SBLC TRANSACTION PROCEDURE
Instrument & Service Description
A Bank Guarantee (BG) is the name used mostly in Europe and Standby Letter of Credit (SBLC) is exactly the same, but used in the USA. Since we are working globally you will see the expression BG/SBLC in our documents.
Our Purchased as well as leased BG/SBLCs are issued by World's rated Top 25 Banks. We use the Bank SWIFT Network to have clients' BG/ SBLC delivered Bank to Bank using SWIFT MT799 followed by SWIFT MT760. We operate an extremely reliable, efficient delivery and authentication process.
STEP BY STEP PROCEDURE FOR OBTAINING BG/ SBLC
1. Beneficiary submits to Subcontracts India a signed official Letter Of Interest (LOI) for applying for SBLC/BG together with compliance documents:
1.1 Client Information Sheet (CIS)
1.2 Statement of Non-Solicitation of Funds
1.3 Irrevocable Fee Protection Agreement covering all identified beneficiaries/ intermediaries from both sides
1.4 Clear color copy of the beneficiary’s/Signatory’s passport
1.5 Certificate of Incorporation of beneficiary’s company
1.6 Proof of fund (POF): There must be availability of cash funds (not credit line) in the beneficiary's bank account sufficient to cover at least the price of the first tranche of the instrument. This can be in the form of a Bank Comfort Letter (BCL) or RWA (ready, willing, and able) letter issued by the beneficiary's bank and signed by at least two bank officers, or a screen shot of the account statement no older than 48 hours from the date of submitting the CIS.
1.7 Applicant pays Due Diligence Charges for KYC Compliance online
2. After thorough and extensive due-diligence of the applicant/beneficiary and subsequent approval by the Provider, applicant/beneficiary will receive the Deed Of Agreement (DOA) Format which spells out Terms and Conditions of the Contract, approved contract amount (Face Value), individual tranche size and schedule, price, etc.
3. The applicant/beneficiary completes the Deed of Agreement (DOA):
a. Accepting the SBLC price.
b. Confirming applicant’s/beneficiary’s bank will accept the Provider’s Corporate Invoice
c. Confirming acceptance of SWIFT MT799 BPU verbiage.
d. Confirming the Intermediary Fee Protection Agreement
e. Confirming the acceptance of the SWIFT MT760 (SBLC) verbiage
The filled & signed DOA must be returned on beneficiary’s letterhead & sent to Subcontract India via e-mail duly signed in blue ink and stamped on each page
4. After internal scrutiny and evaluation of the filled DOA received from the applicant/ beneficiary, the Provider might undertake another due-diligence of the applicant/beneficiary. Once satisfied, the Deed Of Agreement (DOA) would be countersigned by the Provider after filling in all the relevant information relating to the Provider and his Bank, and returned to either the applicant/beneficiary for lodging it in his bank or to the applicant’s/beneficiary’s bank directly
5. The fully executed Deed Of Agreement (now lodged with Provider’s and Beneficiary’s respective banks) becomes the legally binding contract between the two parties.
6. The Provider will issue a Corporate Invoice to the Beneficiary’s bank showing the all-inclusive amount of the SBLC/BG price and commissions to be paid after the SBLC/BG has been delivered via SWIFT MT760.
7. The beneficiary’s bank will send a written confirmation via SWIFT MT799 to the Provider’s bank stating that “it is RWA (ready, willing and able) to receive the SBLC/BG as per the Deed Of Agreement.
8. Provider’s Bank will acknowledge the receipt of the SWIFT MT799 RWA send a counter MT799 RWA to the Beneficiary’s bank confirming it is ready, willing and able to send the SBLC/BG Pre-Advice via SWIFT MT799 to the Beneficiary’s Bank.
9. Within three (3) banking days, the Provider’s bank will issue the SWIFT MT799 Pre-Advice confirming that the instrument will be delivered against the issuance of SWIFT MT799 BPU (bank payment undertaking) by the beneficiary's bank.
