Which bank sign the draft drawn on the drawee in between the issuing bank and the advising bank

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whykay
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Joined: 03/07/2013
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Please help me out.

1.

If a letter of credit is by "payment" advised through an advising bank who confirmed the lc to the beneciary, upon presentation of shipping documents and a draft drawn on the drawee. My question is "who is to sign the draft between the issuing bank and the  advising bank who confirm the lc? because at payment "documents is to be sent to the issuing bank for final verification (confirm this if i am right) and if this is so, why is the draft drawn on the drawee then.

2.

If an lc is by negotiation, which bank become the negotiating bank? which bank pay the negotiating bank upon compliance of lc? which bank reimburse the payee bank?

Thanks.

Hiren Makadia
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Joined: 02/24/2013
Hi whykay,   1) The draft is

Hi whykay,
 
1) The draft is always drawn on the Drawee mentioned in the LC Field 42A. and Draft may be endorsed if required, But the Drawee bank should always be as per the LC Field 42A (Drawee). Henc, the draft to be accepted by that Drawee bank only.
Further, draft may be endorsed if required, for,e.g. Draft drawn payable to the order of presenting bank in which case, thepresenting bank may endorse the draft in favor of the negotiating bank.
2) If an LC is available with any bank by Negotiation then any bank can be a negotiating bank and the negotiating bank to pay to the beneficiary and issuing bank is obliged to reimburse to the negotiating bank as per the LC terms. Ultimately, LC Issuing Bank is obliged to honour the presentation as per the LC terms and should pay to the negotiating bank as per LC terms irrsepctive whether the negotiating bank has paid to the beneficiary or not.

whykay
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Joined: 03/07/2013
Hello hiren, I appreciate

Hello hiren,
I appreciate your reply which had solved my question, that's a good one from you. No matter what may arise, the draft should be endorse by the drawee under the lc clause (that's what you mean right?.
But if the issuing bank (zenith bank nig) is a correspondent bank of an offshore bank (zenith bank uk) and the drawee on the lc state zenith bank uk, can zenith bank nig which is the issuance of the lc assume the same responsibility of zenith bank uk (advising bank) because its just a branch of the advising bank in nig?

Hiren Makadia
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Joined: 02/24/2013
Hello Whykay, as per UCP600,

Hello Whykay,

as per UCP600, branches of a bank in different countries are considered as separate banks.

Further, if Zenith bank UK is drawee bank mentioned in the LC as well as draft then Zenith bank UK is obliged to honour the presentation from the presenting bank or the beneficiary and Zenith bank Nigeria as a LC Issuing Bank is obliged to reimburse zenith bank UK. it is ulimate obligation of the LC issuing bank to honour the complying presentation from the beneficiary or the negotiating bank and remit proceeds as per the LC terms.

if the draft is drawn on Zenith bank UK as per the LC than Zenith bank need to preserve the draft and no need to present the same to the LC Issuing Bank Zenith Bank Nigeria.

whykay
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Joined: 03/07/2013
Dear Hiren, You have always

Dear Hiren,
You have always been a support to me, its nice having you around here.
Can a beneficiary present the documents to the advising bank and negotiate himself without the consent of his local bank? Since LC is to be sent to the international department of the exporter bank which may not necessary be in the same state as the beneficiary local bank.

Thanks prof

Hiren Makadia
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Joined: 02/24/2013
Hi Whykay, The nogitiation of

Hi Whykay,

The nogitiation of the LC is available with any bank if the LC is available wih any bank by negotiation, If the LC restricts the negotiability with a specific bank than the specific bank only can negotiate the documents.

anudipindia
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Joined: 03/07/2013
hello, Lc issue from RAC

hello,

Lc issue from RAC BANK, dubai. LC the name of AIB PVT.LTD., STANDERD CHATERD BANK, kolkata, India. INDIA STANDERD CHATERD BANK HAS TIE UP WITH RAC BANK , DUBAI.

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