What Is an Issuing Bank?

Issuing bank refers to the bank that accepts the entrustment of the issuer to open the letter of credit, which is generally the bank in the place of import. The rights and obligations of the issuer and the issuing bank are based on the application for issuance. The application for issuance is in the nature of an entrusted contract. The issuer entrusts the issuing bank to provide credit to the beneficiary through the application for issuance, and at the same time exercises the right to request the beneficiary to deliver the document in accordance with the sales contract. ^[1]

Issuing Bank

Issuing bank refers to the bank that accepts the entrustment of the issuer to open the letter of credit, which is generally the bank in the place of import. The rights and obligations of the issuer and the issuing bank are based on the application for issuance. The application for issuance is in the nature of an entrusted contract. The issuer entrusts the issuing bank to provide credit to the beneficiary through the application for issuance, and at the same time exercises the right to request the beneficiary to deliver the document in accordance with the sales contract. ^[1]

Opening Bank (Opening Bank, Issuing Bank, Establishing Bank) means accepting

Issuing Bank Is Opening

As an issuing bank, it is necessary to open the letter of credit in a timely and accurate manner in strict accordance with the terms of the application for issuance submitted by the importer. After issuing a letter of credit, as the issuing bank of the primary payment responsibility, its liability is based on the maximum amount of the letter of credit and the longest period of responsibility as the validity of the letter of credit. The issuing bank's responsibility is only responsible for the letter of credit itself, and is not affected by the contract signed by the importer and the exporter. Its obligation is to pay only with a seemingly correct document, and cannot be paid by the importer, or the consideration is insufficient (the deposit , Collateral, handling fees, etc.), or fraudulent acts as an excuse to show the exporter that he is no longer responsible for the letter of credit, and that he cannot require the importer to be deducted from the payment when paying the exporter (and the negotiating bank, etc.) Arrears to it.

The issuing bank must review all documents reasonably carefully to determine whether the documents appear to comply with the terms of the letter of credit. Superficially inconsistent documents will be deemed not to be in conformity with the terms of the letter of credit. If the bank is authorized to pay on the basis of a document that appears to meet the terms of the letter of credit, or to assume late payment obligations, or to accept or negotiate, the party issuing the authorization is obliged to accept the document and pay or have paid late payment Responsible, or accepted, or negotiated bank.

If an issuing bank receives a document and considers that the document does not appear to comply with the terms of the letter of credit, it must use the document as its sole basis to determine whether the document is accepted or rejected, and declare that the document does not appear to meet the terms of the letter of credit.

If the issuing bank decides to reject the document, it must use a telecommunications tool without delay, or if it is not possible, by other means, notify the sending bank (the sending bank), or if the document is sent by the beneficiary , The beneficiary is notified. The notice must explain the discrepancy between the issuing bank and the rejection of the document, and explain whether the document is kept for processing or returned to the document (the billing bank or beneficiary). Only after this is done will the issuing bank have the right to claim from the billing bank any repayments already made to the bank, otherwise it will not have the right to declare that the documents do not comply with the terms of the credit. If the billing bank draws the issuing bank's attention to any discrepancies in the document, or informs the issuing bank about the discrepancies, it shall keep the recourse method or pay according to the guarantee, assume late payment obligations, accept or negotiate, and No obligation shall be discharged for this purpose. The reservation or letter of guarantee only belongs to the relationship between the billing bank and the party who is held to recourse or issue a letter of guarantee or obtain a letter of guarantee.