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Bank A in Vietnam received a collection docs subject to URC522 from a remitting bank in Hongkong. Tenor: DA 90 days from B/L date. Upon acceptance of the Drawee, Bank A released the doc and sent advice of acceptance to the Remiting bank with maturity date as 4 July 2012. However, because of the internal policy, bank A was unable to finance the drawee on the maturity date. Then, the drawee was unable to effect payment through bank A .



According to remitting bank’s instructions (by swift msg) and in line with the drawee’s instructions, Bank A forwarded all copy of docs, original covering letter and swift msg of remitting bank to us and instructed us to effect payment (The reason is that we are ready to finance the drawee to effect this payment)



Question:

According URC522, could our bank make payment for the a/m docs?
If the answer is “NO”, could our bank make this payment outside URC522? In this case, what should we do to avoid risks?”

Hi Pal,

Accepted draft remained with collecting bank for a payment at maturity. On that day the collecting bank did not grant an import finance to pay said draft.
In my Country it is possible for a second bank to intervene and pay the draft still pending at collecting bank by financing it. It is considered import finance.
In effect you will transfer the amount to collecting bank quoting collection reference only and the latter bank will pay the foreign bank. I am not aware if it is possible in every Country, if some local rules forbid such procedure.
Other comments appreciated
Ciao

Hi,

URC 522 does not restrict payment from a bank other than the collecting instructed in the schedule of the collecting bank, however it will be considered as violation of collection instructions.

In our country, there is no such restrictions that you can't receive payment from the bank other than the collecting bank.

Even we shall accept payment from other bank (Other than the collecting bank nominated in the schedule) in currency other than the documents currency (e.g. documents sent in USD but Payment effected in EUR or vice versa) provided the amount received in other currency should be equivalent to that of the documents amounts and beneficiary agrees to the same.

Thanks. Other Comments Appreciated.

Further to it, If your Bank is not confident in effecting payment to the foreign bank (Remitting Bank) due to any eventuality on the part of FB due to non-acceptance of payment, you should write to the remitting bank through SWIFT requesting them that you are to going to remit the proceeds against reference collection bill received at the counter of other bank, please do convey FB that if you or beneficiary to the collection have any objection to this issue (Payment), also request them that please do convey if your local FE Laws prohibits any such payment.

On receipt of NOC from the Remitting Bank, you may proceed without any risk.

Thanks & Regards. Other Comments Appreciated.