T3tlc - Letters Of Credit

T24 Letters of Credit TEMENOS EDUCATION CENTRE Warning:These training materials are the copyrighted work of Temenos Headquarters SA and other companies in the TEMENOS group of companies (The Copyright Owner). The training materials contain protected logos, graphics and images. Use of the training materials is restricted solely for use by licensed end users, partners and employees. Any un-licensed reproduction by any means, redistribution, editing, transformation, publishing, distribution, or public demonstration of the training materials whether for commercial or personal gain is expressly prohibited by law, and may result in severe civil and criminal penalties. Violators will be prosecuted to the maximum extent possible. Such training materials shall not be represented, extracted into or included in part, or in whole, as part of any other training documentation without the express permission of the Copyright Owner, which must given in writing by an authorised agent of the Copyright Owner to be valid. Where such permission is given a clear and prominent notice must be displayed on any and all documentation accrediting the Copyright Owner with having copyright over the materials. End-user licenses will in no event contain permissions extending the use of these training materials to third parties for commercial training purposes.

Copyright © 2010 Temenos Headquarters SA

Objectives



Overview of LC Module



Linkages between LC module and T24 Core and other applications



Dependencies and parameter tables to be set up



Main business features of LC module



Import LC Issuance through Internet Banking



Accounting, messaging and enquiries

Slide 2

LC Dependencies



LC makes use of  CUSTOMER  ACCOUNT



Core dependencies  Delivery  Accounting  Limits



LC also uses other Static tables

Slide 3

LC – Product Overview

Import Negotiation

Confirmed Un Confirmed

Letters of Credit

Revolving

Opening

LC

Amending

Documentary Collections

DRAWINGS Sight

Non Revolving

Usance

Transferable

Mixed

Non Transferable

DRAW. NEGOTIATION

Back to Back Stand by

Export

Slide 4

LC Dependencies – Product Related



LC and DRAWINGS applications use hard coded category range  23000 – 23999  Could be used to reflect various LC and Collection types in line with reporting requirements like LC Import Sight, LC Import Acceptance, LC Export sight confirmed, Collection document outward sight



A default category code may be specified for each type of LC in LC.TYPES file



Category of an LC could be changed after authorisation through internal amendment



Further, P & L category codes for collecting and writing off charges and commission and internal provision account category codes used are indicated in LC.PARAMETERS

Slide 5

LC Dependencies – Interest Related

PERIODIC.INTEREST

Used in discounted drawings using tiered system of rate calculation

Slide 6

LC Dependencies – Charges and Commissions

These Codes can be used while demanding or collecting charges and Commission in LC and DRAWINGS applications For default input, LC.TXN.TYPE.CONDITION could be used Possible to stipulate minimum and maximum amounts for commissions Possible to amortise charges & commissions in LC over 1-11 months or 1 – 99 years (Annum)

Slide 7

Period based charges, related to contract tenure 

Depending on length of contract, commission can be collected for eg ; LC for 90 days, LC for 180 days etc…



Application PERIODIC.COMMISSION used



Process  FT.COMMISSION,TYPE records for amount band for each period to be defined  Periods bands in PERIODIC.COMMISSION table to be defined, attaching record Id of FT.COMMISSION.TYPE for respective bands  Another FT.COMMISSION.TYPE record with same id as that of PERIODIC.COMMISSION to be defined

Slide 8

FT.COMMISION.TYPE

Slide 9

LC Dependencies – Settlement Related



No standard settlement rules for accounts in LC application



If account numbers are input for opener, beneficiary , advising bank etc…. Then they are defaulted while collecting charges



They are also defaulted in DRAWINGS application



If the payment method is indicated as Nostro in Drawings , then Payment account is defaulted using NOSTRO.ACCOUNT for the payment currency

Slide 10

LC Dependencies – Currency Related

COUNTRY

CURRENCY.PARAM

CURRENCY

HOLIDAY

CURRENCY.MARKET

Holidays will be checked for defaulting Expiry and Closing dates Interest Day Basis will be defaulted from Currency table to transactions. Possible to change at contract level Slide 11

LC Dependencies – Currency Related



The following choices available for interest day basis at LC level A. 360/360 B. 366/360 C. 366/366 D. 360/366 E. 366/365 F. 360/365 and S. Special W. 252/252 W1. 252/252

Interest day basis is used for calculation of Discount and Load amounts on Drawing contracts and also for amortising charges over the life of LC Defaulted from Currency record but could be changed by User at LC level

Slide 12

Application Specific Parameters

Slide 13

LC – Parameter Table



The Parameter table to be set-up during implementation are given below:       



LC.PARAMETERS LC.TYPES LC.CLAUSES ACCOUNT.CLASS CONDITION.PRIORITY LC.GROUP.CONDITION LC.TXN.TYPE.CONDITION

LC.ENRICHMENT LC.ADVICE.TEXT DR.DISCREPANT.TYPE EB.DUPLICATE.TYPE LC.GEN.CONDITION LC.CUSTOMER.CONDITION

LC.CUSTOMER.CONDITION is set-up during secondary build as it is specific to Customers

Slide 14

LC.PARAMETERS 

Company level parameters for processing LC and DRAWINGS  Id is Company Code



Different Currency markets could be indicated for  LC/Collection transactions and charges in CURRENCY.MARKET and CHARGE.CCY.MKT Field



Amortisations of charges done monthly on any chosen date  Local currency and Foreign currencies in AMR.CYCLE.CCY and AMR.CYCLE.CCY Fields



Discount drawings interest accrual can be done daily or monthly on chosen date  Local currency and Foreign currencies in DIS.CYCLE.L.CCY and DIS.CYCLE.CCY Fields



When discounted drawings is amended, amortised charges can be reversed and recalculated ONLY if opted for YES in RECALCULATE.AMORT Field Slide 15

LC.PARAMETERS



General information - Dates  Days mentioned in CLOSURE.DAYS Field helps move LC or Collection after expiry to history if there are no Drawings or Charges outstanding Value defaulted to CLOSING.DATE Field in LC  Days mentioned in PRE.ADVISE.DAYS Field helps move a Pre-advice to history, if no further action has been taken  Days mentioned in COLL.EXTN.DAYS Field helps to rollover the expiry date of a Collection document automatically and keeps it live Expiry date in a Collection document helps send Tracers

Slide 16

LC.PARAMETERS



Limits related  Limit information could be opted for unconfirmed portion of partially confirmed Export LC through UNCONFIRMED.LIMIT Field  If set to Yes, Export LC of USD 100,000 when partially confirmed for 40,000 will hit Product Limit line with USD 40,000 and default Limit line with USD 60,000 for information  If set to No, it will hit only the Product Limit line with USD 40,000 and the second limit line will be suppressed  One time input

Slide 17

LC.PARAMETERS



Limits related  Limit could be set to be affected after considering Provision amount or not through LIMIT.WITH.PROV Field YES - to hit Limit after considering Provision NO - for full amount of LC without considering Provision  EXCH.TOLERANCE Field can be used to indicate the percentage of tolerance that can be ignored while calculating limit amount minus provision when provision and limit are in different currencies Useful while taking 100% provision in currency different from limit currency

Slide 18

LC.PARAMETERS



Advice / Report related fields to define how many number of days prior to an event should a message be sent or reported  REIMBURSE.DAYS Field to send reimbursement message in case of Usance Drawing before Maturity  REVOL.ADVICE.DAYS Field to send a revolution advice before next revolution  MATURITY.USANCE Field to report imminent maturity of Usance drawings  COLLECTIONS.DUE Field to report imminent due date of Collections



For export LC, choice available in DEL.WITH.NO.DISCREP Field  Yes – MT 750 and 1750 produced whether drawings are discrepant or not  No – MT 750 produced only if drawings have discrepancies

Slide 19

LC.PARAMETERS



Transaction codes related Fields



Transaction Codes from 500 to 599 are earmarked for LC/Collections. These codes are used in accounting entries for narrating the underlying transaction  PAY.TRANS.CR and PAY.TRANS.DR Fields for Credit /Debit entries for payments  REIMB.TRANS.CR and REIMB.TRANS.DR Fields for reimbursement  DISC.TRAN.CODE.CR and DISC.TRAN.CODE.DR Fields for discount  LOAD.TRAN.CODE.CR and LOAD.TRAN.CODE.DR Fields for discount spread

Slide 20

LC.PARAMETERS



Transaction codes related fields



UNCOLLECTED.TR.CR and UNCOLLECTED.TR.DR Fields for uncollected commission



WRITE.OFF.TR.CR Field for credit entries for writing off charges



AMORT.TRANS Field for credit entries for amortising charges



UNDER.RES.TX.CR and UNDER.RES.TX.DR Fields for payments under reserve



PROVISION.CR and PROVISION.DR Fields for provision/margin under LC

Slide 21

LC.PARAMETERS

 ROUND.RULE  ROUND.RULE Field enables the user to define the type of rounding that should take place while debiting or crediting customer’s account in DRAWINGS application Pre defined rules set in EB.ROUNDING.RULE can be used Natural, Round up, Round down, Tax Up, Tax down or None are options already available in EB.ROUNDING.RULE Syndicate Charges  Charges to be syndicated are defined in SYND.CHG.CODE Field  Only those charges defined here can be syndicated  SYND.CHG.CODE is a multi value field

Slide 22

LC.PARAMETERS



P & L Category code related Fields



Used for automatic debit / credit to PL heads



Category codes above 50000 to be used  DISC.CAT.CODE Field to indicate Category code to be used for discount amount related to discounted drawings  LOAD.CAT.CODE Field for discount spread amount of discounted drawings  UNCOLLECTED.CATRG Field for charges claimed and booked but not settled

Slide 23

LC.PARAMETERS



P & L Category code related Fields  WRITE.OFF.PL Field to indicate Category code to be used for writing off claimed and booked charges  EXCH.PRFT.CAT Field for exchange profit & loss due to a spread on exchange rate specified at the Drawings transaction level This represents the difference between rate quoted to Customer and Treasury Department rate Meant for Trade Finance Department marketing profit  DIS.RETAIN.CODE Field for excess interest / discount when amending a discounted drawing

Slide 24

LC.PARAMETERS



Default internal accounts / Category code Fields are used to facilitate automatic debit / credit into internal accounts  Category codes between 10000 to 19999 can be used



