4. Defining Product Attributes

In this chapter, we shall discuss the manner in which you can define attributes specific to a Letters of Credit product. You can create a loans product in the Letters of Credit (LC) Product Definition screen, invoked from the Application Browser.

This chapter contains the following details:

4.1 Creating LC Product

The basic information about the product such as the Product Code and its description is captured through the ‘Letters of Credit Product Definition’ screen. Information related to specific attributes of a product can be defined in subsequent screens that can be invoked from the product definition screen. You can invoke this screen by typing ‘LCDPRMNT’ in the field at the top right corner of the Application tool bar and clicking on the adjoining arrow button. The ‘LC Product Definition’ Screen is displayed. From this screen click new icon on the toolbar. The ‘Product Definition’ screen will be displayed with no values in the fields. From the ‘Summary’ screen you can open an existing product. The details of the products that you have created will be displayed in a tabular form.

You can define the attributes specific to a letters of credit product in this screen.

 

The buttons on this screen are explained below:

Buttons

Description

Accounting Roles

Click this button to define the accounting role to accounting head map­ping.

Events

Click this button to select the events for the product and then maintain event-wise accounting entries and advices.

Preferences

Click this button to define preferences like tenor, Prepayment option etc.

MIS

Click this button to capture MIS related parameters.

Commission

Click this button to define the Commission details.

Charges

Click this button to define charge components, rules, events and other associated details.

Tax

Click this button to associate tax rules and select tax currencies.

Free Format Tax

Click this button to attach the Documents and Free format text required for the Product. If you specify details in this screen for a ‘Reimburse­ment’ type of product, the system will display an error message while saving the product.

Tracers

Click this button to enter details of the tracers that should be generated for all LCs under this product.

Status

Click this button to define the criteria for LC status change.

For any product you create in Oracle FLEXCUBE, you can define generic attributes, such as branch, currency, and customer restrictions, interest details, tax details, etc., by clicking on the appropriate icon in the horizontal array of icons in this screen.

You can define product restrictions for branch, currency, customer category and customer in Product Restrictions (CSDPRDRS) screen.

For details on product restrictions refer Product Restriction Maintenance chapter in Core Service User Manual.

You can define User Defined Fields in ‘Product UDF Mapping’ screen (CSDPDUDF).

For details on User Defined Fields screen refer Other Maintenances chapter in Core Service User Manual.

For a letters of credit product, in addition to these generic attributes, you can specifically define other attributes. These attributes are discussed in detail in this chapter.

Product Code

The code you assign to a product will identify the product throughout the module. The code should contain four characters. You can follow your own convention for devising the code, however, at least one of the characters should be a letter of the English alphabet.

Since the code that you define is used to identify the product, it should be unique across the modules of Oracle FLEXCUBE. For instance, if you have assigned the code ‘LC01’ to a particular product in this module, you cannot use it as a code in any other module.

Description

You can enter a brief description of the product, which will be associated with the product for information retrieval purposes.

Product Type

The product type identifies the basic nature of a product. An LC product that you create in Oracle FLEXCUBE can be of the following types:

The entries that are passed, the messages that are generated and the processing of contracts involving the product, is determined by your input to this field.

Slogan

You can specify a marketing punch-line to be associated with the product. This slogan will be printed on all the advices that are sent to the customer, for an LC involving this product.

Product Group

Each product is classified under a specific group. The different groups are defined in the Product Group Definition table.

Start/End Date

A product can be set up for use over a specific period, by defining a start and an end date. The Issue Date of an LC involving a product should be:

The start and end dates of a product come in handy when you are defining a product for a scheme, which is open for a specific period.

Remarks

You can enter information about the product, intended for the internal reference of your bank. The remarks are displayed when the details of the LC are displayed or printed. However, this information will not be printed on any correspondence with the customer.

To maintain the allowed and disallowed customer and customer categories, you have to click the button and invoke the ‘Customer and Customer Restrictions’ screen.

