'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.

import, export, economy, shipping

Photo: Bloomberg

TNC Rajagopalan
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?

In a LC that is not confirmed, it is the LC-issuing bank that undertakes to pay against documents compliant with the terms and conditions of the LC. In a freely negotiable

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First Published: Apr 18 2022 | 3:40 PM IST

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