T3TLC - Letters of Credit - R10.2

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
 Accounting, messaging and enquiries
Slide 2
LC – Product Overview
Import
Confirmed
Letters of Un Confirmed
Credit
Revolving
Opening Negotiation
Non
LC Revolving
Amending Transferable DRAWINGS
Non
Transferable
Sight
Documentary
Back to Back Usance
Collections
Stand by Mixed
DRAW.
Export
NEGOTIATION
Slide 3
LC Dependencies
 LC makes use of
 CUSTOMER
 ACCOUNT
 Core dependencies
 Delivery
 Accounting
 Limits
 LC also uses other Static tables
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
Used in
discounted drawings
PERIODIC.INTEREST 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
 Collecting multiple times of charges
 LC application has a Field

CHARGE.PERIOD. If any number is
entered manually there, then default
charges are multiplied so many times and
taken
 If MINIMUM.PERIOD Field in
FT.COMMISSION. TYPE is entered
(1,3,6,9,12,24), then this value is
automatically defaulted by the system into
CHARGE.PERIOD Field in LC
 CHARGE.PERIOD Field in
FT.COMMISSION. TYPE should then be
left blank
Slide 8
 Collecting period based charges
 Number of months that comprise a charge

period can be defined (1,3,6,9,12,24 M) in
CHARGE.PERIOD Field in
FT.COMMISSION.TYPE and the same
period entered in MINIMUM.PERIOD Field
also
 Depending on the contract length, charges

and commission will be suitably multiplied
and taken. If the commission shown here is
applied to an LC of 12 months, then
CHARGE.PERIOD Field in LC gets a value
of 12 and 12 times this commission is taken.
If 3 and 3 defined, then 4 times
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 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 HOLIDAY
CURRENCY 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
 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 Tables
 The Parameter tables to be set-up during implementation are given

below:
 LC.PARAMETERS LC.ENRICHMENT
 LC.TYPES LC.ADVICE.TEXT
 LC.CLAUSES DR.DISCREPANT.TYPE
 ACCOUNT.CLASS EB.DUPLICATE.TYPE
 DR.INT.CALC.COND
 CONDITION.PRIORITY LC.GEN.CONDITION
 LC.GROUP.CONDITION LC.CUSTOMER.CONDITION
 LC.TXN.TYPE.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 Fields
 Amortisation of charges done monthly on any chosen date

 Local currency and Foreign currencies in AMR.CYCLE.L.CCY and
AMR.CYCLE.F.CCY Fields
 Discount drawing interest accrual can be done daily or monthly on

chosen date
 Local currency and Foreign currencies in DIS.CYCLE.L.CCY and
DIS.CYCLE.F.CCY Fields
 When discounted drawing 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
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.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 29
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 30
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 31
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 32
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 33
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 34
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 35
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 36
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 37
Workshop - 1
 Use Command Line
 Set up a record in EB.DUPLICATE.TYPE
 It should check duplication of Fields in APPLICANT, BENEFICIARY,

LC.CURRENCY and LC.AMOUNT in LETTER.OF.CREDIT application
Slide 38
Workshop – 1 Solution
Slide 39
Workshop - 2
 Use Admin Menu > Core > Category

 Create a new category code (category code as given by trainer) and set up
a new type of LC for the following requirements:
Confirmed
Export
Back to back payable by Acceptance
 Use Admin Menu>Corporate Administration>Trade Finance>LC Types

 Create a new record in LC.TYPES by using the above category code as
default category code
 Choose an existing Import Acceptance LC Type – IAC - as back to back for
this LC
 Include the EB.DUPLICATE.TYPE record set up earlier for checking
duplicates
Slide 40
Slide 41
Slide 42
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 43
Workshop - 3
 Use Admin Menu > Corporate Administration >Trade Finance > LC

Advice Text
 Add a new LC.ADVICE.TEXT for the following text

 1 X 2 Packing list with full particulars (carton wise) of packing goods
shipped
Slide 44
Slide 45
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 46
Workshop - 4

Clauses
 Add a new record in LC.CLAUSES for the following clause
 Documents should be sent in two sets
Slide 47
Slide 48
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 49
Discrepant Document Processing
Documents YES PAY /

Conform to LC terms ? Claim from
REIMBURSE
Issuer
NO YES Pay under

MINOR Reserve
Discrepancy Claim from
Inform only Issuer
INTERNAL Presenter
NO
YES
Pay under
Reserve
YES Take Inform Issuer
MAJOR
Discrepancy Risk on Seek Instructions
EXTERNAL Customer ?
Send for
NO
collection
Slide 50
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 51
DR.DISCREPANT.TYPE
 For Export documents, for each type

 Payment under reserve enabled in DRAWINGS only if URESERVE.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 indicated 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 of discrepancy should be indicated in Field
DISCREPANCY in DRAWINGS. This will be communicated through
advice of discrepancy through MT 750
Input of No/None in Field DISCREPANCY will suppress MT 750
generation
Slide 52
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 53
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 54
LC.ENRICHMENT
The values in LC will have an
enrichment as specified here.
‘ Y ’ at different Fields give
This is important as values
different enrichments
in LC need to conform to
SWIFT standards
Slide 55
DR.INT.CALC.COND
 While discounting drawings, if the currency of Drawings is in foreign

currency, rules can be set here to choose method of calculating the
discount component
 INT.CALC.CCY Field can be either of the options DRAW.CCY or LCCY
 CONV.RATE Field could be Buy or Sell or Mid
If the INT.CALC.CCY Field is selected as LCCY, the entire Drawing
amount is converted into local currency at the rate specified in
CONV.RATE Field. Discount is calculated on this amount and then
converted to the Drawing currency using the same CONV.RATE Field
 In the absence of these rules, the discount amount is worked out in

