The Marginal Deposit On Letter Of Credit agreement is a critical document in Saudi Arabian trade finance, used when a bank requires security in the form of a cash deposit against issuing a letter of credit. This document is essential for businesses engaged in international trade within Saudi Arabia, particularly importers who need to provide financial security to their banks. The agreement details the deposit percentage (typically 10-100% of the letter of credit value), deposit management terms, and release conditions, all while ensuring compliance with Saudi Arabian banking regulations and Shariah law. It protects the bank's interests while providing clarity to customers about their obligations and rights regarding the deposited funds. The document is particularly relevant in the current economic climate where banks seek additional security for trade finance instruments.
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1. Parties: Identification of the bank and the customer (applicant for the letter of credit)
2. Background: Context of the agreement, including reference to the underlying letter of credit application
3. Definitions: Key terms used in the agreement, including 'Marginal Deposit', 'Letter of Credit', and banking terms
4. Deposit Requirements: Details of the marginal deposit amount, calculation method, and timing of deposit
5. Letter of Credit Terms: Reference to the associated letter of credit, its purpose, and basic terms
6. Rights and Obligations: Detailed responsibilities of both parties regarding the deposit and letter of credit
7. Use and Treatment of Deposit: Specifications for how the deposit will be held, any profit sharing arrangements (if applicable under Shariah), and release conditions
8. Security and Lien: Bank's rights over the marginal deposit as security
9. Currency and Exchange Rates: Specifications regarding currency of deposit and handling of exchange rate fluctuations
10. Fees and Charges: Details of all applicable banking fees and charges
11. Representations and Warranties: Standard declarations by the customer regarding their capacity and authority
12. Events of Default: Circumstances constituting default and consequences
13. Governing Law and Jurisdiction: Specification of Saudi Arabian law and relevant jurisdiction for disputes
14. Notices: Communication methods and contact details for official notices
1. Shariah Compliance: Specific provisions ensuring compliance with Islamic banking principles - required when the transaction needs explicit Shariah compliance confirmation
2. Additional Security: Provisions for any additional security requirements - included when extra collateral is required
3. Foreign Currency Provisions: Detailed provisions for handling foreign currency aspects - required for international trade transactions
4. Insurance: Requirements for insurance of underlying goods - included when specified by the bank's policy or transaction requirements
5. Joint Account Provisions: Special provisions for when the customer is multiple parties - required for joint applications
6. Electronic Banking Provisions: Terms for electronic handling of the deposit and communications - included when electronic banking services are used
1. Schedule 1 - Letter of Credit Details: Complete details of the associated letter of credit including beneficiary details, amount, and validity
2. Schedule 2 - Deposit Calculation: Detailed calculation method for the marginal deposit amount and any adjustments
3. Schedule 3 - Fee Schedule: Comprehensive list of all applicable fees and charges
4. Schedule 4 - Required Documents: List of documents required for letter of credit operation
5. Appendix A - Bank's Standard Terms: Standard terms and conditions of the bank applicable to marginal deposits
6. Appendix B - Communication Procedures: Detailed procedures for communications between parties
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
International Trade
Import/Export
Manufacturing
Retail
Wholesale
Construction
Energy
Agriculture
Mining
Telecommunications
Healthcare
Automotive
Petrochemicals
Relevant Teams
Legal
Finance
Treasury
Trade Finance
Risk Management
Compliance
Corporate Banking
International Banking
Islamic Banking
Operations
Credit Administration
Commercial Banking
Documentation
Relevant Roles
Trade Finance Manager
Import/Export Manager
Treasury Manager
Chief Financial Officer
Finance Director
Banking Relationship Manager
Credit Manager
Risk Management Officer
Compliance Officer
Legal Counsel
Commercial Director
Supply Chain Manager
Procurement Manager
Financial Controller
Islamic Banking Specialist
Trade Operations Manager
Corporate Banking Officer
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