What is a Complying Presentation?
If issuing bank determines that the presentation is complying then the issuing bank must honor. If credit is available by sight payment you should expect to receive your funds within couple of days after the end of the document evaluation period, which is 5 banking days.
Malik from Pakistan is asking a question regarding the responsibilities of the banks against presentations of documents. Below you can find his question.
I request you to please answer the following questions for my better understanding, and also please give example if possible.
In how many days Import L/C opening bank should send the payment or discrepancies to beneficiary of Sight L/C. Some persons saying 3 days and some saying 5 days, which one is correct under UCP 600.
A nominated bank, a confirming bank and the issuing bank must determine whether presentation is complying or not maximum five banking days following the day of presentation.
This is governed under UCP 600 article 14-b as follows:
“A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank shall each have a maximum of five banking days following the day of presentation to determine if a presentation is complying.”
There are two options available for the banks after they receive a presentation:
- Option 1 : Determining a non-complying presentation
- Option 2 : Determining a complying presentation
If issuing bank determines that the presentation is not complying then issuing bank may refuse to honor.
The issuing bank decides to refuse to honor, it must give a single notice to that effect to the presenter, in other terms to the beneficiary.
Once the issuing bank sends its single notice to the beneficiary within a maximum of five banking days period following the day of presentation, then its responsibility will be ended to the beneficiary under a non-complying presentation in terms of UCP 600 rules.
If issuing bank determines that the presentation is complying, then the issuing bank must honor.
If credit is available by sight payment, you should expect to receive your funds within couple of days after the end of the 5 banking day period.