The applicant controls the data input in the document after negotiation with the beneficiary II) The applicant/ buyer stipulates the nature and data to be mentioned in the documents. The applicant/ buyer stipulates the nature of instruments to be presented and the terms and conditions of the contract with the beneficiary/ seller I) The applicant/ buyer stipulates the exact nature of documents to be presented by the beneficiary/ seller to the bank for claim of payment. On payment by applicant to the bank, his liability towards the bank fulfilled to the extent the amount utilised in the Letters of Credit issued by the bank.ĪDVANTAGES OT LETTERS OF CREDIT TO APPLICANT the applicant/ buyer through Letters of Credit effectively control over various critical areas of International trade operations as NEGOTIATING BANK CLAIM if the documents presented to the issuing bank comply or in accordance with the terms of credit or contract, then claim of negotiating bank should be honoured.ĪPPLICANT REIMBURSE TO THE BANK the applicant account is debited by the issuing bank with the negotiated amount as well as all types of charges leviable for issue of LC.ĭELIVERY OF DOCUMENTS TO BUYER the documents released to the applicant against immediate payment or against acceptance of time draft (in case of bill, payable at maturity). If documents contain discrepancies, the issuing bank may, in its sole judgment, approach the applicant with full details of discrepancies for waiver. The Nominated Bank claims reimbursement as per terms of the credit.ĮXAMINATION BY ISSUING BANK on receipt of the documents, issuing bank examines documents for compliance with terms of credit. NEGOTIATION, ACCEPTANCE, PAYMENT the Nominated Bank accepts, negotiate or honours documents as per credit terms, if documents comply or discrepancies (if any) are approved by the issuing bank.įORWARDING DOCUMENTS AND CLAIMING REIMBURSEMENT the negotiated documents are forwarded to the issuing bank or the confirming bank (as applicable). If rectification made it must be within credit period. ![]() ![]() The communication should be sent as per Rule 16(c) of UCP 600. SHIPMENT OF GOODS The beneficiary / seller shipped the specified goods before the last date as mentioned in the contract, subject to LC.ĭOCUMENTS TO NOMINATED BANK the beneficiary presents complying documents to the nominated bank for negotiation or for acceptance or for payment as per terms of LC, within the last date for presentation.ĮXAMINATION OF DOCUMENTS before acceptance or payments, the documents submitted by the beneficiary shall be examined by the negotiating bank, to ensure that the presenting documents are accordance with the terms of contract.ĭISCREPANCIES IN THE DOCUMENTS if any defect or discrepancy found in the complying documents, the nominated bank may refuse to negotiate or accept the presentation. UTILISATION OF LETTERS OF CREDIT there are various stages from shipment of goods and / or provisions of services till the payment received by the seller / beneficiary In this article we are going to discuss utilisation of Letters of Credit and its advantages / disadvantages ![]() Read- Letters of Credit (LC): Basic Concepts – Part I The UCP 600 Rules and its provisions have been adopted by majority of countries as Code of Conduct of International Transactions. The UCP 600 Rules have been adopted by many countries, though these rules are not enforceable in any state or country. ![]() Dear friends we have discussed regarding types of Letters of Credits and international rules and regulations applicable in my previous article.
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