My question is regarding use of MT756 in letter of credit operations.

Under what circumstances do the issuing Bank sends an MT756.

Under what circumstances do the reimbursing Bank sends an MT756 to a claiming Bank. 

Does a negotiating bank requires to send an MT742 after receiving an MT756/MT752.

BR

 

Salman

Hi
What is the MT756???

MT756 is and advice of reimbursement or payment. This advice is normally sent out to the claiming bank in the event the LC does not bear the reimbursement claim clause. This advice will inform the claiming bank on how to make a reimbursement; direct TT or by drawing a sight draft on a reimbursing bank.

However, this case is not widely practiced now because majority of the LCs are issued available by negotiation. As such, the reimbursement claim must be clearly stated otherwise negotiating bank would refuse to negotiate.

As a formality, the claiming bank is required to confirmed the reimbursement claim by sending and advice, MT742 or MT799 to the issuing bank after receiving MT756.

This message is sent by the issuing bank to the bank from which it has received documents or by the reimbursing bank to the bank from which it has received a reimbursement claim. It may also be sent by the bank nominated to pay/accept/negotiate/incur a deferred payment undertaking to the bank from which it has received documents. It is used to advise the Receiver about reimbursement or payment, to that bank, for a drawing under a documentary credit or which no specific reimbursement instructions or payment provisions were provided.
The account relationship between the Sender and the Receiver is used unless otherwise expressly stated in the message.