1. Letter of Credit User Guide
  2. Process LC Contract
  3. Cancel LC
  4. Cancel LC

4.5.1 Cancel LC

You may have to cancel an LC that has been opened, before its Expiry Date. An example for a cancellation is when the trade deal for which the LC is opened falls through. A cancelled LC will not be available for any availment. However, you can cancel an LC that has been availed partially.

A Pre-advice Import LC contract can also be cancelled like any other LC contract.

In Oracle Banking Trade Finance, the following are the prerequisites for cancellation:
  • The LC has not yet reached its expiry date
  • The cancellation event - CANC, has been defined

The accounting entries for this event are generally the reversal of the accounting entries passed for liability and collateral, when the LC was opened. In addition, a charge can be levied for canceling the LC. A cancellation advice informing, the advising bank or beneficiary, about the cancellation may be generated.

On cancelling of an LC, if there are any outstanding receivable components in the LC (Charges meant to be collected from the bills availed against the LC), then the system will display an error message indicating the same.

Parent topic: Cancel LC