Indian Banks' Association

No. PS&BT/SFMSI1662
16th April, 2015

The Chief Executives of all Member Banks

Dear Sir/Madam,

Use of SFMS for sending and receiving Letter of Credit and Bank Guarantee Instrument

Please refer to our letter No. PS&BT/SFMS/215 dated 24th June, 2014, No.
PS&BT/RBIISFMS/6350 dated 28th July, 2012 enclosing letter F.No.7/112/2011-BOA dated
17th July, 2012 on the above subject from Department of Financial Services, Ministry of

Finance, Government of India. It was mentioned that Department of Financial Services had
issued guidelines making it mandatory with effect from 1st August, 2012 for all Public Sector
Banks for sending and receiving Letter of Credit Of Bank Guarantee through SFMS system
only. (Copies of the letters are enclosed).

2. In the above referred IBA letter dated 24th June, 2014, it was stated that IBA had issued
letter No. PS&BT/RBIISFMS/6350 dated yd January, 2013 on the captioned subject
forwarding therewith letter F.No.7/112/2011-BOA dated 31st December, 2012 on the above
subject from Department of Financial Services, Ministry of Finance, Government of India It
was mentioned that BGs may continue to be issued in paper form and delivered by issuing
banks to beneficiary/ applicant as being done presently. However, in addition to it, with
effect from r' April, 2013, a separate advice of the BG be sent by issuing bank to the
advising bank through SFMS only after which the paper BG could become operative. IDRBT
was requested to bring necessary changes in the system to incorporate the text of separate
advice in the SFMS by 31st March, 2013. We had requested all the member banks vide above
mentioned letter to implement the above directions. (Copies of the letters are enclosed).

3. In this connection, we have to state that the IFN 760 COY Bank Guarantee Message
and IFN 767 COY Bank Guarantee Amendment Message formats developed by the IDRBT
have been finalized based on the feedback received from some of the member banks by the
Working Group on Implementation of e-Bank Guarantee and placed before the IBA Committee
on Payments Systems and Banking Technology at its meeting held on 19th March, 201 S. The
Committee on Payments Systems and Banking Technology deliberated the matter and decided
that IBA may circulate the IFN 760 COY Bank Guarantee Message and IFN 767 COY
Bank Guarantee Amendment Message formats to the member banks and IDRBT for
implementation.
V
World Trade Centre Complex, Centre 1, 6th Floor,Cuffe Parade, Mumbai - 400005. Tel: +9122 22174040. Fax: +91 2222184222/22154131
Website: www.iba.org.in
indian Banks' Association CONTINUATION SHEET

4. The IBA Managing Committee at its meeting held on th April, 2015 endorsed the
views of the Standing Committee of Payment Systems and Banking Technology and decided
that:
1. The IFN 760 COY Bank Guarantee Message and IFN 767 COY Bank Guarantee
Amendment Message formats shall be uniformly implemented by all the member
banks with effect from lSI June 2015.
11. IBA shall write to the Department of Financial Services requesting to issue suitable
guidelines to all the Central and State Government Ministries/Departments to give the
Name of the Beneficiary and his details, Beneficiary Bank Branch IFSC, Beneficiary
Bank Branch Name and address while giving their requirements for the Bank
Guarantee, so that the Issuing Bank Branch can send the IFN 760 COY Bank Guarantee

-
Advice Message to .the Advising Bank Branch (Beneficiary Bank Branch) through
. ~
SFMS, only after which the paper Bank Guarantee could become operative.
111. Further, IBA shall write to the Department of Financial Services requesting them to
write to the State Governments to implement the e-Stamping facility.

The Managing Committee also directed IBA to advise banks to introduce e-Bank Guarantee
latest by l" July 2015. The IBA Working Group on Implementation of e-Bank Guarantee is
finalizing the modalities for implementation of the e-Bank Guarantee, which will be
communicated in due course for implementation.

5. We request you to kindly take note of the above Managing Committee decisions.

Yours faithfully,

~~
K Unnikrishnan
Deputy Chief Executive
(ij,; ~
 Indian Banks' Association
No. PS&BT/SFMS/215
24thJune, 2014

The Chief Executives of all Member Banks

Dear Sirs/Madam,

Use of SFMS for sending and receiving Letter

of Credit and Bank Guarantee Instrument

.lease refer to our letter Nos. PS&BT/RBI/SFMS/6350 dated 28thJuly, 2012 enclosing letter
F.No.7/112/2011-BOA dated 17th July, 2012 on the above subject from Department of
Financial Services, Ministry of Finance, Government of India. It was mentioned that
Department of Financial Services had issued guidelines making it mandatory with effect from
151 August, 2012 for all Public Sector Banks for sending and receiving Letter of Credit or
Bank Guarantee through SFMS system only. (copies of the letters are enclosed).

