46A (Documents Required) is an optional field in MT700 type SWIFT message of a Letter of Credit (L/C).
Here the list of documents is mentioned which to be presented.
Under this field, the description of the required documents is described serially.
Why F46A is not mandatory?
In most of the commercial L/C, this field is present though it is not mandatory.
This is an optional field in clean L/C because of the negotiating documents can only be draft. So, no documents are required for presentation and no need to mention in this field.
The bank only deals with documents. The documents that will be presented for negotiation are listed here.
If any of the document listed here is missing the bank will find the discrepancy.
The L/C issuing bank check and examine these documents upon received from the negotiating bank.
Types of documents required
The documents required for negotiation and listed here depends on various factors. Such as the bank’s own requirement, Central bank rules, import policy, buyer and seller negotiation, customs requirement, etc.
Normally these type of Shipping documents are mentioned there:
Draft/Bill of Exchange
Commerical documents (Packing List, Commercial Invoice)
Transport documents (Bill of Lading or Airway Bill or Truck Receipt etc.)
Insurance cover notes
Certificate of Origin, Mill Inspection report, etc.
Let’s examine one sample L/C
1 BENEFICIARY‘S SIGNED INVOICE IN FOUR COPIES SHOWING:
A) MERCHANDISE OF (COUNTRY NAME) ORIGIN
B) THE PRICE OF THE GOODS AND FREIGHT CHARGES SEPARATELY
C) MERCHANDISE SHIPPED ARE AS PER PROFORMA INVOICE NO. STATED IN FIELD 45A
Here the requirement is the “Commercial Invoice(CI)“. And in the CI where the country of origin, FOB value and freight charge, and Proforma Invoice no. should be mentioned.
To get the separate FOB value and the Freight charge is the requirement of the Central bank (Bangladesh Bank). So, it might vary country-wise.
2 FULL SET OF SHIPPED ON BOARD CLEAN BILL OF LADING DRAWN OR ENDORSED TO THE ORDER OF THE CITY BANK LIMITED MARKED ‘FREIGHT PREPAID’ NOTIFY APPLICANT AND THE ISSUING BANK.
This is the requirement of a transport document and in terms of sea shipment, it is Bill of Lading here.
In terms of CFR, the ‘FREIGHT PREPAID’ is mentioned. The ownership is still with the bank so the “TO THE ORDER OF ……” bank name is mentioned until the document handover to the applicant.
3 PACKING LIST IN THREE COPIES REQUIRED, SHOWING
A) GROSS WEIGHT AND NET WEIGHT
B) PACKING: BARE IN BUNDLE
The packing list is required and gross weight and net weight should be mentioned in the packing list. Packing conditions is bare in a bundle.
4 CERTIFICATE OF ORIGIN ISSUED BY CHAMBER OF COMMERCE/GOVT. APPROVED AUTHORITY/AGENCY OF THE EXPORTING COUNTRY, MUST ACCOMPANY THE ORIGINAL SHIPPING DOCUMENTS.
The requirement of Certificate of Origin(COO). The COO should be included in the original shipping documents.
5 ONCE COPY OF SHIPPING DOCUMENTS MUST BE SENT TO APPLICANT BY EMAIL (EMAIL ADDRESS) OR DIRECTLY BY COURIER WITHIN SEVEN WORKING DAYS AFTER THE SHIPMENT. BENEFICIARY’S CERTIFICATE TO THIS EFFECT MUST ACCOMPANY THE ORIGINAL SHIPPING DOCUMENTS.
So the seller will send one set of non-nego copy to the buyer either by courier or email. But the advice/certificate of sending must be issued by the beneficiary and will attache with the original shipping documents during the presentation to the negotiation bank.
6 INSURANCE COVERED BY APPLICANT. SHIPMENT(S) UNDER THIS CREDIT MUST BE ADVISED BY THE BENEFICIARY WITHIN SEVEN WORKING DAYS AFTER SHIPMENT DIRECTLY TO INSURANCE COMPANY NAME & ADDRESS OR EMAIL (EMAIL ADDRESS).
Sometimes people asked me that why this is mentioned here as because this was a CFR basis contract where the applicant bears the insurance.
Here only the advice is required that the exporter informed the insurance company after the shipment has done.
In our country, it’s included to check the activities have been maintained properly.
Hope you have a good understanding of field 46A in a letter of credit. As I told you earlier these clauses may vary in your country. Let me know by commenting here if you experience it.