An amendment to an Islamic Letter of Credit (Islamic LC) signifies any change made to the terms of an Islamic LC after it has been authorised. An amendment can be made at anytime after an Islamic LC has been authorised and before its expiry date.
The following are some examples when you would amend the details of an Islamic LC:
This chapter contains the following sections:
While in the detailed view of the Islamic LC, you can amend the details of the contract depending on whether:
Depending on the authorisation status of an Islamic LC contract, you can amend its details as follows:
For each amendment, a new version of the Islamic LC will be generated. Different versions of the Islamic LC will also be generated by events like reinstatement and reopening. In the ‘Contract Detailed View screen, you can view the different versions by clicking on back button for the previous version and forward button on the screen for the next one.
When a customer requests for changes in the terms of the contract, the details of the Islamic LC are amended accordingly and an amendment instrument is generated. The amendment of the following details of an Islamic LC, result in the generation of an amendment instrument:
If there are changes in the terms of the Islamic LC other than IN the amount, the expiry date or latest shipment date, indicate the same in the form of a free format instruction, for the amendment instrument.
In case of amendment, you have the option to reissue the Guarantee. If you choose to do so, the REIS (Reissue of Guarantee) event will be triggered.
The system checks for any previous amendment. In case no amendment has been performed, the system displays the message as “Do you want to Reissue the Guarantee?”
Click on OK to reissue the Guarantee or click on Cancel to process the amendment of Guarantee.
The system checks if REIS event is maintained for the product. If the event is maintained, the system does not allow any further change in the Islamic LC contract details apart from FFT fields, which can be modified/added but you cannot delete the existing data.
The system creates a new version for the Reissue event and the event inherits all the contract information defined for the authorized BISS event. The version also inherits the information from the subsystem excluding Charges and Commission. No commission is associated with the Reissue event and charges can be maintained for the REIS event, which is processed along with the reissue event.
When the Reissue event is authorized, the advices maintained in the REIS event are processed.
When the Islamic LC amount is being changed, the new amount of the Islamic LC should be indicated after the amendment.
For example, the original Islamic LC amount was USD 100,000 and you want to make it USD 150,000. In the Islamic LC amount field, during amendment, enter the amount as USD 150,000. The system will calculate the increase in amount and pass the appropriate entries. The Islamic LC amendment instrument will have both the old and new values.
The original Islamic LC amount was USD 100,000 and you want to change it to USD 75,000. In the Islamic LC amount field, during amendment, enter the amount as USD 75,000. The system will calculate the decrease in amount and pass the appropriate entries. The Islamic LC amendment instrument will have both the old and new values.
When you are changing the expiry date or the latest shipment date, you should enter the new date in their respective fields.
While amending the details of an Islamic LC, you can specify the commissions and charges that you want to levy for processing the amendment. These will be effective from the date of amendment. It will not affect the booking commission in any way.
Refer to the chapter Commission calculation for details on how commission is calculated, for an amendment.
The amendment of an unauthorised Islamic LC is considered as a modification. When an Islamic LC that you have entered is not yet authorized, you can change all its details except the details in the header (contract reference number, the product and type of operation). To change any detail on an Islamic LC that has been stored and not authorised, delete the Islamic LC and input a new one.
After amending the details of the unauthorised Islamic LC, save the contract with the new information. On saving the amendment, all the accounting entries that were passed during the input of the contract and the earlier accounting entries specified for the Islamic LC, will be deleted. A fresh set of accounting entries will be passed for the amended Islamic LC contract.
As the advices to be generated for an Islamic LC, are generated only at the time of authorisation, no action needs to be taken regarding messages.
Note
The system will not allow you to amend the following fields in the ‘Islamic LC Contract’ screen:
However, you can amend the above fields in the ‘Amendment Confirmation’ screen. This screen is explained in the following section.
This section contains the following topics:
The option to amend these fields is also available in the ‘Islamic LC Amendment Confirmation Input’ screen. However, the amendments will become effective only upon receiving the confirmation from the beneficiary.
You can invoke this screen by typing ‘LIDAMEND’ in the field at the top right corner of the Application tool bar and clicking on the adjoining arrow button. The screen will be displayed without any details, as shown below:
Click new icon in the application toolbar of the screen.
Contract Reference Number
Select the reference number of the contract to be amended from the option list provided. This option list will display all contracts that are authorized.
Upon selection of the contract, the following details will be displayed in editable mode:
Make the necessary amendments. Save the changes. To save, click save icon in the toolbar of the screen.
The system will update the following details in the audit trail of the screen:
For details on the amendable fields, refer the chapter ‘Processing an Islamic LC contract’ in this User Manual.
Click the ‘Parties’ tab to view and specify the following details:
Party Type
The system defaults the party type. The user can edit the party type using the adjoining option list that displays all the party types available for the Islamic LC..
Customer
The system defaults the customer number. However, you can modify it.
