available by negotiation

narisa · Post by **narisa** » Sat Jul 18, 2009 5:31 pm

Dear all
I have some problems for available by negotiation of l/c usance.In case l/c only shown as discount are for buyer's a/c but not indicate it should pay at sight basis.Can nominated bank requested issuing bank payment at sight basis?

looking forward for all of your replied.
thks.

iLC · Post by **iLC** » Sat Jul 18, 2009 5:52 pm

dear narisa,

not sure about your question. i assume that the credit before you is a deferred one which says that the discount charges are on applicant's accounts. is it? first thing is there may be several charges related to discount like commission, interest, miscellaneous charges etc. you should look for clear instruction on this in the LC or contact the LC issuing bank for clarification. it is also necessary to know when this charges will be paid; at the time of negotiation or maturity?

from the given question, it appears that issuing bank issued a deferred letter of credit but want the nominated bank to pay at sight basis. since the LC is a usance one available by negotiation, as a nominated bank, you can pay the beneficiary any after presentation till any time on or before maturity. since the charges is on applicant's account, i believe that he would like to get the money as soon as possible

narisa · Post by **narisa** » Sun Jul 19, 2009 12:46 pm

Dear iLC
Thanks for yr replied.and I have another question is that in this situation can nominated bank asked issuing bank to reimburse them at sight basis? In your opinion how different about the words discount and interest which usually use in l/c usance and available by negotiation.I understand that if l/c states discount charges are for buyer's a/c is mean that issuing bank will pay at sight in full amount in otherwise if l/c states interest are for buyer's a/c , bene will get money on maturity and plus interest,is it right?
Thks so much

iLC · Post by **iLC** » Mon Jul 20, 2009 8:00 pm

narisa wrote:I understand that if l/c states discount charges are for buyer's a/c is mean that issuing bank will pay at sight in full amount in otherwise if l/c states interest are for buyer's a/c , bene will get money on maturity and plus interest,is it right?

well i believe that in both the case the issuing bank wants the nominated bank to discount the undertaking given by the issuing bank. if the issuing bank were to pay at sight, it would have issued a sight letter of credit. about usance period interest and discount; cant say for sure. depends on the entire structure of the LC. for example i usually use a clause where interest in conditioned by a preceding discount. depending on the sentence structure, discount charges may even mean a usuance interest.