TRANSFERRED CREDIT AVAILABLE WITH ANY BANK BY NEGOTIATION?

QUESTION

Hello Mr.Nyugen,

1) In case of transferrable LC : What if the issuing bank , 1st beneficiary and second beneficiary all 3 are in 3 different countries , how will the payment be processed ? As per the clause put by issuing bank is credit available with any bank in 1st beneficiary country, what if second beneficiary requests for credit availability with any bank in the their country… how are such situations tackled ?

2) what to do in case if the second beneficiary is demanding for confirmation of LC from 1st beneficiary as mandatory , how to solve the above to points.

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Thanks & Regards,
Jitu Rohera
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ANSWER

Hi Jitu,

1. A nominated transferring bank would only agree to transfer if the credit is available with that nominated transferring bank. Presentation of documents by or on behalf of the second beneficiary must be made to the transferring bank (sub-article 38.k). The bank presenting the document on behalf of the second beneficiary only acts as a presenting bank.
The transferring may accept the transferred credit to be available with any bank in the second beneficiary’s country. However, it can instruct the documents to be forwarded to their counter and would undertake to pay/reimburse only after receipt of the proceeds from the issuing bank.
I’m afraid no bank in the second beneficiary’s country accept to negotiate the documents unless such a negotiation is done on a with recourse basis.

2. The second beneficiary may insist on a confirmed credit. But the fact whether the credit is confirmed or not depends on whether or not the issuing bank agrees to issue such an L/C and whether or not the advising bank agrees to add confirmation.

However, if the original credit is confirmed then the transferred credit must include confirmation (sub-article 38.g).

Best regards,
Nguyen Huu Duc