Usance Lc 90 Days Template for Saudi Arabia

A Usance LC 90 Days is a specialized documentary credit that allows you to defer payment for 90 days after presentation of compliant documents, providing essential working capital flexibility in international trade transactions. This Islamic finance-compliant instrument ensures your suppliers receive bank-guaranteed payment while giving you extended settlement terms under Saudi Arabian banking law.

When do you need this document?

You need a Usance LC 90 Days when importing goods into Saudi Arabia and require extended payment terms beyond the standard sight payment structure. This document is particularly valuable for high-value transactions involving machinery, raw materials, or bulk commodities where immediate payment would strain your cash flow. Manufacturing companies often use 90-day usance LCs to align payment obligations with their production cycles and revenue generation. It's also essential when your overseas suppliers demand bank-guaranteed payment security but you need time to process, sell, or manufacture products before making payment. The 90-day period provides sufficient time for goods clearance, quality inspection, and market distribution while maintaining strong supplier relationships.

Key legal considerations

Your Usance LC 90 Days must comply with UCP 600 international rules while adhering to Islamic banking principles as required under Saudi law. The document must clearly specify the 90-day usance period calculation method, typically from the bill of lading date or document presentation date. You must ensure all payment terms are Sharia-compliant, avoiding interest-based calculations and instead using profit-sharing or fee-based structures. The LC should include precise documentary requirements, shipping terms, and expiry dates to prevent disputes during document examination. Pay careful attention to the reimbursement clause, confirming bank arrangements, and SWIFT message requirements for smooth international processing. Insurance requirements must be clearly defined, and you should specify whether partial shipments and transshipments are permitted to avoid operational complications.

Legal requirements in Saudi Arabia

Under the Banking Control Law (Royal Decree No. M/5) and SAMA regulations on documentary credits, your issuing bank must be licensed to provide LC services and maintain adequate capital reserves. The LC must comply with Saudi Arabian Monetary Authority guidelines on documentary credits, including proper SWIFT formatting and international messaging standards. All currency exchange transactions must follow SAMA foreign exchange regulations, and you may need approval for certain currency pairs or transaction amounts exceeding specified thresholds. The document must conform to Commercial Court Law requirements for enforceability in Saudi commercial disputes. Islamic banking compliance is mandatory, requiring the LC structure to avoid prohibited elements such as gharar (excessive uncertainty) and riba (interest). You must ensure proper customs documentation alignment with Saudi Customs Authority requirements, including accurate commodity codes and valuation declarations for import clearance purposes.