Reimbursing Bank in a Letter of Credit: Its Function
What a reimbursing bank does in a Letter of Credit and how UCP 600 Article 13 governs bank-to-bank reimbursement.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
A reimbursing bank pays the nominated bank on the issuing bank's behalf after the nominated bank has paid or negotiated. UCP 600 Article 13 applies: the issuing bank remains responsible for reimbursement, and if the credit states it, URR 725 governs the reimbursement. The reimbursing bank does not examine documents.
| Rule | UCP 600 Art. 13; URR 725 if stated |
|---|---|
| MT700 | Field 53a Reimbursing Bank |
| Examines documents? | No |
How it works
- Nominated bank pays the exporter.
- Nominated bank claims from reimbursing bank.
- Reimbursing bank pays under issuing bank's authorisation.
- Issuing bank still liable if reimbursement fails.
For exporters
- Mostly a bank-to-bank matter.
- Delays here can still delay your funds under negotiation.
Sources
- ICC — UCP 600 (Uniform Customs and Practice for Documentary Credits)
- Swift — MT700 Issue of a Documentary Credit (category 7 standards)
General guidance, not legal advice. Your bank examines documents independently.
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