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The Clean Letter of Credit serves as a crucial financial instrument in commercial transactions under Indian law, providing a simplified alternative to documentary letters of credit. This type of LC is particularly valuable when parties have established trust or when the transaction doesn't require extensive documentation. A Clean Letter of Credit requires only the presentation of a draft or demand for payment, without the need for supporting commercial documents like bills of lading or inspection certificates. It operates under Indian banking regulations, the Banking Regulation Act, and follows international banking practices (UCP 600). The document is commonly used in ongoing commercial relationships, inter-company transactions, or when immediate access to funds is crucial. Its simplified nature makes it an efficient tool for businesses while still maintaining the security of bank-backed payment.

1. Letter Details: Date, reference number, and type of credit (irrevocable)

2. Parties Information: Full details of the applicant, beneficiary, and issuing bank

3. Credit Amount: Currency and amount of the letter of credit, including words and figures

4. Form of Credit: Specification that this is a Clean Letter of Credit with no documentary requirements except presentation of drafts

5. Availability and Expiry: How and where the credit is available, expiry date and place

6. Payment Terms: Specification of payment terms, whether at sight or usance

7. Drawing Terms: Instructions for how the beneficiary can draw on the credit

8. Bank Undertaking: The bank's commitment to honor compliant presentations

9. Governing Law: Statement that the credit is subject to Indian law and UCP 600