Which One Is Advising Bank And Second Advising Bank

Sharif · Post by **Sharif** » Sun Sep 28, 2008 9:56 pm

Situation:

State bank of India, Kolkata Branch Issued a DC for USD50,000.00

Advising Bank (Field 57) : Janata Bank

Now the SWIFT has been rcvd by State Bank Of India Dhaka Branch and they Advise the credit and forward the same to Janata Bank.

Now Janata Bank Further Advise the same and hand over to the Beneficiary.

Confusion – 1. Regarding which one is Advising Bank and second advising bank
2. Is state bank of India, Dhaka Doing right?

cristiand969 · Post by **cristiand969** » Mon Sep 29, 2008 4:13 pm

Dear Sharif,
If credit is subject to UCP 600 (UCP LATEST VERSION in field 40E of swift message) then, pursuant to adhering to this publication State bank of India, in capacity of issuer must follow art. 3 paragraph 5 'Branches of a bank in different countries are considered to be separate banks. Since both branches of STATE BANK OF INDIA are within INDIA, they are the same ISSUING bank. Therefore in this situation there is one Advising bank : Janata Bank .
regards
Cristian

nesarul · Post by **nesarul** » Tue Sep 30, 2008 3:16 pm

Dear Sharif,
thnaks, your eagerness stimulates us.
First of all: Field 57a= Field name is an advise through bank not advising bank.
If we utilize the name of the field 57a, we can say that there must be a bank [advising bank] which is instructed and requested by the issuing bank [definition of advising bank article 2] to advise the credit through a bank [second advising bank mentioned in field 57a] to the beneficiary.

I don't know whether i can touch you point but surely i try .
regards
nesar

iLC · Post by **iLC** » Thu Oct 02, 2008 4:13 pm

dear cristian,

nice try but not a the appropriate one. i think you will like to repost knowing that dhaka is not a part of india. so your point.. branches of a bank in ..... actually indicate that the two state bank of india are separate.

dear nesar,

advise through bank is not a term recognizedly by the UCP600. its a term of swift. so its better to understand it from swift perspective.

swift defines field 57A as

This field identifies the bank, if different from the Receiver, through which the documentary credit is to be advised/confirmed to the beneficiary.

therefore the 57A is the actual advising bank.

iLC

cristiand969 · Post by **cristiand969** » Thu Oct 02, 2008 4:57 pm

Dear iLC,
Thanks for correcting me.
regards
Cristian

nesarul · Post by **nesarul** » Sun Oct 05, 2008 7:06 pm

Dear ILC,
First of all Eid Mubarak, Pls don't take my below statement as defence of my previous statement. Here I want put something to the best of my guess and i have few idea abt SWIFT. If illogical, pls disregard it.
.
Regarding you quatation from SWIFT handbook:
To the best of my knowledge, this available handbook is solely based on UCP 500, where 2nd advising bank was not recognized concept, consequtly, the explanation of it according to your quotation didn't go beyond it.
.
Moreover , i refer to you [for your comments,]
Comparison between UCP 600 and UCP500
James E Bryne, page 101, point 12a.(ii)
.
eagerly awaiting for comments.
regards
nesar

shahriar · Post by **shahriar** » Sun Oct 05, 2008 7:52 pm

dear nesar,

allow us to participate!! i will appreciate if you plz quote the text.

regd

shahriar

picant · Post by **picant** » Tue Oct 07, 2008 2:53 am

Hi Pals,

I think that this post refer to the previous comment "2nd Advising bank" dated by Sept 15, 2008.

Please see it.

