Is Issuing Bank Always A Transferring Bank Under UCP600

[shahriar]

dear all,

is the issuing bank always a transferring bank?

regd

shahriar

[nesarul]

Dear Shahriar,
Lets analysis the issue.

If one looks into sub article 38(b) definition of transferring bank:
"Transferring bank means a nominated bank that transfers the credit or, in a credit available with any bank, a bank that is specifically authorized by the issuing bank to transfer and that transfers the credit. An issuing bank may be a transferring bank. [Emphasis added].

Here the definition of transferring bank provides us some insight meaning: this definition consists of three sentences with an objective to cover the three situations as under"

= Where a transferable credit is available with a particular nominated bank, this NB is a transferring bank. This first line is applicable where availability of a credit is restricted to a particular bank [other than issuing bank]

= A specific authorization is required when credit is freely available. In other words, where credit is freely available, the second sentence is applicable.

= The third sentence is applicable in above two cases along with where credit available with the issuing bank only.

The third sentence is nothing but upheld the principle of UCP mentioned in sub article 6(a) i.e. a credit is always available with the issuing bank. [Emphasis added]

The above cogent is further amplified by starting sub article 38(a) with the word " A bank" such as:
"A bank [emphasis added] is under no obligation to transfer a credit except to the extent and in the manner expressly consented to by that bank"

Here this article purposively starts with the word "a bank"[emphasis added] rather than "a transferring bank". Here the word "a bank " [emphasis added] included issuing bank also.

Hence we can conclude that an issuing bank is always transferring bank [either explicit or implied] but it is not obligated to act accordingly.
regards
nesar

[shahriar]

dear nesar,

nice answer. truly appreciated. however i have a weak protest to make. UCP 600 says

Transferring bank means a nominated bank that transfers the credit or, in a credit available with any bank, a bank that is specially authorized by the issuing bank to transfer and that transfers the credit. An issuing bank may be the transferring bank.

so a bank becomes a transferring bank only when it transfer a credit. since there cannot be two transferring bank in operation, if the nominated bank transfer a credit once, the issuing bank loses its ability to transfer that credit. whats your opinion?

regd

shahriar