Transferable credit 38J

[dinesh2476]

Dear Experts,

This is a question doing round in DC world without an precise answer. Please support

Though abrar has already explained this in details. However, unable to follow due to the language he used to explained it.

Transferable credit:

Issuing bank undertaking to beneficiary is independent. Bank added confirmation in between and fail to make a payment, beneficiary can present the documents directly to issuing bank for payment. Issuing bank makes payment as they know they are the beneficiary and also presentation complies with LC terms.

Issuing bank is aware of the beneficiary of letter of credit..

In a transferable credit, transferring bank nominated a bank in second beneficiary country and they bank acted on it nomination and effected payment to the 2nd beneficiary( say for example without recourse basis of course it should not be)

In a situation, if transferring bank not acting as per the expectation of the second beneficiary then what is the protection that second beneficiary bank has

How does the issuing bank aware that the LC has been transferred to 2nd beneficiary and issuing bank responsibilities to reimburse the second beneficiary bank.

How does 2nd beneficiary bank justify their position that issuing bank holds responsibilities to them when they don't even know which bank they are dealing with and the second beneficiary's presentation may not comply with original LC terms and conditions.

Thanks & Regards
Dinesh Kumar