LETTER OF CREDIT

This query is : Resolved

P.S.VISHWANATHAN

P.S.VISHWANATHAN (Querist)
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16 December 2009 OUR CLIENTS BASED IN DEHRADUN HAVE ESTABLISHED AN INLAND LETTER OF CREDIT ON US( WE ARE BASED IN DELHI) AND THE LC HAS BEEN ADVISED THROUGH OUR BANKERS. SINCE THE DISTANCE BETWEEN DELHI AND DEHRADUN IS LESS THAN 12 HOURS, THE NEGOTIATION DOUCMENTS MAY NOT REACH THE APPLICANT BANK BEFORE THE MATERIALS. AS A RESULT, THE TRUCK WOULD HAVE TO WAIT FOR THE DOCUMENTS TO BE COLLECTED BY THE APPLICANT AND HANDED OVER TO THE TRANSPORTER ( CONSIGNEE COPY OF MTR). IN SUCH AN EVENT CAN WE SEND THE NEGOTIATION DOCUMENTS DIRECTLY TO THE APPLICANT BANK TO SAVE TIME? OUR BANKERS ARE MERELY A COLLECTION AGENT AS WE DO NOT INTEND TO DISCOUNT THE LC DOCUMENTS.

Jyotindra Thakar

Jyotindra Thakar (Expert)
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16 December 2009 Dear Mr.Vishwanathan,
As per my opinion, you can not send documents directly to the L/c opening Bank. You need to submit documents to your bankers as your bank will have to claim payment / acceptance from L/C opening bank. Further if you are so confident that the customer will surely make payment, why you are using L/C route. As you know L/C route is used for payment surity. You may check-up with your bankers possibility of a system where L/C provides for seding of original set of documents direcly to opening bank a set of photocopy copy be submitted to your / advising /negotiating bank.