MT 760 GUARANTEERiley Finance & Leasing Ltd
MT 760 guarantee is a type of swift message which is used by banks when issuing guarantee or standby letter of credit. MT 760 swift message is sent by the issuing bank to the advising bank.
WHAT IS SWIFT
Swift is a provider of secure message platform for financial institutions. Swift is used mainly by banks. Swift messages have been sent and received by banks in encrypted forms. As a result, swift messages are accepted as a valid and reliable way of communication between banks. For example an issuing bank sends a swift message to an advising bank in order to inform issuance of a documentary credit. Similarly advising banks sends their acknowledgement via swift platform.
Swift messages play a key role not only in letters of credit but also but also in other payment methods in international trade such as bank guarantee (BG), cash in advance payments, documentary collections, opens accounts and bank payments obligations.
WHAT IS A MT760 GUARANTEE/STANDBY LETTER OF CREDIT IN TRADE FINANCE?
MT 760 is a special swift message type that is used by issuing banks when issuing a guarantee or a standby letter of credit.
Issuing banks sends terms and conditions of the guarantee or a standby letter of credit briefly with a MT760 guarantee/SBLC swift message type.
MT760 GUARANTEE/STANDBY LETTER OF CREDIT RULES IN TRADE AND FINANCE
- This message is sent between banks involved in the issuance of a guarantee.
- It is used to issue a guarantee or to request the receiver to issue the guarantee.
- This message may also be used for SBLCs/SLOCs.
- Any applicable rules must be indicated in field 40c. if no rules are applicable, this must also be indicated (code”NONE”).
If the guarantee is subject to rules other than Uniform Rules for Demand Guarantee (URDG), or international standby practices (ISP), or international chamber of commerce (ICOC) then it must be indicated in field 40C using the code OTHR.
The definition of this message type does not specify any characteristics or underlying agreementsof the actual guarantee. Therefore, all specific terms, conditions and details of the guarantee are to be specified in field 77C.
Since a Swift message is restricted to the maximum input message length, more than one MT760 may be required to accommodate all the details of the guarantee.
WHAT DOES THE CURRENT BANK GUARANTEE RULES (URDG758) OR STANDBY LETTER OF CREDIT RULES (ISP 98) SAY ABOUT ISSUANCE OF A BG OR SBLB/SLOC?
- According to URDG 758 a guarantee is deemed to be issued when it leaves the control of the guarantor.
- URDG 758 states that a guarantee is irrevocable on issue even if it does not state this.
- As per URDG 758 a guarantee may be advised to a beneficiary through an advising bank. By advising a guarantee, the advising bank certifies to the beneficiary that is has satisfied itself as to the apparent authenticity of the guarantee. Advising banks also certifies that the advice accurately reflects the terms and conditions of the guarantee as received from the issuing bank.
- According to ISP 98 a standby letter of credit is an irrevocable, independent, documentary and binding undertaking when issued and need not to state.
- ISP 98 states that unless an advice states otherwise, it signifies that
– The advisor has checked the apparent authenticity of the advised message in accordance with standard letter of credit practice and
– The advice accurately reflects what has been received.