Standby Letter of Credit (SBLC) Solutions for International Businesses

A Standby Letter of Credit (SBLC) is a bank-issued instrument that serves as a guarantee of payment or performance to a beneficiary. The issuing bank commits to paying the beneficiary a specified amount when the applicant fails to meet the underlying obligation, such as a payment, delivery, or performance commitment. An SBLC functions as a secondary payment mechanism, meaning it is not intended to be drawn upon under normal circumstances. Instead, it provides the beneficiary with bank-backed assurance that payment will be made if the applicant defaults. SBLCs are governed by ISP98 (International Standby Practices), published by the Institute of International Banking Law and Practice (IIBLP), or UCP 600 (Uniform Customs and Practice for Documentary Credits), published by the International Chamber of Commerce (ICC). The applicable rules are stated in the SBLC wording. SBLCs are delivered from the issuing bank to the advising or beneficiary bank via the SWIFT network, typically using the MT760 message format.

The process starts when you and a beneficiary agree that an SBLC is needed. You submit the requirement to us, SBLC type, amount, currency, beneficiary details, and the underlying contract. You provide KYC documentation (company registration, director ID, audited financials). We coordinate the application with the issuing bank, who assesses your creditworthiness and determines fees and collateral. Once approved, the SBLC wording is drafted and agreed between all parties. The SBLC is issued and transmitted via SWIFT MT760 to the beneficiary's bank. If you default, the beneficiary presents a demand with the required documents, and the bank pays if the demand is compliant.

An SBLC transaction involves 3 primary parties and may include additional parties. The applicant is the party requesting the SBLC, typically the buyer, borrower, contractor, or party with a payment or performance obligation. The applicant provides KYC documentation, pays the fees, and provides collateral if required. The issuing bank is the licensed commercial bank that issues the SBLC and assumes the payment obligation. The issuing bank assesses creditworthiness, structures the SBLC, and transmits it via SWIFT MT760. The beneficiary is the party receiving the SBLC as security, typically the seller, lender, supplier, or project owner. The beneficiary holds the SBLC and can draw on it when the applicant defaults. Additional parties may include an advising bank, which receives the SBLC from the issuing bank and advises it to the beneficiary after verifying its authenticity. A confirming bank may also be involved, this bank adds its own independent payment undertaking to the SBLC, providing the beneficiary with a second bank's commitment to pay.

Registered businesses, corporations, limited liability companies, government entities, project companies (SPVs), and publicly listed companies can apply for an SBLC. The applicant must be a legally registered entity with a genuine underlying transaction, a contract, agreement, loan, or obligation, that the SBLC will secure. Individual applicants may be eligible in specific jurisdictions, subject to the issuing bank's policies. The applicant must provide complete KYC documentation, including company registration and incorporation documents, identification of directors and shareholders, audited financial statements (typically 2-3 years), and details of the underlying transaction. The issuing bank assesses the applicant's creditworthiness, financial standing, business track record, and existing banking relationships before deciding on approval. The bank may require collateral, cash margin, or allocation against an existing credit facility. Applications that are incomplete or fail to meet KYC requirements are not processed.

The documentation required for an SBLC application includes several categories. Company registration and incorporation documents verify the applicant's legal standing and business registration. Identification of directors and shareholders includes passports or national IDs, proof of address, and ownership structure documentation. Audited financial statements for the most recent 2-3 years demonstrate the applicant's financial capacity and creditworthiness. The underlying contract or agreement is required to establish the transaction purpose and the SBLC's role within it. Beneficiary details must include the full legal name, registered address, bank name, bank address, and SWIFT/BIC code. SBLC details must specify the amount, currency (USD, EUR, GBP, or other), validity period (start date and expiry date), and SBLC type (financial, performance, or direct pay). If the beneficiary or applicant has proposed SBLC wording, this should be submitted with the application. Additional documents may be required depending on the issuing bank's policies, the transaction complexity, and the jurisdictions involved.

SBLC fees are a percentage of the face value, charged annually or for the full validity period. The cost depends on several factors: the SBLC amount (higher amounts may have different pricing tiers), your credit profile (stronger profiles get more competitive terms), the bank's fee structure, the tenor (longer periods may cost more), and transaction complexity (cross-border or multi-party deals may carry extra charges). You might also see SWIFT fees, amendment fees, advising fees from the beneficiary's bank, and confirming fees. Each transaction is priced individually, we'll give you a fee estimate after reviewing the details and checking with the bank.

