Restricted l/c
A LC is received from xyz bank (issuing bank ) which says available with : abc bank ;
by : negotiation .
1) can the beneficiary of the lc, forward the documents directly to xyz bank ? directly to abc bank
2) can the beneficiary ask its bank ( say KBC bank) to negotiate tha documents and forward them to xyz bank (issuing bank ) . will the issuing bank pay or is it a discrepancy ? can kbc bank demand reimbursement from issuing bank?
3) can the kbc bank (beneficiarys bank ) forward and demand reimbursement from abc bank with whom the credit is available .
2) again UCP article 6 a; b.
As I've researched only the nominated bank can negotiate the documents. Or in case of freely negotiable credit, in other words a credit which is not available by any particular bank, the beneficiary has the possibility of finding another bank in the market which is prepared to negotiate. Your case is not freely negotiable. Therefore the answer is no.
so the answer is no since the LC is Restricted to abc Bank. due the name of the bank is nominated .
Following on from LB's comments below:
1. Yes
2. KBC is not a nominated bank under the LC, so it cannot negotiate the documents, but nevertheless, as an agent of the beneficiary, it may by-pass abc bank and forward documents directly to xyz bank. KBC bank may request for payment under the documents to be made through itself, and the issuing bank cannot withold payment on account of the fact that the beneficiary elected not avail the benefit of negotiation by a nominated bank.
3. Yes
Following Abrar's comments-
Just one additional comment to point 2: The beneficiary or KBC Bank must make a complying presentation to the issuing bank. In other words, the presentation should be within the date of expiry of the credit or the period of presentation, whichever is earlier.
Dear Abrar, can I have your email address?
UCP 600 article 6
a) a credit must state the bank with which it is available or whether it is available with any bank. A credit available with a nominated bank is also available with the issuing bank.
d) ii
The place of the bank with which the credit is available is the place for presentation. The place for presentation under a credit available with any bank is that of any bank. A place for presentation other than that of the issuing bank is in addition to the place of the issuing bank.
referring to this article, I assume that documents can or may be presented to the issuing bank directly, as the credit is also available with the issuing bank.
Under a restricted L/C documents can be directly presented to the issuing bank as per Art 6(a). It states that if the credit is available with a nominated bank, it is available with the issuing bank also. One more reference we have in Position Paper No.2 wherein it is stated
"Failure by the beneficiary to seek/and or secure 'negotiation' from the nominated bank which allows 'negotiation' does not affect the undertaking of the issuing bank or the confirming bank (if any) nor does it constitute non compliance with the documentary credit conditions provided that the confirming documents are presented by the beneficiary within the validity of the documentary credit or within the presentation period where appropriate to a nominated bank or direct to the confirming bank, if any or direct to the issuing bank."
In view of the above clarificationa and also in terms of UCP Art 6 (a) documents can be presented directly to the issuing bank within the validity period.
Issuing bank has the right to check with the nominated bank about the negotiations if any made by them.
For further clarifications you may please log in to our website:www.paramshree.com wherein we have provided details about the materials available for documentary credit transactions.
thanks.
Parameswaran.K.
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