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TRANSCRIPT
BANK INDONESIA REGULATION
NUMBER: 5/6/PBI/2003
CONCERNING
DOMESTIC LETTERS OF CREDIT
THE GOVERNOR OF BANK INDONESIA,
Considering : a. whereas to expedite domestic commercial transactions, it is
necessary to adopt measures to support development in means of
payment for these transactions;
b. whereas, this development in means of payment may take place
by standardizing the provisions governing the relationship
between a bank and related parties while upholding prudential
principles;
c. whereas, due to the increasing openness of the Indonesian
economy, commercial transactions in Indonesia cannot operate
in isolation from international commercial transactions for
which payments are made in foreign currency;
d. whereas, the provisions currently in force for Domestic Letters
of Credit need to be adjusted to the needs of parties conducting
transactions and to be adjusted to developments in domestic
commercial transactions;
e. now therefore it is deemed necessary to enact new provisions
concerning Domestic Letters of Credit in a Bank Indonesia
Regulation;
In view ...
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In view of : 1. Act Number 7 of 1992 concerning Banking (State Gazette of the
Republic of Indonesia Number 31 of 1992, Supplement to the
State Gazette Number 3472) as amended by Act Number 10 of
1998 (State Gazette of the Republic of Indonesia Number 182 of
1998, Supplement to the State Gazette Number 3790);
2. Act Number 23 of 1999 concerning Bank Indonesia (State
Gazette of the Republic of Indonesia Number 66 of 1999,
Supplement to the State Gazette Number 3843);
HAS DECREED:
To enact : THE BANK INDONESIA REGULATION CONCERNING
DOMESTIC LETTERS OF CREDIT.
CHAPTER I
GENERAL PROVISIONS
Article 1 The terminology used in this Bank Indonesia Regulation has the following meanings:
1. Domestic Letter of Credit (SKBDN), commonly known as Domestic L/C, is any
written commitment based on written application by an Applicant binding the
Issuing Bank to:
a. execute ...
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a. execute payment to the Beneficiary or at order of the Beneficiary, or accept
and execute payment against a draft drawn by the Beneficiary;
b. authorize another bank to execute payment to the Beneficiary or at order of
the Beneficiary, or accept and execute payment against a draft drawn by the
Beneficiary; or
c. authorize another bank to negotiate a draft drawn by the Beneficiary;
against presentation of documents insofar as the terms and conditions of the
Domestic L/C are met.
2. Bank is a Commercial Bank as referred to in Act Number 7 of 1992 concerning
Banking as amended by Act Number 10 of 1998.
3. Issuing Bank is a Bank issuing a Domestic L/C at the request of the Applicant.
4. Advising Bank is a Bank forwarding a Domestic L/C to the Beneficiary.
5. Nominated Bank is a Bank authorized to execute payment at sight, to accept a
draft, or to conduct Negotiation.
6. Confirming Bank is the Bank confirming the Domestic L/C by binding itself to
pay, accept, or negotiate a draft drawn against the Domestic L/C.
7. Negotiating Bank is the Bank conducting Negotiation.
8. Paying Bank is the Bank executing payment to the Beneficiary against
presentation of the documents required in the Domestic L/C.
9. Reimbursing Bank is the Bank appointed by the Issuing Bank to reimburse the
Paying Bank.
10. Remitting Bank is the bank sending the documents required in the Domestic L/C
to the Issuing Bank.
11. Transferring ...
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11. Transferring Bank is the Bank that at the request of the Beneficiary executes
transfer of the Domestic L/C, whether in whole or in part, to one or more other
parties.
12. Drawn Bank is the Bank required to execute payment against any drafts drawn on
that Bank.
13. Accepting Bank is the Bank accepting a draft against a Domestic L/C.
14. Negotiation is negotiation of drafts and /or documents by a Bank, accompanied by
payment.
15. Applicant is a natural or legal person submitting an application for opening a
Domestic L/C at a Bank.
16. Beneficiary is a natural or legal person specified in a draft, Domestic L/C, or other
documentary agreement pertaining to the Domestic L/C, as the party entitled to
receive payment.
17. Written Commitment is a commitment by a Bank that may be executed by letter,
telex, swift, or by other means commonly employed in banking practice.
18. Banking Day is the business day of a Bank, commencing from Monday through
Friday, with the exception of national holidays and special holidays stipulated by
the Government.
Article 2
(1) The provisions in this Bank Indonesia Regulation shall apply only to the issuance
of a Domestic L/C in the event that the Bank, Applicant, and Beneficiary are
domiciled in Indonesia.
(2) In the event ...
