Advising Banks – Assuring Better Transaction
Advising banks are also popularly known as Notifying Banks. As a matter of fact, advising banks are profitable from the point of view of an exporter. An advising bank advises an exporter whether a L/C or letter of credit opened by the importer through an issuing bank is available or not.
This kind of bank serves as a great communicator to bridge the gap. Being an exporter or an importer you can rely on the service.
-First of all, the inclusion of an advising bank would make the deal much easier, smoother for both the parties.
-Second, it would take care of fraudulence. Though an advising bank is not responsible for payments, still it ensures the payment to be made by the exact issuer.
The advising bank is usually located in the exporter’s country. The advising bank might be the branch office of the issuing bank or it could be a correspondent bank.
The normal procedure is – an issuing bank emits the letter of credit or L/C through the branch office or the correspondent office of the issuing bank. Then it becomes the duty of the branch office or the correspondent bank to maintain the specimen signature and when the time demands make necessary arrangements to verify them.
For either beneficiary (exporter) or applicant (importer), adopting the help of an advising bank can help them with a reduction in the processing fee and the transaction becomes much safer.