11. Guarantees and Standby Letter of Credit

A Standby Letter of Credit (SBLC) and Bank Guarantee (BG) is a payment guarantee generally issued by the issuing bank on behalf of an applicant securing payment to the beneficiary, If the buyer fails to fulfil a contractual commitment the issuing bank will release payment to the seller.

This chapter contains the following details:

11.1 Guarantees and Standby Letters of Credit Contract In­put

This section contains the following details:

11.1.1 Processing Guarantees and Standby LC

You can process Guarantees and SBLC contract using ‘Guarantees and Standby Letters of Credit Contract Input’ screen. The system processes SBLC from Guarantee screens if SWIFT 2019 is enabled.You can invoke this screen by typing ‘LCDGUONL’ in the top right corner of the Application toolbar and clicking the adjoining arrow button.

Acknowledgement Reference Number

Specify the acknowledgement reference number. Alternatively, you can select the reference number from the option list. The list displays all the Guarantees and SBLCs related acknowledgement reference numbers.

Contract Reference

The system displays the contract reference number.

Product Code

Select the product code from the list of products created in the LC. Guarantees, Advice of Guarantees, SBLCs, Advice of SBLC Product codes are displayed in the option list. Click ‘Populate’ button for details of this product to get defaulted from the Product screen.

Operation Code

You can select operation code from the list of valid operation code value based on Product Type. The list displays the following options:

Advice and Confirm is applicable for Guarantees if SWIFT 2019 is enabled.

Additional Details

Product Description

The system displays the product description.

Source Code

The system displays the source code.

Source Reference

The system displays the source reference number.

Product Type

The type of product gets displayed here from the product screen, specifying if the product is of type import/export or revolving or non-revolving.

User Reference

The system displays the contract reference number as user reference number.

Version Number

Specify the version number.

The Guarantees and SBLC contract processes can be simulated only through gateway. The Guarantee Issuance Simulation does not have screen, so user cannot invoke Guarantee Issuance Simulation from the application front. All operations are supported for Guarantee Issuance Simulation same as ‘Guarantees and Standby Letters of Credit Contract Input’ screen.

11.1.2 Main Tab

 

Customer Details

Customer

Specify the customer for which you need to maintain. Alternatively, you can select the customer from the option list. The list displays all valid customer numbers.

Note

BIC Code appears next to the 'Customer' only if the BIC code is mapped with that custom­er number.If the BIC Code is not mapped with that customer number, then the BIC Code will not appear next to the ‘Customer’ in the adjoining option list.

Customer Name

The system displays the customer name.

Party Type

Specify the party type of the customer who is the counter party of the Guarantee/SBLC. Alternatively, you can select the party type from the option list. The list displays all the valid party types maintained in the system.

Dated

Enter the date of the customer reference. This would normally be the date on which you have a correspondence from the party regarding the Guarantees/SBLC.

Customer Reference

Specify the customer reference number.

Amount Details

Currency

Specify the currency of the transaction. Alternatively, you can select the currency from the option list. The list displays all valid currencies maintained in the system.

Language

Specify the language to be used for Guarantees/SBLC. Alternatively, you can select the language from the option list. The list displays all valid language codes.

Contract Amount

Specify the amount for which the Guarantee and SBLC is drawn.

Amount

The balance amount available after the availment of Guarantee/SBLC is displayed here.

Liability

The system displays the liability amount.

Transaction Details

Issue Date

Specify the issue date from the adjoining calendar.

Effective Date

Specify the effective date from the adjoining calendar.

Tenor

Specify the tenor of the contract.

Expiry Date

Specify the date on which the Guarantee/SBLC contract expires.

Claim Date

Select the claim date from the adjoining calendar. Claim date indicates the date by which all claims needs to be lodged for the guarantee. Claim Date should be on or before Claim Expiry Date.

Claim Expiry Date

Select the claim expiry date from the adjoining calendar. Claim expiry date indicates the date by which all claims lodged need to be settled. Claim Expiry Date = Expiry Date + Claim Days.

System defaults Claim Expiry date as Expiry Date + Claim Days on Product default. If Claim Days is zero, Claim Expiry date will be Expiry Date. Claim Expiry Date can be modified. On Save, system will validate the following:

Note

Auto Closure

Check this option to indicate that the Guarantee/SBLC should be automatically closed.

Closure Date

The date of closure is based on the ‘Closure Days’ maintained for the product involved in the Guarantees/SBLC. The number of days specified as the Closure Days is calculated from the expiry date of the Guarantee/SBLC, to arrive at the Closure Date.

Closure Date = Expiry Date + Closure Days

Stop Date

This date will be defaulted to LC Expiry date. Stop date cannot be earlier than Issue date and later than expiry date.

Guarantee Details

Type of guarantee

Select the guarantee type from the adjoining list. This is maintained using static type maintenance screen.

Description

Specify the details of guarantee description.

Purpose of Guarantee

If the LC that you are processing is a guarantee you should specify the purpose of guarantee. Click the adjoining drop-down list and select one of the following values:

Validity Type

Select the type of validity from the list provided. The list is as follows:

Expiry Condition

Specify the details for conditional guarantee.

Remarks

Specify remarks, if any.

Contract Status

User Defined Status

Specify the status of the Guarantee/SBLC contract. The option list displays all valid statuses that are applicable. Choose the appropriate one.

Derived Status

The system displays the derived status of the Guarantee/SBLC contract. You cannot modify this.

