The Bank Found an LC Discrepancy: What Happens Next?
The documents have already been presented.
Then the message arrives:
Documents discrepant.
At this stage, the useful question is not simply, “Can the buyer waive it?”
It is:
What exactly has the bank refused, what are the available options now, and what can still be fixed?
The short answer
When a bank determines that an LC presentation does not comply, it may refuse to honour or negotiate.
Under UCP 600 Article 16, the refusal notice should identify the discrepancies and state what the bank is doing with the documents. An issuing bank may also approach the applicant for a waiver, but a waiver is not automatic and does not extend the bank’s examination period.
Your next action depends on:
| Question | Why it matters |
|---|---|
| What discrepancy was raised? | You first need to know whether it is valid and material |
| Which bank raised it? | Nominated, confirming and issuing banks have different roles |
| Where are the documents now? | Held, returned or awaiting instructions changes your options |
| Can the document still be corrected? | Some documents can be replaced; others cannot practically be changed |
| Is presentation still within time? | A correction is useless if the new presentation becomes late |
| Will the applicant waive? | A waiver may resolve the issue, but only if the issuing bank accepts it |
Do not start by arguing or asking for a waiver.
Start by understanding the finding.
1. Read the refusal notice carefully
A proper refusal notice should do more than say:
Documents discrepant.
It should identify each discrepancy on which refusal is based.
Example:
Commercial invoice shows Model WP-40 whereas credit requires Model WP-50.
That is actionable.
Compare it with:
Invoice not as per LC.
That is too vague to resolve intelligently.
First response
Create a small exception table:
| Bank finding | Evidence | Initial view |
|---|---|---|
| Invoice model differs | LC: WP-50 / Invoice: WP-40 | Likely valid discrepancy |
| Applicant address differs | Formatting difference only | Review UCP/ISBP before accepting |
| BL goods description shorter | General description, no conflict apparent | Review before conceding |
The bank’s wording is a finding to examine — not something to accept blindly or reject emotionally.
2. Is the discrepancy actually valid?
Banks can raise invalid discrepancies.
UCP 600 does not require data to be identical everywhere. The standard is more nuanced: information must be read in context and must not conflict where the rules require consistency.
So ask:
What does the credit require?
What does the document actually show?
What UCP/ISBP rule applies to this document?
Is there a genuine conflict or only different wording?
Example
LC:
Stainless steel coils, Grade AISI 304
Bill of Lading:
Stainless steel coils
A shorter goods description on a BL is not automatically discrepant merely because it is not identical to the LC description.
Before accepting the bank’s finding, identify the actual rule.
Issue type
This is a documentary-discrepancy review.
Owner: Trade/documentation team
Deadline: Immediately — while bank options are still open
3. If the discrepancy is valid, decide whether it can still be corrected
The answer depends heavily on the document.
A beneficiary-created invoice may be relatively easy to reissue.
A Bill of Lading may require the carrier or agent to amend or reissue it.
An insurance document may require the insurer or broker.
A certificate issued by an independent inspection company may take longer.
And some problems cannot realistically be repaired after shipment.
Ask three questions
- Who controls the document?
- Can it legitimately be corrected or replaced?
- Can the corrected document still be presented within the permitted time?
Do not simply alter a third-party document yourself.
4. A waiver is an option — not a right
If the issuing bank determines that the presentation does not comply, UCP 600 allows it to approach the applicant for a waiver.
That does not mean:
Buyer agrees = payment automatically guaranteed.
The issuing bank still decides whether to accept the waiver and honour the presentation.
The practical sequence is:
Discrepancy identified → applicant considers waiver → issuing bank decides whether to accept
A waiver can be commercially useful where the buyer is comfortable with the documents and the issue cannot easily be corrected.
But it should not become the default strategy for avoidable discrepancies.
5. Watch the clock while deciding
This is where otherwise sensible solutions fail.
Suppose:
Presentation deadline: 23 September
Bank raises discrepancy: 21 September
Corrected carrier document available: 25 September
The correction may be technically perfect and operationally useless if a fresh compliant presentation can no longer be made in time.
So every discrepancy response should include:
Current date
Presentation deadline
LC expiry
Time needed to obtain corrected document
Timing is part of the finding, not an afterthought.
6. What is the bank doing with the documents?
Under Article 16, the refusal notice should indicate the status of the documents — for example, whether they are being held pending instructions, held while a waiver is sought, returned, or handled under prior instructions.
That affects your next move.
If documents are being held while the issuing bank seeks a waiver, immediately replacing documents may not be the only path.
If they are being returned, logistics matter.
If originals are required for correction, you need to know where they physically are.
This is an operational issue as much as a documentary one.
A practical response example
Bank finding:
Insurance document shows 105% cover. Credit requires 110%.
A useful response is:
WHAT
Insurance coverage appears below the LC requirement.
WHY
Credit requires 110%; presented document shows 105%.
EVIDENCE
LC insurance condition + insurance certificate.
ACTION
Ask insurer/broker whether a compliant replacement or endorsement can be issued. In parallel, assess applicant-waiver route if correction is not feasible.
OWNER
Documentation + insurer/broker.
DEADLINE
Before the final permissible presentation date.
That is far more useful than:
“Insurance discrepancy — please arrange waiver.”
The 60-second discrepancy response
When a refusal arrives, check:
1. Exact finding
What precisely has the bank raised?
2. Validity
Does the finding follow the LC, UCP and applicable banking practice?
3. Document control
Who can correct the affected document?
4. Timing
Can a corrected presentation still be made in time?
5. Waiver
Is applicant waiver commercially realistic, and will the issuing bank consider it?
6. Document status
Are the originals being held or returned?
Then choose the path.
Do not choose the path before understanding the issue.
Three things to take back to your desk
A bank discrepancy is a starting point for analysis, not the end of it.
Correction, challenge and waiver are different paths.
The right one depends on the finding, document, transaction stage and time remaining.
Timing changes everything.
A fix that would have been easy before presentation may no longer be practical after refusal.
The useful question is:
What is wrong, is the finding valid, and what can still be done at this stage of the transaction?
Related questions
How long does a bank have to refuse discrepant LC documents?
Under UCP 600, the relevant bank has a maximum of five banking days following the day of presentation to determine whether the presentation complies. A refusal notice must meet the requirements of Article 16.
Can the buyer waive an LC discrepancy?
The issuing bank may approach the applicant for a waiver. The applicant’s willingness to waive does not by itself force the issuing bank to accept the discrepant presentation.
Can I replace documents after the bank finds a discrepancy?
Sometimes. It depends on whether the document can legitimately be corrected or reissued and whether a compliant presentation can still be made within the applicable presentation and expiry limits.
Should every bank discrepancy be challenged?
No. First establish whether the discrepancy is valid. Challenge findings that appear inconsistent with the credit or applicable documentary rules; correct valid issues where practical.
What happens if the bank’s refusal notice is defective?
UCP 600 Article 16 sets specific requirements for refusal notices. A defective or late notice can affect the bank’s ability to rely on the discrepancies. The exact facts should be reviewed carefully.
This guide is educational and does not replace examination of the specific credit, applicable ICC rules, international standard banking practice, contractual requirements or professional advice relevant to a particular transaction.