The Standby Credit is a Documentary Credit or similar arrangement, however named or described, which represents an obligation to the Beneficiary on the part of the Issuing Bank to:

[1]  repay money borrowed by the applicant, or advanced to or for the account of the applicant.

[2] make payment on account of any indebtedness undertaken by the applicant.

[3] make payment on account of any default by the applicant in the performance of an obligation.

The difference in application between the commercial documentary credit and the standby credit is that the commercial documentary credit is activated by the ‘performance’ of the beneficiary whereas the standby credit supports the beneficiary in the event of a ‘default’ on the part of the applicant.