Hi all,
Scenario:
Mr.X, a customer of bank ABC, approaches his back to issue a SBLC.....for $100,000 and it is revolving every year(cumulative) for 5 yrs.Kindly clarify on the limit to be blocked on customer's liability.....ie $100,000 or $500,000. Please explain the reason too.
Regards
SRN
Blocking customer liability
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srini.sri4u
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leekaiyin55
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Blocking customer liability
Dear Picant
It should be booked for liability $500,000 in 1st year with reducing $100,000 yearly for subsequent 2nd, 3rd and 4th year till it is expired on expiry date in 5th year. Supposing that there is no drawing in between and SBLC is governed by either UCP600 or ISP98.
Reason: SBLC is irrevocable in nature in the sense that the issuing bank can discharge itself without the consent of the beneficiary and/or confirming bank, if any.
Thank you.
It should be booked for liability $500,000 in 1st year with reducing $100,000 yearly for subsequent 2nd, 3rd and 4th year till it is expired on expiry date in 5th year. Supposing that there is no drawing in between and SBLC is governed by either UCP600 or ISP98.
Reason: SBLC is irrevocable in nature in the sense that the issuing bank can discharge itself without the consent of the beneficiary and/or confirming bank, if any.
Thank you.