Article 9

Advising of Credits and Amendments

218

a. A credit and any amendment may be advised to a beneficiary through

an advising bank. An advising bank that is not a confirming bank advises
the credit and any amendment without any undertaking to honour or
negotiate.
b. By advising the credit or amendment, the advising bank signifies that it
has satisfied itself as to the apparent authenticity of the credit or
amendment and that the advice accurately reflects the terms and
conditions of the credit or amendment received.
c. An advising bank may utilize the services of another bank (“second
advising bank”) to advise the credit and any amendment to the
beneficiary. By advising the credit or amendment, the second advising
bank signifies that it has satisfied itself as to the apparent authenticity of
the advice it has received and that the advice accurately reflects the terms
and conditions of the credit or amendment received.

K. M. Lutfor Rahman CDCS Presentation

 Article 9
Advising of Credits and Amendments
219

d. A bank utilizing the services of an advising bank or second advising

bank to advise a credit must use the same bank to advise any amendment
thereto.
e. If a bank is requested to advise a credit or amendment but elects not to
do so, it must so inform, without delay, the bank from which the credit,
amendment or advice has been received.
f. If a bank is requested to advise a credit or amendment but cannot satisfy
itself as to the apparent authenticity of the credit, the amendment or the
advice, it must so inform, without delay, the bank from which the
instructions appear to have been received. If the advising bank or second
advising bank elects nonetheless to advise the credit or amendment, it
must inform the beneficiary or second advising bank that it has not been
able to satisfy itself as to the apparent authenticity of the credit, the
amendment or the advice.

K. M. Lutfor Rahman CDCS Presentation

 220

The bank that

Advising
advises the credit
Bank
at the request of
the issuing bank.

K. M. Lutfor Rahman CDCS Presentation

 The beneficiary may mention the
name of its banker in the sale contract
as its preferred
221 advising bank. The
applicant of the LC may mention the
same in the LC application. The issuing
Choosing
may select that bank as the advising
an bank provided it has correspondent
Advising banking relationship with that bank.
Bank
When the issuing bank does not have
correspondent relationship with the
beneficiary’s bank, it will select the
advising bank at its own choice and
beneficiary’s preferred bank may be
selected as the seconding advising (i.e.,
advise through) bank in the LC.
K. M. Lutfor Rahman CDCS Presentation
 Issuing banks having global or
regional presence
222 may select one of its
branches in the beneficiary’s country as
the advising bank considering its
Choosing
internal policy and revenue
an perspective. In that case, beneficiary’s
Advising preferred bank may be selected as the
Bank seconding advising (i.e., advise
through) bank in the LC.

An issuing bank’s internal policy may

dictate the decision in choosing an
advising bank.

K. M. Lutfor Rahman CDCS Presentation

 223

Issuing banks
indicate the name of
the second advising
bank in this field

K. M. Lutfor Rahman CDCS Presentation

 Article 9 (a)
Advising of Credits and Amendments
224

‘A credit and any amendment may be advised

to a beneficiary through an advising bank. An
advising bank that is not a confirming bank
advises the credit and any amendment
without any undertaking to honour or
negotiate.’

K. M. Lutfor Rahman CDCS Presentation

 Article 09(a)
Is not related to
225
any undertaking
under the
documentary
credit.

Advising

K. M. Lutfor Rahman CDCS Presentation

 An issuing bank could
send an advice of a
documentary credit direct
to the beneficiary.

K. M. Lutfor Rahman CDCS Presentation

 Article 9 (b)
Advising of Credits and Amendments
227

‘By advising the credit or amendment, the advising

bank signifies that it has satisfied itself as to the
apparent authenticity of the credit or amendment
and that the advice accurately reflects the terms and
conditions of the credit or amendment received.’

K. M. Lutfor Rahman CDCS Presentation

 Article 09(b)
The terms and
conditions
228
of the credit
or amendment have
been accurately
advised.

Significance of Advising

K. M. Lutfor Rahman CDCS Presentation

 229

Sub-article 9(b)
Explanation
i. To have apparent authenticity
TWO of the credit or amendment.
RESPONSIBILITIES
OF THE ADVISING
BANK
ii. To accurately advise the terms
and conditions of the credit or
amendment received.

