Nominated Bank Insisted For Fund On With Recourse Basis

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he123
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Nominated Bank Insisted For Fund On With Recourse Basis

Post by he123 » Tue Jul 23, 2013 11:25 am

Condition under L/C
1.The mechanism under this is: Field 47b sub field 10: Through the tenor of the L/C is 180 days sight negotiating bank will pay up front at sight basis to beneficiary the value of documents provided that L/C conditions of fully complied with. Discounting interest is on account of applicant at LIBOR+ 80 BPS points.
2. Issuing bank: BNXXX,LONDON, Available with by: BNXXX, NEW DLEHI Advise by: BNXXX, NEW DELHI
Negotiating bank Confirm and paid to beneficiary
1. Documents presented on 30.04.13 to NB
2. NB had given confirmation: Documents are complying as per UCP 600.
3. NB dispatch documents to issuing bank on 30.04.2013 & reached at issuing bank counter on 02.05.13, issuing bank verify as independent authority and confirmed on 08.05.13 stating presentation is comply and advise maturity date on 08.05.13 to NB.
As per Mr. Abrar comment, I Agree and raise point to NB, as below:
It is important to note that the payment from the issuing bank to the NB is separate from the payment from the applicant to the issuing bank, as the NB is taking on the risk of the IB, Even the L/C was not confirmed by NB, and it is the obligation of the issuing bank to pay the NB from its own funds even if payment is never received from the applicant.
View is that recourse in the event of non-settlement should be exercised by the NB against the IB rather than on us.

My question needs more clarification:
I raised question to NB stating that, now the fund is without recourse, on the basis of above explanation, because IB also given confirmation documents and fully comply as per terms and condition of L/C. Now you don’t have any recourse on us. Interest is your own.

I received reply from NB, NB is saying, your fund is on with recourse basis,
Could you please explain still what kind of recourse NB is talking about?

IJTUDU
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Nominated Bank Insisted For Fund On With Recourse Basis

Post by IJTUDU » Fri Aug 02, 2013 12:41 pm

Art 12 (a) of UCP 600 states "Unless a nominated bank is the confirming bank, an authorization to honour or negotiate does not impose any obligation on that nominated bank to honour or negotiate, except when expressly agreed to by that nominated bank and so communicated to the beneficiary." The agreement of NB must be communicated to the beneficiary and, unless this has been done, the beneficiary should not rely on the nomination as a definitive obligation on the part of a NB that has not confirmed the DC. Unless the NB is also the confirming bank, any settlement received by the beneficiary may well be "with recourse" to the beneficiary.

Art 8 (a.vii) of UCP 600 - Confirming Bank Undertaking - after a complying presentation, the confirming bank must negotiate, "without recourse", if the credit is available by negotiation with the confirming bank.

Regards,

Isaac

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