Auto Status Change

The system defaults the status of the check box based on the product maintenance. However, you can modify this. If you check this box, the system picks up the contract during EOD operations for status processing. If you do not check this, the system will not consider the Guarantee/SBLC contract for automatic status processing.

Sanction Check Status

The system displays the sanction check status. The statuses can be any of following:

Last Sanction Check Date

The system displays the last sanction check date.

Settlement Details

Debit Account Branch

Specify the debit account branch. Alternatively, you can select the debit account branch from the option list. The list displays all valid values.

Debit Account Currency

Specify the debit account currency. Alternatively, you can select the currency from the option list. The list displays all valid values.

Debit Account

Specify the debit account. Alternatively, you can select debit account from the option list. The list display all valid values.

Charges Debit Account Branch

Specify the charges debit account branch. Alternatively, you can select the charges debit account branch from the option list. The list displays all valid values.

Charges Debit Account Currency

Specify charges debit account currency. Alternatively, you can select charges debit account currency from the option list. The list displays all valid values.

Charges Debit Account

Specify the charges debit account. Alternatively, you can select charges debit account from the option list. The list displays all valid values.

11.1.3 Preferences Tab

Other Details

Applicable Rule

The system defaults the applicable rule for the product type. However, you can modify this.

Please refer to the section ‘Specifying the Applicable Rules’ under chapter ‘Defining Product Attributes’ in this user manual.

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’.

Claim Advice in Swift

Check this box to generate the charge claim advice in MT799 SWIFT format.

Template Id

Specify the template ID related to MT799 message types from the option list.

Ancillary Message

Check this box to generate MT 759 on contract authorization.

Ancillary Message Function

Specify the ancillary message function. Alternatively, you can select the ancillary message from the option list. The list displays all valid options maintained in the system. Ancillary Message Function is mandatory if ‘Ancillary Message’ is checked.

Charges From Beneficiary

Specify the charge amount borne by the beneficiary.

Additional Amounts Covered

Specify the additional amount covered.

Claim Indicator

Select the indicator for claim from the drop-down list. The list displays the following options:

Amendment Details

Amendment Number

The system displays the amendment number.

Amendment Date

Specify the amendment date from the adjoining calendar.

Acknowledgement Received

Check this box to indicate that the acknowledgment has received.

Acknowledgement Date

Specify the date on which the acknowledgement is received.

Charges to be Claimed

Currency

Specify the currency in which the charges attributed to the issuing bank is expressed.

Amount

Specify the charge amount.

Charge From Issuing Bank

Give a brief description of the charge.

Issuing Bank Acc

Specify the account from which charge should be collected.

Issuing Bank Date

Specify the date of charge collection.

Preferences

Advice of Reduction

The system displays the value for Advice of Reduction (MT 769) message.

Allow Prepayment

Check this option to indicate that the customer can make a prepayment on the contract.

Transferrable

Check this box to indicate that the Guarantee/SBLC is transferrable. Guarantee/SBLC can be transferred only if SWIFT 2019 is enabled.

Transfer Conditions

Specify the transfer conditions for the Guarantee/SBLC transfer.

Confirmation Instructions

Check this option to indicate that the SBLC can have an associated confirmation message. In Guarantee/SBLC if Confirmation Instruction option is checked cannot be amended to uncheck.

Requested Confirmation Party

Select the confirmation party type. You can select one of the following messages:

Obligor Collateral Percentage

Specify the Obligor collateral percentage. If Obligor Collateral Percentage is provided, system will collect the collateral partially from Applicant and Obligor Party depending on the percentage provided. Else system will collect the entire collateral from Applicant.

Local Guarantee Details

Issue Date

Select the issue date for local guarantee from the adjoining calendar.

Expiry Date

Select the expiry date for local guarantee from the adjoining calendar.

Standard Wording Required

Check this option to indicate that the customer needs standard wording for local guarantee details.

Standard Wording Requested Language

Specify the language in which standard wording requested. Alternatively, you can select the language from the adjoining list.

11.1.4 Parties Tab

 

Party Details

Party Type

Specify the party type. Alternatively, you can select the party type from the option list. The list displays all the valid party types maintained in the system.

Party Description

The system displays the party description.

Party Id

Specify the ‘Party ID’ for which you need to maintain. Alternatively, you can select the ‘Customer No’ from the adjoining option list.

Note

BIC Code appears next to the 'Customer No' only if the BIC code is mapped with that cus­tomer number.If the BIC Code is not mapped with that customer number, then the BIC Code will not appear next to the ‘Customer No’ in the adjoining option list.

Customer Name

Specify the customer name.

Address 1 - 4

Specify the address of the customer.

Country

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

Customer Reference

Specify the customer reference number.

Dated

Enter the date of the customer reference. This would normally be the date on which you have a correspondence from the party regarding the SBLC.

Language

Specify the language in which advices should be sent to the customer.

Issuer

Check this option to indicate that the issuer is a bank.

Template ID

Specify the template ID. If you change REB party, then a template ID needs to be attached to send MT799 to Advising bank.

Other Addresses

Media Type

Specify the media type. Alternatively, you can select the media type from the option list. The list displays all valid values.

Address

Specify the address of the party.

Account

The system defaults the account number. However, you can edit this field.

The parties involved in a Guarantee/SBLC depend upon the type of guarantee/SBLC you are processing. The following table indicates the minimum number of parties required for the types of Guarantee/SBLC that you can process..

