The ICC Banking Commission conducted its final meeting of 2024 virtually via Teams on 20-21 November. Four separate portions of the event open to Banking Commission members and ICC National Committee representatives took place.
Because of widespread interest on the subject, the ICC Banking Commission issued ICC Opinion TA537 (2002) on when a non-bank issues a letter of credit. The Opinion addressed the principal advantages to bank issuance and handling of LCs. Although not contemplated in the rules, the Opinion stated that it does not “violate” the UCP for a non-bank to issue an LC subject to the rules.
In the past, it has been pointed out that a beneficiary may be far more inclined to take an LC issued by a corporate with personnel (perhaps former bankers) of considerable LC operational expertise than accepting an LC from a bank with unknown or questionable LC experience. Nonetheless, this tends to be the exception than the norm.
There is an overarching problem for exporters relying on LCs. As framed by one DCW reader: With every bank in the world telling their customers that an LC is a “definite undertaking of payment”, many small companies who receive LCs that have been advised to them by their trusted bank believe they have a “definite undertaking of payment” in their hand. The truth is far removed from this.
