TFFE 96th Banking Professional Exam: Case Study

(8) As a Head of Foreign Trade Division of your bank, how would you deal with the following situation under UCP-600

(a) As per LC terms, 08 March 2023 was the deadline of presentation of documents. Your customer has presented the documents on 09 March 2023. Note, that 08 March 2023 was a public holiday. Thus, all banks were closed on that day in Bangladesh.

(b) Your customer has presented export documents for negotiation under irrevocable LC of UCP-600. Transport document shows that the shipment has been made late after the due date stipulated in export LC.

(c) Suppose your bank is an advising bank of an LC. The LC issuing bank has requested you to add confirmation by your bank to the LC before advising it to the beneficiary. But the issuing bank has no credit line with your bank.

(d) After scrutinizing shipping documents, you have found that there is a mismatch of the HS Code of goods between LC and Bill of Lading.

Solution:

According to UCP 600 Article 29, if the expiry date or last date for presentation falls on a public holiday, it is automatically extended to the next banking day.

Therefore, I would:

Accept the documents presented on 9 March 2023.
Treat the presentation as valid.
Not consider it a discrepancy.
Process the documents according to the LC terms.

(b) The transport document shows that the shipment was made after the latest shipment date mentioned in the LC. What will you do?

Late shipment is a discrepancy under UCP 600.

As Head of Foreign Trade Division, I would:

Inform the exporter about the discrepancy.
Seek a waiver from the applicant or issuing bank.
Negotiate the documents only if the discrepancy is accepted.
If the waiver is not received, refuse negotiation and return the documents.

(c) Your bank has been requested to add confirmation to an LC, but the issuing bank has no credit line with your bank. What will you do?

A bank is not bound to add confirmation to an LC.

As Head of Foreign Trade Division, I would:

Decline to add confirmation.
Inform the issuing bank immediately.
Advise the LC to the beneficiary without confirmation.
Avoid taking unnecessary credit risk.

(d) After checking the shipping documents, you find that the HS Code mentioned in the Bill of Lading does not match the LC. What will you do?

First, I would check whether the LC specifically requires the HS Code on the Bill of Lading.

If the LC does not require the HS Code, I would not treat it as a discrepancy.
If the LC requires the HS Code, I would treat it as a discrepancy.
I would seek a waiver from the applicant or issuing bank.
If no waiver is received, I would refuse negotiation.