LC type

Parties applicable

Mandatory parties

Parties not allowed

Shipping Guarantee

Applicant/Accountee

Advising Bank

Beneficiary

Confirming Bank

Advice Through Bank

Reimbursing Bank

Applicant and Beneficiary

Issuing Bank

Guarantee

Applicant and Benefi­ciary

Applicant and Beneficiary

Advise Through Bank

Reimbursement Bank

Issuing Bank

Standby

Applicant/Accountee

Advising bank

Beneficiary

Confirming bank

Reimbursing bank

Applicant and Beneficiary

Issuing Bank

11.1.5 Parties Limits Tab

 

Credit Line

Limits Tracking Required

Specify whether the credit granted under the LC you are processing should be tracked against the credit limit assigned to the customer under a Credit Line.

Check this box to indicate that limit tracking is required for the Guarantee/SBLC. If left unchecked, the system will display an override message ‘Limit tracking not done for the contract’ while saving the record. In the subsequent fields of this screen, you can specify details of the line under which the credit is to be tracked.

Serial Number

Specify the serial number.

Party Type

Specify the type of party involved in the Guarantee/SBLC you are processing, whose details you would subsequently enter. The parties involved in the Guarantee/SBLC can be specified in any sequence. However, a party code can be used only once in each Guarantee/SBLC.

Customer No

Specify the ‘Customer No’ for which you need to maintain. Alternatively, you can select ‘Customer No’ from the adjoining option list also.

Note

BIC Code appears for a ‘Customer No’ only if the BIC Code is mapped to that customer number. If the BIC Code is not mapped with that customer number then the BIC Code will not appear next to the ‘Customer No’ in the adjoining option list.

Liability Number

When you click ‘Default’ button, the system defaults the liability number from ‘Joint Venture’ sub-screen of ’Customer Maintenance’ screen.

Linkage Type

Specify the linkage type. The drop-down list displays the following options:

Choose the appropriate one.

% Contribution

Specify the proportion of limits to be tracked for the credit line or collateral pool for the joint venture customer. When you click ‘Default’ button, the system defaults the percentage of contribution maintained under ‘Joint Venture’ sub-screen of ‘Customer Maintenance’ screen.Linkage Reference No

Specify the reference number that identifies the facility or collateral pool. The option list displays all valid facilities and collateral pools specific to the liability. Choose the appropriate one.

Amount Tag

Specify the amount tag. The system tracks the limits for non joint venture customers based on the amount tag.

Limit Amount

When you click ‘Default’ button, the system defaults the amount tracked for each credit line.

JV Parent

When you click ‘Default’ button, the system defaults the joint venture customer number of the party. This customer number is defaulted based on the details maintained in ‘Joint Venture’ sub-screen of ‘Customer Maintenance’ screen.

11.1.6 Document Tab

Document Details

Code

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

Type

Select the type of document from the drop-down list.

Description

The system displays the document description.

Reference

Enter the document reference number based on which the Guarantee/SBLC issued.

Copy

Enter the number of copies of the document.

Originals

Enter the number of Original documents here.

Original Required

Check this box if original document is required.

Default

Click the default button for default generation.

11.1.7 Tracers Tab

Tracers are reminders that can be sent to various parties involved in Guarantees and SBLC.

Tracer Details

The tracers, specified for the product to which you have linked the Guarantee/SBLC, will be defaulted to this screen. The following details will be displayed:

11.1.8 Terms and Conditions Tab

Terms and Conditions

Serial No.

Specify the serial number for terms and conditions.

Type

Select the guarantee type from the drop-down list. Available options are:

Terms and Conditions

Specify the terms and conditions.

Note

Terms and Conditions for Guarantee are mandatory.

11.1.9 Advices Tab

The details of the advices for an event are displayed in the Advices screen. The party type to whom a specific advice should be sent is picked up automatically based on the type of Guarantee/SBLC being processed and the parties involved.

Advice Details

Advice Name

Specify the advice name.

Party Type

The system displays the party type for which the message is generated.

Party Id

The system displays the party ID for which the message is generated.

Party Name

The system displays the name of the party for which the advice is generated.

Medium

The medium by which an advice will be transmitted and the corresponding address will be picked up based on the media and address maintenance for a customer.

You can, however, change either of these while processing the LC. Typically, if changed, both of them will be changed.

After selecting the advices to be generated for the LC, click on ‘Ok’ to save it. Click ‘Exit’ or ‘Cancel’ button to reject the inputs you have made. In either case, you will be taken to the Contract Main screen.

Priority

For a payment message by SWIFT, you also have the option to change the priority of the message. By default, the priority of all advices is marked as low. The priority of a payment message can be changed to one of the following:

Suppress

By default, all the advices that have been defined for a product will be generated for the LCs involving it. If any of the advices are not applicable to the LC you are processing, you can suppress its generation by Checking against the suppress field.

Charges

The system displays the charges configured.

Guarantee Reference Number

Choose the guarantee whose details you would like to upload (from the Incoming Message Browser) in the FFT Description fields.

A FFT Description field can contain 2000 characters. If the details of the guarantee you specify exceeds 2000 characters, the system will automatically stagger the remaining text into subsequent FFT Description fields.

To delete an FFT from the list, highlight the code that identifies the FFT and click delete icon. The free format codes for the following purposes have the fixed codes:

SND2RECMTxxx

Sender to receiver information (Field 72 of SWIFT).

INSTRUCTION

Instructions to the Paying/Accepting/Negotiating bank (Field 78 of SWIFT).

Sender to Receiver Info Tag

FFT codes “SND2RECMTxxx” will be used to pick up the sender to receiver information in various swift messages. In the FFT code “MTxxx” will stand for the SWIFT message type in which the FFT code will be picked up. This facilitates defining a separate FFT code for each of the SWIFT message.