Revolving

LC products can be revolving or non-revolving. If you indicate that the product is revolving, you can associate the product with only revolving LCs. While actually processing revolving you can indicate whether the LC should revolve in time or in value. Note that if the product type is ‘Reimbursement’, the system will automatically select the option ‘No’. You will not be able to change it.

Similarly, if you indicate that the product is non-revolving, you can associate the product to only non-revolving LCs.

Note

All LCs will be of irrevocable nature.

LC Type

LC products can be sight or usance. The system displays an override message if the credit mode is not applicable for LI product.

The system generates notification on authorization of any modification, addition or deletion of LC product details.

4.2  Preferences for a Product

This section contains the following details:

4.2.1 Specifying Preferences for a Product

Preferences are the options available for defining the attributes of a product. The options you make here will ultimately shape the product. Click ‘Preferences’ button to invoke the ‘Letters of Credit Product Preferences’ screen.

Through this screen you can define preferences for the product you are creating.

The Preferences that you define for a product will be applied to all the LC contracts involving the product.

Product Code and Product Description

The Product Code and the description get defaulted from the main product screen.

Note that if the product you are creating is of the type ‘Reimbursement’, you will be able to specify only the following details:

Tenor

You can set the Standard, Minimum and the Maximum limits for tenor based LCs. The tenor details that you specify for an LC product is always expressed in days.

Standard

The standard tenor is the tenor that is normally associated with an LC involving a product. The standard tenor of an LC is expressed in days and will apply to all LCs involving the product. If you do not specify any specific tenor while processing an LC, the standard tenor will by default apply to it.

The default standard tenor applied on an LC can be changed during LC processing. An expiry date will be calculated based on the tenor, as follows:

Expiry Date = Effective Date + Tenor

Maximum

You can fix the maximum tenor of a product. The tenor of the LCs that involves the product should be less than or equal to the Maximum tenor specified. If not, an override will be required before the LC is stored.

Minimum

The minimum tenor of a product can be fixed. The tenor of the LCs that involves the product should be greater than or equal to the minimum tenor that you specify. If not, an override will be required before the LC is stored.

For example you have defined an LC product, to cater to tenor based import LCs. The minimum tenor specified for this product is 100 days and the maximum tenor is 1000 days. You have also specified a standard tenor of 500 days.

Under this product, you can process LCs with a tenor between 100 and 1000 days. As you have specified the standard tenor as 500 days, by default, an LC involving this product will have a 500 day tenor. At the time of processing the LC you can however, change this tenor to anything between the Minimum and Maximum tenor limits. This is done by changing the Expiry Date of the LC. If the new tenor falls outside the range defined as the maximum and minimum tenors, an appropriate override will be sought.

Cash Collateral Percentage

For a product, you can fix the percentage of the LC amount that should be taken as cash collateral. This percentage will be applied by default and can be changed when the LC is processed. In addition, the currency in which the collateral is to be collected can be specified in the LC Contract Collateral screen, while processing an LC.

For example for a guarantee product, you have specified that customers should offer cash collateral to the tune of 50% of the LC amount. If you enter a guarantee, using this product, valued at USD $100,000, a sum of USD $50,000 which is 50% of the guarantee amount will be collected as cash collateral when the guarantee is issued.

If you enter a guarantee using this product, valued at GBP 500,000, then a sum of GBP 250,000 which is 50% of the guarantee amount will be collected as cash collateral when the guarantee is issued. You can collect the cash collateral in a currency different from the guarantee currency.

LC Authorization Re-key

All operations on an LC (input, modification, reversal, etc.) have to be authorized by a user other than the one who carried out the operation. Authorization is a method of cross checking the inputs made by a user. All operations on an LC, except placing it on hold, should be authorized before beginning the End of Day operations.

