The Full Wiki

More info on Advising bank

Advising bank: Wikis

Advertisements
  

Note: Many of our articles have direct quotes from sources you can cite, within the Wikipedia article! This article doesn't yet, but we're working on it! See more info or our list of citable articles.

Encyclopedia

From Wikipedia, the free encyclopedia

Banking
B&O RR common stock.jpg

Finance
Financial markets
Financial market participants
Corporate finance
Personal finance
Public finance
Banks and Banking
Financial regulation

Types of Bank
Central bank
Advising bank
Commercial bank
Community development bank
Credit union
Custodian bank
Depository bank
Investment bank
Industrial bank
Islamic banking
Merchant bank
Mutual bank
Mutual savings bank
National bank
Offshore bank
Private bank
Savings bank
Sparkasse
Swiss bank

Banking terms
Anonymous banking
Automatic teller machine
Deposit
Loan
Money creation
Substitute check

List of banks
List of banks and credit unions in Canada
List of banks in Hong Kong
List of banks in Singapore
List of banks in Pakistan

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. Advising Bank's responsibility is to authenticate the letter of credit issued by the issuer to avoid fraud. The advising bank is not necessarily responsible for the payment of the credit which it advises the beneficiary of.

The advising bank is usually located in the beneficiary's country. It can be (1) a branch office of the issuing bank or a correspondent bank, or (2) a bank appointed by the beneficiary. Important point is the beneficiary has to be comfortable with the advising bank.

In case (1), the issuing bank most often sends the L/C through its branch office or correspondent bank to avoid fraud. The branch office or the correspondent bank maintains specimen signature(s) on file where it may counter-check the signature(s) on the L/C, and it has a coding system (a secret test key) to distinguish a genuine L/C from a fraudulent one (authentication) .

In case (2), the beneficiary can request the applicant to specify his/her bank (the beneficiary's bank) as the advising bank in an L/C application. In many countries, this is beneficial to the beneficiary, who may avail the reduced bank charges and fees because of special relationships with the bank. Under normal circumstances, advising charges is standard and minimal. In addition, it is more convenient to deal with the beneficiary's own bank over a bank with which the beneficiary does not maintain an account.

Advertisements

Advertisements






Got something to say? Make a comment.
Your name
Your email address
Message