Dear friend,
Can an issuing bank be a nominated bank?
Thanks
Can An Issuing Bank Be A Nominated Bank?
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firas
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rejisac
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Where credit available with issuing bank:
According to sub article 7(a) (i) of UCP 600, It has been appeared that a credit can only be available with the issuing bank by sight payment, deferred payment or acceptance only which implied that issuing bank only extended its obligation only towards beneficiary or his or her authorized person or entity [straight letter of credit]. An issuing bank is allowed to do it under the auspicious of sub article 7(b) of UCP 600 and should not be termed as a nominated bank by the virtue of definition of Nominated bank. In other word, the sole function of issuing bank i.e. “Honour”, needs not be necessary to appear its name as available because of with which explicitly mentioned in sub article 7(b) of UCP 600:
“An issuing bank is irrevocably bound to honour AS OF THE TIME [EMPHASIS ADDED] it issues the credit”
Moreover making no reference of nominated bank in sub article 16(f) & (g) of UCP 600 strengthen the position that issuing bank should not be treated as nominated bank in any circumstances.
Conclusion:
From above analysis, we can conclude that article 2, definition of nominated bank under UCP 600 should read as follows:
“Nominated bank means the bank [OTHER THAN ISSUING BANK] with which credit is available or any bank [OTHER THAN ISSUING BANK] in case of credit available with any bank.”
According to sub article 7(a) (i) of UCP 600, It has been appeared that a credit can only be available with the issuing bank by sight payment, deferred payment or acceptance only which implied that issuing bank only extended its obligation only towards beneficiary or his or her authorized person or entity [straight letter of credit]. An issuing bank is allowed to do it under the auspicious of sub article 7(b) of UCP 600 and should not be termed as a nominated bank by the virtue of definition of Nominated bank. In other word, the sole function of issuing bank i.e. “Honour”, needs not be necessary to appear its name as available because of with which explicitly mentioned in sub article 7(b) of UCP 600:
“An issuing bank is irrevocably bound to honour AS OF THE TIME [EMPHASIS ADDED] it issues the credit”
Moreover making no reference of nominated bank in sub article 16(f) & (g) of UCP 600 strengthen the position that issuing bank should not be treated as nominated bank in any circumstances.
Conclusion:
From above analysis, we can conclude that article 2, definition of nominated bank under UCP 600 should read as follows:
“Nominated bank means the bank [OTHER THAN ISSUING BANK] with which credit is available or any bank [OTHER THAN ISSUING BANK] in case of credit available with any bank.”
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firas
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Issuing bank
Thanks for your comment
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M.A.Chowdhury
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Issuing bank is not nominated bank
Assume you have opened a Fixed Deposit A/C of Mr. X for 5 years tenor.
Mr. X mentioned Mr. N as a nominee.
After 5 years, if Mr. X come to encash the FD A/C, whom will you pay?
Obviously to Mr. X. Because when Mr. X is available, Mr. N has no right on the proceed.
.
Hence, when issuing bank is concern, as a primary obligarot, it need not be a nominated bank.
.
Nominated bank is where credit is available (other than issuing bank & confirming bank)
Mr. X mentioned Mr. N as a nominee.
After 5 years, if Mr. X come to encash the FD A/C, whom will you pay?
Obviously to Mr. X. Because when Mr. X is available, Mr. N has no right on the proceed.
.
Hence, when issuing bank is concern, as a primary obligarot, it need not be a nominated bank.
.
Nominated bank is where credit is available (other than issuing bank & confirming bank)