D/P Drafts At Sight

[jasmine]

Hi Pals,

Is it a common practice now for Collection Bills at D/P Sight to be presented without Drafts?Any particular reason or difference between D/P Sight bills presented with or without Drafts?

Thank you for your comments.

[picant]

Hi Pal,

draft or better bil is the tipical way to give the buyer a sort of receipt for the money he pays. In my Country due to fiscal duties it is better to avoid such practice when it is not necessary. So in D/P at sight documents are enough, naturally in usance draft, specially when accepted, the draft will be discounted may be the fiscal duty will be repay by a lower discount rate vs advance on invoice.
Other comments appreciated
Ciao

[leekaiyin55]

Dear Friends,

The spirit of D/P is to "release documents against payment". Draft is excessive in the sense that it plays no value-added to the txn. That's why it is more common that D/P transaction is absent of draft. It happens the same to LC transaction wherein payment LC calls for no draft.

Thank you.

[vinodkoli]

Collection means handling of the documents(financial or commercial) by banks, in accordance with instructions received, in order to:
Obtain payment and/or acceptance
Deliver documents against payment and/or against acceptance (D/P, D/A)
Deliver documents on other terms and condition

Documents against payments: Documents are realized to the buyer once he honors a sight bill of exchange issued by the seller and makes immediate payment to the seller.

Draft is additional security to the transaction.