SWIFT MT700 L/C Message Breakdown

In modern international trade and apparel manufacturing, the Letter of Credit (L/C) is not delivered as a decorative wax-sealed paper parchment. Instead, documentary credits are transmitted electronically between international financial institutions through a secure, encrypted global network known as SWIFT.

When a foreign retail buyer applies to their bank to issue a commercial Letter of Credit in favor of an apparel manufacturer in Bangladesh, the issuing bank formats the credit instructions into a standardized electronic message called SWIFT MT700.

For a Commercial Executive, Export Officer, or Garment Merchandiser, understanding how to read, deconstruct, and audit a SWIFT MT700 message is an indispensable daily skill. Every single field in an MT700 message carries legal, operational, logistics, and financial obligations under the International Chamber of Commerce (ICC) Uniform Customs and Practice for Documentary Credits (UCP 600).

Disclaimer: This lesson provides operational standard operating procedures for educational purposes under international commercial practice. Because issuing banks structure optional fields differently and banking conventions adapt over time, commercial teams must verify active transactional requirements with their authorized dealer negotiating banks and statutory bodies.

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. Established in 1973 and headquartered in Belgium, SWIFT provides a standardized, highly secure messaging network that connects over 11,000 financial institutions and corporations across more than 200 countries.

The MT700 (Message Type 700) is the universal SWIFT message template used by an Issuing Bank to issue and transmit an irrevocable documentary credit to the Advising Bank in the seller's country.

THE SWIFT MT700 TRANSMISSION LIFECYCLE
                        
   [ 1. FOREIGN BUYER / APPLICANT ]
                  │
                  │ Submits L/C Application & Collateral
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   [ 2. ISSUING BANK (e.g., BNP Paribas, Paris) ]
                  │
                  │ Formats & Transmits Encrypted SWIFT MT700
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   [ 3. SECURE SWIFT NETWORK GATEWAY ]
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                  │ Global Interbank Routing
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   [ 4. ADVISING BANK (e.g., Eastern Bank PLC, Dhaka) ]
                  │
                  │ Authenticates Encryption & Issues Official Advising Letter
                  ▼
   [ 5. EXPORTER / BENEFICIARY (Apex Garments Ltd.) ]

In practical factory operations, junior commercial officers often confuse a raw SWIFT copy with the official advised L/C:

An MT700 message consists of standard tagged fields, where each field begins with a colon, a two or three-character number/letter code, and a colon (e.g., :20:, :31D:, :45A:).

Field 27 — Sequence of Total

• Field Name: Sequence of Total
• Meaning: Indicates pagination of the SWIFT message (e.g., 1/1 means page 1 of 1; 1/2 followed by 2/2 indicates a multi-part message).
• Commercial Importance: Confirms that the commercial team has received the full transmission and no pages or additional clauses are missing.
• Verification: Check that the denominator matches the total messages received.
• Common Issue: Operating on 1/2 while missing 2/2 containing critical document clauses in Field 46A/47A.

Field 40A — Form of Documentary Credit

• Field Name: Form of Documentary Credit
• Meaning: Identifies the revocability status of the credit (e.g., IRREVOCABLE, IRREVOCABLE TRANSFERABLE).
• Commercial Importance: Under UCP 600 Article 3, all credits are irrevocable by default even if unstated, meaning terms cannot be modified or canceled without beneficiary consent.
• Verification: Confirm it reads IRREVOCABLE.
• Common Issue: Accepting non-standard notations or revocable structures from non-UCP jurisdictions.

Field 20 — Documentary Credit Number

• Field Name: Documentary Credit (L/C) Number
• Meaning: The unique reference number assigned by the issuing bank to this specific credit.
• Example: LC/2026/4587
• Commercial Importance: This number must appear on every export shipping document, invoice, certificate, shipping bill, and bank presentation schedule.
• Verification: Ensure exact alphanumeric accuracy including slashes, dashes, and spaces.
• Common Issue: Typographical errors on commercial invoices (e.g., typing LC-2026-4587 instead of LC/2026/4587), causing bank discrepancy queries.

