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The Collateral for Letter of Credit agreement is a crucial document used in Indonesian banking and trade finance transactions where security is required to support Letter of Credit facilities. This document is essential when companies engage in international trade using Letters of Credit and need to provide security to the issuing bank. The agreement must comply with Indonesian banking regulations, particularly Bank Indonesia's regulations on Letters of Credit and security arrangements. It details the specific assets being pledged as collateral, the secured obligations, enforcement rights, and the parties' ongoing obligations. The document is particularly important in Indonesia's context where banks typically require substantial security for trade finance facilities, and specific formalities must be observed for creating valid and enforceable security interests.

1. Parties: Identification of the bank (secured party), the collateral provider, and the L/C applicant (if different from collateral provider)

2. Background: Context of the security arrangement, reference to the underlying Letter of Credit, and purpose of the agreement

3. Definitions: Definitions of key terms including Letter of Credit, Secured Obligations, Collateral, Security Period, and other relevant terms

4. Security Creation: Express provision creating the security interest over the collateral in favor of the bank

5. Description of Collateral: Detailed description and identification of the assets being provided as collateral

6. Secured Obligations: Definition and scope of the obligations secured by the collateral, including the Letter of Credit amount and related charges

7. Representations and Warranties: Collateral provider's confirmations regarding ownership, authority, and status of the collateral

8. Covenants: Ongoing obligations regarding maintenance, insurance, and preservation of the collateral

9. Rights and Obligations: Specific rights and obligations of both parties regarding the collateral

10. Events of Default: Circumstances constituting default and triggering enforcement rights

11. Enforcement: Bank's rights and procedures for enforcing the security upon default

12. Governing Law and Jurisdiction: Confirmation of Indonesian law as governing law and jurisdiction for disputes