Thursday, April 25, 2013

Nominated bank and UCP 600


This article analyses the roles and responsibilities of a nominated bank under selected provisions of UCP 600.
Article 6(a) of UCP 600 requires that a “credit must state the bank with which a credit is available”. This bank has been defined under Article 2 as the ‘nominated bank’. A nominated bank could be a bank specifically designated by the issuing bank for the purpose of negotiation or honour of documents. Alternately, it may be any bank. According to sub-article 7(c), the issuing bank’s undertaking to reimburse under its own LC is restricted only to a nominated bank. Note that the bank that has added its confirmation to a credit need not necessarily be a nominated bank.
Let us focus on the first major article on nomination, viz., Article 12. Sub-article 12(a) states: (contd...)

[The complete article is available in the book 'Beyond Trade Finance', published on 13-Apr-2021 by Notion Press, and available at https://notionpress.com/read/beyond-trade-finance or at https://www.amazon.in/dp/1638508666]




[1] Published in DC Insight, Volume 17, No. 1, Jan-March 2011.
[1] Author is the former managing director of Fina Bank Ltd, Nairobi, Kenya and TransAfrica Bank  Ltd., Kampala, Uganda; founder and CEO of Institute of Banking Studies.  

[i] ‘Suggested answer’ to question no. 2.15, Frequently Asked Questions on UCP 600, Gary Collyer.

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