Best Trade Solution

Dear Experts,

need expert opinion for the below

1. why does bank need control over the goods by keeping them as consignee when the LC is issued basis the collateral from the applicant. e.g the applicant has fixed account with bank for 100% LC value and these funds also earmarked to utilize it under LC.

2. can the LC be issued with conditions ''charter party bill of lading.....consignee - to the order of issuing bank/ issuing bank? Does such condition change the behavior/approach of the issuing towards LC? though they are aware of the goods will be released according to the charter party agreements.

3. when we are certain that goods will be released according to charter party agreements(between shipowner and charterer) why do have consignee field in the charter party? and why should we bother about this?

4. Is there any way bank can take control over goods under charter party?

Regards
Dinesh Kumar

Hi Pal,

Charter Party bill of lading has a proper article in UCP, it means that has a different treatment by
banks that vary the customers risks dependin on the control over the goods.It is possible, for a bank,
to have warehouse at destination port and store the goods after loading!!!
From legal point of view the bank may have property of the goods even if these are in the hands of
the buyer, if a transport documents stated so. Last, many banks avoid to change wording of already proven l/c, notwithstanding the modification of the UCP rules.
Other comments appreciated
Ciao

Banks need control over the goods in LC operations because this is Trade Finance, and the essence of Trade Finance is to put control over the goods and provide money/credit against it.
Regarding charter party B/L; banks don't want them because the contract between shipowner and charterer overrides against the LC contract between applicant and bank. In any risky situation during the LC operation, shipowner may foreclosure the goods instead of issuing bank!