Letter of Credit – MT 700 Format

Earlier article “Types of Swift Message used in Letter of Credit and Suppliers Credit” discussed details related to Category 7 message. This article further explore MT700 used for Letter of Credit Issuance. This will help importers understand various fields in MT700, related UCP 600 reference etc.

Summary

  • There are 40 field in MT700
  • 11 Mandatory field and 29 Optional fields
  • Maximum length: 10,000 characters
  • A Relationship Management Application (RMA) authorisation is required in order to sign a MT700 message.
  • Either field 39A or 39B, but not both, may be present
  • When used, fields 42C and 42a must both be present
  • Either fields 42C and 42a together, or field 42M alone, or field 42P alone may be present. No other combination of these fields is allowed
  • Either field 44C or 44D, but not both, may be present

Usage Rules

  1. When the documentary credit message exceeds the maximum input message length, additional documentary credit information should be transmitted via one or more MTs 701. Up to eight MTs 701 may be sent in addition to the MT 700
  2. Information conveyed in a designated field in the MT 700 must not be repeated in any related MT 701. Information in any related MT 701 must not conflict with any information that is present in this MT 700.
  3. Unless otherwise specified, a documentary credit advised to the beneficiary or another advising bank based on a SWIFT message constitutes an operative credit instrument.
  4. For freely negotiable documentary credits, if the Receiver does not further transmit the credit by MT 710, it must add sentences to the effect that:
    • The advice to the beneficiary must be presented at each negotiation
    • The negotiating bank must note each negotiation on that advice.
  5. To avoid misunderstandings, where possible, banks are to use identifier codes rather than expressions such as ourselves, yourselves, us, or you.
  6. The advising bank must advise a documentary credit, including all its details, in a way that is clear and unambiguous to the beneficiary.

MT 700 Format Specifications

Status: M = Mandatory, O = Optional

Status Tag Field Name Field Info
M 27 Sequence of Total This field specifies the number of this message in the series of messages sent for a documentary credit, and the total number of messages in the series.

If only MT700 is issued it will say 1/1. If in addition one MT701 is sent for the same LC, it will day 1/2

M 40A Form of Documentary Credit This field specifies the type of credit

  • Irrevocable,
  • Irrevocable Transferable,
  • Irrevocable Standby,
  • Irrevoc Trans Standby
M 20 Documentary Credit Number Documentary credit number which has been assigned by the Sender.
O 23 Reference to Pre-Advice Use of this field indicates that the documentary credit has been pre-advised
M 31C Date of Issue Date On Which The Issuing Bank (Sender) Considers The Documentary Credit As Being Issued.
M 40E Applicable Rules

This field specifies the rules the credit is subject to. If LC is silent it will be deemed as irrevocable as per Art.3 of UCP 600

  • Eucp Latest Version,
  • Eucpurr Latest Version,
  • Isp Latest Version,
  • Othr,
  • Ucp Latest Version,
  • Ucpurr Latest Version
M 31D Date and Place of Expiry Art.6.d. of UCP 600 stipulates that every credit must state the date of expiry of credit.

Expiry Date would be the last date for presentation of documents by the beneficiary under the letter of credit and is referred to as validity date of letter of credit

Along with the date of expiry, credit must also specify the place for presentation of documents as per Art.6.d, where the LC expires.

O 51a Applicant Bank Bank of the applicant customer, if different from the issuing bank.
M 50 Applicant Party on behalf of which the documentary credit is being issued.
M 59 Beneficiary Party in favour of which the documentary credit is being issued.
M 32B Currency Code, Amount Currency code and amount of the documentary credit.
O 39A Percentage Credit Amount Tolerance

Tolerance denotes the variance that has to be built around the LC amount, to arrive at the actual availability amount for the LC

  • The positive tolerance is the percentage that should be added to the LC amount, to arrive at the Maximum LC Amount.
  • The negative tolerance is the percentage that should be subtracted from the LC amount, to arrive at the Minimum LC Amount.
O 39B Maximum Credit Amount

This field further qualifies the  documentary credit amount.

Not Exceeding

O 39C Additional Amounts Covered Additional amounts available to the beneficiary under the terms of the credit, such as insurance, freight, interest, etc
M 41a Available With … By …

As per Art.6.b. of UCP 600, the Issuing Bank must indicate how a credit is available, whether

1) By Sight Payment : Nominated / Overseas Bank will make payment on receipt of documents
2) By Deferred Payment : Nominated/ Overseas bank will make payment on due date
3) By Acceptance :  Nominated/ Overseas Bank will accept the draft to make payment on due date provided the draft is drawn on them – this normally is done when the credit is confirmed or restricted
4. By Negotiation :   Nominated / Overseas Bank will negotiate the draft drawn on the Confirming Bank/LC issuing Bank to part with the value on sight basis or at a future date.

