March 25, 1976
CBP MEMORANDUM
| TO | : | All Commercial Banks |
| SUBJECT | : | Domestic Stand-by L/Cs |
The Monetary Board, in its Resolution No. 318 dated February 13, 1976, approved the following guidelines under which domestic stand-by letters of credit may be issued or used in transactions other than those involving movement of goods: dctai
a. The bank's obligation to pay shall be either unconditional (as against presentation of clean draft) or conditional only upon the presentation of documents and not upon actual existence or non-existence of facts; i.e., the bank must not be called upon to determine disputed questions of fact or law;
b. The bank's obligation shall be limited to a fixed maximum amount;
c. The bank's obligation shall have an express expiration date;
d. The stand-by of credit accommodation shall not violate, nor shall drawings against it result in violation of, any law or existing CB directives, rules and regulations; provided, however, that the total amount of the L/C to be opened shall not exceed an amount equivalent to fifteen per cent (15%) of net worth; and provided further that:
i. If...
