Can the advising bank ask a written assuranceletter /power to debit from the beneficiary a/c from the beneficiary prior to crediting the lc amount to the beneficiary a/c in case the issuing bank or the applicant fails to pay on the due date?
2 Replies
Vineet Kumar Sharma
(Chartered Accountant)
(316 Points)
Replied 25 December 2011
The bank will not ask from the beneficiary such an assurance letter.
Kolluru Krishna Murty
(Partner)
(315 Points)
Replied 04 January 2012
In terms of LC application,the opener of LC assures the bank that he would make the funds available to the paying/opening bank the necessary funds required for payment.
Also the opening banker assures the advising banker that he would make the payment to the benificiary ,even in the unlikely event of the opener ot making the funds available.
This is the way the modus-operandi of LC works.
kkm
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