Ciao

jmitra · Post by **jmitra** » Tue Oct 07, 2008 11:03 pm

humm... i dont also have the copy of that book. anyway, dear nesar, could please help me with a answer? say you want abc bank to advice your credit. but abc bank is a very small bank and dont have any swift. so you transmitted the swift to xyz bank. which one is the advising bank here?

regards

mitra

picant · Post by **picant** » Wed Oct 08, 2008 3:53 am

Hi Pals

it depends on the name of the bank inserted in field 57

Ciao

jmitra · Post by **jmitra** » Wed Oct 08, 2008 10:50 am

Ciao,

im confused :?

mitra

saeef · Post by **saeef** » Tue Jun 04, 2013 12:36 pm

In 57 a we use "advising through bank"
My question is what does actually "advising through bank" means?
is "advising through bank"and name of "advising bank" r the same meaning?

abrar · Post by **abrar** » Tue Jun 04, 2013 3:07 pm

saeef wrote:In 57 a we use "advising through bank"
My question is what does actually "advising through bank" means?
is "advising through bank"and name of "advising bank" r the same meaning?

No, they are not the same thing. Although the beneficiary/applicant might nominate a bank through whom he/she would wish the LC to be advised, it often happens that the issuing bank will not have a direct correspondent relationship or SWIFT authentication keys with such nominated bank. Therefore, the issuing bank will be obliged to issue its MT700 to its own correspondent (the advising bank) and indicate in field 57 the name of the final advising bank (advise through bank) as nominated by the beneficiary/applicant. It is this last bank from whom the beneficiary would receive the formal LC advice.

saeef · Post by **saeef** » Tue Jun 04, 2013 4:11 pm

Mr abrar
Thank u for ur cooperation.
So in that case "advice through advise" is a 2nd advising bank. Is it?.

abrar · Post by **abrar** » Tue Jun 04, 2013 7:53 pm

Yes, that's more or less it

dinesh2476 · Post by **dinesh2476** » Fri Apr 27, 2018 3:42 pm

Dear Experts,

Can the 57A(advice through bank) add confirmation to the LC?

One of the article in this forum said '' issuing bank instruction regarding LC field confirm /May add is only to the receiver of LC''

In the above case, the issuing bank does not have RMA validation with the advise through bank hence it relayed the message through one of the bank in advise through bank country to relay it.

Thanks & Regards
Dinesh Kumar

picant · Post by **picant** » Fri Apr 27, 2018 5:06 pm

Hi Pals,

MT700 di bank ABC, requiring Confirm, advising bank DEF in field 57, Bank ABC will send MT710 to DEF
bank adding its confirmation and state Without in field 49. MT710 must be modified in some fields to be workable.
Second advising bank is a bank chosen by the advising bank when the lc omits to indicate the bank of beneficiary(sic).
Today, with AML, CT, KYC rules beneficiary's data are necessary, but still some banks routed their lc for interests, money, compensaton etc and there are difficulties in exchanging SWIFT Rma to address lc directly.
Ciao

dinesh2476 · Post by **dinesh2476** » Fri Apr 27, 2018 6:44 pm

Hi Picant,

Thanks for your assistance as always. Am keen follower of your opinions

we are in situation where
Issuing bank: ABC
Received

EF
Field 57A

XX(our bank)

We received MT710 from DEF stating 40E ''irrevocable without adding confirmation''. However, beneficiary is requesting our bank to add confirmation under this LC. Do we authorized to do so?. We have set of procedure which we need to follow before adding confirmation say changing LC availability , expiry place, draft available with us. can we contact issuing bank through received changing these fields to add confirmation at our end. Will we be protected under UCP if we add confirmtion in this scenario?

Thanks & Regards
Dinesh Kumar

picant · Post by **picant** » Sat Apr 28, 2018 7:03 pm

Hi Pal,

as per credit terms your bank is not requested nor authorized to add confirmation. In particular cases it is possible to back the issuing bank undertaking locally and probably costly. Protection under UCP is not a question of confirmation but, IMHO, to the nomination.Confirmation is towards the beneficiary, nomination is towards your bank. So if your bank may be a nominated bank, it will protect. if you adhere to the beneficiary request of "confirmation" you need to verify the creditworth of the issuing bank and act accordingly. Some ECA's back Del credere and silenti confirmation too.
Other comments appreciated
Ciao

dinesh2476 · Post by **dinesh2476** » Sun Apr 29, 2018 1:37 pm

Hi picant,

UCP article 10 Amendments

a. Except as otherwise provided by article 38, a credit can neither be amended nor cancelled without the
agreement of the issuing bank, the confirming bank, if any, and the beneficiary.

can we add confirmation ignoring the fact that we are not the receiver of the issuing bank instruction to add confirmation and just because beneficiary wants our banks to add confirmation to have the LC amended LC available with us?

