I would like to have have your advice on the below.
I have the following questions on confirmation of L/c:-
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1. If a l/c has instructions for confirmation as "without", what does it mean - the l/c is not confirmed by the advising bank or the l/c cannot be confirmed by any bank? L/C is not confirmed at the time of issuing and advising. If you required to add the confirmation, you can add confirmation later.
2. Is it mandatory that the confirming and advising bank be same? It is not mediatory.
3. Whom do we present the document in case of a confirmed L/c?. Only to confirming bank.
4. If the seller has an unconfirmed L/c can he approach any bank other than the advising bank to confirm the l/c whether the confirmation can be obtained? ( yes the seller can approach any bank for confirmation subject to the L/C conditions other than advising bank. After the confirmation you have to request to amend the related fields).
Dear Vikash Agrawal,
If a l/c has instructions for confirmation as "without",
it means that the advising bank is not required to confirm the Lc while advising to the beneficiary.
Hope of being assistance to you.
Dear Mr Agarwal,
LC confirmation will be only at the instruction of the issuing bank. In the case where the LC states confiration instruction as "without"' it means that the issuing bank has not asked the advising bank to confirm the LC.
This LC cannot be confirmed by any bank, because as mentioned above, the confirmation will be done ONLYat the request of the LC issuing bank.
As to the second point, if a bank is requested by the issuing bank to add its confirmation, naturally it wilol require all the previous LC amendments and hence generally the advising bank and confirming bank are th one and the same. However if at a letter stage the issuing bank desires to request another bank to add its confirmation, the issuing bank sends the LC and previous amendments to that bank for adding confirmation. The beneficiary is also requested to present original of the lC and amendments to the confirming bank for getting confirmation.
Confirmation of LC and authentication of the LC are two different aspects and should not be confused with. The advising presupposes verification of authenticity of the LC. The confirmation denotes taking up the responsibility of the issuing bank to honour the documents presented under the credit if the presentation is accoording to the terms and conditions of the LC.
Even if the issuing bank requests the confirmation of the LC, the advising bank may refuse to add its confirmation to the LC.
In case the LC is confirmed by another bank, the exporter can present the documents to either the confirming bank or to the issuing bank. Normally the advising/confirming bank is in the country of the exporter and hence submission of documents to the confirming bank in the country of the exporter is more convenient.
In cases of countries facing difficulty of payment many times the confirming bank is situated outside the country of the exporter as well as importer. In such cases the documents have necessarility to be submitted to the confirming bank to ensure prompt trouble free payment.
As to your last point, friend, confirmation cannot be added at the request of the seller. Based on the relationship and credit arrangement with the bank, the seller can arrange negotiaion of documents under an unconfirmed unrestricted credit.
1. If the LC from issuing bank is "without" the confirming bank will take their own discretion whether to confirm or not. However, some bank add thier "silent confirmation" even if it is without. Advisable to get the LC amended to "add confirmation".
2. No need. each bank has their own role of advising, confirming or even both.
3. If the LC is confirmed, the document has to be presented to the confirming bank only.
4. Again it is each banks discretion whether they can confirm ( depending upon availability of line, arrangement etc with the LC issuing bank). However, some banks will take their own risk to add silent confirmation to an unconfirmed LC unless anything contrary is specified in the LC itself.
Anyone facing a "silent confirmation": please read the conditions under it very carefully. They should put the beneficiary in a position as under a payment guarantee given for the payment obligation of the issuing bank. But this has to happen in the "silent confirmation" itself as silent confirmations are neither defined under the UCPs nor under the ISBPs.
Again many thanks for Raj's valuable comment!!
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