THE LEGAL PERSPECTIVE ON STRENGTHENING THE PRACTICE OF BANK GUARANTEES IN INDONESIA: REVISITING THE PROVISIONS RELATED TO PAYMENT

Ramlan Ginting ()
Additional contact information
Ramlan Ginting: Banking Law Consultant, Indonesia

Journal of Central Banking Law and Institutions, 2022, vol. 1, issue 2, 215-236

Abstract: This Article provides the legal perspective of the transaction of bank guarantees in the banking practice in Indonesia. It examines the provisions related to payment for bank guarantees by comparing the provisions related to payment for the bank garansi and that of the standby letter of credit or demand guarantee. The work shows that the bank garansi is dependent guaranty, whereas the standby letter of credit or demand guarantee is independent guaranty. The payment for the bank garansi is based on the actual default, whereas the payment for the standby letter of credit or demand guarantee is based on the statement of default. The primary obligation to pay for the bank garansi is that of the issuing bank or guaranteed party, while the primary obligation to pay for the standby letter of credit or demand guarantee is that of the issuing bank. And, as to the international counter guarantee, the conflicting provisions arise when it is asking the bank garansi as the domestic bank guarantee. The banks, companies and government agencies involved in the transaction of bank guarantees are encouraged to understand the implication of these findings and further prepare the appropriate solution.

Keywords: bank garansi; standby letter of credit; demand guarantee; counter guarantee; international rules (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://jcli-bi.org/index.php/jcli/article/view/16/12 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idn:jclijn:v:1:y:2022:i:2b:p:215-236

DOI: 10.21098/jcli.v1i2.16

Access Statistics for this article

Journal of Central Banking Law and Institutions is currently edited by Dr. Arie Afriansyah

More articles in Journal of Central Banking Law and Institutions from Bank Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Sudiro Pambudi () and R. Dwi Tjahja Kusumo Wardhono ().