Reimbursement Undertaking In Favour Of A Nominated Bank

[Arun]

Hi

The below question is taken from IFS sample question need know the exact justification why Anwer A is correct and why not answer B

At the request of the issuing bank, a reimbursing bank has issued its reimbursement undertaking in
favour of a nominated bank. The documentary credit is advised to the beneficiary by the nominated
bank. The beneficiary subsequently presents documents direct to the issuing bank for settlement.
What BEST describes the action that the issuing bank should now take?
A Check the documents and, if compliant, make payment to the beneficiary through the
reimbursing bank.
B Check the documents and, if compliant, make payment to the beneficiary and seek
cancellation of the reimbursement undertaking.
C Return the documents to the beneficiary and request that documents be presented through
the nominated bank.
D Return the documents to the beneficiary and request that documents be presented to the
reimbursing bank to enable the reimbursement undertaking to be utilised.

[GUBAZ]

Hi Arun ,

as per answer B , payment is made in duplicate.İf issuıing bank effect payment directly to beneficiary , beneficary can claim second payment via beneficiary's bank because undertaking cant not be cancelled without obtain beneficiary's instruction.

Check the documents and, if compliant, make payment to the beneficiary and seek
cancellation of the reimbursement undertaking.

[poojagandhi]

Hi, as per article 16 of URR the issuing bank remains liable for reimbursing bank charges even if the reimbursement claim is not presented to reimbursing bank. So it is wise that the issuing bank pays through reimbursing bank and thereby let reimbursing bank take its charges from amount reimbursed.