Internal Accounts in local currency should be opened using these Category codes. System opens in other currencies, when needed  If Provision is not proposed to be kept at Customer (Account) level, then Internal account opened using the Category code indicated in PRO.CATEGORY Field will be used as Credit Provision account  Currency of this account would be that of Debit Provision account

Slide 25

LC.PARAMETERS



Default internal accounts / Category code Fields  CHEQUES.ISSUED.ACC / B.P.ISSUED.ACC / DRAFTS.ISSUED.ACC Fields to indicate internal Accounts to be credited for payments under LC made through local currency cheque or Bankers Pay order or Drafts respectively  PAY.SUBDIVISION / REIMB.SUBDIVISION Fields The four digit internal account sub-division when payment / reimbursement is made under LC or Collection If 1 is entered, then internal suspense account with 0001 sub division (say USD14900-0001) will be used by the system

Slide 26

LC.PARAMETERS



Soft delivery options  For new installations, BACKWARD.DELIVERY Field is recommended to be set to NO  LC.CLASS.TYPE and EB.CLASS.NO multi value Fields are necessary for the soft delivery set-up. It is recommended to use the model bank data for the initial build



Delivery related  If TAKEOVER.PROCESS Field is set to Yes, no delivery message will be produced To be used during take over from existing system and then set to NO  CUST.BY.ORDER Field A Customer record to be created for the Bank using the System and input here. Information in this Field will be used in Swift messages Tag 50 – Ordering Cust

Slide 27

LC.PARAMETERS



There are some fields which are currently not in use and some are meant for future use  IN.SWIFT.DAYS, CLAIM.ENTRIES, DEL.CHARGES.ADV, CON.ACCR.TRCR, PON.ACCR.TRCR, CON.ACCR.CATEG, CON.PREV.MTH, CON.PREV.YEAR, OPN.ACCR.CATEG, OPEN.PRV.MTH, OPEN.PREV.YEAR, REDUCE.LIMIT.BAL, COMBINE.CHARGES, CHARGE.AT.END, DRAFT.PRINT, WP.PATH, CHRG.CAL.METHOD, PROV.CAL.METHOD, BROK.CAL.METHOD Fields are not currently in use



The mandatory fields from amongst these can be filled using the Model bank set-up

Slide 28

LC.PARAMETERS



Bank has an option to be define whether Provision on LC can be calculated for LC amount or on the Liability amount



It is can be parameterised based on a Field called PROV.CALC.BASE  Company level validation needs to be defined be selecting LC amount or Liability Amount  Will get defaulted in LC application level, user can modify at transaction level



T24 will calculate and collect the provision from customer based on these settings

Slide 29

LC.PARAMETERS



User has a choice to net the provision amount with the drawing amount and to debit the balance amount from the draw down account



Can be parameterised based on a Field called PROV.NETTING  Company level validation needs to be defined by selecting yes or no  Gets defaulted in drawing application, user can modify at transaction level



Netting of accounting entries will be raised by the system at the time of making payment under drawings  Subject to the condition that the drawing currency and credit provision account currency are the same

Slide 30

LC.TYPES



Used to define all the types of products to be handled so that T24 can treat transactions suitably during various phases from opening, drawing and to maturity         

Default category code Import or Export Transferable or not Confirmed or unconfirmed Documentary collection or not Clean credit or not Whether back to back Standby or not Which payment type Payment, Acceptance, Negotiated, Mixed, Deferred

Slide 31

LC.TYPES



Id is user definable unique identifier of 2 to 4 alphanumeric characters



Good to have suggestive Ids    



List of Model bank products could be reviewed and added upon IAC – Import Acceptance Confirmed ESNU – Export Sight Negotiation Unconfirmed CDIS – Collection Documentary Inward Sight

Category code field to indicate default Category code while inputting  Helps grouping for reporting purpose Import LCs can be grouped together for reporting purposes under one category  Cannot be modified if there are outstanding LCs under the type

Slide 32

LC.TYPES



IMPORT.EXPORT Field with options I and E  I for Import / Outward and E for Export / Inward LCs and Collections  Helps decide role of bank as Issuer (Import) or Advising/Confirming (Export) and opens up Fields accordingly



CONFIRMED Field with options No and Yes  For export LCs, this Field will have an impact on Limit processing  For import LCs, helps for Confirmation request to receiver - Tag 49 of MT 700

Slide 33

LC.TYPES



TRANSFERABLE Field with options No and Yes. If Yes is opted here  In Export LCs, system allows transfer to third party  In Import LCs, this prints data for Transferable LCs on Swift messages



Yes or No Option in STANDBY Field helps mapping in advices whether the LC is a Standby LC



As a standard feature, Yes option not allowed for TRANSFERABLE and STANDBY Fields together

Slide 34

LC.TYPES



Payment (settlement) method for product in PAY.TYPE Field     



Sight Payment LC P – Payment Acceptance LC A – Acceptance Deferred Payment LC D – Deferred Payment Mixed Payment LC M – Mixed Payment Negotiation LC N – Negotiation Draw type not decided at LC stage. Appears as Mixed Can be SP and/or AC

Based on input here, system determines Draw type to be allowed while negotiating that type of LC

Slide 35

LC.TYPES



CLEAN.CREDIT Field should be set to YES if the underlying LC is meant to be handled without documents



Collection related  DOC.COLLECTION Field if set to YES then all processing is carried out for Documentary collections and not LC  CLEAN.COLLECTION Field should be set to YES if the underlying collection is meant to be handled without documents



Back to Back LCs  BACK.TO.BACK Field meant only for Export LCs  Yes option will enable creating back to back import LCs at transaction level. Then the LC.TYPE of the proposed import back to back LC to be mentioned in BACK.LC.TYPE Field

Slide 36

LC.TYPES



Field suppression  By entering the LC application field names in UCPDC.DEFAULT multi value Field , cross validation field defaults could be suppressed. However, field level default is not affected by this



Duplicate check for Export LCs  It is possible to check for duplicate export LCs by pre-defined conditions set in EB.DUPLICATE.TYPE  Id of EB.DUPLICATE.TYPE records are to be mentioned in DUPLICATE.CHECK multi value Field. Override generated even if one condition is met



System maintains automatic Tab on Pre-advised, opened and Expired but not closed items

Slide 37

EB.DUPLICATE.TYPE



It is possible to set rules for checking whether an LC transaction is likely to be a duplicate of another similar transaction by setting rules in EB.DUPLICATE.TYPE



Id is alpha numeric. Can be designed to reflect nature of rules  LCEXPLC for duplicate checking in LC used for export LC



Application for which duplicate check is intended should be indicated in APPLICATION Field



The Field values that are to be compared for determining whether the transaction is duplicate or not are to be indicated in multi value Fields  If LC.CURRENCY and LC.AMOUNT Fields are indicated, a transaction will be termed as duplicate, if only its Currency as well as amount are the same as of another transaction

Slide 38

EB.DUPLICATE.TYPE



One or more records of EB.DUPLICATE.TYPE can be attached to required LC.TYPES records



When the first LC of the chosen type is input, System creates a record in EB.DUPLICATE  Id depends on Fields defined in EB.DUPLICATE.TYPE  GBP*11000.00 if Currency and amount have been selected  When the next LC is input, System checks EB.DUPLICATE for similar Id, and if present, generates override and when approved, records details of that transaction also in EB.DUPLICATE under the same record



Details retained for comparison for the period defined in the PURGE.DAYS Field of EB.DUPLICATE.TYPE

Slide 39

LC.ADVICE.TEXT



Standard documents with details required for different LCs stored here



To reduce input time while opening or amending LC, the Id of this record can be chosen in DOCUMENT.CODE multi value Field in LC and DRAWINGS to get the document text defaulted



Id can be up to 10 Alpha numeric characters. Advised to keep meaningful Ids to remind the nature of documents  PLIST, COMINV



Desired full description can be recorded in the NARRATIVE multi value Field  While general description could be entered in full, specific / variable part could be marked as XXXX so that at LC level the text could be suitably modified Invoices in XXXX copies indicating purchase order XXXX dated XXXX

Slide 40

LC.ADVICE.TEXT

 Also Record id of LC.ADVICE.TEXT and the details are defaulted in the Documents related multi value fields based on Applicant’s Customer ID, Inco Terms and Mode of Shipment. Most appropriate record is defaulted and the preferential order is:  Customer ID-Inco Terms-Mode of Shipment  Inco Terms-Mode of Shipment  Customer ID

Slide 41

LC.ADVICE.TEXT

Slide 42

LC.CLAUSES



Standard clauses required for different LCs are stored in this table



To reduce the input time while opening or amending LC, the Id of this record can be inserted through Enquiry in CLAUSES.TEXT multi value Field in the LC to get the clauses text defaulted



Id can be up to 6 Alpha numeric characters. Advised to keep meaningful Ids to remind the nature of clauses  NMBR, PRSNTM



Desired full description can be recorded in the DESCR multi value Field .

Slide 43

LC.CLAUSES LC.CLAUSES details are defaulted in the field, Additional Conditions based on Applicant’s Customer ID, Inco Terms and Mode of Shipment. Details from the most appropriate record is defaulted and the preferential order is  Customer ID-Inco Terms-Mode of Shipment  Inco Terms-Mode of Shipment  Customer ID

Slide 44

LC.CLAUSES

Slide 45

Discrepant Document Processing



When documents received from negotiating bank (Import LCs) or beneficiary (Export LCs) do not conform with LC terms, the negotiating bank has following choices    

Negotiate and Pay Pay under Reserve Send for collection Reject and return



Normally when documents are negotiated under RESERVE, the LC issuing bank is continued to be held as the risk party



However, in some cases (like Major Discrepancy – External), the negotiating bank may wish to hold the presenting person as the risk party This is seen in detail in the next slide

Slide 46

Discrepant Document Processing

Documents Conform to LC terms ?