draw currency and the local currency equivalent is calculated by using
the middle rate, if exchange rate is not input in Drawings
Slide 56
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/Drawing 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 CHARGE.TYPES
 Other Fields are not currently in use as they are available in respective
Charge/Commission types and in LC application
Slide 57
Workshop - 5
 Use Admin Menu > Retail Administration > Interest, Taxes & Charges >
Charges > FT Commission Type
 Create a new FT.COMMISSION.TYPE for opening LC
 0.25% level for USD. Minimum USD 100. Maximum USD 10,000
 To be amortised over 1 month
 Charge period 3 months. Minimum charge period 3 months
 Create one more FT.COMMISSION.TYPE as per the same specification but
to be amortised over 6 months
 Create another FT.COMMISSION.TYPE for outward SWIFT messages with
flat rates of USD 30, GBP 20

Txn Type Condition
 For the Export LC type set up earlier, create an
LC.TXN.TYPE.CONDITION using the newly created Commission and
Charge types for LC opening operation
Slide 58
Slide 59
Slide 60
Slide 61
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 62
 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 63
 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 64
 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 65
Workshop - 6
 Use Admin Menu > Corporate Administration > Trade Finance >
Param > LC Gen Condition
 Form a special group of Customers – VVIP group in LC.GEN.CONDITION
 Use Admin Menu > Corporate Administration > Trade Finance > LC
Group Condition
 Through LC.GROUP.CONDITION, set rules to collect only 50% of Export
LC opening commission and USD 10 as Swift charges for this group
 Use the FT.COMMISSION.TYPE records created earlier
Slide 66
Slide 67
Slide 68
 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 69
Workshop - 7
 Use Admin Menu > Corporate Administration > Trade Finance >
LC.Group.Condition
 Set the following rules for your customer
 Collect 33.33% of the Commission type set up earlier for LC opening
 Collect USD 15 for the Commission type set up earlier for Swift charges

 Check whether CUSTOMER.CHARGE reflects this position

 In LC.CUSTOMER.CONDITION, indicate the customer’s account from
which Provision amount is to be collected
Slide 70
Slide 71
Slide 72
LC Commission & Charges
FT.COMMISSION.TYPE
CONDITION.PRIORITY
LC.TYPES
LC.GEN.CONDITION
Operations
Drawing Types
CUSTOMER.
CHARGE
LC.TXN.TYPE.CONDITION LC.GROUP.
CON.CUS.LINK
CONDITION
CUSTOMER.LINK
Fields
LC.CUSTOMER.
CONDITION
LETTER.OF.CREDIT
DRAWINGS
Slide 73
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 74
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 75
LC Build Sequence
1. ACCOUNT.CLASS*
Records Mandatory*
AMORT, LCDIFF, TFLC
Optional
CUSDEBIT, BROKER
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 76
LC Build Sequence
9. LC.PARAMETERS* Mandatory*
Optional
10. EB.DUPLICATE.TYPE
11. LC.TYPES LC.ENRICHMENT*

(Back - Back LC.TYPES)
LC.TYPES
12. LC.TYPES * (Back – Back LC.TYPES)
13. LC.TXN.TYPE.CONDITION* LC.ENRICHMENT*

LC.TYPES*
14. DR.INT.CALC.COND
15. LC.CUSTOMER.CONDITION
Slide 77
LC – Product Features
Slide 78
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 79
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 80
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 81
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 82
Workshop - 8
 Use User Menu > Customer > Corporate Customer

 Create Customer record for Abiz Business Corp Inc (ABC Inc)
 Use User Menu > Corporate Operations > Trade Finance > Trade
Finance Menu > Import LCs > Issuance of Import LCs > Pre Advice of
Import LCs
 Prepare a Pre-advice for your Customer on the following basis:
 An LC for GBP 10,000 expiring after 3 months at your country. Liability to
be reversed 1 month thereafter
 Beneficiary – ABC Inc
 Advising bank and available with Allied Irish Bank
 View the delivery message MT 705 before committing
 Commit record and get it authorised
Finance Menu > Accounting Entries > View Transaction Entries
 View the accounting entries and RE.CONSOL.SPEC.ENTRY
Slide 83
Slide 84
Slide 85
Slide 86
Slide 87
Workshop - 9
Finance Menu > Import LCs > Issuance of Import LCs > Pre Advice of
Import LCs
 Prepare another Pre-advice for your customer on the same terms as in
Workshop – 8
 Mark PREADV.LIMIT (UPDATE.LIMIT) Field as Yes
 Use User Menu > Credit Operations > Limits > Enquiries > Liab Enquiry
 Observe the effect on Limits
 Drill down to Enquiries LIM.TRADE and LIM.TXN
Slide 88
Slide 89
Slide 90
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 positive 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 91
Opening Import LC – Basic elements
 LETTER.OF.CREDIT (1)
 Operation code - O
 Type of Credit
 Applicant
 Beneficiary
 Advising
using ADVISING.BK.CUSTNO / ADVISING.BK Fields
 Intermediary Bank
using ADVISE.THRU.CUSTNO / ADVISE.THRU Fields
 Reimbursement
using THIRD.PARTY.CUSTNO / THIRD.PARTY Fields
Slide 92
 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 93
 Documents required
 Additional Conditions
 Charges
 Liability
For Issuing bank of Import LC, LC Applicant 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 94
Workshop - 10
Finance Menu > Import LCs > Issuance of Import LCs > Pre Advice to
Issue/List of Preadvised LCs
 Pick the Pre advised LC from Workshop – 9 and open an Import Sight
Payment LC with the following changes
 Indicate LC Number as an internally maintained number
 Indicate ‘Computer Software’ under description of goods
 Choose “UCP Latest Version” in APPL.RULE.CODES Field
 Include the following documents as required:
For the packing list include the text created earlier in LC.ADVICE.TEXT
Include a clause that the Documents should be sent as two different sets
by using the LC.CLAUSES set earlier
 Observe the change in the Limit Reference after validation
 Preview the delivery messages and get the record authorised
 Use User Menu > Corporate Operations > Trade Finance > Accounting
Entries > View Transaction Entries
 Look at the accounting entries
Slide 95
Slide 96
Slide 97
Slide 98
Slide 99
Slide 100
Slide 101
Workshop - 11
Finance Menu > Import LCs > Issuance of Import LCs > Issue of Sight
Payment LCs/Issue of Usance LCs/Issue of Negotiation LCs/Issue of
Mixed Payment LCs/Issue of Stand By LCs
 Open the following types of Import LCs for USD 10,000 each expiring in 6
months in favour of ABC Inc. Credit available only with yourselves and
applicable rules - UCP Latest Version, Advising Bank – Allied Irish Bank
1. Sight Confirmed
2. Acceptance Unconfirmed
3. Negotiation Sight Confirmed
4. Mixed payment Transferable Unconfirmed – 40% sight and 60%
acceptance 30 days from BL date
 Open a Standby LC for USD 10,000 in favour of ABC Inc expiring in 6
months
 Get the records authorised
 Look at the different Limit References getting defaulted in line with

