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Divisible Letter Of Credit for India

Divisible Letter Of Credit Template for India

A Divisible Letter of Credit is a specialized financial instrument governed by Indian banking laws and international banking practices (UCP 600), which allows for partial drawings against the total credit amount. This document serves as a bank's irrevocable undertaking to pay the beneficiary, typically in international trade transactions, where the credit amount can be utilized in portions rather than as a single drawing. The document incorporates specific provisions under Indian banking regulations, including Reserve Bank of India guidelines, while maintaining alignment with international standards for documentary credits.

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Divisible Letter Of Credit

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What is a Divisible Letter Of Credit?

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.

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

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

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

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

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

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

Alex Denne

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

Jurisdiction

India

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
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

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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