Freely Negotiable and Restricted Letter of Credit

Freely Negotiable and Restricted Letter of Credit

 

Freely Negotiable and Restricted Letter of CreditWhen the letter of credit does not put any condition for the negotiation of documents, it is a freely negotiable letter of credit. This letter of credit can be negotiated through any willing bank. In case, the credit names a specific bank for negotiation, then the letter of credit is a restricted credit. In case, the bank that has been named for negotiation refuses to negotiate, then it is the responsibility of the opening bank to pay as per the terms of credit.

 

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Jeetendra Rao: How to deal with a restricted LC? If the documents are presented by a bank other than the negotiating bank, what steps the opening bank has to take.

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