You have the option to specify whether certain important details of an LC need to be reeked, at the time of authorization. If you indicate positively, you should also specify the fields that will have to be re-keyed at the time of contract authorization. You can specify any or all of the following as re-key fields:

When you invoke an LC for authorization − as a cross-checking mechanism to ensure that you are calling the right LC − you can specify that the values of certain fields should be entered before the other details are displayed. The complete details of the LC will be displayed only after the values to these fields are entered. This is called the‘re-key’ option. The fields for which the values have to be given are called the‘re-key’ fields.

If no re-key fields have been defined, the details of the LC will be displayed immediately once the authorizer calls the LC for authorization. The re-key option also serves as a means of ensuring the accuracy of inputs.

INCO Term

Specify the INCO term that should be linked to all contracts under this product. The adjoining option list displays all INCO terms available in the system. You can select the appropriate one.

Commission

You can specify the following details.

Collection

Indicate when the commission components of an LC should be collected. Commission on an LC can be collected in the following ways:

Choose an option to suit the product you are creating.

Calculation

You can have the commission amount that is due to an LC collected in one of the following ways:

Retrospective

Check this option to indicate that commission is collected retrospectively.

Start Date

Specify the start date for commission calculation.

Include To Date

Check this option to indicate that the end date for commission calculation should be included in the calculation tenure.

Refer the Commissions User Manual under Modularity for further commission related preferences.

Tolerance

Tolerance denotes the variance that has to be built around the LC amount, to arrive at the Maximum LC amount.

Positive

A positive tolerance is the percentage that should be added to the LC amount to arrive at the Maximum LC amount. When an LC is issued or advised, the Maximum LC amount will be the outstanding LC amount. This will be the maximum amount available for availment.

Negative

The negative tolerance is the percentage that should be subtracted from the LC amount. The minimum tolerance is captured for information purposes only. The tolerance percentage can be changed when an LC is processed under a product.

The positive and negative tolerance amounts will be a part of the LC instrument and the subsequent amendment instruments. You should use the positive tolerance to indicate the amount that is uncovered, in the LC amount. Instances could be of the freight or insurance not being paid.

Closure Days

You can also maintain the number of days after which all LCs processed under the product being defined, will be closed. The number of days specified here is calculated from the expiry date of the LC to arrive at the closure date, as follows:

LC Closure Date = LC Expiry Date + Closure Days

By default, the system will display 30 days as the closure days. You are allowed to change this value. At the time of capturing the details of an LC contract, the system will calculate the closure date, based on the closure days that you have maintained for the product involved in the contract. However, you can change the date to any other date after the expiry date.

For example for the import LC product, LCIR, your bank has specified the closure days as 20 days.

Let us assume that the expiry date of the LC Contract involving LCIR is 29th February 2000. The system will calculate the closure date as 20th March 2000. This is arrived at, by adding the number of closure days to the expiry date of the LC (i.e. 29th Feb + 20 days = 20th March).

Exchange Rate

You can specify the exchange rates to be picked up and used, when an LC in a foreign currency, is processed.

Default Rate Type

Specify the rate type to be used to process an LC.

The exchange rate variance is applicable only if the defaulted rates are changed for an LC, in a foreign currency. For the rate type applicable, you can specify the variance based on which, either an override should be sought or the LC should not be saved.

Rate Override Limit

If the variance between the rate defaulted and the rate input is a percentage that lies between the Rate Override Limit and the Rate Stop Limit, the LC can be saved by giving an override.

Rate Stop Limit

If the variance between the rate defaulted and the rate input is a percentage value greater than or equal to the Rate Stop Limit, the LC cannot be saved.

For example for a product, you have specified the override range as between 7% and 30%. In such a case the entries in these fields would read as follows:

You enter an LC involving this product. This is a cross currency contract involving the American and the Australian dollar. Also assume that the standard mid-rate for the currency pair is 1.25. We shall examine the three possible situations that you can encounter.

Below the override limit - Let us assume that for the LC you have specified the exchange rate to be 1.2. In this case the exchange rate exceeds the standard rate by 4%. The LC will be processed without any override.