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(2) In the event that a Domestic L/C is opened in foreign currency, the Reimbursing
Bank may be domiciled outside Indonesia.
(3) Domestic L/Cs may only be used for merchandise transactions.
(4) In the event that the merchandise transaction is related to a services transaction
that comprises an integral and inseparable part, the value of merchandise must be
greater than the value of services.
Article 3 Merchandise transactions as referred to in Article 2 paragraph (3) may only be
conducted under the following restrictions:
a. Movement of merchandise takes place within Indonesia.
b. Movement of merchandise takes place from within Indonesia to outside Indonesia
insofar as the Domestic L/C is issued on the basis of a master L/C and non-L/C
payment for export purposes.
Article 4
(1) Domestic L/Cs shall be issued in the Rupiah currency.
(2) A Domestic L/C as referred to in paragraph (1) may be issued in foreign currency
insofar as the Domestic L/C is related to an international commercial transaction.
Article 5 ...
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Article 5
(1) Each issuance of a Domestic L/C and amendment thereto must be subject to the
provisions of this Bank Indonesia Regulation.
(2) Domestic L/Cs may only be issued with the condition that it may not be amended
and may not be revoked or may not be canceled without approval from the Issuing
Bank, Confirming Bank, if any, and Beneficiary.
(3) The term of a Domestic L/C and term of deferment of payment on a Domestic L/C
shall be determined according to the agreement between the Applicant and the
Issuing Bank.
(4) In issuing a Domestic L/C, a Bank may determine for itself the size of any
guarantee and/or cash deposit, taking into account the bonafides of the Applicant.
(5) In the event that a Domestic L/C is referred to in paragraph (4) is issued with
terms of advance payment (red clause), the Bank shall set an adequate cash
deposit, taking into account the size of advance payment to be drawn.
(6) Domestic L/Cs shall be made in the Indonesian language and, if unavoidable, may
be made in the English language.
Article 6
(1) Application for issuance of a Domestic L/C may only be made in writing by the
Applicant or agent of the Applicant.
(2) A Bank may only accept an application for issuance of a Domestic L/C if the
application states at least the following:
a. full name and address of the Applicant;
b. full name ...
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b. full name and address of the Beneficiary;
c. value of the Domestic L/C;
d. terms of payment specified as at sight, acceptance, or Negotiation;
e. details of documents, such as cargo documents and/or other required
documents;
f. final date for submission of documents;
g. place for presentation of documents for payment at sight, acceptance, or
Negotiation;
h. date of issue and due date of the Domestic L/C;
i. media for issuance of the Domestic L/C: letter, telex, swift, or other means;
j. description of merchandise;
k. final date for shipment of merchandise;
l. destination of merchandise;
m. statement that the Domestic L/C is subject to prevailing Bank terms for
issuance of Domestic L/Cs.
Article 7
Each application for issuance of a Domestic L/C, the Domestic L/C itself, application
for amendment of Domestic L/C, and amendment of the Domestic L/C itself, shall:
a. shall be written truthfully and in full;
b. shall state the exact documents comprising the basis for execution of payment,
acceptance, or Negotiation.
Article 8 ...
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Article 8
(1) Terms of payment of a Domestic L/C shall be executed on the basis of agreement
between the Applicant and the Issuing Bank and shall be stated clearly in the
Domestic L/C concerned.
(2) A Domestic L/C shall state terms for payment at sight, acceptance, or Negotiation.
(3) The drawee of a draft for a Domestic L/C shall be only a Bank.
Article 9
(1) A Domestic L/C constitutes a separate contract from a sales contract or other
contract constituting the basis for issuance of the Domestic L/C.
(2) In processing a Domestic L/C, a Bank shall deal only with documents and not
with merchandise and/or services or other performance.
CHAPTER II
OBLIGATIONS OF THE BANK
Article 10
(1) The Issuing Bank shall state in the Domestic L/C:
a. information as listed in Article 6 paragraph (2) letter a through letter l.
b. the name “Surat Kredit Berdokumen Dalam Negeri” (Domestic Letter of
Credit).
(2) A Domestic ...
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(2) A Domestic L/C shall constitute a guarantee from the Issuing Bank insofar as the
documents presented to the Nominated Bank or to the Issuing Bank are in
accordance with the terms and conditions of the Domestic L/C:
a. if the Domestic L/C stipulates payment at sight – for payment at sight;
b. if the Domestic L/C stipulates acceptance:
1. by the Issuing Bank – for acceptance of draft drawn by the Beneficiary on
the Issuing Bank and payment of draft at due date; or
2. by other Drawn Bank – to accept and pay against at due date the draft
drawn by the Beneficiary on the Issuing Bank in the event that the Drawn
Bank stated in the Domestic L/C does not accept the draft drawn thereon,
or to pay against a draft accepted by the Drawn Bank but not paid by the
Drawn Bank at due date;
c. if the Domestic L/C stipulates Negotiation – to pay without recourse to the
drawer or rightful bearer of the draft drawn by the Beneficiary and/or
documents presented on the basis of the Domestic L/C.
