Global Traders Ltd., an Indian importing company based in Delhi, enters into a contract with Asia Tech Electronics, a South Korean exporter, for the import of electronic components worth USD 500,000. Since the two compan

(i) Actions Asia Tech Electronics Can Take: Asia Tech. Electronics may inter alia take the following Corrective Actions: Amend the LC: The officials of Asia Tech. Electronics may facilitate discussions with the bank and exporter for an amendment, ensuring compliance with company risk policies. Provide Correct Documents: The exporter may resubmit documents. The Company Secretary ensures timelines are met and no further non-compliance occurs. Engage with Confirming Bank: The Company Secretary plays a key role in correspondence with Korea Trust Bank, ensuring all regulatory requirements are met. Seek a Waiver: Request Global Traders Ltd. to instruct Secure Bank India to waive the discrepancies (less insurance and late shipment date). (ii) Role of the Confirming Bank (Korea Trust Bank): Examine Documents: Ensure that documents strictly comply with LC terms. Payment Decision: Make payment only if terms are fully complied with or if the applicant agrees to accept discrepancies. Communication: Relay discrepancies to both the issuing bank and the exporter promptly. Provide Security: If compliant, it guarantees payment irrespective of the issuing bank's position. Alternate Answer Corrective Actions by Asia Tech Electronics and Role of Confirming Bank In the given scenario, Asia Tech Electronics, the exporter, is facing discrepancies in two submitted documents under a Letter of Credit (LC): (i) the insurance certificate only covers 80% of the shipment value instead of the required 100%, and (ii) the bill of lading is dated two days after the last permissible shipment date under the LC. These discrepancies may result in the documents being deemed non-compliant, and Secure Bank India (the issuing bank) may refuse payment. To correct these and ensure realization of payment, the following actions are possible: 1. Corrective Actions by Asia Tech Electronics: (i) Request for Amendment of the Letter of Credit: Asia Tech Electronics can request Global Traders Ltd. (the applicant/buyer) to approach Secure Bank India (the issuing bank) for an amendment of the LC. The required amendments would be: Relaxation of the insurance coverage condition from 100% to 80%. Extension of the latest permissible shipment date to include the actual date of shipment. Such amendments must be agreed upon by all parties, including the confirming bank (Korea Trust Bank), to be valid. (ii) Resubmission of Compliant Documents (if possible): If alternative documents that meet the original LC terms exist (e.g., an insurance certificate with 100% coverage), Asia Tech can resubmit those documents within the LC presentation period. This avoids the need for amendment. (iii) Waiver of Discrepancies by the Applicant: Asia Tech can request Global Traders Ltd. to waive the discrepancies. If the buyer agrees to accept the documents despite the non-compliance and instructs Secure Bank India accordingly, the payment may still be processed. 2. Role of the Confirming Bank (Korea Trust Bank): The confirming bank plays a crucial role in such situations. Its functions include: (i) Independent Undertaking to Pay: As the confirming bank, Korea Trust Bank has added its own undertaking to pay Asia Tech Electronics upon proper presentation of documents in compliance with LC terms. If the documents are discrepant, it is not obligated to pay unless the discrepancies are cured or waived. (ii) Document Examination: The confirming bank examines the documents strictly in accordance with the LC terms. It must inform Asia Tech promptly about any discrepancies found, as it did in this case. (iii) Advising on Discrepancy Resolution: While the confirming bank is not a party to the sale contract, it may assist the exporter by advising on possible steps—such as amendment requests, resubmission, or waiver routes—and facilitate communication with the issuing bank. (iv) Liaison with Issuing Bank: The confirming bank acts as an intermediary and may forward amended or substituted documents to the issuing bank and follow up for payment.