Uniform Customs and Practice for

Documentary Credits 600

Peter DJKM
AGM.Trade Finance
IDBI Bank Ltd., New Delhi.

History of UCP.

UCP 82 1933 created

UCP 151 1951 1st revision
UCP 222 1962 2nd revision
UCP 290 1974 3rd revision
UCP 400 1983 4th revision
UCP 500 1993 5th revision
UCP 600 2007 6th revision
UCP 600 represents the sixth revision of the Uniform
Customs and Practice for Documentary Credits, since its
inception. Final text of UCP 600 was unanimously
approved on October 25, 2006 at the ICC Banking
Committee meeting in Paris, France.

UCP 600 has become effective on July 1, 2007

Article-1

Application of UCP

Applicable to any Documentary Credits (to The extent

to which they may be applicable and Standby Letter(s)
Of Credit
UCP applicable when the LC expressly indicates that it
is subject to these rules;
Concept of Modify or Exclude;and
Retention of Standby Letters of Credit

Article 2
Definitions
ADVISING BANK
APPLICANT
BANKING DAY
BENEFICIARY
COMPLYING
PRESENTATION
CONFIRMATION
CONFIRMING BANK
CREDIT

HONOR
ISSUING BANK
NEGOTIATION
NOMINATED BANK
PRESENTATION
PRESENTER

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Article
2
Definitions
Complying Presentation a presentation that is

in accordance with the terms and conditions of

the credit, the applicable provisions of these
rules and international standard banking
practice.
Credit means any arrangement, however
named or described, that is irrevocable and
thereby constitute a definite undertaking of the
issuing bank to honour a complying
presentation.

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Article 2
Honour:
Definitions

Cont.

a.To pay at sight if the credit is

available by
sight payment.
b.To incur a deferred payment
undertaking
and pay at maturity if the credit is
available by deferred payment.
c.To accept a bill of exchange (draft)
drawn by the beneficiary and pay at
maturity if the credit is available by
acceptance.

Article 2
Definition
Negotiation
The purchase by the nominated bank of drafts
(drawn on a bank other than the nominated bank)
and/or documents under a complying presentation,
by advancing or agreeing to advance funds to the
beneficiary on or before the banking day on which
reimbursement is due to the nominated bank

Article 3
Interpretations
A Credit is Irrevocable even if there is no indication to that
effect.
Branches of a Bank in Different Countries are considered to be
Separate Banks
The words until,till, from and between when used to
determine a period of shipment include the dates mentioned.
The words before & after exclude the dates mentioned
The words from & After when used to determine a maturity
date exclude the date mentioned
Use of terms FIRST CLASS, WELL KNOWN,INDEPENDENT,
OFFICIAL, COMPETENT,LOCAL used to describe the issuer of a
document allow any issuer except the beneficiary

Article 3
Interpretations
A document may be signed by handwriting, by facsimile
signature, by perforated signature, by stamp, by symbol, or by
any other mechanical or electronic method of authentication
The expression on or about is interpreted as 5 calendar days
before & 5 calendar days after the specified date both start
and end date included.
Begining of month- 1st to 10th, middle -11th to 20th, end- 21st to
end of month.
Ist half of month- 1st to 15th, 2nd half- 16th to end

Article 4

Credit Vs Contracts

By nature are separate transactions from sales or other

contracts on which they may be based and banks are no
way concerned with or bound by such contract.
Bene cannot avail of contractual relationships between
banks or between applicant and issuing bank
Issuing bank should discourage inclusion of underlying
contract, proforma invoice and the like in to the text
( Addition)

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Article-6: Availability, Expiry

Date & Place of Presentation
Must Indicate whether available by sight payment,by
deferred payment, by acceptance or by negotiation.
Always available with issuing bank.
A Credit must not be issued available by a draft drawn
on applicant

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Article-6: Availability, Expiry

Date & Place of Presentation
Available with any bank, nominated bank or issuing
bank
Expiry date is the last date for presentation.
The place of the bank with which the credit is available
is the place for presentation. Place other than the
issuing bank include the place of issuing bank.
Documents must be presented before expiry date.

