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Bank Standby Letter Of Credit for United Arab Emirates

Bank Standby Letter Of Credit Template for United Arab Emirates

A Standby Letter of Credit (SBLC) under UAE law is a formal bank undertaking that provides a financial guarantee of payment to a beneficiary if the applicant fails to fulfill specified obligations. Governed by UAE Federal Law No. 18 of 1993 (Commercial Code) and UAE Central Bank regulations, this document serves as a contingent payment mechanism, typically remaining undrawn unless a default occurs. The document must comply with both local UAE banking regulations and international banking practices such as ISP98 or UCP 600, making it a robust instrument for securing commercial transactions in the UAE's business environment.

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Bank Standby Letter Of Credit

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What is a Bank Standby Letter Of Credit?

The Bank Standby Letter of Credit is a crucial financial instrument in the UAE's commercial landscape, commonly used to provide payment security in various business transactions. It serves as a contingent obligation where the issuing bank commits to pay the beneficiary upon presentation of compliant documents evidencing a default or non-performance by the applicant. Subject to UAE Federal Law No. 18 of 1993 and UAE Central Bank regulations, this document type incorporates both local legal requirements and international banking standards. The SBLC typically includes specific details about the underlying transaction, parties involved, expiry date, drawing conditions, and required documentation. It's particularly valuable in the UAE market where cross-border transactions and large commercial deals require robust payment security mechanisms.

What sections should be included in a Bank Standby Letter Of Credit?

1. Letter Reference Number: Unique identification number assigned to the SBLC

2. Date of Issuance: The official date when the SBLC is issued

3. Issuing Bank Details: Complete name, address, and SWIFT code of the issuing bank

4. Beneficiary Details: Full name and address of the party in whose favor the SBLC is issued

5. Applicant Details: Full name and address of the party requesting the SBLC

6. Currency and Amount: The currency and maximum amount available under the SBLC, in both figures and words

7. Expiry Date: The date and place of expiry of the SBLC

8. Drawing Terms: Specific conditions and documentation required for drawing under the SBLC

9. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant jurisdiction

10. Applicable Rules: Reference to applicable rules (e.g., ISP98 or UCP 600)

What sections are optional to include in a Bank Standby Letter Of Credit?

1. Transferability Clause: Include when the SBLC needs to be transferable to other beneficiaries

2. Partial Drawings: Include when multiple partial drawings are to be permitted

3. Automatic Extension Clause: Include when the SBLC should automatically extend beyond its initial expiry date

4. Counter-Guarantee Requirements: Include when there's a requirement for counter-guarantee from another bank

5. Electronic Presentation Clause: Include when electronic presentation of documents is permitted

6. Assignment of Proceeds: Include when the beneficiary should have the right to assign proceeds

7. Multiple Currency Drawing Option: Include when drawings in multiple currencies are permitted

What schedules should be included in a Bank Standby Letter Of Credit?

1. Schedule A - Required Documents: Detailed list of documents required for drawing under the SBLC

2. Schedule B - Form of Demand: Prescribed format for making a demand under the SBLC

3. Schedule C - Underlying Transaction Details: Description of the underlying transaction or obligation being secured

4. Appendix 1 - Authorized Signatories: List of authorized signatories and specimen signatures for the beneficiary

5. Appendix 2 - Special Instructions: Any special instructions for document presentation or communication

Authors

Alex Denne

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

Publisher

Genie AI

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Relevant legal definitions



































Clauses






























Relevant Industries

Banking and Financial Services

International Trade

Construction and Infrastructure

Manufacturing

Energy and Utilities

Real Estate

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Retail and Wholesale

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Relevant Teams

Legal

Finance

Treasury

Trade Finance

Risk Management

Compliance

Corporate Banking

International Banking

Credit Administration

Documentary Credits

Commercial Operations

Relevant Roles

Trade Finance Manager

Corporate Banking Officer

Chief Financial Officer

Treasury Manager

Credit Risk Manager

Documentary Credits Specialist

Compliance Officer

Legal Counsel

Commercial Director

Finance Director

Banking Operations Manager

International Trade Specialist

Account Relationship Manager

Transaction Banking Manager

Industries








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