settings in LIMIT.PARAMETER
Slide 102
Slide 103
Slide 104
Slide 105
Slide 106
Slide 107
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 be input as % to LC amount
 Charges calculated on LC amount + Positive Tolerance
Slide 108
Product Features – Charges and Commission
 Other Features – Charges & 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
Amortised over stipulated period in FT.COMMISSION.TYPE
 Collected immediately or any time later including ad hoc charge

Later collection through Operation Code
C in LC Take a Direct Charge / ad hoc charge
CH in DR Collection of deferred charge AC / DP
 Waived using WAIVE.CHARGES Field
Slide 109
 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 indicating “R” in PARTY.CHRG Field here
Slide 110
 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 111
 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 to 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 112
Workshop - 12
Payment LCs
 Open Import Sight Confirmed LC for USD 15,000 expiring in 6 months
 Positive tolerance 10%
 Reimbursing bank American Express UK
 Collect from your Customer (LC Opener) Swift charges using
FT.COMMISSION.TYPE set up earlier (Observe the charges defaulted as
per the group condition set up earlier)
 Preview delivery message before authorisation and then get the record
authorised
 Look at the Impact on Limit
 View Accounting entries through STMT.ENTRY and CATEG.ENTRY
Slide 113
Slide 114
Slide 115
Slide 116
Slide 117
Slide 118
Slide 119
Workshop - 13
Payment LCs
 Open import sight LC for USD 15,000 expiring in 6 months
 Negative tolerance 10%
 Collect from your Customer (LC opener) LC opening commission using
FT.COMMISSION.TYPE set up earlier (amortisation period 6M)
 Take this commission in GBP from Customer’s GBP account
 Check whether the amount collected is in line with the conditions set in
LC.GROUP.CONDITION
 Get the record authorised
 Through context sensitive enquiry, look at Accounting entries including
amortisation
Slide 120
Slide 121
Slide 122
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 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 123
Opening Import LC - Revolving
 Steps involved
 ISSUE.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 124
Workshop - 14
Payment LCs
 Open at Sight Import LC on the following terms:
 Face value USD 10,000 expiring in 6 months
 Revolving Cumulative with 2 additional revolutions
 Negative tolerance 10%
 Look at the accounting entries through context sensitive enquiry
 Observe the impact on limit
Slide 125
Slide 126
Slide 127
Slide 128
Slide 129
Slide 130
Workshop - 15
Payment LCs
 Open at Sight import LC on the following terms:
 Face value USD 10,000 expiring in 6 months
 Revolving Non cumulative with 2 additional revolutions
 Set the Limit only for Single revolution at a time
 Positive tolerance 10% and Negative tolerance 10%
 Observe the impact on limit
 Look at the accounting entries passed
Slide 131
Slide 132
Slide 133
Slide 134
Slide 135
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 136
Effecting LC.AMENDMENTS
 For amendments which await Beneficiary’s consent,

LC.AMENDMENTS can be used
 Id of the record is LC number. System creates 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 137
Workshop - 16
Finance Menu > Import LCs > Maintenance of Import LCs > External
Amendment Make the following amendments to the Import Sight
Payment LC opened in Workshop – 11 (LC No.2010/JAN/203)
 Mark External reference as 2010/JAN/2003
 LC amount increased to USD 15,000
 LC expiry place change to Singapore from London
 Preview the delivery message and get the record authorised
 Look at the effect on limit
 Through context sensitive enquiry, look at Accounting entries for the

increase
Slide 138
Slide 139
Workshop - 16 Solution
Slide 140
Slide 141
Slide 142
Slide 143
Workshop - 17
Finance Menu > Import LCs > Maintenance of Import LCs > Internal
Amendment
 Make the following amendments to the Import Sight LC amended in
previous Workshop (LC No.2010/JAN/203)
 Indicate Customer’s GBP account as CHARGES.ACCOUNT to default
while taking charges
 Mark this as Internal amendment not requiring any delivery message
Slide 144
Slide 145
Workshop - 18
Finance Menu > Import LCs > Maintenance of Import LCs >
Amendment seeking Benef’s Consent
 To the LC handled in the previous workshop (LC No.2010/JAN/203), make

