Why TF-NG Restructuring

• Addressing BB Compliance Guideline

• SWIFT Integration (All MT Message)
• Addressing Existing Issues
 Export

• Incoming 700,707,710.720
• SWIFT Integration & Manual
• Sales Contract & File
• Replacement
 BB Compliance Issues
• System shall clearly mention bank’s position and liability against DC
advice and liability
• System shall confirm DC through swift or manual
• System shall verify DC as per International (UCP latest version) and Local
(Foreign Exchange Policy) guideline – Is it scrutiny?
• System shall have options for substitution flag
• Substitute Documents?
• System shall have silent or open confirmation flag ?
• Open Confirmation
• Silent Confirmation
• System shall have DC lien flag – Is BB Allowed?
• System shall have facility for DC transfer w/o substitution?
 Notes
• Charge & Commission:
• Schedule of Charge declaration product wise
• Customer wise exception
• Rights base manipulation facility
• Doc:
• Product wise document required flag for LC issuing (Mandatory/Optional)
• Incoterm
• PI
• Misc. (Existing Issues):
• Liability with tolerance
• Partial Payment
• Bill Amendment
• Shipping Guarantee
• Sales' Contract Replacement(Many to Many)
 Notes
• --Insurance

• Customer???
• Account??

• Is INCO associated with product/goods?

• ----
• Goods Detail:
• 45A: Description of Goods and/or Services
• How to make it default? If Multiple commodity then how to manage?
 Notes
• Following are the options available for document type:
• Transport
• Insurance
• Invoice
• Others
• Whats the relation with clause?
• How to make it default?
• Open Insurance Policy??
• What is the relation with LC Amount?
LC Module

LC Draft
LC Issue
LC Issue
LC Draft:
• Customer Request(lc initiation request) – not in current scope
• Contrac Detail Entry (canbe ritrive from draft)
LC Issuance Flow:
• Customer Request (lc initiation request) – not in current scope
• Limit Retrive & Checking
• Contrac Detail Entry (canbe ritrive from draft)
• Margin Lien – if applicable (in sanction tells FDR as security margin)
• Document Attachment
• Transaction Build
• Submission for verification.
LC Amendment Flow:
• Customer Request (lc initiation request) – not in current scope
• Limit Retrive & Checking
• Contrac Detail Entry (canbe ritrive from draft)
• Margin Lien – if applicable (in sanction tells FDR as security margin)
• Document Attachment
• Transaction Build
• Submission for verification.
Bills Module
• Abc
• Def
 ess 8
roc
d it P

Present the document

e Reimbursement Bank
C r
of

Present the document

er Confirming Bank
tt 5
Le

Pay
7
6 Instruction for Payment
Issue LC to Advising Bank
2
Advising Bank 11
Pay to Nego Bank
Advise to Exporter

Present the document

3
Nominated Bank
4
Apply for LC
1
9 Issuing Bank
Pay
Ship the goods to Applicant 10
 Letter of Credit Steps

• Step 1: The importer and exporter agree on the sale terms and come
into the contract encompassing the type of products, delivery
schedule, mode of payment etc. After this, buyer arranges for his
bank (Issuing Bank) to open a Letter of Credit in favor of the supplies.
The buyer’s bank is liable to prepare LC as per importer’s instructions
to the exporter and required LC documents including – Bill of Lading,
Commercial Invoice, Transport Document such as Bill of Lading,
Airway Bill, etc., Insurance Document, Inspection Certificate,
Certificate of Origin and any other document as per the sale contract.
 Letter of Credit Steps

• Step 2: The bank of importer transfers LC to the Advising Bank in

the exporter's country.
• Step 3: Once authenticity of LC is checked, the advising
bank forwards it to the supplier. The exporter now reviews the terms
& conditions mentioned in LC and notify any required amendment to
the importer.
• Step 4: After agreeing the finalized terms & conditions for trade,
the supplier makes goods ready for shipment to the final destination.
The exporter gets required transport documents like Bill of Lading,
while shipping the goods.
 Letter of Credit Steps

• Step 5: Now supplier presents the shipping documents to

the Negotiating Bank, indicating complete compliance with the terms
of the letter of credit. The Negotiating Bank will review these
documents and dispatch these to the Issuing Bank. The Negotiating
Bank will also raise a reimbursement claim to the Reimbursing Bank.
• Step 6: After Issuing Bank receiving all documents, buyer has to make
the payment to bank and will receive the documents, which will make
him to take the shipment into possession.
 Issuing Bank
Authorize
Reimbursement
Applicant
Bank In MT700 Bank

Reimbursement bank
Issuing Bank
Available with..
(Nominated
Bank) Pays to..

Re
c
ly

eiv
0

MT vise Th
On

er
70
Presented to

&
Document

70
ver
MT

Ad

0
cei
Re

rou
h g
MT 710
Document Advising Confirming
Beneficiary Advise Through
Presented to Bank Bank
Document
Presented to
Nominated Bank Type
• Accepting Bank
• Accepts the term draft(s) drawn by the beneficiary
• Available by : BY ACCEPTANCE
• Paying Bank
• Makes payment to the sight draft(s) drawn by the beneficiary
• Available by : BY PAYMENT, BY MIXED PYMT, BY DEF PAYMENT
• Negotiating Bank
• Negotiates the draft(s) and/or documents presented by the beneficiary
• Available by : BY NEGOTIATION
 SWIFT Message Flow in Letter of Credit
Applicant Beneficiary

MT 705: Send LC without Confirmation MT 705: Pre-Advice

705
(Issuing Bank) Advising Bank

1 1
• Advice to
third bank
• MT 700 & 701: Send LC with Confirmation 700 & 701 • LC Advice 710 & 711

730 720 & 721 • Transfer

Advice
2 2

• MT 707 & 708: Send LC Amendment 707 & 708

• MT 707 & 708:
730 LC Advice
 SWIFT Message Flow in Bills under Letter of Credit
Presenting
Applicant Beneficiary Bank
1

MT 732/734: Discharge or Refusal 3 732/734 MT 754: Send the Shipping Document

(Issuing4Bank) 754 2
(Advising Bank)
8/9
7 7
4/ 4 752 756 750
0 7
7
MT 740: Reimbursement Bank Nominated Bank
8/9 Presenting
6 744 752/756
Bank (Available
742 5 750 7with)

6 202

Issuer Receiver
759
Import LC Opening Process
• Initiate The LC
• Evaluate The LC