1. Letter of Credit User Guide
  2. Process LC Contract
  3. Reopening LC
  4. Procedure for Reopening LC

4.7.1 Procedure for Reopening LC

This topic describes the systematic instruction to reopen the closed LC.

When you reopen the closed letters of credit, the system automatically levies a charge based on a given tariff. The system uses the amount tag ‘OLD_OS_AMT’ for the charge. This charge is calculated for a period between the last expiry date and the new expiry date defined while reopening the LC.

At times, the customer may request to reopen an expired LC with an increment in the LC amount. In such cases, the system considers the new LC amount as the basis amount for computation of the commission. Based on the LC product preferences, this commission can be collected in advance or arrears. This commission is applied during ROPN event.

Specify the User ID and Password, and login to the homepage.
  1. On the Letters of Credit Contract Detailed screen, click Reopen.
    • LC Amount
    • Closure Date
    • Shipment Details
    • Details under Party Limits Tab
    • Cash Collateral Details

    Note:

    However, you cannot modify the other details of the LC.

    Once you have made the required modifications, save the contract. The system posts contingent entries
    defined for ROPN event with the modified LC amount. The system also tracks the limits for the LC.
    When the LC amount is increased, there may be a corresponding increment against the respective parties in the New Limits tab. However, you need to manually handle such changes.

    Reopening of an LC needs to be authorized by a different user having sufficient user rights:
    • Reopening Import LC -On authorization of reopening of an import LC, the system generates MT707. If a reimbursement bank is also involved in the import LC, MT747 is generated.
    • Reopening Export LC - When an export LC is closed, the system receives MT707 as a request for amendment. This message is moved to the repair queue. In such cases, you need to manually reopen and amend the LC. If a reimbursement bank is involved, the system receives MT747. Reopening and amendment need to be handled manually. If the parent LC of a transferred export LC is closed, you need to reopen the parent LC first. If you directly try to reopen the transferred export LC, the system displays an error message. This is applicable to reopening of back-to-back LCs as well.
    • Reopening Letter of Guarantee - In case of a letter of guarantee, the system generates MT767 on authorization of reopening.

      Note:

      You can reopen the closed LCs only. In case PCLS event has been triggered, you need to manually close the LC before reopening.

Parent topic: Reopening LC