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Negotiating Bank
A Negotiating Bank purchases drafts and documents from the beneficiary under a letter of credit.
Uniform Customs and Practice (UCP) rules govern this process.
Banks such as HSBC, Citibank, and Deutsche Bank often act as Negotiating Banks.
The Negotiating Bank assesses document compliance with the letter of credit terms.
After purchasing, the Negotiating Bank forwards the documents to the Issuing Bank for reimbursement.
Specific responsibilities include scrutinizing bills of exchange, commercial invoices, and transport documents.
The Negotiating Bank assumes financial risk if documents are non-compliant.
Examples of required documents include bills of lading, airway bills, or insurance certificates.