O 42C Drafts at … Tenor of drafts to be drawn under the documentary credit.
O 42a Drawee This field identifies the drawee of the drafts to be drawn under the documentary credit.
O 42M Mixed Payment Details This field specifies the payment dates, amounts and/or method for their determination in a documentary credit which is available by mixed payment.
O 42P Negotiation / Deferred Payment Details This field specifies the payment date or method for its determination in a documentary credit which is available by deferred payment or negotiation only.
O 43P Partial Shipments

LC should indicate expressly whether partial shipments are allowed or not. If nothing is stated, by virtue of Art.31.a of UCP 600, the partial shipments are deemed as allowed.

  • Allowed
  • Conditional
  • Not Allowed
O 43T Transhipment

Articles 19 to 24 of UCP 600 allow transhipment even if the credit specifically prohibits transhipment. In the light of these provisions, it is up to the banks to act prudently as per instructions of applicant and to allow transhipments wherever credit allows combined transport

  • Allowed
  • Conditional
  • Not Allowed
O 44A Place of Taking in Charge/Dispatch from…/Place of Receipt This field specifies the place of taking in charge (in case of a multimodal transport document), the place of receipt (in case of a road, rail or inland waterway transport document or a courier or expedited delivery service document), the place of dispatch or the place of shipment to be indicated on the transport document.
O 44E Port of Loading/Airport of Departure Port of loading or airport of departure to be indicated on the transport document.
O 44F Port of Discharge/Airport of Destination Port of discharge or airport of destination to be indicated on the transport document.
O 44B Place of Final Destination/For Transportation to…/Place of Delivery Final destination or place of delivery to be indicated on the transport document.
O 44C Latest Date of Shipment Latest date for loading on  board/ dispatch/ taking in charge.
O 44D Shipment Period Specifies the period of time during which the goods are to be loaded on board / despatched /taken in charge
O 45A Description of Goods and/or Services While stating the description of goods, excessive details (particularly technical specifications etc.) must be avoided. They should be as brief as possible. Reference to proforma invoices must be avoided. In the description, INCO terms such as ‘CIF MUMBAI’, ‘FOB TOKYO’ etc. should be stated. In the description of goods either quantity or unit price should necessarily be mentioned.
O 46A Documents Required Description of any documents required.
O 47A Additional Conditions Description of further conditions of the documentary credit.
O 49G Special Payment Conditions for Beneficiary This field specifies special payment conditions applicable to the beneficiary, for example, post-financing request / condition
O 49H Special Payment Conditions for Receiving Bank This field specifies special payment conditions applicable to the receiving bank without disclosure to the beneficiary, for example, post-financing request/conditions for receiving bank only.
O 71D Charges

This field may be used only to specify charges to be borne by the beneficiary. In the absence of this field, all charges, except negotiation and transfer charges, are to be borne by the applicant.

  • Agent,
  • Comm,
  • Corcom,
  • Disc,
  • Insur,
  • Post,
  • Stamp,
  • Telechar,
  • Warehous
O 48 Period for Presentation in Days As per Art.14.c of UCP 600, every credit which calls for a transport documents must stipulate a specified period of time after the date of issuance of the transport documents during which beneficiary must present the documents to the nominated bank (for settlement). If no such period is stipulated, banks will not accept documents presented later than 21 days after the date of shipment.
M 49 Confirmation Instructions

This field contains confirmation instructions for the Receiver (advising bank).

  • Confirm,
  • May Add,
  • Without
O 58a Requested Confirmation Party Bank which is requested to add its confirmation or may add its confirmation.
O 53a Reimbursing Bank Name of the bank which has been authorised by the Sender to reimburse drawings under the documentary credit. This may be a branch of the Sender or the Receiver, or an entirely different bank.
O 78 Instructions to the Paying/Accepting/Negotiating Bank This field specifies instructions to the paying, accepting or negotiating bank. It may also indicate if pre-notification of a reimbursement claim or pre-debit notification to the issuing bank is required.
O 57a Second Advising Bank This field identifies the bank, if different from the Receiver, through which the documentary credit is to be advised / confirmed to the beneficiary.
O 72Z Sender to Receiver Information Additional information for the Receiver.

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