Letter of Credit

Arina Puspita Sari

Aulia Rizky Suseno
Ayu Indah Cahyani
Ratna Dian Pangesti
 Definition
“Letter of Credit is an instrument issued by a
bank in the name of one of its customers, which
authorizes a person or a company receiving the
instrument to withdraw notes on the bank
concerned or one of its correspondent banks for
their interests, based on conditions / conditions
requirements listed on the intrument.”
 Parties in L/C Transaction;

Applicant • Is an importer (buyer) who submits an L/C

Beneficiary • Is an exporter (seller) who receives an L/C

Advising • Is a correspondent bank (agent) that passes L/C to

Bank beneficiary

Confirming • Is a bank that confrims the request of the issuing bank and

bank guarantees full payment

• Is a bank specifically designated in the L/C

Paying bank to make payment
 Prosedur Ekspor dengan L/C
12
10
Bank Devisa Dalam
2
Negeri (Advising Bank)
Bank Luar
Negeri ( Issuing
Bank)
3 5 6 9 11

8
1
4
Pembeli Luar
Surveyor Eksportir Negeri

7
8
Maskapai
Bea & Cukai Pelayaran
Prosedur Impor dengan L/C
9
3
Bank Devisa Bank Koresponden

4 8
11 1 2
0
SGS LN
SGS JLO

1 5
Importir
7
12 Supplier Luar Negeri
13

Bea & cukai

 Procedure for Opening L/C
Signing of general conditions for opening credit outside Indonesia by the importer.

Fill out the import application letter for import L/C by the importer.

Examination of the opening application form L/C that has been filled by the importer by
Bank X.

Fiil out the complete application form for opening an L/C by the Bank.

Authorization of opening L/C by Bank X.

News submission of opening L/C to advising bank.

Payment of guarantee deposits, fees, port fees,and news shipping costs to advising bank.
 Syarat-Syarat Pembukaan L/C

Dalam pelaksanaan jual beli (ekspor impor)

tersebut perlu ditetapkan/diperjanjikan hal-
hal yang menyangkut kegiatan jual beli
tersebut. Perjanjian tersebut diwujudkan
dalam perjanjian tertulis yang mengikat
kedua belah pihak yang disebut dengan sales
contract atau purchase contract. Kontak
tersebut umumnya memuat keterangan
tentang :
 Types of L/C

• REVOCABLE L/C
This LC type can be cancelled or modified by the Bank (issuer) at the
customer's instructions without prior agreement of the beneficiary (Seller).
The Bank will not have any liabilities to the beneficiary after revocation of the
LC.
• IRREVOCABLE L/C
This LC cannot be cancelled or modified without consent of the beneficiary
(Seller). This LC reflects absolute liability of the Bank (issuer) to the other
party.
• BACK TO BACK L/C
This LC type considers issuing the second LC on the basis of the first letter of
credit. LC is opened in favor of intermediary as per the Buyer's instructions
and on the basis of this LC and instructions of the intermediary a new LC is
opened in favor of Seller of the goods.
• RED CLAUSE L/C
The seller can request an advance for an agreed amount of the LC before
shipment of goods and submittal of required documents. This red clause is so
termed because it is usually printed in red on the document to draw attention
to "advance payment" term of the credit.
 Jenis-Jenis L/C

• CONFIRMED L/C
In addition to the Bank guarantee of the LC issuer, this LC type is confirmed by
the Seller's bank or any other bank. Irrespective to the payment by the Bank
issuing the LC (issuer), the Bank confirming the LC is liable for performance of
obligations.
 Mekanisme Back to Back L/C
14. Payment

4. L/C Master

13. Negotiate

7. Advice back to back

Doc.
Opening Bank Advising/Paying/Negotiating

10. Payment
Bank

Documents

5. Advice Master

9. Documents
11. New
16. Payment

6. Application

Pembayaran
Application

back to back

Selisih Harga
Documents

L/C
12.
15.

3.

1. Sales 2. Sales
Contract Contract

Applicant / First Beneficiary / Second

Importir Applicant Beneficiary /
8. Pengiriman Supplier
Barang
Keterangan
1. Kontrak penjualan (sales contract)

2. Kontrak penjualan (sales contract)

3. Aplikasi pembukaan L/C

4. Pembukaan L/C master

5. Penerusan L/C

6. Aplikasi back to back L/C

7. Pembukaan back to back L/C

8. Pengiriman barang

9. Penyerahan dokumen

10. Pembayaran

11. Penggantian dokumen

12. Pembayaran selisih harga

13. Pengiriman dokumen

14. Penggantian pembayaran

15. Penyerahan dokumen

16. Pembayaran
 Mekanisme Red Clause L/C
16. Pembayaran Rendorse
13. Pengiriman Dokumen
3. Pembukaan
L/C
8. Pembayaran Advance
Advising/Paying/Negoti Payment
ating Bank Opening Bank
7. Pengiriman Dokumen Advance
Payment

9. Dokumen Advance
Dokumen Advance

Advance Payment
12. Penyerahan

14. Dokumen
Advance Payment
Pembayaran
4. Penerusan

6. Pembayaran

Pembayaran
Penyerahan

10. Pembayaran
Dokumen

Payment
Payment

2. Aplikasi
L/C

17.

L/C
15.
5.

1. Kontrak Penjualan

11. Pengiriman
Barang
Beneficiary Applicant
 Kelemahan

1. Penjual memerlukan modal

yang besar untuk
pembiayaan piutang.
2. Kurangnya perlindungan bagi
penjual.
 Advantages of L/C

Importer doesn’t need to worry if the payment made by

exporter will harm them, because exporter receives
payment only after shipment and meeting of all
necessary requirements under L/C term and conditions
with presentation of documentary prood including
evidence of shipment.
Otherwise, exporter doesnt need to worry about not
getting paid after they shipped the goods to the
importer. Both importer and exporter also dont need to
worry about foreign exchange in each country. L/C
could be opened in foreign currency that has been
agreed by both parties.