12. Customer Correspondence

This chapter explains the various types of advices and notices generated at each stage for the type of contract that the Loans Syndication (LS) module handles.

The following fields are common to all the Advices/Notices sent to the customer:

• The Standard FAX Header
• The System Date
• The name of the Contact person and his address (may include Fax/Phone No)
• The name of the customer (addressee)
• The Ref No of the facility contract, the facility amount and currency and the date on which the contract is booked in the system
• The name of the borrowing customer
• The details of sender of the advice/notice (Administrator’s name and address)

The following details will form the part of all the drawdown notices generated at your bank:

• Interest rate fixing date
• Exchange rate fixing date

Note

Please note that the default borrower of a facility may be different from the default borrower of its tranche. Likewise, the default borrower of a tranche may be different from the default borrower of its drawdown. Hence, the borrower field in all the advices will be populated based on the type of the contract, whether facility, tranche or a drawdown, for which the advice is being sent.

This chapter contains the following sections:

• Section 12.1, "Drawdown Notices"
• Section 12.2, "Exchange Rate Fixing Advices"
• Section 12.3, "Interest Rate Fixing Advices"
• Section 12.4, "Ad-hoc Fee Due Notice"
• Section 12.5, "Advice of Payment of Principal and/or of Interest"
• Section 12.6, "Billing Notice"
• Section 12.7, "Rate Revision Notice"

12.1 Drawdown Notices

This section discusses the notices generated for Drawdowns and contains the following topics:

• Section 12.1.1, "New Drawdown Notice to the Borrower"
• Section 12.1.2, "New Drawdown Notice to the participant bank"

12.1.1 New Drawdown Notice to the Borrower

You can generate this notice to inform the borrowing customer about the new drawdown that is due to him.

The drawdown notice to the borrower contains the following information:

• The reference number of the tranche to which the new drawdown loan is linked
• The date on which the drawdown is booked in the system
• The period for interest calculation
• The Maturity Date of the drawdown
• The tranche currency (Base Ccy) and amount
• The drawdown currency (Optional Ccy) and amount
• The following Settlement Instructions details
  • ‘Acc with bank’ name and address
  • The beneficiary account number at ‘Account with bank’

• The purpose of the syndication - The message type for the Borrower Drawdown Notice will be DRAWDOWN_NOTC and that for the Participant Drawdown Notice will be PART_DDOWN_NOTC.

12.1.2 New Drawdown Notice to the participant bank

You can generate this notice to inform the participant bank about the new drawdown that is due to the customer.

All the fields available in the ‘New Drawdown Notice to the Borrower’ will be available in this notice. In addition, the following fields will be included:

• The name of the borrowing customer
• The amount contributed by the participant bank and the base currency in which it is expressed
• The participant’s amount in the optional currency
• The following Settlement Instructions
  • The name of the beneficiary’s bank name, account no and address

If you have chosen the SWIFT media for sending the advice, then instead of the above mail format, the corresponding SWIFT message, MT643 will be generated.

12.2 Exchange Rate Fixing Advices

This section discusses the advices generated for exchange rates and contains the following topics:

• Section 12.2.1, "Exchange Rate Fixing Advice to Borrower for new Drawdown"
• Section 12.2.2, "Exchange Rate Fixing Advice to Participant for new drawdown"

12.2.1 Exchange Rate Fixing Advice to Borrower for new Drawdown

If the drawdown currency is different from the currency of the tranche under which it is initiated or the account to which it is linked, you would use the exchange rates maintained at your bank for the currency conversions.

You can send an ‘Exchange Rate Fixing Advice’ to the borrowing customer when a new drawdown is initiated for the customer.

The following details will be included in this advice:

• The reference number of the tranche to which the new drawdown loan is linked
• The date on which the drawdown is booked in the system
• The period for interest calculation
• The Maturity Date of the drawdown
• The exchange rate used for the currency conversion
• The currency (Base Ccy) of the tranche contract to which the new drawdown is linked
• The Base currency equivalent of the amount in the drawdown currency.
• The drawdown currency (Optional Ccy)
• The drawdown amount, expressed in the optional currency
• The following Settlement Instructions:
  • ‘Acc with bank’ name and address
  • The beneficiary account number at ‘Account with bank’

• The purpose of the syndication

Note

The Message Type for the Borrower Exchange Rate Fixing Advice will be BORR_EXFX­_ADV and that for the Participant Exchange Rate Fixing Advice will be PART_EXFX_ADV.

