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INTRODUCTION

International trade can be defined as the exchange of capital, goods and services
across international borders or territories. In most developing countries, such
trade represents a significant share of the gross domestic product of some
countries.
It allows us to expand our market for both goods and services that otherwise may
not be available to us.
The international standards methods of payments for goods shipped across countries are
documentary credits, documentary collections, advance payments and open accounts. In
recent times documentary collections are mostly used for goods shipped from European
countries where as documentary collections and advanced payments are mostly used by the
Asians. Importation of goods has been predominant trade in Ghana and has augmented the
volume of foreign business for Authorized Dealers. The banks make a remarkable income from
international trade but it has a high risk exposure.
1. DOCUMENTARY CREDIT/LETTERS OF CREDIT (IMPORT)
It is always better to establish Import letters of Credit on behalf of customers of the Bank
because of the high risk exposure.
I.
PROCESS WORK FLOW
a. The customer shall complete and submit
Letter of Credit Application Form
Pro-forma invoice
Import Declaration Form from MOTI
Other Documentations depending on your import item.
STAGES OF THE LETTERS OF CREDIT

LC APPLICATION
LC/DC/EXP

II.

OVERVIEW

LODGEMENT

DRAWINGS

In T24 Trade Finance application is used in processing Documentary Credits/Letters of credit.


This system allows documents lodgment which is common with documentary collections and
documentary credits. The maintenance menu helps in amendments, take/reduce margin, and
approve/reject amendment and cancellation of LC. The system is able to raise and reverse all
Contingent liabilities entries without human intervention.

TRADE FINANCE MENU

Click on Trade Finance

Click on and import LCs to view the various types of LCs

TYPES OF LCS

Issue of sight payment


Issue of Usuance LCS
Issue of negotiation of LCS
Issue of mixed payment LC
Issue of standby LCS
Note that the Clauses/conditions of LC determine the type. Therefore users are advised
to study the conditions carefully to determine its type and drop down to select the type

Procedure

Basic Info
Click on the tab of the type of LC
Input data into all the fields required especially the mandatory fields

Charges
Click on charges button for your commission
Note that the user would only need to select

The charge default account number


Charge code
Amortized charge to be no
Charged status to be collected
Validate the transaction to default the currency and the charge amount

Taking Margin
Click on the margin tab where necessary
Select the margin calc base
Input your percentage margin or margin amount
Select your margin debit and credit account
Validate the transaction to default the margin amount or the margin percentage

Margin could also be taking after the MT 700 has been sent

Pay/Revolving Details
User shall not input data in pay/revolving detail menu details would be defaulted by the
system.
User is only required to select the type of INCOTERMS

MT 700/701
Click on MT 700/701 and enter the necessary information
Validate and commit for authorization

ADVISES

CLICK ON DELIVERY PREVIEW TO


VIEW ALL THE ADVICES

Please note that user can have advice of authorization to reimburse MT740 only if the user
input the reimbursing bank i.e. field 53 a

MT 700 ADVISE

COVERING LETTER TO LC APPLICANT

DEBIT ADVICE FOR CHARGES

DEBIT PROVISION FOR LC

TO EDIT A LETTERS OF CREDIT

Click on Unauthorized LC/ Collection transactions


Select the tab (import LC, Export LC..)
Click on edit button to enable the edition
Validate and commit for authorization
Note that users can only edit unauthorized records and amend authorized records
This menu can also be used for viewing and deletion of records.

VIEW

EDIT

DELETE

MAINTENANCE OF IMPORT LC
During the life of any import and export transaction you can carry out an amendment either
internal or external.
The internal amendments, relate to changes in the original Letters of credit which does not
result in generating MT707 by amending liability reversal date of contingent liabilities entries
date for example, whereas external amendment, at the instance of the customer- system
automatically generate MT707 for final authorization in swift and related charges are taken.

Take/Reduce Margin
This menu is used for taking margins after the LC have sent or reduce the LC amount.