K. M. Lutfor Rahman CDCS Presentation

 230

Sub-article 9(b)
Explanation
‘To satisfy the requirement of the
What does it ‘advice accurately reflecting’, the
mean advising or second advising bank
‘accurately is responsible for ensuring what is
reflects the received by it- at a minimum, the
terms and information pertinent for the
conditions’?
beneficiary to perform under the
documentary credit- is advised to
the beneficiary.’
Commented by UCP 600 DRAFTING GROUP

K. M. Lutfor Rahman CDCS Presentation

 231

Sub-article 9(b)
Explanation ‘Documentary credits often
include information that can be
What does it
classed as ‘bank to bank
mean
‘accurately information’, such as refinancing
reflects the requests, credit agreements and
terms and specific instructions for the
conditions’? nominated banks. This pieces of
information may be extracted or
deleted from the advice conveyed
to the beneficiary.’
Commented by UCP 600 DRAFTING GROUP

K. M. Lutfor Rahman CDCS Presentation

 232

Information that is considered strictly bank-to-

bank information need not form part of the
advice to the beneficiary unless it may be
appropriate to another nominated bank, in the
event that the documentary credit is available
with any bank.

May be
deleted while
advising.

K. M. Lutfor Rahman CDCS Presentation

 233

Sub-article 9(b)
Explanation
Some advising banks may change
credit’s availability, documents
Changing
credit terms
sending instruction etc. while
while advising so that documents are
advising routed through the advising bank.
This is not allowed as per UCP600
Sub-article 9(b) unless there is an
agreement in place between the
issuing and advising bank.

K. M. Lutfor Rahman CDCS Presentation

 234

Such
changes are
not allowed

ADVISING BANK

K. M. Lutfor Rahman CDCS Presentation

 Article 9 (c)
Advising of Credits and Amendments
235

‘An advising bank may utilize the services of another

bank (“second advising bank”) to advise the credit
and any amendment to the beneficiary. By advising
the credit or amendment, the second advising bank
signifies that it has satisfied itself as to the apparent
authenticity of the advice it has received and that the
advice accurately reflects the terms and conditions of
the credit or amendment received.’

K. M. Lutfor Rahman CDCS Presentation

 Article 09(c)

236
First ever
acknowledgement
in UCP

Second Advising Bank

K. M. Lutfor Rahman CDCS Presentation

 237

Whilst the use of a second

Second advising bank has been practice
advising bank for a number of years, UCP
never previously acknowledged
its role (before UCP600).
An advise through bank (SWIFT
Filed 57) is also a second
advising bank for the purpose of
UCP600.

K. M. Lutfor Rahman CDCS Presentation

 238

Second Advising
Bank
(nominated by the
issuing bank)

K. M. Lutfor Rahman CDCS Presentation

 239

Sub-article 9(c)
Explanation

By advising the credit or

amendment, the second advising
Advising by a bank signifies that it has
second
advising bank
satisfied itself as to the apparent
authenticity of the advice it has
received and that the advice
accurately reflects the terms and
conditions of the credit or
amendment received.

K. M. Lutfor Rahman CDCS Presentation

 240

Sub-article 9(c)
Explanation
By advising the credit or
amendment, the second advising
Significance bank signifies:
of Advising (i) that it has satisfied itself as to
by a second the apparent authenticity of
advising bank the advice it has received and
(ii) that the advice accurately
reflects the terms and
conditions of the credit or
amendment received (from the
first advising bank).
K. M. Lutfor Rahman CDCS Presentation
 FIRST ADVISING BANK VS SECOND ADVISING BANK
241

First Advising Bank Second Advising Bank

The first advising bank signifies The second advising bank

that: signifies that:
it has satisfied itself as to the it has satisfied itself as to the
of the
apparent authenticity apparent authenticity of the
credit or amendment it advice it has received from
has received from the issuing the first advising bank.
bank.
the advice accurately reflects
the advice accurately reflects the terms and conditions of the
the terms and conditions of the credit or amendment received
credit or amendment received from the first advising bank.
from the issuing bank.
K. M. Lutfor Rahman CDCS Presentation
 242

An advising bank determines

Please note the apparent authenticity of
the documentary credit
whereas the second advising
bank determines the
apparent authenticity of the
advising bank’s advice of a
documentary credit.