12.2.2 Exchange Rate Fixing Advice to Participant for new drawdown

When you initiate a new drawdown for the borrowing customer, you can send an Exchange Rate Fixing Advice to the participant bank also. To recall, exchange rate is fixed only if the drawdown currency is different from the currency of the tranche under which is initiated or the account to which it is linked. The exchange will be used for currency conversions.

All the fields (excluding Standing Instructions fields) available in the ‘Exchange Rate Fixing Advice’ sent to the borrowing customer will be available in this advice also. In addition, the following informations will also be included:

• The name of the borrowing customer
• The participant’s contribution in the currency of the tranche (Base Currency) under which the drawdown contract is linked.
• The participant’s contribution in the drawdown currency (Optional Ccy).
• Settlement Instructions like:
  • The name of the Beneficiary’s bank, the beneficiary account number and address.

Note

If you have chosen the SWIFT media for sending the advice, then instead of the above mail format, the corresponding SWIFT message, MT644 will be generated.

12.3 Interest Rate Fixing Advices

This section discusses the advices generated for interest rates and contains the following topics:

• Section 12.3.1, "Interest Rate Fixing Advice to borrower for new drawdown"
• Section 12.3.2, "Interest Rate Fixing Advice to Participant for new Drawdown"

12.3.1 Interest Rate Fixing Advice to borrower for new drawdown

If the product specified for the tranche or draw down loan has a ‘Fixed’ rate of interest, the same will be applicable on the drawdown loan. However, you can change this rate at the contract level. If a ‘Floating’ rate has been defined for the product, the rate attached to the specified Rate Code, in the Floating Rates table, will be applicable. You can change the rate code by using the Value Dated Changes function.

After the appropriate interest rate has been fixed for the new drawdown loan initiated at your bank, you can send an ‘Interest Rate Fixing’ advice to the borrowing customer.

The Interest rate fixing advice will include the following details:

• The reference number of the tranche to which the new drawdown loan is linked
• The date on which the drawdown is booked in the system
• The period for interest calculation
• The maturity date of the drawdown
• The amount of the drawdown loan
• If you have applied a floating interest rate on the drawdown, the Spread (LIBOR basis) that is applied over the floating interest rate
• The margin applied on the interest rate
• The interest/lending rate applied on the drawdown
• The purpose of the syndication

Note

The Message Type for the Borrower Interest Rate Fixing Advice will be BORR_IRFX_ADV and that for the Participant Interest Rate Fixing Advice will be PART_IRFX_ADV.

12.3.2 Interest Rate Fixing Advice to Participant for new Drawdown

Just as you send an ‘Interest Rate Fixing’ Advice to the borrowing customer, you may send an Interest Rate Fixing Advice to the participant bank as well, at the time of initiating a new drawdown for the borrowing customer.

All the fields available in the advice sent to the borrower will be available in the advice to the participant bank also. In addition, the following additional fields will be included:

• The name of the borrowing customer
• The Participant’s contribution in the currency of the tranche (Base Currency) under which the drawdown contract is linked.
• The Participant’s contribution in the drawdown currency (Optional Currency).

Note

If you have chosen the SWIFT media for sending the advice, then instead of the above mail format, the corresponding SWIFT message, MT644 will be generated.

12.4 Ad-hoc Fee Due Notice

This section discusses the notices generated for Ad-hoc fees and contains the following topics:

• Section 12.4.1, "Ad-hoc Fee Due Notice to Borrower"
• Section 12.4.2, "Ad-hoc Fee Due Notice to Participant"

12.4.1 Ad-hoc Fee Due Notice to Borrower

You can generate this notice to inform the borrowing customer when an ad hoc fee is due.