PAY PAY // REIMBURSE REIMBURSE

YES

NO

YES MINOR MINOR Discrepancy Discrepancy INTERNAL INTERNAL

Claim Claim from from Issuer Issuer

Pay Pay under under Reserve Reserve Inform Inform only only Presenter Presenter

Claim Claim from from Issuer Issuer

NO YES MAJOR MAJOR Discrepancy Discrepancy EXTERNAL EXTERNAL

YES

Take Take Risk Risk on on Customer Customer ?? NO

Pay Pay under under Reserve Reserve Inform Inform Issuer Issuer Seek Seek Instructions Instructions Send Send for for collection collection

Slide 47

DR.DISCREPANT.TYPE



DR.DISCREPANT.TYPE table is used to define the different types of discrepancies and rules for handling them  Whether payment under reserve can be made for documents under export LC and if so who is the risk party and type of message to go and whether the discrepancy is internal or not



Available standard types for import and export could be reviewed and new types created, if need be  Authorising Reimbursement (for import) and Internal Reserve, External Reserve, Holding of documents, On approval and On collection for exports



Id could be up to 13 alpha numeric characters



For each type, whether for Import or Export to be indicated in INSTRUMENT.TYPE Field which is a no change field

Slide 48

DR.DISCREPANT.TYPE 

For Export Documents, for each type  Payment under reserve enabled in DRAWINGS only if UNRESERVE.REQ Field is set to YES  Risk party for such payments to be indicated as Issuing Bank or Presenter in RISK.PARTY Field  Whether giving details of internal reserve should be made mandatory in DRAWINGS is decided in IN.DISCRE.REQ Field If set to Yes , details of discrepancy should be indicate in IN.DISCREPANCY Field in DRAWINGS. This will not be communicated  Whether giving details of external reserve should be made mandatory in Drawings is decided in EX.DISCRE.REQ Field If set to Yes , details discrepancy should be indicated in Field DISCREPANCY in DRAWINGS. This will be communicate through advice of discrepancy through MT 750 Input of No/None in Field DISCREPANCY will suppress MT 750 generation

Slide 49

DR.DISCREPANT.TYPE



For each discrepant type  Whether Tracer mechanism should be made mandatory in Drawings is decided in TRACE.DATE.REQ Field If set to Yes, TRACE.DATE Field in DRAWINGS becomes mandatory  Whether LC liability should be reduced with a Drawing of this type is decided through REDUCE.LIAB Field Yes will reduce the LC liability with Drawing amount even though the Drawing type is CO No will not reduce the liability Internal Ticklers can be controlled through TICKLER.DAYS, TICKLER.MODE and DEFA.TICKL.TXT Fields

Slide 50

LC.ENRICHMENT 

Trade Finance makes extensive use of short codes (O for open) to enable fast and accurate input



This file holds enrichment descriptions for a variety of Codes/ Abbreviations used in L/C input which are not obtainable from other files in T24



If the user desires to have different enrichment data to be displayed when inputting transactions, then suitable changes could be made here



Key to alpha characters should be preceded with a dot  ,Y, A , P etc

Slide 51

LC.ENRICHMENT

The values in LC will have an enrichment as specified here This is important as values in LC need to conform to SWIFT standards

‘Y’ at different Fields give different enrichments

Slide 52

LC.TXN.TYPE.CONDITION 

Charges and commissions for each type of LC and Collection is defined here so that the same is applied by default



As they vary for each LC type and operation, rules are also set up accordingly – Sight Import LC opening charges, Acceptance Export LC Amendment charges  Id is LC.TYPES – Operation/Drawings type LISC-O,LEXC-A,LXSC-SP,COL-AC  Duly defined FT.COMMISSION.TYPE records can be included through multi value Fields COMM.TYPES and CHARGES.TYPES



Other Fields are not currently in use as they are available in respective Charge/Commission types and in LC application

Slide 53

Preferential Grouping for Commission & Charges



CONDITION.PRIORITY  Quite often banks levy commission and charges by applying different set of rules for select groups  To enable need based grouping for charges and commissions, it is essential to set the CONDITION.PRIORITY file for Letter of Credit properly  Id of record is LETTER.OF.CREDIT Subsequent changes could be made with effect from system date or future value date for specific company or for entire system  Any number of fields from CUSTOMER can be chosen  The order of prioritising is set here Residence first, Sector next, Industry third etc

Slide 54

Preferential Grouping for Commission & Charges



LC.GEN.CONDITION  General conditions of customers are defined to form meaningful combination of LC charge groups, in line with bank’s policies Group 1 is of US residence, Private Sector, Software industry Group 2 is of US residence, Private Sector, all other industries Group 99 is of Any residence, any sector, any industry  Up to 99 groups can be formed. Id is Numeric  The system always does a best fit for every Customer based on Customer Field selections  Customer’s actual group is recorded in CUSTOMER.CHARGE for all applications Also possible to effect change into any other group at this level

Slide 55

Preferential Grouping for Commission & Charges



LC.GROUP.CONDITION  For the group (s) defined under LC.GEN.CONDITION, rules set here for collection of charges Can be set for a group or for any specific Customer  Any percentage (between 0 and 100%) of Charges/Commission could be collected for this group Specific Charge/Commission could be indicated by their Ids in the associated multi value Fields or “ALL” could be indicated  Alternately a fixed amount can also be defined which supersedes the minimum and maximum set in respective Charge/Commission types

Slide 56

Preferential Grouping for Commission & Charges



LC.GROUP.CONDITION - other group specific concessions  RATE.SPREAD Field to denote concessional spread for currency exchange Where the absolute rate is to be applied, input should be ‘0’ (No rate spread) and where entire spread is to be applied, input should be ‘100’ If left blank, standard Customer spread will be assumed (as if 100%)  PAYMENT.TYPE and CUSTOMER.FLOAT Fields can be used to denote value date dispensation for transactions that involve (i) Foreign currency Conversion or (ii) do not involve conversion or (iii) All transactions CUSTOMER.FLOAT Field value can be between 0 to 9 calendar days or P for Processing date ALL and 2 mean Value date for all transactions after 2 days  CHG.COMM.SEPARATE Field to denote whether in Customer statements, Charges and Commission should be separated from LC transaction entries

Slide 57

Preferential Grouping for Commission & Charges 

Customer specific condition can also be set through LC.GROUP.CONDITION with Id as C-XXXXXX  Then, Customer Id is shown as Actual Group in CUSTOMER.CHARGE



They can also be stored for information in LC.CUSTOMER.CONDITION with Id as Customer Id  This table has additional facilities to indicate Provision related information also in PROVIS.ACCT, PROV.PERCENT, LC.TYPE, and CREDIT.PROV.ACC Fields Provision percentage could be indicated LC.TYPE wise or a common percentage for all types by indicating “DEFAULT” in LC.TYPE Field Accounts, if entered, must belong to the same customer and be in the same currency

Slide 58

LC Commission & Charges

FT.COMMISSION.TYPE CONDITION.PRIORITY LC.TYPES

LC.GEN.CONDITION

Operations Drawing Types

CUSTOMER. CHARGE

LC.TXN.TYPE.CONDITION CON.CUS.LINK CUSTOMER.LINK Fields

LC.GROUP. CONDITION LC.CUSTOMER. CONDITION

LETTER.OF.CREDIT DRAWINGS Slide 59

ACCOUNT.CLASS



ACCOUNT.CLASS records are required for automatic debit / credit by the System. Internal accounts in local currency to be opened



LCAMORT: Internal account for amortising Commission over a period of time instead of immediate booking to PL



LCDIFF: To post the small difference on account of rounding the amount with exchange rate when two currencies are involved



TFLC: Internal suspense account used when Nostro account is not available for credit currency



CUSDEBIT: Internal suspense account used when customer account is not available for debit in the case of Sight bills  This facility covers transit time for document travel

Slide 60

Quiz – 1 – Mark True or False

1) Charges/Commission on LCs can be collected based on the period of the LC Ans: True 2) LC.CUSTOMER.CONDITION can be set up even before creating records in CUSTOMER table Ans: False 3) When a Discounted drawing is amended, amortised charges are automatically reversed and recalculated Ans: False (possible only when RECALCULATE.AMORT field set to Yes) 4) EB.DUPLICATE.TYPE table maintains list of LCs with similar LC number Ans: False (records are maintained in EB.DUPLICATE while rules set in EB.DUPLICATE.TYPE)

Slide 61

LC Build Sequence 1. ACCOUNT.CLASS* Records AMORT, LCDIFF, TFLC CUSDEBIT, BROKER

Mandatory* Optional

2. DR.DISCREPANT.TYPE* 3. LC.ADVICE.TEXT 4. LC.CLAUSES 5. LC.ENRICHMENT* 6. CONDITION.PRIORITY* 7. LC.GEN.CONDITION 8. LC.GROUP.CONDITION Slide 62

LC Build Sequence

9. LC.PARAMETERS*

Mandatory* Optional

10. EB.DUPLICATE.TYPE 11. LC.TYPES (Back - Back LC.TYPES) 12. LC.TYPES * 13. LC.TXN.TYPE.CONDITION*

LC.ENRICHMENT* LC.TYPES (Back – Back LC.TYPES) LC.ENRICHMENT* LC.TYPES*

14. DR.INT.CALC.COND 15. LC.CUSTOMER.CONDITION

Slide 63

LC – Product Features

Slide 64

Product Features – Products Handled



LCs and Collections handled through  LETTER.OF.CREDIT Issue Pre-advice Issue actual LC Amend LC terms and conditions As exporter’s Bank Advice/ Confirm LCs Send / Advice documents for collection  DRAWINGS Receive and pay drawing Send advice and effect a payment Authorise reimbursement / payment  DRAW.NEGOTIATION Acts as front end for inputting mixed payment Drawings



Linked on-line with Soft Delivery

Slide 65

LETTER.OF.CREDIT



Handles all activities of import and export LCs and documents for collection  Enables pre advising, opening, advising, confirming, amending



Enables collection of charges  In different currencies  Any time



Permits specification of exchange rate



Supports Sight, Usance and mixed payment    

Revocable, Irrevocable Transferable, Non transferable Revolving, Non revolving Back to Back and Standby LCs

Slide 66

LETTER.OF.CREDIT – Operation Codes



P - Pre-advise LC  Limit can be optionally affected



O - Open LC  Converts pre-advised to Actual LC or opens new LC



A - Amend LC



C - Collect charges  Used, if not collected while at any of the above operations



D - Decision on amendments  Amendments pending acceptance of counterparty kept in LC.AMENDMENTS. On counterparty advice, decision effected to LC

Slide 67

LC Issuance – UCP Compliance 

LC Issuance UCP Compliance

At the time issuance of import LC, some of the required fields are defaulted based on the values input by the user in the associated fields. Documents required and additional conditions can be pre-defined and defaulted based on Applicant ID, Inco Terms and Mode of Shipment. 

