Field 78 in a Letter of Credit (LC) provides specific instructions to the paying, accepting, or negotiating bank involved in the transaction. Think of it as a dedicated space for crucial guidance on how the bank should handle the payment, acceptance, or negotiation process under the LC.
Understanding Field 78: Instructions to the Paying/Accepting/Negotiating Bank
Field 78 is a crucial element within the SWIFT MT700 message type, which is used for issuing letters of credit. Its primary purpose is to convey specific instructions that the advising bank (the bank that handles payment, acceptance, or negotiation) needs to follow. These instructions can relate to various aspects of the transaction, ensuring smooth processing and adherence to the LC's terms.
Here's a breakdown of what it entails:
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Specific Instructions: The information contained in Field 78 are specific to the bank responsible for paying, accepting, or negotiating the documents presented under the LC. This could include detailed procedures, special requirements, or even contact information.
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Payment, Acceptance, or Negotiation: The instructions directly relate to how the bank is to handle the payment, acceptance (agreeing to pay at a future date), or negotiation (purchasing the exporter's drafts/documents) related to the presented documents.
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Examples of Instructions: Common instructions found in Field 78 include:
- Details about reimbursement claims.
- Instructions on how to handle discrepancies.
- Information about applicable charges and fees.
- Specific documentation requirements beyond the standard LC terms.
- Contact details for specific individuals at the issuing bank.
- Confirmation instructions.
Why is Field 78 Important?
Field 78 is crucial for a few key reasons:
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Clarity: It provides a dedicated space for precise instructions, reducing ambiguity and the potential for errors.
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Compliance: It ensures the paying, accepting, or negotiating bank complies with the specific requirements outlined by the issuing bank.
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Efficiency: By providing clear instructions upfront, it streamlines the payment process and minimizes delays.
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Risk Mitigation: It helps to mitigate risks associated with discrepancies or non-compliance with the LC terms.
Example Scenario
Imagine an LC requires the negotiating bank to send a swift message confirming negotiation to a specific department within the issuing bank before claiming reimbursement. This specific instruction would be placed in Field 78.