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Article 7: Issuing Banks

Undertaking
An issuing Bank is irrevocably bound to honour as of
the time it issues the credit
Issuing bank Honours It does not negotiate.
Provided the documents are presented to nominated
bank or issuing bank and that they constitute a
complying presentation, the issuing bank must
honour.

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Article 8: Confirming Bank

Undertaking

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The Confirming Bank is irrevocably bound to

negotiate or honour as of the time it adds its
confirmation

Honours or Negotiates

If the bank is not ready to add its confirmation, it

should inform the issuing bank without delay and
may advise the credit without adding its confirmation

Article 9:Advising Banks

Liability.

Elects to advise : shall satisfy itself as to

authenticity .

Elects not to advise : must so inform the Issuing Bank

without delay.

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apparent

Second advising bank

Advice of credit or amendment accurately reflects
the terms and conditions of the credit or amendment
received.

Article 10: Amendments

An issuing bank is irrevocably bound at the time it issues
the amendment
A confirming bank may choose to advise the amendment
without extending it confirmation
A beneficiary should give notification of acceptance/
rejection of amendment. Partial acceptance of amendment
=Rejection
Time limit for acceptance or rejection will be disregarded

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Article11:Teletransmitted & Pre

Advised Credits & Amendments
An authenticated tele transmission of a credit or amendment
will be deemed to be the operative credit or amendment, and
any subsequent mail confirmation shall be disregarded.
A preliminary advice of issuance of a credit or
amendment(pre-advice) shall only be sent if the issuing bank
is prepared to issue the operative credit or amendment. An
issuing bank that sends a pre-advice is irrevocably committed
to issue the operative credit or amendment, without delay, in
terms not inconsistent with the pre-advice.

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Article 12: Nomination

By nominating a bank, the issuing bank authorizes the
nominated bank to prepay or purchase a draft accepted
or a deferred payment undertaking incurred by that
nominated bank
Unless nominated bank is the confirming bank, it does
not impose any obligation to honour or negotiate
Nominated bank may obligate itself under an
unconfirmed credit if expressly communicated to
beneficiary

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Article 13: Bank to Bank

Reimbursement.
(b) Issuing Banks shall not require a Claiming Bank to
supply a certificate of compliance with the terms and
conditions of the Credit to the Reimbursing Bank.
(d) The Issuing Bank shall be responsible to the Claiming
Bank for any loss of interest if reimbursement is not
provided by the Reimbursing Bank on first demand, or as
otherwise specified in the Credit, or mutually agreed, as
the case may be.

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Article 14 Standard
Examination
of Documents
Check on the basis of documents alone.
Appear on their face compliant of credit terms.
14(d) Data in a document when read in context with the
credit, the document itself and international standard
banking practice, need not be identical to, but must not
conflict with, data in that document, any other
stipulated document or the credit.

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Article 14

Contd..

Inconsistent Documents on their face will be treated as

non-compliant.
Documents not stipulated in credit will not be examined.
Issuing/Confirming/Nominated bank each shall have a
maximum of 5 banking days following the day of receipt .
If a credit contains conditions without stating the docs to
be presented, banks will consider such condition
A) as not stated

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B) will disregard them .

ARTICLE 15
COMPLYING PRESENATION
a. When an Issuing bank determines that a
presentation is complying, it must Honour.
b. When a Confirming bank determines that a
presentation is complying, it must Honour or
negotiate and forward the documents to the Issuing
bank.
c. When a Nominated bank determines that a
presentation is complying and Honour or negotiates, it
must forward the documents to the Confirming bank
or Issuing bank.

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Article 16

Discrepant documents,
waiver
& notice

(a) When the Issuing Bank authorises another bank to

pay, incur a
deferred payment undertaking, accept
Draft (s), or negotiate against documents which appear
on their face to be in compliance with the terms and
conditions of the Credit, the Issuing Bank and the
Confirming Bank ,if any, are bound to :
(i) Reimburse the Nominated Bank
(ii) Honour or
(iii) Negotiate

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Article 16

Contd

(b) Upon receipt of the documents the Issuing Bank

and/or Confirming Bank, if any, or a Nominated Bank
acting on their behalf, must determine on the basis of
the documents alone whether or not they appear on
their face to be in compliance with the terms and
conditions of the Credit. If the documents appear on
their face not to be in compliance with the terms and
conditions of the Credit, such banks may refuse to
honour or negotiate.

