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 import/export transactions involving a letter of credit (L/C), the exporter's bank acts as the advising and/or confirming bank, while the importer's bank acts as the issuing bank. The advising bank usually provides notification to the exporter that the L/C has been issued, and may also confirm the credit if requested by the exporter. The issuing bank is responsible for opening the L/C and making payments to the exporter in accordance with the terms and conditions of the credit. Therefore, option B is the correct choice.

Which of the Following Correctly States the Role of Banks