the following amendment and seek beneficiary’s consent:
 Decrease the value by USD 1,000
 Set the LIMIT.UPDATE Field to No
 Collect SWIFT charges as per the Commission type set up earlier
 See the Charge account getting defaulted on validating input
Slide 146
Slide 147
Workshop - 19
Amendment seeking Benef’s Consent
 To the LC handled in the previous workshop (LC No.2010/JAN/203), make
another amendment awaiting beneficiary consent
 Reduce the expiry date by 1 month
Slide 148
Slide 149
Workshop - 20
 You have now received beneficiary’s acceptance for the first

amendment (Workshop 18). Beneficiary is not agreeable for the
second amendment (Workshop 19)
Approve/Reject Amendment of Import LC
 Give suitable effect to the two amendments
 Get the records authorised
 Look at the effect on limit
 See the accounting entries for the decrease
Slide 150
Slide 151
Slide 152
Slide 153
Slide 154
Product Features - Provision
 Also known 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
Slide 155
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 156
Workshop - 21
Take/Reduce Margin
 Take provision of 50% for the LC handled in the previous workshop (LC
No.2010/JAN/203)
 Mention the customer’s USD account as Margin Debit account
 Observe defaulting of an internal account as Margin Credit Account
Slide 157
Slide 158
Slide 159
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 160
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 161
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 162
Workshop - 22
Finance Menu > Export LCs > Register/Advise Export LCs >
Advise/Register Usance LCs
 Using the Export LC Type created earlier, advice Usance LC as below:
 LC issued by Allied Irish Bank ; Applicant ABC Inc
 Beneficiary – Your customer
 Amount GBP 10,000; LC Tenor - 6 months
 Collect the defaulting charges from your Customer’s GBP account
 View the effect of Limit on the risk party
Slide 163
Slide 164
Slide 165
Slide 166
Workshop - 23
 Use User Menu > Corporate Operations > Trade Finance > Trade Finance
Menu > Export LCs > Register/Advise Export LCs > Advise/Register
Usance LCs
 Using the export LC Type created earlier, advice another Usance LC:
 LC issued by Allied Irish Bank
 Set American Express Bank as risk party since they are going to reimburse LC
 Applicant ABC Inc; Beneficiary – Your customer
 Amount GBP 10,000 and LC Tenor 6 months
 Claim the defaulting charges from the LC opener
 Observe whether the system is checking for possibility of duplicate contract
 View the effect of Limit on the risk party
 Look at the accounting entries passed for contract and charges claimed
Slide 167
Slide 168
Slide 169
Slide 170
Slide 171
Export LC Handling - Transferable LC
 LCs can be transferred in full or in part if permitted by the Issuer

 Export LC should have used LC.TYPES permitting Transfer
 Steps for transfer

 Enter and Authorise 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
 In the parent LC, the system updates TRANSFERRED.LC and

TRAN.PORT.AMT Fields for information and validation
Slide 172
Workshop - 24
Advise/Register Sight Payment LCs
 Advice at Sight Transferable Export LC in favour of our customer for GBP
10,000 issued by our Correspondent bank – Allied Irish Bank on behalf of
M/s ABC Inc. Choose suitable LC.TYPES record
 Look at the effect on limits of the Risk party
Finance Menu > Export LCs > Transfer of Export LCs > Transfer of
Export LC
 Transfer GBP 6,000 of this LC in favour of a third party M/s.XYZ Inc
 Look at Enquiry LIM.TXN for the effect on limits of the Risk party
 Look at the LC record for information on transferred LC
Slide 173
Slide 174
Slide 175
Slide 176
Slide 177
Export LC Handling – Back to Back Import LC
 Export LC should have used LC.TYPES permitting Back to Back and

indicating 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 178
Workshop - 25
Finance Menu > Back to Back LCs > Export LC for Back to Back LCs
 Advice Export LC in favour of our customer for GBP 10,000 issued by our
Correspondent Bank – Allied Irish Bank – on behalf of M/s ABC Inc
 Use LC.TYPES record created earlier
Finance Menu > Back to Back LCs > Back to Back Import LC
 Open a Back to Back Import LC for USD 5,000 in favour of a third party
M/s.XYZ Inc
 View the impact on limit for the Import LC
Slide 179
Slide 180
Slide 181
Slide 182
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 183
Drawings – Product Features
Slide 184
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 than Sight payments
 Exchange rate
Slide 185
DRAWINGS – Basic Elements
 Id is the LC No. System generates Drawing sequence No.
 Currency and amount of documents can be different from LC and draw

