Meaning Of Back Value Date In URR725

[saeef]

Art 11b under urr 725 stated that a RB will not precess a request for back value (valur dating prior to the date of a reimbursment claim) from the claiming bank.
Any one can explain me the meaning of back value of this article.
Cooperation appreciated.

Saeef ahmed

[abrar]

An example of back value dating might be where the claiming bank submits a claim on 7.6.13 but requests payment for value date 5.6.13. If the reimbursing bank were to agree to this, it would effectively mean that the debit to the issuing bank's account would be made for 5.6.13 and applied to the claiming bank's account for value date 5.6.13 (even though the entry date would remain as 7.6.13 on both accounts).

It should be noted that unless otherwise authorised in the issuing bank's reimbursement authority, the reimbursing bank would not be authorised to "back value date" debit entries to the issuing bank's account. If the reimbursing bank were to back value date the debit and payment, for the the issuing bank there would be a negative interest impact and for the claiming bank there would be a positive interest impact.

[saeef]

Thank u Mr abrar gor ur nice example. I think I hv got the point.

[dinesh2476]

Dear Abrar,

Kindly elaborate the below quoted

If the reimbursing bank were to back value date the debit and payment, for the the issuing bank there would be a negative interest impact and for the claiming bank there would be a positive interest impact.

Regards
Dinesh

[abrar]

Dear Abrar,

Kindly elaborate the below quoted

If the reimbursing bank were to back value date the debit and payment, for the the issuing bank there would be a negative interest impact and for the claiming bank there would be a positive interest impact.

Regards
Dinesh

I mean to say that if the issuing bank maintans an account with the reimbursing bank which pays interest, a back value debit to the issuing bank's account would result a downward adjustment of the interest accrued on the issuing bank's account. Similarly, if the claiming bank were to receive reimbursement for a value date earlier than the date of its settlement to the beneficiary, taking into account the net cashflow, this would reflect as a positive interest variance as regards its account with its nostro.