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Article 16

(c)

Contd

If the Issuing Bank determines that the documents

appear on their face not to be in compliance with the
terms and conditions of the Credit, it may in its sole
judgment approach the Applicant for a waiver of the
discrepancy (ies). This does not, however, extend the
period of 5 banking days

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Article 16

Contd

d)If decides to refuse must give notice by

telecommunication or other expeditious means without
delay but no latter than the close of fifth banking day
following the day of receipt.Notice to be given to(a)
bank or beneficiary from whom received.
A single notice must be given to the presenter.

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Article 16

Contd

The notice must state that

1.
2.

The Bank is refusing to honour or negotiate and

Each discrepancy in respect of which the bank refuses to
honour or negotiate
Status of Document

3.

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That the bank is holding documents pending further

instruction from presenter ,or
That the issuing bank is holding documents until it receives
a waiver from the applicant and agree to accept it or
receives further instruction from presenter prior to
agreeing to accept a waiver ,or
That it is returning documents ,or
That it is acting as per previous instructions received from
the presenter

Article 17 Original Documents and

copies
At least one original of each document must be
presented.
A bank shall treat as an original any document bearing
an apparently original signature, mark, stamp, or label
of the issuer of the document, unless the document
itself indicates that it is not an original.
Copies will be satisfied by either originals or copies.
Photocopy = copy.
In duplicate", In two fold" or In two copies", this will
be satisfied by the presentation of at least one original
and the remaining number in copies,

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Article 18

Commercial Invoice

A Commercial Invoice
must appear to have been issued by the beneficiary
(except as provided in Article 38 Transferable credits)
Must be made out in the name of the applicant
Must be in the same currency as that of credit
Need not be signed
Invoice for amount in excess of the credit is permitted
provided the bank in question has not honoured or
negotiated for an amount in excess of that permitted by
the credit
The description of goods, services or performance in a
commercial invoice must correspond to that appearing in
the credit

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TRANSPORT DOCUMENTS
Art 19: Transport Document covering at
least two different Modes of Transport
Art 20: Bill of Lading
Art 21:Non Negotiable Seaway Bill
Art 22:Charter Party Bill of Lading
Art 23:Air transport documents
Art 24: Road,rail or inland water way
trans port document
Art 25:Courier and Postal receipts
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Article 19 Transport Document Covering

at least two different modes of transport
(a) May be however named,
(b) Signed by the carrier/ master or a named agent on behalf of
the carrier/ master
(c) Any Signature by the carrier, master or agent must be
identified as that of carrier, master or agent
(d) Any signature by an agent must indicate
Whether the agent has signed on behalf of the carrier/ the
master

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Article 19
Contd..
(e) Indicate the place of dispatch, taking in charge or
shipment and the place of final destination stated in the
credit even if the transport document states in addition,
a different place of dispatch, taking in charge or
shipment or place of final destination or the transport
document contains the indication intended or similar
qualification in relation to the vessel, port of loading or
port of discharge.

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Article 19
Contd
(f) Appears to contain all of the terms and conditions
of carriage, or some of such terms and conditions by
reference to a source or document other than the bill
of lading (short form/blank back bill of lading); banks
will not examine the contents of such terms and
conditions, and
(g) Contains no indication that it is subject to a charter
party

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Article 20

Bill of Lading

If a Credit calls for a bill of lading, banks will, unless

otherwise stipulated in the Credit, accept a document,
however named, which:
Appears on its face to indicate the name of the carrier
and to have been signed or otherwise authenticated
by:
The carrier or a named agent for or on behalf of the
carrier, or
The master or a named agent for or on behalf of the
master.

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Article 20

Contd..

