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Dear All,

Have you ever effect payment under reserve and indemnity?
Could you pls clarify how it happens in practice.

Thank you in advance.

i did it once. back in 2006. and got the payment after 4 months :lol: there was nothing special. i checked the document. found the discrepancies. since the client was a very value one, the management decided to negotiate it. and then....

This usually happens in case the documents are discrepant.

If the beneficiary is a valuable client, they sign an indemnity or an agreement stating that the negotiation is under reserve and that the bank advancing funds has the right to recourse on the beneficiary if the issuing bank were to refuse documents including the right to be reimbursed for interest / losses.

I didn’t do it

but as far as my knowledge - when you accept the nomination and come to an internal agreement with the beny with recourse , this action take place for the non complied docs - at the sole risk of nominated bank - in such case nominated bank specify this on their covering letter as a goodwill gesture .

If such docs rejected you will not get the settlement from issuing bank which you have already paid to beny against the reserve / indemnity .

at the same time if L/C prohibits don’t do this



Thanks & Regards,