The ad hoc fee due notice to the borrower contains the following information:

• The reference number of the Tranche contract
• The reference number of the Drawdown Contract (only if applicable)
• The ad hoc Fee Amount
• The Currency of Fee
• The Value Date of contract
• The Settlement Instructions details:
  • ‘Acc with bank’ name and address

• The Account number at ‘Account with bank’
• The purpose of the syndication

Note

The Message Type for Borrower Ad-Hoc Fee Due Notice will be ADHOC_FEE_NOTC and that for Participant Ad-Hoc Fee Due Notice will be PART_ADHOC_NOTC

12.4.2 Ad-hoc Fee Due Notice to Participant

You can generate this notice to inform the participant about the ad hoc fee that is due to him.

The ad hoc fee due notice to the participant contains the following information:

• The reference number of the Tranche contract
• The reference number of the Drawdown Contract (only if applicable)
• The name of the Borrower customer
• The Fee Amount Due to or Due from Participant
• The Currency of Fee
• The Value Date of the contract
• The Settlement Instructions in case the ad hoc fee is due from Participant:
  • The ‘Acc with bank’ name and address

• The Account number at ‘Account with bank’
• The purpose of the syndication

In case you have chosen the media as SWIFT, an MT645 will be generated instead of the above mail format.

12.5 Advice of Payment of Principal and/or of Interest

This notice is generated to inform the participant about the payments and/or prepayments of principal and/or payment of interest on the same value date and which belong to the same drawdown contract.

The agent of a facility sends this notice to the participants and the notice specifies the amounts with respect to principal and/or interest.

The advice notice to the participant contains the following information:

• The Tranche reference number
• The Drawdown Reference Number
• The CIF id of the Borrower
• The Optional Currency and Drawdown amount
• The Base Currency and Base Amount
• The details of the Interest Calculation:
  • The Interest rate
  • The Computation Base Amount
  • The Interest Period
  • The Interest Amount

• The details of the Principal Payment/Sum of Interest Due:
  • The Total Principal Amount Repaid/Prepaid
  • The Principal Amount Due to Receiver
  • The Gross Interest Amount Due to Receiver
  • The Charges/Fees/Taxes deducted (if any)
  • The Net Interest Amount Due to Receiver
  • The Total Amount Transferred

• The purpose of the syndication

Note

The message type for payment advice will be PART_PAYMENT_ADV.

In case you have chosen the media as SWIFT, an MT646 will be generated instead of the above mail format.

12.6 Billing Notice

This section discusses the notices generated for bills. and contains the following topics:

• Section 12.6.1, "Billing Notice to Borrower"‘
• Section 12.6.2, "Billing Notice to Participant"

12.6.1 Billing Notice to Borrower

This notice is sent to the borrower to indicate the amount due from him and the date on which it is due. This is like a normal notice indicating that a schedule is falling due so that the customer (borrower) can arrange for funds to be made available in his account.

The Billing Notice to Borrower contains the following additional information apart from generic information already mentioned:

• Facility Reference Number
• Tranche Reference Number
• Contract Currency
• Component
• Due Date
• Amount Due
• The message type for billing notice to borrower is LS_BILLNOTC

12.6.2 Billing Notice to Participant

This notice is sent to the participant to indicate that a specified amount (as was due and received from the borrower) has been deposited into the participant’s account. The message type for billing notice to participant is LS_PARTBILLNOTC.

The Billing Notice to Participant contains the following additional information apart from generic information already mentioned:

• Rate
• Basis Amount
• Participant Amount
• No of Days
• Beneficiary Institution

12.7 Rate Revision Notice

This section discusses the notices generated for rate revisions and contains the following topics:

• Section 12.7.1, "Rate Revision Notice to Borrower"
• Section 12.7.2, "Rate Revision Notice to Participant"

12.7.1 Rate Revision Notice to Borrower

This notice is sent to the borrower to indicate the interest rate fixing date.

The Rate Revision Notice to Borrower will include the following details.

• The reference number of the tranche to which the drawdown loan is linked
• The date on which the drawdown is booked in the system
• The period for interest calculation
• The maturity date of the drawdown
• The amount of the drawdown loan
• The interest fixing date

Note

The message type for rate revision notice to borrower will be LS_REVN_NOTC and that for the participant will be LS_PART_RVNNTC.

12.7.2 Rate Revision Notice to Participant

This notice is sent to the participant to indicate the interest rate fixing date. The rate revision notice to the participant will include the similar details as the borrower rate revision notice. The message type for rate revision notice to participant will be LS_PART_RVNNTC.