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”).
The LC becomes discrepant if the exporter fails to meet the deadline or provides documents that do not match what is specified in the terms and condition of the credit.
The Exporters bank have every rights to reject the presented documents due to discrepancies. The bank will retain the documents for time being until further clarification received by the Beneficiary or the Presented party. The relevant party to be notified with the rejection of documents.
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.
If the 'Rejection pending Instructions' checkbox on the Discrepancies/Refusal details panel is checked, the rejection is not final. 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 Export L/C Document Set contract , BETDCR transaction is used.
Select it from the menu item[Export Products -> Export L/C -> Documents -> Process Discrepant Docs].
When you have made your changes, click on the ( ) Save function to save all the the data entered in the transaction to the database.