Customer Name
The system defaults the customer name. However, you can modify it.
Country
The system defaults the country of the customer. However, you can modify it.
Party Description
The system defaults the party description. However, you can modify it.
Dated
The system defaults the date on which the party joined. However, you can modify it.
Customer Reference
The system defaults the customer reference number. However, you can modify it.
Address 1 to 4
The system defaults the address of the party.
Language
The system defaults the language in which advices are sent to the customer.
Issuer Bank
The system defaults the name of the issuer bank.
Media Type
The system defaults the media type. You can select a different medium from the adjoining option list.
Address
The system defaults the other address of the party. However, you can edit this field.
Account
The system defaults the account number. However, you can edit this field.
Click the ‘Advices’ tab to view and specify the following details:
Message type
Check the box to view the advice details.
Party type
The system displays the party type for which the advice is generated.
Party Id
The system displays the party id for which the advice is generated.
Party Name
The system displays the name of the party for which the advice is generated.
Medium
The system displays the medium through which the advice is sent. The user can select a different medium from the list. If the medium is modified, the user must provide the new address in the ‘Other Addresses’ section, in the ‘Parties’ tab.
Priority
The system displays the priority of sending the advice. However, you can change the priority.
Suppress
The system displays if the advice is suppressed or not. However, you can edit this field.
Charges
The system displays the charges involved. However, you can edit the charges.
The user can select a message from the ‘Advices Details’ section and associate a code and a description to it.
Code
The user can select the appropriate code from the adjoining option list.
Description
The system displays the description of the selected code. However, you can modify this description.
Note
Advices for a party are sent to the default media maintained in the Customer Addresses table. However, you can send the advices through a different medium by doing the following:
Click on ’Collateral’ button in the ‘Islamic LC Amendment Confirmation Input’ screen to invoke the collateral detail screen.
Currency
Specify the currency in which cash is offered as collateral.
Percent
If you specify the cash that is to be collected as collateral as a percentage of the Islamic LC amount, the equivalent amount is displayed. This amount is taken to be in the currency, defined as the collateral currency.
Exchange Rate
If the collateral currency and the currency in which the Islamic LC is issued are different, you should also specify an exchange rate to be used in the conversion. The value of the collateral is determined based on this exchange rate.
Amount
You can specify the cash collateral as an amount. In this case you do not need to specify a percentage. However if you specified the collateral as a percentage of the Islamic LC amount, the actual amount is computed in the collateral currency by the system.
Description
Enter a brief description of the collateral.
Type
At any time during the lifecycle of an Islamic LC, you may want to increase or decrease the value of the cash, accepted as collateral on Islamic LC. This is done by way of an amendment to the Islamic LC.
The cash collateral can be increased or decreased, without changing the Islamic LC amount. On the other hand, a change in the Islamic LC amount may necessitate a change to the collateral amount.
If you wish to increase the collateral amount, indicate Increase on this screen and enter the amount by which, you want to increase the cash accepted as collateral.
If you wish to decrease the collateral amount that you have collected while issuing an Islamic LC, indicate decrease on this screen. Enter the amount by which you want to decrease the cash accepted as collateral.
Amount
Enter the amount by which you want to decrease the cash accepted as collateral.
The collateral deposit account will automatically increase or reduce based on the specifications you make.
You can invoke the Events screen by clicking the ‘Events’ button in the ‘Islamic Letters of Credit Amendment Confirmation Input’ screen.
The details of events that have already taken place on the contract will be displayed, along with the date on which the event took place.
Click on ‘Accounting Entries’ button to view the accounting entries for the event that is highlighted. Click ‘Message’ button to view the messages applicable to the event. Click on ‘Exit’ button to go back to the ’Event Details’ screen.
From ‘Event Details’ screen, click ’Accounting Entries’ button to view the Accounting Entries for the event.The accounting entries that are passed depends on the type of Islamic LC contract that you are processing.
The following information is provided for each event:
Click ‘Exit’ button to go back to the screen from where you invoked the ‘Accounting Entries’ screen.
Click ‘Message’ button from the ’Event Details’ screen to view the list of advices applicable to a particular event in the lifecycle of Islamic LC.
The following details of a message are displayed:
To view the text of a message, highlight the message and click on the ‘Message Details’ button. Click ‘Exit’ button to exit the screen.
You can invoke the Fields screen by clicking the ‘Fields’ button in the ‘Islamic Letters of Credit Amendment Confirmation Input’ screen.
You can link the import license to an import Islamic LC contract and update the utilization amount or quantity for the linked import licenses. Click on ‘Import License’ to invoke the import license screen.
Import License No
Select the import license number from the adjoining option list.
Goods Code
Select the goods code from the adjoining option list.
Goods Short description
The system displays the goods code description maintained in the ‘Bills and Collections Commodity Code Maintenance’ screen.
