TYPES OF SWIFT INFORMATION IN TRADE FINANCE - For Your Read

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a messaging network used by banks and financial institutions to exchange information related to trade finance instruments. There are various SWIFT messages available in trade finance instruments, including:




MT700: This message is used for issuing a letter of credit (LC) and contains details such as the LC amount, expiry date, beneficiary details, and terms and conditions.

MT701: This message is used for amending an LC and contains details of the changes to be made to the original LC.

MT707: This message is used for confirming an LC and contains details of the confirming bank, including their commitment to pay the beneficiary.

MT710: This message is used for a bank to bank reimbursement of an LC and contains details of the reimbursement claim.

MT711: This message is used for advising the beneficiary of an LC and contains details of the LC, such as the amount, expiry date, and issuing bank.

MT720: This message is used for issuing a demand guarantee (DG) and contains details such as the DG amount, expiry date, beneficiary details, and terms and conditions.

MT721: This message is used for amending a DG and contains details of the changes to be made to the original DG.

MT799: This message is used for a bank to bank communication related to trade finance transactions, such as confirmation of funds availability.

MT740: This message is used for a bank to issue a pre-advice of a documentary credit, providing an early indication to the beneficiary that a documentary credit is being established. MT742: This message is used for a bank to advise the beneficiary of the establishment of a documentary credit, and contains details such as the amount, expiry date, and issuing bank. MT747: This message is used for a bank to inform the beneficiary that documents have been received and are being checked for compliance with the terms and conditions of the documentary credit. MT754: This message is used for a bank to confirm to the beneficiary that documents have been found to be compliant with the terms and conditions of the documentary credit. MT760: This message is used for a bank to issue a standby letter of credit (SBLC) and contains details such as the amount, expiry date, beneficiary details, and terms and conditions. MT767: This message is used for a bank to confirm to the beneficiary that the SBLC has been issued and is available for drawing.

These SWIFT messages are standardized and ensure that information related to trade finance instruments is transmitted accurately and securely between banks and financial institutions.

Arasan Trade Finance Consultant
+91 9345516057

Comments

Post a Comment

Popular posts from this blog

SBLC - STANDBY LETTER OF CREDIT - For Your Read

Image
  A standby letter of credit (SBLC) is a financial instrument that serves as a guarantee to ensure that a specific obligation is fulfilled. It is commonly used in international trade transactions where there is a significant amount of risk for both the buyer and seller. An SBLC is issued by a bank on behalf of a buyer (the applicant) in favor of a seller (the beneficiary). The purpose of the SBLC is to provide assurance to the seller that payment will be made in the event that the buyer is unable to fulfill their payment obligations. If the buyer defaults, the seller can draw on the SBLC to receive payment from the issuing bank. There are two main types of SBLCs: performance SBLCs and financial SBLCs. A performance SBLC is used to guarantee that the buyer will fulfill their contractual obligations, such as completing a construction project or delivering goods on time. A financial SBLC is used to guarantee payment for goods or services. To obtain an SBLC, the applicant must provide coll
Read more

IS IT POSSIBLE FOR A NONRATED BANKS TO ISSUE TRADE FINANCE INSTRUMENTS LC|SBLC|BG? - For Your Read

Image
  It is possible for non-rated banks to provide letters of credit (LCs) to applicants, but it can be more challenging than for rated banks. A bank's credit rating reflects its financial strength and ability to meet its financial obligations. Banks with higher credit ratings are generally viewed as more reliable and trustworthy by counterparties in trade transactions. Non-rated banks, on the other hand, have not been evaluated by credit rating agencies and may be viewed as riskier by counterparties. Therefore, non-rated banks may face more scrutiny from counterparties and may need to provide additional assurances of their ability to fulfill their obligations under the LC. This could include providing collateral, obtaining insurance or guarantees from third-party insurers, or working with a rated bank as a confirming bank to provide additional security to the beneficiary. Overall, while non-rated banks can provide LCs to applicants, they may face more challenges and may need to take
Read more

BANK GUARANTEE IN TRADE FINANCE - For Your Read

Image
  A Bank Guarantee (BG) is a financial instrument issued by a bank on behalf of a customer, which guarantees payment to a beneficiary if the customer fails to fulfill their contractual obligations. A Bank Guarantee is a popular tool used in a variety of business transactions, including trade finance. In the context of trade finance, a Bank Guarantee can be used to secure payment for goods or services. For example, if a buyer and seller are located in different countries and the seller requires payment before shipping the goods, the buyer can request a Bank Guarantee from their bank to provide assurance to the seller that payment will be made. The seller's bank can then confirm the validity of the Bank Guarantee and release the goods for shipment. There are several types of Bank Guarantees that can be used in trade finance, including performance guarantees, bid bonds, advance payment guarantees, and warranty guarantees. Each type of Bank Guarantee serves a specific purpose and provi
Read more