Standby Letter of Credit Draft
Standby Letter of Credit Draft
Executive Summary
A standby letter of credit (SLBC) constitutes a binding commitment by the issuing bank to honor payment upon beneficiary’s legitimate demand, should the applicant default. Precision in drafting is imperative to mitigate interpretation risk. This article presents standardized templates compliant with URDG 758 and ISP98, formatted in SWIFT-inspired tables for seamless integration into treasury workflows.
Essential Provisions
An effective SLBC must articulate unambiguously the parties, governing rules, monetary limits, expiry parameters, and draw conditions. Inclusion of each element as specified below ensures enforceability and operational clarity.
- Applicant Identification: Full legal name, address, and jurisdiction.
- Beneficiary Identification: Full legal name, address, and jurisdiction.
- Credit Amount & Currency: Stated in words and figures (e.g., “One Million United States Dollars (USD 1,000,000.00)”).
- Expiry Details: Exact date, time (local to specified place), and location for presentation.
- Governing Rules: Either URDG 758 or ISP98—specify one exclusively.
- Presentation Requirements: Documents or statements that trigger payment, typically a beneficiary’s signed demand.
- Cost Allocation: Delineation of fees and charges (e.g., “All charges outside the issuing bank’s jurisdiction shall be borne by the beneficiary”).
URDG 758-Compliant Template
| :27: | Sequence of total 1/1 |
| :40E: | URDG 758 |
| :20: | SBLC123456789 |
| :31C: | 2025-06-01 |
| :50: | ABC Corporation 123 Main Street Lisbon, Portugal |
| :59: | XYZ Limited 45 River Road London, United Kingdom |
| :32B: | USD 1,000,000.00 |
| :41D: | Available with Banco Financio by payment at sight |
| :71B: | All charges outside issuing bank are for beneficiary’s account |
| :49: | Confirmation charges for beneficiary’s account |
| :78: | The beneficiary may draw by presenting: 1. The original of this standby letter of credit; 2. A signed statement reading: “I certify that the amount claimed is due under the terms of this standby letter of credit.” |
ISP98-Compliant Template
| :20: | SBLC-ISP-2025-0001 |
| :30: | 2025-06-01 |
| :31D: | Expiry 2026-05-31 at 17:00 Lisbon time |
| :32B: | USD 500,000.00 |
| :40E: | ISP98 |
| :50: | ABC Corporation 123 Main Street Lisbon, Portugal |
| :59: | XYZ Limited 45 River Road London, United Kingdom |
| :41A: | Available by payment at sight through Banco Financio |
| :71B: | Issuing bank’s charges for account of applicant; all other charges for beneficiary’s account |
| :78: | To draw under this credit, the beneficiary must present: – A signed statement of the amount claimed; – This standby letter of credit. |
For expert guidance on structuring and issuing standby letters of credit in compliance with international standards, please contact our trade finance specialists.
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