The Divisible Letter of Credit is a crucial financial instrument in international trade, particularly relevant under Indian jurisdiction where cross-border transactions require structured financial guarantees. This document type is specifically designed for situations where the underlying commercial transaction involves multiple shipments or staged deliveries, allowing the beneficiary to draw against the credit in parts rather than as a single amount. The instrument is governed by Indian banking laws, particularly the Banking Regulation Act and RBI guidelines, while also adhering to the Uniform Customs and Practice for Documentary Credits (UCP 600). It provides security to sellers in international trade while offering flexibility in execution through its divisible nature, making it particularly suitable for large-scale trade transactions with phased deliveries or multiple shipment schedules.
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1. Issue Date and Reference Number: Unique identification details and date of issuance of the Letter of Credit
2. Beneficiary Details: Complete name and address of the party in whose favor the Letter of Credit is issued
3. Applicant Details: Complete name and address of the party requesting the Letter of Credit
4. Issuing Bank Details: Name, address, and SWIFT code of the issuing bank
5. Credit Amount and Currency: Total value of the Letter of Credit and currency denomination
6. Division Structure: Specification of how the credit amount can be divided and utilized in portions
7. Expiry Date and Place: Validity period and location where the credit expires
8. Shipment Terms: Latest shipment date and partial shipment/transhipment conditions
9. Document Requirements: List of required documents for drawing under the credit
10. Payment Terms: Conditions and timing of payment upon document presentation
11. Governing Law and UCP Reference: Reference to Indian law and UCP 600 application
1. Advising Bank Details: Required when an advising bank is involved in transmitting the credit
2. Confirming Bank Details: Include when a confirming bank is adding its confirmation to the credit
3. Transferability Clause: Include when the credit is transferable to other beneficiaries
4. Red Clause Provisions: Include when advance payment facilities are provided under the credit
5. Back-to-Back Provisions: Include when the credit can be used as backing for another credit
6. Revolving Terms: Include when the credit has revolving features
7. Special Conditions: Any additional terms specific to the transaction
1. Schedule A - Description of Goods: Detailed specification of goods covered under the Letter of Credit
2. Schedule B - Document Checklist: Comprehensive list of required documents with specific format requirements
3. Schedule C - Division Schedule: Detailed breakdown of how the credit amount can be divided and utilized
4. Schedule D - Fee Structure: Breakdown of all applicable fees and charges
5. Appendix 1 - Standard Drawing Forms: Templates for documents required for drawing under the credit
6. Appendix 2 - Bank Communication Formats: Standard formats for bank-to-bank communications under the credit
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
International Trade
Manufacturing
Import/Export
Commodities Trading
Agriculture
Textile Industry
Heavy Engineering
Shipping & Logistics
Oil & Gas
Mining
Wholesale Distribution
Relevant Teams
Trade Finance
International Banking
Treasury
Risk Management
Legal & Compliance
Operations
Credit Administration
Documentary Credits
Global Transaction Services
Supply Chain Finance
Relevant Roles
Trade Finance Manager
International Banking Officer
Letter of Credit Specialist
Import/Export Manager
Treasury Manager
Trade Operations Officer
Compliance Officer
Credit Risk Manager
Documentary Credits Specialist
Banking Relationship Manager
Chief Financial Officer
International Trade Specialist
Supply Chain Manager
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