LC available bank is authorized to add confirmation though they are not in receipt of IB instructions to do so?

Don't we consider this as separate agreement between beneficiary and our bank ignoring UCP article supporting confirming bank?

Thanks & Regards
Dinesh Kumar

picant · Post by **picant** » Sun Apr 29, 2018 3:40 pm

Hi Pals,

a part theory, if a credit has been issued without confirmation, silent confirmation is always possible, i said ruled locally, it is evident that beneficiary and the "confirming bank" will stipulate a contract regulating all the aspects, including the possiblity of rejection/acceptance of amendments. Nominated bank will act on its nomination towards issuing bank and on its silent confirmation towards beneficiary.
We have some banks in Italy that provide so called Pro-soluto(without recourse) when the l/c is not confirmed, may be awaiting for acceptance of documents by issuing bank. Even Export Credit Agency dont cover eventual presentation with discrepancies.
However all it happens when an advising bank is not requested or authorized to add confirmation. In case of receipt of proper instruction the advising bank will book or the issuing bank or the first confirming bank as risk.
That's all.
Ciao

mesbah · Post by **mesbah** » Wed Jun 19, 2019 11:29 pm

Dear Experts
i just joined with this forum to know somethings.
Actually issuing bank send the lc to his corresponding bank in beneficiaries countries to advise lc to beneficiary.
Sometimes as per requirement of beneficiary applicant instruct issuing bank to advise the lc through beneficiaries own bank (XYZ bank) . But if the issuing bank has no RMA with bene. bank in that case issuing bank send the lc to his corresponding bank (ABC bank) and request the said bank to advise the lc to bene. through that bank (XYZ bank).
My question is:
1. I think ABC bank not a advising bank at all. issuing bank just sent the lc to his correspondent (ABC bank) and instructed to advise lc through XYZ bank. In this case XYZ bank is the advising bank only. Am i correct ??
2. When an issuing bank instruct his correspondent to advise the lc through XYZ bank, in that case corresponding bank (ABC bank) should follow this instruction or he can advise the lc directly to beneficiary ??

picant · Post by **picant** » Fri Jun 21, 2019 5:45 pm

Hi Pals
Very interesting report on this issue by
Top@doc Newsletter by Commerzbank December 2015:

Documentary credits are often available with the “advising bank”: that is to say, the bank that advises the credit to the beneficiary. But what if, according to the terms of the credit, the services of a second bank are used to advise the credit? Must the documents be presented to the advising or second advising bank? This question can be of crucial importance with regard to compliance with presentation periods for documents or the mailing risk. The “Uniform Customs and Practice for Docu-mentary Credits UCP 600” do in fact distinguish in Article 9 c between an advising and a second advising bank – “An advising bank may utilize the services of another bank (“second advising bank”) to advise the credit and any amend-ment to the beneficiary ...”. Here, however, the question of availability is not dealt with. Moreover, the aforementioned article refers to a case where the bank that was requested to advise the credit and makes use of the services of another bank for this purpose at its sole discretion. However, we wish to deal with a scenario in which the issuing bank has already stipulated that a second advising bank must be involved.A case study to illustrate the situation:Careful Bank receives a credit in favour of Proper and Prompt Ltd. via SWIFT MT 700 that includes, inter alia, the following instructions:•Field 41D (Available with... By...): Advising bank by negotiation•Field 57D (“Advise through” bank): Free and Easy BankMoreover, the credit specifies that the documents must be presented to the nominated bank until 15 December 2015.On 15 December 2015, Proper and Prompt Ltd. presents a set of documents to its principal banker, Free and Easy Bank, with the instruction to negotiate these documents. The following questions now arise:•Have the documents been submitted in time by presenting them to the second advising bank within the presentation period? Or should the documents have been presented to Careful Bank on 15 December 2015 at the latest?•Is Free and Easy Bank authorized to negotiate the docu-ments? Or must the negotiation be effected by Careful Bank as the advising bank?

