Need your expert opinion on the below.
LC is 180 days usance @ Libor + 2.6 pct. Beneficiary can negotiate the documents on sight basis. However, the negotiating bank shall get the reimbursement of the bill amount only on the due date confirmed by the applicant bankWe requested for "TT reimbursement allowed" in order to ensure after 180 days our bank will be reimbused through TT which is faster. But applicant's bank came up with below "
. The adviced amendment by you being contradictory with this clause "Beneficiary can negotiate the documents on sight basis. However, the negotiating bank shall get the reimbursement of the bill amount only on the due date confirmed by the applicant bank".
Pls advise is bank right? Do sight LC need TT reimbursment only. What is exact interpretation of the same.
Also there is another case " Indian reserve bank has ceiling for cost to applicant and their bank whihc is LIBOR + 200 basis point. We agreed in contract of Libor + 2.6 pct for 180 days usance. Now we thing of asking an amendment to increase the total value and unit price for recovering the differential 0.6 pct. Should we do that or ask for TT transfer of the differential ammount.
The undertaking of the issuing bank in honouring an acceptance or deferred payment undertaking includes payment to the beneficiary at maturity of the usance period - there is no reimbursement claim made and therefore TT reimbursement is unnecessary.
Sorry, cannot help you on the second part of your question, I have no experience of Indian Reserve Bank regulations - you should ask your local bank about this issue.
Reimbursement conditions are only for banks. In your case being possible to negotiate, beneficiary will receive the proceeds at sight and the bank will be reimbursed at maturity with good value. Today difference between TT or mail reimbursement are very closer due to the possibility of sending HARD draft by DHL or similar courier, to the reimbursing bank, and costs too are similar.
Prices and other arrangements could be agreed in any time, but....
Ciao and good luck
pals, request your help on above subject matter.