Page 232 - International Marketing

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234 International Marketing BRILLIANT'S

addition to the Opening Bank, provided the
stipulated documents are presented in ac- Liabilities/Responsibi-
cordance with the terms and conditions of lities of the Parties to
the credit within the due date. the Letter of Credit
5. Negotiating Bank: The nomination 1. Applicant
of bank by the opening bank for negotiation of 2. Issuing Bank
documents under a credit does not consti- 3. Advising Bank
tute any undertaking on the nominated bank 4. Confirming Bank
unless the credit is confirmed by it. Negotiat- 5. Negotiating Bank
ing Bank may be the bank of the beneficiary 6. Reimbursing Bank
of the credit. Issuing Bank will reimburse the
nominated bank if it had negotiated the documents as per the Letter of
Credit.
6. Reimbursing Bank: Reimbursing bank will reimburse the claim
made by the negotiating bank under a credit. It need not insist for submis-
sion of any certificate of compliance from the Negotiating Bank along with
their claim. The Issuing Bank will have prior arrangement or provide suffi-
cient funds with the reimbursing bank for honouring the reimbursement
claim as and when it is made. The role of the reimbursing bank is further
clarified with the introduction of Uniform Rules For Bank To Bank Reim-
bursement. Which has come into effect from July 1, 1996.
Procedure of Opening of Letter of Credit
The following is the procedure for the opening of letter of credit:
1. Importer’s Request: If the method of payment agreed between
the importer and exporter is through letter of credit then the importer re-
quests his bank to open a letter of credit in
favour of exporter, either by paying the Procedure of Opening
amount of letter of credit or by requesting of Letter of Credit
credit to that extent.
2. Issue of Letter of Credit: The issu- 1. Importer’s Request
ing bank issues letter of credit in favour of 2. Issue of Letter of Credit
the exporter and sends it to its branch lo- 3. Receipt of Letter of
cated in exporter’s country (advising bank) . Credit
The issuing bank may also request advising 4. Shipment of Goods
bank to add its confirmation, if desired by 5. Negotiation of
the beneficiary. Documents
3. Receipt of Letter of Credit: The 6. Re-imbursement of
exporter takes the possession of the letter Payment
of credit from the advising bank. He should 7. Documents to Importer
check the relevant details in the letter of credit