UCPDC – 600
What is ICC? When is has been established? What was the objective of ICC?
Ans. As per Article 2 of UCPDC 600, Advising Bank means the bank that advises the credit at the request of the issuing Bank.
What is ‘Banking Day’ as per UCPDC?
Ans. As per Article 2 of UCPDC-600, Banking day means a day where a bank is regularly open at the place at which an act subject to these rules is to be performed.
What do you mean by ‘Beneficiary’?
Ans. As per Article 2 of UCPDC-600, Beneficiary means the party in whose favor the credit is issued.
What do you mean by ‘Complying presentation’?
Ans. As per Article 2 of UCPDC-600, Complying Presentation means presentation in accordance with the terms & conditions of the credit, the applicable provisions to these rules and International standard banking practice.
What do you mean by ‘Confirmation’?
Ans. As per Article 2 of UCPDC-600, Confirmation means a definite undertaking of the confirming bank, in addition to that of the issuing bank to honor, negotiate a complying presentation.
What do you mean by ‘confirming bank’?
Ans. As per Article 2 of UCPDC-600, Confirming bank means that bank which adds its confirmation to the credit upon the issuing bank’s authorization or request.
What do you mean by ‘Credit’?
Ans. As per Article 2 of UCPDC-600, credit means any arrangement, whatsoever named or described, that is irrevocable & constitutes a definite undertaking of issuing bank to honor a complying presentation.
What do you mean by ‘Honour’?
Ans. As per Article 2 of UCPDC-600, Honour means: a). To pay at sight if the credit is available at sight payment. b). To incur a deferred payment undertaking and pay at maturity if the credit available at deferred payment. c). To accept a bill of exchange or draft drawn by the beneficiary and pay at maturity if the credit is available by acceptance.
What do you mean by ‘Negotiation’?
Ans. As per Article 2 of UCPDC-600, Negotiation means purchase of Drafts by the nominated bank (Drawn on a bank other than the nominated bank) and or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due form the nominated Bank.
What do you mean by ‘Nominated Bank’?
Ans. As per Article 2 of UCPDC-600, Nominated bank means the bank with which the credit is available or any bank in the case of a credit is available with any Bank.
What do you mean by “Presentation” ?
Ans. As per Article 2 of UCPDC-600, Presentation means either the delivery of documents under a credit to the issuing bank or nominated bank or the documents so delivered.
What do you mean by ‘Presenter’?
Ans. As per Article 2 of UCPDC-600, Presenter means a beneficiary, bank or other party that makes a presentation.
What does the terms ‘first half’ & ‘second half’ means as per UCPDC?
Ans. As per UCPDC 600, the term ‘first half’ indicates 1st to 15th day of a month & ‘second half’ indicates 16th to the last day of the month.
What does the terms ‘beginning’ & ‘middle’ & ‘end’ means as per UCPDC?
Ans. As per UCPDC 600, the term ‘beginning’ ‘middle’ & ‘end’ shall be construed respectively as the 1sto to 10th, the 11th to 20th & the 21st to the last day of a month.
What does UCPDC say regarding terms & conditions of “credit contract” and Sales/Purchase contract?
Ans. As per Article 4 of UCPDC-600, a credit by its nature is a separate transaction from sale or any other contract on which it may be based. Banks are in no way concerned with or bound by such contract, even if any reference what so ever to is included in the credit. Consequently undertaking of a bank to honor, to negotiate or to fulfill any other obligation under the credit is not subject to claims or defenses by the applicant resulting from its relationship with the issuing bank or the beneficiary. Similarly a Beneficiary can in no case avail itself of the contractual relationships existing between banks or between the applicant and the issuing bank.
Define a confirmed Irrevocable L/C?
Ans. An Irrevocable L/C constitutes/make up a definite undertaking of the issuing bank (Since it can not be amended or cancelled without prior agreement of all parties) provided that the stipulated documents are presented and the terms and conditions are satisfied by the seller. When another bank at the request of issuing bank takes liability and responsibility like issuing bank by adding it’s confirmation to the credit is called confirmed irrevocable L/C.
What UCPDC say regarding Documents and goods, services or performance?