(3) In the event that the Issuing Bank prefers that reimbursement from the Paying
Bank, Accepting Bank, or Negotiating Bank can be claimed from the Reimbursing
Bank, the Issuing Bank shall issue instructions or authorization to the
Reimbursing Bank within a reasonable time for payment of the claim for
reimbursement.
(4) The Issuing Bank shall be prohibited from requesting the Paying Bank, Accepting
Bank, or Negotiating Bank to issue a statement to the Reimbursing Bank that the
documents are in accordance with the terms and conditions of the Domestic L/C.
(5) The Issuing ...
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(5) The Issuing Bank shall be required to reimburse payment if reimbursement of
payment is not received from the Reimbursing Bank by the Paying Bank,
Accepting Bank, or Negotiating Bank.
(6) The Issuing Bank shall be responsible to the Paying Bank, Accepting Bank, or
Negotiating Bank for any interest losses if reimbursement is not executed by the
Reimbursing Bank at first claim, or by means other than stipulated in the
Domestic L/C, or according to mutual agreement.
Article 11
(1) The Confirming Bank shall issue confirmation of the Domestic L/C on the basis of
request from the Issuing Bank.
(2) Confirmation as referred to in paragraph (1) shall constitute a guarantee from the
Confirming Bank, and also a guarantee from the Issuing Bank, insofar as the
documents presented to the Confirming Bank or other Nominated Bank comply
with the terms and conditions of the Domestic L/C.
(3) The guarantee referred to in paragraph (2) is as follows:
a. if the Domestic L/C stipulates payment at sight – for payment at sight;
b. if the Domestic L/C stipulates acceptance:
1. by the Confirming Bank – for acceptance of draft drawn by the
Beneficiary on the Confirming Bank and payment of draft at due date; or
2. by other Drawn Bank – to accept and pay at due date the draft drawn by
the Beneficiary on the Confirming Bank in the event that the Drawn Bank
stated in the Domestic L/C does not accept the draft drawn thereon, or to
pay ...
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pay the draft accepted by the Drawn Bank but not paid by the Drawn Bank
at due date;
c. if the Domestic L/C stipulates Negotiation – to conduct Negotiation without
recourse to the drawer or rightful bearer of the draft drawn by the Beneficiary
and/or documents presented on the basis of the Domestic L/C.
Article 12
(1) The Issuing Bank may transmit the Domestic L/C or transmit amendments to the
Domestic L/C to the Advising Bank by means of letter, telex, swift, or other
means according to customary banking practice.
(2) Transmittal as referred to in paragraph (1) may be operative nor non-operative.
(3) In the event that forwarding conducted by other means than as referred to in
paragraph (1) is deemed an operative instrument, letter of confirmation shall no
longer be required.
(4) In the event that forwarding conducted by other means than as referred to in
paragraph (1) is not deemed an operative instrument, the Issuing Bank shall be
required to convey at the earliest opportunity a letter of confirmation constituting
an operative instrument.
(5) When forwarding any amendment to a Domestic L/C, the Issuing Bank shall be
required to use the services of the same Advising Bank that forwarded the
Domestic L/C issued in the first instance.
Article 13 ...
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Article 13 A Domestic L/C may be forwarded to the Beneficiary through the Advising Bank
without binding the Advising Bank under the following provisions:
a. if the Advising Bank elects to forward the Domestic L/C to the Beneficiary, the
Advising Bank shall take adequate measures for prior authentication of the
Domestic L/C;
b. if the Advising Bank elects not to forward the Domestic L/C, the Advising Bank
shall immediately inform the Issuing Bank;
c. if the Advising Bank is unable to authenticate the Domestic L/C, the Advising Bank
shall immediately inform the Issuing Bank, and if the Advising Bank
notwithstanding intends to forward the Domestic L/C to the Beneficiary, the
Domestic L/C shall be accompanied by notification that the Advising Bank is
unable to authenticate the Domestic L/C.
Article 14
(1) The Advising Bank may forward the Domestic L/C to the Beneficiary without
additional confirmation, unless specified otherwise by the Issuing Bank in a
request or authorization for additional confirmation.
