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Usance Draft on collection docs
Posted: Sun Apr 01, 2012 7:20 pm
by Shankar
Dear Experts,
Why usance drafts drawn on Buyers instead of Buyers bank?
Kindly advise
Regards
Shankar
URC 522
Posted: Sun Apr 01, 2012 9:00 pm
by picant
Hi Pal,
We are in the URC so documents must be delivered to buyer against payment or against acceptance of an usance draft/bill of exchange.
The bank as acting as collecting agent, in the first case by collect the money to be sent to the remitting bank, in the second obtaining acceptance by the drawee and hold the draft for payment at maturity or return it to the remitting bank for a further use.
The collecting bank is not responsible for the payment of the draft at maturity, but it is possible to ask it for a guarantee or aval.
Collection is quite different from documentary credit.
Other comments appreciated
Ciao