Best Trade Solution

I would like to clarify whether my simple understanding in LC is correct. Are the following steps correct?
1. First the buyer will ask the bank for issuing letter of letter of credit.
Bank will send first MT 705 and then a 700 or 701 to advising bank

2. Advising bank informs the seller about the documentary credit.

3. Now the seller will ship the goods and submit the transport documents to advising bank.

4. The advising bank checks the documents. If the documents are OK it will credit the seller and forward the documents to issuing bank.

5. When the issuing bank receives the documents it will reimburse the advising bank through MT 202 or MT 103.

6. Then the buyer will be debited and the documents will be released.


Thanks and best regards,

John

John,
With small additions/clarifications you are on the right track...

johndr wrote:Bank will send first MT 705 and then a 700 or 701 to advising bank

MT 701 is a continuation of MT700. You have to have both in case MT701 is issued.

johndr wrote:Now the seller will ship the goods and submit the transport documents to advising bank.

Seller will not ship the goods if only MT 705 is received. He is to wait MT 700. Then seller presents ALL documents required not only transport docs either to advising bank, negotiating bank or issuing bank depending the availability of credit.

johndr wrote:The advising bank checks the documents. If the documents are OK it will credit the seller and forward the documents to issuing bank.

It depends on how the credit is available (py negotiation, payment, acceptance or deff payment)

cristiand969,
Thank you very much for your reply. I would like to know, in which scenario the MTs 710, 760 and 767 are used. And the role of negotiating bank in LC.

Thanks a lot and Best Regards,
John

John
Are you a banker or a bank customer?

First I apologize for the late reply. Actually I was not able to work on this project for the last 1 week.

I was assigned a project in which I have to present a seminar on the full work flow of Letter of credits.

Thanks,
John