Relief Letter Template for Indonesia

A Relief Letter is a formal document banks issue when they agree to temporarily ease or suspend certain loan requirements for borrowers facing financial difficulties. In Indonesia's banking sector, these letters help companies manage their debt obligations during challenging periods without defaulting on their loans.

The letter typically outlines specific relief measures like extending payment deadlines, adjusting interest rates, or waiving covenant breaches. Under OJK regulations, Indonesian banks can provide this relief to maintain financial stability, especially during economic downturns or when businesses face temporary cash flow problems. The agreement protects both the lender's interests and helps borrowers stay afloat during tough times.

Request a Relief Letter from your bank when your company faces temporary financial challenges that make it difficult to meet loan obligations. Common triggers include significant revenue drops, unexpected market disruptions, or major operational setbacks that affect cash flow. Indonesian companies often seek these letters during economic downturns or industry-specific crises.

Getting a Relief Letter early is crucial - ideally as soon as you spot potential payment difficulties. Under OJK guidelines, banks are more likely to grant relief when businesses show proactive financial management and maintain open communication. The letter can help prevent loan defaults, protect your credit standing, and give your company breathing room to implement recovery plans.

• Payment Relief Letters: Most common type, offering temporary suspension or reduction of loan payments during financial hardship
• Covenant Relief Letters: Grants temporary waivers for specific loan agreement requirements like debt-to-equity ratios
• Interest Relief Letters: Focuses on modifying interest terms, such as rate reductions or interest payment deferrals
• Restructuring Relief Letters: Comprehensive relief that includes payment rescheduling and loan term modifications
• Industry-Specific Relief Letters: Tailored relief options for sectors like property, manufacturing, or retail, following OJK sector guidelines

• Banks and Financial Institutions: Issue Relief Letters after evaluating borrower requests and assessing financial conditions
• Corporate Borrowers: Request and receive relief measures, usually through their finance directors or CFOs
• Bank Relationship Managers: Coordinate relief discussions and draft initial letter terms
• Legal Departments: Review and finalize Relief Letter terms for both banks and borrowers
• OJK Officials: Monitor relief arrangements to ensure compliance with Indonesian banking regulations
• Corporate Trustees: Oversee implementation when relief affects bondholder interests

• Financial Documentation: Gather current loan agreements, financial statements, and cash flow projections
• Hardship Evidence: Document specific financial challenges and their temporary nature
• Relief Scope: Outline exact relief measures needed - payment deferrals, interest adjustments, or covenant waivers
• Recovery Plan: Prepare a clear business recovery strategy showing how you'll resume normal payments
• Bank Requirements: Check your bank's specific relief application criteria under OJK guidelines
• Template Selection: Use our platform's Relief Letter generator to ensure all required elements are included
• Internal Review: Have finance and legal teams validate the draft before submission

• Party Details: Full legal names and addresses of both bank and borrower
• Original Loan Reference: Details of existing loan agreement, including date and registration number
• Relief Terms: Specific modifications to payment terms, interest rates, or covenant requirements
• Relief Period: Clear start and end dates for the relief measures
• Conditions Precedent: Requirements borrower must meet before relief takes effect
• Compliance Statement: Confirmation of adherence to OJK regulations
• Governing Law: Statement confirming Indonesian law jurisdiction
• Authorized Signatures: Designated signing blocks for both parties with corporate seals

Relief Letters are often confused with Debt Recovery Letters, but they serve fundamentally different purposes in Indonesian banking practice. While both deal with debt situations, their approach and objectives differ significantly.

• Purpose and Timing: Relief Letters aim to prevent default by offering temporary assistance to viable businesses, while Debt Recovery Letters demand payment after default has occurred
• Tone and Approach: Relief Letters are cooperative and supportive, focusing on maintaining the business relationship. Debt Recovery Letters are formal demands with potential legal consequences
• Legal Framework: Relief Letters operate under OJK's debt restructuring guidelines, whereas Debt Recovery Letters fall under debt collection and enforcement regulations
• Outcome: Relief Letters typically result in modified payment terms and continued banking relationship, while Debt Recovery Letters often lead to legal action or asset seizure