The applicant typically pays the SBLC issuance fees, which cover the bank's risk assessment, credit commitment, and administrative processing. These fees are charged by the issuing bank directly to the applicant. The beneficiary may pay advising fees (charged by the advising bank for receiving and advising the SBLC) and confirming fees (charged by the confirming bank for adding its own payment commitment). In some transactions, the applicant agrees to cover all charges, including the beneficiary's banking fees. In other cases, each party pays the fees charged by their own bank. Fee allocation is agreed between the applicant and beneficiary before issuance and may be specified in the underlying contract. Amendment fees, extension fees, and drawing-related charges are typically paid by the party requesting the change or action.

An SBLC has a defined validity period, running from the issue date (or the effective date stated in the wording) to the expiry date. The validity period is agreed between the applicant and beneficiary based on the duration of the underlying obligation, the contract term, loan period, or project timeline. SBLCs can be issued for terms as short as a few months or as long as several years, depending on the transaction requirements. For multi-year contracts, the SBLC may include an auto-renewal clause or may require a formal extension before each expiry date. Extensions and renewals are possible with the consent of the issuing bank and the beneficiary. The applicant typically requests the extension before the SBLC expires. After expiry, the issuing bank's obligation ends, and the beneficiary can no longer draw on the SBLC. The applicant's collateral or margin is released after expiry, subject to the bank's internal processing timeline.

SWIFT MT760 is a standardised bank-to-bank message type within the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network. MT760 is used to issue or advise a guarantee or standby letter of credit from one bank to another. The MT760 message contains the full text and details of the SBLC, including the applicant and beneficiary details, the SBLC amount and currency, the wording, the effective and expiry dates, and the governing rules. MT760 is a delivery mechanism, not a financial instrument. The SBLC is the financial instrument (the bank's undertaking); the MT760 is the secure messaging format used to transmit that instrument between the issuing bank and the advising or beneficiary bank. The SWIFT network ensures that the message is authenticated, encrypted, and transmitted securely between banks. The advising bank verifies the MT760 message upon receipt and advises the SBLC to the beneficiary.

No, MT760 and an SBLC are not the same. MT760 is a SWIFT message format, a standardised electronic template used by banks to transmit guarantees and standby letters of credit through the SWIFT network. An SBLC is the financial instrument itself, the bank's written undertaking to pay the beneficiary when the applicant defaults on the underlying obligation. The MT760 message carries the SBLC details from the issuing bank to the advising or beneficiary bank. Without the MT760, the SBLC has not been delivered through the SWIFT network. Without the SBLC content, the MT760 is an empty delivery format. Both are required for a properly issued and delivered standby letter of credit. Some fraudulent schemes misrepresent MT760 as a standalone financial instrument, this is incorrect. MT760 is only the delivery channel.

ISP98 (International Standby Practices) is a set of internationally recognised rules published by the Institute of International Banking Law and Practice (IIBLP) in 1998. ISP98 provides a comprehensive framework specifically designed for standby letters of credit. ISP98 covers the full lifecycle of a standby, including issuance, amendment, presentation of documents, examination of documents, honour or dishonour, and transfer. ISP98 establishes that a standby is independent from the underlying transaction, meaning the issuing bank's obligation is based solely on the terms of the SBLC, not on whether the applicant has actually defaulted. Under ISP98, the issuing bank must examine a presentation within a reasonable time, not to exceed 7 business days. ISP98 is the primary rule set for SBLCs worldwide and is endorsed by the International Chamber of Commerce (ICC) as ICC Publication No. 590. When an SBLC states that it is subject to ISP98, all parties' rights and obligations are governed by these rules.

Yes, UCP 600 (Uniform Customs and Practice for Documentary Credits) can apply to an SBLC when the SBLC wording explicitly states that the instrument is subject to UCP 600. UCP 600 is published by the International Chamber of Commerce (ICC) and is primarily designed for commercial documentary letters of credit, the instruments used to finance trade payments. However, Article 1 of UCP 600 states that the rules apply to any documentary credit, including standbys, when the credit states that it is subject to UCP 600. When UCP 600 governs an SBLC, the examination period is a maximum of 5 banking days following the day of presentation. The key difference between ISP98 and UCP 600 is that ISP98 is purpose-built for standbys, while UCP 600 is primarily designed for commercial LCs. The choice of rules depends on the transaction requirements, the beneficiary's preferences, and the issuing bank's policies.