Within the override limit - If you have specified the exchange rate to be 2.0. In this case you exceeded the standard rate by 20%. You will be prompted to confirm the override. If you confirm the override the LC will be processed using these rates.

Above the override limit - Let us visualise a situation in which you have specified the exchange rates to be 2.5. In this case you have exceeded the standard rate by 100%. In such a case an error message will be displayed and you will not be allowed to continue until the exchange rate you specify is within the permissible limit of 7-30%.

Period of Presentation

As part of the preferences you define for a product, you can specify the manner in which the Period of Presentation should be calculated for the documents that accompany LCs processed under the product. The period of presentation can be arrived at in two ways.

Number of Days

Firstly, you can specify it directly, in terms of days, in the Number of Days field. Typically, this would be 21 days. (However, you can change this to suit your need.) If you choose this option, the number of days specified will default to all LCs processed under the product. The value will default to the ‘Period For Presentation’ field in the LC Contract – Others screen.

Calculated Days

You can opt to calculate the period of presentation as follows:

Expiry Date of the LC – Latest Shipment Date

(You would choose this option if the period of presentation varies for each LC processed under a product.) To specify this manner of calculating the period of presentation, choose the ‘Calculated Days’ option.

The system uses the Expiry Date and the Last Shipment Date specified for the LC you are processing, and arrives at the period of presentation. The period of presentation defined for the product - or calculated for the LC, as the case may be - will be displayed in the ‘Period For Presentation’ field in the LC Contract - Others screen. You can change the default to suit the LC you are processing.

LC Expiry Advices

While creating an LC product, you can indicate whether an expiry advice should be generated for LCs involving the product.

Required

Check this option to indicate that an expiry advice should be generated for LCs involving the product.

Expiry Advice

These advices are generated based on the preferences that you specify for them. Select the appropriate option on the screen to indicate your preference. If you indicated that an expiry advice should be generated, you need to indicate:

Notice Days

Specify the number of days before/after expiry when the advice should be generated.

LC Closure Advices

While creating an LC product, you can indicate whether a closure advice should be generated for LCs involving the product.

Required

Check this option to indicate that a closure advice should be generated for LCs involving the product.

Closure Advice

These advices are generated based on the preferences that you specify for them. Select the appropriate option on the screen to indicate your preference. If you indicated that a closure advice should be generated, you need to indicate:

Notice Days

Specify the number of days before/after closure when the advice should be generated.

Rate Code

When defining the settlement details for a product, you can specify the rate type (under the Rate Code option) that should be used in case of cross-currency settlements. Your specification for the product will default to all contracts involving the product. However, you can change the rate type defined for the product to suit a contract entered under the product. The ‘rate type’ indicates the type of exchange rate that will be used. It can be:

Note

In case of charges, the system will apply mid rate maintained for the currency pair as per default rate type maintained in preferences at LC Product Level.

Draft Tenor in Days

Minimum

Specify the minimum draft tenor for an LC product.The value that you enter must be non-decimal numeric value > = 0 and < Maximum Draft Tenor.

Maximum

Specify the maximum draft tenor for an LC product. The value that you enter must be non-decimal numeric value > 0 and > = Minimum Draft Tenor

Note

If the LC Type of an LC product is selected as 'Sight':

If the LC Type of an LC product is selected as 'Usance':

The validations described are applicable only if drafts information is captured in the Drafts sub-system. If drafts are not applicable / captured for an LC contract, the said validations are not applicable. The validations stated above are applicable for both Import and Export LC products.

Charge Claim Advice

Claim Advice in Swift

Check this box to determine whether the charge claim advice should be generated in SWIFT.

Applicable Rules

You need to indicate the rules applicable for the guarantee.

Applicable Rule

Indicate the rule applicable by selecting the appropriate value from the list of values. The available values are as follows:

Note

The above values are applicable only for Guarantee type of products.The default value of Applicable Rule is set to NONE. This is applicable only for Guarantee type of products.

