Best Trade Solution

Dear Friend,

We received a LC from customer in which

Clause 42C reads: 180 days after sight
but
clause 78 reads: we will reimburse you at sight basis

will we get the payment from bank at sight upon presentation of documents or only after 180 days after sight?

Request you to pls revert asap to proceed for amendments if required.

Thanks

Antony

In this case, I think L/C type is UPAS L/C (usance payable at sight), which means: beneficiary/nominated bank will be reimbursed at sight basis but the applicant reserves the right to reimburse issuing bank at maturity date (180 days after sight)

nhungth306 wrote: ↑

Thu Feb 22, 2018 3:13 pm

In this case, I think L/C type is UPAS L/C (usance payable at sight), which means: beneficiary/nominated bank will be reimbursed at sight basis but the applicant reserves the right to reimburse issuing bank at maturity date (180 days after sight)

Correct

@Reetika...
Then in that case buyer will be obliged to pay interest for ussance period if he so pays after 180 from sight ? Bcouz bank had already paid ...

Yes. A UPAS L/C is always having this kind of clause `` Usance interest is on applicant``. So, applicant has to pay Issuing bank bill amount + usance interest on maturity. ( Sometimes, other bank charges might also be on applicant )
It is kind of Import financing product. For Reimbursing bank, it is called RA finance in some banks. Reimbursing bank finances Issuing bank for usance tenor in COF(cost of fund) + marging. Basically, interest is payable in lump sum at maturity date. But it might have some cases that interest is to be reset in certain time frame such as interest resets in every 3 month. That case is usually applicable for long tenor such as tenor is over 180 days or so.