Ans. As per Article – 5 of UCPDC-600, Banks deal with documents not with goods, services or performances to which the documents may relate.
What does UCPDC say regarding expiry date of the Credit?
Ans. As per Article 6 of UCPDC 600, A credit must state an expiry date for presentation. An expiry date stated for honor or negotiation will be deemed to be an expiry date for presentation.
What does UCPDC says about “place of presentation” & “Separate Bank”?
Ans. As per Article – 6 of UCPDC-600: The place of the bank with which the credit available is the place for presentation. As per Article – 3 of UCPDC-600, Branches of a bank in different countries are considered to be separate bank.
What is the liability of Advising Bank?
Ans. As per Article 9 of UCPDC – 600, liability of the advising bank are as follows: i). An advising bank that is not a confirming bank, advise the credit and any amendment without any undertaking to honor or negotiate.
ii). By advising the credit or amendment, the advising bank signifies that it has satisfied itself as to the apparent authenticity of the credit or amendments and that the advise accurate reflects the terms and conditions of the credit or amendment received.
iii). An advising bank may utilize the service of another bank to advise the credit or amendment to the beneficiary. When an advising bank utilize the service of another bank to advise the credit, must use the service of the same bank to advise any amendments thereto.
iv). If a bank is requested to advise the credit or amendment but elects not to do so must inform without delay the bank from which the credit, amendment or advise is received.
v). If a bank requested to advise the credit or amendment but cannot satisfy himself as to the apparent authenticity of the credit, the amendment or the advise, it must inform without delay to the bank from which the instructions appear have been received.
vi). If the advising bank or second advising bank elects nonetheless to advise the credit or amendment, it must inform the beneficiary or second advising bank that it has not been able to satisfy itself as to the apparent authenticity of the credit, the amendment or the advise.
- Who has the authority for giving instructions in case of following:
i). Confirmation of an L/C ii). Transferring an L/C iii). Nomination of different banks for performing different activities. Ans. L/C issuing bank has the authority for giving instructions in case of confirming, transferring and nominating of different banks for performing different activities.
What would an advising bank do in case of unclear or incomplete instructions?
Ans. As per UCPDC, if incomplete or unclear instructions are sent to advise, confirm or amendment the bank may give preliminary notification without any responsibility and it must inform such action taken and request to provide necessary information. The issuing bank must provide necessary information without delay and then only action will be taken.
What specific requirements are to be observed by issuing bank in regard to “other documents” while opening an L/C by issuing Banks?
Ans. UCPDC states that in case of other documents, credit should stipulate by whom to be issued and their wording or data content, if not bank will accept documents provided their data content is not inconsistent with any other stipulated documents presented.
What does “reasonable time” mean while examining documents?
Ans. The issuing bank, the confirming bank or a nominated bank acting on their behalf shall each have a reasonable time for examining the documents, not to exceed five banking days following the day of receipt of the documents, whether to take up or refuse the documents.
What are the liabilities of Issuing Bank?
Ans. As per Article 7 of UCPDC 600 liabilities of issuing bank are as follows: i). If the stipulated/specific documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honor if the credit is available by sight payment, deferred payment or acceptance with the issuing bank. ii). An issuing bank is irrevocably bound to honor as of the time it issues the credit. iii). Issuing bank must inform to the negotiating/nominating bank if any discrepancies found in presented documents, otherwise he will made payment within five banking days. iv). Issuing bank return the document to negotiating bank /confirming bank when he received non acceptance of applicant. v).An issuing bank undertakes to reimburse a nominated bank that has honored or negotiated a complying presentation and forwarded the documents to the issuing bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not the nominated bank prepaid or purchased before maturity. An issuing bank’s undertaking to reimburse a nominated bank is independent of the issuing banks undertaking to the beneficiary.
What is liability of confirming bank?
Ans. As per Article 8 of UCPDC 600, the confirming bank has following liabilities: i). The confirming bank undertakes in addition to that of the issuing bank to pay, accept and pay Draft(s) or negotiate provided that the stipulated documents are presented to the conforming bank or any other nominated bank and that the terms and conditions of the credit are complied with . ii). If a Bank authorized or requested by the issuing Bank to add it confirmation to a credit but is not prepared to do so, it must so inform the issuing bank without delay. iii). The confirming bank must inform the issuing bank and the Beneficiary without delay if it advises and amendment to the Beneficiary without extending its confirmation to the subject amendment.
