Issuing Bank accepted but cannot pay

[akomolpa]

Dear all,

Could you please give me your kind instruction concerning to the situation that
When the Issuing Bank accepted the usance draft drawn on them under their Credit, at that time they are liable to pay the Negotiating Bank at maturity. The question are :
1. Does the beneficiary ,which had already received the discounted amount of bills, be released from the liability to the Negotiating Bank whether the Issuing Bank pay at maturity or not?

2. If the Issuing Bank cannot pay at maturity, can the Negotiating Bank recourse to the Beneficiary?

Thanks very much in advance for your kind attention.

Best regards,

Ajcha Komolpamorn

[picant]

Hi Pal,

negotiation can be made to the beneficiary with or without recourse, with recourse you grant a facility to beneficiary, a sort of advance; without recourse you pay beneficiary definetely and you post bank risk versus issuing bank(similar to confirmation). Naturally these operations have a different price/cost.

Other comment appreciated

Ciao

[ajoy]

Hi

Dear all,

Could you please give me your kind instruction concerning to the situation that
When the Issuing Bank accepted the usance draft drawn on them under their Credit, at that time they are liable to pay the Negotiating Bank at maturity. The question are :
1. Does the beneficiary ,which had already received the discounted amount of bills, be released from the liability to the Negotiating Bank whether the Issuing Bank pay at maturity or not?

2. If the Issuing Bank cannot pay at maturity, can the Negotiating Bank recourse to the Beneficiary?

Thanks very much in advance for your kind attention.

1. It depends if you discounted with recourse you have recourse to bene . If you didnot then you dont.
Typically, your cover letter to bene will state that clearly - with or without recourse.

2. Depends did you negotiate 'with' or 'with out recourse'

In general we discount 'without recourse' always for confirmed LCs or we should.

For others depends on case to case . Check the advise to bene in this case . did you say ' without recourse ' on that . if you did you have no recourse to bene.

DO note that recourse has nothing to do with UCP or ISBP. It is an arrangement between the bene and the bank which discounted.

I hope that answers and I hope that your bank discounted this one 'with recourse'.

Have a nice weekend.

Cheers