It must be clarified as to which of the two “advising banks” is acting as the nominated bank.As mentioned before, the UCP 600 do not provide an answer and top@doc cannot offer a general solution either. It ap-pears to make sense to regard the second advising Free and Easy Bank as nominated bank. After all, this bank is the beneficiary’s principal banker. But it is not safe to say that this position meets the intentions of the issuing bank or those of the applicant.To avoid misinterpretations and any related difficulties, we urgently recommend to clarify the matter with the issuing bank. The bank should be requested to define which of the two “advising banks” is entitled to negotiate as the nominated bank and/or at which bank the credit is available
-----------
My comment
Moreover an attempt to modify field 57A in SECOND ADVISING BANK has not been accepted and the new MT700 Version repeats field 57A as ADVICE THROUGH BANK.

So IMHO, advising bank is the bank of beneficiary, indicated in field 57A: Marketing and competition between bank cannot cause damages to l/c beneficiaries.
Other comments appreciated

dinesh2476 · Post by **dinesh2476** » Sat Sep 21, 2019 1:53 pm

Hi Picant

Thanks for this posting. I was looking for clarity and this post made me understand that.

However, This is not in line with recent update that when there are two banks involved(issuing bank utilising the services of correspondent bank due to RMA and country regulations on their own and while communicating applicant about the additional charges they might face for the involvement correspondent bank, they need to clarify that instead of wording ''advising'' they need to specify the name of the nominated bank ''xxxx bank''.

Thanks & Regards
Dinesh Kumar

picant · Post by **picant** » Sat Sep 21, 2019 7:11 pm

Hi Pal,

in the past without compliance, aml ct, kyc etc, a l/c could be issued by telex and authenticated by
third banks testkey, due to the Swift system there was the necessity to have a Swift testkey direct
between issuing bank and advising bank. Naturally the field 57A indicated the bank of the beneficiary,
IMHO, the advising bank. A that time, in Italy, if the bank had no testkey arrangement the receiver
charged that bank for a 2/3 commission letting the true advising bank to get 1/3 commissions.
This was, and still is, a problem of small/medium bank that are not in contact with all the banks in
the world and do not partecipate to Sibos.So, IMHO, the advising bank remains the bank in field 57A,
I dare say that, if in the meantime that bank to have a Swift RMA with the issuing bank, eventual amendment may be sent directly.
Now,we are all bankers and checking the Swift messages, if a MT700 indicates another bank, before advising beneficiary(not yet client) it is necessary to involve the nearest branch or marketing dept to invite the beneficiary for an interview, etc.
Ok
Ciao

TaiOanlan · Post by **TaiOanlan** » Sat Oct 12, 2019 7:36 pm

QUOTE
Situation:
State bank of India, Kolkata Branch Issued a DC for USD50,000.00
Advising Bank (Field 57) : Janata Bank
Now the SWIFT has been rcvd by State Bank Of India Dhaka Branch and they Advise the credit and forward the same to Janata Bank.
Now Janata Bank Further Advise the same and hand over to the Beneficiary.
Confusion – 1. Regarding which one is Advising Bank and second advising bank
2. Is state bank of India, Dhaka Doing right?
UNQUOTE

Kinda getting lost right after the initial question.....Anyhow, regarding the initial question, SBI Dhaka is doing it correctly.