Page 127 - eBook: EXIM for Beginner

Advising Letter Of Credit

• Advice of credit is a notification by an advising bank to the

exporter directly or through the exporter’s banker to inform that a

credit has been issued in his favour and enclosing the letter of

credit.

• An 'advising bank (also known as a notifying bank) advises a

beneficiary (exporter) that a letter of credit (L/C) opened by an

issuing bank for an applicant (importer) is available. An advising

bank's responsibility is to authenticate the letter of credit issued

by the issuer to avoid fraud.

• An advising bank acts as the agent of the issuing bank. The

function of the advising bank is to take reasonable care to verify

the authenticity of credits received and then accurately transmit

them to their beneficiaries. When advising a letter of credit, the

bank assumes no other liability. On receipt of the documents for

examination and payment, the advising bank will pay the seller

only if it has received good funds from the issuing bank, even if it

was specifically named as paying bank in the letter of credit.