For Import and Export type of products, the following values are applicable:

Note

Rule Narrative

This is enabled only if ‘Applicable Rule’ is set to ‘OTHR’. It is mandatory to specify the rule narrative if the applicable rule is ‘OTHR’. You need to describe the Applicable rule here. Oracle FLEXCUBE will validate the rule narrative for slashes.

Note

Applicable Rule For Reimbursement

Select applicable rule for which you need a reimbursement from the adjoining drop-down list. This list displays the following:

LIFO/FIFO Rule

Specify the order in which the availment under this contract should be processed. You can choose one of the following options:

If multiple amendments are made to the LC contract amount, then the system applies the FIFO/LIFO rule when utilization is made against the LC contract.

The system will calculate the commission accordingly.

The system applies FIFO / LIFO rule when it finds that multiple amendment has been made to an LC contract against which utilization has been completed.

Confirmation Required

Check this option to indicate that confirmation message is required for all LCs under this product.

Partial Confirmation Allowed

Check this box to confirm the partial amount. The remaining amount can be confirmed after you receive the approval from the external agent.

Note

Partial confirmation is allowed only for export LC.

Allow Prepay

Check this option to indicate that prepayment should be allowed for commissions that are marked as ‘Arrears’.

Loan

Select the type of loan maintained from the drop-down list. The list displays the following values:

Note

This is allowed only for Shipping Guarantee product.

Loan Bridge GL

Specify the bridge GL used for accounting between loan product and shipping/bank guarantee. The adjoining option list displays a list of all GLs. Choose the appropriate one.

Loan Product

Specify the loan product used for the creation of loan account. The adjoining option list displays a list of loan products. Choose the appropriate one.

Collateral Transfer Bridge

Specify the bridge GL used for collateral transfer from LC to shipping guarantee and shipping guarantee to Bill. The adjoining option list displays a list of all GLs. Choose the appropriate one.

Status

Specify the following status details:

Auto Status Control

Check this box to set automatic status control for the LC product. If you do not check this box, the system will not consider the LC contracts associated with this product for automatic status change.

The status of this checkbox is defaulted to the field ‘Auto Status Change’ of every LC contract associated with this product. However, you can modify this at the contract level.

Claim Details

Claim Days

Specify the claim days for the bank guarantee and advice of bank guarantee products. Claim days is used for calculating the claim expiry date.

Accrual

Specify the following accrual details.

Frequency

Specify the frequency of accrual for commission, charge or fees. The frequency can be one of the following:

In case of monthly, quarterly, half yearly or yearly accruals, you should specify the date on which the accruals have to be done during the month. For example, if you specify the date as ‘30’, accruals will be carried out on the 30th of the month, depending on the frequency.

If you fix the accrual date for the last working day of the month, you should specify the date as ‘31’ and indicate the frequency. If you indicate the frequency as monthly, the accruals will be done at the end of every month -- that is, on 31st for months with 31 days, on 30th for months with 30 days and on 28th or 29th, as the case may be, for February.

If you specify the frequency as quarterly and fix the accrual date as the last day of the month, then the accruals will be done on the last day of the month at the end of every quarter. It works in a similar fashion for half-yearly accrual frequency.

If you set the accrual frequency as quarterly, half yearly or yearly, you have to specify the month in which the first accrual has to begin, besides the date.

Month

If you choose one of the following options for accrual frequency, specify the month in which the first accrual has to begin:

Day

If you choose one of the following options for accrual frequency, specify the date on which the accruals have to be done during the month:

External Pricing

External Charge

Check this box to indicate that external charges can be fetched from external pricing and billing engine for contracts created under this product.

External Charge is enabled only when the system integrates with external pricing and billing engine (PRICING_INTEGRATION = Y at CSTB_PARAM level).

Sanction Check

Sanction Check Required

Check this box to indicate that sanction check is required. This indicates whether any transaction booked using the product is subject to Sanction Check or not. If ‘Sanction Check Required’ flag is checked, then the event ‘SNCK’ should be maintained.