This will be applicable for the following swift messages: MT700, 707, 705, 710, 720, 730, 740, 747, 760, 767, 768, 400, 410, 412, 420,422, 430, 734, 732, 742, 756, 750, 752, 754,798, 760 and 762.

The various FFT codes for SND2RECMTxxx are maintained in the Free Format Code maintenance screen. During contract processing, based on the event being processed system defaults the advices maintained for the particular event. For messages of SWIFT type ,you can select the corresponding SND2RECMTxxx FFT code from the list of values

In the SWIFT message generated , the tag 72 will be populated with the text associated with the FFT code SND2RECMTxxx attached for the advice at the contract level.System will not validate the FFT code SND2RECMTxxx being attached with the advice. This has to be operationally controlled.

During advice generation, if the FFT code SND2RECMTxxx corresponding to the advice is not attached or if a different SND2RECMTxxx is attached, system will not populate the tag 72 in the advice generated.

Free Format Text Details

Free Format Text Code

To add an FFT to the list, click add icon. Select an FFT code from the adjoining option list that is displayed.

Text

After selecting the code that identifies the FFT you wish to attach to the advice, its description is automatically picked up and displayed. The FFT description can be changed to suit the requirements of the LC you are processing.

Single

Check this option to indicate that the FFT is a single message.

For more details on the buttons in Guarantees and SBLC Contract Input screen, refer the chapter titled ‘Capturing Additional Details’ in this user manual.

The following table provides the list of SWIFT messages and the fields of SWIFT messages that utilizes the information provided in this screen:

Field in Oracle FLEXCUBE

SWIFT Message

Field of the SWIFT message

Operation Code

MT760

22A,49

Purpose of Guarantee

MT760

22A

Contract Reference

MT760,MT761,MT768,MT769

20

Issue Date

MT760

30

Product Type

MT760

22D

Applicable Rule

MT760

40C

Validity Type

MT760

23B

Expiry Date

MT760

31B

Expiry Condition

MT760

35G

Party Id – APP

MT760

50

Party Id – APB

MT760

51

Party Id – ISB

MT760,MT761

52a

Party Id - BEN

MT760

59

Party Id - ABK

MT760

56a

Party Id - ATB

MT760

57a

Contract Amount

MT760

32B

Documents - Description

MT760

45C

May Confirm

MT760

49

Party Id - COB

MT760

49a

Claim Indicator

MT760

48B

Transferable

MT760

48D

Local Guarantee Details - Issue Date

MT760

31C

Local Guarantee Details - Expiry Date

MT760

31B - Sequence C

Charges to be Claimed - Amount

MT768,MT769

32a

Charges to be Claimed - Currency

MT768,MT769

32a

Issuing Bank Date

MT768,MT769

32a

Issuing Bank Acc

MT768,MT769

25

Charge From Issuing Bank

MT768

71D

Additional Amounts Cov­ered

MT769

39C

Charges From Benefi­ciary

MT769

71D

The above details are applicable if SWIFT 2019 is enabled.

11.1.10 Viewing Guarantees and SBLC Contract Details

You can view guarantees and SBLC contract details through ‘Guarantees and Standby Letters of Credit Contract Summary’ screen. You can invoke this screen by typing ‘LCSGUONL’ in the top right corner of the Application toolbar and clicking the adjoining arrow button.

In the above screen, you can base your queries on any or all of the following parameters and fetch records:

Recommended Fields

Optional Fields

Select any or all of the above parameters for a query and click ‘Search’ button. The system displays the following records meeting the selected criteria:

11.2 Guarantees and Standby Letters of Credit Amendment

This section contains the following topics:

11.2.1 Processing Amendment of Guarantees and SBLC

You can process amendment of guarantees and SBLC using ‘Guarantees and Standby Letters of Credit Amendment’ screen. You can invoke this screen by typing ‘LCDGUAMD’ in the top right corner of the Application toolbar and clicking the adjoining arrow button.

Hold button to support financial amendment [LCDGUAMD]

Click Hold button to support financial amendment [LCDGUAMD] from the below given options:

User can unlock amendments on Hold, modify details if required and save. Processing on Save will continue as existing.

‘Deletion of Hold’ will be supported. ‘Hold of Hold’ will be supported. Contract will be on Hold and in unauthorized status. Authorization is not supported for Contracts put on Hold

Note

Hold will not be supported for amendment with beneficiary confirmation and Advice of re­duction, amendment with Cancellation flag or Confirmation / Rejection of amendment

Acknowledgement Reference Number

Specify the acknowledgement reference number. Alternatively, you can select the reference number from the option list. The list displays all the acknowledgement reference numbers for contract amendment registered in the system.

ESN

The system displays the event sequence number.

Product Type

The system displays the product type of Guarantee/SBLC.

Amendment Status

The system displays the amendment status.

Amendment Initiation Date

The system displays the amendment initiation date.

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.

Number of Amendment

The system displays the number of amendments based on the contract reference number.You can amend a Guarantee/SBLC multiple times before the previous amendment is confirmed or rejected.

Financial amendment without Beneficiary Confirmation will not be allowed if there are unauthorized unconfirmed amendments.

Beneficiary Confirmation Required

The system enables ‘Beneficiary Confirmation Required’ flag by default.

When amendment is initiated with Beneficiary confirmation flag checked, then AMNV is triggered and MT767 is generated. When the amendment is confirmed then ACON and AMND is triggered and details are propagated to LCDGUONL.

