Home Uncategorized WHERE 1/3 ORIGINAL BILL OF LADING IS TO BE SENT DIRECTLY TO THE ISSUING BANK

WHERE 1/3 ORIGINAL BILL OF LADING IS TO BE SENT DIRECTLY TO THE ISSUING BANK

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QUERY FROM LTT

Hi Mr.Old Man,

We, advising bank, receive an LC in which F46B requires:

+2/3 set of original clean BL made out to order of issuing bank
+…..
+Ben's certificate certifying that 1/3 of negotiable shipping documents to be couriered to issuing bank within 3 working days of shipment date.

I am wondering why the credit requires that since our bank shall at last forward the documents to the issuing bank? what does the issuing bank need the 1/3 set of negotiable docs for?

Please clarify this for me.

Thank you so much.

————————-

ANSWER

Hi,

The nominated bank, the confirming bank (if any), and the issuing bank each may have a maximum of five bank days following the date of presentation to determine if the documents are complying whereas shipments, for example, from HCMC port, Vietnam may arrive at Malaysian port within 72 hours or less than that. This means that the goods may arrive before the documents.

If this is the case, the applicant cannot take delivery of and clear the goods as he does not have the original bill of lading (duly endorsed) and/or other related documents (e.g., invoices, certificate of origin…).

So, the fact that 1/3 set of negotiable documents or one set of non-negotiable documents plus 1/3 original bill of lading is requested to be sent directly to the issuing bank or to the applicant within three working days after shipment date is aimed at enabling the applicant to take delivery of and clear the goods and avoid demurrage and/or storage charges in case the goods arrive before the documents.

Best regards.
Mr. Old Man
——————-

From LTT

I thought of this at first as well. It is true that the applicant is in Malaysia. I do not know the cargo arrives that fast. I thought it would be at least 10 days.

Thank you Mr Old Man.

As the advising bank, we receive and examine docs before forwading them to foreign bank. Our customer sometimes presents docs at our bank after the expiry date 1 or 2 days and requires us not to cite late presentation as a discrepancy in the bill schedule since the fee is pretty high. It is a sensitive matter so I do not accept it. I am new in this area so I am not sure. Maybe I would help our customer by shortening my 05 working days of checking docs.

I would be pleased to hear your opinion.

Regards,
Trang
——————

ANSWER

Hi,

Some banks still act in the same manner as yours, i.e., making full use of five banking day gap to save their customers from the discrepancy “late presentation”.

Such a dishonest action is not encouraged.

Regards,
Mr. Old Man

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2 Comments

  1. Pratik Tapadia

    October 14, 2015 at 4:09 pm

    Mr Old Man,

    We are exporting some goods to Nigeria. Importer Bank is First Bank of Nigeria, confirming bank is Standard Chartered Bank, Mumbai and advising bank is State Bank of India, Nagpur, India.

    In our LC there is a clause, wherein through our advising bank, we have to submit 2/3 original Shipped on Board OCEAN BILL OF LADING and 3 Negotiable copies to the Confirming bank i.e. SCB, Mumbai. Further, we have to issue a certificate to SCB, Mumbai that 1/3 original Shipped on Board OCEAN BILL OF LADING have been sent directly to Issuing bank (i.e. FIRST BANK, NIGERIA) within 21 days by air courier.

    Our worry is that if we send 1/3 original directly to the Issuing bank, the applicant can take possession of the container and if some discrepancy arises in the documents, SCB Mumbai may not complete the payment.

    Please let me know if our understanding is correct and what is the recourse?

    Reply

  2. mroldman

    October 14, 2015 at 5:32 pm

    Dear Pratik,
    It is agreed that the confirming bank must honour a complying presentation notwithstanding that 1/3 original bill of lading has been sent directly to the issuing bank. Therefore, please try to present complying documents to get the payment from the confirming bank.
    I guess the bill of lading in question is required to be issued to the order of the issuing bank, i.e. First Bank of Nigeria. If so, like other banks, First Bank of Nigeria would hand the duly endorsed bill of lading to the applicant only when the applicant:
    (i) agrees in writing to waive all discrepancies, if any, in the documents, and
    (ii) undertakes to or has deposited sufficient funds (if the transaction is self financed by the applicant) or has provided a duly signed promissory note (if the transaction financed by the issuing bank) to enable First Bank of Nigeria to honour the L/C.
    I think First Bank of Nigeria, which is the country’s largest bank by asset, will act in accordance with international practice. Therefore, once having endorsed the bill of lading to the applicant, it will certainly honour irrespective of whether the documents are discrepant.
    If it fails to honour, you may take legal action against it. Don’t worry!
    Kind regards,
    Mr. Old Man

    Reply

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