Product Restriction

Branch List

Indicate whether you want to create a list of allowed branches or disallowed branches by selecting one of the following options:

Currency Restrictions

Indicate whether you want to create a list of allowed currencies or disallowed currencies by selecting one of the following options:

Categories List

Indicate whether you want to create a list of allowed customers or disallowed customers by choosing one of the following options:

4.2.1.1 Specifying Sanction Check Details

Click ‘Sanction Check’ button in LC Product Preference screen to invoke ‘Sanction Check’ sub-screen.You can maintain the events for which the sanction check is applicable in this screen.

The following events are applicable for sanction check:

Event Code

Event Description

AATC

Amendment from Advice to Confirm

AMND

Amendment

AMNV

Initiation Of Amendment Confirmation

AOCF

Amend from open to Open & Confirm

APAC

Amend - Pre-advice to Adv & confirm

APAD

Amendment from Pre-advice to advice

BADV

Booking Export LC-operation Advice

BANC

Booking of LC with Advice & Confirm

BCFM

Booking export LC with Confirm

BISS

Booking LC or Guarantee Issue

BPRE

Booking of LC with Pre-Advice

REIS

Reissue of Guarantee

ROPN

Reopening of an LC

TRNF

Transfer of LC

 

The system displays the following in this screen:

Event Code

Specify the event code. Alternatively, you can select the event code from the option list. The list displays all valid options.

4.2.2 Specifying Accounting Roles

Click ‘Accounting Roles’ button to maintain accounting roles for the product.

4.2.3 Specifying Events

Click ‘Events’ button to maintain accounting roles for the product.

For further details on maintaining ‘Events’ refer to the ‘Product Definition’ User Manual under Modularity

4.2.3.1 Specifying Event for Reissue of Guarantee

You must associate the event REIS for an LC product for processing of reissue of guarantee. The system will display the REIS event during Events definition in the Product Maintenance.

Refer Products user manual for detailed explanation of ‘The Product Event Accounting Entries and Advices Maintenance screen’.

4.2.3.2 Generating advices for the Insurance Company

For generation of advice to insurance company for the LC product, you need to associate the message type ‘LC_INSURANCEADV’ for the events BISS and AMND respectively. During authorization of these two events, the system will process the messages for all import LCs.

Refer Product Definition User Manual for the procedure to define advices that are generated for each event.

All the messages are sent to the insurance company via mail. For this reason, you need to specify the insurance code (Receiver) and the mailing address of the Insurance Company in the LC Drafts screen.

Refer the Annexure chapter to view an advice sample generated for the insurance company.

4.2.3.3 Generating Advices for Faxing LC Confirmation to Counterparty

For generation of advice to the counterparty at the time of confirming an LC, you need to associate the message type ‘LC_INSTR_COPY’ and ‘LC_AM_INST_COPY’ for the events BISS and AMND respectively. During authorization of these two events, the system will process the messages for confirmed LCs.

Refer the Annexure chapter to view an advice sample generated for faxing the confirmation to the counterparty.

4.2.4 Specifying Commission Details

Click ‘Commission’ button to maintain commission details.

For more details on ICCF Details sub screen refer Commission user manual.

4.2.5 Specifying Free Format Text

Click ‘Free Format Text’ button to maintain free format messages.

4.2.6 Specifying Tracer Details

Click ‘Tracer’ button to maintain tracer details.

4.2.7 Specifying Charge Details

Click ‘Charge’ button to maintain charge details.

For more details on Charge Details sub screen, refer Charges and Fees user manual.

4.2.8 Specifying Tax Details

Click ‘Tax’ button to maintain tax details.

4.2.9 Specifying MIS Details

Click ‘MIS’ button to maintain MIS details.

4.2.10 Setting Criteria for Status Change

You can set specific criteria for status change of an LC product using ‘Letters of Credit Product – User Defined Status’ screen. To invoke the screen, click ‘Status’ button on ‘Letters of Credit Product Definition’ screen.

