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Hi everybody,

Would appreciate if anybody can explain me what a grace period is in the following situation - an l/c is issued by a Chinese bank and available with any bank by negotiation with drafts at SIGHT FOR 100PCT OF INVOICE VALUE. A negotiating bank is ready to discount the draft under the l/c but the GRACE PERIOD it will apply FOR SIGHT L/C WILL BE 8 WORKING DAYS.
So my question is what the grace period is in this particular case and why it may take up to 8 working days?
thank you for your feedback in advance.

Regards,

Hi Pal,

grace period means the possible difference between the value date of proceeds given to the beneficiary and the effective date of credit entry received from the issuing bank.
In discounting a draft too, the period of interests is calculated by adding few days, 3 or 4 necessary to cash the draft,in international transaction this period is enlarged to 8 - 10 days due to the spot value and time areas.
Hoping to have been clear.
Ciao

Hi picant ,

Thank you very much for your reply.

Enjoy your day!

Regards