Defaulting field values at the time of issuance of import LC

Expiry Date (Tag 31D of MT700) is the number of days in Presentation Days + Shipment Date

Slide 68

LC Issuance – UCP Compliance 

Period for Presentation with text, "Documents must be presented within (Presentation Days) from the date of shipment but before the expiry of credit"

Slide 69

LC Issuance – UCP Compliance 

Drafts At (Tag 42C of MT700) based on values in Coll Mat Code and Days fields when Available By is By Acceptance

Slide 70

LC Issuance – UCP Compliance 

Deferred Payment Details (Tag 42P of MT700) based on values in Coll Mat Code and Days fields when Available By is By Def Payment

Slide 71

LC Issuance – UCP Compliance 

Narrative Charges (Tag 71B of MT700) with text, "All charges outside (Applicant’s Country) are for the account of Beneficiary“

Slide 72

Issuing Pre-Advice 

Mandatory Fields /details  Operation Code as P  LC type to reflect suitable nature including Draw type  Applicant, Beneficiary and Advising Bank details or Customer Number either Beneficiary, Advising Bank or Reimbursing bank should be our Customer  Currency and Amount  Expiry date and Expiry place Advice expiry indicated in ADVICE.EXPIRY.DAT Field and expiry date in bank’s books indicated in EXPIRY.DATE Field Available with details or Customer Number PREADV.LIMIT to be set as Yes if Limits are to be checked now

Delivery message can be viewed even before committing input

Slide 73

Opening Import LC



LC can be opened after or without Pre-advice  If Pre-advice has been opened , we keep the same LC transaction Id and thereby maintain an audit trail of LC



LCs are issued for a particular amount. However , variations can be indicated  Positive and /or Negative tolerance percentage through PERCENTAGE.CR.AMT and PERCENTAGE.DR.AMT Fields limit always impacted for LC amount + Positive tolerance  If possible tolerance is not indicated, LC amount can also be indicated as Upto / Maximum / Not exceeding using MAXIMUM.CR.AMT Field  ADD.AMT.COVERED Field can be used as free text to indicate other amounts covered – like Charges, transportation etc ( Tag 39c in MT 700)

Slide 74

Opening Import LC – Basic elements



LETTER.OFCREDIT (1) Operation code – O Type of Credit Application Beneficiary Advising Using ADVISING.BK.CUSTNO / ADVISING.BK Fields  Intermediary Bank Using ADVICE.THRU.CUSTNO / ADVISE.THRU Fields  Reimbursement Using THIRD.PARTY.CUSTNO / THIRD.PARTY Fields     

Slide 75

Opening Import LC – Basic elements



LETTER.OF.CREDIT (2)  Confirmation request CONFIRM.INST Field has 3 options for sending instructions to receiver Confirm, May add, without Default from LC.TYPES can be over written at LC level Instruction goes as Tag 49 of MT 700  Currency, amount & tolerance  Expiry date & place  Tenor  Availability  Latest shipment Slide 76

Opening Import LC – Basic elements



LETTER.OFCREDIT (3)  Documents required  Additional Conditions  Charges  Liability For issuing bank of Import LC , LC Application is the risk party For confirming bank of Export LC, LC opening bank is the risk party In addition to sanctioning Limits with / without security , also possible to Take Provision / Cash collateral

Slide 77

Opening Import LC – Basic elements



LETTER.OFCREDIT (4)  Auto Expiry When AUTO.EXPIRY is set to ‘Yes’, system will automatically liquidate the contract on the expiry/maturity date and when set to ‘No’, the contract has to be manually liquidated. This field will default to ‘Yes’ , if not input by the user

Slide 78

Product Features – Charges & Commission



Other Features – Charges and Commission



Can be collected from Opener or Beneficiary or any Third party like Broker by using PARTY.CHARGED Field O, B, T CB, CO



Can be collected in any currency at chosen exchange rate CHARGE.ACCT Field currency can be different from CHARGE.CURRENCY Field and LC.CURRENCY Field CHARGE.AMOUNT Field can also be input with exchange rate in CHARGE.XCHG Field. Otherwise system defaults mid rate of Currency Market chosen CHARGE.AMOUNT Field can also input as % to LC amount

Charges calculated on LC amount + Positive Tolerance

Slide 79

Product Features – Charges & Commission



Other Features – Charges and Commission  Can be collected on any chosen amount indicated in CHARGE.BASE.AMT Field when using operation codes O and A Can be used to collect commission only on the increase in value while amending Can be amortised or accounted immediately AMORT.CHARGES Field to be set to Yes Collected Immediately or any time later including and hoc charge Later collection through Operation Code C in LC. Take a Direct Change / ad hoc charge CH in DR Collection of deferred charge AC/DP Waived using WAIVE.CHARGES Field

Slide 80

Period Based Charges, Related to Contract Tenure 

Depending on length of contract, commission can be collected for e.g; LC for 90 days , LC for 180 days etc.



Application PERIODIC.COMMISSION used



Process  FT.COMMISSION.TYPE records for amount band for each type period to be defined  Period bands in PERIODIC.COMMISSION table to be defined, attaching record Id of FT.COMMISSION.TYPE for respective bands  Another FT.COMMISSION.TYPE record with same id as that of PERIODIC.COMMISSION to be defined Slide 81

Product Features – Charges and Commission 

LC.ACCOUNT.BALANCES  Automatically created and updated for each LC and Drawing

 Contains all authorised charges for each LC Collected as well as claimed  Claimed but unpaid charges can be collected / written off here  Closed when LC is closed LC closed only when there are no deferred charges Deferred charges reversed by indication ‘R’ in PARTY.CHRG Field here

Slide 82

Product Features – Charges and Commission



Charge Status ( LC and DRAWINGS input)  Blank – Collect Charge at a later date (Deferring collection) Subsequent collection through Operation C and CH LC will not be allowed to close with Blank status for any Charge  2 – Collect charge immediately (debit charge a/c now )  3 – Charges are claimed but not yet taken Claim advice is sent to party. PL credited and Receivable debited



Charge Status (LC.ACCOUNT.BALANCES input )  4 – Claimed Charge has been settled  5 – Claimed charge has been written off  7 – Charge unpaid reversed Maintained by System when “R” is used in PARTY.CHARG Field to reverse charges already deferred through Blank status

Slide 83

Product Features – Charges and Commission



Charge Status ( During sight drawings )  8 – collect charges now to debit of reimbursing account charges added to reimbursement claim from LC opener in case of import LC and beneficiary in case of export LC  9 – collect charges now to debit of payment account Charges deducted from payment of beneficiary in case of import LC and opener in case of export LC

 Charge Status (during Usance drawings)  11 – collect charges on maturity to debit of payment account  12 – collect charges on maturity to debit of reimbursing account

Slide 84

Product Features – Charges and Commission



LC.ACCOUNT.BALANCES  Partial settlement or write off of claimed charges possible  When a partial settlement is made the value needs to be defined in LC.ACCOUNT.BALANCE amount under the Field CLAIM.STLE.AMT will be debited from Settlement account  Difference between the claimed amount and the settled amount will be held in CLAIM.DIFF.AMT  Different amount has to be debited from an account which needs to be defined in a Field CLAIM.DIFF.ACC If Bank has decided to write off the differential amount it needs to mention PL category under this field

Slide 85

Product Features – Charges and Commission

   

LC module supports generation of : MT 791 when charges are claimed from corresponding banks MT 790 for an advice on debit or credit relating to refund of charges through a Vostro account When commission and charges with CHARGE.STATUS as 2 is debited from a Vostro account system will generate MT 790 to the Vostro account holder  When a refund of charge happens to a Vostro account through LC.ACCOUNT.BALANCES system will generate MT 790 to the account holder  System would generate a single MT 791/ MT 790 message for consolidated amount in case multiple charges are to be claimed / collected

Slide 86

Opening Import LC – Revolving



Two options available  Cumulative and Non – cumulative



L/C USD 10000 with 3 revolutions on 15th of every month  Monthly / weekly revolutions always correspond with issue Date  Liability for every cycle is USD 10,000 while the total liability under the LC is USD 30,000



Under the Cumulative type, un-utilised amount under a revolution period is carried over to the next cycle



Under Non cumulative type the un-utilised portion lapses Hence, choice available to impact limit only with current revolution amount Available by choosing ‘Single’ in LMT.FOR.REVOLVING Field

Slide 87

Opening Import LC – Revolving



Steps involved  ISSUED.DATE and EXPIRY.DATE Fields should be filled first Revolutions will correspond with Issue date Expiry date should match revolving cycle



REVOLVING.TYPE, NO.OF.REVOLVING and REVOLVING.FQY Fields should then be filled CM and NC options to indicate Cumulative or Non cumulative revolving Number of further revolutions to be indicated as the first cycle / revolution is automatic Frequency could be in Mnn or WEEKn Forms



System generates the due dates and amount of each portion in DRAW.TYPE related Fields

Slide 88

Effecting LC Amendments 

Mandatory Field / details  Operation Code set to “A”  EXTERNAL.REFERENCE Field to hold Bank’s/ Customer’s reference for use in advice



Internal amendment  AMENDMENT.DEL Field can be set as NO to stop advice generation Amendment Number also not generated

 External amendment  AMENDMENT.DEL Field to be set as Yes to generate advices  Amendment Number generated

Slide 89

Effecting LC Amendments 

For amendments which await Beneficiary’s consent, LC.AMENDMENTS can be used  Id of the record is LC number. System created A01, A02 etc  Status shown as pending till approved or rejected through LC Operation code ‘D’



When LIMIT.UPDATE Field is set to YES, a separate limit line is created to update Limit if there is upward impact due to Principal and / or tolerance increase  This can be seen as separate transaction in Enquiry LIM,TXN

 If LIMIT.UPDATE Field is set to NO, limit update will take place only when the amendment is approved

Slide 90

Product Features – Provision



Also know as Margin or cash cover or collateral  Can even exceed 100% of value of LC  Calculated on LC value + Tolerance  Can be kept in an internal account or customer account with or without interest



