Last updated on June 3rd, 2021 at 05:10 am
F71D (Charges) is an optional field in the MT700 type SWIFT message.
This field specifies the charges borne by the beneficiary. Actually, it mentions who is responsible for which charges.
There are several charges related to a letter of credit such as advising charge, reimbursement charge, amendment charge, etc.
So it should define who bear those charge clearly. If the beneficiary bank couldn’t collect charges from the beneficiary, they will claim to the issuing bank.
According to SWIFT:
“This field may be used only to specify charges to be borne by the beneficiary.”
In the absence of this field, all charges, except negotiation and transfer charges, are to be borne by the applicant.
According to the latest SWIFT version F71D is used i/o F71B.
Let’s see few examples of different situations in the LC
Example 1: Here all charges outside the applicant bank are beneficiary account except discounting charges. This is an UPAS LC. So the discounting charge will bear by the applicant. It’s also a confirmed LC and the confirmation charge is on the beneficiary account.
Example 2: It’s the same condition as example 1. Here the wording is changed.
Example 3: Here all charges outside the Applicant country are on the Beneficiary account. LC advising charge, negotiating charge, reimbursement charge, etc. are on beneficiary account.
Example 4: It’s similar to example 3. But here the confirmation charge is added to the Applicant account. Since it’s a confirmed LC and the confirmation charge will bear by the applicant.
Example 5: Here this field referred to the clause under F47A (Additional condition). Due to space limitation, the charge detail is mentioned in F47A Clause 29.
All charges at the beneficiary bank will bear by the beneficiary and all charges at the applicant bank will bear by the applicant. Confirmation charge and the cost for the payment will also bear by the Applicant.
Example 6: This field also refers to another clause in F47A (Additional conditions) 21.
Here’s Clause 21 in F47A (Additional conditions).
It’s different from others. Charges on Applicant bank and Correspondent bank are on the applicant. A correspondent bank may be used if the applicant bank doesn’t have direct RMA with the beneficiary bank.
This is a confirmed LC and confirmation charges are on the beneficiary.