(2) If another Bank is requested or authorized by the Issuing Bank to add
confirmation to the Domestic L/C but the Bank receiving the request is unwilling
to comply, the Issuing Bank shall be immediately informed of the refusal.
Article 15 ...
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Article 15
(1) The Issuing Bank shall be bound by any amendment made from the time that the
amendment is made.
(2) The Confirming Bank may forward any amendment of the Domestic L/C with or
without adding confirmation.
(3) In the event that the Confirming Bank adds confirmation of amendment of
Domestic L/C, the Confirming Bank shall be bound by the amendment of
Domestic L/C commencing from the date of forwarding of amendment of the
Domestic L/C to the Beneficiary.
(4) In the event that the Confirming Bank forwards amendment of Domestic L/C to
the Beneficiary without adding confirmation, the Confirming Bank shall
immediately inform the Issuing Bank and Beneficiary.
(5) The Beneficiary shall be prohibited from issuing partial acceptance of any
amendment of Domestic L/C set forth in advice of amendment of Domestic L/C.
(6) Amendment to Domestic L/C shall become effective upon issuance of written
approval by the Beneficiary of the amendment to the Advising Bank.
(7) In the event that the Beneficiary fails to convey written approval as referred to in
paragraph (6), presentation of documents to the Issuing Bank or Nominated Bank
in accordance with the terms of the Domestic L/C, including any amendments
thereto, shall be deemed as approval by the Beneficiary of the amendment to the
Domestic L/C.
(8) Amendment to a Domestic L/C as referred to in paragraph (7) shall be effective
from the date of presentation of documents.
Article 16 ...
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Article 16 (1) A Domestic L/C is required to specify a Nominated Bank.
(2) The provision referred to in paragraph (1) shall not apply if it is stipulated in the
Domestic L/C that:
a. payment at sight, acceptance, and Negotiation may be made only at the Issuing
Bank;
b. the Domestic L/C may be negotiated at any Bank.
(3) Receipt and forwarding of documents by the Nominated Bank shall not incur any
liability for the Nominated Bank in respect of payment, acceptance, or negotiation
unless the Nominated Bank explicitly conveys its approval to the Issuing Bank
and Beneficiary.
(4) In the event that the Nominated Bank agrees to become the Confirming Bank, the
Nominating Bank shall be required to execute its authority for payment,
acceptance, or negotiation.
Article 17 (1) A Bank receiving incomplete or unclear instructions from the Issuing Bank for
forwarding, confirmation, or amendment to a Domestic L/C may convey these
instructions to the Beneficiary only as information and without incurring liability.
(2) A Bank receiving instructions as referred to in paragraph (1) shall inform the
Issuing Bank of actions taken and the Issuing Bank shall immediately provide the
needed information.
(3) A Bank ...
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(3) A Bank receiving instructions may forward, confirm, or amend a Domestic L/C
only if complete and clear information is received as referred to in paragraph (2)
and the Bank receiving the instructions is willing to carry out the instructions.
CHAPTER III
EXAMINATION OF DOCUMENTS
Article 18
(1) The Issuing Bank, Confirmation Bank if any, or Nominated Bank acting on its
own account:
a. shall examine all documents required in the Domestic L/C to obtain assurance
that the documents comply with the terms and conditions of the Domestic L/C,
in accordance with standard banking practices;
b. has a maximum of 7 (seven) Banking Days after the date of receipt of the
documents to conduct examination and determine whether to negotiate or
reject the documents.
(2) In the event that a Bank as referred to in paragraph (1) decides to reject the
documents, the rejection shall be notified in writing to the sender of the
documents no later than 7 (seven) Banking Days after the date of receipt of the
documents.
(3) In the event that a Bank as referred to in paragraph (1) does not inform in writing
after having exceeded the 7 (seven) Banking Days as referred to in paragraph (2),
the Bank shall be deemed to have received the documents.
(4) A Bank ...
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(4) A Bank as referred to in paragraph (1) shall not need to examine documents not
required by the Domestic L/C, and must return such documents to the sender or
forward the documents to the concerned party without any liability whatsoever.
(5) A Bank as referred to in paragraph (1) may accept presentation of documents past
the deadline for expiration of the Domestic L/C.
Article 19
(1) A Domestic L/C may require cargo documents.
(2) In the event that a Domestic L/C requires cargo documents, it shall stipulate a
deadline for presentation of documents, calculated from the shipping date.
(3) In the event that a Domestic L/C does not specify a deadline as referred to in
paragraph (2), the Bank may reject documents presented past 21 (twenty-one)
calendar days after the shipping date.
