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I am new here ( New to LC Business ) but have a query which is killing me , experts plz clarify....

I am a Banker of say Bank ABC , I have an applicant X who wants to open an LC in favor of Y where both X & Y are my customer , so here ABC bank is the LC Opening Bank as well LC Advising Bank ( And of course both X and Y are of the same branch as well)

The beneficiary Y wants to discount a bill drawn on X ( of the same Branch ) ca this operation be permitted ?

I know we can issue LC on behalf of other Branches of the same Bank , but can we do it for the same Branch ?

Plz Pardon my ignorance

Hi Pal,

I dont see an issue. The problem is that you are risking a relationship. Then I think it is a domestic l/c, may be valid with invoice and packing list only.
I will word the l/c in the way the simpliest possible, obtaining authorization specially if you pay someone in advance.
I am involved in this type of l/c, but only as issuing and advising bank at the moment. In the next future I will see it
working, hoping without big problems.
Ciao

Indeed it is a domestic LC ( Inland LC ) ,I was getting a lot of those and worrying if there is any restriction for the same...

Thanx for the clarification picant