LC – Case Study 01

 

The Banking Tutor’s Lessons

BTL 823                                                                   12-09-2025

LC – Case Study 01

XYZ is a big exporter exporting sea food to various countries.

They had a contract with one Japanese Company for the export of “Specified cuttle fish”.

The inspection agency, appointed by the Importer inspected the goods and certified that the goods are as per the export order.

But there was mistake in typing in the bill attached to the LC. The bill described the goods as "cuttlefish," while the export order “specified cuttlefish." This discrepancy, though seemingly minor, led the importer to refuse payment.

The Bank in India received the information from the importer and it did not inform the exporter for 6 months.

In the meantime since the exporter got the money by discounting the bill, he did not follow up the matter. To his shock Bank debited the bill amount from his account and gave a letter after 6 months.

Exporter filed a consumer Complaint. Bank took a stand that they informed the exporter orally, which was disbelieved by the National Consumer Commission and ordered the Bank to pay the entire bill amount with interest from the date of the application.

The case highlights the importance of careful document review and prompt communication from banks in letter of credit transactions.

Sekhar Pariti

+91 9440641014