Revolving Bank Guarantee Template for Indonesia

A Revolving Bank Guarantee is a comprehensive banking facility that allows your business to obtain multiple bank guarantees up to a pre-approved credit limit under Indonesian banking law. Unlike traditional single-use guarantees, this revolving facility enables you to reuse the available limit as guarantees expire or are released, providing operational flexibility for businesses with ongoing guarantee requirements.

When do you need this document?

You need a Revolving Bank Guarantee when your business regularly participates in government tenders, construction projects, or international trade requiring multiple guarantee submissions throughout the year. This facility is essential for companies bidding on infrastructure projects where bid bonds, performance guarantees, and advance payment guarantees are frequently required. It's particularly valuable for exporters who need shipping guarantees, importers requiring customs guarantees, or contractors involved in multiple simultaneous projects. The revolving structure eliminates the need to negotiate separate guarantee facilities for each transaction, reducing administrative burden and ensuring continuous access to guarantee services.

Key legal considerations

The agreement must clearly define the maximum facility limit, individual guarantee limits, and renewal procedures to comply with Indonesian banking standards. Security provisions are crucial, typically requiring corporate guarantees, personal guarantees from directors, or collateral arrangements governed by Law No. 42/1999 on Fiduciary Security. The document should specify claim procedures, including notification requirements and dispute resolution mechanisms under Indonesian Civil Code provisions. Fee structures must be transparent, covering facility fees, guarantee issuance fees, and any applicable taxes. Termination clauses should protect both parties while ensuring orderly wind-down of outstanding guarantees. The agreement must address force majeure events and their impact on existing guarantees, particularly important in Indonesia's regulatory environment.

Legal requirements in Indonesia

Indonesian law requires compliance with Banking Law No. 10/1998 and OJK Regulation No. 40/POJK.03/2019 governing bank guarantee facilities and collateral assessment procedures. The agreement must satisfy Bank Indonesia Regulation No. 23/6/PBI/2021 requirements for payment systems and banking services, including proper documentation and reporting obligations. All guarantee documents issued under the facility must comply with Indonesian Civil Code Articles 1820-1850 regarding guarantee obligations and enforceability. The facility agreement requires proper stamp duty payment under Indonesian tax regulations and may need notarization depending on security arrangements. Banks must conduct proper due diligence on applicants and maintain adequate provisioning for guarantee exposures as mandated by OJK prudential regulations. Cross-border guarantees issued under the facility must comply with Bank Indonesia foreign exchange regulations and reporting requirements.