What a banker do with the unwanted documents?
Ans. A bank will not examine unwanted documents. The bank shall return those documents to the presenter or pass on without any responsibility.
How would you interpret/take the conditions of L/C which no documents have been sought?
Ans. As per UCPDC, the conditions of the L/C can be considered not stated and disregard/ignore them.
Would you accept documents appearing inconsistent among themselves ?
Ans. We should not accept the documents appearing inconsistent among themselves.
What is the most important factors for an issuing bank on which its decision of either to accept or reject documents depends?
Ans. The most important factor for an issuing bank when it receives the documents, it must determine “on the basis of documents alone” for accepting or rejecting the documents.
Write down briefly the procedure of rejecting the documents on the part of an issuing bank?
Ans. The procedure of rejecting documents on the part of the issuing bank is as follows: i). It must inform the beneficiary by telecommunication or any other expeditious/speedy measure. ii). Such notice must be given without delay but no later than the close of the fifth banking day following the day of receipt of the documents. iii). Such notice must state all discrepancies for which the documents is being refused. iv). Such notice must state the position of the documents.
What does “under reserve”, “under indemnity” “collection basis” etc. negotiation mean on the parts of negotiating and issuing banks?
Ans. As per UCPDC, if the remitting bank draws the attention of the issuing bank and confirming bank, if any to the discrepancies in the documents and advises such bank that it has paid, incurred a deferred payment undertaking, accepted drafts or negotiated under reserve or against an indemnity in respect of such discrepancy the issuing bank and or confirming bank if any shall not be released from any of their obligations under any provision of this article. Such reserve or obligations concerns only the relations between the remitting bank and the party towards whom the reserve was made, or form whom or an whose behalf the indemnity was obtained.
Why a negotiating bank is not required to tender compliance certificate to a reimbursing bank?
Ans. As per UCPDC, one of the major parties of letter of credit the issuing bank shall not require a claiming bank to supply a certificate of compliance with the terms and conditions of the credit to the reimbursing bank.
What are the distinguishes between “UCPDC-500” & “UCPDC-600”?
Ans. Following are the distinguishes: i). In UCPDC – 500 there were 49 Articles where in UCPDC – 600 it has been reduced to 39 Article. ii). As per UCPDC – 500 L/C may be Revocable & Irrevocable but in UCPDC – 600, L/C is only Irrevocable. iii). As per UCPDC – 500 there were 7(Seven) banking days allowed for negotiation & scrutanization of documents where in UCPDC – 600 it has been reduced to 5(five) banking days. iv). “Negotiating Bank” of UCPDC 500 has been defined as “Nominated Bank”.
- what are the different ways to authenticate a document?
Ans. As per Article 3 of UCPDC 600, a document may signed by handwriting, facsimile/duplicate signature, perforated/ punch signature, stamp, symbol of or any other mechanical or electronic method of authentication.
- How a document to be satisfied as document?
Ans. As per Article 3 of UCPDC 600, a requirement for a document to be legalized, visaed, certified or similar will be satisfied by any signature, mark, stamp or level on the document which appears to satisfy that requirement.
- What does UCPDC says regarding period of presentation?
Ans. As per Article 14 of UCPDC 600, a presentation including one or more original transport documents must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as described in these rules, but in any event not later than the expiry of the credit. UCPDC also states that a document may be dated prior to the issuance date of the credit but must not be dated later than its date of presentation.
What UCPDC says about ‘hours of presentation’?
Ans. As per Article 33 of UCPDC 600, a bank has no obligation/responsibility to accept a presentation outside of its banking hours.
What do you mean by ‘Force majeure’?
Ans. A bank assumes no liability or responsibility for the consequences/cost arising out of the interruption/break of it s business Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism or by any strike or lockouts or any other causes by beyond its control. A bank will not, upon resumption of its business, honor or negotiate under a credit that expired during such interruption of its business.