. Key Conditions: Essential conditions for facility availability and maintenance
8. Compliance Requirements: Regulatory and Shariah compliance requirements
9. Termination Provisions: Circumstances under which the facility may be terminated
10. Authorization: Bank's authorized signatories section
1. Foreign Exchange Provisions: Required when the facility involves multiple currencies
2. Insurance Requirements: Needed when specific insurance coverage is required for the facility
3. Syndication Rights: Include when the bank reserves the right to syndicate the facility
4. Cross-Default Provisions: Include when linking to other facilities or agreements
5. Additional Security Rights: When bank requires right to request additional security
6. Shariah Advisory Declaration: When specific confirmation of Shariah compliance is required
1. Facility Pricing Schedule: Detailed breakdown of profit rates, fees, and charges
2. Security Details Schedule: Comprehensive list and description of security/collateral
3. Conditions Precedent: List of documents and conditions required before facility activation
4. Compliance Documentation: Required regulatory and Shariah compliance certificates
5. Bank's Standard Terms: General terms and conditions applicable to the facility
6. Required Forms: Standard forms for drawdown requests and other facility operations
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
Manufacturing
Trading & Commerce
Real Estate & Construction
Healthcare
Technology & Communications
Energy & Utilities
Retail & Consumer Goods
Transportation & Logistics
Agricultural & Food Processing
Relevant Teams
Finance
Treasury
Legal
Compliance
Risk Management
Corporate Banking
Credit Administration
Business Development
Shariah Advisory
Operations
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Financial Controller
Credit Manager
Banking Relationship Manager
Compliance Officer
Legal Counsel
Shariah Compliance Officer
Risk Manager
Corporate Banking Officer
Business Development Manager
Account Manager
Finance Manager
Corporate Secretary
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