K. M. Lutfor Rahman CDCS Presentation

 243

Query
Can there be a third advising
bank?
Third
advising bank Yes! But most unusual. UCP
doesn’t recognize a third
advising bank since UCP
caters common transactions.
The criteria stated for a
second advising bank would
equally apply for a third
advising bank if there is any.
K. M. Lutfor Rahman CDCS Presentation
 Article 9 (d)
Advising of Credits and Amendments
244

‘A bank utilizing the services of an advising bank or

second advising bank to advise a credit must use the
same bank to advise any amendment thereto.’

K. M. Lutfor Rahman CDCS Presentation

 245

Sub-article 9(d)
Explanation

Sub-article 9(d) ensures that the

Using same chain of communication
channel for between the parties will be
advising maintained, not only for the
advising of the documentary
credit, but also for any
amendments thereto.

K. M. Lutfor Rahman CDCS Presentation

 Article 9 (e)
Advising of Credits and Amendments
246

‘If a bank is requested to advise a credit or

amendment but elects not to do so, it must so
inform, without delay, the bank from which the
credit, amendment or advice has been received.’

K. M. Lutfor Rahman CDCS Presentation

 247

There is no requirement for

Please note the bank (to which the LC
was sent for advising) to
indicate its reason(s) for not
advising the documentary
credit.

K. M. Lutfor Rahman CDCS Presentation

 Article 9 (f)
Advising of Credits and Amendments
248

‘If a bank is requested to advise a credit or amendment but

cannot satisfy itself as to the apparent authenticity of the
credit, the amendment or the advice, it must so inform,
without delay, the bank from which the instructions appear to
have been received. If the advising bank or second advising
bank elects nonetheless to advise the credit or amendment, it
must inform the beneficiary or second advising bank that it
has not been able to satisfy itself as to the apparent
authenticity of the credit, the amendment or the advice.’

K. M. Lutfor Rahman CDCS Presentation

 249

Sub-article 9(f)
Explanation

If a bank is requested to advise

When a credit or amendment but
apparent cannot satisfy itself as to the
authenticity apparent authenticity of the
cannot be credit, the amendment or the
satisfied advice, it must so inform,
without delay, the bank from
which the instructions appear to
have been received.

K. M. Lutfor Rahman CDCS Presentation

 250

Sub-article 9(f)
Explanation

If the advising bank or second

Advising even advising bank elects nonetheless
when to advise the credit or
apparent amendment, it must inform
authenticity the beneficiary or second
cannot be advising bank that it has not
satisfied
been able to satisfy itself as
to the apparent authenticity
of the credit, the
amendment or the advice.
K. M. Lutfor Rahman CDCS Presentation
 251

Because of the significant use of the

SWIFT MT700 message type for the
issuance of a documentary credit, the
Please note occurrence of non authentication of
credits/advices is confined to a very
small percentage of transactions that
are sent by telex or in letter form.

However, in today’s regulatory

environment, a bank would be
expected not to advise a documentary
credit until its apparent authenticity
could be determined.

K. M. Lutfor Rahman CDCS Presentation

 Receipt of the documentary credit
252
Reviewing the documentary credit
against an agreed credit facility.
Requirements
prior to Reviewing a documentary credit
advising a against bank policy and regulatory
requirements
documentary
credit Reviewing the content of a
documentary credit

Was the issuance of the

documentary credit subject to an
earlier pre-advice?

K. M. Lutfor Rahman CDCS Presentation

 Receipt of the documentary credit
253

A documentary credit is generally issued by use

MT700 of a SWIFT MT7 type message, such as an
MT700 or MT799. This will enable an advising
MT799 bank to determine the apparent authentication
of the message.

