Home Uncategorized WHETHER DRAFT IS TO BE DRAWN ON ISSUING BANK OR CONFIRMING BANK

WHETHER DRAFT IS TO BE DRAWN ON ISSUING BANK OR CONFIRMING BANK

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QUERY FROM DMSHETTY

We had issued an Import Lc available by negotiation, authorising the advising Bank to add their confirmation and the Draft to be drawn on Confirming Bank. The advising Bank agreed to Confirm the Lc but wanted the draft to be drawn on us (i.e. Issuing Bank). Whether the advising Bank's request is in order?

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COMMENT

N.H.DUC – Viet Nam

Hi,

It is true that under confirmed L/Cs drafts are normally drawn on the confirming bank. Yet, this does not mean that drafts drawn on the issuing bank is impossible.

If the sight draft is drawn on the confirming bank and the documents presented constitutes a complying presentation, the confirming bank must pay at sight (not negotiate).

If the sight draft is drawn on the issuing bank and the documents presented to the confirming bank constitutes a complying presentation, the confirming bank must negotiate without recourse.

Best regards,
N.H.Duc …

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One Comment

  1. Dinesh Kumar Manoharan

    April 20, 2021 at 9:19 am

    Dear All,

    Does it mean that Negotiation with recourse and Negotiation without request be identified basis the drawee field in the draft. If the draft is drawn on issuing bank for the confirmed LCs, should the negotiation be treated as Negotiation without recourse despite a separate confirmation undertaking?

    Answer
    Please bear in mind that where a confirmed LC is available with the confirmed bank by negotiation, the confirmed bank must negotiate without recourse and that where a non-confirmed LC is available with a nominated bank by negotiation, that bank may agree to negotiate on a with or without recourse basis.

    Reply

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