LC.CUSTOMER.CONDITION can be used to default Provision percent and accounts  Provision percent could be indicated LC.TYPE wise  A common percentage for all types by indicating DEFAULT in LC.TYPE Field also possible



Provision can be calculated based on either LC amount or Liability amount  If nothing has been mentioned in LC application it takes the value based on the setting in LC.PARAMETERS

Slide 91

Product Features – Provision



Proportionate refund done automatically on settlement  Can also be refunded any time earlier



Can be collected from different currency accounts also  Allows specification of exchange rate when provision debit and credit accounts differ



Customer limit can be optionally updated taking into account the provision collected  Option available at LC.PARAMETERS and individual LC level

Slide 92

Export LC Handling



Reverse process of Import LC



Different roles    

Advising bank Confirming bank Negotiating bank Reimbursing bank



Suitable LC.TYPES records needed for Advising and Confirming roles



Once LC is entered in bank’s books, outward messages are issued  MT730 for acknowledgement and 1730 to beneficiary

Slide 93

Export LC Handling – Basic Elements



Important Fields / details  Suitable LC.TYPES to reflect Export and payment type  ADVISING.BANK.REF Field to hold correspondent bank’s reference  ISSUING.BANK.NAME Field to indicate the correspondent from whom LC has been received  ISSUING.BANK.ID Field to indicate the customer number of the LC Issuing Bank  Applicant is the LC applicant abroad for whom the LC is opened  Beneficiary is normally our Customer If Customer Number not available, details can be filled in BENFICIARY.ADDRESS multi value Field

Slide 94

Export LC Handling – Basic Elements



RISK.PARTY Field shows the party against whom the risk is to be borne  For Import LC, it is APPLICANT.CUST.NO Field  For Export LC, this may be set as Issuing Bank or Reimbursing bank, if different  When a Customer Number is input here, this updates CON.CUS.LINK Field



CON.CUS.LINK Field is a system maintained Field to identify the Customer Number used for accounting and limits processing  For Import LC, it is APPLICANT.CUST.NO Field  For Export LC, it is ISSUING.BANK.ID Field

Slide 95

Export LC Handling – Transferable LC



LCs can be transferred in full or in part if permitted b the Issuer  Export LC should have used LC.TYPES permitting Transfer



Steps of transfer  Enter and Authorize Original/Parent, transferable, Export LC  Open the transferred LC by inputting PARENT.LC.NO Field first  All information except beneficiary and amount will be defaulted Original beneficiary’s name now appears as Applicant. This can be changed  Get the record authorized



In the parent LC, the system updates TRANSFERRED.LC and TRAN.PORT.AMT Field for information and validation

Slide 96

Export LC Handling – Back to Back Import LC



Export LC should have used LC.TYPES permitting Back to Back and indication the Import LC type



Steps for Back to Back LC  In the Export LC.BACK.TO.BACK Field should be set to YES This could be done while opening export LC itself or any time later by Amending export LC  Back to Back LC with type indicated in LC.TYPES is generated and put on IHLD status This can be opened any time and fresh terms can be set up for the Back to Back Import LC All the terms can be changed. It is left to the User to ensure that expiry date and amount do not exceed the original parent LC, if it is to be an actual back to back LC

For limit updating and accounting purposes, the Import LC is treated as a stand alone and not linked to the parent LC

Slide 97

Partial Confirmation of Export LC

Confirming bank may choose to confirm only a part of LC, and confirmed part may be increased during the life of LC Provision calculation on the Confirmed portion Available only for Non transferable Export LCs

Bank may choose to update limits either with only the confirmed portion or update transaction limit with confirmed portion and information limit with unconfirmed portion Choice at LC.PARAMETERS UNCONFIRMED.LIMIT Field

If Consolidation entries are opted for limits in CONSOLIDATE.COND, this will appear as single entry (CONFIRM) or two entries (CONFIRM and ADVICE portions ) depending on the choice made

Slide 98

Drawings – Product Features

Slide 99

DRAWINGS

Documents received from negotiating bank (Import LC) or beneficiary (Export LC) , accepted for Negotiation and input through DRAWINGS application when they conform to LC terms Drawings support Sight , Acceptance, Mixed , Deferred payments

Payment to NOSTRO/ Customer account or payment by cheque, Bankers cheque etc Release of provision automatically with an option for the user to control the amount and the account Collection of charges with options Now or later for other then Sight payments Exchange rate

Slide 100

DRAWINGS – Basic Elements

Id is the LC No, System generates Drawings sequence No. System will accept a maximum of 999 drawings under a letter of credit Id of the drawings is TFYYDDDNNNNNAAA where AAA refers to sequence number of the drawings

Currency and amount of documents can be different from LC and draw down currencies Fully utilized or not to be indicated during Drawings

Value date of payment can be current, future or back valued Payment methods N,IT,BP,CH Possible to opt for suitable rounding rule like Natural, Round up , Round down etc while handling Drawings  Pre defined rules set in EB.ROUNDING.RULE application can be used

Slide 101

DRAWINGS – Basic Elements Liability Limits can be set separately for Opening LC and Usance Drawings. If DRAWINGS limit products are not set in LIMIT.PARAMETER , Usance drawings use LC opening Limits Provision release proportional. But can be optionally regulated

Auto Expiry This field allows user input value only for AC/DP type of drawings. When AUTO.EXPIRY is set to Yes , system will automatically liquidate the contract on the expiry / maturity date and when set to ‘NO’ , the contract has to be manually liquidated. This field will default to ‘NO’ , if not input by the user

Slide 102

Drawing Types 







Two new draw types Register Document (RD) and Document Check (DC) are introduced to register and check the documents under a letter of credit. RD - When documents are presented under a letter of credit, the receipt of documents is recorded / registered in Drawings application. This process is optional in T24. DC - This draw type enables the user to check the documents presented and to record discrepancy, if any. The system also performs the automatic checking for discrepancies based on the conditions defined The drawings can be initiated under a LC with draw type as either RD or DC. The system allows amending the draw types in the following hierarchy:

Slide 103

Drawing Types

SP – Sight payment Payment / reimbursement made on value date

Usance Drawings : AC – Acceptance, DP – Deferred Payment, MA – Matured Acceptance and MD – Matured Deferred payment If funds are required to be paid before maturity date, then Usance drawings can be discounted. Payment made on value date but reimbursement obtained on Maturity Review date Maturity of usance drawings is automatic in case of import LC and for Export LC when discounted or when CONFIRM.INST Field in LC is CONFIRM. Once maturity review date is reached. Drawing types changes from AC to MA and DP to MD and payment effected in these cases Manual maturing needed for other LCs

Slide 104

Drawing Types RP – Release Payment Used in Export LC Acknowledge documents when presented as per LC terms (MT 754) and generates claim for reimbursement (MT 742)

CH – collection of deferred charge in AC/DP  AD – Amendment to SP / MA / MD drawings Limited scope for amending SP drawings

Slide 105

Discrepant Processing LC.DISCREPANCY.CONDITIONS. table is introduced to define the conditions for discrepant checking. The ID of the table can be either SYSTEM or a valid record ID of LC.TYPES. In this table, user can define the value of the field in DRAWINGS application to be checked against value of a field in LETTER OF CREDIT application, condition to be checked and the discrepancy text to be defaulted when the condition fail.

Slide 106

Discrepant Processing 

When a DC type of drawing is input and on validating, the system checks whether discrepancy conditions are predefined for the LC type and performs the validations. If discrepancy condition is not available for the LC type the system validates based on the conditions defined with the ID as SYSTEM.



when the conditions fail, the system defaults the discrepancy text in the transaction.



User can amend the defaulted discrepancy text and also add new discrepancies.



New fields are introduced in the DRAWINGS application to default the "Documents Required" from LETTER OF CREDIT application and to record their statuses. Further "Additional Conditions" is also defaulted in DRAWINGS application from LETTER OF CREDIT application.

Slide 107

Discrepant Processing

Slide 108

Multiple Payments Under Single Drawings A new draw type MX is introduced to support the feature of settling sight as well as acceptance/deferred payment portions of a mixed payment LC through a single drawing. When a drawing is input under a mixed payment LC wherein the drawing types are defined, system allows the user to input the different payment types in a single drawing when settlement term is set to Mixed Payment. The draw type of the drawing must be either DC or MX.

Slide 109

Multiple Payments Under Single Drawings In mixed payment LC, if drawing type is defined as MX, as against SP, AC or DP then one drawing record is to be created for each draw portion. The following features are not supported at present under MX type of Drawings:     

Periodic commission Revolving LCs Syndicated LCs Transferrable LCs Shipping guarantee

Slide 110

Multiple Payments Under Single Drawings

Slide 111

Multiple Payments Under Single Drawings

Slide 112

Multiple Payments Under Single Drawings



Bank can generate MT 756 message for each instalment with due date and amount of instalment



On the instalment due date, system will generate MT 202 message for each instalment amount if Reimbursement authority is not provided in the Letter of Credit



Under export Letter of Credit system will generate separate MT 742



Message for each instalment amount. Likewise, MT 754 will be generated for each instalment independently

Slide 113

Drawings Handling Steps Payment method to be indicated as N, IT, BP , CH DRAW.DOWN account and PAYMENT.ACCOUNT ( for BP/CH default from LC.PARAMETERS) Account number of Application, Reimbursing, Advising Bank, if mentioned in LC defaulted for Draw down

For Sight drawings, if DR.DEBIT.TO.CUST Field is set as Not Debited, then Internal suspense defined in ACCOUNT.CLASS as CUSDEBIT used to discount till MATURITY.REVIEW date Limit will be restored only after that DEBIT.VALUE Field for actual debit to DRAW.DOWN account

For Acceptance drawings, MATURITY.REVIEW Field to indicate when the accepted documents are due for payment

Slide 114

Drawings Handling – Different Currencies DRAW.CURRENCY

RATE.BOOKED

TREASURY.RATE Treasury rate, if not input, Mid Reval rate used

RATE.SPREAD

CUSTOMER.SPREAD Trade Finance Department

DEBIT.CUST.RATE

DRAWDOWN.ACCOUNT

CREDIT.CUST.RATE

PAYMENT.ACCOUNT

Slide 115

Drawing – Provision related User can net the provision amount with the drawing amount and debit only the balance amount from the draw down account Field PROV.NETTING needs to be enabled in the drawing application User can parameterize a value in LC.PARAMETER at company level This will get defaulted at the drawing application Can be amended at the drawing application

