Letters of credit (LC) often do not work out as planned, and this is usually because the documents provided in support of a claim under the letter of credit do not meet the conditions (and so become a “Discrepant letter of credit”).

When the conditions are not met, there is no obligation for the Issuing Bank to pay. In this situation, the documents are referred to as “discrepant". The issuing bank cannot waive discrepancies without the consent of the Importer.

When the documents presented are Discrepant under the Import L/C contract, in order to process the discrepant document set and to clarify the discrepancies with the Presenting Party,  BRTDCR transaction is used in the system. This can also be used to reject the documents to the party presented.

In case if the Return of Documents checkbox is checked, then the documents will be rejected and
returned back to the presenting bank and the contract is closed. This can also be seen from the Close Contract checkbox that is also automatically checked.

When the Send Advice of Refusal (MT734) checkbox is checked, a rejection message will be sent to the presenting party. The order date is mainly entered by the user to claim back the document amount.

When the checkbox Send Advice of Discrepancy (MT750) is checked, then the discrepancy advice will be sent.

In all the above cases the document set rejection will be final (Complete Rejection) and the Document set will be closed as the 'close contract' check box is enabled automatically.

Documents refused but later settlement to be done

There is a common scenario where the bank needs to send refusal message MT734 to the presenter upfront and also awaits for further instructions from the presenter to settle at later stage. This is achieved using 'Rejection pending Instructions' checkbox available in the 'Discrepancies/Refusal details' panel. when this checkbox is enabled, the relevant document presentation rejection is not final means that the document set is not closed now but will be settled later.

In this case, the contract is not closed and the liability is not reversed. Documents are only then be settled, or the contract closed when the principal issues its final acceptance/rejection of documents.

To Process Discrepant Documents under an Import L/C Document Set contract , BRTDCR transaction is used.  

Select it from the menu item[Import Products -> Import L/C -> Documents -> Process Discrepant Docs].

(Users can directly start this transaction by clicking the  (Launch transaction ) available in the Panel headline without having to select the relevant menu ) 

When you have made your changes, click on the ( )  Save function to save all the the data entered in the transaction to the database.