Advised Credit Letter

Sometimes, an advising bank notifies the beneficiary of the terms and conditions of a letter of credit on behalf of the credit issuing bank. These letters are known as advised credit letters. However these are unconfirmed letters of credit and the advising bank thereby does not guarantee the payment of a letter of credit to the beneficiary.

Business companies often look for an advice from banks, when they request them to issue letters of credit on their behalf. Therefore, an advised credit letter needs to be forwarded to the company's clients along with their letter of credit. In various cases, the advising bank may deny confirmation from their part on payment against a letter of credit due to several reasons. In such cases, they simply tend to advice the beneficiary of the letter of credit.

An advising bank can be called as an agent for the credit issuing bank. An advising bank is responsible for verifying and confirming the reliability of credits received or to be received and broadcast the accurate information to their beneficiaries. Only after confirmation of a letter of credit, the advising bank will function as the credit issuing bank. After confirmation of the letter of credit, the beneficiary thus gets assurance from both the advising bank and the issuing bank for the payment against these documents.

Often, the beneficiary may be concerned about the issuing bank's reputation or stability in the market. In such occasions, confirmation from a known bank might definitely prove to be a convenient way to promote the seller's goodwill. Advised letters of credit are great documental evidences in case of a dispute and hence needs to be written very carefully.

See below for a sample advised credit letter-

October 14, 2011
Ref no: IGL9/0045/T5

Bank of Amador
422 Sutter Street
Jackson, CA 95642
(209) 223 7720

To
Mr. Thomas Hopp
MLS# AM1200934
Jackson, CA 95642

Dear Mr. Hopp,

Upon receiving your request for the account of Mr. Kyle Broad, we hereby issue this advised letter of credit no - IGL9/0045/T5 in favor of Mr. Thomas Hopp, Owner of ___________.

We hereby undertake that all assignments listed, strictly compliant with the terms and conditions, will be honored on presentation of documents at the above address on or before the expiry date of the letter of credit.

Find the acceptable terms and conditions for letter of credit issued by Wells Fargo Bank listed below. Your compliance with our terms and conditions will ensure prompt dispatch of the order. If you face any difficulties with your letter of credit or if your credits are not being issued within the promised period, kindly contact us on the number provided on the top of this letter.

• The letter of credit is to specify the order of ________________
• The letter of credit will expire on _____________
• The amount of the letter of credit must not exceed $__________

This letter is irrevocable being subject to the Uniform Customs and Practice for Documentary Credits as put forth and updated occasionally by the International Chamber of Commerce.

Note: The terms and conditions in this letter are subject to revision and you will certainly be sent a prior notification in that case.

Sincere Regards,

Frank Malcolm - Branch Manager

The above example of an advised credit letter will definitely give you a fair idea of how it needs to be written.

Also, you can view Stand By Credit Letter and Credit Denial Letter for sample letters.