Procedure
Click on the maintenance of import LCs
Click on take/reduce margin
Input the transaction reference and press ENTER key
In put the required data
Note that margin percentage or amount would compute the other. User does not
necessary need to input both at the same time
User should note that when reducing margin you need to input the amount with the
minus sign (-) to compute the percentage as shown below
User should capture the required details

RELEASE MARGIN
Margin can only be released if the LC is partially or fully unutilized
PROCEDURE
Click on trade finance << import LC << Maintenance of import LC
Click on release margin
Click on release margin icon to open the menu
Set the release margin tab to NO
Input or search for the debit and credit accounts
Validate and commit for authorization
ACCOUNTING ENTRIES
-

DR INTERNAL /NOSTRO ACCOUNT


CR CUSTOMERS ACCOUNT
DR CONTINGENT LIABILITY ACCOUNT
CR CONTINGENT ASSET ACCOUNT

CLICK ON THE RELEASE MARGIN


ICON

INTERNAL AMENDMENTS
Procedure

Click on trade finance << import LC << Maintenance of import LC


Click on internal amendments icon for the correction to be made
Validate after the correction and commit for authorization

AMENDMENT

EXTERNAL AMENDMENT
Procedure
Click on the external amendment button on the menu
Click on the amendment button to view the inputted screen
Click on any of the tabs and make all your corrections
Validate and commit for authorization
Users should know that system will assign the amendment and reference numbers
The system would also generate MT707 and debit advice if charges are taken
ACCOUNTING ENTRIES

DEBIT CUSTOMER ACCOUNT


CREDIT P&L ACCOUNT

MT 707 ADVISE

DEBIT ADVISE FOR AMENDMENT CHARGES

CANCELLATION OF LC
Irrevocable Letters of credit can only be cancelled with the consent of all parties. Applicant
must write officially to the bank stating the details of the LC which ought to be cancelled.
Procedure

Click on trade finance << import LC << Maintenance of import LC


Click on cancellation icon of LC which ought to be cancelled
Take cancellation charges by clicking on the charges tab
Input the debit account number
Select the charge code from the charge table
ACCOUNTING ENTRIES

DR CUSTOMER ACCOUNT
CR P&L ACCOUNT

CANCEL

DRAWINGS OF LC
Drawings, payment or negotiation of letters of credit could be partially or fully done. But if the
documents presented are partial the user would have to lodge the documents accordingly with
the amount on the invoice. Accounting entries relating to this transaction would be passed by
the system.

Procedure

Beneficiary would present documents through the advising bank under LC issued by us.
Documents received should be checked to conform with the LC established
LC documents should be lodged into the system by :
Clicking on import LC on the menu
Click on drawings under import LC
Enter your transaction reference and click on edit icon
Enter the details on the menu and validate

PAYMENT UNDER IMPORT LC


Under sight LC customers have to provide funds
correspondent bank. Correspondent banks have
discrepant documents. Payment can be made
payment in the LC. This screen shows partial
USD120, 000.00.

for payment on receipt of documents by our


the right to negotiate and pay for only nonin part or full depending on the terms of
drawings made on the LC established for

Procedure

Click on Trade finance and import LC


Click on drawings under import LC
Select payment under import LC
Enter the LC transaction reference and press enter
Input the required details
Validate and commit for authorization
ACCOUNTING ENTRIES
-

DEBIT CUSTOMER
CREDIT NOSTRO
OR DEBIT CASH MARGIN AND CREDIT NOSTRO BANK
DEBIT CONTINGENT LIABILITY
CREDIT CONTINGENT ASSETS

OUTSTANDING
BALANCE

DRAWING
AMOUNT

ADVISES

MISCELANEOUS FUNCTIONS

Drawings under shipping guarantees


Sight payment under import LC
Acceptance of documents
Amendment to paid drawings

SIGHT PAYMENT WITH FINANCING

Sight payment under import LCS


Create loan for import payment

Import LC with financing is the process when a customer has not provided any source of
financing for their import and export transactions. This mostly happen in developed
environment where currencies of such import or export is in convertible currencies such as

