dear sir,
we are in a process of issuing a letter of credit which involves two other banks as the participant. we are the lead bank and the credit will be transmitted through our bank. the document will be presented to our counter and our decision on compliance will be final. but payment will be made after the participant bank reimburse us. the LC is a mixed payment one of which 20% will be paid after the clearance of the buyer. the buyer will submit the clearance directly to us. as we are new in this approach, we are having some problem.
1. on whom the draft will be drawn?
2. what will be the availability of the credit?
3. is this LC available by negotiation or mixed payment?
any other tips will be helpful.
syndication letter of credit
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picant
- Posts: 2026
- Joined: Wed Aug 20, 2008 1:49 pm
clarification needed
Hi Pal,
I understand that applicant has no sufficient credit facility with your bank to open a l/c. Other two banks will guarantee the applicant to reach the l/c full amount.
IMHO you will issue a normal 100% l/c granting to applicant a credit line, partially guaranteed by the other banks. I consider it a mixed payment l/c. However other comments appreciated. Please let me know if I fully understood.
Ciao
I understand that applicant has no sufficient credit facility with your bank to open a l/c. Other two banks will guarantee the applicant to reach the l/c full amount.
IMHO you will issue a normal 100% l/c granting to applicant a credit line, partially guaranteed by the other banks. I consider it a mixed payment l/c. However other comments appreciated. Please let me know if I fully understood.
Ciao
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jim
- Posts: 91
- Joined: Fri Aug 15, 2008 11:58 am
mixed payment
dear sir,
is it correct to say then that a LC which has a mixed payment option can not be available by negotiation?
is it correct to say then that a LC which has a mixed payment option can not be available by negotiation?
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picant
- Posts: 2026
- Joined: Wed Aug 20, 2008 1:49 pm
Swift Standard book category 7
Hi Pal,
please check the Swift Standard book category 7 in or with your bank. Being mixed payment alternative to negotiation I presume that a l/c could not be issued by negotiation/mixed payment. But the transaction could be paid partially by L/c available by negotiation, partially by advanced payment and partially on open account basis, etc. The big problem is to withdraw the goods! You can establish a L/C, availed by a presentation of documents worthing more, deliver documents to applicant that has paid the balance in advance or will pay it in future. No hamper to issue such l/c if parties agree to do so.
Other comments appreciated
Ciao
please check the Swift Standard book category 7 in or with your bank. Being mixed payment alternative to negotiation I presume that a l/c could not be issued by negotiation/mixed payment. But the transaction could be paid partially by L/c available by negotiation, partially by advanced payment and partially on open account basis, etc. The big problem is to withdraw the goods! You can establish a L/C, availed by a presentation of documents worthing more, deliver documents to applicant that has paid the balance in advance or will pay it in future. No hamper to issue such l/c if parties agree to do so.
Other comments appreciated
Ciao
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berry
- Posts: 329
- Joined: Fri Nov 07, 2008 11:36 pm
on whom the draft will be drawn?
Hey!! Hello!jim wrote:on whom the draft will be drawn?
i was wondering whether it is really possible to draw a draft in a mixed payment since there would be essentially a different tenor. somebody please help