10. Beneficiary’s Bank will send the SWIFT MT799 BPU (Bank Payment Undertaking earlier used to be called ICBPO) as per the verbiage earlier provided in the DOA to guarantee payment for the Corporate Invoice after delivery of the SBLC/BG to beneficiary’s bank (Note: ICBPO is now banned)
11. Within five (5) banking days after Provider’s bank receives and authenticates the SWIFT MT799 BPU, the Provider’s bank will deliver the SBLC/BG via SWIFT MT760 and also provide the copy of the SWIFT message via bank e-mail.
12. Within Five (5) banking days after the SBLC/BG is delivered and received by Beneficiary’s bank via SWIFT MT760 and is authenticated, the beneficiary’s bank will activate the Bank Payment Undertaking and pay the Provider via SWIFT MT103. The hard copy of the SBLC/BG to be delivered via bank bonded courier to the beneficiary’s bank within seven (7) days after the payment being received by principal’s bank.
13. The beneficiary pays xxxxxxx percent all inclusive (xx% + 2%) of face value of each tranche, as per the relevant irrevocable fee protection agreement .
14. All subsequent tranches will be based on the same procedure, until the agreed amount of the contract with Provider reaches completion or the collateral or funds become exhausted.
15. Any unauthorized bank calls without prior agreement between parties, probes or communications, or an improper solicitation or disclosure involving any of the banks concerned in this transaction will result in immediate cancellation of this transaction and subject the violating party to damages.
GENERAL PROVISIONS AND CONDITIONS:
- Parties are not allowed to contact the other Party’s bank without express written permission. Any Party attempting to do so will lead to cancellation of this Agreement and invoke the penalties described in Paragraph 16, below. For greater clarity, any telephone calls, facsimile or other prohibited forms of communication shall cause the immediate cancellation of this transaction and incur a liability for damages on the part of the breaching Party.
- After countersign The LOI package by PRINCIPAL, the LOI becomes a legally binding Contract (Dead of Agreement) between both parties, only if the BENEFICIARY’s bank issues Proof of Fund (POF) and deliver to the PRINCIPAL’s Bank’s coordinated indicated in this document according timing of mentioned procedure. If the BENEFICIARY’s bank does not issue this mentioned SWIFT within Seven (7) calendar days after date of countersign LOI by the PRINCIPAL, will result immediate cancellation of this transaction and subject the violating party to damages. As mentioned in Paragraph 3 below.
- As mentioned in the Procedures above, should the BENEFICIARY default to pay the purchase price to the PRINCIPAL as agreed upon confirmation of BG MT760 in the BENEFICIARY’s bank account, PRINCIPAL will instruct the issuing bank to put a claim on the BG thereby obliging the BENEFICIARY’s Bank to return the BG MT760 to the issuing Bank.
- Each Party warrants and represents that it has full power and authority to enter into this Agreement and to perform the transaction as per the terms stated herein.
- The Parties agree that the Non-Circumvention / Non-Disclosure rules of all issues from the (International Chamber of Commerce) ICC up to and including the latest edition apply and shall remain effective for a period of five years from the date of execution of this Agreement. All information contained herein including banking information and codes are privileged information and represent the sole property of the Party from which they originate.
- The terms of this Agreement are binding upon the Parties whose signatures appear herein. The Parties to this Agreement and their respective employees, agents, associates/affiliates, transferees, assignees or designees agree to be bound by the Non-Circumvention / Non-Disclosure and Force Majeure provisions of the ICC as mentioned in Paragraph 5 above.
- This Agreement is subject to the domestic laws of any country properly having jurisdiction over the subject-matter of this Agreement. The Parties agree that they will strive to resolve all disputes amicably. All disputes arising out of or in connection with the present Agreement that cannot be resolved amicably shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce in Paris, France, by one or more arbitrators appointed in accordance with the said Rules. The language of Arbitration shall be English and the governing law shall be the law of United Kingdom (England). The arbitration award shall be considered as final and shall be binding upon both Parties. The arbitration fee shall be paid by the losing Party.