(ii) indicates that the goods have been loaded on

board, or shipped on a named vessel by a pre printed
wording or an on board notation indicating the date of
goods shipped on board.
(iii) indicates the port of loading and the port of
discharge stipulated in the Credit.
(iv) consists of a sole original bill of lading or, if issued
in more than one original, the full set as so issued, and

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Article 20

Contd

(v) appears to contain all of the terms and conditions of

carriage, or some of such terms and conditions by
reference to a source or document other than the bill of
lading (short form/blank back bill of lading); banks will
not examine the contents of such terms and conditions,
and
(vi) contains no indication that it is subject to a charter
party

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CONTD.
(b) For the purpose of this Article, transshipment means
unloading and reloading from one vessel to another
vessel during the course of carriage from the port of
loading to the port of discharge stipulated in the Credit.
(c) Unless transshipment is prohibited by the terms of
the Credit, banks will accept a bill of lading which
indicates that the goods will be transshipped, provided
that the entire ocean carriage is covered by one and the
same bill of lading.
(d)Clauses that the carrier reserves the right to transship
shall be disregarded

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Article 22-25 Other Transport

Documents- Distinguishing Features
(a) Article 22 additionally introduces a
charterer or a named agent on behalf of
charterer who may sign.
(b) In case of charter party Bill of lading, a
Geographical range or a region is acceptable as a
port of discharge if stated in the credit.
(c) Under Article 23, Flight date in a notation will
always be taken as the date of shipment whether
flight stamp is called for or not. No other
information on the Airway Bill will be accepted as
the flight date.

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Article 22-25
Contd
(d) As per Article 24 A Road transport document must
appear to be the original for the consignor or shipper or
bear no marking indicating for whom the document has
been prepared.
(e) A rail transport document marked duplicate will be
accepted as an original.
(f) A rail or inland waterway transport document will be
accepted as an original whether marked as an original
or not.

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Article 22-25
Contd
(g) As per Article 25, the courier receipt must indicate
the name of the courier service or signed by the courier
service at the place from which the credit states, the
goods are to be shipped.
(h) Indicate the date of pickup or receipt or wording to
this effect. This date will be deemed to be the date of
shipment
(I) A requirement that courier charges are to be paid or
prepaid may be satisfied by an evidence that courier
charges are for the account of a party other than the
consignee.

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Article 26 On Deck, Shippers load

and count, Said by Shipper to Contain
Unless otherwise
documents which

stipulated will accept transport

(i) does not indicate, that the goods are or will be loaded
on deck. Nevertheless, banks will accept a transport
document which contains a provision that the goods
may be carried on deck and /or
(ii) bears a clause as "shipper's load and count" or "said
by shipper to contain" or words of similar effect,
and/or(iii) bears reference to charges additional to the
freight

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Article 27: Clean Transport

documents

(a) A clean transport document is one which bears no

clause or notation which expressly declares a defective
condition of the goods and/or the packaging.
The word clean need not appear on the transport
document

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Article 28 Insurance
Documents
(a) Insurance documents must appear on their face to
be issued and signed by insurance companies or
underwriters or their agents or their proxies.
(e) banks will not accept an insurance document which
bears a date of issuance later than the date of loading
on board or dispatch or taking in charge as indicated in
such transport document unless it is effective from a
date not later than the date of shipment .

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Article 28

Contd

The insurance document must indicate the amount of

insurance coverage and be in the same currency as
that of the credit
If there is no indication in the credit of the insurance
coverage required, the coverage should be for 110%
of the CIF or CIP value
An Insurance document may contain reference to any
exclusion clause

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Article 29

Extn. of Expiry
Date

a) If the expiry date of the Credit and/or the last day of

the period of time for presentation of documents
stipulated by the Credit falls on a day on which the bank
to which presentation has to be made is closed for
reasons other than those referred to in Article 36, the
stipulated expiry date and/or the last day of the period of
time after the date of shipment for presentation of
documents, as the case may be, shall be extended to the
first following banking day.
b) The nominated bank will provide a statement on its
covering schedule that the presentation was made in
accordance with sub Article 29 (a)

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Article 30: Tolerance in Credit

Amount, Quantity & Unit Prices
The words about or approximately indicate tolerance of
10% in amount quantity or unit price
Even when partial shipments are not allowed, a
tolerance not to exceed 5% less than the amount of
credit is allowed provided that the quantity (if stated) is
shipped in full and the unit price (if stated) is not
reduced.

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Article 31 Partial Drawings

shipments

or

(a) Partial drawings and/or shipments are allowed, unless

the Credit stipulates other-wise.
(b) Transport documents which appear on their face to
indicate that shipment has been made on the same
means of conveyance and for the same journey, provided
they indicate the same destination, will not be regarded
as covering partial shipments, even if the transport
documents indicate different dates of shipment and/or
different ports of loading, places of taking in charge, or
despatch.

