Letter Of Credit Limit for Malaysia

Letter Of Credit Limit Template for Malaysia

A Letter of Credit Limit document governed by Malaysian law establishes the terms and conditions under which a bank agrees to issue Letters of Credit up to a specified limit for a corporate client. The document outlines the facility amount, validity period, fees, security requirements, and operational procedures in accordance with Malaysian banking regulations, particularly the Financial Services Act 2013 and Bank Negara Malaysia guidelines. It serves as a formal agreement between the bank and the customer, detailing both parties' obligations and rights regarding the LC facility.

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What is a Letter Of Credit Limit?

The Letter of Credit Limit agreement is a crucial document in Malaysian banking and international trade, used when companies require regular access to Letter of Credit facilities for their business operations. This document, governed by Malaysian law and banking regulations, establishes a pre-approved limit within which a company can request individual Letters of Credit without seeking fresh approval each time. The Letter of Credit Limit typically includes comprehensive terms covering facility limits, validity periods, security requirements, fees and charges, along with conditions precedent and ongoing obligations. It's particularly important for businesses engaged in international trade, providing them with a streamlined process for obtaining trade finance facilities while giving banks necessary security and control measures.

What sections should be included in a Letter Of Credit Limit?

1. Bank Details and Reference: Issuing bank's details and reference number

2. Customer Details: Complete details of the customer/applicant including registration number

3. Facility Type and Purpose: Specification of LC facility type and intended purpose

4. Facility Limit: Total approved limit for LC issuance

5. Facility Term: Validity period of the LC facility

6. Pricing and Charges: Commission rates, fees, and other charges applicable

7. Security/Collateral Requirements: Required security or collateral for the facility

8. Key Terms and Conditions: Essential conditions for LC issuance and operations

9. Representations and Warranties: Standard banking facility representations

10. Events of Default: Circumstances constituting default

11. Governing Law: Specification of Malaysian law as governing law

12. Acceptance Section: Space for customer acknowledgment and acceptance

What sections are optional to include in a Letter Of Credit Limit?

1. Sub-limits: Breakdown of different types of LCs allowed within the main limit

2. Special Conditions: Any specific conditions based on customer profile or risk assessment

3. Group Exposure: Required when facility is part of a group exposure

4. Cross-Default Provisions: When there are other facilities with the same bank

5. Islamic Banking Requirements: Required for Shariah-compliant LC facilities

6. Foreign Exchange Provisions: Required for LC facilities in foreign currencies

What schedules should be included in a Letter Of Credit Limit?

1. Schedule 1 - Pricing Schedule: Detailed breakdown of all applicable fees and charges

2. Schedule 2 - Standard Terms and Conditions: Bank's standard terms for LC facilities

3. Schedule 3 - Security Documents List: List of required security documents and forms

4. Schedule 4 - Conditions Precedent: List of documents required before facility activation

5. Schedule 5 - LC Application Form: Standard form for requesting individual LCs

6. Appendix A - Compliance Requirements: Regulatory and compliance requirements

7. Appendix B - Financial Covenants: If applicable, financial ratios to be maintained

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

Letter of Credit

Cost

Free to use
Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Import/Export

Retail

Wholesale

Commodities Trading

Construction

Agriculture

Mining and Resources

Relevant Teams

Finance

Treasury

Legal

Trade Finance

Risk Management

Procurement

Commercial Operations

Compliance

International Business

Corporate Secretarial

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Trade Finance Manager

Import/Export Manager

Financial Controller

Company Secretary

Legal Counsel

Risk Manager

Commercial Director

Procurement Manager

Banking Relationship 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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