An SBLC and a bank guarantee (BG) are both bank-issued instruments that provide security for payment or performance obligations, but they differ in legal form, governing rules, and typical usage. An SBLC is structured as a letter of credit, a documentary instrument governed by ISP98 (International Standby Practices) or UCP 600 (Uniform Customs and Practice for Documentary Credits). A bank guarantee is structured as a direct guarantee, typically a demand guarantee governed by URDG 758 (Uniform Rules for Demand Guarantees), published by the ICC. Both instruments are delivered via SWIFT MT760, both are independent from the underlying transaction, and both require the beneficiary to present a compliant demand to receive payment. In practice, SBLCs are more commonly used in the United States and cross-border trade finance, while bank guarantees are more common in Europe, the Middle East, and construction and procurement contracts. The choice between an SBLC and a BG depends on the beneficiary's requirements, the contract terms, the applicable jurisdiction, and the issuing bank's capabilities.

An SBLC and a commercial letter of credit (LC) serve fundamentally different purposes. A commercial LC is a primary payment mechanism, the issuing bank pays the seller (beneficiary) directly upon presentation of compliant shipping and trade documents (bill of lading, commercial invoice, packing list, certificate of origin). The LC facilitates international trade payments, the bank pays instead of waiting for the buyer to pay. An SBLC is a secondary payment mechanism, a standby instrument that is not intended to be drawn upon under normal circumstances. The SBLC is called upon only when the applicant fails to meet the underlying obligation (defaults on payment, fails to perform, or breaches the contract). Commercial LCs are always governed by UCP 600. SBLCs can be governed by ISP98 or UCP 600. Commercial LCs are transmitted via SWIFT MT700. SBLCs are transmitted via SWIFT MT760. Commercial LCs require trade-related documents (shipping documents). SBLCs typically require a written demand statement and any documents specified in the SBLC wording.

An SBLC and a performance bond both serve to secure contractual performance, but they differ in their legal form, issuers, and governing rules. An SBLC is a bank-issued letter of credit governed by ISP98 or UCP 600. A performance bond is a guarantee that can be issued by a licensed bank or a surety company. Performance bonds issued by banks are often governed by URDG 758 (Uniform Rules for Demand Guarantees) or local law, while performance bonds issued by surety companies are governed by the surety bond contract and applicable local regulations. SBLCs are documentary instruments, payment is made against compliant presentation of documents specified in the SBLC terms. Performance bonds may be payable on demand (demand guarantees) or may require proof of the applicant's default (conditional guarantees), depending on the wording. The choice between an SBLC and a performance bond depends on the contract requirements, the beneficiary's preferences, the jurisdiction, and whether the contract specifies a particular instrument type.

An SBLC can be transferable or non-transferable, as specified in the instrument wording at the time of issuance. A transferable SBLC allows the beneficiary to transfer their rights under the SBLC to a second beneficiary, with the consent of the issuing bank. Transfer requires a formal request, compliance with the SBLC terms, and payment of any transfer fees. Assignment of proceeds is a separate concept, the beneficiary can assign the right to receive payment proceeds from the SBLC to a third party without transferring the SBLC itself. Under ISP98, transfer of a standby requires the issuing bank's consent unless the standby states otherwise. Most SBLCs are issued as non-transferable by default. If transferability is required, it must be agreed at the time of issuance and stated in the SBLC wording. The transferring bank may charge a fee for processing the transfer.

When an SBLC reaches its stated expiry date, the issuing bank's obligation to pay ends. The beneficiary can no longer present a demand or draw on the SBLC after the expiry date, even if the applicant has defaulted on the underlying obligation. Any demand or presentation must be made before the expiry date and within the presentation period specified in the SBLC terms. After expiry, the issuing bank updates its records and releases any collateral, cash margin, or credit facility allocation that was held against the SBLC. The release process timeline depends on the issuing bank's internal procedures. If the beneficiary requires continued security after the original expiry date, the SBLC must be extended or renewed before it expires. Some SBLCs include an 'extend or pay' clause, which requires the issuing bank to either extend the SBLC or pay the beneficiary before expiry. The applicant and beneficiary should monitor expiry dates to ensure continued coverage.