down currencies
 Fully utilised 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 186
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
Slide 187
Drawing Types
 SP - Sight payment
 Payment / reimbursement made on value dates
 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 type changes
from AC to MA and DP to MD and payment effected in these cases
 Manual maturing needed for other LCs
Slide 188
Drawing Types
 RP - Release Payment
 Used in Export LC
 Acknowledges 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 189
Drawing 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 numbers of Applicant, 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 190
Drawing 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 spread
DEBIT.CUST.RATE CREDIT.CUST.RATE
DRAWDOWN.ACCOUNT PAYMENT.ACCOUNT
Slide 191
Workshop - 26
Finance Menu > Import LCs > Drawings under Import LC (Non-
Discrepant) > Sight Payment under Import LC
 For the Import Sight LC opened in Workshop – 12 for USD 15,000 (LC
No.2010/JAN/208) effect a suitable drawing for USD 16,000
 Credit the proceeds to Nostro account 23752 with Citi Bank, New York
 Mark it as NOT fully utilised and get the record authorised
 View the impact on Limits
Slide 192
Slide 193
Slide 194
Slide 195
Workshop - 27
Discrepant) > Sight Payment under Import LC
 For the same Import LC, input another drawing for USD 200
 Let the credit value date of drawings be after 4 days and the debit value
date after 1 day. Mark it as fully utilised
 Collect SWIFT charges created earlier @ 7.5% of Drawing amount from the
LC Opener. Input charge status code 8
Slide 196
Slide 197
Slide 198
Slide 199
Workshop - 28
Discrepant) > Acceptance of Documents
 For the Import Acceptance LC opened in Workshop – 11 for USD 10,000
(LC No.2010/JAN/204), input a drawing for the full amount with suitable
Maturity Review date
 Use your customer’s GBP account for reimbursement
 Collect from the proceeds from beneficiary of LC, the commission created
earlier for opening LC
Slide 200
Slide 201
Slide 202
Slide 203
Product Features – DRAW.NEGOTIATION
 In DRAWINGS application, sight and acceptance portions should be

input in different drawings as they fall under different draw types
 In DRAW.NEGOTIATION both are input together and system

generates Drawings on hold
 Steps for input

 Id format DNSSDDDNNNNN.
DN0133500001 comes as DN01-335-00001
 Enter details of Mixed payment
 Once the ‘Discrepant Status’ Field is set to ‘SETTLED’, T24 will generate
the related Drawings files in IHLD status
 The Drawings will require completion and authorisation
Slide 204
Workshop - 29
Finance Menu > Export LCs > Documents under Export LC (Non-
Discrepant) > Acceptance under Export LC
 Input a drawing for the Export LC opened in Workshop – 22 (Ref
No.AIB/2010/301)
 Usance payable after one month
 Fully utilise the LC amount
 Payment by debiting Nostro account and crediting customer account with
you
Slide 205
Slide 206
Slide 207
Workshop - 30
Discrepant) > Online Maturity of Acceptances
 Mature the drawing in Workshop - 29 online by suitably changing the Draw
type Field
Slide 208
Slide 209
Slide 210
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
 Authorise 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
 Meets the requirement to show money passing through first beneficiary’s
account
Slide 211
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 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.RTE Field
 Exchange Load rate / Load amount for Treasury or Marketing Department if
two currencies are involved
 Details maintained in LC.DISCOUNT.BALANCES
Slide 212
Workshop - 31
Advise/Register Usance LCs
 Input an Export LC issued by Allied Irish Bank for GBP 6,000 in favour of
your customer payable 6 months after acceptance
Discrepant) > Negotiation/Discounting under Export LC > Usance Bill
Negotiation/Discounting
 Discount the LC in full @ 5% for 6 months. Collect a load of 1%
 Beneficiary to bear these charges
 After authorisation of the record, look at the accounting entries

 Look at system maintained LC.DISCOUNT.BALANCES
Slide 213
Slide 214
Slide 215
Slide 216
Slide 217
Product Features – Discounting 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 218
Product Features – Discounting 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 219
Workshop - 32
Discrepant) > Negotiation/Discounting under Export LC > Sight Bill
Negotiation/Discounting
 Input a sight drawing of GBP 3,000 for the Parent Export sight LC opened in
Workshop – 24 (Ref: AIB/2010/401) for GBP 10,000
 As it normally takes 1 week time to receive documents, deduct discount for
this period @ 3% from the proceeds. Apply Yield method for calculating
Discount. Beneficiary to bear Discount amount
 Credit proceeds to USD account of beneficiary. Indicate Treasury rate as
1.93 and Customer spread as 0.02 for the Credit side
 For the debit side, indicate Rate Booked as 1.95 and Rate spread as 0.01.
Observe the marketing exchange profit of TF Department
Slide 220
Workshop - 32
 View the impact on Limits of Correspondent Bank
Slide 221
Slide 222
Slide 223
Slide 224
Product Features – Settlement of Discounted Sight Drawings
 Final settlement is effected through DR.DISC.AMENDMENTS for on-

line or back dated closure
 Two options 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 discounted 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 225
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 226
Workshop - 33
 For the Sight LC discounted in the previous workshop, view

LC.DISCOUNT.BALANCES using the Command Line
Discrepant) > Negotiation/Discounting under Export LC > Amendment
to Sight Discounting
 Change the discount period to 3 days, instead of 7 days
 Opt to return the excess discount collected

 View LC.DISCOUNT.BALANCES after the change
Slide 227
Slide 228
Discount period 7 days Discount period 3 days
Slide 229
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 230
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

of DR.INT.CALC.COND application
 Method of calculation of Discount component could be based on the
Drawing Currency or the Local Currency and the rate applicable on that
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 authorised
Slide 231
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 Fields in

Drawings
Slide 232
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.ASSN.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 233
Workshop - 34
Advise/Register Sight Payment LCs
 Advice Sight Export LC for USD 5,000 to your customer issued by Allied
Irish Bank on behalf of ABC Inc
 Indicate assignment of USD 1,000 to a third party in the LC
Discrepant) > Sight Payment under Export LC
 Effect drawings of USD 5,000 for the above through a Nostro account
 Assignment indicated in the LC to a GBP account at an exchange rate of 2
 Effect an additional assignment of USD 1,500 to another party’s USD
account (use TPPAY)
Slide 234
Slide 235
Slide 236
Slide 237
Slide 238
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 balance 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 239
Collections – Product Features
Slide 240
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
 Handled through suitable pre defined LC.TYPES