When amendment is initiated without Beneficiary confirmation flag checked, amendment details are propagated to LCDGUONL. You can modify the and guarantee details. The system triggers AMND event on save and MT767 is generated.

Cancellation Request

Check this box to request cancellation.

If Cancel flag is checked, only cancel information shows a message on authorization of amendment.

If Cancel flag is enabled, other field amendments are not considered and CANCEL event is triggered on amendment confirmation.

The amendment of guarantees and SBLC can be simulated only through gateway. The Guarantee Amendment Simulation does not have screen, so user cannot invoke Guarantee Amendment Simulation from the application front. All operations are supported for Guarantee Amendment Simulation is same as Guarantees and Standby Letters of Credit Amendment.

11.2.2 Details Tab

Currency

The system displays the currency.

Contract Amount

The system displays the contract amount.

Increase Decrease Contract Amount

The system displays the contract amount increased or decreased.

Issue Date

The system displays the issue date.

Expiry Date

Select the date on which the Guarantee/SBLC is scheduled to expire. On confirmation of guarantee amendment, revised Expiry Date is propagated to ‘LCDGUONL’. System derives Claim Expiry date based on the new Expiry Date.

Closure Date

Specify the date LC is scheduled to be closed. You can modify this.

Other Details

Charges from Beneficiary

Specify the charge amount borne by the beneficiary.

Validity Type

Select the validity type from the drop-down list. the list displays the following options:

Expiry Condition

Specify the details for conditional guarantee.

Transferable

Check this box to indicate that the Guarantee/SBLC is transferable.

May Confirm

Check this option to indicate that the LC can have an associated confirmation message. In LC if May confirm option is checked cannot be amended to uncheck.

Advice of Reduction

Check this box to send Advice of Reduction (MT 769) message.

Advice of Reduction cannot be enabled if ‘Beneficiary Confirmation Required’ flag is enabled. You can amend ‘Advice of Reduction’ check box, after disabling Beneficiary Confirmation Required flag and choosing Contract Reference number from the option list and clicking ‘P’ (Populate) button.

If ‘Advice of Reduction’ is enabled along with Beneficiary Confirmation flag then the system provides appropriate error message.

Charges to be Claimed

Currency

Specify the currency in which the charges attributed to the issuing bank is expressed.

Amount

Specify the charge amount.

Issuing Bank Date

Specify the date of charge collection.

Issuing Bank Account

Specify the account from which charge should be collected.

Additional Amount Covered

Specify the additional amount covered.

Details applicable to ‘Advice of Reduction’ will be propagated to ‘Guarantees and Standby Letters of Credit Contract Input’ screen and it can be modified.

STP of MT769 will initiate amendment or cancellation of Guarantees/Counter Guarantees in LCDGUAMD without Beneficiary Confirmation.

Local Guarantee Details

Expiry Date

Select the expiry date of the local guarantee from the adjoining calendar.

Sanction Check Details

Sanction Check Status

The system displays the sanction check status.

Last Sanction Check Date

The system displays the last sanction check date.

11.2.3 Parties Tab

Parties

 

Party Type

The system defaults the party type.

Party Description

The system defaults the party description.

Customer

The system defaults the customer number. You can modify the customer number of the beneficiary.

Specify the ‘Customer’ for which you need to maintain. Alternatively, you can select the ‘Customer No’ from the adjoining option list also.

Note

BIC code appears next to the ‘Customer No’ only if the BIC code is mapped with the cus­tomer number. If the BIC Code is not mapped with that customer number, then the BIC Code will not appear next to the ‘Customer No’ in the adjoining option list.

Customer Name

The system defaults the customer name.

Address 1 to 4

The system defaults the address of the party.

Country

The system defaults the country of the customer.

Customer Reference

The system defaults the customer reference number. However, you can modify it.

Dated

The system defaults the date on which the party joined. However, you can modify it.

Language

The system defaults the language in which advices are sent to the customer.

Issuer

The system defaults the name of the issuer bank.

Template ID

The system defaults the template ID.

Other Addresses

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.

11.2.4 Documents Tab

Document Details

Contract Reference

Enter the contract reference number based on which the Guarantee or SBLC is issued.

Code

Enter the document code.

Type

Enter the document type.

Description

Enter the document description of the document that is defaulted to suit the Guarantee/SBLC you are processing.

During copy operation, the value of this field will not be copied to the new contract.

Reference

Enter the document reference number based on which the Guarantee/SBLC is issued.

Copy

Enter the number of copies of the document.

Originals

Enter the originals details.

Original Required

Check this box to generate the original receipts.

Default

Check the default button for default generation.

11.2.5 Terms and Conditions Tab

Terms and Conditions

Serial No

Specify the serial number for terms and conditions.

Type

Select the guarantee type from the drop-down list. Available options are:

Terms and Conditions

Specify the terms and conditions.

Note

Terms and Conditions for Guarantee are mandatory.

11.2.6 Advices Tab

Advices 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.

FFT Details

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.

For more details on the buttons in Guarantees and SBLC Amendment screen, refer the chapter titled ‘Amending Details of LC’ in this user manual.

The following table provides the list of SWIFT messages and the fields of SWIFT messages that utilizes the information provided in this screen:

Field in Oracle FLEXCUBE

SWIFT Message

Field of the SWIFT message

Operation Code

MT767

22A

Purpose of Guarantee

MT767

22A

Cancellation Request

MT767

23S

Contract Reference Number

MT767,MT775

20

Number of Amendment

MT767,MT775,MT787

26E

Amendment Initiation Date

MT767

30

Party Id – ISB

MT767,MT775

52a

Increase Decrease Contract Amount

MT767

32B,33B

Validity Type

MT767

23B

Expiry Date

MT767

31E

Expiry Condition

MT767

35L

Party Id – BEN

MT767

59

Documents – Description

MT767

45C

Local Guarantee Details- Expiry Date

MT767

31E - Sequence C

Amendment Status

MT787

23R

The above details are applicable only if SWIFT 2019 is enabled.

