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Non Recourse SBLC for Malaysia

Non Recourse SBLC Template for Malaysia

A Non-Recourse Standby Letter of Credit (SBLC) under Malaysian law is a financial instrument issued by a bank that provides an irrevocable payment guarantee to a beneficiary, without recourse to the applicant beyond the stated collateral or security. This document, governed by Malaysian law and regulated under the Financial Services Act 2013, incorporates international banking practices while meeting local regulatory requirements. It details the conditions for drawing on the credit, documentation requirements, and payment terms, providing security in international trade and financial transactions while limiting the applicant's liability to specific assets or collateral.

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Non Recourse SBLC

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What is a Non Recourse SBLC?

The Non-Recourse SBLC is a crucial financial instrument in Malaysian banking and international trade, providing payment security while limiting the applicant's liability. It is commonly used in project finance, international trade, and large commercial transactions where parties seek to limit their exposure to specific assets or collateral. The document must comply with Malaysian banking regulations, particularly the Financial Services Act 2013, while incorporating international banking standards such as UCP 600 and ISP98. This type of SBLC is particularly valuable when the applicant wants to ring-fence their liability to specific assets or when the transaction structure requires limited recourse financing. The document includes detailed provisions for drawing conditions, documentation requirements, and payment terms, reflecting both Malaysian legal requirements and international banking practices.

What sections should be included in a Non Recourse SBLC?

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

2. Background: Context of the SBLC issuance, underlying transaction details, and relationship between parties

3. Definitions: Key terms used in the SBLC including banking terms, financial definitions, and technical terminology

4. SBLC Amount and Currency: Specification of the maximum amount and currency of the SBLC

5. Non-Recourse Provisions: Clear statement of the non-recourse nature and its implications

6. Drawing Conditions: Specific conditions under which the beneficiary can draw on the SBLC

7. Presentation Requirements: Required documents and format for making a complying presentation

8. Payment Terms: Timeline and method of payment upon complying presentation

9. Expiry and Termination: SBLC validity period, expiry conditions, and termination circumstances

10. Governing Law and Jurisdiction: Malaysian law as governing law and jurisdiction specifications

What sections are optional to include in a Non Recourse SBLC?

1. Transfer Rights: Include when the SBLC needs to be transferable to other beneficiaries

2. Counter-Indemnity: Include when there are specific indemnification arrangements between applicant and issuing bank

3. Automatic Extension Clause: Include when the SBLC may need to be automatically extended under certain conditions

4. Force Majeure: Include when specific force majeure provisions are required beyond standard banking practice

5. Multiple Drawing Provisions: Include when multiple drawings are permitted under the SBLC

6. Assignment Provisions: Include when rights under the SBLC may be assigned to third parties

What schedules should be included in a Non Recourse SBLC?

1. Schedule 1 - Form of Demand: Template for making a complying demand under the SBLC

2. Schedule 2 - Required Documents: Detailed list of documents required for presentation

3. Schedule 3 - Fee Schedule: Details of banking fees, charges, and commission

4. Schedule 4 - Communication Methods: Approved methods for notifications and presentations

5. Appendix A - Underlying Transaction Details: Details of the transaction or obligation being supported by the SBLC

6. Appendix B - Special Instructions: Any special instructions for handling presentations or payments

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

Malaysia

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions






























Clauses


























Relevant Industries

Banking & Financial Services

International Trade

Construction

Energy & Resources

Manufacturing

Infrastructure Development

Real Estate

Import/Export

Shipping & Logistics

Project Finance

Relevant Teams

Legal

Trade Finance

Corporate Banking

Risk Management

Compliance

Treasury

International Banking

Credit Administration

Documentation

Project Finance

Relevant Roles

Trade Finance Manager

Corporate Banking Officer

International Banking Manager

Credit Risk Officer

Legal Counsel

Compliance Officer

Treasury Manager

Project Finance Manager

Commercial Banking Officer

Documentary Credits Specialist

Chief Financial Officer

Risk Management Officer

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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