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dear sir,

as the URR 725 says, a time draft may be drawn on the reimbursing bank. in that case what is the status of the reimbursing bank. can it refuse to pay at maturity.

URR also says that reimbursing bank may discount a draft. will the reimbursing bank enjoy the status of nominated bank?

is there really any use of such provision?

if the issuing bank changes a reimbursement authorization, will it be an amendment of the credit and will the beneficiary be required to be agreed with that?

Q1. as the URR 725 says, a time draft may be drawn on the reimbursing bank. in that case what is the status of the reimbursing bank. can it refuse to pay at maturity.

A1. A reimbursing bank is a drawee under the credit. Unless it has issued its reimbursement undertaking, a reimbursing bank is not obligated to accept a draft drawn on it. If is has accepted a draft, then it must pay at maturity (not under UCP but under the local negotiable instruments act). If it refuses to pay at maturity, the issuing bank must still reimburse the nominated bank at maturity (Article 7 of UCP)

Q2. URR also says that reimbursing bank may discount a draft. will the reimbursing bank enjoy the status of nominated bank?

A2. No, it does not become a nominated bank. A reimbursement arrangement is independent of the credit and any agreement of the reimbursing bank to accept a draft is separate from the credit.

Q3. if the issuing bank changes a reimbursement authorization, will it be an amendment of the credit and will the beneficiary be required to be agreed with that?

A3. No. As a reimbursement arrangement is independent of the credit, it may be revoked / amended any time by the issuing bank (unless the reimbursing bank has been requested and has issued a reimbursement undertaking).

A reimbursement instruction is not a term and condition of the credit. It is merely instructions on how reimbursement will be provided and can be amended by the issuing bank.