BENIFIT FOR THE APPLICANT
BENIFIT FOR THE BENEFICIARY
the part of the doc.credit concerning reimbursement instructions is not a part for all parties involved. Such instruction is only for banks, the bad habit to attach the whole swift message to doc.credit advice brought to this behaviour. See broch 515(valid for ucp 500, ok) difference between advice for beneficiary and advice for advising bank form.
In letter of credit (L/C) arrangements, the reimbursing bank is the bank that serves as A SOURCE OF FUNDS for PAYMENT to the l/c’s beneficiary.
Upon presentation of credit conform documents nominated/confirming bank would need to pay the beneficiary and claim reimbursement from reimbursing bank or issuing bank.
Upon stipulating a reimbursing bank (which is different from the issuing bank in the letter of credit), previous arrangements are made to reimburse the nominated/confirming bank. If documents are considered conform by the nominated/confirming bank a reimbursement claim will be presented to the reimbursing bank. Reimbursing banks have a reasonable time, not to exceed three banking days following the day of receipt of the reimbursement claim, to process claims.
If no reimbursing bank has been indicated, the nominated/confirming bank will have to wait until issuing bank pays the documentary remittance. Traveltime of the documents 2 days + Issuing bank has 5 days to examine the documents, this makes that the payment can be delayed with 7 banking days.
Nominated/confirming bank will mostly pay the beneficiary with the same value as they received or will receive the money. The sooner the claiming bank can receive the money, the sooner beneficiary will be paid.