Yes, an SBLC can be amended after issuance to change the amount (increase or decrease), the validity period (extension of expiry date), the beneficiary details, the drawing conditions, or other terms specified in the wording. The applicant requests the amendment through the issuing bank. Under ISP98, an amendment is binding on the issuing bank when it is issued, but is only effective when consented to by the beneficiary. The beneficiary can accept or reject the amendment. If the beneficiary does not respond, the amendment remains pending. Under UCP 600, a similar consent mechanism applies. Amendment fees are typically charged by the issuing bank and paid by the applicant. Each amendment is transmitted to the beneficiary's bank via SWIFT. Multiple amendments can be made to the same SBLC during its validity period, as long as each amendment is agreed by all parties.

An SBLC can be drawn when 3 conditions are met simultaneously. First, the applicant has defaulted on the underlying obligation, failed to make a payment, failed to perform under the contract, or failed to meet a specified condition. Second, the SBLC is still within its validity period, the expiry date has not passed. Third, the beneficiary presents a compliant demand with all required documents as specified in the SBLC terms. The drawing conditions are defined in the SBLC wording and typically require the beneficiary to present a written demand statement declaring that the applicant has failed to meet the obligation. Additional documents, such as copies of invoices, delivery notices, or default notices, may also be required, depending on the SBLC terms. The demand must be presented at the place and in the manner specified in the SBLC. Any presentation that does not comply with the SBLC terms may be rejected by the issuing bank.

When the beneficiary presents a demand with compliant documents, the issuing bank examines the presentation against the SBLC terms. Under ISP98, the examination must be completed within a reasonable time, not to exceed 7 business days. Under UCP 600, the examination period is a maximum of 5 banking days. If the presentation is compliant, the issuing bank honours the demand and pays the beneficiary the amount specified in the demand (up to the SBLC amount). If the presentation contains discrepancies (documents that do not match the SBLC terms), the issuing bank issues a notice of dishonour, specifying the discrepancies. The beneficiary may correct the discrepancies and re-present within the validity period. After payment, the issuing bank seeks reimbursement from the applicant under the reimbursement agreement or indemnity signed at the time of SBLC issuance. The SBLC amount may be reduced by the draw amount, unless the SBLC permits multiple presentations or reinstatement.

Yes, SBLCs are used in financing structures as a form of credit enhancement. An SBLC from a rated bank strengthens the borrower's credit profile by providing the lender with bank-backed assurance that the loan or credit facility will be repaid. Lenders accept SBLCs as additional security for loans, credit lines, bond issuances, and other financing arrangements. The SBLC reduces the lender's risk exposure, which may result in more favourable financing terms for the borrower, including lower interest rates, higher loan amounts, or longer repayment periods. SBLCs are also used to secure project finance facilities, trade finance lines, and working capital facilities. The feasibility of using an SBLC for financing depends on the issuing bank's credit rating, the SBLC amount and tenor, the SBLC wording and governing rules, and the lending institution's internal policies and risk appetite.

Monetisation means using an SBLC as collateral to obtain financing. Whether it's possible depends on: the issuing bank's credit rating, the SBLC amount and tenor, the wording and applicable rules, the lending institution's policies, and whether the underlying transaction makes commercial sense. Not all SBLCs qualify, the lender does its own due diligence on the SBLC, the issuing bank, the applicant, and the deal before making any lending decision. We assess feasibility on a case-by-case basis but we don't guarantee monetisation outcomes. Be cautious of anyone who guarantees results or offers unusually high loan-to-value ratios, those are red flags for fraud.

SBLC transactions carry several categories of risk that both applicants and beneficiaries should understand. Issuing bank credit risk means the SBLC is only as reliable as the issuing bank's financial stability, if the issuing bank becomes insolvent, the beneficiary may not receive payment. Documentation and compliance risk arises when the beneficiary's demand does not comply with the SBLC terms, resulting in rejected draws. Wording and presentation risk occurs when the SBLC wording is ambiguous, incomplete, or does not match the underlying contract requirements. Collateral and cost considerations affect the applicant, who must provide collateral or cash margin and pay ongoing fees. Counterparty risk exists when the applicant defaults and the beneficiary must navigate the drawing process. Fraud risk involves fraudulent SBLCs issued by non-existent or unregulated entities. Beneficiaries should always verify the issuing bank's SWIFT code, regulatory registration, credit rating, and financial stability before accepting an SBLC.

Yes. Both applicants and beneficiaries can submit proposed wording for the bank's review. Many beneficiaries, especially government agencies, institutional lenders, and large corporates, have their own standard templates. The issuing bank reviews all proposed wording for compliance with its policies, banking regulations, international standards (ISP98 or UCP 600), and AML requirements. The bank can amend or reject wording that doesn't meet its standards or exposes it to unacceptable risk. Wording negotiation between all parties is a normal part of the process. We coordinate the review to make sure the final wording works for everyone.

