Issuing bank<\/span> is the core financial institution in a documentary credit process.<\/p>\n At least an issuing bank must be present for the existence of an L\/C payment. All other banks shall be added to the transaction as circumstances required.<\/p>\n For example, the issuing bank will be using an advising bank’s<\/span> services to advise the letter of credit to the beneficiary.<\/p>\n L\/C may be issued so that it is available with a nominated bank<\/span> which is located in the same country as the beneficiary.<\/p>\n Additionally, the issuing bank may demand from the nominated bank to add its confirmation to the letter of credit.<\/p>\n Confirming bank<\/span> can claim reimbursement from the reimbursement bank<\/span> against a complying set of documents.<\/p>\n As I have shown above, all other banks, but the issuing bank, can be added to the letter of credit transaction, if the issuing bank needs to use that particular bank’s services.<\/p>\n Let me explain the banks in a letter of credit transaction one by one more in detail below.<\/p>\n Issuing bank is the main bank in a letter of credit transaction.<\/p>\n Letter of credit is opened by the issuing bank mostly on behalf of the applicant.<\/p>\n Rarely issuing banks open letters of credit on their own name without having been instructed by the applicants.<\/p>\n All other banks are acting according to the instructions and authorization that they have received from the issuing bank.<\/p>\n For more details please click here<\/a>.<\/p>\n <\/p>\n Advising bank is the bank that advises the letter of credit to the beneficiary.<\/p>\n Advising bank acts at the request of the issuing bank.<\/p>\n In most cases advising bank and beneficiary locate at the same country which is contrary to the issuing bank.<\/p>\n This is why issuing banks use another bank’s services to advice the letter of credit to the beneficiaries.<\/p>\n Advising bank has no obligation for payment.<\/p>\n For more details please click here<\/a>.<\/p>\n <\/p>\n Nominated Bank is the bank with which the letter of credit is available.<\/p>\n In some situations issuing banks open letters of credit that is available with any bank in beneficiaries countries. These kind of letters of credit are known as “freely negotiable l\/cs”.<\/p>\n Nominated bank’s payment obligation is not defined in strict terms.<\/p>\n Beneficiaries could get their payment from nominated banks with recourse basis.<\/p>\n For more details please click here<\/a>.<\/p>\n Confirming bank is the bank that adds its confirmation to a letter of credit.<\/p>\n Confirming banks could only add their confirmation if the issuing banks authorize them to do so.<\/p>\n Confirming bank and nominated bank are expected to be the same bank, although it is not a necessity according to UCP 600.<\/p>\n Confirming bank’s payment obligation is defined in strict terms. Beneficiaries could get their payment from confirming banks without recourse basis.<\/p>\nIssuing Bank’s Roles and Responsibilities in A Documentary Credit Transaction:<\/strong><\/h4>\n
![\"issuing](\"http:\/\/www.letterofcredit.biz\/wp-content\/uploads\/letter-of-credit-banks-issuing-bank.png\")
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\nAdvising Bank\u2019s Roles and Responsibilities in A Documentary Credit Transaction:<\/strong><\/h4>\n
![\"Advising](\"http:\/\/www.letterofcredit.biz\/wp-content\/uploads\/letter-of-credit-advising-bank.png\")
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\nNominated Bank\u2019s Roles and Responsibilities in A Documentary Credit Transaction:<\/strong><\/h4>\n
![\"Nominated](\"http:\/\/www.letterofcredit.biz\/wp-content\/uploads\/letter-of-credit-nominated-bank.png\")
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\nConfirming Bank\u2019s Roles and Responsibilities in A Documentary Credit Transaction:<\/strong><\/h4>\n
![\"Confirming](\"http:\/\/www.letterofcredit.biz\/wp-content\/uploads\/letter-of-credit-confirming-bank.png\")
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![\"Reimbursing](\"http:\/\/www.letterofcredit.biz\/wp-content\/uploads\/letter-of-credit-reimbursing-bank.png\")
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