What are the Duties and Responsibilities of the Confirming Bank and Reimbursing Bank under a letter of credit

(c) Confirming Bank

(i) When a bank in the exporter’s country adds its confirmation to the credit, it gives an additional undertaking to the beneficiary, in addition to that of the issuing bank, to negotiate documents under the credit. Therefore, the relationship of the confirming bank with the beneficiary is similar to that of the issuing bank. If the documents tendered are in conformity with the letter of credit terms and within the expiry time of the credit, it has to make payment against them. The responsibilities and liabilities of the issuing bank discussed above apply, mutatis mutandis, to confirmingĀ  bank also.

(ii) As to the relation of the confirming bank with the issuing bank, the position is same as that of the negotiating bank.

(d) Reimbursing Bank

The issuing bank may indicate in the credit the name of a bank, from whom the paying/negotiating bank can obtain reimbursement. The documents are sent to the bank; the negotiating/paying bank simultaneously makes a claim with the reimbursing bank for the negotiating/payment effected.

Normally the reimbursing bank would be the bank with whom the issuing bank maintains an account. A copy of the letter of credit would also be sent to the reimbursing bank so that it may know the arrangement.

The reimbursing bank will normally pay the claiming bank under a letter of credit provided proper claim is made. However, no specific responsibility or duty is cast on the reimbursing bank under the UCPDC. The issuing bank remains liableĀ  to the claiming bank if no reimbursement is made by the reimbursing bank.

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