negotiating bank

(banking) In a letter of credit transaction, the bank that (1) receives and examines the seller’s documents for adherence to the terms and conditions of the letter of credit, (2) gives value to the seller, so long as the terms of the credit have been met, and (3) forwards them to the issuing bank (the buyer’s or importer’s bank). Depending upon the type of credit, the negotiating bank will either credit or pay the seller/exporter immediately under the terms of the letter of credit, or credit or pay the exporter once it has received payment from the issuing bank. See advising bank; issuing bank.

Was this article helpful?

Related Articles

Need Support?

Can't find the answer you're looking for?
Contact Support