Amendment 41D:

[UT18GX]

AMENDMENT:

I had received one Ammendment to be done from our client, Stating:

SUBJECT: Amendment on L/C # ABC123456 in favor of M/s.XYZ LIMITED

Reference to the above subject (two) letters of Credit and further to the request of
beneficiary, we would like to request you to arrange the necessary amendments in the
LICs as detailed below;

1) Beneficiary's Banker; " ABC Bank"
Make the LC restricted for negotiation with " ABC Bank" only.
Bank charges for this amendment shall be on beneficiary's account and all other terms
and conditions of the LIe shall remain un-changed.

At the time of L/c issuance,

L/c was advised to ABC BANK

Field 41D: Avaliable with....By...Name&Addr
ANY BANK IN AUSTRIA
BY NEGOTIATION.

After Amemdmment :

NOW AMENDED TO READ AS,
ABC BANK
AUSTRIA
BY NEGOTIATION'


Now question arises:

1.what my be the reason that Advising bank want to be make this change and want the L/c to be available with them only ?
2.Why Beneficiary agree to get it changed since it does not make to much difference to him, beneficiary can present documents to ABC BANK and with also to other banks in AUSTRIA.

[picant]

Hi Pal,

It seems to me that the Austrian bank will finance the transactions and must be sure that documents will be presented to its counters.
Finance could be made by an advance, delcredere, silent confirmation etc, transactions not regulated by the UCP 600, so the bank is acting to restrict the presentation.
Other comments appreciated
Ciao

[shahriar]

i agree with picant.the advising bank most probably want to give back to back LC or export credit facility against this credit. restricting the credit to their counter would give them extra comfort; the beneficiary wont be able to negotiate the credit with some other bank by passing the advising bank which has financed the beneficiary. this amendment is to some extent unnecessary and useless if the intention of the advising bank is like the one said above. as per SWIFT rule, if the LC is available with any bank, the original advised credit must be presented at the time of negotiation. hence the advising bank may simply choose to keep the original credit in their control. need to mention that the beneficiary is still able to present the document to the issuing bank directly.

[ibnejafar]

Dear,
agreed with PAL However....
if there might not be any finance then the only intention of advising bank seems to capture the export volume.

[ibnejafar]

Dear
in reply to restriction of L/C you are very right but in the ending para you quoted:
"need to mention that the beneficiary is still able to present the document to the issuing bank directly."

im confused here that if this might possible then why in L/C Clause 41D exists. because if bene would be direct to L/C Issuing bank then there seems to need/functions of nomination

Kindly advise through UCP that ........
does bene has the right to be direct to L/C Issuing bank.

Regards.
Ibnejafar

[shahriar]

Dear Ibnejafar,

please refer to UCP 600 article 6a which says

"A credit available with a nominated bank is also available with the issuing bank."

that means even if you restrict the LC using 41D, issuing bank is always there. to avoid direct presentation by the beneficiary, you need to add separate clause like "presentation must be made through the nominated bank"

[picant]

Hi Pals,

What's about loss of documents? If the beneficiary present documents to the bank in field 41 the risk passes to issuing bank, if send documents to issuing bank risk remains to itsself.

Other comments appreciated

Ciao

[iLC]

personally as an issuing bank i always prefer to have document presented through a bank. whenever i received a document directly from the beneficiary, i created problem for me