Field 31C — Date of Issue

• Field Name: Date of Issue
• Meaning: The date the issuing bank generated the credit (Format: YYMMDD, e.g., 261001 = October 01, 2026).
• Commercial Importance: Establishes the legal commencement date and baseline for document dating rules (e.g., invoices and certificates cannot pre-date L/C issuance unless explicitly permitted).
• Verification: Log the issue date in the factory order tracking ERP.
• Common Issue: Pre-shipment certificates dated prior to Field 31C when prohibited by buyer guidelines.

Field 40E — Applicable Rules

• Field Name: Applicable Rules
• Meaning: Identifies the international regulatory framework governing the credit (e.g., UCP LATEST VERSION, UCPURR LATEST VERSION, EUCP LATEST VERSION).
• Commercial Importance: Confirms that ICC UCP 600 rules apply to document examination, standards of compliance, and bank liability.
• Verification: Verify that UCP LATEST VERSION (UCP 600) is specified.
• Common Issue: References to obsolete rules (UCP 500) or local banking statutes excluding UCP protections.

Field 31D — Date and Place of Expiry

• Field Name: Date and Place of Expiry
• Meaning: The final calendar date and country where documents must be presented to the bank.
• Example: 261130BANGLADESH (November 30, 2026 in Bangladesh).
• Commercial Importance: Documents presented after this date are void. The place of expiry MUST be in the beneficiary's country (Bangladesh).
• Verification: Confirm adequate buffer between shipment date and expiry date (minimum 15–21 days) and that place is Bangladesh.
• Common Issue: Accepting expiry in the Issuing Bank's Country, forcing the factory to risk courier transit delays.

Field 50 — Applicant

• Field Name: Applicant
• Meaning: The foreign buyer/importer who applied for the credit.
• Example: GLOBAL FASHION BUYER LTD., 124 AVENUE DES CHAMPS-ELYSEES, PARIS, FRANCE
• Commercial Importance: Must match the buyer entity named in the sales contract and purchase order.
• Verification: Verify corporate name, tax ID, and address against the approved PO.
• Common Issue: Third-party buying house or subsidiary named as applicant without prior factory agreement.

Field 59 — Beneficiary

• Field Name: Beneficiary
• Meaning: The exporter/factory in whose favor the credit is issued.
• Example: APEX GARMENTS LTD., PLOT 12, BLOCK B, TONGI I/A, GAZIPUR, BANGLADESH
• Commercial Importance: The legal entity entitled to receive payment. Must match the factory's bank account title, Export Registration Certificate (ERC), and bonded warehouse license 100% character-for-character.
• Verification: Audit spelling, punctuation, and factory location address.
• Common Issue: Minor typos (e.g., Apex Garment Ltd. omitting "s"), requiring an immediate MT707 amendment.

Field 32B — Currency Code, Amount

• Field Name: Currency Code and Amount
• Meaning: The currency and numerical limit of the credit.
• Example: USD 225,000.00
• Commercial Importance: Must cover 100% of the purchase order value (Total Quantity × Unit Price).
• Verification: Multiply PO Quantity by PO Unit Price and compare against Field 32B.
• Common Issue: L/C amount opened for less than contracted order value, resulting in under-invoicing or shortfall.

Field 39A — Percentage Credit Amount Tolerance

• Field Name: Percentage Credit Amount Tolerance
• Meaning: The allowable positive/negative variance in credit amount and quantity.
• Example: 05/05 (+5% / -5%) or 10/10 (+10% / -10%).
• Commercial Importance: Knitwear and bulk garment exports require tolerance to accommodate fabric yield, dyeing batches, and cutting overages.
• Verification: Check whether tolerance is positive/negative and covers factory cutting estimates.
• Common Issue: Assuming tolerance exists when Field 39A is absent (under UCP 600 Art 30b, 5% quantity tolerance applies only if quantity is not stated in discrete units like pcs/cartons).

Field 41a — Available With...By...

