Bank A being an issuing bank requests Bank B to advise and confirm a term L/C to the beneficiary.
L/C is available with Bank B by acceptable, and draft drawn on Bank B (the Confirming Bank).
Is there any problem with this structure, especially drawee is not a issuing bank ?
Can Bank B discount the bill presented by the beneficiary, before sending it to the issuing bank ?
Shahed
Toronto
Drawee Bank
Drawee Bank
Bank B is a nominated bank per UCP600 definition. Whether or not Bank B confirms, the beneficiary may present to Bank B its time draft drawn on Bank B. If Bank B accepts that draft, it could prepay or purchase it per UCP600 Art 12 (and 7c).
The beneficiary may by-pass Bank B and present its draft drawn on Bank A to Bank A. I think UCP600 allows for direct presentation to Bank A, and presentation to either A or B would toll expiry UCP600 Art 6d. What this LC and UCP600 do not permit is presentation to Bank B of a draft drawn on Bank A that Bank B may accept or “negotiate”. Bank B could forward the presented draft but would not be nominated to give value and claim reimbursement
Regards, Jim Barnes.
The beneficiary may by-pass Bank B and present its draft drawn on Bank A to Bank A. I think UCP600 allows for direct presentation to Bank A, and presentation to either A or B would toll expiry UCP600 Art 6d. What this LC and UCP600 do not permit is presentation to Bank B of a draft drawn on Bank A that Bank B may accept or “negotiate”. Bank B could forward the presented draft but would not be nominated to give value and claim reimbursement
Regards, Jim Barnes.
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HOANGTHIANHTHU_invalid
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Drawee Bank
Hi Shahed,
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Sub-article 12 (b) allows the nominated bank to discount (i.e., prepay or purchase) the draft that it has accepted or the deferred payment undertaking that it has incurred.
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So, I say yes to your question. If the documents prensented by the beneficiary comply, Bank B as confirming bank must accept the draft and it can discount its own accepted draft at any time including before forwarding the documents to the issuing bank.
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Kind regards,
N.H.Duc
[edited 7/28/2015 11:12:06 AM]
.
Sub-article 12 (b) allows the nominated bank to discount (i.e., prepay or purchase) the draft that it has accepted or the deferred payment undertaking that it has incurred.
.
So, I say yes to your question. If the documents prensented by the beneficiary comply, Bank B as confirming bank must accept the draft and it can discount its own accepted draft at any time including before forwarding the documents to the issuing bank.
.
Kind regards,
N.H.Duc
[edited 7/28/2015 11:12:06 AM]