Name: kapil tanna

 Dear Sir,

We have received an LC from Nigeria, where in field no 41A (available with ...by...) Deutsche Bank - Mumbai is mentioned by deferred payment.

Can we ask our banker to negotiate under this LC, i.e. can this be done by another bank than Deutsche Bank?

My understanding is that since the LC is available by def. payment it is not restricted for negotiation at a specific bank.

Expert views required

Dear Kapil,

It does not work that way exactly.

Let me give you one quote from the UCP 600

Sub-article 6(a):

A credit must state the bank with which it is available or whether it is
available with any bank.

In general you (or rather the issuing bank) can choose 3 ways:
 

1. with the issuing bank

2. with a specified bank

3. with any bank (some times restricted by country)

If it is a specified bank - then that bank is "nominated" to act under the
LC - which includes prepaying or purchasing if documents comply.

If it is available with any bank - then any bank is "nominated" to act under
the LC - which includes prepaying or purchasing if documents comply.

So if you by "negotiate" mean that you wish your banker to prepay or
purchase prior to maturity - then it seem from the text of your question (if
I read that correct) that such acts can not be done under the protection of
the UCP 600 - and such would be a financing outside the LC.

Ps. You do not "negotiate" under an LC available for deferred payment - you
"incur a deferred payment undertaking - and pay at maturity".

I hope this helps you.

Best regards

Kim