UoM/Currency
The system displays the unit of measurement or currency captured for the goods code of import license.
Qty/License Amount
The system displays the Quantity or License Amount captured for the goods code of import license.
Qty/License Amt Already Utilized
The system displays the sum total of Quantity or License Amount already utilized for the goods code.
Qty/License Amt Already Reinstated
The system displays the sum total of Quantity or License Amount already reinstated for the goods code.
Available Qty/License Amt
The system displays either the Available Quantity or Available License Amount for the goods code.
Qty/License Amt Utilized
Specify the quantity or the license amount utilized.
Qty/License Amt Reinstated
Specify the quantity or the license amount reinstated.
After authorization, you cannot modify or delete import licenses linked to an Islamic LC contract.
The system allows utilization details only for an import license linked to an Islamic import LC contract. The system displays an error message if reinstatement details are specified.
The utilization maintained for an import license is updated on save of an amendment capture. Subsequently if the amendment is marked as 'rejected', then the system automatically reinstates the utilization captured.
If reinstatement details are captured for an import license, then the same should be captured while marking the amendment status as confirmed. During status marking, the system displays the Islamic import LC contract information in the Islamic LC Contract Input screen and the Import License sub-system in the screen can be accessed for input of reinstatement details. The system displays an empty Import License sub screen where the user can input or add new rows to reinstate.
When a reduction in Islamic LC amount is performed as an amendment for an Islamic import LC contract with import licenses, then the system will validate whether reinstatement details are entered for the linked import licenses. If not, the system displays an override message as “Reinstatement details are not entered”.
When a utilization for an import license is already entered as part of an amendment capture and if utilization details are captured again while marking the amendment status as 'confirmed' in Islamic LC Contract screen, the system displays an override message as “Utilization is already marked as a part of amendment capture”.
You can preview the messages or advices that will be generated for the contract using ‘Message Preview’ screen. To invoke this screen, click ‘Message Preview’ button.
For the contract, you can view the following details of the messages:
You cannot preview the message if the contract has been authorized. The ‘Message Preview’ button will be disabled in that case.
Select a message/ advice and click ‘View’ button to view the complete message/advice. The system will display the following details in a new window.
You can view the following details:
From the ‘Message Preview’ screen, you can print a message/advice using ‘Print’ button. Select the message/advice and click ‘Print’ button to print the message/advice.
While saving the amendment details, the amended amount is validated against the product transaction limit and the user input limit maintained in the system. If the amount exceeds the allowed input limit or the product transaction input limit, an appropriate override/error message is displayed.
The system will convert the contract amount using the standard mid rate to the transaction limit currency and check against the transaction limit amount maintained for the product if the contract currency is different from the transaction limit currency.
You have to get a contract authorized by your supervisor. Follow the steps given below to authorize:
Once authorized, you will not be allowed to modify these details. The system will provide option for confirming or rejecting the amendment details. To confirm the details, do the following:
You can unlock the Islamic LC contract screen after clicking ‘OK’ in the message window above. The Islamic LC contract online screen is used for modifying details after confirmation of the amendment action. The system creates an amendment on the Islamic LC once the proposed amendment is confirmed. When this amendment is created the confirmation and amendment events are both left in an unauthorized state. This allows unlocking of the Islamic LC contract to make the necessary amendments.
Once the confirmation is saved on the amendment screen, the Islamic LC contract online screen is launched with the data modified, and this can be unlocked and modified, or closed as chosen by the user. These changes are directly made by launching the Islamic LC contract screen. However the amendment can only be deleted by using the amendment screen as described above.
The following Islamic LC contract screen is launched when the amendment is confirmed in the Islamic LC amendment confirmation input screen.
The amendment cannot be deleted using the Islamic LC contract screen, and can only be deleted using the amendment screen as part of the confirmation. This is done by deleting the confirmation using the amendment screen.
Hence the process is carried out as follows:
During an auto authorization of Amendment Confirmation, the amendment created by this confirmation is also authorized
Your supervisor now needs authorize the confirmation to view the changes made. The steps to authorize are given below:
Note
You can delete the amendment if the ‘Amnd Status’ of the contract is ‘Confirmed’ but unauthorized.
To reject the amendment details, do the following:
Your supervisor now needs authorize the rejection. The steps to authorize are given below:
Note
You can amend the same contract several times in ‘Amendment Confirmation’ screen as long as the amendment is not authorized.
In addition to the operations discussed above (Save, Authorize, Confirm), you can perform the following operations in the ‘Amendment Confirmation’ screen:
While uploading an amendment, the system checks the user reference number in the contract with the external reference number of the incoming message. If a contract exists with the reference number and its status is ‘Authorized’ and ‘Active’, then the system will amend it provided the upload action is ‘AMND’.
If upload action is ‘NEW’ and the external reference number exists, the system will display an error message. In case of contract amendment through STP of MT707, the following fields are updated: