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Performance SBLC for India

Performance SBLC Template for India

A Performance Standby Letter of Credit (SBLC) under Indian jurisdiction is a bank-issued financial instrument that provides an irrevocable guarantee of payment in case of non-performance of contractual obligations by the applicant. This document, governed by Indian banking and contract laws, particularly the Banking Regulation Act 1949 and Contract Act 1872, serves as a contingent payment mechanism that can be drawn upon by the beneficiary if the applicant fails to fulfill specified performance obligations. The document includes detailed terms for drawing conditions, documentary requirements, validity period, and claim procedures, all structured within the framework of Indian legal requirements and international banking practices.

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What is a Performance SBLC?

The Performance SBLC is a crucial financial instrument in Indian business transactions, particularly used in scenarios where one party needs assurance of the other party's performance capabilities. This document becomes relevant when significant contractual obligations are involved, especially in large-scale projects, international trade, or major commercial transactions. The Performance SBLC, structured under Indian banking and contract laws, provides the beneficiary with a secure, bank-backed guarantee that can be called upon in case of default or non-performance by the applicant. It typically includes specific performance metrics, drawing conditions, expiry terms, and claim procedures, all aligned with Reserve Bank of India (RBI) guidelines and international banking practices. The document serves as a risk mitigation tool, offering more security than a simple contractual promise while being more flexible than a bank guarantee.

What sections should be included in a Performance SBLC?

1. Parties: Details of the issuing bank, beneficiary, and applicant

2. Reference Details: SBLC number, date, and reference to underlying contract

3. Amount and Currency: Maximum drawable amount and currency of the SBLC

4. Performance Obligation: Description of the underlying performance obligation being guaranteed

5. Terms of Payment: Conditions under which the bank will make payment upon demand

6. Drawing Requirements: Specific documents and statements required for making a claim

7. Expiry Date and Place: Validity period and location where claims must be presented

8. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction

9. Form of Demand: Specified format for making a claim under the SBLC

10. Notice Requirements: Communication procedures and contact details for all parties

What sections are optional to include in a Performance SBLC?

1. Transferability Clause: Include when the SBLC needs to be transferable to another beneficiary

2. Partial Drawings: Include when multiple partial drawings are to be permitted

3. Automatic Extension Clause: Include when the SBLC should automatically extend beyond its initial expiry date

4. Counter-Indemnity: Include when specific counter-indemnity terms from the applicant are required

5. Electronic Presentation: Include when electronic presentation of documents is acceptable

6. Force Majeure: Include when specific force majeure provisions are required beyond standard UCP terms

7. Assignment of Proceeds: Include when the right to assign proceeds needs to be explicitly stated

What schedules should be included in a Performance SBLC?

1. Schedule A - Form of Demand: Template for the beneficiary to make a complying demand under the SBLC

2. Schedule B - Supporting Documents: List and formats of required supporting documents for making a claim

3. Schedule C - Underlying Contract Reference: Key details or extract of the underlying performance contract being guaranteed

4. Schedule D - Fee Schedule: Details of banking fees, charges, and payment terms

5. Appendix 1 - Authorized Signatories: List of authorized signatories and specimen signatures

6. Appendix 2 - Communication Details: Detailed contact information and communication protocols for all parties

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

Construction

Manufacturing

Infrastructure Development

Energy and Utilities

International Trade

Engineering Services

Telecommunications

Oil and Gas

Mining

Heavy Industry

Project Development

Government Contracting

Defense Manufacturing

Real Estate Development

Relevant Teams

Legal

Finance

Treasury

Trade Finance

Risk Management

Compliance

Operations

Commercial

Credit

Project Management

Business Development

International Banking

Documentary Credits

Relevant Roles

Chief Financial Officer

Treasury Manager

Trade Finance Manager

Contract Manager

Project Manager

Risk Manager

Legal Counsel

Compliance Officer

Banking Relationship Manager

Financial Controller

Business Development Manager

Commercial Director

Operations Manager

Credit Manager

Document Specialist

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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