Advising Bank Request To Discount Usance Payment Undertaking

[firas]

Dear friends
We issued letter ofcredit to the Ben through our corespondent A in country B and advised through their bank C in beneficiarys country D.
Bank A also is nominated and confirming bank .
The LC avalilabe with bank A by deferred payment 180 days from B/L
The documents received in compiling presentation and maturity date advised to Ben
After few weeks advising bank contacting us to authorize them to discount the the deferred
Payment undertaking
As we know that article 12b is only authorized the nominated bank to prepay or purchase.
Can we refuse the advising bank request . Please advice me with thanks

[mano]

dear,

could you please specify the route of presentation, the bank that presented documents to you (the issuing bank) and you replied to them with the acceptance message.

This is to advise the practice that we follow in such cases.

nevertheless, you have no obligation to authorize the advising bank and it is outside the scope of ucp.
the advising bank merely want to be sure that you will pay them on maturity this the reason behind the authorization so routing is very important to me to advise our practice (please provide route)

for ucb sub artilcle 12b (By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank)

which only authorizes a nominated bank to prepay where they have incurred a deferred payment undertaking. It does not cover circumstances where a bank seeks to prepay under another banks deferred payment undertaking.
.
regards

[firas]

Dear friend
The documents presented to bank A ( nominated and confirming bank )
The bank A forwarded the documents with the advise us that they are complied and maturity date.
And our bank also checked the documents (art.7 and 14) and we found complied and confirmed the maturity date to bank A
Best regards

[mano]

dear,

as the sequence of the transaction under ucp only bank A is authorized to discount but the main issue is respect way of payment of funds which is outside the UCP , ucp only specify the responsibilities and duties.
you can merely refuse this advising bank request as it is outside scope of ucp or even your local law but banks always exist to help in professional way to facilitate the transaction

we as per our practice have two options

1-preferably if documents have presented by beneficiary through its bank c (advising bank) to the nominated bank and then to your counter.

nominated/confirming bank a actually has undertaken to pay at maturity to beneficiary through its advising bank c and you the issuing bank has undertaken to reimburse nominated bank at maturity, in such case you should contact advising bank recommending it to discount funds on the strength of the undertaking of the nominated bank to the advising bank and advising bank would consider the credit and country risk of the nominated/confirming bank and check the limit of credit.

this discount process/payment arrangement is outside ucp

2-more complicated and require the interfere of beneficiary and nominated bank
beneficiary can contact nominated bank through its bank,advising bank, asking to release the nominated bank undertaking/responsibility to pay at maturity and confirm same to you then nominated bank should ask you to release your responsibilities to reimburse it at maturity, once this arrangement completed you can authorize advising bank to discount and give it your undertaking to reimburse the advising bank at maturity.
of course this is outside UCP and you would avoid any scenario of being committed to pay to two parties as beneficiary can discount same funds with two different banks and at maturity we will have two claims of same fund

i hope this my help.

regards