Letter of Credit Advising

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When a letter of credit is made, the advising bank forwards it to the beneficiary. The advising bank plays the role of a conduit between the beneficiary and the bank issuing letter of credit and payments. 

We at BCF, connect the issuing bank to advising banks to ensure that the letter of credit so formed is authentic. To manage the security of messages, international banks make use of test key arrangements. 

The key reason why the issuing bank needs the services of an advising bank is practical. It is mainly because the exporters and importers are located across different borders. So, the importer applies for the letter of credit through the bank in his own country. 

After the issue of LC takes place, the exporter gets it. Nowadays, mostly the issuance of LC takes place through SWIFT platforms, which are used by big corporations and banks alike. 

The role of advising bank in carrying out the transaction of letter of credit is as follows:

  • The advising bank can advise the LC. 
  • There is no responsibility of payment on the advising bank against exporters (the only exception is that it must not be a confirming bank). 
  • There are two main responsibilities of advising banks against beneficiaries. The first is that the advising bank should have satisfied itself with apparent authenticity.
  • The second is that the advice should reflect properly in the terms and conditions of credit.