Confirmed Credit

Confirmed Credit :

If an irrevocable credit is opened by a bank in the buyer's country, the seller may require the credit to be confirmed by a bank in his own country as he may be unaware of the standing of the opening bank or may otherwise like to ask for additional protection of his interest. In such cases, the opening bank requests its correspondent in the seller's country to add its confirmation which in effect means that the confirming bank undertakes the liability to honour the seller's drafts drawn under the credit. It bears an unequivocal undertaking that draft conforming to the terms of the credit will be honoured notwithstanding any change in the position between the person or the bank opening the credit and the bank confirming the same. It ensures double protection to the seller since it is already irrevocable on the part of the opening bank and additionally on the part of the confirming bank in his own country. Although a confirmed letter of credit is irrevocable, an irrevocable credit is not necessarily a confirmed one.

An unconfirmed credit may be a credit not even confirmed by the opening bank and if so, it is in fact a revocable credit. It is normally, however, a credit which is irrevocable on the part of the opening bank but not confirmed by the advising bank in the seller's (beneficiary) country.

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