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Team,

Will there be any difference the way issuing bank look at unconfirmed LC and confirmed LC in terms of effecting payment?

While i understand that the issuing bank responsibility/obligation to pay stats the movement the LC released is from the issuing bank system, there is a statement that in case of dispute, when situation to step into the court, issuing bank favors the confirming bank rather than advising/nominated bank as the LC is confirmed as requested by the issuing bank.

please also confirm why don't we have UCP article that supports payment understanding from issuing bank to confirming bank?

Regards
Dinesh Kumar

Dear Experts,

Any opinion welcome.

Thanks & Regards
Dinesh

Hi Pal,

frankly I dont think that a bank has a credit line with its correspondent for confirming l/c.
Usually we ask the future confirming bank if it is ready to add confirmation, may be big
banks have a mutual agreement. I think the l/c are booked in the same way for the issuing bank,
the confirmimg bank will book its undertaking as per local law(depending on the Issuing's bank Country),then there are ECA; SACE, COFACE, Atradius etc that may guarantee Country Risk or Issuing Bank Default.
As per art 8 f, an advising bank , not prepared to add confirmation, may inform beneficiary anyway.
IMHO it is better to exclude such possibility, the beneficiary may pretend confirmation and the issuing bankshould cancel the l/c and transmit another l/c via a different bank.
Sorry for being too long.
Ciao

No matter whethwr it is a confirmed LC or unconfirmed LC, issuing bank has to effect payment on complying prsentation. In case of any dispute issuing bank will support not only the confirming bank but also nominared bank because these banks would be generally the correspondent banks of issuing bank. So inorder not to loose the correspondent relationship issuing bank will support

Confirming bank is also a nominated bank, issuing bank finally must effect pyt to confirming bank.
Any way, there is no confirming bank wanna get involved in a transaction of taking its own risks without security from issuing bank.
regds,

Dear Friend ,

payment will be effected against complying presentation regardless confirming or negotiating or presenting bank

issuing bank will back up the nominated bank or confirming bank as per UCP600 7C

regards

(1) for confirmed LC, the issuing bank have to follow the instruction of the confirming bank to make effective payment on due date because for the beneficiary's viewpoint, risk related to payment is transferred from the issuing bank to the confirming bank.
(2) for unconfirmed LC, for the beneficiary's viewpoint, risk related to payment is transferred from the applicant to the issuing bank.
My thought is that liability of the issuing bank in the 2nd situation is even higher than that in the 1st one.
In practice, to save cost, Ben can choose the nominated bank acts as the confirming bank provided that this bank has RMA with the issuing bank

from issuing bank: no big difference
from beneficiary point of view : there is huge difference