pls help choose one option - Negotiation or acceptance from the confirming bank

[dv01001]

hi all,
i have the situation as belows, could you help choose the best answer for this case. many thanks

The buyer has stated that the payments due at staged intervals of 60, 90 and 120 days after shipment date will be managed through a documentary credit. The seller requires immediate access to these funds. How could the credit be best constructed to achieve this?
Available with:
A. any bank by negotiation
B. The confirming bank by acceptance
C. The advising bank by acceptance
D. The issuing bank by acceptance
I wonder if the answer if A or B, pls help choose the correct one
I prefer to choose A because the seller can access the fund shortly by raising finance with negotiation before due date of payment terms (60, 90 and 120 days after shipment date)

[Saifullah]

Dear dv01001,
First of all I want to make one thing clear u wrote in option C advising bank by acceptance... The thing is according to the Letter of credit rules the bank with which the credit will be available will be treated as nominated bank and also the advising bank.But in swift if the receiver is different from the advise through bank in field 57A then the receiver bank will be treated as first advising bank and the mentioned name bank in 57A will be second advising bank and the nominated bank as well.actually same bank perform in different name at different stage in the transaction .
Case A: Any Bank by Negotiation and will be utilizing time draft ....in this situation if the sellers want to get the money at sight basis or immediate access to fund then the seller have to go the process of discounting with the nominated bank ..but the seller has to be too communicative with bank then the bank will discount with the seller with resource basis..the bank will not give him or her full fund...because the issuing bank will remit the fund to the sellers bank at maturity.

Case B: the definition or confirming bank is when the advising bank add its confirmation in the L/C then it becomes the confirming Bank as I told u before the bank with which the LC will be available it will be treated as the advising bank and nominated bank the in this situation nominated confirming bank.so the responsibility of the confirming bank is if the issuing bank does not pay at maturity ....nominated confirming bank is obliged to honor the lc under complying presentation .here the case is same if the confirming bank pay the seller immediately then the bank will discount the bill with the seller.As the confirming bank will give the seller before due date.but nominated bank and confirming bank could be different bank according to the letter of credit rules ......but in reality until and unless the lc will be available with the bank it will not add its confirmation.

Case D: The issuing bank by acceptance ...the advising bank is the bank which advises lc to the seller at the request of issuing bank Case D is some thing like ISSUING BANK : IN FRANCE >>>>PLACE AND DATE OF EXPIRY IN FRANCE <<<<<LC AVAILABLE WITH ISSUING BANK BY ACCEPTANCE >>>>AND ADVISING BANK IN LET Say GERMANY.......now the only responsibility in this case of advising bank is just inform the seller or advise the seller about the lc and authentication of the lc whether it has come through genuine source or not.In this situation what the advising bank has no authority to honor or negotiate the docs so the advising bank will send the docs to the issuing bank then issuing bank within 5 days it will decide whether the docs are payable or not if the doc find under complying presentation then the Issuing bank will remit the credit through the advising bank to the sellers account at maturity here I don't think the seller has any chance for discounting ......as the advising bank is not nominated by the issuing bank.

Case C the Advising bank by acceptance similar to case a only difference is it acceptance basis hope you know the acceptance procedure ....so except Case D discounting is possible if seller is communicative with the bank but in case of acceptance the procedure is different as per I know example the buyer bank will endorse the draft and send to the sellers bank and the sellers can discount the draft as it is negotiable doc....... other comments appreciated.any confusion if I am wrong correct me I am in this forum to learn ..........

Regards
Saifullah

[dv01001]

hi Saifullah,
thanks much for your detailed explanation
I just consider for A and B only. I also just find out some clues to explain this case. Other comments appreciated, thanks
For A - any bank by negotiation, agree with you that the BEN must arranges with banks for negotiation and if discounted, it must be with recouse basis
For B - acceptance by confirming bank, i refer to article 12 - ucp600
"a nominated bank is not obliged to honour or negotiate, unless it is also the confirming bank or it has expressly communicated to the BEN its agreement to honour or negotiate"
So, this B option is best for BEN because they can request the nominated bank who takes the role of the confirming bank at this time to purchase accepted draft (assume that the docs are compliant), furthermore, without recourse basis is also applied in this situation due to confirmed LC

[saikumar1208]

If client is in immediate need of funds then it is better to choose available with any by negotiation. If negotiation is being done by any bank other than confirming bank then recourse agreement to be taken with beneficiary.