Dear all,
in a l/c:
nominated bank is N BANK
Docs received from BANK T(a bank other than nominated bank). we want to pay doc,s value to the benef. according to UCP , ISBP , . . . how we must do it ? through presenting bank(bank T) or through nominated bank(bank N)?
thank you very much
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shruti
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payment channel
Dear Hassan
Refer article 6a.... A credit available with nomianted bank is also availble owth issuing bank.
you have option to get it honoured through issuing bank or through nominated bank as per LC (Bank N) .
bank T may also negotiate at its own risk & get reimbused from issuing bank , who is bound to honour a complying presentation.
regards
kalra n k
Refer article 6a.... A credit available with nomianted bank is also availble owth issuing bank.
you have option to get it honoured through issuing bank or through nominated bank as per LC (Bank N) .
bank T may also negotiate at its own risk & get reimbused from issuing bank , who is bound to honour a complying presentation.
regards
kalra n k
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SHAMEER
- Posts: 50
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PAYMENT CHANNEL
YOU CAN MAKE THE PAYMENT TO THE BNFY THROUGH THE PRESENTING BANK [BANK T] ONLY
Regards,
MS
Regards,
MS
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iLC
- Posts: 504
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to whom the payment is to be made
though i agree with sameer, there are many exceptions. i have seen cases where the document is presented though a bank while the beneficiary requires the issuing bank to pay a third party in a different country. so we should better say that we should follow the payment instruction given with the presentation.
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hassan
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payment channel
Dear shameer and iLC,
thank you for answering , but there are two points as followes :
1) sometimes according to l/c terms all charges in benef. country (nominated bank,s charges and ...) are on benef. acc. if we pay docs value through third bank (bank T) then since we don,t have any information about the amount and payment or non-payment of nominated bank,s charges it is possible that said charges be remained unpaid and we as issuing bank as per Art. 37-c to be forced to pay it too. wheras if we would pay doc,s value through nominated bak then this bank will deduct it,s charges before paying to benef.
2) is there any Articles in UCP or ISBP about this case?
thank you
thank you for answering , but there are two points as followes :
1) sometimes according to l/c terms all charges in benef. country (nominated bank,s charges and ...) are on benef. acc. if we pay docs value through third bank (bank T) then since we don,t have any information about the amount and payment or non-payment of nominated bank,s charges it is possible that said charges be remained unpaid and we as issuing bank as per Art. 37-c to be forced to pay it too. wheras if we would pay doc,s value through nominated bak then this bank will deduct it,s charges before paying to benef.
2) is there any Articles in UCP or ISBP about this case?
thank you
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ok12
- Posts: 13
- Joined: Fri Apr 10, 2009 1:32 pm
My opinion
In my opinion, the issuing bank may need to check with nominated bank if there is any outstanding charges yet to settle by the beneficiary.
My second thought is i wonder if BANK T is being protected under UCP600 since they are not the nominated bank?
My second thought is i wonder if BANK T is being protected under UCP600 since they are not the nominated bank?
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iLC
- Posts: 504
- Joined: Thu Jun 26, 2008 10:33 pm
what are the charges?
dear hassan,
before negotiation or honor, the only possible charges are the advising charges and confirming ban charges. while its wise to recover these charges before advising, the nominated bank may not do so and in that event, the issuing bank will be liable. the UCP600 disclaimer clauses deals with this. there is also an opinion i think.
i agree with ok12. its will be wise to inquire with the advising bank. but its not a solution. the same problem remains if the credit is available with any bank. if the LC is confirmed one, i find no reason why a beneficiary would present the document to a non nominated bank. to avoid this unnecessary complexity, i prefer to put a clause like "Presentation must be made to the nominated bank" in the credit. you may criticize me for restricting the freedom, as a document issuer, i can take this advantage :lol:
before negotiation or honor, the only possible charges are the advising charges and confirming ban charges. while its wise to recover these charges before advising, the nominated bank may not do so and in that event, the issuing bank will be liable. the UCP600 disclaimer clauses deals with this. there is also an opinion i think.
i agree with ok12. its will be wise to inquire with the advising bank. but its not a solution. the same problem remains if the credit is available with any bank. if the LC is confirmed one, i find no reason why a beneficiary would present the document to a non nominated bank. to avoid this unnecessary complexity, i prefer to put a clause like "Presentation must be made to the nominated bank" in the credit. you may criticize me for restricting the freedom, as a document issuer, i can take this advantage :lol:
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nayanrshah
- Posts: 57
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- First Name: Nayan
- Last Name: Shah CDCS
- Organization: YES BANK
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My View
Pay to BANK T.
.
Possible charges are the advising charges and confirming bank charges.As a prudent banker it is wise to confirm for charges with advising /confirming bank.
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Possible charges are the advising charges and confirming bank charges.As a prudent banker it is wise to confirm for charges with advising /confirming bank.
