Letter of Credit User Guide

12.1.22 STP of MT740 - Authorization to Reimburse

STP of MT740 triggers creation of an import LC with the operation code Reimbursement. The product for this import LC is fetched from the STP product mapping maintenance. The system check for the following during the STP:

The product type of the LC product is ‘Reimbursement’ or not
The operation code of the LC contract is ‘Reimbursement’ or not.

The following table lists the mapping that should exist between the SWIFT tags in MT740 and the fields in the LC Contract screen.

Table 12-15 SWIFT tags in MT740 and the fields in the LC Contract

Status	Tag value	Description	Oracle Banking Trade Finance field value	Remarks
M	20	Documentary credit number	Their reference of party ‘ISB’
O	25	Account identification	Account of Issuing bank in others tab
O	31D	Date and place of expiry	Expiry date and place of expiry
O	58A or D	Negotiating bank	Party details of ‘ABK’	The party details would be fetched using BIC code if 58A is present else the party details needs to be fetched using D to A converter. In case counterparty is not found then Walk in customer would be used
O	59	Beneficiary	Party details of ‘BEN’	The party details would be fetched using name of the party
M	32B	Credit amount	LC currency and LC amount
O	39A	Percentage credit tolerance	About clause, positive and negative tolerance	If not present then about clause should be ‘None’. If present then the about clause should be ‘About’ with positive and negative tolerance. The system should calculate Max LC amount = LC amount+ Tolerance.
O	39C	Additional amounts covered	Additional amounts covered in others tab
M	41A or D	Available with. by	Credit details of Teletype, mode and available with)	Refer ‘Table D’ for details.
O	42C	Drafts at	Credit details
O	42A or D	Drawee	Party details of ‘APP’	The party details would be fetched using BIC code if 42A is present else the party details needs to be fetched using D to A converter. In case counterparty is not found then Walk in customer would be used
O	42M	Mixed payment details	Credit details
O	42P	Deferred payment details	Credit details
O	71A	Reimbursing bank charges	Charges from in others tab	Refer ‘Table E’ for the tags. If the tag is not present then charges from should be ‘OUR’.
O	71B	Other charges	FFT	Tag 71 would be uploaded as FFT with FFT code as ‘71BCHARGES’ and message type as ‘LC_ACK_ADVICE’.
O	72	Sender to receiver info	FFT	Tag 72 would be uploaded as FFT with FFT code as ‘SND2RECINFO’ and message type as ‘LC_ACK_ADVICE’.

Table 12-16 TABLE D

Tag value	Type (Oracle Banking Trade Finance value)	Mode (Oracle Banking Trade Finance value)	With (Oracle Banking Trade Finance value)
Payment	Straight	Sight
Acceptance	Straight	Acceptance
Negotiation	Negotiable	Negotiation
Def payment	Straight	Deferred
Mixed pymt	Straight	Mixed
Option A			1st line
Option D			1st 4 lines

Table 12-17 TABLE E

Tag value	Charges From
CLM	Claimants
OUR	Ours

The closure date is driven by the closure days maintained in the LC product. The party details of issuing bank ‘ISB’ in the import LC is derived from the header details using the BIC present in tag 1. This value corresponds to the CIF of the LC contract. The party details of claiming bank ‘CLB’ in the import LC are derived using field 41A or D. These details are updated in the ‘Parties’ tab of the import LC contract. If value in field 41D is ‘ANY BANK’, then the system will not update the party type as ‘CLB’.

The STP process creates authorized or unauthorized LC contract based on the post upload status maintained in the ‘Upload Source Preferences’ screen. The system triggers the event ‘BISS’ after the upload of MT740.

If you modify the LC amount, the undertaken amount will not be impacted. However, the non-undertaken amount will be respectively modified based on the change in LC amount.

If the check box Undertake Entire LC on STP is selected on Letters of Credit branch Parameters Maintenance screen, the system will pass the following entries on receipt of MT740:

Table 12-18 Accounting Entries

Dr/ Cr	Account Role Code	Amount Tag	Amount Tag Description
Dr	LC_OCU_OFFSET (Unutilized Credit Offset)	REIM_UND_AMT	Reimbursement Undertaking Amount
Cr	LC_OCU (Outstanding Credit Unutilized)	REIM_UND_AMT	Reimbursement Undertaking Amount

If the check box Undertake Entire LC on STP is not selected, the system will pass the following entries on receipt of MT740:

Table 12-19 Accounting Entries

Dr/ Cr	Account Role Code	Amount Tag	Amount Tag Description
Dr	LC_REM_NU_OFF	REIM_NON_UND_AMT	Reimbursement Non-undertaking Amount
Cr	LC_REM_NU	REIM_NON_UND_AMT	Reimbursement Non-undertaking Amount

Note:

While liquidating a bill under the LC, the system verifies the liquidation amount and the undertaken amount. If the liquidation amount is greater than the undertaken amount, the system displays an override message. You may choose to proceed or cancel.

Parent topic: Branch Parameters Details