Document background
The Revolving Standby Letter of Credit serves as a crucial financial instrument in international trade and domestic transactions within the Indian legal framework. It is typically used when parties require a renewable guarantee for recurring business transactions, providing financial security that automatically reinstates after each drawing. This document is especially valuable in ongoing supply contracts, recurring service agreements, or repeated trading relationships where continuous financial assurance is needed. The instrument must comply with Reserve Bank of India guidelines, FEMA regulations for international transactions, and typically follows UCP 600 standards. It differs from regular Standby Letters of Credit in its renewable nature, making it more cost-effective for recurring transactions as it eliminates the need for multiple separate guarantees.
