Moneyzine
Contents
/Personal Finance/Nominated Bank

Nominated Bank

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
September 25th, 2023
Advertiser Disclosure

Definition

The term nominated bank refers to the financial institution that receives payment on behalf of a beneficiary to a letter of credit. Nominated banks are typically used to facilitate the receipt of payment when goods or services are provided to the importer.

Explanation

When an importer, or buyer / applicant, enters into an agreement with an exporter, or seller / beneficiary, a nominated bank will receive payment from the buyer's bank when the documented conditions of the agreement are fulfilled. Along with the advising bank, the nominated bank plays a key role when a letter of credit is used for international trade.

Issuing banks, also known as buyer's banks, are used by importers to issue letters of credit; thereby assuring payment will be made by an importer when goods or services are provided by an exporter. The nominated bank facilitates the eventual payment to the exporter by the buyer. It is the bank that is authorized to pay as stipulated in a documentary credit and is bound to pay under the line of credit. Nominated banks, advising banks, and issuing banks are frequently used by importers and exporters to avoid cases of fraud.

Related Terms

Related Content

How to Make a Million Dollars in 10 Years
Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
March 26th, 2024
How to Apply Maslow’s Hierarchy to Your Money This Year
You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
March 27th, 2024
How to Tackle Multiple Savings Goals
When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
March 22nd, 2024
The Countdown to Early Retirement: 10 Expenses to Eliminate
Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
March 22nd, 2024
What’s Your One Page Financial Plan? Mapping out Your Future
“What’s your one page financial plan?” — This is the absolute best question that I’ve heard asked in a long time. Instead of talking about your hot stock pick or your fancy investment that shields you from paying taxes, I think it’s time for all of us to step back and ask ourselves the most intelligent question of all, “Why the heck do I care about money anyway??”
March 14th, 2024

Contributors

Moneyzine 2024. All Rights Reserved.