Payment commission

asamaha · Post by **asamaha** » Thu Feb 05, 2015 12:00 am

Is an Issuing bank allowed to charge a payment comm for drawings under sight LCs like the usance comm for term LC drawings
Thanks & Regards
Antoine

JudithAutié · Post by **JudithAutié** » Thu Feb 12, 2015 12:00 am

It depends on the credit terms. If the credit states "Issuing bank commissions are for beneficiaries" of course they can. Most credits have IB charges for Applicant and all other charges for Beneficiary. In that case, I would say that IB should not claim a payment commission.

asamaha · Post by **asamaha** » Thu Feb 12, 2015 12:00 am

Regardless of who will bear the charges, is an issuing bank allowed to perceive a payment commission for each drawing under a sight payment credit in addition to the issuance commission.
Regards
Antoine

JimBarnes · Post by **JimBarnes** » Mon Feb 16, 2015 12:00 am

An LC issuer that undertakes to pay the beneficiary must, absent an unusual provision in the LC, honor its LC obligation without delay or deduction.

The issuer also has a separate agreement with the applicant that would typically provide for immediate reimbursement plus interest for late reimbursement and/or an agreed fee in addition to or in lieu of interest for any drawing received. That issuer-applicant agreement may also provide for a commission or fee based on the amount of the issuer's exposure under the LC over time, including the time after LC expiry until the issuer duly honors by payment.

Maybe local law or practice will provide for a drawing fee or a post-expiry commission based on continuing exposure under an LC absent agreement, but that is not something I see in the US.

Regards, Jim Barnes