Accounting entries related to netting with the proportionate amount of cash margin released only when the drawing currency and credit provision currency are the same

Slide 116

Drawings In Transferable LC



Method 1  Can be input directly in the Child LC itself  Outstanding amount in Parent LC will get affected suitably



Method 2  Authorize drawing in parent LC  Then input this drawing number in PARENT.DRAWING Field in Child drawing  All information get defaulted  Amend account numbers and amount  Get the record authorised  Meets the requirement to show money passing through first beneficiary’s account

Slide 117

Product Features – Discounted Drawings



Beneficiary of an Export Usance transaction may wish to receive funds in advance before maturity date



Bank may discount the drawing and pay the proceeds to them after collecting discount charges for the remaining period  At the maturity, the issuing / Remitting bank will reimburse beneficiary’s bank



Discounted through DRAWINGS application by giving details of  Discount rate / Discount amount Yield method of calculating Discount possible by opting for ‘Y’ in CAL.DISCOUNT.RATE Field  Exchange Load rate / Load amount for Treasury or Marketing Department if two currencies are involved



Details maintained in LC.DISCOUNT.BALANCES

Slide 118

Product Features – Discounted Sight Drawings



Exporter is normally paid when he submits the documents for negotiation while the importer would expect his account to be debited only after the documents are sighted



There could be transit time taken for the documents to reach the importers bank from the exporters bank  Possible to give a future DEBIT.VALUE field  Also possible to discount the sight bills and pay the exporter’s bank



To handle such a situation, while inputting a drawing, the DR.DEBIT.TO.CUST field should be marked as NOT DEBITED

Slide 119

Product Features – Discounted Sight Drawings



DIS.PARTY.CHRD Field can be used to indicate who will bear the charges – Beneficiary or Opener



System debits the internal account defined in ACCOUNT.CLASS as CUSDEBIT instead of Customer account to make payment



Possible to provide grace time for calculation of interest by using DISC.EFF.DATE Field. Interest calculated from DISC.EFF.DATE Field to MATURITY.REVIEW Field  May be input with an effective date or simply “NND” where “NN” would indicate the number of days of Grace  DISC.EFF.DATE Field cannot be less than the VALUE.DATE field or greater than the MATURITY.REVIEW field

Slide 120

Product Features – Settlement of Discounted Sight Drawings



Final settlement Is effected through DR.DISC.AMENDMENTS for online or back dated closure  Two option available in DR.DEBIT.TO.CUST field Debit Customer account (DEBITED) or convert into loan (TRFLOAN)  While debiting customer account, if value date is earlier than maturity review date, it is possible to return un-amortised portion of discount or retain the same  When converted into loan, drawdown account of loan to be mentioned as settlement account of discount drawings. In this case, the entire interest component, already amortised as well as pending amortisation, is credited to the account of the Discount party charged As such loans will be back-valued , customer is not charged twice

Slide 121

Product Features – Amendments to Discounted Drawings



Possible to amend some features of discounted drawings through DR.DISC.AMENDMENTS



Maturity dates could be changed  With this discount and load rates can be changed  Excess discount can be retained or returned  Excess discount retained in internal account defined in LC.PARAMETERS in DIS.RETAIN.CODE field  LC.DISCOUNT.BALANCES keeps track of these changes also



On line maturity of discounted drawings before maturity date can be done by inputting “TODAY” in NEW.MATURITY.DATE Field

Slide 122

Product Features – Tiered Rates for Discounted Drawings



Instead of uniform load rate, it is possible to apply tiered interest rate using PERIODIC.INTEREST for sight and usance discounted drawings  First 1 day 5%  Next 30 days 5.5 %  Rest 6%



The rate and routine to be used is set in LC.PARAMETERS



In Drawings  Currency to be referred is indicated in CURRENCY.REF Field  Bid rate or offer rate can be chosen through INT.MLR.MOR Field  Period determined by the difference between DEBIT.VALUE.DATE and MATURITY.REVIEW.DATE Fields

Slide 123

Product Features – Exchange Rates for Discounted Drawings



When the draw currency is not local, the discount amount is worked out in draw currency and the local currency equivalent is calculated by using the middle rate, if not input in Drawings



Alternately, INT.CALC.COND Field can be used to apply relevant rules for DR.INT.CALC.COND application  Method of calculation of Discount component could be based on the amount could be Buy , Sell or Mid rate  When DISCOUNT.AMT is input ( sans rate ), this Field accepts only those Id of DR.INT.CALC.COND that have DRAW.CCY as INT.CALC.CCY  input can not be changed once the drawing is authorized

Slide 124

Product Features – Broker



Broker is an agent or middleman between the importer and exporter



Gets fee or commission from LC Drawings amount as a percentage or flat amount



Should be valid entry in BROKER table



Brokerage can be settled in any currency



Settled through BROKER.CODE field and broker related field in Drawings

Slide 125

Product Features – Assignment of Proceeds



A beneficiary may like the bank to set aside part of LC proceeds to one or more persons



Actual assignment and payment of proceeds happens only during drawing by referring to the assignment(s) marked in LC  To indicate DOCUMENT.AMOUNT and BEN.DRAW.AMT Fields. System calculates TOT.ASS.AMT field  Possible to specify and / or change assignment during drawing  Wherever an assignee has not been specified in the LC but has to be introduced in DRAWINGS, reserved word TPPAY can be used in ASSIGNMENT.REF field ASSN.AMOUNT field should indicate amount in DRAW.CURRENCY



Allows payment to multiple parties and / or multiple accounts with facility to specify exchange rate for each credit

Slide 126

Product Features – Multiple Debits in Drawings



Through Assignment related fields, it is also possible to have multiple draw down accounts with different exchange rates



APP.DRAW.AMT Field in drawings to be used to indicate the amount to be used from DRAWDOWN.ACCOUNT  When this amount is less than the DOCUMENT.AMOUNT , System populates the balances as MULTI.DR.AMT



Reserved word “ TPRECV” can be used in ASSIGNMENT.REF Field to debit several accounts with different exchange rates  ASSN.AMOUNT Field should indicate amount in DRAW.CURRENCY field

Slide 127

Collections – Product Features

Slide 128

Collection Handling



Inward and Outward  Inward similar to handling import LC and outward like Export LC without any obligation for the involved banks to pay



Clean and Documentary  Sight and Usance



Handle through suitable pre defined LC.TYPES    

CCIS CCIT CDOS CDOT

- Collections Clean Inward Sight - Collections Clean Inward Tenor -Collection Documentary Outward Sight - Collection Documentary Outward Tenor

Slide 129

Collection – Basic Elements



Handled through LC and DRAWINGS application



Basic elements  Drawee / Buyer Application Field ( Inward collection ) Beneficiary Field ( Outward Collection)  Drawer / Seller Applicant Field ( Outward Collection ) Beneficiary Field ( Inward Collection)  Collecting Bank Issuing Bank Field used to denote the counterpart bank  Tracer Expiry date triggers Tracer action  Limits Information purpose limits can be used

Slide 130

Collection – Basic Elements



Tenor  COLL.MAT.CODE or TENOR Fields can be used to indicate collection Tenor – 3 days after Sight, 1 Month from date of Bill of exchange etc  Values in COLL.MAT.CODE Field can be ST , BE, CC etc while TENOR field allows free text input  DAYS Field allow 3 digits number preceded by D or M  These values are used together in Option K of Tag 32a in 400 series of SWIFT message



When a Usance collection is accepted by Drawee, two methods available to effect payment  Drawings could be input with payment type AC, When payment is received, Payment type could be changed as MA DATE.ACCEPTED Field in LC used to record maturity date when payment is received. Drawing input with SP Payment Type

Slide 131

Product Features – Charges and Commission

LC module support generation of :  MT 491 when charges are claimed from correspondent banks for collection of documents  MT 490 for an advice on debit or a credit relating to a refund of charges through a Vostro Account 

When commission and charges with CHARGES.STATUS as 2 is debited from Vostro account system will generate MT490 to the Vostro account holder  When a refund of charge happens to a Vostro account through LC.ACCOUNT.BALANCES, system will generate MT 490 to the account holder  System would generate a single MT 491/ MT490 message for consolidated amount in case multiple charges are to be claimed/collected

Slide 132

Product Features – Direct Collection Allotment



If the bank so desires, it may allow the exporter to directly send documents for collection but take them on its record



For this purpose, it has to allot a series of numbers/ range to each of the select customers to identify the documents



The application DIR.COL.ALL is used to input the range  Id is Customer Number for whom the arrangement is made say 111195  Range can be given with prefix and Start and end Prefix like RB and Start and end like 101 and 150  These numbers could be used in the LC at the DIRECT.COLL.NO Field after authorizing the LC, the respective records may also be fetched by giving Ids like 111195.RB.101, 111195.RB102 etc

Slide 133

Product Features – Collection Tracers



An extra feature not used by other LC transactions  Helps automatic following up collection documents at periodic intervals by way of reminders/ tracers  Automatic generation of Tracers during COB



Default period to define frequency of sending tracer may be set in Country table  Country of Issuing Bank ( for export collections ) and applicant ( for import collections ) is made applicable



Alternately , can be set in EB.FREE.PARAMENTS. Frequency may be changed in EB.FREE.MESSAGE



Manual operation using Operation code T , Tracer date and further frequency with Bank to Bank message can be set

Slide 134

Product Features – Amendments to Collection



When export documents are sent for collection, if the importer does not take delivery, the export tries to find a new buyer



This may necessitate changing the Collecting and / or reimbursing bank also in addition to changing the beneficiary



By effecting these changes, the limit set against the collecting / reimbursing bank changes. They may or may not be customers  In collections, the RISK.PARTY field could be left blank if the counterparties are not out Customers

Slide 135

Linkage with MD

 

Shipping guarantees are issued in case of Import bill for collection due to delay in arrival of documents MD.DEAL can register BILLREFRENCE,LC.MARGIN.AMT and LC.MARGIN.ACC Fields  System maintains GTEE.REFERENCE and GTEE.MARGIN.AMT Fields in LC