No, and be sceptical of anyone who says otherwise. Every SBLC application goes through the issuing bank's independent assessment. They evaluate KYC documentation, creditworthiness, the transaction itself, and the risk profile. Applications can be declined for incomplete documentation, insufficient credit, unacceptable risk, regulatory restrictions, or sanctions issues. We facilitate the entire process, bank selection, application, KYC coordination, and wording review, but the final decision rests with the bank.

Straightforward transactions with complete documentation, a clear contract, and an existing banking relationship can be processed in 5-10 business days. More complex deals, multiple jurisdictions, high values, non-standard wording, or new banking relationships, may take 2-4 weeks or longer. The most common delays come from incomplete documentation, missing KYC info, wording negotiations, or additional bank due diligence. You can speed things up by submitting complete documentation, providing clear transaction details, and responding quickly to bank queries. We coordinate the process to keep delays to a minimum.

An SBLC can be funded through several methods, depending on the applicant's financial position and the issuing bank's requirements. Cash collateral involves depositing cash (typically 100% or a percentage of the SBLC amount) with the issuing bank. Credit facility allocation means the SBLC is issued against the applicant's existing credit line with the bank, reducing the available credit by the SBLC amount. Property or asset collateral involves pledging property, receivables, fixed deposits, or other assets acceptable to the bank. Third-party funding arrangements involve a third party providing collateral or security on behalf of the applicant, subject to the bank's approval. The funding method affects the SBLC's cost structure and the applicant's overall financial position. Cash collateralised SBLCs typically carry lower fees because the bank's risk is fully secured. Credit facility-based SBLCs may carry higher fees but do not require additional cash outlay. The issuing bank determines which funding methods are acceptable for each transaction.

Yes, non-payment under an SBLC is possible in several circumstances. The most common cause is a non-compliant presentation, when the beneficiary's demand and supporting documents do not match the SBLC terms exactly, the issuing bank is obligated to reject the presentation and issue a notice of dishonour. The beneficiary can correct discrepancies and re-present if still within the validity period. Non-payment also occurs when the SBLC has expired, the bank's obligation ends on the stated expiry date. In extreme cases, non-payment can result from the issuing bank's insolvency, regulatory intervention, or sanctions restrictions that prevent the bank from making payment. To mitigate these risks, beneficiaries should carefully review the SBLC terms before acceptance, ensure all documents match the SBLC requirements exactly, present demands well before the expiry date, verify the issuing bank's financial stability and credit rating, and consider requesting confirmation from a second bank.

If the issuing bank becomes insolvent or enters administration, the beneficiary's claim under the SBLC becomes part of the bank's insolvency proceedings. The beneficiary becomes a creditor of the bank, and the claim is subject to the priority rules of the applicable insolvency regime. Recovery may be partial and may take a significant period of time. A confirming bank provides protection against issuing bank failure, when a confirming bank adds its confirmation to the SBLC, the confirming bank provides its own independent payment undertaking. The beneficiary can claim from the confirming bank even if the issuing bank fails. To mitigate issuing bank risk, beneficiaries should assess the issuing bank's credit rating (from agencies such as Moody's, Standard and Poor's, or Fitch), review the bank's financial statements, confirm the bank's regulatory registration, and consider requiring confirmation from a bank in the beneficiary's own jurisdiction.

Verification of an SBLC involves multiple steps. First, verify the issuing bank through its SWIFT BIC code, every bank on the SWIFT network has a unique BIC code that can be verified through the SWIFT directory. Second, verify the bank's regulatory registration with the banking regulator in its jurisdiction (for example, the FCA in the United Kingdom, BaFin in Germany, or the OCC in the United States). Third, check the bank's credit rating through credit rating agencies (Moody's, Standard and Poor's, Fitch). Fourth, verify that the MT760 was transmitted through the SWIFT network by contacting the beneficiary's advising bank directly, the advising bank should authenticate the SWIFT message. Fifth, contact the issuing bank directly through its official website and official contact details (not through contact details provided by the applicant or any third party) to confirm the SBLC reference number, amount, beneficiary details, and validity. Red flags include SBLCs that are not transmitted via SWIFT, banks that do not appear in the SWIFT directory, non-existent bank websites, and pressure to transact without proper verification.