(4) Cargo documents as referred to in paragraph (1) shall state at least the following:
a. Name and address of sender;
b. Name and address of receiver;
c. Name and address of shipping company or shipping agent;
d. Business license number of shipping company or shipping company agent;
e. Description of merchandise: make and number, number of packages, type of
packaging, gross weight and size (may be adjusted to the terms of the Domestic
L/C);
f. Date of receipt of merchandise for shipping and type of carrier;
g. Destination of merchandise;
h. Place of origin (port of loading) of merchandise;
i. Number ...
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i. Number of original sheets;
j. Signature and full name of person responsible for the appointed shipping
company or agent;
k. Number and date of the Domestic L/C.
(5) The format of the shipping documents shall include a statement of cargo insurance
coverage or no cargo insurance coverage.
(6) In the event that a Domestic L/C is accompanied by cargo insurance documents,
the insurance may be executed with a banker’s clause in the name of the Issuing
Bank.
(7) The Bank may reject cargo insurance documents as referred to in paragraph (5) in
the event that:
a. insured value is lower than the value of the Domestic L/C or value of draft;
and/or
b. the date of issuance of the cargo insurance documents is past the date of
issuance of the cargo documents.
Article 20 (1) The Issuing Bank or Confirming Bank, if any, shall be required to negotiate
documents and reimburse expenses to the Nominated Bank having executed
payment, accepted, or negotiated documents in accordance with the terms and
conditions of the Domestic L/C.
(2) The Issuing Bank or Confirming Bank, if any, or Nominated Bank receiving
documents shall determine the compliance of documents with the terms and
conditions of the Domestic L/C.
(3) If there ...
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(3) If there is any discrepancy between the documents and the terms and conditions of
the Domestic L/C:
a. The Issuing Bank, Confirming Bank if any, or Nominated Bank may refuse to
negotiate the documents;
b. The Issuing Bank may contact the Applicant to request approval for any
variance in the documents within the deadline referred to in Article 18
paragraph (1) letter b.
(4) In the event of rejection as referred to in paragraph (3) letter a, the Issuing Bank,
Confirming Bank if any, or Nominated Bank shall state the variance constituting
grounds for rejection of the documents and determine whether to retain the
documents on behalf of the sender or to return the documents to the sender.
(5) In the event of rejection as referred to in paragraph (3) letter a, the Issuing Bank or
Confirming Bank, if any, shall be entitled to recover any payment made to the
Remitting Bank with interest.
(6) In the event that the Remitting Bank informs the Issuing Bank or Confirming
Bank, if any, that:
a. there are variances in the documents; or
b. the Remitting Bank has paid, accepted, or negotiated under reserve or against
letter of indemnity in regard to that discrepancy;
the Issuing Bank or Confirming Bank, if any, shall if required invoke the
provisions referred to in this Article.
(7) The terms of under reserve or letter of indemnity as referred to in paragraph (6)
letter b shall apply only to dealings between the Remitting Bank and the parties in
respect of which the terms were made, or from whom or in whose name the letter
of indemnity was obtained.
CHAPTER IV ...
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CHAPTER IV
TRANSFER OF DOMESTIC LETTERS OF CREDIT
Article 21
(1) Transferable Domestic L/Cs are Domestic L/Cs in which the first Beneficiary is
entitled to apply to the Advising Bank conducting payment, acceptance, or
negotiation for transfer of the Domestic L/C, in whole or in part, to one or more
second Beneficiaries.
(2) A Domestic L/C may only be transferred if it explicitly contains the word
“transferable”, while use of no other term shall be permitted.
(3) The Transferring Bank shall be required to carry out the transfer of the Domestic
L/C if explicitly approved by the Transferring Bank.
(4) A Domestic L/C may only be transferred one time to a second Beneficiary.
(5) Transfer of partial value of a Domestic L/C as referred to in paragraph (1) may be
undertaken separately, insofar as partial shipment or partial drawing is not
prohibited in the Domestic L/C.
(6) A Domestic L/C may only be transferred in accordance with the terms and
conditions stated in the original Domestic L/C, with the exception of:
a. value of the Domestic L/C;
b. unit price;
c. due date;
d. final date for submission of documents;
e. shipping period;
any or all of these restrictions may be reduced or shortened.
(7) The percentage ...
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(7) The percentage of insurance coverage that must be taken out may be increased in
value to achieve the coverage stipulated in the original Domestic L/C.
(8) The name and address of the first Beneficiary may be replaced by the name and
address of the Applicant, unless the original Domestic L/C requires that the name
of the Applicant shall be specifically stated on each document other than the
invoice.
