Transferable L/C

[Naru]

Dear Sir/Madam,

I would appreciate your kind advices on the following case for Transferable L/C:

L/C Issuing Bank: Bank A in India issued a transferable L/C (without confirmation)
Transferring Bank: Bank B in Hong Kong
- 1st Bene: a small trader in Hong Kong
Transferred L/C Advising Bank: Bank C in Japan
- 2nd Bene: a manufacturer in Japan

Now, 2nd Bene approached Bank C to request L/C forfaiting of a transferred L/C (without recourse based negotiate of docs).

My view is that Bank C cannot provide L/C forfaiting, considering the followings:
- Bank C who is not a transferring bank cannot be a nominated bank in accordance with UCP600 Article38(b). Hence, Bank C does not have a right to receive funds from Bank A as LC Issuing Bank, and a right to make a claim directly to Bank A.
- While Article 38(j) mentions that honour or negotiation is to be effected to a 2nd beneficiary at the place to which the credit has been transferred. This clause just simply does not Bank C to honour/negotiate the transferred credit on with recourse basis to 2nd beneficiary. Still this won't affect the obligation of Bank A as LC issuing bank to make a payment to Bank C.

So, 2nd Bene needs to approach Bank B through Bank C to ask if Bank B would negotiate the docs without recourse basis (subject to the document substitution by 1st Bene and the same request from 1st Bene), in my opinion.

Could you please advise any solution that enables 2nd Bene to mitigate the risk of Bank A / Bank B?

Best regards,