 CCIS - Collections Clean Inward Sight
 CCIT - Collections Clean Inward Tenor
 CDOS - Collection Documentary Outward Sight
 CDOT - Collection Documentary Outward Tenor
Slide 241
Collection – Basic Elements
 Handled through LC and DRAWINGS applications
 Basic elements
 Drawee/Buyer
Applicant 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 242
Workshop - 35
Finance Menu > Outward Collections > Lodge Clean Collections
 Send a Sight bill for USD 10,000 on clean collection basis on behalf of your
customer to your correspondent bank – Allied Irish Bank
 Using the LC opening commission type set up earlier, collect charges from
your customer immediately
 Through Delivery preview, view the Delivery advice and get the record
authorised
Slide 243
Slide 244
Slide 245
Slide 246
Slide 247
Workshop - 36
 Payment for the above collection is now available
Finance Menu > Outward Collections > Payment of Outward
Collections
 Input suitable drawings to credit the proceeds to our customer
 Let the credit value date be one day later than debit value date
 Through Delivery preview, view the Delivery advice and get the record
authorised
Slide 248
Slide 249
Slide 250
Slide 251
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 allows 3 digit 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
 Drawing 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 252
Workshop - 37
Finance Menu > Outward Collections > Lodge Usance(Tenor)
Documentary Collection
 Send an acceptance bill with documents for USD 9,000 for collection
 Payable 3 months from the date of Bill of exchange
 Indicate that Packing list is enclosed as document by using the text created
earlier in LC.ADVICE.TEXT
 Through Delivery preview, view the Delivery advice
Entries > View Unauthorised Entries
 Look at the accounting entries passed and observe CRF type recorded as
COLL
Slide 253
Workshop – 37 Contd..
Finance Menu > Outward Collections > Amend Outward Collection
 The bill has been accepted for payment as per terms
 Indicate this in Collection record created (DATE.ACCEPTED Field)
Finance Menu > Outward Collections > Payment of Outward Collection
 Payment has been received
 Input Drawing and get payment authorised
 Look at the accounting entries at first and last stages
Slide 254
Slide 255
Slide 256
Slide 257
Slide 258
Slide 259
Slide 260
Slide 261
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 authorising the LC, the respective records may also be fetched by
giving Ids like 111195.RB101, 111195.RB102 etc
Slide 262
Workshop - 38
Finance Menu > Outward Collections > Define Direct Collection Range
for Customers
 Define a suitable range of 15 numbers for Direct collection to your
Customer
Finance Menu > Outward Collections > Lodge Sight Docy Collection
 Send a Sight bill with documents for USD 5,000 on collection basis on
behalf of your customer to your correspondent bank. Include Bill of Lading
as document
 Make use of a number in the Direct collection range already allotted to your
Customer
Slide 263
Slide 264
Slide 265
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.PARAMETERS. 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 266
Workshop - 39
Finance Menu > Outward Collections > Trace the Collection
 For the Sight bill with document sent on collection basis in the previous
workshop, send a tracer to the Collecting bank and set the frequency for
further Tracers as 3 working days
 Use the Direct Collection allotment Id to fetch the record
 Include message to the Bank as below:
“PLEASE ADVISE STATUS OF OUR ABOVE COLLECTION”
 View the message through Delivery Preview and get the record authorised
Slide 267
Slide 268
Slide 269
Product Features – Amendments to Collection
 When export documents are sent for collection, if the importer does not
take delivery, the exporter 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 our Customers
Slide 270
Workshop - 40
Finance Menu > Outward Collections > Amend Outward Collection
 Effect amendments to the Sight bill with document sent on

collection basis in the previous workshop, as payment is not
forthcoming in spite of Tracers
 Change the beneficiary and issuing bank. Both are not

customers now
 See whether you get the override regarding Limit impact now
Slide 271
Slide 272
Discrepant Document Processing Under LC
 DRAWINGS application used to input Non discrepant as well as

discrepant documents 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 - to record payment by counterparty
 CC - to produce Chaser advices
 CR - to indicate rejection and FR for final rejection
Slide 273
Workshop - 41
Advice/Register Sight Payment LCs
 Advice at Sight Export LC to your customer for USD 12,000, valid for 6
months, to supply 1000 Super Computers
 Documents required are

Packing list 3 copies
Bill of Lading 3 sets
Certificate for country of origin
Slide 274
Slide 275
Workshop - 42
Your customer has shipped the goods in 3 batches
Discrepant) > Sight Payment under Export LC
 For the first batch, no discrepancy was observed. So pay him USD 4,000
and claim reimbursement
Slide 276
Slide 277
Workshop - 43
 The second batch has only 2 sets of Bill of Lading
Finance Menu > Export LCs > Discrepant Documents under Export LC
> Payment Under Reserve > Payment Under Reserve (Exports)
 Treat the above as external discrepancy. Pay USD 4000 under reserve
 Inform importer’s bank about the discrepancy
 Look at the accounting entries passed (observe CRF types as COLL,
PAYRES, ADVICE)
Slide 278
Slide 279
Slide 280
Workshop - 44
 You have now received message from the applicant’s bank that the
discrepancy for the second batch is acceptable
> Payment Under Reserve > Payment of Sight Bill Paid Under Reserve
 Effect necessary action
Slide 281
Slide 282
Slide 283
Workshop - 45
 The last batch has the following discrepancy – Certificate of Origin not
provided
> Lodge Discrepant Docs under Export LC
 Treat it as external discrepancy and send for collection for USD 4,000
without paying
 Look at the accounting entry
Slide 284
Slide 285
Slide 286
Workshop - 46
 You have now received message from the applicant’s bank that the
discrepancy for the third batch is not acceptable
> Reject Discrepant Documents (Exports)
 State the disposal instructions as “HOLD” and get the record authorised
 You have now received the documents back
> Payment Under Reserve > Final Rejection of Returned Bill
 Finally reject the documents with the disposal instructions as “RETURN”
and get the record authorised
Slide 287
Slide 288
Slide 289
Product Features – Trust Release
 When a discrepant document is received under Import LC, the Bank, at