Specify the following details:

Product Code

The system displays the code that identifies the product being maintained.

Product Description

The system displays a brief description of the product.

Status

Specify the status. The LC contract will be moved to the status that you define here. If more than one status are defined for a product, you need to indicate the sequence in which a contract moves from one status to another.

Sequence

The system displays the sequence number if you have defined more than one status for the product.

Transaction

Specify the transaction code to be used for the GL transfer entries involved in the status change. The option list displays all valid transactions that are applicable. Choose the appropriate one.

A transaction code is associated with every accounting entry in Oracle FLEXCUBE. In case of status change, a component is transferred from one GL to another resulting in a new accounting entry. The system uses this transaction code to pass such entries.

Accruals

You can set certain preferences for accruals in the event of status change. These preferences are applicable to non periodic commission components that are collected in arrears. These are not applicable to components that are collected in advance.

Stop Accruals

Check this box to stop further accrual on components when the LC is moved to the status defined above. If you do not check this, the system will continue to accrue the components even after LC status change.

Reverse Accruals

Check this box to reverse the accrued outstanding amount when the LC is moved to the status defined above. If you do not check this box, the system will not reverse the accrued amount after LC status change.

Complete Accruals

Check this box to complete the accruals when the LC is moved to the status defined above. Further to completion of the accrual, the system proceeds with the status change. If you do not check this option, the system will not complete the accruals.

Automatic Movement

Here, you can indicate whether the status change has to be carried out automatically.

Forward

Check this option to automatically move forward the status of the LC. If you do not check this option, the system will not facilitate automatic forward movement of the LC status. This is applicable only if LC automatic status processing is enabled.

Reverse

Check this option to automatically move the status in reverse. If you do not check this option, the system will not facilitate automatic reverse movement of LC status. This is applicable only if LC automatic status processing is enabled.

Derivation Rule

You can use the following fields to define derivation rules:

Derivation Rule

If you have opted for automatic status change, specify the criteria (rules) based on which the system will perform the status change. An LC is said to be in a specific status if any one of the five conditions associated with the status holds true. If all the conditions are false, the LC will automatically move to the next available status for which the condition is true.

You can define five conditions for each status. The conjunctions ‘AND’ and ‘OR’ can be used to create multiple conditions. Use those buttons appropriately between each condition.

Elements

Select element based on which you need to build a condition for automatic status change of LC. For letters of credit, you need to select ‘Credit Rating’. The system resolves the value for this element as the credit rating for the main applicant of the LC in customer information maintenance.

Operators

Select the operator for building a condition for automatic status change. You can use multiple elements, in conjunction with the functions and arithmetic operators. The drop-down list displays the following operators:

Choose the appropriate one.

Logical Operators

Select the logical operator for building a condition for automatic status change. The system uses the logical operators in combination with the elements for creating derivation rules. The drop-down list displays the following logical operators:

Choose the appropriate one.

The ‘Customer Credit Rating’ field at the Customer level will be used as a SDE CUSTOMER_CREDIT_RATING for defining status change rules. This will also be available for provision rule definition at the LC product level.

Upward and Downward Movement

Specify the following details:

Accounting Role

Specify the role to be used for provisioning accounting entries for the LC contracts in the selected status. The option list displays all accounting roles pertaining to commission components. Choose the appropriate one.

Description

The system displays a brief description of the selected accounting role.

Accounting Head

Specify the account head (GL) to which the provisioning accounting entries should be passed, for the LC contracts in the selected status. The option list displays real as well as contingent general ledgers. Choose the appropriate one.

Description

The system displays a brief description of the selected accounting head.

Note

In case of prepayment of commission for arrears, if the status of the contingent set of GLs changes, the system does not move the prepaid commission. Accrual continues to take place from the real GLs until the prepaid commission is exhausted. Contingent accrual takes place once the prepaid commission is exhausted.