Article 9 d of UCP 600 states
"A bank utilizing the services of an advising bank or second advising bank to advise a credit must use the same bank to advise any amendment thereto.”
What does the issuing bank do if the advising bank is not available for any reason, if they cannot or will not advise the amendment?
Advising An Amendment
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Finance
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shahriar
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find a new advising bank!
These are some of the scenerios for which UCP has no answe. I mean you can go to court and sue the advising bank. But when an advising bank does so, there probably a strong reason to defend.
So best idea is to find a new advising bank and make sure that the beneficiary gets the amendment. Also notify the previous advising bank about your decision.
I have a question... What are the consequences if the issuing bank violate this rule?
So best idea is to find a new advising bank and make sure that the beneficiary gets the amendment. Also notify the previous advising bank about your decision.
I have a question... What are the consequences if the issuing bank violate this rule?
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nraajesh
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Advise thru' bank
Hello,
To answer the first question:
The ideal or the best banking practice in such a scenario for an issuing bank is
a) To find a new advising bank (as stated by Shahriar)
b) To get the confirmation from the previous advising bank stating that they had treated the transaction (LC and Amendment) null and void.
c) To advise another original of the LC (with a possible duplication clause) to the new advising bank along with the amendment
To answer Shahriar's question:
If the bank violates the rule in UCP (indirectly not following the above steps too), there's a possibility of two LCs floating in the market which would probably result in fraudulent transaction. This is jus a macro view... though there are lots of risks if two LCs float in the market.
Regards,
Rajesh
To answer the first question:
The ideal or the best banking practice in such a scenario for an issuing bank is
a) To find a new advising bank (as stated by Shahriar)
b) To get the confirmation from the previous advising bank stating that they had treated the transaction (LC and Amendment) null and void.
c) To advise another original of the LC (with a possible duplication clause) to the new advising bank along with the amendment
To answer Shahriar's question:
If the bank violates the rule in UCP (indirectly not following the above steps too), there's a possibility of two LCs floating in the market which would probably result in fraudulent transaction. This is jus a macro view... though there are lots of risks if two LCs float in the market.
Regards,
Rajesh