(9) The Bank may receive the invoice and draft amended by the first Beneficiary on
the basis of the invoice and draft from the second Beneficiary insofar as the value
does not exceed the value of the original Domestic L/C.
(10) The Transferring Bank shall be entitled to present to the Issuing Bank the
documents received on the basis of the original Domestic L/C, including the
invoice and draft of the second Beneficiary, without liability in the event of failure
by the first Beneficiary to present its own invoice and draft amended on the basis
of the invoice and draft from the second Beneficiary.
CHAPTER V
EXCLUSION OF BANK LIABILITY
Article 22 When examining documents as referred to in Article 18 paragraph (1), the Issuing
Bank, Confirming Bank if any, or Nominated Bank shall not be held responsible for:
a. the format, adequacy, authenticity, forgery, or legal consequences of any document
whatsoever, or in respect of general and/or specific conditions set forth in
documents or added therein;
b. the description ...
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b. the description, quantity, weight, quality, condition, packaging, delivery, value, or
existence of merchandise listed in the documents;
c. good faith or actions and/or negligence, ability to pay, performance or bonafides of
sender, carrier, forwarder, receiver, or underwriter of merchandise, or anyone
whosoever;
d. consequences arising from delay and/or loss of messages, letters, or documents in
transit, or in respect of delay, defect, or other error arising when advising by means
of telecommunications facilities;
e. improper interpretation of technical terms.
Article 23
(1) A Bank using the services of another Bank for carrying out the instructions of the
Applicant shall charge any expenses and risks thus incurred to the Applicant.
(2) The Bank issuing instructions shall not bear liability if the Bank receiving
instructions does not carry out the instructions given, notwithstanding the Bank
issuing the instructions has itself selected the Bank receiving the instructions.
(3) The party issuing instructions shall bear all costs incurred by the receiver of
instructions for carrying out the instructions.
(4) In the event that a Domestic L/C stipulates that expenses as referred to in
paragraph (1) shall be charged to a party other than the party issuing the
instructions and the expenses cannot be collected, the issuer of instructions shall
be required to pay the expenses thus incurred.
CHAPTER VI ...
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CHAPTER VI
MISCELLANEOUS PROVISIONS
Article 24 A Domestic L/C issued on the basis of a master L/C from outside Indonesia as part of a
back-to-back L/C shall be subject to this Bank Indonesia Regulation.
Article 25 A Domestic L/C may not be made into a master for opening a foreign L/C.
Article 26 Claims on a usance Domestic L/Cs may be pledged as collateral for the issuance of a
foreign L/C insofar as the draft issued on the basis of the Domestic L/C has been
accepted by the Accepting Bank.
CHAPTER VII
REPORTING PROVISIONS
Article 27
(1) Banks are required to submit complete and accurate monthly Domestic L/C
Reports each month according to the format set forth in appendix 1 and appendix
2.
(2) Reports ...
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(2) Reports as referred to in paragraph (1) shall be submitted by the Bank Head Office
to Bank Indonesia, c.q., Directorate of International Affairs – Economic
Cooperation and International Trade Division, Jl. M.H. Thamrin No. 2, Central
Jakarta.
(3) Reports as referred to in paragraph (1) shall be submitted to Bank Indonesia no
later than the end of the following reporting month.
(4) In the event that the end of the month is not a working day, the report shall be
submitted on the following working day.
(5) A Bank shall be deemed non-reporting if the report is submitted past the reporting
deadline as referred to in paragraph (3).
Article 28 (1) A non-reporting bank as referred to in Article 27 paragraph (5) shall be subject to
administrative sanctions comprising a penalty of Rp 50,000 (fifty thousand
rupiahs) per day, calculated from 1 (one) day after the expiration of the reporting
deadline through the date that the report is received by Bank Indonesia to a
maximum of Rp 2,000,000 (two million rupiahs).
(2) The administrative sanctions referred to in paragraph (1) shall be imposed by
debiting the demand deposit account of the reporting bank at Bank Indonesia.
CHAPTER VIII ...
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CHAPTER VIII
TRANSITIONAL PROVISIONS
Article 29
(1) Any Domestic L/C issued prior to the enactment of this Bank Indonesia
Regulation shall remain valid until expiration of the term of the Domestic L/C.
(2) Any extension and/or amendment of a Domestic L/C as referred to in paragraph
(1) shall comply with the provisions of this Bank Indonesia Regulation.
(3) The requirements for submission of monthly Domestic L/C reports as referred to
in Article 2 of Decree of the Management of Bank Indonesia Number
30/56/KEP/DIR dated August 12, 1997, shall remain in force through the May
2003 reporting period for Domestic L/Cs.