Pounds, Dollars and Euros. Under this condition the customer present the documents for
payment and the same time request for financing. When the loan module is activated the
screen is opened for the user to capture the required details. There is a link in there where
transaction ID of the import transaction is inputted in, this will enable the system to validate the
value of the import itself. The importance of this is to link the import finance for the purpose of
reporting and monitoring. If such transactions do not exist you cannot use this module to
create import finance since transaction ID of the import or export letter of credit is a mandatory
field for creating import finance of such Loan.
EXPORT LCS
Export LCs is MT710 which are received through our correspondent banks and are requested
to advise beneficiaries (Customers)

REGISTE
R/ADVISE
EXPORT
LCS
With the help of
Swift
interface
incoming
LC
would
be
dropped into this
menu
without
human intervention but can also be keyed in manually.
Procedure

Click on Trade finance << Export LC


Click on Register/Advise Export LC
Select the type of register
User has the opportunity to key in manually

Users are to create id for all issuing bank before it is inputted if not just the bank name and
address would throw out an error.

DOCUMENTARY CREDIT (EXPORT)

This type of documentary collection are those received from correspondent banks and are
requested to advise beneficiaries. The swift would be interfaced with T24 for the user to get
access to it, but could also be keyed in manually. The inward LC could be transferred to
another bank if stated in the conditions.
Procedure

Click on trade finance << Export LC


Click on register/Advise Export LC
Select the required type (eg. sight, Usance,)
Enter the details manually
Select the charges tab to take the required commission

NOTE
Users are to input data under the following buttons:
- Basic info
- Charges
- MT710/720
The others are left as it is the required information would be defaulted by the system
ACCOUNTING ENTRIES
-

DR CUSTOMER
CR P&L ACCOUNT

Export LC advises

A sample of a third party advice

A sample of Export Advice letter

DOCUMENTARY COLLECTIONS (INWARD COLLECTIONS)


A documentary collection is a type of payment where the exporter would send shipping
documents through his bankers to the Drawees bank. This menu is used for advance and
open account transactions in addition to the documentary collections. These methods of
payments are handled in the same way because of the type of documents. The transaction
reference generated for lodging documents is used for the payment.
Procedure:

Click on Trade finance << inward collections


Click on lodge of inward documents
Select the type by clicking the tabs ( sight, usance, clean, open account and advance
payment)

Enter the details on the collection order


Click on the documents/instructions tab and enter the details of the documents in
accordance what is written on the collection order
Take charges when it is required
MT 410 (acknowledgement) would be generated automatically by the system
Validate and commit for authorization

Inward Documentary collections (Sight)

TENOR/ACCEPTANCE

Open account screen

PAYMENT OF INWARD COLLECTION


Documentary collection at sight/acceptance would generate MT202
Open account and advance payment would also generate MT103
ACCOUNTING ENTRIES
-

DR CUSTOMER
CR NOSTRO ACCOUNT
CONTINGENT LIABILITIES REVERSED BY SYSTEM
DR CONTINGENT LIABILITY
CR CONTINGENT ASSET

Note that fully Utilised button can be Yes if the document amount is full amount of LC or no
further drawings is expected.

