How to handle drafts when Lc allows TT reimburse

[Mickhon2013]

Dear All,

Appreciate your input on the following questions. The scenario is as follows:

MT700 Issue of an L/C From Bank X

Lc field 42c : Drafts at Sight
Lc field 41D : available with any bank by payment
Lc field 42A (drawee) : Bank Y
Lc field 47A : TT reimbursement is allowed
Lc field 53A (Reimbursing bank) : Bank Y

LC requires drafts drawn at sight on the reimbursing bank - Bank Y, while the LC also allows TT reimbursement from Bank Y.

Presumably the nominated bank forwarded the documents to Issuing bank upon compliant presentation and proceeded to TT claim reimbursement from Bank Y.

Question: should the drafts be sent together with documents to issuing bank?

Or, should the drafts be sent to reimbursing bank - Bank Y at the same time as TT claim?

Or, drafts are not required in this case?

Big thanks in advance for your advise.

[picant]

Hi Pal,

in this case I will keep draft on reimbursing bank as support for TT and send it to reimbursing bank if no RMA or testkey with the latter. DHL or other express courier cost 25/30 Euros and reach reimbursing bank in two/three days.(stamp duties permitting)
Other comment appreciated
Ciao

[Navi]

This is an SIGHT payment LC available by PAYMENT and why draft required and why on reimbursing bank?
If I were beneficiary's bank, I would keep draft in my files. I do not think reimbursement bank will request it or accept it.
I would proceed without draft. I always say, unnecessary and pointless terms makes LC life harder.

[MinhNguyen]

Since the credit is Available by Payment. There should be no draft required. The credit is badly issued.
I do not know if the credit was made subject to URR725, but if it did, then according to URR725 Art 9(c):
"An issuing bank should not require a sight draft to be drawn on the reimbursing
bank."
.
In this situation, the Nominated bank may choose to keep the draft on their own and send their claim through Swift to Reimbursing bank. Otherwise, If there is no RMA between these banks, Nominated bank may send Draft and claiming letter to Reimbursing bank by courier services which need further instruction from reimbursing bank.

[Mickhon2013]

Thanks for all the comments. I agree that the LC should not have been issued with drafts requirement in the first place due to the availability.