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Advising bank

An advising bank is usually a foreign CORRESPONDENT BANK to an ISSUING BANK of a LETTER OF CREDIT.

Usually a bank local to the BENEFICIARY of a Letter of Credit, the advising bank informs the Beneficiary, either by telephone or by standard post or by both, that the Letter of Credit has arrived.

This is the bank to which the Beneficiary must present the documents required by the Letter of Credit, along with a DRAFT or BILL OF EXCHANGE in order to be paid.

The advising bank then forwards the documents to the issuing bank who, upon review and acceptance of the required documents, relates to the advising bank that the draft or bill of exchange against the Letter of Credit can be paid, i.e. that the funds can be released.

If the issuing bank does not approve the documents, the advising bank is under no obligation to pay.

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