Difference between advising bank and confirming bank
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I am going to give answers strictly based on their roles in a documentary credit transaction. Also, there are many other bank roles in this transaction, but I'll define the ones you asked.
Confirming Bank: Is a bank that adds its commitment or undertaking to that of the issuing bank guaranteeing that the exporter will be paid. Normally this is done when the exporter wants to avoid a country risk or he is more comfortable receiving assurance from such a bank. If issuing and confirming bank are different, it is a CONFIRMED letter of credit. When the issuing bank is also the confirming bank, it is an UNCONFIRMED letter of credit.
Advising bank: This is simply the bank that advises(informs) the exporter that the Letter of credit has been issued by the importer.
Confirming Bank: Is a bank that adds its commitment or undertaking to that of the issuing bank guaranteeing that the exporter will be paid. Normally this is done when the exporter wants to avoid a country risk or he is more comfortable receiving assurance from such a bank. If issuing and confirming bank are different, it is a CONFIRMED letter of credit. When the issuing bank is also the confirming bank, it is an UNCONFIRMED letter of credit.
Advising bank: This is simply the bank that advises(informs) the exporter that the Letter of credit has been issued by the importer.
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