What is role of advising bank?

Question

Accepted Answer

The advising bank plays a crucial role in international trade transactions by providing guidance and assistance to both the exporter and importer.

The advising bank acts as an intermediary between the exporter's bank and the importer's bank.
It verifies the authenticity of the letter of credit (LC) issued by the importer's bank to ensure its compliance with the terms and conditions.
The advising bank advises the exporter about the terms and conditions of the LC, including any amendments or discrepancies.
It may also provide financing options to the exporter, such as pre-shipment or post-shipment financing.
The advising bank may assist in the collection of payment from the importer's bank and ensure timely remittance to the exporter.
In case of any disputes or discrepancies, the advising bank may help in resolving the issues between the exporter and importer.
Example: If an exporter in the United States receives a letter of credit from an importer in China, the advising bank (usually a bank in the United States) will verify the LC's authenticity and advise the exporter about its terms and conditions.

Accepted Answer

It authenticates the swift and re-advises the lc to second adv bank

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