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DRAFT PAYABLE TO THE ORDER OF THE NOMINATED BANK

By Mr Old Man
Posted on March 7, 2010
1 min read
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QUERY FROM SHAHRIAR

dear duc,

thanks for your excellent analysis. as you have said that a draft is required for a post export finance and nominated bank require a draft for negotiation. but the draft in concern is never on the nominated bank and therefore not even endorsed by them. how can then a draft help a nominated bank then?

shahriar

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COMMENT FROM MR. OLD MAN

Dear Shahriar,

Under L/C transactions, drafts drawn by the beneficiary are normally made payable to order of the nominated bank, which is a named bank or any bank.

For example, the draft drawn under the L/C available with Bank AAA by negotiation shall contain the following wordings:

PAY TO THE ORDER OF BANK AAA

Before forwarding the draft and documents to the issuing bank for payment or reimbursement, Bank AAA endorses on the back side of the draft as follows:

PAY TO THE ORDER OF ANY BANK, BANKER OR TRUST COMPANY

For BANK AAA
(Authorized signature)

Best regards,
Nguyen Huu Duc. …

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