An SBLC follows a standardised format that includes 11 key elements. Applicant details include the full legal name and registered address of the party requesting the SBLC. Beneficiary details include the full legal name, registered address, bank name, bank address, and SWIFT code of the party receiving the SBLC. Issuing bank details include the bank's name, address, and SWIFT BIC code. The SBLC amount and currency specify the maximum amount payable, expressed in a specific currency (USD, EUR, GBP, or other). The purpose and underlying obligation reference the contract, agreement, or obligation the SBLC secures. The SBLC wording is the substantive text that defines the rights, obligations, and conditions of the instrument. The effective date and expiry date define the period during which the SBLC is valid. Demand and claim conditions specify how and when the beneficiary can present a demand. Documentary requirements list the documents the beneficiary must present. Governing rules specify whether ISP98, UCP 600, or other rules apply. Transfer provisions state whether the SBLC is transferable or non-transferable.

A supplier may prefer an SBLC over advance payment for several commercial and financial reasons. An SBLC provides the supplier with bank-backed payment security, the assurance that a licensed bank will pay the supplier if the buyer defaults, without requiring the buyer to transfer cash upfront. This preserves the buyer's working capital and cash flow, which is particularly important for businesses managing multiple projects, inventory, and operational expenses simultaneously. For the supplier, an SBLC from a rated bank is often more reliable than a buyer's promise to pay, especially in cross-border transactions where direct legal recourse may be difficult. An SBLC is independent from the underlying contract, meaning the bank's obligation is based on the SBLC terms, not on disputed contract performance. Additionally, an SBLC does not create a refund risk, unlike advance payments, which may need to be returned if the contract is terminated or modified. Suppliers in construction, commodity trade, and manufacturing frequently require SBLCs as standard practice in their contracts.

No, an SBLC is not a loan. No funds are disbursed to the applicant when an SBLC is issued. The applicant does not receive money, does not make repayments, and does not pay interest on a borrowed amount. An SBLC is a contingent liability, the issuing bank commits to paying the beneficiary only when the applicant defaults on the underlying obligation. If the applicant fulfils the underlying obligation (makes the payment, completes the project, delivers the goods), the SBLC is never drawn upon, and no payment is made by the bank. The applicant pays issuance fees for the bank's commitment, similar to a guarantee fee, but this is not a loan repayment. An SBLC does, however, affect the applicant's credit capacity, the SBLC amount is typically allocated against the applicant's credit facility with the issuing bank, reducing the available credit for other purposes. If the SBLC is drawn upon and the bank pays the beneficiary, the bank seeks reimbursement from the applicant, at that point, the applicant owes the bank the drawn amount.

Yes, SBLCs are regulated at multiple levels. At the national level, SBLCs are subject to the banking regulations of the issuing bank's jurisdiction. The issuing bank must be a licensed banking institution regulated by the national banking authority, such as the Financial Conduct Authority (FCA) in the United Kingdom, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) in Germany, the Office of the Comptroller of the Currency (OCC) in the United States, or the Monetary Authority of Singapore (MAS). Banks must comply with capital adequacy requirements, anti-money laundering (AML) regulations, know-your-customer (KYC) requirements, and international sanctions regimes. At the international level, SBLCs are governed by standardised rules, ISP98 (International Standby Practices) or UCP 600 (Uniform Customs and Practice for Documentary Credits), which establish the framework for issuance, amendment, presentation, examination, and payment. The combination of national banking regulation and international rules provides a structured, regulated framework for SBLC transactions.

URDG 758 (Uniform Rules for Demand Guarantees, 2010 Revision) is published by the International Chamber of Commerce (ICC) and is the primary international rule set for demand guarantees, commonly known as bank guarantees. URDG 758 provides a standardised framework for the issuance, amendment, presentation, examination, and payment of demand guarantees. URDG 758 primarily governs bank guarantees (BGs), not SBLCs. SBLCs are governed by ISP98 or UCP 600. However, in some jurisdictions and transactions, an SBLC may be structured as a demand guarantee and may reference URDG 758 as the governing rules. URDG 758 establishes that a guarantee is independent from the underlying transaction, that the guarantor must examine a presentation within 5 business days, and that the guarantee expires on the stated expiry date. The key difference between URDG 758 and ISP98 is that URDG 758 is designed for guarantees while ISP98 is designed for standbys, though both instruments serve similar commercial purposes.