its discretion, may release the document prior to receipt of payment
 At this juncture, the Bank records delivery of the document in a Trust
delivery receipt, has the same acknowledged 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 290
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 changed 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 with TRCOLL
Slide 291
Workshop - 47
Finance Menu > Import LCs > Discrepant Documents under Import LC
> Documents Under Trust (Import LC) >
1) Release Documents Under Trust
2) Pay/Reject/Accept Doc Released Under Trust
3) Final Rejection of Documents
 For the Negotiation LC opened in workshop – 11 (LC No.2010/JAN/205)
documents have now been received for USD 3,000
 As discrepancy is observed (Invoice details not matching with LC terms)
 Release the documents under Trust to your customer
 Your customer is not satisfied with the discrepancy and is not willing to pay
 Hence keep the record on HOLD and get the record authorised
 Finally reject and return the documents
Slide 292
Slide 293
Slide 294
LC Other Features
Slide 295
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 296
Product Features - Accounting
 Accounting entries are Contingent as well as Non contingent
 STMT.ENTRY and CATEG.ENTRY for Accounts 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, DEFPAY, ACPTCONTRA, ACPTBANK,

COLL, TRCOLL, ADVICE, CONFIRM, ACPT, OPEN (for RP status in
Drawings) are contingent and PAYRES 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 297
Accounting Entries
Import Sight LC
SE / CE /
Cr / Dr Account Remarks
SPEC
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 PAYCR
Dr Customer SE PAYDR
Slide 298
Accounting Entries
Import Acceptance LC
SE / CE /
SPEC
Cr Outstanding Cr unused SPEC NEW
Dr Outstanding Cr unused SPEC LIQ – Reversal
Cr Outstanding Acceptances SPEC NEW – Acceptance

Customer’s liabilities for
Dr SPEC NEW – Contra
Acceptances
Dr Outstanding Acceptances SPEC On Maturity
Customer’s liabilities for
Cr SPEC MAT – On Maturity
Acceptances
Cr Nostro Account / Beneficiary SE PAYCR
Dr Customer Account SE PAYDR
Slide 299
Accounting Entries
Export Sight LC
SE / CE /
SPEC
LC advised or SPEC NEW – Advice

Cr Outstanding Cr unused or SPEC NEW – Confirm
Outstanding Cr unused SPEC 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 PAYDR
Cr Customer SE PAYCR
Slide 300
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
SE / CE /
SPEC
Customer Paying or SE Paid immediately

Dr
Charges claimed SPEC Claimed
PL or CE Applied immediately
Cr
Charges received not earned SE Amortised
Slide 301
SWIFT Messages Supported
Application /
SWIFT Description Remarks
Field Name
MT 700 Issue of LETTER.OF.CREDIT
MT 701 Documentary credit OPERATION ‘O’
LETTER.OF.CREDIT
Authorisation to
MT 740
reimburse OPERATION ‘O’ ;
THIRD.PARTY.CUST.NO NE ‘’
Pre advice of LETTER.OF.CREDIT

MT 705
Documentary credit OPERATION ‘P’
Amendment to LETTER.OF.CREDIT
MT 707
Documentary credit OPERATION ‘A’
MT 710 Advice of a Third LETTER.OF.CREDIT

bank’s
MT 711 Documentary credit ADVICE.THRU.CUST.NO “NE‘’
Slide 302
Application /
Field Name
MT 720 Transfer of
LETTER.OF.CREDIT
MT 721 Documentary credit
LETTER.OF.CREDIT Available for

MT 730 Acknowledgement Outward
OPERATION ‘O’ message
DRAWINGS Available for

MT 734 Advice of refusal Outward
DRAWING.TYPE ‘CR’ message

Reimbursement
MT 742 Outward
claim DRAWING.TYPE ‘SP’/’AC’/’DP’ message
Slide 303
SWIFT Description Application / Field Name Remarks
Amendment to LETTER.OF.CREDIT Available for

MT 747 authorisation to OPERATION ‘A’ ; Outward
reimburse THIRD.PARTY.CUST.NO NE ‘’ message
Advice of
MT 750
discrepancy DRAWING.TYPE ‘CO’ Field 33 Outward
NE ‘’ message
Authorisation to DRAWINGS Available for
MT 752 Pay, Accept or Outward
Negotiate DRAWING.TYPE ‘CO’ TO ‘SP’ message
Advice of payment / DRAWINGS Available for
MT 754 acceptance / Outward
negotiation DRAWING.TYPE ‘SP’/’AC’/’DP’ message
Advice of DRAWINGS Available for
MT 756 reimbursement or Outward
payment DRAWING.TYPE ‘SP’/’AC’/’DP’ message
Slide 304
Application /
Field Name
Available for
MT 400 Advice of payment
Outward message
Available for
MT 405 Clean collection
Outward message
MT 410 Acknowledgement
MT 412 Advice of Acceptance
Available for
MT 420 Tracer
Outward message
Available for
MT 430 Amendment of instructions
Outward message
Slide 305
Application /
Field Name
Advice of charges, interest Available for

MT 490
and other adjustments Outward message
Available for
MT 492 Request for cancellation
Outward message
Available for
MT 495 Queries
Outward message
Available for
MT 496 Answers
Outward message
MT 499 Free format message
Slide 306
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 authorised, 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 pre defined in DE.MESSAGE)
Slide 307
Outward Delivery Process
 DE.FORMAT.SWIFT formats 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 lets us know the message disposition