- Neither Party may assign, transfer or delegate its interest or duties without prior written consent of the other Party. No modification, amendment or supplement of this Agreement shall be binding unless it is in writing and signed by both the BENEFICIARY and the PRINCIPAL.
- If any provision of this Agreement shall be or become prohibited or invalid under any applicable law, rule or regulation, then such provision shall be deemed ineffective to the extent of such prohibition or invalidity only, without thereby invalidating any of the remaining terms or provisions of this Agreement.
- Neither Party hereto is making any representation regarding the tax consequences, if any, of the transactions envisaged herein. It is understood that the BENEFICIARY and the PRINCIPAL individually accept responsibility and liability for any/all taxes, imposts, levies, duties or charges that may be applicable in the execution of their respective roles and the discharge of this Agreement.
- The BENEFICIARY and the PRINCIPAL shall be responsible only for those commissions/fees that they have respectively agreed, in writing, to pay.
- Each Party shall indemnify and hold harmless the other Party against any and all claims, demands, damages or expenses of any nature arising out of the execution or implementation of this Agreement for a period beginning with the execution of this Agreement and ending three (3) years after the date of the completion of all acts contemplated in this Agreement.
- The Parties hereby agree that the Parties have entered into this private transaction at their sole discretion and no one Party has solicited the other Party in any way neither it can be considered as the solicitation of funds. This transaction is strictly of a private nature between the private Parties which is being defined by this private Agreement. This transaction does not and shall not be interpreted as the sale of securities as defined by the Securities Act of 1933/34 of the United States of America as amended and/or any other laws of any other nation related to the securities transaction. This transaction/Agreement is exempted from the Securities Act and would not be required to be registered with any authority or with any government body department.
- This Agreement embodies the entire understanding of the Parties hereto. There is no other Agreement, understandings, representations or warranties, whether written or oral, in effect between the Parties. The Parties acknowledge that this Agreement is the sole governing document between the Parties. The Parties agree that this Agreement supersedes any and all prior correspondence, Agreements or drafts, which shall be null and void and of no further force and effect.
- All terms, condition and closing procedures of this Agreement shall be binding upon and inure to the benefit of the Parties hereto, and their respective heirs, legal representative, successor and assigns.
- These documents may be signed in counterparts, which when taken together shall constitute an original. This document may also be transmitted by facsimile or email and shall be deemed as original for the purposes of enforceability. The Parties declare that they have read this entire Agreement and have clearly understood the same to its fullest.
- By signing this LOI / DOA, both parties agree under the laws and trading guidelines set forth by the ICC that they are ready willing and able to complete this transaction under the terms and conditions stated within this letter of intent.
- EDT (Electronic document transmissions) shall be deemed valid and enforceable in respect of any provisions of this Contract. As applicable, this agreement shall be: (1)-Incorporate U.S. Public Law 106-229,” Electronic Signatures in Global and National Commerce Act” or such other applicable law conforming to the UNCITRAL Model Law on Electronic Signatures (2001) and; (2)-ELECTRONIC COMMERCE AGREEMENT (ECE/TRADE/257, Geneva, May 2000) adopted by the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT). (3)-EDT documents shall be subject to European Community Directive No. 95/46/EEC, as applicable.
- Either Party may request hard copy of any document that has been previously transmitted by Electronic means provided however, that any such request shall in no manner delay the parties from performing their respective obligations and duties under EDT instruments.
- The BENEFICIARY hereby acknowledges and confirms that neither the Collateral Provider nor their associates, nor any person on their behalf solicited him/her in any way whatsoever that can be construed to be a solicitation herein. Both parties hereby confirm with full authority that the above terms are agreed and acceptable.
IMPORTANT: THE TRANSACTION PROCEDURE AND THE TERMS AND CONDITIONS KEEP CHANGING. GET IN TOUCH WITH US FOR LATEST UPDATES