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Whether its necessary to add confirmation before negotiating and discounting the documents

no its not necessary to add confirmation to the bill before negotiation

Dear All,

I heard about pre confirmation and post confirmation(after presentation of credit comply documents) at negotiation bank/confirming bank counters.

It is additional undertaking/commitment of the confirming bank on behalf of the the issuing bank to the presenter. Having said that, Believe no such commitment required to the presenter after negotiating/discounting the documents(means no value after the presenter received proceeds)

Please correct me if am wrong. Hope i am missing something.

Thanks &regards
Dinesh Kumar

Hello Abhishek,

As Dinesh rightly said Confirmation is an additional undertaking if Credit compliant docs are presented under a confirmed LC, the confirming bank will have to honor the presentation and pay the beneficiary.

Negotiation means means the purchase by the nominated bank of drafts (drawn on a bank other than the
nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance
funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated
bank. Also i see that you are acting as a Nego bank and credit available at your counters.

I feel confirmation is not required before negotiating.

Please correct me if wrong.

Many thanks,
Krish

no its not necessary.

Not necessary to add confirmation before negotiation. However, in case of a confirmed LC, the confirming bank undertakes negotiation on a "without recourse" basis, whereas in case of an unconfirmed LC, the nominated bank will invariably negotiate on a "with recourse" basis.

Regards,

Isaac

Yes, the main issue is "recourse". If the bank negotiate "Without Recourse", confirmation may not be a issue for beneficiary. But, in practice, negotiation by nominated bank is with recourse to beneficiary.