Issuing Bank

Issuing Bank refers to the bank that, at the request and instruction of the applicant (usually the importer), issues a letter of credit in favor of the beneficiary (usually the exporter). In international trade, the issuing bank assumes the primary payment responsibility. As long as the documents submitted by the beneficiary comply with the terms of the letter of credit, the issuing bank must make payment, regardless of whether the applicant is willing or able to pay. The issuing bank is usually located in the importer's country, and its creditworthiness and reputation directly affect the exporter's ability to safely receive payment. Usage scenarios are mostly seen in letter of credit settlement methods, such as documentary letters of credit and standby letters of credit. Precautions include: exporters should pay attention to the creditworthiness of the issuing bank and the country risk of its location; the issuing bank must strictly examine documents to ensure compliance between documents and the letter of credit and among the documents themselves; the issuing bank is different from roles such as the advising bank, negotiating bank, and confirming bank. The advising bank is only responsible for advising the letter of credit, the negotiating bank may purchase documents, and the confirming bank assumes the same payment responsibility as the issuing bank. The relationship between the issuing bank and the applicant is one of mandate, while the relationship between the issuing bank and the beneficiary is a legal relationship under the letter of credit.