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Red Letter Of Credit for Indonesia

Red Letter Of Credit Template for Indonesia

A Red Letter of Credit is a specialized financial instrument governed by Indonesian banking regulations and international trade practices (UCP 600), which provides an advance payment facility to the beneficiary before shipment of goods. This document, while following international L/C standards, must specifically comply with Bank Indonesia regulations, particularly Regulation No. 5/11/PBI/2003 and relevant foreign exchange regulations. It serves as both a payment guarantee and a short-term financing tool, incorporating specific provisions for advance payments while maintaining the security features of a traditional Letter of Credit within the Indonesian legal framework.

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What is a Red Letter Of Credit?

The Red Letter of Credit is a crucial trade finance instrument used when exporters require advance funding before shipment while still providing security to importers. This document type combines the traditional Letter of Credit's payment security with pre-shipment financing features, making it particularly valuable in Indonesian trade transactions where suppliers need working capital. It must comply with Bank Indonesia regulations, Indonesian Banking Law, and international UCP 600 guidelines. The document typically includes advance payment provisions of up to 40% of the credit amount, detailed requirements for triggering payments, and specific conditions for document presentation. Red Letters of Credit are commonly used in Indonesian export transactions, especially in sectors requiring significant pre-shipment expenses, and must incorporate specific regulatory requirements for foreign exchange transactions under Indonesian law.

What sections should be included in a Red Letter Of Credit?

1. Issuing Bank Details: Complete details of the issuing bank including name, branch, SWIFT code, and contact information

2. L/C Number and Date: Unique reference number and issuance date of the Letter of Credit

3. Beneficiary Details: Full name and address of the beneficiary (seller/exporter)

4. Applicant Details: Full name and address of the applicant (buyer/importer)

5. Credit Amount and Currency: Specification of the L/C amount, currency, and whether it's maximum or exact

6. Credit Type and Availability: Specification of credit type (irrevocable, confirmed if applicable) and how/where the credit is available

7. Expiry Date and Place: Clear statement of the L/C expiry date and location for document presentation

8. Shipment Terms: Details of shipment including latest shipment date, partial shipment/transhipment permissions

9. Required Documents: Comprehensive list of all required documents for L/C negotiation

10. Goods Description: Detailed description of goods/services being traded

11. Payment Terms: Specific conditions and timing of payment

12. Special Conditions: Any additional terms, conditions, or requirements specific to this L/C

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

1. Transferability Clause: Include when the L/C needs to be transferable to a second beneficiary

2. Confirmation Instructions: Include when confirmation from another bank is requested/required

3. Back-to-Back Provisions: Include when the L/C is part of a back-to-back arrangement

4. Red Clause Provisions: Specific details about the advance payment facility, as this is a Red Clause L/C

5. Insurance Requirements: Include when specific insurance requirements differ from standard UCP provisions

6. Secondary Beneficiary Details: Include when L/C is transferable and secondary beneficiary is known

What schedules should be included in a Red Letter Of Credit?

1. Schedule A - Document Requirements: Detailed checklist of required documents and their specific requirements

2. Schedule B - Advance Payment Terms: Specific terms and conditions relating to the advance payment facility

3. Schedule C - Goods Specifications: Detailed technical specifications of goods when too lengthy for main body

4. Appendix 1 - Bank Forms: Standard forms required by the issuing bank for L/C operations

5. Appendix 2 - UCP 600 References: Relevant UCP 600 articles specifically applicable to this L/C

6. Appendix 3 - Required Certifications: Format of specific certifications required under the L/C

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

Jurisdiction

Indonesia

Publisher

Genie AI

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions



































Clauses






























Relevant Industries

International Trade

Banking and Financial Services

Manufacturing

Agriculture and Commodities

Mining and Resources

Textile and Garments

Electronics and Technology

Automotive

Oil and Gas

Consumer Goods

Relevant Teams

Trade Finance

International Banking

Treasury

Legal

Compliance

Risk Management

Corporate Banking

Documentary Credits

Trade Operations

Credit Risk

Relevant Roles

Trade Finance Manager

International Banking Officer

Chief Financial Officer

Treasury Manager

Import/Export Manager

Trade Operations Officer

Compliance Officer

Documentary Credits Specialist

Risk Management Officer

Banking Relationship Manager

Finance Director

Trade Finance Analyst

Corporate Banking Officer

Legal Counsel

Credit Risk Officer

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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