Facility Letter for Malaysia

Facility Letter Template for Malaysia

A Facility Letter is a formal document issued by a financial institution in Malaysia that outlines the terms and conditions of a credit facility or loan. It serves as a binding agreement between the lender and borrower, incorporating both Malaysian banking regulations and local legal requirements. The document details crucial elements such as facility amount, interest rates/profit rates, tenure, security requirements, and conditions precedent, while adhering to Malaysian banking laws including the Financial Services Act 2013 and, where applicable, the Islamic Financial Services Act 2013. It represents a more concise alternative to a full facility agreement while maintaining legal enforceability under Malaysian law.

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What is a Facility Letter?

The Facility Letter is a fundamental banking document used extensively in Malaysian financial transactions to formalize credit arrangements between financial institutions and borrowers. It serves as a more streamlined alternative to a full facility agreement while maintaining legal enforceability under Malaysian law. This document is particularly relevant in scenarios requiring quick turnaround times or for less complex financing arrangements. The Facility Letter must comply with Malaysian banking regulations, including requirements from Bank Negara Malaysia, and can be structured for both conventional and Islamic banking systems. It typically includes essential terms such as facility amount, interest/profit rates, tenure, security requirements, and conditions precedent, while also incorporating necessary regulatory compliance elements specific to the Malaysian jurisdiction.

What sections should be included in a Facility Letter?

1. Letter Header: Bank's letterhead, date, reference number, and addressee details

2. Salutation: Formal address to the borrower

3. Subject Line: Clear identification of the facility type and amount

4. Facility Overview: Brief introduction stating the bank's approval of the facility

5. Facility Details: Key terms including facility amount, purpose, interest rate/profit rate, tenure

6. Conditions Precedent: Prerequisites that must be fulfilled before facility drawdown

7. Security Requirements: Details of required security/collateral

8. Representations and Warranties: Key statements about borrower's legal and financial status

9. Covenants: Key ongoing obligations of the borrower

10. Events of Default: Circumstances that would trigger default

11. Fees and Charges: All applicable fees, charges, and costs

12. Acceptance Section: Space for borrower's acknowledgment and acceptance

13. Execution Block: Signature blocks for authorized bank signatories

What sections are optional to include in a Facility Letter?

1. Islamic Banking Provisions: Required when offering Shariah-compliant facilities, including specific Islamic financing structures and terminology

2. Guarantee Requirements: Include when a guarantee is required as part of the security package

3. Insurance/Takaful Requirements: Detailed when specific insurance/takaful coverage is required

4. Special Conditions: Any unique or special conditions applicable to the specific borrower or facility

5. Foreign Exchange Provisions: Required for facilities in foreign currencies

6. Group Structure Requirements: Needed for corporate borrowers with complex group structures

7. Project Specific Conditions: For project financing or specific purpose facilities

What schedules should be included in a Facility Letter?

1. Schedule 1 - Facility Terms and Conditions: Detailed breakdown of all facility terms and conditions

2. Schedule 2 - Security Details: Comprehensive list and description of required security/collateral

3. Schedule 3 - Conditions Precedent Checklist: Detailed list of all required documents and conditions

4. Schedule 4 - Fee Schedule: Breakdown of all applicable fees and charges

5. Schedule 5 - Drawdown Notice Format: Template for drawdown requests

6. Schedule 6 - Compliance Certificate Format: Template for periodic compliance certification

7. Appendix A - Definitions: Definitions of key terms used in the facility letter

8. Appendix B - Standard Terms and Conditions: Bank's standard terms and conditions incorporated by reference

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Malaysia

Publisher

Genie AI

Document Type

Service Agreement

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking and Financial Services

Real Estate and Property Development

Manufacturing

Trading and Commerce

Construction

Agriculture

Technology and Communications

Healthcare

Education

Hospitality and Tourism

Retail

Transportation and Logistics

Mining and Resources

Energy

Professional Services

Relevant Teams

Legal

Finance

Corporate Banking

Credit Risk

Compliance

Operations

Treasury

Islamic Banking

Documentation

Credit Administration

Risk Management

Corporate Secretarial

Business Development

Relationship Management

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Banking Officer

Credit Risk Manager

Legal Counsel

Compliance Officer

Relationship Manager

Credit Analyst

Banking Operations Manager

Corporate Secretary

Financial Controller

Islamic Banking Officer

Loan Officer

Senior Credit Administrator

Documentation Specialist

Risk Assessment Officer

Banking Executive

Corporate Finance Manager

Business Development Manager

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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