Bank A issued a MT700 in favour of Bank B with a request to Bank B to issue another MT700 in favour of Bank C without mentioning the name of Bank A and its country.
Reimbursement instruction to the payment bank in the 1st L/C authorise Bank B to claim reimbursement from the reimbursing bank in case of clean presentation. However, in the event of presentation of documents with discrepancy(s) Bank B need to have approval from Bank A prior to pay.
Is there any problem from UCP's point of view to issue a new L/C (MT700) against an L/C (MT700) issued by Bank A ?
Need to mention there is no Service level agreement exist between Bank A and Bank B to issue such L/C by Bank B against the L/C issued by Bank A.
Regards,
Shahed
Back to back L/C
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GlennRansier_
- Posts: 132
- Joined: Fri Apr 05, 2019 5:19 pm
Back to back L/C
You will have two separate and distinct instruments that may or may not have all the same terms, conditions and documentary requirements. There are many things that can go wrong so you will need to exercise caution. Because it is two separate instruments, I suggest that you obtain some form of legal document from the bank that is requesting you to issue the second LC that is similar to your LC application and reimbursement agreement.