Legal Question in Banking Law in India

The ABC company has requested to open the LC of Rs. 50.00 lacs in favour of XYZ company with terms and conditions with prior date of shipment allowed, but the authorized signatory of both the company is same. The company is force to discount the LC bills in the month of May 2016 against Purchase order of June 2013. Please suggest me the bills is accommodation or not. If it possible to discount the bills.


Asked on 5/12/16, 5:01 pm

2 Answers from Attorneys

Fca Prashant Chavan Expert Edge LLP

13.05.2016

Dear Sir / Madam,

Yes, it is an accommodation bill arrangement and discounting of the bills is possible and right.

Regards,

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Answered on 5/12/16, 6:55 pm

1) It appears to be window dressing accommodation.

2) It lands the banker/ lender in problem if discounted,

may turn out to be NPA.

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Answered on 5/12/16, 10:00 pm


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