Collecting Bank

The Collecting Bank is a bank that, under the Collection settlement method, accepts the entrustment of the Remitting Bank to collect payment from the Drawee (importer). It is usually located in the country of the Drawee and is responsible for presenting documents to the Drawee, demanding payment or acceptance, and after receiving payment, remitting funds according to the instructions of the Remitting Bank. The Collecting Bank plays a key role in collection operations: it does not examine the contents of the documents and acts only according to the instructions of the Remitting Bank, and therefore bears no responsibility for the authenticity of the documents or the quality of the goods. When using a Collecting Bank, note the following: the relationship between the Collecting Bank and the Remitting Bank is one of entrustment and agency. If the Drawee refuses payment, the Collecting Bank should promptly notify the Remitting Bank, but it is not obliged to take delivery of the goods or handle them on behalf of the parties. Unlike the Issuing Bank under a letter of credit, which bears primary payment liability, the Collecting Bank under a collection does not assume a payment guarantee and is only responsible for presentation and collection. In addition, the Collecting Bank may be designated by the Remitting Bank or by the exporter through the Remitting Bank. Choosing a reputable Collecting Bank helps reduce the risk of non-receipt of payment.