Hi friends,
We are about to issue a connfirmed LC.
Applicant insists that only invoice would be presented to confirming bank and all other originalls would be sent directly to us (issuing bank) by beneficiary. This makes me suspicious because beneficiary will get LC amount from confirming bank only against invoice and confirming bank will reimburse himself accordingly. In case of a fraud or non-performance of beneficiary how can we avoid payment? We request a benef. decl. that they will send all docs to us except for original invoice, but how can this be helpful or protective?
Do I act too prudently or show a reasonable care?
I would be glad to hear your experiences..
Apllicant shouldn't ask for such stipulations
Importantly, he cannot insist on anything!! Primarily the credit is your obligation and only secondly his.
Of course he plays an important role, but this wish is just foolish. If he gets betrayed, he deserves it, but what if he and the beneficiary want to play a game on you?
The solution with incomplete sets of B/Ls to be presented through the banking channels as documents to be presented under the credit isn't much better. You will never know what really happened to the missing original B/Ls!
I have my problems with this under import businesses, but would definitely advise my clients to insist on an amendment of the credit that a full set of B/Ls is to be presented under the credit.
-Each long journey starts with a small step-
Best regards
Frammi
payment against the invoice. But!-------------
Beneficiary is getting payment against the invoice value only. But, if the L/C calling for some documents with the invoice, beneficiary must submit all documents to the confirming bank for negotiation. These documents are the supporting documents as per L/C.
Documents will under discrepant, if the beneficiary is submitting only the invoice and the remaining documents to the issuing bank directly as per the applicant's advise. You need to follow up L/C conditions and not according to the applicant’s advise.
Contact: tulsiusha1@yahoo.com or tulsipillaiex@hotmail.com
Regards
Tulsi / dubai
Your responsibility is to the bank first!
Hello Navi,
You are acting prudently in this transaction.
Normal procedures are for all of the required documents to be presented through the banking channels. If you issue the letter of credit such that certain documents are being sent to you directly from the beneficiary while payment is based on other documentation, you are now exceeding your role as a bank.
Now in order for you to better protect yourself in this scenario, try the following.
1. Let your applicant know that the letter of credit is a contract between the issuing bank (you), the beneficiary and a confirming bank (if any). The payout under the letter of credit will be controlled only by the required documents that are presented to you by the confirming bank. So if all that is ever received is the invoice, the applicant would be required to pay.
2. If you do end up having the clause where certain documents are sent to you, the confirming bank will probably want some kind of documentary evidence, such as a beneficiary's certificate showing the documents were sent.
3. Let your client know the confirming bank would not confirm a letter of credit if payment was contingent upon your receipt of documents.
4. Refuse to do the transaction if you do not feel comfortable with the risk. If you get pushed by your manager to do it, go above them and get a higher approval in writing. Remember you must protect the bank before you service the customer. In the end you will be protecting both parties.
I wish you luck with this.
LC Sam
This is signal of fraud from Benificiary
Respected Applicant
I feel that shipper want to do fraud with you. If Invoice is the only negotiating documents un LC then shipper can prepare invoice and negotiate LC without doing shipment. So, Keep BL as must document for negotiation under LC
Be Alert
From
Mukesh Doshi
Mukesh
Dear Mukesh, did you read Navi's question properly? He said " Applicant " wants such act not " Bene ".
Imran Umer
IamImranUmer@gmail.com
Thanks Friends,
Thanks for your comments,
I persuaded applicant that beneficiary present 1/3 original of B/L, original PL and a declaration as well as invoice to confirming bank and issued LC yesterday.
Hope everthing will go OK.
Thanks again..