• Field Name: Available With... By...
• Meaning: Designates the bank authorized to honor/negotiate the credit and the settlement method.
• Options: BY SIGHT PAYMENT, BY DEFERRED PAYMENT, BY ACCEPTANCE, BY NEGOTIATION.
• Example: EASTERN BANK PLC, DHAKA BY NEGOTIATION or ANY BANK IN BANGLADESH BY NEGOTIATION.
• Commercial Importance: Dictates whether the factory can negotiate documents locally at their own bank.
• Verification: Ensure availability is freely negotiable or restricted to the factory's primary authorized dealer bank.
• Common Issue: Credit restricted to an inconvenient foreign bank branch with no operational presence in Dhaka/Chattogram.

Field 42C — Drafts at... & Field 42a — Drawee

• Field Name: Drafts at... (42C) / Drawee (42a)
• Meaning: Specifies the tenor of the Bill of Exchange (Draft) and the institution on which it must be drawn.
• Example: 42C: AT SIGHT / 42a: BNPAFRPP (Issuing Bank).
• Commercial Importance: Governs the preparation of the financial draft presented with shipping documents.
• Verification: Confirm whether Sight or Usance (30/60/90 days) and ensure Drawee is the Issuing Bank (never the Buyer).
• Common Issue: Drawing drafts on the buyer instead of the bank, violating documentary credit rules.

Field 43P — Partial Shipments

• Field Name: Partial Shipments
• Meaning: Indicates whether goods can be shipped in separate batches under multiple Bills of Lading.
• Options: ALLOWED / NOT ALLOWED (or PROHIBITED).
• Commercial Importance: Essential flexibility for garment factories managing multi-line production schedules or split deliveries.
• Verification: Ensure it states ALLOWED unless the buyer contracted a strict single-lot shipment.
• Common Issue: Shipping split container lots when Field 43P states NOT ALLOWED.

Field 43T — Transshipment

• Field Name: Transshipment
• Meaning: Indicates whether cargo can be transferred from one vessel to another during ocean transit.
• Options: ALLOWED / NOT ALLOWED (or PROHIBITED).
• Commercial Importance: In Bangladesh maritime logistics, feeder vessels carry containers from Chattogram to regional hub ports (Singapore, Colombo, Tanjung Pelepas) where containers are transferred to mother vessels.
• Verification: Field 43T MUST ALWAYS BE ALLOWED for containerized ocean freight.
• Common Issue: L/C stating PROHIBITED, causing an unavoidable discrepancy on the ocean Bill of Lading.

Field 44A, 44E, 44F — Transport Locations & Ports

• Field 44A: Place of Taking in Charge / Dispatch / Receipt (e.g., GAZIPUR, BANGLADESH)
• Field 44E: Port of Loading / Airport of Departure (e.g., CHATTOGRAM PORT, BANGLADESH or HAZRAT SHAHJALAL INT AIRPORT, DHAKA)
• Field 44F: Port of Discharge / Airport of Destination (e.g., LE HAVRE PORT, FRANCE or HAMBURG PORT, GERMANY)
• Commercial Importance: Defines the geographic origin, loading terminal, and final destination for transport documents.
• Verification: Ensure POL matches the factory's logistics route and POD matches the buyer's destination warehouse network.
• Common Issue: PO stating Hamburg but L/C stating Rotterdam, creating a Bill of Lading port mismatch.

Field 44C — Latest Date of Shipment & Field 44D — Shipment Period

• Field Name: Latest Date of Shipment (44C) / Shipment Period (44D)
• Meaning: The absolute final acceptable date stamped on the carrier's On-Board Bill of Lading.
• Example: 261115 (November 15, 2026).
• Commercial Importance: One of the most critical operational deadlines for Merchandising and Commercial.
• Verification: Confirm that factory ex-factory date allows at least 3–5 days buffer for inland trucking, customs clearance, and port gate-in before Field 44C.
• Common Issue: B/L on-board date stamped one day after Field 44C (late shipment discrepancy).

Field 45A — Description of Goods and/or Services

• Field Name: Description of Goods and/or Services
• Meaning: Details the merchandise, style numbers, unit prices, total quantities, and Incoterms.
• Example: 50,000 PCS OF 100% COTTON MEN'S KNITTED POLO SHIRTS, STYLE NO: PL-409, UNIT PRICE: USD 4.50 PER PC FOB CHATTOGRAM...
• Commercial Importance: Under UCP 600 Article 18(c), the description on the Commercial Invoice must correspond precisely with the description in Field 45A.
• Verification: Check every word, style code, fabric specification, and Incoterm against PO and PI.
• Common Issue: Unauthorized extra marketing descriptions on the invoice that do not appear in Field 45A.