CHAPTER IX
CONCLUDING PROVISIONS
Article 30
(1) With the enactment of this Bank Indonesia Regulation:
a. Decree of the Management of Bank Indonesia Number 29/150/KEP/DIR
dated December 31, 1996, concerning Domestic Letters of Credit;
b. Decree of the Management of Bank Indonesia Number 30/195/KEP/DIR
dated February 4, 1998, concerning amendment to Article 3 paragraph (3) of
Decree of the Management of Bank Indonesia Number 29/150/KEP/DIR
dated December 31, 1996, concerning Domestic Letters of Credit;
are declared no longer valid.
(2) With the ...
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(2) With the enactment of this Bank Indonesia Regulation, Article 2 of Decree of the
Management of Bank Indonesia Number 30/56/KEP/DIR dated August 12, 1997,
concerning Reporting of Issuance and Position of Domestic Letters of Credit,
Discount on Drafts for Domestic Letters of Credit and Discount on Export Drafts,
and Bank Correspondent Dealings with Overseas Banks stipulating the reporting
of Domestic Letters of Credit are declared no longer valid commencing from the
June 2003 reporting period for Domestic L/Cs.
(3) In addition to Article 2, other provisions in Decree of the Management of Bank
Indonesia Number 30/56/KEP/DIR dated August 12, 1997, concerning Reporting
of Issuance and Position of Domestic Letters of Credit, Discount on Drafts for
Domestic Letters of Credit and Discount on Export Drafts, and Bank
Correspondent Dealings with Overseas Banks are declared to remain valid insofar
as they are not contrary to this Bank Indonesia Regulation.
Article 31
(1) The provisions for submission of monthly Domestic L/C reports as referred to in
Article 27 paragraph (1) shall come into force commencing from the June 2003
reporting period.
(2) The provisions for administrative sanctions imposed for reporting purposes as
referred to in Article 28 shall come into force commencing from the October 2003
reporting period.
Article 32 ...
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Article 32 This Bank Indonesia Regulation shall come into force on the date of its enactment.
Enacted in Jakarta
Dated May 2, 2003
THE GOVERNOR OF BANK INDONESIA
(signed)
SYAHRIL SABIRIN
STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 51 OF 2003
DLN
ELUCIDATION
TO
BANK INDONESIA REGULATION
NUMBER: 5/ 6 /PBI/2003
CONCERNING
DOMESTIC LETTERS OF CREDIT GENERAL REVIEW To improve economic growth in the wake of the impact brought from the monetary and
economic crisis, it is necessary to adopt measures capable of revitalizing the real sector.
One means of revitalizing the national economy is the adoption of policies that remove
impediments to the business community in the operation of their production processes.
Alongside this, in line with world economic developments, it is deemed necessary to
restructure the policies and regulations of Bank Indonesia, including but not limited to
improvements in the provisions for Domestic Letters of Credit (Domestic L/Cs).
In principle, the improvements to the provisions for Domestic L/Cs are adjusted to the
current condition of the economy, in which the business community has an important
need to conduct merchandise transactions in foreign currency, particularly in regard to
merchandise transactions directly related to international trade. By permitting the
issuance of Domestic L/Cs in foreign currency, it is expected that a stimulus will be
delivered to the real sector in harnessing and gaining economic potential, which in turn
will provide impetus for the national economy. Nevertheless, attention will be required
to the restrictions on Domestic L/C transactions in foreign currency in order not to
encourage the use of foreign currency transactions within Indonesia and not to run
counter ...
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counter to the government policy of reducing dependence on merchandise imported
from other countries. Accordingly, improvements to the regulatory provisions for
Domestic L/Cs remain guided by prudential principles in regard to the regulatory
content itself and in regard to banking practice.
ARTICLE BY ARTICLE Article 1
Self-explanatory
Article 2
Paragraph (1)
A Bank branch office shall be treated as another Bank, including any sub-
branch office of a foreign bank.
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Article 3
Letter a
In regard to movement of merchandise involving a bonded zone in the
territory of Indonesia, the movement shall take place with regard to
prevailing laws and regulations.
Letter b ...
- 3 -
Letter b
Means of non-L/C payment are means of payment customarily used in
settlement of international commercial transactions, including but not
limited to:
(i) prepayment;
(ii) open account;
(iii) collection; and
(iv) consignment.
