Quoted from DCPro Discussion Forum (15 – 24 Feb, 2016)
QUESTION
I would like to seek for your opinion in the following case:
Extract from L/C:
41D: AVAILABLE WITH…BY…
ANY BANK
BY NEGOTIATION
42C: DRAFT AT…
60 DAY AFTER BILL OF LADING
FOR 100PCT OF FULL INVOICE VALUE
42A: DRAWEE
ISSUING BANK (BIDV)
BIDV received the complying document from the presenting bank with bill of lading date is 13 Dec, 2015. As LC terms the due date will be 11 Feb 2016 BUT 11 Feb 2016 is non-banking day in Vietnam (Tet Holiday).
The questions are:
- How to calculate the due date?
1.1 The due date will be 11 Feb 2016 (banking day in beneficiary’s country) and the issuing bank must be sure that the Beneficiary will receive funds on the due date (11 Feb, 2016 – banking day in beneficiary’s country); OR
1.2 The due date will fall on the first banking day in the issuing bank’s country after the holiday and the payment will be made after 11 Feb, 2016.
- In case the due date falls on non-banking holiday in reimbursing bank’s country, which one in item 1.1 or 1.2 mentioned above will be applied.”
Thanks for your support!
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ANSWER
Hi,
It should be understood that:
If the LC is available with the issuing bank by acceptance of the drafts drawn on the issuing bank and if the due date falls on a non-banking day of the issuing bank, the payment is to be made on the first banking day following the due date.
If the LC is available with a nominated bank by acceptance of the drafts drawn on the nominated bank and the nominated bank has acted on its nomination, the issuing bank must ensure that the nominated bank would be reimbursed with value date not later than the due date notwithstanding that the due date falls on a non-banking day of the issuing bank.
It is noted that the place of expiry and the place of availability should be one and the same. However, in practice, we sometimes come across LCs available with the issuing bank while the expiry place being in the beneficiary’s country. And the LC in your case is a typical one of this type. This practice is uncommon but acceptable. By so stipulating, the issuing bank intends to allow the beneficiary to make presentation to any bank in the beneficiary’s country and the issuing bank would honour if the beneficiary presents complying documents to the bank in his country within the expiry date irrespective of whether the documents reach the issuing bank within the expiry date.
The issuing bank (BIDV) will honour, i.e., accept the drafts and pay at maturity. So, when the due date is a non-banking day, payment is due on the first banking day following the due date, i.e., after 11 Feb 2016 (ISBP para. B7).
Kind regards,
N.H. Duc