Negotiation of Export Documents under Letters of Credit

Negotiation of Export Documents under Letters of Credit

Negotiation of Export Documents under Letters of CreditWhen the export bill is drawn under letter of credit arrangement, it is the duty of negotiating bank to scrutinize carefully whether all the documents required under L/C are presented and they are drawn in conformity to the terms of letter of credit. If the documents are in order and comply with the total terms of letter of credit only, the negotiating bank makes the payment to the exporter. Even if there is slightest deviation from the terms of letter of credit or there is even minor discrepancy in the documents, the negotiating bank does not make the payment to the exporter. There is no distinction between major and minor discrepancy. If the documents are not in order, even after the negotiating bank makes payment to the exporter, opening bank does not make reimbursement to the negotiating bank.

 

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