Bypassing the transferring bank

[CDCS2009]

as per ICC opinion, in case of 100% transfer, the transferring bank may allow the second beneficiary to present the document directly to the issuing bank. if the LC includes a clause indicating that all presentation must be routed through the transferring bank, can the transferring bank still allow the 2nd beneficiary to allow to present directly to the issuing bank?

[picant]

Hi Pals,

this is permitted, naturally, when l/c is WITHOUT SUBSTITUTION". IMHO I think that in case of issuing bank request to present documents via transferring bank, the transferring bank must insert this clause in the transfered l/c, however to avoid that the transferring bank, not confirming, can refuse to act, presentation of documents direc tly to the issuing bank is possible, with some risks for the beneficiar; lost in transit, etc.

Other comments appreciated
Ciao

[nesarul]

DEar,
With due respect ICC official opinion, when 1st bnf. effect 100 pct transfer... it has no interest on the transaction.. my confusion is why 1st beneficiary engage is such a complex transaction where it has no financial benefit..... can any one pls help me.
regards
nesar

[CDCS2009]

With due respect ICC official opinion, when 1st bnf. effect 100 pct transfer... it has no interest on the transaction.. my confusion is why 1st beneficiary engage is such a complex transaction where it has no financial benefit..... can any one pls help me.
regards
nesar

well i can there are mainly two reasons.

1. first beneficiary has some commission arrangement with the 2nd beneficiary after utilization. in most cases these first beneficiary are not the actual manufacturer.
2. the first beneficiary does not have the capacity to perform under the credit and transfer it some allied concerns

[nesarul]

dear CDCS,
Thanks for ur response.
Your Point No.1
I am little bit suspicious abt ur point no.1.... As a Banker .. I can not allow underhand transaction which derive from Transferable credit..... Because this transaction may jeopardize my position as a Banker.
Point no.2
Agreed
Nesar