Field 46A — Documents Required

• Field Name: Documents Required
• Meaning: The master list of all shipping, commercial, transport, origin, and inspection documents required for payment negotiation.
• Core Documents Explained:
  1. Signed Commercial Invoice: Stating exact value, quantity, style, L/C number, and PO reference.
  2. Detailed Packing List: Stating gross weight, net weight, carton dimensions, and size/color breakdown.
  3. Full Set Clean On-Board Ocean Bills of Lading: Consigned to bank order, marked "Freight Collect" (FOB) or "Freight Prepaid" (CFR/CIF).
  4. Certificate of Origin (COO): Issued by Export Promotion Bureau (EPB) or BGMEA/BKMEA.
  5. Pre-Shipment Inspection Certificate: Issued by buyer nominated third-party agency (SGS, Intertek, Bureau Veritas).
  6. Beneficiary Certificates: Confirming courier dispatch of non-negotiable sets, shipment notices, or defect-free declarations.
• Commercial Importance: Missing even one required copy or failing to include a mandated clause triggers bank refusal.
• Verification: Review every document bullet point to ensure the factory can physically obtain and comply.

Field 47A — Additional Conditions

• Field Name: Additional Conditions
• Meaning: Contains specialized contractual clauses, document notation instructions, and operational covenants.
• Examples of Normal vs Risky Clauses:
  • Normal Condition: "All documents must state Buyer PO No. PO-8842 and L/C No. LC/2026/4587."
  • Normal Condition: "Commercial invoice must certify that goods are new, unused, and of Bangladesh origin."
  • Clause Requiring Clarification: "Inspection certificate must be countersigned by buyer's authorized representative whose signature must match issuing bank records."
• Commercial Importance: Must be audited line by line to identify unachievable requirements or document traps.
• Verification: Ensure no clauses require third-party signatures beyond factory control without prior arrangements.

Field 71B / 71D — Charges

• Field Name: Charges
• Meaning: Allocates banking charges, postage, confirmation fees, and reimbursement commissions between parties.
• Example: ALL BANKING CHARGES OUTSIDE BANGLADESH ARE FOR APPLICANT ACCOUNT. ALL CHARGES INSIDE BANGLADESH ARE FOR BENEFICIARY ACCOUNT.
• Commercial Importance: Governs bank fee deductions upon export realization.
• Verification: Ensure the division aligns with agreed sales contract terms.

Field 48 — Period for Presentation

• Field Name: Period for Presentation
• Meaning: The timeframe (in days) after the transport document issuance date within which documents must be submitted to the bank.
• Example: 21 DAYS AFTER SHIPMENT DATE BUT WITHIN CREDIT VALIDITY
• Commercial Importance: Governs how quickly the factory must compile, audit, and submit the document package.
• Verification: Under UCP 600 Article 14(c), if Field 48 is omitted, the default is 21 calendar days. Ensure credit validity (Field 31D) covers this window.
• Common Issue: L/C stipulating a tight 7-day presentation window when obtaining original Bills of Lading takes 8–10 days.

Field 49 — Confirmation Instructions

• Field Name: Confirmation Instructions
• Meaning: Instructs the advising/nominated bank regarding adding confirmation.
• Options: CONFIRM (Bank must add confirmation), MAY ADD (Bank is authorized to add confirmation if requested by beneficiary), WITHOUT (No confirmation requested).
• Commercial Importance: Dictates whether secondary international bank payment backing is attached.

Field 78 — Instructions to Paying/Accepting/Negotiating Bank

• Field Name: Instructions to the Paying/Accepting/Negotiating Bank
• Meaning: Internal interbank settlement and document dispatch instructions (e.g., courier addresses, reimbursement channels).
• Commercial Importance: Informs the nominated bank how and where to dispatch documents to receive interbank reimbursement.

Field 72 — Sender to Receiver Information

• Field Name: Sender to Receiver Information
• Meaning: Technical bank-to-bank communication notes (e.g., advising fees, routing keys).
• Commercial Importance: High-level administrative information with minimal direct commercial compliance impact for the factory.

