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Presenting Exporters Documents Straight to Issuing Bank

Posted by Rahmanhakim pada September 8, 2008

As we know in LC terms, exporters commonly negotiate their documents to negotiating bank in their country, negotiating bank usually as for several conditions and guarantee (under reserve) to negotiate documents, it’s normally to protect their risks covering earlier payment to exporters and waiting reimbursement from issuing bank.
but, if we look inside the concept of Letter of credit, that the ultimate guarantor is Issuing bank, the sellers actually can negotiate their documents straight to issuing bank, with condition they have to go to issuing bank’s country by their own and surrender the documents directly or by direct post services. (eventhough it’s more risky, expensive and need extra effort) but it’s possible.

It’s not common practice, but it’s still happen and nobody concern about negotiating bank risks if the sellers (with or without their maniputaion of documents) negotiate their other documents under the same partial shipment LC that has overdrawn in issuing bank counter (because, in practice, issuing bank never update the latest ballance amount of the Letter of Credit).

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