19) T24 - Induction - Business - Letter - of - Credit

T24 Letter of Credit
Release Date September, 2012

Agenda
01 Learning Objectives
02 Product Overview
03 Static Tables
04 Import LC
05 Export LC
06 Drawings
07 Enquiries and COB Reports
Learning Objectives
T24 Letter of Credit > Learning Objectives
Objectives
To Learn what is T24 Trade Finance used for
Trade Finance linkages with other Static Tables
Opening Import and Export Letter of Credits Transactions
Amendments and Drawings related to Import letter of Credits
Enquiries and COB Reports

Agenda
02 Product Overview
03 Static Tables
04 Import LC
05 Export LC
06 Drawings
T24 Trade Finance – What is it used for?
T24 Letter of Credit > Product Overview
 T24 Trade Finance can be used for

 Establishing Import Letter of Credits on behalf of their
Constituents/ Applicant
 Receiving Export Letter of Credits from other banks for
their beneficiary
 This Module is encompassed with Drawings and

negotiation of Bills received Under Import / Export
Letter of Credits
T24 Trade Finance - How it works
Parties to Letter of Credit/Documentary Collections
ISSUING BANK
B
REIMBURSING ADVISING
BANK BANK
G APPLICANT C
A
CONFIRMING
NEGOTIATING BANK
BANK D
F
BENEFICIARY
E
Product Overview
Import
Confirmed
Letters of Unconfirmed
Credit
Revolving
Opening Non
Negotiation
LC Revolving
Amending Transferable DRAWINGS
Non
Sight
Transferable
Documentary
Back to Back Usance
Collections
Stand by Mixed
Guarantees
Financial DRAW.
Stand by LC Export
Guarantee NEGOTIATION
Payment Guarantee
Performance
Guarantee
Agenda
02 Product Overview
03 Static Tables
04 Import LC
05 Export LC
06 Drawings
Letter of Credit – Static Tables
T24 Letter of Credit > Static Tables
Interest PERIODIC.INTEREST
Related
INTEREST.BASIS
LETTER CATEGORY
Product
OF Related
CREDIT FT.COMMISSION.TYPE
CURRENCY
CUSTOMER
Currency COUNTRY
Related
ACCOUNT
Agenda
02 Product Overview
03 Static Tables
04 Import LC
05 Export LC
06 Drawings
LETTER.OF.CREDIT
T24 Letter of Credit > Import LC
 Handles all activities of import and export LCs and documents for
collection
 Enables pre advising, opening, advising, confirming, amending
 Enables collection of charges

 In different currencies
 Any time
 Permits specification of exchange rate

Transaction
ID is
 Supports Sight, Usance and mixed payment generated
 Revocable, Irrevocable automatically
 Transferable, Non transferable by T24
 Revolving, Non revolving
 Back to Back and Standby LCs
Basic elements
 Operation code - O
 Type of Credit
 Applicant
 Beneficiary
 Advising bank
 Intermediary Bank
 Reimbursement Bank
Basic elements
 Confirmation request
 A bank May add confirmation while advising the LC to the beneficiary or it
may not add confirmation
 Three choice are available in T24 CONFIRM, MAY ADD and UNCOFIRM
 When it adds its confirmation that bank is called as confirming bank
 Value of this Confirmation goes as Tag 49 of MT 700 of SWIFT MSG
 Currency, amount & tolerance
 Expiry date & place
 Tenor
 Availability ( “FOR PAYMENT”, “ACCEPTANCE”,“NEGOTIATION”)
 Latest shipment
Basic elements
 Documents required
 Additional Conditions
 Charges
 Liability
 For Issuing bank of Import LC, LC Applicant is the risk party
 For Confirming bank of Export LC, LC opening bank is the risk
party
Open an Import LC
Menu Navigation
Workshop
Use User Menu > Corporate Operations > Trade Finance >
Import LCs > Issuance of Import LCs > Issue of Sight
Payment LCs
Instructions
 Open an Import LCs for USD 10,000 expiring in 6

months in favour of ABC Inc. Credit available only with
yourselves and applicable rules - UCP Latest Version,
Advising Bank – Allied Irish Bank Sight Confirmed
 Get the records authorised

Solution - Open an Import LC
Workshop
Effecting LC Amendments
 Mandatory Field / details

 Operation Code set to “A”
 EXTERNAL.REFERENCE Field to hold Bank’s / Customer’s
reference for use in advice
 Internal amendment
 AMENDMENT.DEL Field can be set as NO to stop advice
generation. Amendment Number also not generated
 External amendment
 AMENDMENT.DEL Field to be set as Yes to generate advices
 Amendment Number generated
Effecting LC.AMENDMENTS
 For amendments which await Beneficiary’s consent,

