The application provides a limit control system which allows limits to be defined and maintained for specific parties. The Liability Concept basically defines whether a business sector is linked to the limit system or not. The limit system defines limits and indicates how limit requests are to be handled.
What is an Earmarking
'Earmarking' means setting aside some amount of money from the total funds and then using it for a stated purpose later. In simple words, earmarked money is the money blocked (by bank) which is a part of your bank balance, for a specific purpose as per your request or any other order.
How Earmarking Works in the Limit System
For instance when opening an Import L/C, some part of money is blocked as Cash cover in place of Standard Limit facility. As you see below screenshot in the Liability panel some amount(EUR400,000) is booked under Cash Cover in additional to the Standard Liability Booking out of the total transaction amount.
Cash Cover Limit
Limits Approved in the System
Utilized Earmarked Amount
Utilized Standard Limit
For more details on Limits please refer the below article,
And for reserving an Liability amount which is very similar in effect , have a look at How to get Liability Approval in Import L/C?