reimbursing bank

(banking) The bank named in a documentary credit (letter of credit) from which the paying, accepting or negotiating bank may request cover after receipt of the documents in compliance with the documentary credit. The reimbursing bank is often, but not always, the issuing bank. If the reimbursing bank is not the issuing bank, it does not have a commitment to pay unless it has confirmed the reimbursement instruction. The issuing bank is not released from its commitment to pay through the nomination of a reimbursing bank. If cover from the reimbursing bank should not arrive in time, the issuing bank is obliged to pay (also any accrued interest on arrears).

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