[ Step 01: Receive Official Advised L/C from Local Advising Bank ]
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                              ▼
[ Step 02: Verify Field 20 (L/C Number) & Field 27 (Sequence 1/1) ]
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[ Step 03: Audit Field 50 (Applicant) & Field 59 (Beneficiary Legal Name) ]
                              │
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[ Step 04: Audit Field 32B (Currency & Value = Qty x Unit Price) & Field 39A (Tolerance) ]
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[ Step 05: Check Field 31C (Issue Date), 44C (Latest Ship Date), and 31D (Expiry in BD) ]
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[ Step 06: Check Field 43P (Partial Ship) & Field 43T (Transshipment: MUST BE ALLOWED) ]
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[ Step 07: Check Field 44E (POL: Chattogram) & Field 44F (POD: Destination Port) ]
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[ Step 08: Compare Field 45A (Goods Description & Incoterm) Against Approved PO/PI ]
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[ Step 09: Audit Field 46A (Required Documents) — Can Factory Obtain All Certificates? ]
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[ Step 10: Audit Field 47A (Additional Conditions) — Check for Non-Standard Demands ]
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[ Step 11: Check Field 48 (Presentation Period) & Field 71B (Bank Charges Division) ]
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[ Step 12: Are Any Discrepancies, Typos, or Unachievable Clauses Detected? ]
               │                                            │
              YES                                           NO
               │                                            │
               ▼                                            ▼
[ Issue Formal MT707 Amendment Request ]       [ Approve L/C & Distribute to ]
[ Halt Fabric Cutting Until Received  ]       [ Merchandising, Planning & BTB ]

Profile:

• Exporter: Apex Garments Ltd. (Gazipur, Bangladesh)
• Buyer: Global Fashion Buyer Ltd. (Paris, France)
• Purchase Order Ref: PO #PO-8842
• Item: 50,000 Men's Cotton Knitted Polo Shirts (Style #PL-409)
• PO Price: USD 4.50 / pc FOB Chattogram
• Total PO Value: 50,000 ×4.50 = $225,000.00$
• Advised L/C Ref: LC/2026/4587 issued by BNP Paribas Paris via Eastern Bank PLC

Field-by-Field Audit Findings:

1. Field 20 (Credit Number): LC/2026/4587 [✓ Exact match]
2. Field 59 (Beneficiary): APEX GARMENTS LTD., PLOT 12, BLOCK B, TONGI I/A, GAZIPUR, BANGLADESH [✓ Exact legal match]
3. Field 32B (Value): USD 225,000.00 [✓ Exact mathematical match: 50,000 × $4.50]
4. Field 39A (Tolerance): 05/05 [✓ Provides +/- 2,500 pcs cutting variance]
5. Field 44C (Latest Ship Date): 15-NOV-2026 [✓ Allows 5 days buffer after 10-Nov ex-factory]
6. Field 31D (Expiry): 30-NOV-2026 IN BANGLADESH [✓ 15 days presentation window in seller country]
7. Field 43T (Transshipment): ALLOWED [✓ Compatible with Chattogram feeder routing]
8. Field 45A (Goods Description): Exactly mirrors PO wording.

Outcome: The Commercial Executive signed the L/C Verification Approval Sheet. Copies were distributed to Merchandising for yarn procurement and the BTB department to open Back-to-Back L/Cs for fabric and accessories.

A foreign buyer opened an L/C containing 5 distinct additional clauses in Field 47A. The Commercial Executive evaluated each condition:

