18 Mar, 2022
Confirmation of documentary credit
If the beneficiary, upon receipt of a documentary credit in their favour, has any doubts as to the standing of the issuing bank or the economic stability of the buyer’s country, they may request their local bank to confirm that credit. Additionally requests to confirm a credit can be incorporated into the documentary credit terms and conditions by the issuing bank.
If the local bank is agreeable to add its confirmation, it adds its own separate engagement (normally under authority from issuing bank) to the credit and by this engagement it undertakes that correct drawings under the credit will be honoured. Thus the local bank adds to the credit its own backing in addition to that of the issuing bank.