Article 4
Paragraph (1)
Self-explanatory
Paragraph (2)
Domestic L/Cs pertaining to international commercial transactions
include but are not limited to:
a. Domestic L/Cs issued for purchase of domestic merchandise without
imported materials, but related to export-oriented manufacturing; or
b. Domestic L/Cs issued for purchase of domestic merchandise with
imported components for purposes of domestic trading and for export.
Article 5
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3) ...
- 4 -
Paragraph (3)
The term of a Domestic L/C is the period of validity of the Domestic L/C,
calculated from the date of issuance of the Domestic L/C through the
expiration of the Domestic L/C.
The period for deferment of payment is the period in which payment is
executed for the Domestic L/C.
Paragraph (4)
Self-explanatory
Paragraph (5)
Cash payment for issuance of a red clause Domestic L/C is necessary,
given that payment by this means requires payment in advance of actual
shipment of merchandise. Cash payment averts the risk that the
Beneficiary will not ship the merchandise to the Applicant even after
full/partial payment has been received by the Beneficiary.
Paragraph (6)
A Domestic L/C may be issued in the English language subject to the
condition that this is unavoidable, such as in the case of issuance of a
Domestic L/C by means of swift message type (mt) 700.
The name “Surat Kredit Berdokumen Dalam Negeri” shall
notwithstanding appear in a Domestic L/C issued in the English language.
Article 6
Paragraph (1)
Agent is defined as a party appointed to process the issuance of a
Domestic L/C at the Issuing Bank.
Paragraph (2) ...
- 5 -
Paragraph (2)
Self-explanatory
Article 7
Self-explanatory
Article 8
Paragraph (1)
Self-explanatory
Paragraph (2)
The parties may agree to a combination of payment on conditions of at
sight and acceptance.
Paragraph (3)
Self-explanatory
Article 9
Paragraph (1)
Domestic L/C as a separate contract means that a Bank executing a
Domestic L/C is not bound by any sales contract or other contract
constituting the basis for issuance of the Domestic L/C, notwithstanding
any reference to such contract.
Paragraph (2)
Self-explanatory
Article 10 ...
- 6 -
Article 10
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Reasonable period is defined as a period based on customary banking
practice.
Paragraph (4)
Self-explanatory
Paragraph (5)
Self-explanatory
Paragraph (6)
Self-explanatory
Article 11
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Article 12...
- 7 -
Article 12
Paragraph (1)
Self-explanatory
Paragraph (2)
Operative Domestic L/C is defined as a Domestic L/C that may be
executed immediately for the reason that it does not require any further
confirmation from the Issuing Bank.
Non-operative Domestic L/C is defined as a Domestic L/C that may not
be executed pending further confirmation from the Issuing Bank.
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Paragraph (5)
Self-explanatory
Article 13
Self-explanatory
Article 14
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Article 15...
- 8 -
Article 15
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Paragraph (5)
Self-explanatory
Paragraph (6)
Self-explanatory
Paragraph (7)
Self-explanatory
Paragraph (8)
Self-explanatory
Article 16
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4) ...
- 9 -
Paragraph (4)
Self-explanatory
Article 17
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Article 18
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Paragraph (5)
Self-explanatory
Article 19
Paragraph (1)
Self-explanatory
Paragraph (2) ...
- 10 -
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Paragraph (5)
Self-explanatory
Paragraph (6)
Self-explanatory
Paragraph (7)
Self-explanatory
Article 20
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Paragraph (5)
Self-explanatory
Paragraph (6)
Self-explanatory
Paragraph (7) ...
- 11 -
Paragraph (7)
Self-explanatory
Article 21
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Paragraph (5)
Self-explanatory
Paragraph (6)
Self-explanatory
Paragraph (7)
Self-explanatory
Paragraph (8)
Self-explanatory
Paragraph (9)
Self-explanatory
Paragraph (10)
Self-explanatory
Article 22 ...
- 12 -
Article 22
Self-explanatory
Article 23
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Article 24
Self-explanatory
Article 25
Self-explanatory
Article 26
A Bank accepting a Domestic L/C draft may comprise the Issuing Bank,
Nominated Bank, or Confirming Bank.
Article 27 ...
- 13 -
Article 27
Paragraph (1)
The reporting requirements shall apply to all Banks, including Banks that
do not have any Domestic L/C transactions or with zero transactions.
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Paragraph (4)
Self-explanatory
Paragraph (5)
Self-explanatory
Article 28
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Article 29
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3) ...
- 14 -
Paragraph (3)
Self-explanatory
Article 30
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Paragraph (3)
Self-explanatory
Article 31
Paragraph (1)
Self-explanatory
Paragraph (2)
Self-explanatory
Article 32
Self-explanatory
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA
NUMBER 4289
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