Reimbursement Authorization - Timing

[Christianecf]

The UCP 600 states that the issuing bank must reimburse the nominated bank which honored or negotiated a complying presentation and forwarded the documents to the issuing bank. As the issuing bank has five banking days to check documents after receipt at their counters, I think that the reimbursement authorization must be made after this period. I have seen nominated banks asking issuing banks to determine that authorization to reimbursement will occur five
bank days after receipt of documents at their counters (nominated bank counters) in order to add confirmation to the LC. Is this interpretation supported by the rules? I think it is a misconception.

[picant]

Hi Pal,

one is the reimbursement that the issuing bank has towards nominated bank, another is the
Reimbursement Authirization given to a third bank to honor claims by nominated bank or banks.
The first case the issuing bank will check the documents remitted by a presenting bank, within the stipulated time, and remit the procceds.

The second is instructing a third bank, where the issuing bank has an account, to accept claims by one or more banks and remit the proceeds, where UCP600 are silenti, URR725 state within 3 days from the claims receipt.
So I understood, no native speaker!
Ciao

[PRITISH24]

Reimburse= MAKING PAYMENT ON DUE DATE
Reimb. Author. = AUTHORIZING A THIRD PARTY BANK TO MAKE PAYMENT ON DUE DATE

[cristiand969]

I understand from your query that the main concern is that the nominated bank should not reimburse itself from the reimbursing bank prior to the occurence of 5 banking days after issuing bank receipt of documents.
This is a misconception regarding the action of the nominated bank because the undertaking of the issuing bank is to pay on the basis of the nominated bank swift message that they honored and forwarded to issuing bank a complying presentation. If the nominated bank should have to wait the occurence of the 5 days at the issuing bank counters , this credit is not considered to be available with nominated bank but to issuing bank only.
On the other hand , as per art 7 of URR 725 : Except to the extent expressly agreed to by the reimbursing bank, the
reimbursement authorization should not be subject to an expiry date or latest date for presentation of a claim.
Therefore, any precondition of the reimbursement authorization should raise a big question regarding the 'ability' of issuing bank to keep their undertaking in accordance with the international rules.

[saikumar1208]

Reimbursement authorization is an instruction to reimbursement bank from issuing bank authorizibg to reimburse reimbursement claim pursuant to reimbursement authorization. Reimbursement authorization is sent to reimbursing bank at the time of LC issuance only