1. Reading Only the Monetary Amount: Verifying Field 32B while ignoring critical dates in Field 44C and 31D.
2. Ignoring the Country of Expiry (Field 31D): Overlooking that the credit expires in Europe or the US rather than Bangladesh.
3. Failing to Audit Beneficiary Name Spelling (Field 59): Missing a single dropped letter that invalidates banking endorsement.
4. Allowing Transshipment: Prohibited (Field 43T): Accepting a prohibited transshipment clause on feeder ocean shipments.
5. Missing Multi-Part Sequences (Field 27): Reading page 1/2 and failing to request page 2/2 from the advising bank.
6. Accepting Tight Presentation Periods (Field 48): Agreeing to 7 days when original B/Ls take 10 days to release from shipping lines.
7. Neglecting Currency ISO Codes: Assuming $ represents US Dollars when the contract was agreed in Australian or Canadian Dollars.
8. Overlooking Special Document Clauses in Field 47A: Failing to produce a required beneficiary declaration upon bank presentation.
9. Treating Unofficial Raw SWIFT Copies as Legal L/Cs: Cutting fabric based on an unadvised buyer screenshot.
10. Failing to Compare Field 45A with the Approved PO: Missing discrepancies in fabric composition or style numbers.
11. Assuming Tolerance Exists Automatically: Over-shipping garments when Field 39A is absent.
12. Accepting Ambiguous Ports in Field 44E/44F: Allowing generic entries like "Any Asian Port" that cause customs clearance delays.
13. Ignoring Draft Tenor (Field 42C): Overlooking a shift from Sight payment to 90-day deferred Usance terms.
14. Failing to Track MT707 Amendments: Presenting documents conforming to original L/C terms after an amendment modified the ship date.
15. Discarding Bank Advising Schedules: Failing to maintain an authenticated archive of original advising bank coversheets.

1. SWIFT MT700: The standardized interbank electronic message format used to issue a documentary credit. Practical Note: Contains all numbered fields governing export payment execution.
2. SWIFT (Society for Worldwide Interbank Financial Telecommunication): The secure global messaging network facilitating cross-border interbank financial communication. Practical Note: Connects issuing and advising banks securely.
3. Documentary Credit Number (Field 20): The unique alphanumeric identifier assigned to an L/C by the issuing bank. Practical Note: Must be cited on all export invoices and certificates.
4. Sequence of Total (Field 27): The pagination indicator showing the message sequence number and total message parts (e.g., 1/1). Practical Note: Ensures no missing pages in SWIFT transmission.
5. Applicable Rules (Field 40E): The legal code governing the credit, typically ICC UCP 600. Practical Note: Establishes international standards of documentary compliance.
6. Applicant (Field 50): The foreign buyer or importer who requests the bank to issue the Letter of Credit. Practical Note: Reimburses the issuing bank upon receipt of compliant documents.
7. Beneficiary (Field 59): The exporter or manufacturing factory in whose favor the credit is issued and who receives payment. Practical Note: Legal title must match factory registration character-for-character.
8. Latest Date of Shipment (Field 44C): The final permissible on-board date stamped on the carrier's Bill of Lading. Practical Note: Shipments after this date represent fatal, incurable discrepancies.
9. Presentation Period (Field 48): The contracted timeframe following the transport document date within which documents must reach the bank. Practical Note: Default is 21 calendar days under UCP 600 Art 14(c).
10. Additional Conditions (Field 47A): Special clauses, certifications, and operational instructions stipulated by the buyer and issuing bank. Practical Note: Must be audited thoroughly for document traps and soft clauses.

Q1: What is a SWIFT MT700 message, and what is its primary function in garment exports?

Model Answer: SWIFT MT700 is the standardized electronic banking message format used by an Issuing Bank to transmit an irrevocable documentary credit (Letter of Credit) to an Advising Bank in the exporter's country. Its primary function is to establish the legally binding terms, required shipping documents, monetary amount, and deadlines under which the issuing bank guarantees payment to the garment manufacturer.

Q2: What is the significance of Field 20 in an MT700 message?

Model Answer: Field 20 contains the unique Documentary Credit Number assigned by the issuing bank. It is the primary legal reference that must be cited on every export shipping document—including Commercial Invoices, Packing Lists, Bills of Lading, Certificates of Origin, and bank presentation schedules—to ensure traceability and documentary compliance under UCP 600.

Q3: Why is Field 31D (Date and Place of Expiry) critical for a Bangladesh garment exporter?

Model Answer: Field 31D specifies both the final date for document presentation and the geographical location where documents must be presented. For a Bangladesh exporter, the place of expiry must be in Bangladesh (e.g., 261130BANGLADESH). If it expires in the buyer's country, the factory risks credit expiry while physical documents are in international courier transit.

