acceptance of a draft

[GAMZEODABASI]

ýf the collection instruction indicates that the collecting bank may deliver documents against the drawee's acceptance of a tenor bill of exchange, does the collecting bank has a liability to keep the bill of exchange in his hands after the acceptance of the bill of exchange and delivers the documents to the drawee?

[larryBacon]

It is presumed that we are considering details of a collection under URC 522. Under such rules, if the collecting bank delivers documents against endorsement of a term draft, this accepted draft is valid proof of indebtedness of the drawee(importer) to the collecting bank. Such proof usually stands up as an "open and shut case" in court. Therefore the collecting bank should treat such prima facie evidence with the value it deserves and retain it securely until the debt has been discharged in full.

Laurence A. J. Bacon

[PGauntlett]

The collecting bank should act in accordance with the instructions given by the remitting bank. In similar circumstances we say to the collecting bank: 'Documents to be released to drawee against acceptance of the Bill of Exchange which please retain and re-present for payment at maturity'.
Having handled collections for a number of years I would say that this is standard banking practice (Art 4ai of URC522 refers).
Banks, however, are not bound by instructions and may invoke ART 1b (and then follow ART 1c)

[AbdulkaderBazara]

Agree, the practice is to retain the accepted draft and re-present it to the drawee for payment within a reasonable time before maturity unless the collection instruction requires the accepted draft be returned to the remitting bank. If the collecting bank elects not to follow the collection instruction it must advise the remitting bank in accordance with article 1(c).
[edited 5/25/01 9:29:57 AM]

[T.O.Lee]

When we put our hard-earned savings into a bank in exchange of a passbook, we feel quite comfortable because a bank gives us a feeling of security.

Then why should we not let the collecting/presenting bank keep the accepted drafts under lock and key and then present it for payment upon maturity?

This "green" banking practice is environmental friendly by using less eneregy and helps to reduce pollution. From business sense point of view, it saves a lot of costs as well.

The collecting/presenting bank is held responsible without charging a fee for timely presentation for payment upon maturity and presentation can be faster by a local bank.

This is similar to the situation of parking your car in your neighbour's carpark rent free and your neighbour is willing to be held responsible for the security of your car and in case it is stolen you can claim on your neighbour. Can you find a better deal than this?

I think those banks that start charging for discrepancies may consider charging for such additional services.

I am from www.tolee.com

[edited 12/15/01 8:53:12 PM]