Which of the following correctly states the role of banks in import/export transactions involving a letter of credit (L/C)?
A)The importer's bank is the advising and/or confirming bank; the exporter's bank is the issuing bank.
B)The exporter's bank is the advising and/or confirming bank; the importer's bank is the issuing bank.
C)The exporter's bank is the advising, confirming, and issuing bank.
D)The importer's bank is the advising, confirming, and issuing bank.
E)The exporter's bank is the drawee; the importer's bank is the payee.

Question

Quizplus · Accepted Answer

In an L/C transaction, the exporter's bank acts as the advising bank to inform the exporter of the L/C issued by the importer's bank. The exporter's bank can also act as the confirming bank to add its assurance of payment to the exporter. The importer's bank issues the L/C and can also act as the confirming bank if required. Therefore, option B correctly states the roles of the banks in an L/C transaction.

Which of the Following Correctly States the Role of Banks