OUTWARD COLLECTIONS
This menu is meant for export customers where the user would lodge documents submitted by
the exporter (drawer/our customer) into the system before it would be mailed to the drawee
(importer).
Procedure

Click trade finance << outward collections

User can select the type of outward collection (sight or usance)


Enter the basic and details of the documents submitted
Take the necessary charges

ADVISES FOR OUTWARD COLLECTIONS

Collection order to the receiving bank

Advice sent to the customer

CHARGE PROCESSING

These are charge tables which can apply to customers after the transaction has been
completed.
-Direct charge collections
-LC refund of charges
-Settle/write off claim charges
-Waive unpaid charges

PAYMENT SERVICES
Funds Transfer is an interactive banking function which affects most banking services. This
application is used for moving funds between account to the same or different customers be it
individual or corporate entity.
The funds transfer module is responsible for inward and outward remittances. The inward
remittances would be interfaced with the software so that the various messages could drop
into the system for further checks. For the outward remittances swift messages would be
generated after indicating the message type and inputting the necessary requirements in the
template viewed. This outward remittance menu is meant for Service fees and not for import
Procedure
Inter account transfer

Click on Trade finance << Payment Services


Click on Local funds transfer when user wants to do inter account transfer without swift
message.
Validate and send for authorization
Inter account transfer can be reversed by selecting same day FT reversal tab after
authorization
The Reversal can be used for transactions after COB ( Close of Business)
Validate and commit for authorization

Foreign funds transfer

Click on Trade finance << Payment Services << Funds transfer

All MT 103 and MT 202 transactions could only be processed under this module
User should not input the debit currency and amount
Debit the customer account as stated in his/her request with the principal amount and
charges
Choose or input the required Nostro account
Indicate beneficiary details where necessary
Indicate the time on which the transaction is being inputted
Validate and commit for authorization

The user have the opportunity to select which message type is required of him, for instance a
particular transfer would require both MT202 and 103 at the same time.

Accounts transfer between nostro accounts

ACCOUNTING ENTRIES
-

DR NOSTRO ACCOUNT (1)


CR NOSTRO ACCOUNT (2)

ISSUE OF FOREIGN DRAFT


This menu is used for issuing foreign draft for customer who do not want to use SWIFT which
is expensive for them. Usually the customer would have to apply for by a written letter or
completion of an application form.
Procedure

Click on payment services << Foreign funds transfer << foreign currency
Select foreign currency draft or foreign currency draft with MT110
Input the details required by the system
Take the required charges
MT 110 is automatically generated
Validate and commit for authorisation.
ACCOUNTING ENTRIES
- DEBIT CUSTOMERS ACCOUNT
- CREDIT NOSTRO ACCOUNT

AUTHORISATION MENU FOR TRADE FINANCE

LC NEW ENQUIRES

Export LC outstanding
Import LC and documentary collections paid
Import LC establishment and doc collections
Customer position
Exchange rates

ENQUIRES
The following report can be generated by T24. These report can be printed out and can also be
converted into excel

OUTWARD MISCELLANEOUS MESSAGES


UNDER THIS MENU, USER CAN

Request stop payment of cheques (MT111)


Send free format messages
Send cancellation messages
Send query
View sent queries

INWARD MISCELLANEOUS MESSAGES

Cancellation of request(MT n92)


Queries received (MT n95)
Answers received (MT n96)
Inward free format messages (MT n99)

VIEWING DAILY TRANSACTIONS

Click on funds transfer remittances enquiry


Select the various tabs and view the days transactions
- Draft issued
- Outward remittances
- Nostro transfers
- Inward remittances
Users are advised to print out these report on daily basis
Users are to convert all report into excel format by clicking the printer to select SAVE
AS CSV.

INWARD REMITTANCES

Inward remittances is handled through funds transfer application


This can be done manually or through suitable interface
When it is interfaced, the system creates a record in INAU status to enable users to
view and authenticate messages before authorization
The inward remittances can be handled through
- Vostro accounts (GIS messages from and to BOG)
-Nostro accounts (offshore swift messages)

Inward swift transfers would be interfaced with t24. The various message types would drop into
the system for further checks before they would be release to credit the account numbers
concerned.

REMITTANCE ENQUIRES
Remittance enquires are useful for various reports, therefore users are required to print out
these reports on daily basis for easy access.

Click on the green button to expand the report.

ADHOC CHARGE/DEFERRED COLLECTION

GUARANTEES

ENQUIRES FOR GUARANTEES