Dear experts,
Our issued L/C is expired on 25/8/2016- 1 months until now. We closed this L/C in our system and also inform this matter to our customer- applicant. I would to like to ask two cases:
+ do we need to inform this closing to the beneficiary?
+ what will we do if the beneficiary continue to present their docs to claim for the 10% tolerance in L/C amount ?
Your reply is appreciated.
Closing Expired LC With Beneficiary's Consent
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dodo
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picant
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Expiry-where?
Hi Pal,
Place of expiry is, in this case, very important to close l/c.
If it s by you, issuing bank, that is ok. otherwise you have to ask the advising bannk about the status, even if one month is elapsed. If the l/c has been regulated and only tolerance 10% remains, IMHO, the l/c has been fully availed.
Ciao
Place of expiry is, in this case, very important to close l/c.
If it s by you, issuing bank, that is ok. otherwise you have to ask the advising bannk about the status, even if one month is elapsed. If the l/c has been regulated and only tolerance 10% remains, IMHO, the l/c has been fully availed.
Ciao
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CristianD
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Expiry
I think 1 month until now is suffice to determine that the place of expiry is no longer relevant.
+There is no need to inform beneficiary, the know from the advising time when the credit expires
+ Further presentations after expiry date would be rejected as there is no longer authorization from the applicant to honor such presentation even if is within credit amount
Regards
C
+There is no need to inform beneficiary, the know from the advising time when the credit expires
+ Further presentations after expiry date would be rejected as there is no longer authorization from the applicant to honor such presentation even if is within credit amount
Regards
C
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gondem
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You don't have to inform to beneficiary. I mean it depends on your bank policy but It is the beneficiary's responsibility to follow up the deadlines. If they still make a presentation under the expired l/c, you have no responsibility and obviously you will reject. Because, technically, there is no l/c after expiry date. It doesn't exist.
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gegeeee
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Article 16
Hi colleagues,
Regarding question 2 - IMHO Expiry date exists only for presentation and it does not affect obligations of Issuing/Confirming Bank (art.7/8), but bank should decide whether presentation is compliant or not, and for this purpose art.14 is applied, in case documents are discrepant - art.16 should apply, otherwise art.16.f and back to art.7/8 (depending on bank's role).
So, LC expired is not a discrepancy, but presentation made after expiry date stated in the credit is a discrepancy (with ref. to art.6.e.).
Other comments are appreciated
Best,
Gega
Regarding question 2 - IMHO Expiry date exists only for presentation and it does not affect obligations of Issuing/Confirming Bank (art.7/8), but bank should decide whether presentation is compliant or not, and for this purpose art.14 is applied, in case documents are discrepant - art.16 should apply, otherwise art.16.f and back to art.7/8 (depending on bank's role).
So, LC expired is not a discrepancy, but presentation made after expiry date stated in the credit is a discrepancy (with ref. to art.6.e.).
Other comments are appreciated
Best,
Gega