 Used to track the message. Contains information about the processing and
status of the message. Can also be used to re submit a message
Slide 308
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 digit is for Operation, second digit is Application type and last two
digits are for function
 LC – 1801
 Here 1 is Operation P or O , 8 is Import LC and 01 is Input / Authorise
 EB.ACTIVITY contains all activity codes hard coded in LC and

DRAWINGS life cycle
Slide 309
 For each activity a set of advices are defined in EB.ADVICES
 EB.ACTIVITY codes are linked to required Message Types and

Message classes like Advice, Payment 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 310
 Once input is complete in LC or DRAWINGS, preview of all related

message for that activity can be launched
 At the launch of all related messages, user can

 Change the default carrier
 Insert change of address
 Decide to send the message or not
Slide 311
Workshop - 48
 Input an import LC
 Using the Soft Delivery functions, view the message generated before
commitment
 Make changes in options for generating messages and view the

resultant changes
Slide 312
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 discounted drawings
 LC.ISSUING.BANK
 Customer wise details of Issuing Bank for Export LCs and export
collections
Slide 313
 LC.NEGOTIATE
 LC wise details of DRAW.NEGOTIATE
 LC.PARENT.DRAW
 LC wise list of Drawing in Child LC done THROUGH Parent LC
 LC.REVOL
 Due date wise list of 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 314
 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 315
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 316
LC Standard Reports
 LCS.BY.EXPIRY
 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 317
LC Dependency Diagram
LC.PARAMETERS
BASIC.RATE.TEXT
LC.TYPES
INTEREST.BASIS
LC.ENRICHMENT
PERIODIC.INTEREST
LC.CLAUSES
CUSTOMER LC.ADVICE.TEXT
CATEGORY DR.DISCREPANT.TYPE
ACCOUNT FT.COMMISSION.TYPE
CURRENCY LC.TXN.TYPE.CONDITION
NOSTRO.ACCOUNT
LC
LC.GEN.CONDITION
ACCOUNT.CLASS
LC.GROUP.CONDITION
LIMIT
LC.CUSTOMER.CONDITION
COLLATERAL
LC.ACCOUNT.BALANCES
LC.DISCOUNT.BALANCES
EB.ACTIVITY LC.APPLICANT
EB.ADVICES LC.BENEFICIARY
Slide 318
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
 Accounting, messaging and enquiries
Slide 319
Thank You
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

T3TLC - Letters of Credit - R10.2

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

T3TLC - Letters of Credit - R10.2

Diunggah oleh

Hak Cipta:

Format Tersedia

T24 Letters of Credit

TEMENOS EDUCATION CENTRE

 Linkages between LC module and T24 Core and other applications

 Dependencies and parameter tables to be set up

 Main business features of LC module

 Accounting, messaging and enquiries

 LC also uses other Static tables

 LC and DRAWINGS applications use hard coded category range

 A default category code may be specified for each type of LC in

 Category of an LC could be changed after authorisation through

These Codes can be used

 Collecting multiple times of charges

 LC application has a Field

 Collecting period based charges

 Number of months that comprise a charge

 Depending on the contract length, charges

 No standard settlement rules for accounts in LC application

 If account numbers are input for opener, beneficiary, advising bank

 They are also defaulted in DRAWINGS application

 If payment method is indicated as Nostro in DRAWINGS, then Payment

Holidays will be checked for defaulting Expiry and Closing dates

 The following choices available for interest day basis at LC level

 Defaulted from Currency record but could be changed by User at LC

 The Parameter tables to be set-up during implementation are given

 LC.CUSTOMER.CONDITION is set up during secondary build as it is

 Company level parameters for processing LC and DRAWINGS

 Different Currency markets could be indicated for

 Amortisation of charges done monthly on any chosen date

 Discount drawing interest accrual can be done daily or monthly on

 When discounted drawing is amended, amortised charges can be

 General information - Dates

 Days mentioned in CLOSURE.DAYS Field helps move LC or Collection

 Days mentioned in PRE.ADVISE.DAYS Field helps move a Pre-advice to

 Days mentioned in COLL.EXTN.DAYS Field helps to rollover the expiry

 Limit information could be opted for unconfirmed portion of partially

 If set to Yes, Export LC of USD 100,000 when partially confirmed for

 One time input

 Limit could be set to be affected after considering Provision amount or not

 EXCH.TOLERANCE Field can be used to indicate the percentage of

 For export LC, choice available in DEL.WITH.NO.DISCREP Field

 Transaction codes related Fields

 Transaction Codes from 500 to 599 are earmarked for LC/Collections.

 Transaction codes related fields

 UNCOLLECTED.TR.CR and UNCOLLECTED.TR.DR Fields for

 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

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

 P & L Category code related Fields

 Used for automatic debit / credit to PL heads

 Category codes above 50000 to be used

 P & L Category code related Fields

 WRITE.OFF.PL Field to indicate Category code to be used for writing off

 EXCH.PRFT.CAT Field for exchange profit & loss due to a spread on

 DIS.RETAIN.CODE Field for excess interest / discount when amending a

 Default internal accounts / Category code Fields are used to facilitate

 Internal Accounts in local currency should be opened using these

 Default internal accounts / Category code Fields

 CHEQUES.ISSUED.ACC / B.P.ISSUED.ACC / DRAFTS.ISSUED.ACC

 PAY.SUBDIVISION / REIMB.SUBDIVISION Fields

 Soft delivery options

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

 Good to have suggestive Ids