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'Unconfirmed LC binds only the issuing bank to pay'

In a freely negotiable LC, any bank can negotiate the LC compliant documents, pay the party and claim reimbursement in accordance with the instructions of the LC issuing bank.

Topics
SME | sme CHATROOM | Banks

TNC Rajagopalan 

import, export, economy, shipping
Photo: Bloomberg

Our bankers, SBI Kolkata, opened a LC on our behalf in favour of a German supplier. The LC says that it is without confirmation, available by payment and freely negotiable. In the reimbursement instructions, SBI says that payment will be effected after receipt of documents compliant with the terms and conditions of the LC. Can the supplier get payment immediately upon submission of documents to a bank in Germany?

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First Published: Mon, April 18 2022. 15:40 IST
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