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.

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.

'Rejection pending Instructions' checkbox:

'Close Contract' checkbox disabled:

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].

(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.

If the document set is closed then to reopen the document set please go through the below article,

Re-Opening a Closed Document Set under Export LC