11.2.7 Viewing Guarantees and SBLC Amendment Details

You can view guarantees and SBLC amendment details through ‘Guarantees and Standby Letters of Credit Amendment Summary’ screen. You can invoke this screen by typing ‘LCSGUAMD’ in the top right corner of the Application toolbar and clicking the adjoining arrow button.

In the above screen, you can base your queries on any or all of the following parameters and fetch records:

Recommended Fields

Optional Fields

Select any or all of the above parameters for a query and click ‘Search’ button. The system displays the following records meeting the selected criteria:

11.3 Lodging Guarantee Claim

This section contains the following details:

11.3.1 Lodging Guarantee Claim

You can lodge claim on guarantee contract through ‘Claim Lodgement’ screen. You can invoke this screen by typing ‘LCDGCLM’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button.

You can specify the following here:

Contract Reference

Select the guarantee contract reference number from the adjoining option list.

Click ‘P’ Process button to generate the claim serial number.

Claim Sl. No

The system displays the claim serial number.

11.3.2 Specifying Main Details

The system displays the following contract details:

Claim Details

Claim Lodgement Date

Select the date on which claim is lodged.

Claims have to be lodged on or before Guarantee Claim Date. If claims are lodged after the Guarantee Claim date, system displays a configurable override message.

Claim Amount

Specify the amount of the claim.

The claim amount should not be greater than the guarantee amount and the outstanding guarantee amount.

Remarks

Specify remarks, if any.

Template Id

Select the template ID from the adjoining option list.Template ID is applicable only when the party type is applicant bank or issuing bank. Template ID is applicable only if SWIFT 2018 is enabled.

Note

The claim message is generated only if the template is selected.

Claim Status

The status of the claim is displayed here. The statuses are as follows:

Legal Injunction

Check this box to indicate that there is a legal injunction received against the claim, to be captured during Claim Amendment.

Note

System triggers GCAM event and Claim Status is updated as 'Injunction Received'

External Pricing

External Charge

While lodging guarantee claim for a contract for which ‘External Charges’ is enabled at product level, external charges is fetched from external pricing and billing engine.

Ancillary Message

Check this box to generate MT 759 on contract authorization.

Ancillary Message Function

Specify the ancillary message function. Alternatively, you can select the ancillary message from the option list. The list displays all valid options maintained in the system. Ancillary Message Function is mandatory if ‘Ancillary Message’ is checked.

Extend or Settle Details

Extend or Settle

Select the option from the drop-down list. The list displays the following options:

New Expiry Date

Specify the new expiry date. The New Expiry date is mandatory when 'Query to Extend or Settle’ option is selected.

Latest Reply Date

Specify the latest reply date. The Latest Reply date is mandatory when 'Query to Extend or Settle option is selected.

Settlement Details

You can set the following settlement details:

Settlement Account Branch

The system displays the settlement account branch on selection of the debit account number.

Settlement Account Currency

The system displays the settlement account currency on selection of the debit account number.

Settlement Account

The system displays the settlement account details.

Charges Debit Account Branch

The system displays the charges debit account branch on selection of the charges debit account number.

Charges Debit Account Currency

The system displays the charges debit account currency on selection of the charges debit account number.

Charges Debit Account

The system displays the charge debit account details.

11.3.3 Specifying Advise Details

Click on the ‘Advices’ tab to capture the advise details.

Advise Details

Message Type

The system displays the message type of the advice generated.

Party Type

The system displays the party type for which the message is generated.

Party Id

The system displays the party ID for which the message is generated.

Party Name

The system displays the name of the party for which the advice is generated.

Medium

Select the medium through which the message has to be sent from the adjoining option list.

Priority

Select the priority of sending message from the adjoining drop-down list.

Suppress

Check this box to suppress the message.

Charges

The system displays the charges configured.

Note

Guarantee claim advice GUA_CLAIM_ADV/MT799 is generated during claim lodgement if SWIFT 2018 is enabled. MT765 is generated if SWIFT 2019 is enabled

FFT Details

Free Format Text Code

Select the free format text code from the adjoining option list.

Text

The system displays a brief description on free format text.

11.3.4 Specifying Document Details

Click on “Documents” tab to capture document details.

Documents captured during Guarantee Issuance are defaulted when claim is lodged

Document Code

The code of the document captured during guarantee issuance is defaulted here.

Document Type

The type of document captured during guarantee issuance is defaulted here.

Document Description

The description of the document is defaulted here.

Documents Received

Check this box to indicate that documents are received.

The following table provides the list of SWIFT messages and the fields of SWIFT messages that utilizes the information provided in this screen:

Field in Oracle FLEXCUBE

SWIFT Message

Field of the SWIFT message

Contract Reference

MT765,MT786

20

Claim Lodgement date

MT765

30A

Extend or Settle

MT765

21M

Claim Amount

MT765,MT786

32B

New Expiry Date

MT765

31J

Claim Lodgement date

Mt786

30

The above details are applicable only if SWIFT 2019 is enabled.

11.3.4.1 Event Details

Click on ‘Event’ link of the ‘Guarantee Claim Lodging’ screen to view the event details.

