Normally we don't pay any importance of Bill of Exchange of L/Cs opened under sight but we always need Bill of Exchange for usance L/Cs. My question is why Bill of Exchange is important under usance L/Cs.
Shahed
Bill of Exchange
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HOANGTHIANHTHU_invalid
- Posts: 189
- Joined: Fri Apr 05, 2019 5:15 pm
Bill of Exchange
Hi,
Under a deferred payment L/C (no draft is required) only the nominated bank is authorized to negotiate/discount the deferred payment undertaking incurred by that nominated bank. In practice, deferred payment L/C is normally available with the issuing bank, hence, the beneficiary seems to be unable to obtain the payment in advance by discounting the issuing bank’s deferred payment undertaking but would wait until the payment is due.
Under an acceptance L/C, the time draft accepted by the issuing bank or by the nominated bank would become an independent financial instrument which can be discounted by any bank or traded in the forfaiting market.
That is one of the reasons why wise exporters would prefer acceptance L/Cs to deferred payment L/Cs.
Best regards,
N.H. Duc
[edited 8/8/2009 5:32:54 PM]
Under a deferred payment L/C (no draft is required) only the nominated bank is authorized to negotiate/discount the deferred payment undertaking incurred by that nominated bank. In practice, deferred payment L/C is normally available with the issuing bank, hence, the beneficiary seems to be unable to obtain the payment in advance by discounting the issuing bank’s deferred payment undertaking but would wait until the payment is due.
Under an acceptance L/C, the time draft accepted by the issuing bank or by the nominated bank would become an independent financial instrument which can be discounted by any bank or traded in the forfaiting market.
That is one of the reasons why wise exporters would prefer acceptance L/Cs to deferred payment L/Cs.
Best regards,
N.H. Duc
[edited 8/8/2009 5:32:54 PM]