Sandeep Garg
(Manager)
(26 Points)
Replied 23 August 2013
LC can be discounted by beneficiary only.
if the Contract between buyer & seller specifies the usance period and who will bear interest cost then it will be as per the contract. However, buyer & seller can have a understanding out of LC for sharing of interest cost also.
CA Akhil Mittaal
(B.Com(h), SRCC )
(2159 Points)
Replied 23 August 2013
Dear sandeep,
If suppose buyer co.get it discounted, then what is the benefit to buyer company , seller party & bank....could u elaborate it little bit more....
Sandeep Garg
(Manager)
(26 Points)
Replied 24 August 2013
Dear Akhil,
Buyer i.e. applicant is under obligation to pay under the LC not to receive. It is seller i.e. beneficiary who get the LC discounted to get his payment before agreed usance period and in turn he has to bear the interest cost. Whether the beneficiary discount the LC or not, buyer is liable to pay to the bank on the due date of LC.
How can a person who is under obligation to pay can get the payment by discounting the LC??
CAclubindia