LC.AMENDMENTS can be used
 Id of the record is LC number. System creates A01, A02 etc

 Status shown as Pending till approved or rejected through LC
Operation code ‘D’
 After the LC has been established there could be a request to make
certain modification on certain terms and condition in LC they are
called as amendments
Amend LC
Menu Navigation
Workshop
Import LCs > Maintenance of Import LCs > External
Amendment
Instructions
 Make the following amendments to the Import Sight

Payment LC opened in Workshop – 1 (LC
No.2010/JAN/203)
 Mark External reference as 2010/JAN/2003
 LC amount increased to USD 15,000
 LC expiry place change to Singapore from London
 Preview the delivery message and get the record authorized
 Through context sensitive enquiry, look at Accounting

entries for the increase
Solution - Amend LC
Workshop
Solution - Amend LC
Workshop
Solution - Amend LC
Workshop
Solution - Amend LC
Workshop
Solution - Amend LC
Workshop
Agenda
02 Product Overview
03 Static Tables
04 Import LC
05 Export LC
06 Drawings
Export LC Handling
T24 Letter of Credit > Export LC
 Reverse process of Import LC
 Different roles -
 Advising bank
 Confirming bank
 Negotiating bank
 Reimbursing bank
 Once LC is entered in bank’s books, outward messages are

issued
 MT730 for acknowledgement and 1730 to beneficiary
Agenda
02 Product Overview
03 Static Tables
04 Import LC
05 Export LC
06 Drawings
Drawings
T24 Letter of Credit > Drawings
 Documents received from negotiating bank (Import LC) or

beneficiary (Export LC), accepted for Negotiation and input
through DRAWINGS application when they conform to LC terms
 System support the following Drawings type

 Sight, Acceptance, Mixed, Deferred payments
 Payment is made to LC negotiating bank through NOSTRO by

debiting Customer account or payment by cheque, Bankers
cheque etc
 Collection of charges can also be attached to the respective

drawing which can be collected immediately or later
Drawings – Basic Elements
 Id is the LC No. System generates Drawing sequence No.
 Currency and amount of documents can be different from LC

and draw down currencies
 Fully utilised or not - to be indicated during Drawings
 Value date of payment can be current, future or back valued
 Possible to opt for suitable rounding rule like Natural, Round up,
Round down etc while handling Drawings
Drawings
Menu Navigation
Workshop
A) Use User Menu > Corporate Operations > Trade Finance

> Import LCs > Drawings under Import LC (Non-
Discrepant) > Sight Payment under Import LC
B) Use User Menu > Corporate Operations > Trade Finance
> Accounting Entries > View Transaction Entries
Instructions
A)
 For the Import Sight LC opened in Workshop – 2 for USD 15,000
(LC No.2010/JAN/208) effect a suitable drawing for USD 16,000
 Credit the proceeds to Nostro account 23752 with Citi Bank, New
York
 Mark it as NOT fully utilised and get the record authorised
B)
 Look at the accounting entries passed
Solution - Drawings
Workshop
Solution - Drawings
Workshop
Workshop – Solution
Workshop
Collection – Basic Elements
 Handled through LC and DRAWINGS applications
 Basic elements
 Drawee/Buyer
• Applicant Field (Inward collection) Beneficiary Field
(Outward collection)
 Drawer/Seller
• Applicant Field (Outward collection) Beneficiary Field (Inward
collection)
 Collecting Bank
• Issuing Bank Field used to denote the counterpart bank
 Tracer
• Expiry date triggers Tracer action
Discrepant Document Processing Under LC
 Drawings application used to input Non discrepant as well as

discrepant documents under LC
 Non discrepant documents with Operation code like SP and AC
 Discrepant documents with Operation code CO
 Nature of discrepancy indicated by choosing pre-defined
DR.DISCREPANT.TYPE
 Subsequent Operation codes used for discrepant documents

are
 SP/AC - to record payment by counterparty
 CC - to produce Chaser advices
 CR - to indicate rejection and FR for final rejection
Advise Sight Payment
Menu Navigation
Workshop
Export LCs > Register/Advise Export LCs > Advise/Register
Sight Payment LCs
Instructions
 Advise a Sight Export LC to your customer for USD 12,000, valid

for 6 months, to supply 1000 Super Computers
 Documents required are

 Packing list 3 copies
 Bill of Lading 3 sets
 Certificate for country of origin
 Get the record authorised