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hassan
- Posts: 90
- Joined: Tue May 20, 2008 5:19 pm
PAYMENT CHANNEL
Dear freinds,
I draw your attention to Art. 2 (the definition of presenter)and Art. 16 (c) as follows:
Art. 2 (the definition of presenter):
Presenter means a beneficiary, bank or other party that makes a presentation.
Art. 16 ( c): When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter.
from above Articles I understand that bank T has the role of bank or other party mentioned in Art. 2 above and notice of refusing of docs must be given to that bank but nominated bank. i think according to this logic the payment of , or honouring of docs also must be noticed to presenter i/e the bank T otherwise (if it is effected through nominated bank which here it is not presenter, the bank T as per Art. 2 may follow the case and . . .
I hope experts to discuss this case to get clear.
I draw your attention to Art. 2 (the definition of presenter)and Art. 16 (c) as follows:
Art. 2 (the definition of presenter):
Presenter means a beneficiary, bank or other party that makes a presentation.
Art. 16 ( c): When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter.
from above Articles I understand that bank T has the role of bank or other party mentioned in Art. 2 above and notice of refusing of docs must be given to that bank but nominated bank. i think according to this logic the payment of , or honouring of docs also must be noticed to presenter i/e the bank T otherwise (if it is effected through nominated bank which here it is not presenter, the bank T as per Art. 2 may follow the case and . . .
I hope experts to discuss this case to get clear.
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ok12
- Posts: 13
- Joined: Fri Apr 10, 2009 1:32 pm
By pass Bank T
Dear Hassan,
I might have missunderstood your question. Please correct my understanding below if i'm wrong.
Pertaining to your first question - Whether your payment should effected thru a nominated bank (bank N) althought presenter is Bank T?
My point of view is payment should be effected to Bank T althought Bank N is a nominated bank. In current market, there are alot of issuing bank may restrict the availability to their overseas branches or their overseas business partner if applicant not so mentioned in their application whom the LC should sent to. However, the benenficiary might not have any banking facility with the respective bank and they may choose their respective banker and by passing the nominated bank in order to avoid double up handling charges.
Pertaining to second question - As mentioned, you may seek clarity with the nominated bank for any outstanding charges which has yet to settle by the beneficiary. If the beneficiary is a non-customer to advising bank, i don't think the original LC will be release to him without collecting any advising charges.
Other comments are welcome.
Regards
I might have missunderstood your question. Please correct my understanding below if i'm wrong.
Pertaining to your first question - Whether your payment should effected thru a nominated bank (bank N) althought presenter is Bank T?
My point of view is payment should be effected to Bank T althought Bank N is a nominated bank. In current market, there are alot of issuing bank may restrict the availability to their overseas branches or their overseas business partner if applicant not so mentioned in their application whom the LC should sent to. However, the benenficiary might not have any banking facility with the respective bank and they may choose their respective banker and by passing the nominated bank in order to avoid double up handling charges.
Pertaining to second question - As mentioned, you may seek clarity with the nominated bank for any outstanding charges which has yet to settle by the beneficiary. If the beneficiary is a non-customer to advising bank, i don't think the original LC will be release to him without collecting any advising charges.
Other comments are welcome.
Regards
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hassan
- Posts: 90
- Joined: Tue May 20, 2008 5:19 pm
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Dear ok12,
Thank you very much. you have well understood my questions and I agree to your answers completely but I am searching for some reference Articles to lead to above answers in UCP or ISBP or at least ICC Banking Commission conclusion because i don,t want to say this is my opinion but it is a way suggested by UCP or ISBP or at least ICC Banking Commission.so if you or others know such Articles please let us know too.
Thank you very much. you have well understood my questions and I agree to your answers completely but I am searching for some reference Articles to lead to above answers in UCP or ISBP or at least ICC Banking Commission conclusion because i don,t want to say this is my opinion but it is a way suggested by UCP or ISBP or at least ICC Banking Commission.so if you or others know such Articles please let us know too.
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VIVIAN001
- Posts: 6
- Joined: Sat Apr 04, 2009 9:03 pm
Charges
As per article 37 (c) A bank instructing another bank to perform services is liable for any commissions, fees, costs or expenses ("charges") incurred by that bank in connection with its instructions. If a credit states that charges are for the account of the beneficiary and charges cannot be collected or deducted from proceeds, the issuing bank remains liale for payment of charges.ok12 wrote: Pertaining to second question - As mentioned, you may seek clarity with the nominated bank for any outstanding charges which has yet to settle by the beneficiary. If the beneficiary is a non-customer to advising bank, i don't think the original LC will be release to him without collecting any advising charges.
A credit or amendment should not stipulate that the advising to a beneficiary is conditional upon the receipt by the advising bank or second advising bank of its charges.