This is an optional field in MT700 type SWIFT message of a documentary Letter of Credit (L/C).
These are the conditions which are added by the buyer/applicant or the issuing bank providing further instructions to comply.
Additional conditions include the information should be mentioned in commercial documents (commercial invoice, packing list), email or fax instruction, signature requirement, discrepancy handling charge, etc.)
The beneficiary must make a presentation by confirming these additional conditions.
Let’s bring one example UPAS L/C for our analysis
Field 47A (Additional Conditions)
1 APPLICANT DETAILS
Here the detailed applicant address is written. In the case of including applicant detail in documents, these address should be followed.
2 COMMERCIAL INVOICES, BILL OF LADING, CERTIFICATE OF ORIGIN AND PACKING LIST MUST INDICATE THE FOLLOWING
A) LCAF NO
B) IRC NO
C) TAX IDENTIFICATION NO
E) H.S. CODE
F) APPLICANT BANK BIN
These are the norms should be included in CI, BL, COO, and PL.
IRC is the Import Registration Certificate
BIN is the Business Identification no.
3 DRAFTS AND ALL DOCUMENTS UNDER THIS CREDIT MUST QUOTE THIS CREDIT NO. WITH DATE
Letter of Credit (L/C) number and opening date should be mentioned in the draft (Bill of Exchange) and other documents.
4 EACH PRESENTATION OF DOCUMENTS CONTAINING DISCREPANCY WILL INCUR A SPECIAL HANDLING CHARGE FOR USD 75.00 AND ANY OTHER ASSOCIATED CHARGES WILL BE DEDUCTED FROM THE PROCEEDS.
The discrepancy charge which shall be deducted in applicable cases is mentioned. Sometimes related cable charge is also mentioned for transparency.
5 DOCUMENTS EVIDENCING SHIPMENT MUST NOT BE ISSUED EARLIER THAN THIS CREDIT
The seller cannot make shipment and prepare documents before the L/C opening. This is a standard practice in commercial L/C. So, the exporter can make shipment only after the LC is opened.
6 ALL DOCUMENTS MUST BE PRESENTED IN ENGLISH LANGUAGE
This says that the documents must contain the English language, no local language is applicable. This is an international business between cross borders so English is the common language to be followed by both the applicant and the beneficiary.
7 INVOICE MUST CLEARLY SHOW THE PRICE OF THE GOODS AND FREIGHT CHARGE SEPARATELY OR A SEPARATE FREIGHT CERTIFICATE FROM BENEFICIARY MUST ACCOMPANY THE DOCUMENTS
This is the rule of Bangladesh central bank (Bangladesh bank) that the goods price and freight charge should be mentioned separately in commercial invoice.
According to that information, they prepare the import data. Two common forms are being used by the bank IMP Form and T/M Form and filled up by the applicant to report to Bangladesh bank.
8 THE XXX BANK LIMITED BIN XXX AND APPLICANT’S VAT NO XXX MUST BE MENTIONED IN ALL DOCUMENTS
This indicates that the applicant’s bank’s VAT and BIN number should be mentioned in all documents.
9 PLUS/MINUS 10 PERCENT TOLERANCE IN BOTH AMOUNT AND QUALITY PER SIZE ARE ACCEPTABLE, BUT TOTAL AMOUNT AND QUANTITY SHOULD BE WITHIN THE LC TOLERANCE
For some material (here Steel) the tolerance is applicable. Ten percent tolerance for quantity and the total invoice value will be agreed by the applicant. While submitting commercial invoice the value cannot exceed 10% more than the L/C value.
10 DESPITE THE TENOR OF THIS CREDIT (180 DAYS FROM THE DATE OF NEGOTIATION) THE XXX BANK, OFFSHORE BANKING UNIT, WILL REMIT PROCEEDS AT SIGHT UPON PRESENTATION OF CREDIT COMPLIED DOCUMENTS
Actually, this example is based on UPAS L/C (Usance Payable At Sight). As per UPAS LC rules, the beneficiary will get payment on sight basis though the applicant will pay after 180 days to applicant bank hence Financing bank (OBU of applicant bank).