Q&A Uncategorized A CASE REGARDING CUMULATIVE REVOLVING LC By Mr Old Man Posted on October 4, 2016 2 min read 0 0 2,372 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Hey Mr. Old Man, Could you please help me in clarifying the answer of the following question: A credit is issued for the amount of USD15,000 and is stated to revolve monthly on an automatic and cumulative basis. The credit has a 9 months validity period. The following drawings are made in the first 5 months: January – USD12,500 February – USD16,000 March – USD10,750 April – USD13,800 May – USD15,000 How much is available to be drawn in June? Expecting your prompt response as always. Regards, Rashed ———— ANSWER Hi Rashed, It is understood that the unutilized sums in a cumulative revolving L/C can be added to the upcoming drawings until the LC expires. As the L/C revolves monthly for a validity period of 9 months, the maximum amount available to be drawn in June is USD21,950 Note: Maximum amount that can be drawn for six months is USD90,000 (= USD15,000 x 6). However, the total amount drawn for the last 5 months was USD68,050 (= 12,500 + 16,000 + 10,750 + 13,800 + 15,000). So, the maximum amount available to be drawn in June is USD21,950 (= USD90,000 – USD68,050). I am not good at calculation. Please check again! Kind regards, Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?