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On approval
basis means that the documents are sent under protection of UCP600.
For example,
the issuing bank will still have to check the docs and reply to remitting
bank within the 5 banking days following the day it received the documents.
In case it
fails to do so the issuing bank will be precluded from claiming docs are
discrepant and will have to pay regardless of existing discrepancies.
The issuing
bank will also have to hold the documents at presenter’s disposal until
their acceptance and payment thereof (in case no other instructions are sent
by remitting bank). Otherwise the documents would be sent on collection
basis in which case the presentation is no longer subject to UCP600, none of
the banks involved having any responsibility. |