Q4: How should a Commercial Executive audit Field 32B (Currency and Amount)?

Model Answer: The executive must calculate the total contracted order value (Total Purchase Order Quantity × Agreed Unit Price) and compare it against Field 32B. Additionally, they must verify the 3-letter ISO currency code (USD, EUR, GBP) and check Field 39A for allowable quantity and value tolerances (+/- 5%).

Q5: What is Field 44C, and what operational rule governs its relationship with factory scheduling?

Model Answer: Field 44C is the Latest Date of Shipment, representing the final permissible on-board date stamped on the Bill of Lading. Factory ex-factory dates must be scheduled at least 3 to 5 days before Field 44C to allow adequate time for inland transport from Gazipur/Narayanganj to Chattogram port, customs assessment, and container loading.

Q6: What does Field 40E indicate, and why is "UCP LATEST VERSION" important?

Model Answer: Field 40E identifies the applicable regulatory rules governing the credit. "UCP LATEST VERSION" indicates that the credit is subject to ICC UCP 600 rules, ensuring that banks examine documents under standardized international rules (e.g., 5 banking days examination window, independence of credit, standard 21-day presentation rule).

Q7: Why must Field 43T (Transshipment) always state "ALLOWED" for sea shipments from Bangladesh?

Model Answer: Seaborne container shipments from Bangladesh depart Chattogram Port on feeder vessels and transship onto mother ocean vessels at regional hub ports such as Singapore, Colombo, or Tanjung Pelepas. This transfer constitutes transshipment under transport law. If Field 43T states "PROHIBITED", the Bill of Lading will contain an unavoidable discrepancy.

Q8: What is the difference between Field 46A and Field 47A?

Model Answer: Field 46A (Documents Required) lists the master inventory of shipping documents required for bank negotiation (Invoices, Packing Lists, Bills of Lading, COO, PSI certificates). Field 47A (Additional Conditions) contains specialized terms, document notation instructions, certification wordings, and operational covenants.

Q9: If Field 48 (Period for Presentation) is absent from an MT700, what rule applies?

Model Answer: Under ICC UCP 600 Article 14(c), if no presentation period is stated in the credit, the default period is 21 calendar days after the date of shipment (B/L on-board date), provided that presentation is made no later than the expiry date of the credit (Field 31D).

Q10: Why must an MT700 be compared against both the Buyer PO and the Proforma Invoice (PI)?

Model Answer: The PO represents the buyer's procurement mandate, while the PI represents the seller's accepted commercial terms. Comparing the MT700 against both ensures that the issuing bank has opened the credit with matching quantities, prices, style codes, Incoterms, and shipment windows, preventing costly L/C amendments and bank payment dishonor.

Q11: What should a Commercial Executive do if Field 59 (Beneficiary) contains a typographical error?

Model Answer: The executive must immediately notify the Merchandiser and foreign buyer, providing a formal MT707 Amendment Request correcting the legal name. The factory must not negotiate documents or cut fabric under a misspelled beneficiary name, as the negotiating bank cannot endorse export proceeds to an entity that does not match official bank account records.

Q12: Which 5 MT700 fields should a Commercial Executive prioritize upon initial receipt?

Model Answer: The top 5 priority fields are:

1. Field 59 (Beneficiary Name & Address): Legal entity accuracy.
2. Field 32B & 39A (Currency, Amount & Tolerance): Financial coverage.
3. Field 44C (Latest Date of Shipment): Production and delivery feasibility.
4. Field 31D (Date and Place of Expiry): Presentation deadline and expiry in Bangladesh.
5. Field 43T (Transshipment): Must be ALLOWED for feeder vessel logistics.

1. What does the number "700" in MT700 stand for?

In SWIFT messaging nomenclature, Category 7 represents Documentary Credits and Guarantees. The digit "00" designates the primary message template used for the Issue of a Documentary Credit.

2. Can an exporter negotiate export documents using an unadvised raw SWIFT MT700 copy?

No. Commercial banks require the official advised Letter of Credit authenticated by the local advising bank. An unadvised raw SWIFT copy lacks legal authentication and bank endorsement.

