Designated bank for payment, acceptance or negotiation
After receiving the documents from the beneficiary or its entrusted bank, the designated bank or confirming bank shall promptly examine the documents required by the letter of credit with reasonable prudence. If there are documents not required by the letter of credit, the bank has no obligation to examine them and may return them to the beneficiary or the sending bank, or send them to the issuing bank as is without any responsibility.
The bank’s examination of documents shall be based only on the letter of credit and its amendment notice, and shall not involve any other documents or facts. Banks shall comply with the international standard banking practices stipulated in UCP600 and examine the surface conditions of the documents to determine whether the documents are superficially consistent with the requirements of the letter of credit. If the documents meet the standards of consistency between documents and documents, they are qualified documents. The bank shall accept the documents and make immediate payment, deferred payment, acceptance or negotiation according to the provisions of the letter of credit; if the documents are unqualified, the bank has the right to reject the documents and refuse to arrange payment.
2. The designated bank sends documents to the issuing bank for claim
After the designated bank has processed payment and other matters for the beneficiary, it shall send documents to the issuing bank in accordance with the provisions of the letter of credit. If the letter of credit stipulates that the documents shall be sent at one time, the whole set of documents shall be sent at one time; if the letter of credit stipulates that the documents shall be sent in two batches, for example, “by two consecutive registered airmail” shall be written, then the documents shall be sent in two batches according to the type and number of each batch of documents indicated in the letter of credit. The advantage of sending documents in batches is that in case a batch of documents is delayed or lost, another batch of documents can still be safely sent to the issuing bank.
The designated bank’s claim instruction shall be issued to the issuing bank. If the letter of credit specifies a reimbursing bank, the reimbursing bank shall be claimed first. The claim method shall comply with the provisions of the letter of credit, and it shall be stated to which bank and which account the reimbursing bank should transfer the funds. If the reimbursing bank fails to provide reimbursement, the nominated bank may immediately claim reimbursement from the issuing bank and demand additional interest for delayed reimbursement.