Uniform Customs and Practice for Documentary

Credits (UCP 600)

Session no. 13
b
After this session, you will be able to

Understand the obligations of a Nominated Bank
Identify the reimbursement arrangements in a letter of credit
Appreciate the importance of Examination of Documents
Understand the meaning of Complying presentation undertaking of
Issuing / confirming Bank
Recognise the procedure for Handling of discrepant Documents




TRIMESTER 3/ SUBJECT CODE 301.2.3

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Uniform Customs and Practice for Documentary
Credits (UCP 600)

Nomination

Nominated bank - no obligation to honour or negotiate.
By nominating a bank to accept a draft or incur a deferred
payment undertaking, an issuing bank authorizes that nominated
bank to prepay or purchase a draft accepted or a deferred
payment undertaking incurred by that nominated bank.
Receipt or examination and forwarding of documents by a
nominated bank that is not a confirming bank does not make that
nominated bank liable to honour or negotiate, nor does it
constitute honour or negotiation.


(Refer Article 12 of UCP-600)


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Uniform Customs and Practice for Documentary
Credits (UCP 600)

Bank-to-Bank Reimbursement Arrangements

credit must state if the reimbursement is subject to the ICC.
If a credit does not state so, then the following will apply :
- Issuing Bank to provide authorisation to reimbursing Bank
without indicating expiry date.
- Claiming Bank shall not be required to supply compliance
certificate.
- issuing bank is responsible for any loss of interest, together with
any expenses incurred.
- reimbursing bank's charges are for the account of the issuing
bank. If it is for Benes account, the credit must so indicate.
Issuing bank is not relieved of any of its obligations to provide
reimbursement if reimbursement is not made by a reimbursing
bank on first demand.

(Refer Article 13 of UCP-600)
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Uniform Customs and Practice for Documentary
Credits (UCP 600)

Standard for Examination of Documents

Nominating Bank / Confirming Bank / Issuing Bank :
To examine presentation to determine compliance on the basis of
documents alone
5 Banking days to determine compliant presentation following the
date of presentation
A presentation not later than 21 calendar days after the date of
shipment but not later than the expiry date of the credit.
Data not to be in conflict amongst the documents
If a document is required without stipulating the issuer or its data
content, banks will accept the document as presented if its
content appears to fulfill the function of the required document.


(Refer Article 14 of UCP-600) .continued

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Uniform Customs and Practice for Documentary
Credits (UCP 600)

Standard for Examination of Documents

..continued

A document presented but not required by the credit will be
disregarded
A condition without stipulating the document to indicate
compliance, banks will deem such condition as not stated and
will disregard it.
A document may be dated prior to the issuance date of the credit,
but must not be dated later than its date of presentation.
Address of Beneficiary given in the documents need not be
identical as given in the credit . Consignee or notify party address
shall be exactly as given in the credit.


(Refer Article 14 of UCP-600) .continued


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Uniform Customs and Practice for Documentary
Credits (UCP 600)

Standard for Examination of Documents

The shipper or consignor of the goods indicated on any document
need not be the beneficiary of the credit

A transport document may be issued by any party other than a
carrier, owner, master or charterer provided that the transport
document meets the requirements of articles 19, 20, 21, 22, 23 or
24 of these rules.





(Refer Article 14 of UCP-600)
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Uniform Customs and Practice for Documentary
Credits (UCP 600)

Complying Presentation

issuing bank determines that a presentation is complying, it
must honour.
confirming bank determines that a presentation is
complying, it must honour or negotiate and forward the
documents to the issuing bank.
nominated bank determines that a presentation is
complying and honours or negotiates, it must forward the
documents to the confirming bank or issuing bank.




(Refer Article 15 of UCP-600)


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Uniform Customs and Practice for Documentary
Credits (UCP 600)
Discrepant Documents, Waiver and Notice
In case of discrepant documents

Nominated Bank / Confirming Bank / Issuing
May refuse to negotiate / honour.
Give single notice of rejection to the presenter listing
discrepancies before close of 5
th
banking day following the day of
presentation.
Must state whether holding documents at presenters disposal
until receipt of waiver from applicant , or returning the documents.
Issuing Bank
May or may not accept applicants waiver.
Is entitled to refund with interest, of reimbursement claimed if
any by Negotiating Bank , if documents are not acceptable.

(Refer Article 16 of UCP-600)



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Uniform Customs and Practice for Documentary
Credits (UCP 600)

In this session, you learnt

About the obligations of a Nominated Bank
To Identify the reimbursement arrangements in a letter of credit
The importance of Examination of Documents
The meaning of Complying presentation undertaking of Issuing /
confirming Bank
The procedure for Handling of discrepant Documents


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Uniform Customs and Practice for Documentary
Credits (UCP 600)


In the next session, we shall look at

The meaning of original documents
The making of Commercial Invoice
Essential details in a transport document
Types of Bills of Lading
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