The system displays the events, accounting entries and advices here.

11.3.4.2 Settlement Details

Click on ‘Settlement’ link of the ‘Guarantee Claim Lodging’ screen to view the settlement details.

The system displays the settlement information for charges here.

11.3.4.3 Charges Details

Click on ‘Charges’ link of the ‘Guarantee Claim Lodging’ screen to view the charge details.

The system displays the charges configured for the event at product definition here.

For more details on the Charges Details screen, refer section ‘Contract Charge Details’ in Charges and Fees User Guide under Modularity.

11.3.4.4 Tax Details

Click on ‘Tax’ link of the ‘Guarantee Claim Lodging’ screen to view the tax details.

The system displays the details of the tax configured in the screen.

11.3.4.5 Previewing Message Details

Click on ‘Preview Message’ link of the ‘Guarantee Claim Lodging’ screen to view the message details.

You can view the message or advice generated in the screen.

For more details on this screen, refer Capturing Additional Details chapter in this user manual.

11.3.4.6 Remarks

Click Remarks button to view all the instructions captured on authorization of the contract in ‘History of Remarks’ screen.

For more details on this screen refer the Section 6.21, "Remarks" in this user manual.

11.3.5 Hold Button

Click ‘Hold’ button to hold the the data entered. On hold of the contract, the status of the contract will be updated as ‘Hold’ and the system will not do any mandatory validation on the data.

In auto-auth case, if hold is selected, then the contract will be in unauthorized status. System will not consider the contract which is on hold for any other processing.

During EOD, system will not consider the records which are on hold as pending transactions.

11.3.6 Viewing Guarantee Claim Details

You can view the guarantee claim details maintained in the ‘Guarantee Claim Lodging’ screen using the ‘Guarantee Claim Summary’ screen. You can invoke this screen by typing ‘LCSGCLM’ in the field at the top right corner of the Application tool bar and clicking on the adjoining arrow button.

In the above screen, you can base your queries on any or all of the following parameters and fetch records:

Select any or all of the above parameters for a query and click ‘Search’ button. The system displays the following records meeting the selected criteria:

11.4 Guarantee Claim Settlement

This section contains the following details:

11.4.1 Claim Settlement

You can settle guarantee claims using the ‘Claim Settlement’ screen. Claims have to be settled in the sequence it is lodged. All claims in Lodged Status will be available for settlement.

You can invoke the ‘Claim Settlement’ screen by typing ‘LCDGCLP’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button. Click New icon.

The following details are captured here:

Contract Reference

Specify the Guarantee contract Reference against which the claim is received by the bank and settlement needs to be done. Alternatively you can also select the contract reference from the drop-down list. The list displays only claims for which the status is ‘Lodged’.

Claim Serial No

Specify the claim serial no. for which settlement needs to be done.System validates that the entered unsettled claim is as per the sequential order of lodgement and status of the claim is ‘Lodged’.

11.4.2 Main Tab

The following details are captured here:

Contract Details

Issue Date

System defaults the contract issue date here.

Expiry Date

System defaults the contract expiry date here.

Claim Date

System defaults the guarantee claim date here.

Claim Expiry Date

System defaults the guarantee claim expiry date here.

Currency

System defaults the guarantee currency here.

Amount

System defaults the guarantee amount here.

Outstanding Amount

System defaults the outstanding guarantee amount here.

Counterparty Name

System defaults the name of the counterparty here.

Address

System defaults the address of the counterparty here.

Counterparty Type

System defaults the party type of the counterparty here.

Counterparty Reference

System defaults the reference no. of the counterparty here.

Beneficiary Name

System defaults the name of the beneficiary here.

Address

System defaults the address of the beneficiary here.

External Pricing

External Charge

During guarantee claim settlement for a contract for which ‘External Charges’ is enabled at product level, external charges is fetched from external pricing and billing engine.

For more details on the Charges Details screen, refer section ‘Contract Charge Details’ in Charges and Fees User Guide under Modularity.

Claim Details

Claim Lodgement Date

System defaults the date of claim lodged.

Claim Amount

System defaults the claim payment amount as claim amount.

Remarks

System defaults the remarks of the claim lodged.

Template ID

System defaults the template id of the claim lodged.

Claim Status

System defaults the status of the claim lodged.

Ancillary Message

Check this box to generate MT 759 on contract authorization.

Ancillary Message Function

Specify the ancillary message function. Alternatively, you can select the ancillary message from the option list. The list displays all valid options maintained in the system. Ancillary Message Function is mandatory if ‘Ancillary Message’ is checked.

Payment Details

Claim Payment Date

System defaults the application date as the claim payment date here.

Claim Payment Amount

System defaults the claim payment amount here.

Remarks

Enter remarks if any for claim payment.

Liquidate Using Collateral:

Check this box to indicate if the collateral needs to be utilized for the settlement of the claim.

Settle Available Amount

Check this option to debit the available amount from applicant and then create loan for the remaining amount during claim settlement. Settle Available Amount can be selected only when you select the Loan for Claim Settlement, else the system will validate the same.

Loan for Claim Settlement

System defaults the value maintained at product level. You can check/un-check this box to indicate that loan needs to be created or not for this claim settlement.

Settlement Details

Settlement Account Branch

The system defaults the details of settlement account branch. The values can be modified.

Settlement Account Currency

The system defaults the details of settlement account currency. The values can be modified.

Settlement Account

The system defaults the settlement account. The values can be modified.

Charges Debit Account Branch

The system defaults the details of charges debit account branch.The values can be modified.

