11.1 Introduction
When you issue an import LC or advise and confirm an export LC, you would track your liability against the party on behalf of whom you are undertaking a liability. For an import LC, you would track the exposure against the applicant while for an export LC that you confirm, you would do so for the issuing bank.
In Oracle Banking Trade Finance, credit limit tracking is done using credit lines allotted to a customer. The credit line allotted to the party against whom you want to track your liability, should be indicated while you capture the details of an LC. In the case of an amendment, from advise of an export LC to advise and confirm, you can indicate the credit line during the amendment also.
You can specify Central Liability details for an LC, in the LC Contract Party details screen. To invoke this screen, you have to click on the Parties tab from the ‘Contract Main’ screen.
The amount that is tracked will be the LC Liability Amount. It is arrived at as follows:
Liability Amount = Maximum LC Amount + Liability% of the LC amount
In the case of an LC revolving in time, the liability amount will be calculated taking into account all the scheduled reinstatements.