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Revolving Letter Of Credit for India

Revolving Letter Of Credit Template for India

A Revolving Letter of Credit agreement under Indian law is a comprehensive banking instrument that establishes a renewable credit facility between an issuing bank and an applicant (typically an importer) in favor of a beneficiary (typically an exporter). The document is governed by Indian banking regulations, particularly the Banking Regulation Act, 1949, and follows international standards set by UCP 600. It details the terms and conditions for multiple drawings within a specified period, including credit limits, renewal mechanisms, documentation requirements, and payment terms, while ensuring compliance with Indian foreign exchange regulations and trade laws.

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What is a Revolving Letter Of Credit?

The Revolving Letter of Credit agreement is essential for businesses engaged in recurring international trade transactions under Indian jurisdiction. This document is particularly useful when an importer needs to make regular purchases from the same supplier over an extended period, as it eliminates the need to establish a new Letter of Credit for each transaction. The agreement must comply with Indian banking laws, FEMA regulations, and RBI guidelines while incorporating international UCP 600 standards. It typically includes comprehensive details about credit limits, validity periods, renewal mechanisms, drawing conditions, and documentation requirements. This type of agreement is commonly used in industries with regular import-export cycles and helps streamline trade finance operations while providing security to all parties involved.

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

1. Parties: Details of the issuing bank, applicant (buyer), and beneficiary (seller)

2. Background: Context of the trade relationship and purpose of the Letter of Credit facility

3. Definitions: Key terms used throughout the agreement including banking, trade, and financial terms

4. Credit Facility Details: Specification of the revolving credit amount, nature, and purpose

5. Validity and Renewal: Terms regarding the duration of the facility and conditions for renewal

6. Drawing Conditions: Specific conditions and documentation required for drawing under the LC

7. Payment Terms: Terms of payment, including timing and method

8. Bank Charges and Commissions: Details of all applicable fees, charges, and commission structures

9. Documentation Requirements: List of required documents for LC operations and drawings

10. Representations and Warranties: Standard declarations by the applicant regarding their capacity and authority

11. Obligations of Parties: Specific duties and responsibilities of each party

12. Events of Default: Circumstances constituting default and consequent remedies

13. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction details

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

1. Multiple Currency Provisions: Required when the LC facility operates in multiple currencies

2. Security Arrangements: Needed when specific collateral or security is required for the LC facility

3. Special Trading Terms: Required for specific trade arrangements or special commodity trading

4. Sub-limit Facilities: When the LC facility includes various sub-limits for different purposes

5. Correspondent Bank Arrangements: Required when involving foreign correspondent banks

6. Force Majeure: Detailed provisions for unforeseen circumstances affecting LC operations

7. Electronic Commerce Provisions: Required when electronic presentation of documents is permitted

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

1. Schedule 1 - Facility Limits: Detailed breakdown of credit limits and sub-limits

2. Schedule 2 - Fee Structure: Comprehensive list of all applicable fees and charges

3. Schedule 3 - Document Checklist: Detailed list of required documents for different types of transactions

4. Schedule 4 - Standard Forms: Templates for LC application, amendment requests, and other standard forms

5. Schedule 5 - Authorized Signatories: List of authorized persons who can act on behalf of the applicant

6. Appendix A - UCP 600 References: Specific articles of UCP 600 applicable to this facility

7. Appendix B - Compliance Requirements: Details of regulatory compliance requirements under Indian law

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 and Financial Services

International Trade

Manufacturing

Retail

Agriculture

Commodities Trading

Textiles

Automotive

Electronics

Chemical Industry

Pharmaceutical

Mining and Metals

Energy and Resources

Relevant Teams

Finance

Treasury

International Trade Operations

Legal

Compliance

Procurement

Supply Chain

Risk Management

Trade Documentation

Credit Administration

Relevant Roles

Trade Finance Manager

Import Manager

Export Manager

Chief Financial Officer

Finance Director

Treasury Manager

Banking Relationship Manager

Credit Manager

Trade Operations Officer

Compliance Officer

Legal Counsel

Supply Chain Manager

Procurement Manager

International Trade Specialist

Documentary Credits 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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