SKBDN is a promise written by a Bank (Issuing Bank) issued based on written request from the Applicant binding the Issuing Bank to :
- Make a payment to a Beneficiary or his order, or accept and pay a draft drawn by the Beneficiary, or;
- Grant power of attorney to other Bank to make payment to a Beneficiary, accept, and pay the draft drawn by the Beneficiary, or;
- Grant power of attorney to other Bank to negotiate the draft drawn by a Beneficiary.
- Legal basis related to the issuance of SKBDN is Regulation of Bank Indonesia No.5/6/PBI/2003 dated 2 May 2003.
- Similar to L/C, SKBDN is also irrevocable (meaning it cannot be canceled unilaterally).
- SKBDN is also independent (separated from sales contract).
SKBDN is used to purchase Goods. If there is a Service value, the percentage of the value of the Goods must be LARGER compared to the value of the Service.