Credit available by Negotiation

svishu · Post by **svishu** » Wed Dec 16, 2009 12:00 am

Is there any restriction on issuing a credit available with a nominated bank by sight payment , wherein no reimburement authority is provided to claim the funds?

NigelHolt · Post by **NigelHolt** » Wed Dec 16, 2009 12:00 am

I cannot imagine a nominated bank would be willing to act under a credit stated to be available with it by ‘sight payment’ (as opposed to negotiation) if there was no means for it to obtain simultaneous reimbursement at the time of making payment.

svishu · Post by **svishu** » Wed Dec 16, 2009 12:00 am

If the credit is an unconfirmed one and the issuing bank's reimbursement states " on receipt of credit conforming documents we shall remit as per your instructions " would it be a problem ?

GlennRansier_ · Post by **GlennRansier_** » Wed Dec 16, 2009 12:00 am

The answer will vary from bank to bank. If a LC states the suggest reimbursement clause, the beneficiary will be expected to pay negotiation commission for a large number of days to allow time for the nominated nego. bank to send the documents to the issuer and time for the issuer to review and find them in compliance. The beneficiary may not be willing to do so. Additionally, each bank makes it own decisions as to whether or not they will "negotiate" an unconfirmed LC. Some may accept this reimbursement clause while others will not. Some may accept the clause only for beneficiaries it has a good relationship with.

NigelHolt · Post by **NigelHolt** » Thu Dec 17, 2009 12:00 am

If the credit is available by SIGHT PAYMENT with the nominated bank I am certain it would be a problem. If the credit is available by NEGOTIATION -and therefore with any drafts not being drawn on the nominated bank- this is the norm and therefore it would not, in principle, be a problem.
[edited 12/17/2009 12:27:26 PM]