Solution - Advise Sight Payment
Workshop
Lodge Discrepant Docs
Menu Navigation
Workshop
Export LCs > Discrepant Documents under Export LC >
Lodge Discrepant Docs under Export LC
Instructions
The documents has the following discrepancy – Certificate of Origin

not provided
 Treat it as external discrepancy and send for collection for USD

4,000 without paying
Solution - Lodge Discrepant Docs
Workshop
Lodge Discrepant Docs
Menu Navigation
Workshop
Accounting Entries > View Unauthorised Entries
Instructions
 Look at the accounting entry

 Get the record authorized
Solution - View Unauthorised Entries
Workshop
Reject Discrepant
Menu Navigation
Workshop
Trade Finance Menu > Export LCs > Discrepant Documents
under Export LC > Reject Discrepant Documents (Exports)
Instructions
You have now received message from the applicant’s bank that
the discrepancy is not acceptable
 State the disposal instructions as “HOLD” and get the record

authorized
Solution - Reject Discrepant
Workshop
Final Rejection
Menu Navigation
Workshop
Export LCs > Discrepant Documents under Export LC >
Payment Under Reserve > Final Rejection of Returned Bill
Instructions
You have now received the documents back
 Finally reject the documents with the disposal instructions as

“RETURN” and get the record authorized
Solution - Final Rejection
Workshop
Agenda
02 Product Overview
03 Static Tables
04 Import LC
05 Export LC
06 Drawings
Trade Finance Enquiries
T24 Letter of Credit > Enquiries and COB Reports
 List of Import LCs outstanding

 Displays a list of all Import LCs outstanding
 List of Import LCs expired but outstanding

 Displays a list of all expired import LCs
 List of Export LCs Outstanding

 Displays a list of all Export LCs outstanding
 List Of Export LCs expired but outstanding.

 Displays a list of all expired Export LCs
Standard Enquiries relating to Lcs
 User Menu > Corporate Operations > Trade Finance > Enquiries
Trade Finance COB Reports
 Letter Of Credit by Expiry

 Displays a list of all Expired LCs company wise
 All LCs By risk Party
 Displays details of all LCs Party wise
COB Reports
 Lets look at COB Report
 User Menu > Corporate Operations > Trade Finance > COB Reports
What Did We Learn?
Conclusion
What is T24 Trade Finance used for
How Trade Finance works
Opening of Import LCs and Export Lcs
Drawings
Enquiries & COB Reports

Contact Us
For training Enquiries
university@temenos.com
Thank You
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19) T24 - Induction - Business - Letter - of - Credit

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T24 Letter of Credit

Release Date September, 2012

To Learn what is T24 Trade Finance used for

Trade Finance linkages with other Static Tables

Opening Import and Export Letter of Credits Transactions

Amendments and Drawings related to Import letter of Credits

Enquiries and COB Reports

 T24 Trade Finance can be used for

 This Module is encompassed with Drawings and

 Enables collection of charges

 Permits specification of exchange rate

 Currency, amount & tolerance

 Expiry date & place

 Availability ( “FOR PAYMENT”, “ACCEPTANCE”,“NEGOTIATION”)

 Open an Import LCs for USD 10,000 expiring in 6

 Get the records authorised

 Mandatory Field / details

 For amendments which await Beneficiary’s consent,

 Id of the record is LC number. System creates A01, A02 etc

 Make the following amendments to the Import Sight

 Through context sensitive enquiry, look at Accounting

 Reverse process of Import LC

 Once LC is entered in bank’s books, outward messages are

 Documents received from negotiating bank (Import LC) or

 System support the following Drawings type

 Payment is made to LC negotiating bank through NOSTRO by

 Collection of charges can also be attached to the respective

 Id is the LC No. System generates Drawing sequence No.

 Currency and amount of documents can be different from LC

 Value date of payment can be current, future or back valued

A) Use User Menu > Corporate Operations > Trade Finance

 Handled through LC and DRAWINGS applications

 Drawings application used to input Non discrepant as well as

 Subsequent Operation codes used for discrepant documents

 Advise a Sight Export LC to your customer for USD 12,000, valid

 Documents required are

 Get the record authorised

The documents has the following discrepancy – Certificate of Origin

 Treat it as external discrepancy and send for collection for USD

 Look at the accounting entry

 State the disposal instructions as “HOLD” and get the record

You have now received the documents back

 Finally reject the documents with the disposal instructions as

 List of Import LCs outstanding

 List of Import LCs expired but outstanding

 List of Export LCs Outstanding

 List Of Export LCs expired but outstanding.

 Letter Of Credit by Expiry

 Lets look at COB Report

What is T24 Trade Finance used for

How Trade Finance works

Opening of Import LCs and Export Lcs

Enquiries & COB Reports

For training Enquiries

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