In DRAWINGS , we have GTEE.REFERENCE Field  Input here signifies that the Drawing is done where a shipping Guarantee is issued  Drawdown account of Drawings should be the same as Credit Provision account of MD.DEAL  When shipping Guarantee are issued under the MD.DEAL a new field called SG ( Shipping Guarantee) opens which will display all the import LC and Import Bills for collection

Slide 136

Discrepant Document Processing Under LC



DRAWINGS application used to input Non discrepant as well as discrepant document under LC  Non Discrepant documents with Operation code like SP and AC  Discrepant documents with Operation code CO  Nature of discrepancy indicated by choosing pre-defined DR.DISCREPANT.TYPE



Subsequent Operation Codes used for discrepant documents are  SP/ AC  CC  CR

- to record payment by counterparty - to produce Chaser advices - to indicate rejection and FR for final rejection

Slide 137

Product Features – Trust Release



When a discrepant document is received under Import LC, the Bank, at the its discretion, may release the documents prior to receipt of payment  At this juncture, the Bank records delivery of the document in a Trust delivery receipt, has the same acknowledge by the Importer  The same may also happen for Import Collection documents  Possible to allocate distinct risk product through LIMIT.REFERENCE and LIMIT.PARAMETER (by using Decision Field as TRUST.REL and Decision as RELEASE for LC as well as DRAWINGS applications )



TRUST.REL Field used in LC application for Inward collections and DRAWINGS application for Import LCs

Slide 138

Product Features – Trust Release



TRUST.REL field should be set to RELEASE while releasing the documents to Drawee



If the documents are accepted, then this value to be changed to ACCEPT and subjected to further processing



If the Drawee rejects the documents then this value to be changes to REJECT. The Draw type should be changed as CR and while returning the documents back as FR  Whenever documents are accepted under trust the system will hit the trust limit set up in LIMIT.PARAMETER. Also instead of the normal COLL contingent entry, system will create a contingent entry will TRCOLL

Slide 139

Syndicated LCs

Slide 140

Syndicated LCs



Facility can be linked to an LC; both Import and Export LC  Applicant is the customer in Import LC  Issuing Bank is the customer in Export LC



Product LCI (for import LC ) and LCE for (export LC ) to be defined in Facility to attach it to LC



Both LCI and LCE not possible under the same Facility



Syndicated LCs use Facility limit



In LC, the participant details and share get defaulted from the Facility Can be changed at LC level. However the share for each participant for that product not be exceeded

Slide 141

Steps to attach a Facility



Create a PRE.SYNDICATION.FILE



Define the facility. In the facility , choose multiproduct to be ‘Yes “ include LCI or LCE as one of the allowed products



Input an LC



Field SL.REFERENCE.TRANCHE holds the ID of the Facility-Tranche. This is the field that links the Facility to the LC



Then select the product type (LCI or LCE)



Once the product type is selected, the details of the participant and the details of their share gets defaulted from the facility

Slide 142

Features



Below are the exclusions to a syndicated LC  Preadvise is not allowed for syndicated LCs  An LC with provision cannot be linked to a Facility  Revolving LCs are not allowed under Syndication

 

In an import LC, the applicant should be the facility customer or any allowed customer in the facility In an export LC the issuing bank should be the Facility customer or any allowed customer in the Facility



LC currency should be the Facility currency or any allowed currency in the facility



Syndicated LC cannot be overdrawn

Slide 143

Features



LC can be linked to a Facility through an Amendment also  An LC which already has a drawing ( matured or outstanding ) cannot be linked to Facility



Syndicated Charges  To syndicated charged, the charges should be defined in LC.PARAMETERS  Charges to be syndicated have to be defined in the LC  SYNDICATE.CHARGE field in LC decides whether the charges are to be split amongst participants or taken to P & L  Field SYNDICATE.CHARGE should be “Yes” for the charges to get syndicated  If the bank does not want the charges to be syndicated SYNDICATE.CHARGE Field should be ‘NO’  Charge status can either be blank or 2

Slide 144

Limit



Syndicated LC uses the Facility limit and not the LC limit



If a normal LC is amended to a Syndicated LC, the Initial limit line is reversed  Facility limit get attached to the LC



Limit gets hit only for the own bank share only



For Revolving Facility , Limit gets reinstated after payment is made  For Non Revolving Facility, limit does not get reinstated



Accounting entries are generated for own bank share only

Slide 145

Drawings



Sight and usance Drawings under syndication behave like normal drawings



Facility limit is affected in Drawings also  No separate limit line for usance Drawings



If the Facility is revolving , limit and facility get reinstated



Syndicated charges can be defined or collected under Drawings also  Only charge status ‘2’ is accepted in drawings  Any other charge status throws an error



Discrepant document are handled in the same way as under normal LCs

Slide 146

Discount



Sight and Usance Drawings ( both AC and DP ) can be discounted



Sight Discounts debit the account defined using CUSDEBIT category code  Usance Discount debit LIVEDB  Both CUSDEBIT account and LIVEDB debited for own bank share  Nostro account or the participants account debited for participants share



Own bank and participants can opt not to participate in the discount  Field PART.DISC.AGREE in drawings can have YES or NO  YES indicates agreement and No signifies disagreement  Proceeds are credited to the beneficiary accordingly

Slide 147

LC Issuance through ARC IB

Slide 148

Product features of LC ARC IB



Clients should have login names and password for opening LC through ARCIB



Clients may require different functionalities like Input / authorization levels  Example Manager Level , Officer Level , Clerk level etc  Set up done by the bank – one time set up



List of Documents like Commercial Invoice, Packing List etc are entered by the client in Documents and Condition table  Facilities for drop down functionality at the transaction level



Once an IB client is created system will have a record established in DE.CUSTOMER.PREFERENCES

Slide 149

Process workflow Involved for ARC IB LC



Activities that needs to be created for Corporate customer  Create Customer profile for the corporate user depending upon their role  Proxy permission and internet settings needs to be created for corporate users like Clerks , Officers , Managers etc  Profiles have to be created with login options



Once the settings are enabled it allows the corporate user to enter the LC details  Once the transaction is completed the user will click the submit button  Officer of the Corporate user need to authorize the transaction by clicking the submit Button

Slide 150

LC.PARAMETERS



Limits related to ARC IB Customer  Limit could be set to affected for Corporate Customer using internet banking facility through a Field IB.LIMIT YES – to hit limit after the transaction is entered by corporate user NO – to hit the limit after the bank user authorizes the transaction

Slide 151

Product Features – At the Client level



When the client (Corporate Customer ) wants to issue an LC, it is initiated by the officer who has the requisite privilege to do so



After confirmation of the transaction by the officer, authorization is required at the Client’s end  The officer / manager who has the rights to approve the transaction has to approve the same  Unapproved transactions are shown as ‘Pending’ for the officer



If the limit is required to be hit as soon as the client initiated the LC, Field IB.LIMIT in LC.PARAMETERS has to be set as ‘YES’

Slide 152

Product Features – At the Bank level



LC details are received at the Trade Finance Department of the bank  Transaction will appear at the bank side with Operation Field value as IO and IB.STATUS Field as pending



Limits of the customer are monitored based on the settings in LC.PARAMETERS in a Field called IB.LIMIT  Is set ass Yes limit entries are raised Immediately after the transaction id entered by the corporate user  If bank decides to hit the limit only after authorizing the transaction by the bank user, this Field should be set as NO

Slide 153

Product Features – At the Bank level



Once the transaction is approved by the bank, it will have a status as approved  It will be indicated in the Field Operation as O changed from IO, System will not allow amending the operation Field from O to IO once authorized  IB.STATUS Field will show as Approved  Delivery messages including SWIFT messages and the accounting entries pertaining to the transaction will get generated



If bank requires additional information for amending the LC, Status will be set as Modification Requested and a reason assigned in the Field IB.REASON  Once corrected by the corporate user, its status will be shown as modified



Transaction can have any one of the following statuses – Accepted Advised , Approved , Modification requested, Pending and Rejected.  Reasons for rejection / modification requested are also provided to the customer in the field IB.REASONS

Slide 154

Product Features – At the Bank level



If the bank has rejected the LC request for some reason IB.STATUS will show a status as rejected  Limit for the client would get reinstated if IB.LIMIT is set as Yes in LC.PARAMETERS  Record will move to history after crossing the CLOSING.DATE Field

Slide 155

LC Other Features

Slide 156

Linkage with MD



When Shipping guarantees are issued in case of Import LC due to delay in arrival of documents, margin already collected for LC can be apportioned or entirely used for guarantee issue



MD.DEAL can register LC.REFERENCE , LC.MARGIN.AMT and LC.MARGIN.ACC Fields  System maintains GTEE.REFERENCE and GTEE.MARGIN.AMT Fields in LC



In DRAWINGS, we have GTEE.REFERENCE Field  Input here signifies that the Drawing is done where a Shipping Guarantee is issued  Drawdown account of Drawings should be the same as Credit Provision account of MD.DEAL  When Drawing is done under shipping Guarantee, the Drawing reference is stored in DR.REFERENCE in MD.DEAL

Slide 157

Product Features – Accounting



Accounting entries are Contingent as well as Non contingent  STMT.ENTRY and CATEG.ENTRY for Account and PL heads Accounts include Customer Accounts and Internal accounts PL Heads include Brokerage, Commissions and Discount  RE.CONSOL.SPEC.ENTRY for other entries  Asset types; PREADV,ISSUE,DEPYA,ACPTCONTRA,ACPTBANK,COLL, TRCOLL,ADVICE,CONFRIM,ACPT,OPEN (for RP status in Drawings) are contingent and PAYERS which is non contingent. LIVEDB used for discounted drawings  Transaction codes specified through LC.PARAMETERS also uses FT.COMMISSION.TYPE codes  RE.TXN.CODES;NEW , INC, DEC , LIQ , PAY , MAT , CUS etc

