Issuance and confirmation charges

[dinesh2476]

dear Experts,

LC issuance charges are calculated till expiry date(irrespective of its tenor)wherein confirmation charges are calculated till the assumed maturty date(Late shipment date plus tenor of the transaction)

Are there any specific reason for this?

Thanks & Regards
Dinesh

[picant]

Hi Pal,

it will probably depend on the use in one Country, and sometime on the bank.
We have two type of commissions, at issuance , normal + confirmation, on availment
if at sight a commission and an higher commissions for deferred payment/acceptance+confirmation.
Probably if the confirmation is backed by an ECA, in Italy SACE spa, commissions may follow the requirement of said ECA.
Other comments appreciated
Ciao

[TaiOanlan]

Hi Dinesh
LC issuing bank takes risk under its client (L/C applicant) by giving client credit line. So, L/C issuance fee would be covering from date of issue until L/C expiry. Usually, a bank gives customer L/C issuance credit line for maximum three month period.
As for confirmation charges, confirming bank takes risk under issuing bank by giving issuing bank credit line.
If a L/C is at sight, then confirmation charge would be calculated up to L/C expiry date. If L/C is usance one, then confirmation charge would be calculated covering usance tenor.
Some banks will collect up to L/C expiry date as confirmation charge and collect the tenor portion in the name of "Defer payment charge" ( basically, it is confirmation fee).
By adding confirmation, confirming bank undertakes to pay and the undertaking for usance L/C is without doubt covering not only L/C expiry but also usance tenor.

Regards,