3. What happens if the credit amount in Field 32B is higher than the invoice value?

Under UCP 600, drawing less than the total credit amount (partial drawing) is acceptable provided that partial shipment is allowed and the unit price matches the credit terms.

4. What is the difference between Field 41A and Field 41D?

Field 41A specifies the nominated bank using an 8 or 11-character SWIFT BIC code, whereas Field 41D specifies the bank using free-text name and physical address.

5. Can an issuing bank issue an MT700 without specifying Field 44C (Latest Shipment Date)?

Yes. If Field 44C is omitted, the credit is governed by the Expiry Date (Field 31D), meaning goods can be shipped up to the credit expiry date, provided sufficient time remains for document presentation under Field 48.

6. What does "BY NEGOTIATION" mean in Field 41a?

"By Negotiation" means the nominated bank is authorized to purchase the exporter's compliant drafts and/or shipping documents by advancing funds or agreeing to advance funds before interbank reimbursement from the issuing bank.

7. Is Field 39A (Tolerance) mandatory in all MT700 messages?

No. Field 39A is an optional field. If absent, the credit amount is exact. Under UCP 600 Article 30(b), a 5% quantity tolerance applies automatically only to bulk goods not counted in individual units (e.g., raw cotton in metric tons).

8. What is the difference between a SWIFT MT700 and a SWIFT MT707?

An MT700 is used to issue the original Letter of Credit. An MT707 is used to transmit formal amendments, modifications, extensions, or cancellations of terms in an existing credit.

9. Why do some MT700 messages contain Field 40A as "IRREVOCABLE TRANSFERABLE"?

"Irrevocable Transferable" allows the primary beneficiary (e.g., a buying house or trading company) to request the bank to transfer part or all of the credit to one or more second beneficiaries (actual manufacturing factories).

10. How quickly should a garment factory complete an MT700 audit after receipt?

A standard commercial audit of an advised MT700 must be completed within 24 to 48 hours of receipt from the advising bank to allow timely issuance of amendment requests before production commitments.

1. SWIFT MT700 is the Universal Banking Standard: All international Letters of Credit are issued using standardized electronic tagged fields governed by ICC UCP 600 rules.
2. Work from the Official Advised L/C: Never initiate production or Back-to-Back commitments on unauthenticated raw SWIFT copies; always demand the official advising bank document.
3. Verify Legal Names Exactly (Field 59): The Beneficiary legal name must match the factory's bank title, ERC, and bonded warehouse license character-for-character.
4. Expiry Must Be in Bangladesh (Field 31D): Never accept credit expiry in the buyer's country, which introduces fatal international courier delay risks.
5. Transshipment Must Be Allowed (Field 43T): Chattogram port feeder vessel routing requires transshipment to mother vessels at Singapore or Colombo.
6. Latest Shipment Date Requires Buffer (Field 44C): Ensure at least a 3–5 day buffer between factory ex-factory date and Field 44C to accommodate inland transit and customs.
7. Commercial Invoices Must Match Field 45A: Under UCP 600 Article 18(c), invoice merchandise descriptions must mirror Field 45A wording precisely.
8. Field 47A Demands Rigorous Scrutiny: Audit all additional conditions to eliminate unachievable document demands and third-party signature traps.
9. Amendments Require SWIFT MT707: Never accept email assurances from buyers for discrepant terms; always obtain formal MT707 bank amendments.
10. Three-Way Document Alignment: Complete commercial harmony requires matching parameters across the Buyer PO, Factory PI, and Advised MT700.

Upon completing this lesson, a Commercial Executive in an apparel manufacturing enterprise possesses the specialized technical capability to:

• Receive, deconstruct, and audit every tagged field in a SWIFT MT700 documentary credit transmission.
• Execute three-way cross-verification between the Buyer Purchase Order, Factory Proforma Invoice, and Advised Master L/C.
• Identify high-risk clauses, typographical errors, unfeasible shipping deadlines, and unachievable document conditions.
• Formulate precise SWIFT MT707 amendment requests to protect the factory against bank discrepancy charges and payment dishonor.
• Confidently authorize the opening of raw material Back-to-Back (BTB) L/Cs and statutory Utilization Declaration (UD) applications backed by compliant Master L/C terms.