Slide 158

Accounting Entries Import Sight LC Cr / Dr

Account

SE/ CE/ SPEC

Remarks

Cr

Outstanding Cr unused

SPEC

NEW

Cr

Outstanding Cr unused

SPEC

INC – AMENDMENT

Dr

Outstanding Cr unused

SPEC

DEC – AMENDMENT

Dr

Outstanding Cr unused

SPEC

LIQ – PAYMENT

Cr

Nostro A/c / Beneficiary

SE

PAYMENT

Dr

Customer

SE

PAYCR

Slide 159

Accounting Entries Import Acceptance LC Cr / Dr

Account

SE/ CE/ SPEC

Remarks

Cr

Outstanding Cr unused

SPEC

NEW

Dr

Outstanding Cr unused

SPEC

LIQ – Reversal

Cr

Outstanding Acceptances

SPEC

NEW – Acceptance

Dr

Customer’s liabilities for Acceptances

SPEC

NEW – Contra

Dr

Outstanding Acceptances

SPEC

On Maturity

Cr

Customer’s liabilities for Acceptances

SPEC

MAT – On Maturity

Cr

Nostro A/c / Beneficiary

SE

PAYCR

Dr

Customer Account

SE

PAYCR

Slide 160

Accounting Entries Export Sight LC Cr / Dr

Account

SE/ CE/ SPEC

Remarks

Cr

LC advised or Outstanding Cr unused or Outstanding Cr unused

SPEC SPEC SPEC

NEW – Advice NEW – Confirm NEW – Open

Cr

Outstanding Cr unused

SPEC

INC – AMENDMENT

Dr

Outstanding Cr unused

SPEC

DEC – AMENDMENT

Dr

Outstanding Cr unused

SPEC

LIQ – PAYMENT

Dr

Nostro A/c / Beneficiary

SE

PAYCR

Cr

Customer

SE

PAYCR

Slide 161

Accounting Entries Charges and Commissions Three possible situations 1. Collected and credited to P & L immediately 2. Collected immediately but amortised over a period 3. Claimed (but yet to be paid ) and credited to P & L immediately

Cr /Dr

Account

Dr

Customer Paying Charges claimed

Cr

PL or Charges received not earned

or

SE/ CE/ SPEC

Remarks

SE SPEC

Paid immediately Claimed

CE SE

Applied Immediately Amortised

Slide 162

SWIFT Messages Supported SWIFT

Description

Application / Field Name

MT 700 MT 701

Issue of Documentary credit

LETTER.OF.CREDIT OPERATION ‘O’

MT 740

Authorization to Reimburse

LETTER.OF.CREDIT OPERATION ‘O’ THIRD.PARTY.CUST.NO NE

MT 705

Pre advice of Document credit

LETTER.OF.CREDIT OPERATION ‘P’

MT 707

Amendment to Documentary credit

LETTER.OF.CREDIT OPERATION ‘A’

MT 710 MT 711

Advice of a Third bank’s Documentary credit

LETTER.OF.CREDIT ADVICE.THRU.CUST.NO ‘NE’

Remarks

Slide 163

SWIFT Messages Supported

SWIFT

Description

Application / Field Name

Remarks

MT 720 MT 721

Transfer of Documentary credit

LETTER.OF.CREDIT

MT 730

Acknowledgement

LETTER.OF.CREDIT OPERATION ‘O’

Available for Outward message

MT 734

Advice of refusal

DRAWINGS DRAWING.TYPE ‘CR’

Available for Outward message

MT 742

Reimbursement Claim

DRAWINGS DRAWINGS.TYPE’SP’/’AC’/’DP’

Available for Outward message

MT 710 MT 711

Advice of a Third bank’s Documentary credit

LETTER.OF.CREDIT ADVICE.THRU.CUST.NO ‘NE’

Slide 164

SWIFT Message Supported SWIFT

Description

Application / Field Name

Remarks

MT 747

Amendment to authorization to reimburse

LETTER.OF.CREDIT OPERATION ‘A’ THIRD.PARTY.CUST.NO ‘NE’

Available for Outward message

MT 750

Advice of discrepancy

DRAWINGS DRAWINGS.TYPE ‘CO’ Field 33 NE

Available for Outward message

MT 752

Authorization to Pay, Accept or Negotiation

DRAWINGS DRAWING.TYPE ‘CO’ TO ‘SP’

Available for Outward message

MT 754

Advice of payment / acceptance / negotiation

DRAWINGS DRAWINGS.TYPE’SP’/’AC’/’DP’

Available for Outward message

MT 756

Advice of reimbursement or payment

DRAWINGS DRAWINGS.TYPE’SP’/’AC’/’DP’

Available for Outward message

Slide 165

SWIFT Message Supported SWIFT

Description

Application / Field Name

Remarks

MT 400

Advice payment

Available for Outward message

MT 405

Clean collection

Available for Outward message

MT 410

Acknowledgement

MT 412

Advice of acceptance

MT 420

Tracer

Available for Outward message

MT 430

Amendment of Instructions

Available for Outward message

Slide 166

SWIFT Message Supported

SWIFT

Description

Application / Field Name

Remarks

MT 490

Clean collection

Available for Outward message

MT 492

Request of cancellation

Available for Outward message

MT 495

Queries

Available for Outward message

MT 496

Answers

Available for Outward message

MT 499

Free format message

Slide 167

Outward Delivery Process



DE.MESSAGE contains contents of basic message types  Id 700 meant for issue of Documentary credit and defines all Tags by name like SEQ.TYPE.OF.CREDIT etc



When a transaction is authorized, all transaction details are written to DE.O.HANDOFF  These can be viewed through Enquiry DE.HANDOFF.DETS



DE.MAPPING defines where data is located and helps mapping  Id 700.LC.1 (Message type , Application and sub classification )  Maps through input position (information from DE.O.HANDOFF or Application) and Field Name ( Tag names per defined in DE.MESSAGE)

Slide 168

Outward Delivery Process



DE.FORMAT.SWIFT format the message  Id 700.1.1 formats as Field Tag , Field Name  Tag 27 Field SEQ, Tag 40A Field TYPE.OF CREDIT



DE.PRODUCT sets rule Company wise, Customer / Account wise, Message type wise  Number of copies ,Carrier to be used etc



DE.ADDRESS helps store Company wise , Customer wise , Carrier wise addresses. Can be used to hold mail



DE.O.HEADER let us know the message disposition  Used to track the message. Can also be used to re – submit a message

Slide 169

Auto Process of Inward SWIFT Message



T24 supports auto processing of inward MT734, MT750 and MT754 messages  MT750 – Advice of Discrepancy  MT754 – Advice of Payment, Acceptance or Negotiation  MT734 – Advice of Refusal



When the system receives MT750 or MT754 message for processing , it immediately checks for the value in tag21 (Related Reference)  If the value corresponding to Letter of Credit ID issued by the bank, system creates a drawings record in IHLD status with Draw Type as following:  MT750 – ‘CO’  MT754 – ‘SP’  DE.MAPPING records , 750 DR.IN are defined to map the swift tags to the fields in DRAWINGS

Slide 170

Product Features – Soft Delivery



Each action in LC and DRAWINGS produces an activity



4 digit code triggered by latest activity in life cycle of transaction



First digits is for Operation, second digit is Application type and last two digits as for function  LC – 1801  Here 1 is Operation P or O , 8 is import LC and 01 is Input / Authorize



EB.ACTIVITY contains all activity codes hard coded in LC and DRAWINGS life Cycle

Slide 171

Product Features – Soft Delivery



For each activity a set of advices are defined in EB.ADVICES



EB.ACTIVITY codes are linked to required Messages Types and Message classed like advice , Payments etc



LC – 1801 to produce  700 message type of Operation message class with mapping key 700.LC.1 And  740 message type of Reimbursing message class with mapping key 740.LC.1  But 740 will be produced only if THIRD.PARTY.CUST.NO NE ‘ ‘ in LC

Slide 172

Product Features – Soft Delivery



Once input is complete in LC or DRAWINGS, preview of all related message for that activity can be launched



At the launched of all related messages, user can  Change the default carrier  Insert change of address  Decide to send the message or not

Slide 173

LC System Maintained Tables



Some important System Maintained tables



LC.APPLICANT  Customer wise list of applicants



LC.BENEFICIARY  Customer wise list of LC beneficiaries



LC.DISCOUNT.BALANCES  LC wise discount drawings



LC.ISSUING.BANK  Customer wise details of Issuing Bank for Export LCs and export collections

Slide 174

LC System Maintained Tables



LC.NEGOTIATE  LC wise details of DRAW.NEGOTIATE



LC.PARENT.DRAW  LC wise list of Drawings in Child LC done THROUGH Parent LC



LC.REVOL  Due date wise list off Revolving LCs



LC.TRANSFERABLE  Parent wise list of Child LCs



LC.ACCOUNT.BALANCES  Live LCs , Currency and date wise  Entire history of Charges and payments

Slide 175

LC System Maintained Tables



EB.CONTRACT.BALANCES  Balance file containing details of consolidation key and Asset type wise balances  Principal outstanding amounts in product files and any related amount Fields such as accrued interest, charges, commissions etc  Current and historical details are maintained  Information held currency wise, Asset type wise and date wise balance as well as consolidation key

Slide 176

LC Standard Enquiries



LC.SUMMARY  Overview of an individual LC including its drawing history



LC.REIMBURSE.CLAIM  Overview of drawing wise reimbursements due



LCAC.CHARGES  Details of charges amortised – LC wise



LC.HIST  Complete history of LCs

Slide 177

LC Standard Enquiries



LCS.BY.EXPRIY  LCs by expiry date



LCS.BY.RSKPTY  LCs by risk party



LC.DRAWINGS  List of drawings of the day



LC.ACPT.DUE  Acceptances and deferred payment report

Slide 178

LC Dependency Diagram

BASIC.RATE.TEXT INTEREST.BASIS PERIODIC.INTEREST CUSTOMER CATEGORY ACCOUNT CURRENCY NOSTRO ACCOUNT ACCOUNT.CLASS LIMIT COLLATERAL

FT.COMMISSIO.TYPE LC.TXN.TYPE.CONDITION LC.GROUP.CONDITION LC.CUSTOMER.CONDITION

EB.ACTIVITY ED.ADVICES

LC.PARAMETERS LC.TYPES LC.ENRICHMENT LC.CLAUSES LC.ADVICE.TEXT DR.DISCREPANT.TYPE

LC

LC.ACCOUNT.BALANCES LC.DISCOUNT.BALANCES LC.APPLICANT LC.BENEFICIARY

Slide 179

Summary



We have so far seen  The overview of the LC module  Linkages between LC module and T24 Core and other applications  Dependencies and parameter tables to be set up  Main business features of LC module  Import LC issuance through Internet Banking  Accounting, messaging and enquiries

Slide 180

Slide 181