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as a part of our export business, we often need to open few import LC. recently we have opened a LC using our regular bank. the bank asked the advising bank to confirm the LC. in every previous cases, things were just ok. but this time the advising bank refused the beneficiary to confirm the LC. they said that they have no corresponding arrangement. my bank is also bit confused. my bank is saying that they does have a corresponding arrangement. whats happening i have no idea. my shipment is late already. can anyone help please.

Hi Pal,

the advising bank to confirm l/c, grants credit facility to issuing bank directly or by a counterguaranty issued by Governamental / Private Export Insurance Company. If your bank has not a specific credit line, it risks rejections of its request to add confirmation by the foreign bank. Probably due to the uptodate Bank or Country Rating, the advising bank has some difficulty in accept requests of confirmation, or find difficulties in insure such risks. Please, if it is possible, inform us about full details(Countries, Banks involved, Payment terms requested etc.) or check with your bank if due to the Global Crisis something changed.

Ciao

picchi.antonio@virgilio.it

i agree over all. however i have also seen cases where the advising bank refuses to advise the credit due to poor credit rating of the beneficiary. was it the beneficiary who chose the advising bank?

interesting comment dear jmitra. i wonder if the credit rating of the beneficiary really matters in case of confirming a letter of credit. anyway, about the original question, i am afraid no one can help you on the issue. its something that is to be decided between the issuing bank and the confirming bank. i hope your bank will get a way out shortly. good luck