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Negotion.

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Sun, 06/19/2011 - 01:23
Dinesh Kumar ma...
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Dear All,

Yesterday, I have received an lc with states lc available with 'citius33 by negotiation'  and draft, drawee clause states  'sight and citius33(same as lc available with bank)respectively

Negotiation means draft must be drawn on a bank other than nominated bank. So that the nominated bank can negotiable the documents.

What is the purpose of issuing bank such lc?

 

 

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Sun, 06/19/2011 - 02:25
#1
Dinesh Kumar ma...
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Joined: 06/18/2011
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Negotion.

Dear Imam,

Thanks for your help.

I have one more doubt on this. On what basis the nominated bank taking risk in this case. 

Normally for negotiation, drawee must be other than the nominated bank.  So the nominated bank can negotiate the documents on hope that they can get payment from the other bank where draft drawn on.

In this case, nominated bank is the drawee bank under which basis they can effect payment(without recourse basis).  Please

Thanks in advance

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Mon, 06/20/2011 - 02:00
#2
Mohammed Imam
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Joined: 08/25/2008
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Negatiation

Hi

In such a case the nominated bank prior to agree to handle the LC by negotiation they willl  take a pledge from the beneficiary noting that the nominated bank may paid the value of the LC to the beneficiary in advance to help the beneficiary to buy raw material and so.

I can say that this consider as a loan to the beneficiary and proccedures taken is same proccedures of given a loan to a customer so as the nominated bank reserve his rights.

In this regard if the LC required presentation a draft then the nominated bank request that the draft be drawn on him.

 Regards

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Sun, 06/19/2011 - 01:46
#3
Mohammed Imam
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Joined: 08/25/2008
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Negotiation LC

Hi

Negotiation can either be Sight Negotiation or Term Negotiation. for both types draft(s) may be required.

Negotiation means paying or accept to pay as the case is the value of comply documents from the nominated bank owns fund.

The purpose is sometimes the nominated bank give the beneficiary  credit facilities and so required the LC to be available be Negotiation. the issuing bank has nothing to do in such case as it is obliged to pay the value of complying documents wither the LC is by negotiation or otherwise.

 

Regards

Mohammed Imam

mohdimam@yahoo.com

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