URR 525 vs URR 725
URR 725 replaced URR 525 in October 2008 to match UCP 600. Here is what that means for a reimbursement claim.
A reimbursement arrangement lets the bank that pays under an LC (the claiming bank) recover its money from a third bank (the reimbursing bank), usually the issuing bank's correspondent in the credit's currency. An Indian bank issuing a USD credit, for example, will often nominate its New York correspondent as reimbursing bank. ICC's rules for these arrangements are the Uniform Rules for Bank-to-Bank Reimbursements, known as URR.
IIBF's syllabus names both versions. URR 525 was first published in 1995. URR 725 replaced it from 1 October 2008, after ICC's Banking Commission approved it on 16 April 2008. The reason was alignment: UCP 600 had taken effect on 1 July 2007, and the reimbursement rules needed to match its language.
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URR 525 and URR 725 Compared
Published or in effect
URR 525
First published 1995
URR 725
In effect from 1 October 2008
Written to work with
URR 525
UCP 500, the credit rules of its time
URR 725
UCP 600
Language
URR 525
Pre-UCP 600 terms
URR 725
UCP 600 terms, including "express indication" and "operative reimbursement authorization"
Applies when
URR 525
The reimbursement authorisation refers to it
URR 725
The reimbursement authorisation expressly refers to it (Article 1)
Status today
URR 525
Superseded, but still binds an authorisation that names it
URR 725
The current ICC rules
| Point | URR 525 | URR 725 |
|---|---|---|
| Published or in effect | First published 1995 | In effect from 1 October 2008 |
| Written to work with | UCP 500, the credit rules of its time | UCP 600 |
| Language | Pre-UCP 600 terms | UCP 600 terms, including "express indication" and "operative reimbursement authorization" |
| Applies when | The reimbursement authorisation refers to it | The reimbursement authorisation expressly refers to it (Article 1) |
| Status today | Superseded, but still binds an authorisation that names it | The current ICC rules |
URR 725 Rules That Decide Case Questions
- Article 3: separate from the credit
- A reimbursement authorisation is separate from the credit, and the reimbursing bank is not concerned with the credit's terms.
- Article 4: no obligation without an undertaking
- The reimbursing bank need not pay a claim unless it has issued a reimbursement undertaking, and then only on its terms.
- Article 6: no certificate of compliance
- The authorisation must not require the claiming bank to certify that the credit's terms were met. The issuing bank must not send a copy of the credit as the authorisation.
- Article 7: no expiry
- An authorisation should not carry an expiry date unless the reimbursing bank has agreed to one, and the reimbursing bank disregards the credit's own expiry date.
- Article 11: three banking days
- The reimbursing bank has a maximum of three banking days following the day it receives a claim to process it, or to give notice that it will not reimburse. A claim received more than ten banking days before a predetermined payment date may be disregarded.
- Article 16: charges
- The reimbursing bank's charges are for the issuing bank's account unless the authorisation says otherwise.
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Case: A Claim Under an Indian Bank's USD Credit
An Indian bank issues a USD 200,000 sight credit for a Surat diamond importer, available with any bank in Dubai by negotiation, reimbursement on its New York correspondent under URR 725. A Dubai bank negotiates complying documents and sends its claim to New York.
- 1
What the claim must look like
One claim per teletransmission or letter, showing the credit number, with principal and charges stated separately (Article 10). The claiming bank does not certify compliance (Article 6).
- 2
How fast New York must act
Within three banking days following the day of receipt, it reimburses or sends notice of non-reimbursement (Article 11).
- 3
If New York does not pay
UCP 600 Article 13(c) keeps the issuing bank liable to reimburse. A reimbursing bank's failure never removes the issuing bank's own obligation.
- 4
If the documents later prove discrepant
That dispute is between the issuing bank and the negotiating bank under UCP 600. The reimbursing bank never sees the documents and is not concerned with the credit's terms (Article 3).
How the IIBF Exam Tests This
IIBF lists URR 725 and URR 525 with case studies. Expect questions on who carries the risk when the reimbursing bank does not pay (the issuing bank), how long the reimbursing bank has (three banking days following receipt), and whether a certificate of compliance can be demanded (no). The trap is to treat the reimbursing bank like a confirming bank: it examines no documents and has no obligation to pay unless it has issued a reimbursement undertaking.
FAQs
What is the difference between URR 525 and URR 725?expand_more
URR 725 is the revision that replaced URR 525 from 1 October 2008. ICC revised the rules to bring them in line with UCP 600, including its terms such as "express indication". URR 725 is the current version.
Is URR 525 still valid?expand_more
It is superseded, but ICC rules apply by incorporation, so a reimbursement authorisation that expressly names URR 525 is still governed by it.
Is the issuing bank liable if the reimbursing bank does not pay?expand_more
Yes. Under UCP 600 Article 13(c), the issuing bank is not relieved of its obligation to reimburse if the reimbursing bank does not pay.
Who pays the reimbursing bank's charges?expand_more
The issuing bank, unless the authorisation says they are for the beneficiary's account, in which case they are deducted from the amount paid (Article 16).
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