We had also issued letter No.PS&BT/RBI/SFMS/6350 dated 3rd January, 2013 on the
captioned subject forwarding therewith letter F.No.7/112/2011-BOA dated 31St December,
012 on the above subject from Department of Financial Services, Ministry of Finance,
Government of India. It was mentioned that all banks may exchange LC Messages through
FMS with effect from 1st January, 2013. It was also mentioned that BGs may continue to be
. sued in paper form and delivered by issuing banks to beneficiaryl applicant as being done
: resently. However, in addition to it, with effect from 1sr April, 2013, a separate advice of
1 e BG be sent by issuing bank to the advising bank through SFMS only after which the
IDaperBG could become operative. IDRBY was requested to bring necessary changes in the
~ystem to incorporate the text of separate advice in the SFMS by 31st March, 2013. We had
requested all the member banks vide above mentioned letter to implement the above

Complex. Centre 1, 6th Floor, Cuffe Parade, Mumbai - 400005. Tel: +91 2222174040. Fax: +91 2222184222! 2215 4131
Website: www.iba.org.in
 I

".

CONTINUAT!ON SHEET

3. It has been brought to notice by one of our member bank that in one of the frauds
detected recently by the bank, it has come to their notice that some of the Public Sector
Banks, Private Banks and Foreign Banks are not routing all LCs related transactions through
SFMS mandatorily.

4. As the use of the SFMS system has been mandated by the Department of Financial
Services and would be necessary for preventing frauds, we request you to kindly use SFMS
for receiving and sending LC related transactions. You are also requested to kindly
implement the direction given by Department of Financial Services regarding BGs may
continue to be issued in paper form and delivered by issuing banks to beneficiary/ applicant
as being done presently. However, in addition to it, a separate advice of the BG be sent by
issuing bank to the advising bank through SFMS only after which the paper BG could
become operative.

Yours faithfully,
. ~v.J

d~'tZ~:_-
K Unnikrishnan
Deputy Chief Executive

Encl.: As stated above

)---
 F.No.7/11212011- BOA
Government of India
Ministry of Finance
Department of Financial Services
Jeevan Deep Building, Sansad Marg,
New Delhi, dated the 31St December, 2012
To
The Chief Executive,
Indian Bank's Association,
Mumbai.

Subject: Use of SFMF for sending and receiving Letter of Credit and Bank
Guarantee instruments.

Dear Sir,

Kindly refer to the captioned subject. In this regard, you are requested to issue
appropriate instructions / guidelines /advisory to your members and IDRBT so as to
ensure that-
(i) All banks may exchange LC messages through SFMS w. e. f. 01.01.2013.
(ii) BGs may continue to be issued in paper form and delivered by issuing banks to
beneficiary/ applicant as being done presently. However, in addition to it, with effect
from 01.04.2013, a separate advice of the BG be sent by issuing bank to the advising
bank through SFMS only after which the paper BG could become operative.
(iii) IDRBT may bring necessary changes in the system to incorporate the text of separate
advice in the SFMS by 31.03.2013.
2. This may be accorded top priority and you may advise this Department on the
action taken by you on the above at the earliest.
3. The progress will be reviewed by this Department with IBA, IDRBT and banks
around 20.01.2013.
Yours faithfully,

(Pravin Rawal)
Deputy Secretary to the Government of India
Ph- 011-23746874
email-dirboa-dfs@nic.in.boa@nic.in
Copy to:
1. CEO,IDRBT
2. CEOs of Public Sector Banks,
 BG ISSUANCE INSTRUCTION GUIDE

Performance guarantees

erformance Bank Guarantees are transaction related contingencies that involve an irrevocable
ndertaking to pay a third party in the event the counterparty fails to fulfil or perform a
contractual non-financial obligation. In such transactions, the risk of loss depends on the event
which need not be related to the creditworthiness of the counterparty involved.

eller of the issuing Bank should follow the below table while entering the
issued BG details in SFMS system of RBI* .

Transaction Reference Number

(Issuing Bank Guarantee Number)

2 7022 Guarantee Form Number

3 7024 Type of Bank Guarantee:
Performance,
Financial,
Others
7025 Amount of Guarantee
Currency Code
Amount
7026 Guarantee Validity
Guarantee From Date
Guarantee To Date
6 7027 Guarantee Effective Date

7 7029 End date for lodgment of claim

8 7030 Place of lodgment of claim

9 7031 Issuing Branch IFSC
10 7032 Issuing branch name and address

1.1 7033 Name of applicant and his details

12 7034 Name of Beneficiary and his details

13 7035 Beneficiary IFSC

14 7036 Beneficiary branch name and

address
15 7037 Sender to Receiver Information
, i: -.. ,
•
\. ....

16 7038 Purpose of Guarantee

F 7039 Reference/Description of the

underlined contract

7040 Stamp Duty Electronically Paid (V/N)

7041 E-Stamp Number
7042 E-Stamp Date and time
7043 Amount paid
12 7044 State Code
43 7045 Article Number
24 7046 Date of Payment
25 7047 Place of Payment
26 7048 e-Bank Guarantee to be held in
Demit Form(V/N}

'},7 7050 Custodian Service Provider

28 7049 Demit Account Number

(* I is advised to sellers to share the above instructions guide with the concern the concerned official of
the issuing bank)