Documentary credits sent by telex or in letter

form, authentication will be achieved,
Telex respectively, by means of the agreement of the
testing algorithm, which will appear on the
Letter telex, or the examination of the signature(s)
against specimens held on file.
A second advising bank will receive the
MT710
documentary credit from the advising bank by
Telex
means of a SWIFT MT710 message or telex, or
Letter
in letter form.
K. M. Lutfor Rahman CDCS Presentation
 Reviewing the documentary credit
against an agreed
254 credit facility
Is there any credit facility in the name of the
Confirmation issuing bank?
Does the credit facility, if any, cover
requested or confirmation facility?
authorized? Does the terms and conditions fall within
the parameters of the facility?

Even if the documentary credit does not

When no indicate a request or authorisation for
confirmation to be added, there may still be a
Confirmation
need to review the main criteria against a
is requested credit facility in the name of the issuing bank
or authorized especially when the advising bank is a
nominated bank for honor or negotiation.

K. M. Lutfor Rahman CDCS Presentation

 Reviewing a documentary credit
against bank policy and regulatory
255
requirements
The terms and conditions of a documentary
Reviewing credit, including any names of entities or
regulatory countries appearing thereon, should be
aspects checked against any regulatory requirements,
such as sanction regulations that are
applicable to the bank.

Banks should always review a

Reviewing documentary credit from the
against Bank perspective that it does not breach any
Policy bank policy.

K. M. Lutfor Rahman CDCS Presentation

 Reviewing the content of a
documentary
256
credit
Though there is no requirement in UCP 600 for an
banks will review contents of
The extent to which advising

advising bank or second advising bank to review the

documentary credits is the

text of a documentary credit to ensure that its terms

decision of each bank

and conditions appear to be in a workable form, some

advising and second advising banks will examine
every detail and contact the issuing bank should there
be a conflict of data or a need for clarification of a
term or condition.
Other banks will review one or more of a select number of
criteria, such as expiry date and place, latest shipment date,
goods description, form of availability, etc.

Some banks will not review the text at all, on the basis that
the advice of the documentary credit conveys no
undertaking on the part of the advising bank or second
advising bank.
K. M. Lutfor Rahman CDCS Presentation
 Reviewing the
c content of a
documentary
257
credit

Types of
settlement Advising banks will check
consistency and workability of the
The place documentary credit.
and date of
expiry
The advising bank, if authorized and
agreed to effect transfer of the credit,
Transferable should attach to its advice of the
credits documentary credit its standard transfer
request form.

K. M. Lutfor Rahman CDCS Presentation

 Was the issuance of c the documentary
credit subject to an258earlier pre-advice?

If pre-advice was issued, the documentary credit

should clearly refer to issuance of the pre-advice and
its date.

The advice of the advising or second advising bank

to the beneficiary should make reference to the pre-
advice message.

K. M. Lutfor Rahman CDCS Presentation

 Preparing a documentary credit for
advising to the beneficiary
259
An advising bank or second advising bank will usually
maintain a standard form of advice that it uses to advise
a documentary credit to a beneficiary. These will vary
from bank to bank.
the advice is attached with the LC
Advising charges details, if any.
The conditions under which the advising bank may be willing to
Contents honour or negotiate.
of the A short guide of how to review the terms and conditions of the
advice documentary credit, or one indicating the main points for
consideration when the documents are being prepared for
letter subsequent presentation to the bank.
wording in relation to certain matters, such as sanction clauses.

If a non-bank financial institution has issued the documentary credit,

the advising or second advising bank should inform the beneficiary of
this fact in its advice.
K. M. Lutfor Rahman CDCS Presentation
 Transmitting a documentary credit to
the beneficiary by260the advising bank

In letter form

Sent through mail or by

courier.
the beneficiary to collect from When the LC is
available with any bank
the offices of the advising and the advising bank
wishes to receive the
banks. advising fee in advance.

Through electronic delivery

K. M. Lutfor Rahman CDCS Presentation

Reviewing the documentary credit by the
beneficiary for
261 workability

A beneficiary should review

the documentary credit upon
its receipt to determine if its
terms and conditions are
acceptable. If not, the
beneficiary should contact the
applicant and request an
amendment.

K. M. Lutfor Rahman CDCS Presentation

 262

The slides under Article 09 of UCP600

cover Chapter 09 of the text book.

K. M. Lutfor Rahman CDCS Presentation