Under certain circumstances, the Bank may discount a bill of exchange instead of negotiating them. The amount the Bank advances to you also depends on your past record and reputation of the drawee.
Usually, the Bank may want some conditions to be fulfilled to be able to discount a bill:
The advising or confirming bank will hide the reimbursement instruction from the beneficiary so that his bank must present the documents to the nominated bank for negotiation in order to obtain payment under the DC terms.
Bills which are financed by the receiving branch, whether drawn under a DC or not, are treated as Bills Receivable by both the remitting branch and the receiving branches.
Presenting a bill
Bills may be presented to the nominated bank in two ways:
a. When the opening bank is a member of the Bank nominated for payment, acceptance or negotiation
b. When the nominated bank has confirmed the DC
c. When the nominated bank is the drawee
If you have a good standing, we can give you an advance against an OBN bill. You will then have to repay the advance from the proceeds of the bill.
The remitting bank may finance a good creditworthy exporter by purchasing or discounting his collection bills under an "Export Line". However,