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Article 32: Instalment Drawings

or Presentations
If drawing or shipment by instalments within given
period is stipulated and the instalment is not drawn or
shipped within the prescribed period, the credit
ceases to be available for any subsequent instalment

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Article 33: Hours of

Presentation

A Bank has no obligation to accept a presentation

outside Banking Hours

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Article 34: Disclaimer on

Effectiveness of Documents
A Bank assumes no liability or responsibility for the
form sufficiency, accuracy, genuineness, falsification
or legal effect of any document

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Article 35: Disclaimer on

Transmission Translation
A Bank assumes no liability or responsibility for the
consequences arising out of delay, loss in transit,
mutilation or other errors arising n the transmission.
An issuing bank must honour, negotiate or reimburse
even when the documents have been lost in transit
when forwarded by the nominated bank.

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Article 36

Force Majeure

Banks assume no liability or responsibility for the

consequences arising out of the interruption of their
business by Acts of God, riots, civil commotions,
insurrections, wars or any other causes beyond their
control, or by any strikes or lockouts. Unless
specifically authorized, banks will not, upon
resumption of their business, pay, incur a deferred
payment undertaking, accept Draft(s) or negotiate
under Credits which expired during such interruption
of their business.

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Article 37 Disclaimer for Acts of An

Instructed Party

(c) Where a Credit stipulates that charges are for

the account of beneficiary other than the instructing
party, and charges cannot be collected, the issuing
bank remains ultimately liable for the payment
thereof.

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Article 38 Transferable credit

Transferable credit means a credit that specifically
states it is transferable. A transferable credit may be
made available in whole or in part to another beneficiary
(second beneficiary) at the request of the beneficiary
(first beneficiary).
Transferring bank means a nominated bank that
transfers the credit or, in a credit available with any bank,
a bank that is specifically authorized by the issuing bank
to transfer and that transfers the credit. An issuing bank
may be a transferring bank.
Transferred credit means a credit that has been made
available by the transferring bank to a second beneficiary.

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Article 38

Transferable
credit

Any request for transfer must indicate if and under what

conditions amendments may be advised to the second
beneficiary. The transferred credit must clearly indicate those
conditions.
If a Credit is transferred to more than one Second
Beneficiary(ies), refusal of an amendment by one or more
Second Beneficiary(ies) does not invalidate the acceptance(s) by
the other Second Beneficiary(ies) with respect to whom the
Credit will be amended accordingly. With respect to the Second
Beneficiary(ies) who rejected the amendment, the Credit will
remain unamended
A transferred credit cannot be transferred at the request of a
second beneficiary to any subsequent beneficiary. The first
beneficiary is not considered to be a subsequent beneficiary.

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Article 38

Contd..

(h) The Credit can be transferred only on the terms and

conditions specified in the original Credit, including
confirmation with the exception of:
the amount of the Credit,
any unit price stated therein,
the expiry date,
the period for presentation of documents
the last date of shipment,
Any or all of which may be reduced or curtailed.

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Article 38

Contd..

(i) The First Beneficiary has the right to substitute his own
invoice(s) (and Draft(s)) for those of the Second Beneficiary
(ies), for amounts not in excess of the original amount
stipulated in the Credit and for the original unit prices if
stipulated in the Credit, and upon such substitution of
invoice(s) (and Draft(s)) the First Beneficiary can draw under
the Credit for the difference, if any, between his invoice(s)
and the Second Beneficiary's(ies') invoice(s).
The percentage for which insurance cover must be effected
may be increased to provide the amount of cover stipulated in
the credit or these articles.
Presentation of documents by or on behalf of a second
beneficiary must be made to the transferring bank.

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Article 39 Assignment of
Proceeds

The fact that a Credit is not stated to be transferable

shall not affect the Beneficiary's right to assign any
proceeds to which he may be, or may become, entitled
under such Credit, in accordance with the provisions of
the applicable law. This Article relates only to the
assignment of proceeds and not to the assignment of
the right to perform under the Credit itself.

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THANK YOU

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