Drawee of draft

sean · Post by **sean** » Sun May 02, 2010 1:09 am

Hi all, I'm new here. Good to share and learn from each other.
When is a draft drawn on the Issuing Bank and when is it drawn on the confirming bank?

jmitra · Post by **jmitra** » Sun May 02, 2010 8:45 am

it depends on the availability. for LC available by negotiation, the draft is always on the issuing bank. for LC available by payment / deferred payment / acceptance with nominated bank (including confirming bank), the draft is drawn on the confirming bank. however if the beneficiary choose to present the document directly to the issuing bank, the draft will be on the issuing bank.

Sohel Rana · Post by **Sohel Rana** » Mon May 03, 2010 12:12 am

Dear jmitra
Thank you very much for good answer. Can you let us know any reference on your answer?
It will great get for me if you give any reference about this matter.

Keep well.

rgds
Sohel

jmitra · Post by **jmitra** » Mon May 03, 2010 8:29 am

dear sohel,

it need not any special reference. this is a very core concept of UCP and you can find it with the use of little logic;

UCP 600 article 2

Negotiation means the purchase by the nominated bank of draft (drawn on a bank other than the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank.

if a LC is issued by bank A and confirmed by bank B and available with any bank by negotiation, then the beneficiary can present the document to

1. any third bank for negotiation and the draft will be on confirming bank
2. Confirming bank for negotiation and the draft will be on issuing bank
3. issuing bank for honor and the draft will be on issuing bnak

if the same is avaialble by payment, then the beneficiary can present the document to;

1. any third bank for payment and the draft will be on that 3rd bank
2. Confirming bank for payment and the draft will be on confirming bank
3. issuing bank for honor and the draft will be on issuing bnak

sean · Post by **sean** » Wed May 05, 2010 5:08 pm

Thank you all for your detailed replies.
If the negotiating bank is the same as the confirming bank on whom shall the drafts be drawn. The Issuing Bank I presume.

Drawee of draft

Drawee of draft

depends on the availability

Reference

UCP 600

Confirming Bank and Negotiating Bank the same