Issuing bank definition in URR 725

[dholat]

Dear all,

in URR 725, the issuing bank is defined as

"Issuing bank" means the bank that has issued a credit and the reimbursement authorization under that credit.

i would like to know whether the confirming bank can issue a reimbursement authorization? if yes how we should explain it under this definition of URR 725

[iLC]

my answer is no, a confirming bank cannot issue a reimbursement authorization. because a reimbursement authorization is likely to be supported by a reimbursement clause in the letter of credit. and a letter of credit is issued by the issuing bank and the confirming bank has no authority to insert or amend a new clause. besides a confirming bank is, as in most cases, a nominated bank who seeks reimbursement from the issuing bank. so there is no reason for a confirming bank to issue a reimbursement authorization. however please dont mix reimbursement authorization with reimbursement instruction. if the document is presented to the confirming bank then of course it will have to issue a payment instruction unless the presenting bank has already claimed the fund from the reimbursing bank as mentioned in the original credit.