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zeeshan chauhan   03 June 2019

import fraud with LC

we were importing scrap from peru and we were working on LC.but after some days we had doubt on our exporter and that doubt proved true.we told bank to stop payment but bank denied to stop payment.
and we were ready to pay interest too for delay.and after 2 days we got some proof from SGS department that provided documents were forged documents and now bank is not taking any responsibility.
what i should do?
and bank had received message from foreign bank that"we have told our exporter about this and we are seeking receipt from them,and will update you once we receive receipt"
but in next 2 days our bank said that payment has been released and we can't help you out.
what steps shoul i take?


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 2 Replies

Kishor Mehta (CEO)     03 June 2019

It depends on the terms of LC, whether it is irrevocable. Better cosult a practicing advocate of your region.

SIVARAMAPRASAD KAPPAGANTU (Retired Manager)     04 June 2019

Letter of Credit (LC) is communicated through SWIFT and once it is received by the Banker abroad, they act upon it and intimate the beneficiary. As rightly pointed out by Expert Shri Kishor Mehta, you have not informed whether the LC is revocable. Normally, all LCs are irrevocable in which case the Issuing Bank ie your bank which issued LC on your behalf, is helpless and they need to pay the amount on the due date of the LC.

 

Normally, any Importer and/or their Banker obtains  Status Report/OPL on the overseas Exporter before establishing the LC. In your query, you have not informed the details. Banks have a cut off amount beyond which they compulsorily obtain Status Report/OPL.


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