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

4.6.1 Close an LC

An LC that is opened is negotiated within its expiry date. If the negotiation does not happen even after the expiry date, you can close the LC.

By closing an LC, you will be reversing the liability entries passed for the LC. This ensures that the credit limit that was taken by the LC is released and is available for future utilization.

A similar process is followed to cancel a Pre-advice Import LC.

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

In Oracle Banking Trade Finance, you can close an LC under the following circumstances:
  • The event CLOS is defined for the LC
  • The LC is beyond its Expiry Date
The accounting entries defined for this event is generally the reversal of the outstanding liability. No availment can be made against an LC that is closed. You should reopen a closed LC if you have to make an availment against it. This would be required in a situation when the LC comes in for negotiation after it has been closed. The reopening of the LC will put back the outstanding liability and availability for the LC.

Parent topic: Close LC