Charges Debit Account Currency

The system defaults the details of charges debit account currency. The values can be modified.

Charges Debit Account

The system defaults the details of charges debit account. The values can be modified.

11.4.3 Advices Tab

The following details are captured here:

Advice Details

Message Type

System displays the message type of the message/advice generated.

Party Type

System displays the party type for which the message/advice is generated.

Party ID

System displays the party id for which the message/advice is generated.

Party Name

System displays the party name for which the message/advice is generated.

Medium

System defaults the medium in which the message has to be sent for the party. You can modify this.

Priority

System defaults the priority value of sending the message maintained at product level. You can modify this.

Suppress

Check this box to suppress the message.

Charges

System displays the charges for the claim.

FFT Details

Free Format Text Code

Specify the free format text code.

Text

Specify the free format text here.

The details for the following subsystems are defaulted from Guarantee/SBLC contract level.

Guarantee Collateral will be utilized proportionately for claim settlement and customer available balance will be utilized for the remaining amount. In case of inadequate funds in customer account, loan can be created for the remaining amount. On Save, Loan is created and the generated Loan Reference Number is made available in Linkages Subsystem in LCDGUONL screen.

Accounting entries are posted for below:

Advices:

11.4.4 Hold Button

Click ‘Hold’ button to hold the the data entered. On hold of the contract, the status of the contract will be updated as ‘Hold’ and the system will not do any mandatory validation on the data.

In auto-auth case, if hold is selected, then the contract will be in unauthorized status. System will not consider the contract which is on hold for any other processing.

During EOD, system will not consider the records which are on hold as pending transactions.

11.4.5 Viewing Claim Settlement

You can view the guarantee claim settlement details maintained in the ‘Guarantee Claim Settlement’ screen using the ‘Guarantee Claim Settlement Summary’ screen. You can invoke this screen by typing ‘LCSGCLP’ in the field at the top right corner of the Application tool bar and clicking on the adjoining arrow button.

In the above screen, you can base your queries on any or all of the following parameters and fetch records:

Select any or all of the above parameters for a query and click ‘Search’ button. The system displays records meeting the selected criteria and the following details of the records will be displayed:

11.5 Guarantees and Standby Letters of Credit Transfer In­put

This section contains the following topics:

11.5.1 Transferring Guarantees and Standby Letters of Credit

You can transfer Guarantees and SBLC using ‘Guarantees and Standby Letters of Credit Transfer Input’ screen. You can invoke this screen by typing ‘LCDGUTRF’ in the top right of the Application tool bar and clicking the adjoining arrow button.

You can maintain the following in this screen:

Contract Reference

Indicate the Guarantee/SB LC from which you want to effect the transfer. Click the adjoining option list and select a valid Contract Reference.

To Reference

Specify the reference number to which the Guarantee/SBLC should be transferred.

Expiry Date

The expiry date is the date up to which the transferred Guarantee/SB LC is valid. The expiry date of the original Guarantee/SB LC is defaulted. You can change the defaulted date. However, the expiry date cannot be earlier than the Guarantee/SB LC issue date or today's date.

To Guarantees Reference

Specify the reference number to which the guarantees should be transferred.

Transfer Amount

The transfer amount is the amount that should be transferred from the original Guarantee/SB LC. You can only transfer an amount that is less than or equal to the amount available under the original Guarantee/SB LC.

Transfer Date

Specify the date of transfer.

Remarks

Specify remarks, if any.

Default

Click the Default button for defaulting contract details

Current Availability

The system displays the current outstanding liability amount.

Sanction Check Status

The system displays the sanction check status.

Last Sanction Check Date

The system displays the last sanction check date.

11.5.2 Parties Tab

You can maintain the following details in Parties tab:

 

Party DetailsParty Type

Specify the Party Type by selecting the ‘Party Type’ from the adjoining option list

Party Description

The Party Description appears in the Party Description field once you select the Party Type.

Party ID

Specify the ‘Party ID’ for which you need to maintain. Alternatively, you can select the “Customer Id’ from the adjoining option list also.

Note

BIC Code appears next to the ‘Customer Id’ only if the BIC Code is mapped with that cus­tomer number. If the BIC code is not mapped with that customer number then the BIC Code will not appear next to the ‘Customer Id’ in the adjoining list.

The list displays all the valid parties maintained in the system. On selecting the party ID, the following details are displayed:

11.5.3 Documents Tab

You can maintain the following details in Documents tab:

11.5.4 Parties Limits Tab

You can maintain the following details in Parties Limits tab:

Credit Line

Specify the ‘Customer No’ for which you need to maintain. Alternatively, you can select ‘Customer Id’ from the adjoining option list also.

Note

BIC Code appears next to the ‘Customer Id’ only if the BIC Code is mapped with that Cus­tomer Number. If the BIC code is not mapped with that customer number then the BIC Code will not appear next to the ‘Customer Id’ in the adjoining list.

For more details on the tabs and buttons in Guarantees and SBLC Transfer Input screen, refer the chapter titled ‘Transferring LC’ in this user manual.

11.5.5 Viewing Guarantees and SBLC Transfer Details

You can view guarantees and SBLC transfer details through ‘Guarantees and Standby Letters of Credit Transfer Summary’ screen. You can invoke this screen by typing ‘LCSGUTRF’ in the top right corner of the Application toolbar and clicking the adjoining arrow button.

In the above screen, you can base your queries on any or all of the following parameters and fetch records:

Recommended Fields

Optional Fields

Select any or all of the above parameters for a query and click ‘Search’ button. The system displays the following records meeting the selected criteria: