Swift is a provider of secure message platform for financial institutions mainly for banks.
Swift messages are being sent and received by banks in encrypted forms. As a result swift messages are accepted as a valid and reliable way of communication between banks.
For example, an issuing bank sends a swift message to an advising bank in order to inform issuance of a documentary credit. Similarly the advising bank sends its acknowledgement via a swift message.
Swift messages play a key role not only in letters of credit but also other payment methods in international trade such as cash in advance payment, documentary collections, open accounts and bank payment obligations.
What is MT 760 Guarantee / Standby Letter of Credit?
MT 760 is a swift message type that is used by issuing banks when issuing a guarantee or a standby letter of credit.
Issuing banks send terms and conditions of a guarantee or a standby letter of credit with a MT 760 Guarantee / Standby Letter of Credit swift message type.
On below table you can find detailed explanations of the fields used under MT 760 swift messages.
MT 760 Guarantee / Standby Letter of Credit
|M||27||Sequence of Total|
|M||20||Transaction Reference Number|
|M||77C||Details of Guarantee|
|O||72||Sender to Receiver Information|
|O : Optinal M : Mandatory|
MT 760 Guarantee / Standby Letter of Credit Rules:
- This message is sent between banks involved in the issuance of a guarantee.
- It is used to issue a guarantee or to request the Receiver to issue a guarantee.
- This message may also be used for Standby Letters of Credit.
- Any applicable rules must be indicated in field 40C. If no rules are applicable, this must also be indicated (code “NONE”). If the guarantee is subject to rules other than URDG (Uniform Rules for Demand Guarantees, International Chamber of Commerce, Paris, France) or ISP (International Standby Practices, International Chamber of Commerce, Paris, France) it must be indicated in field 40C using the code OTHR.
The definition of this message type does not specify any characteristics or underlying agreements of the actual guarantee. Therefore, all specific terms, conditions and details of the guarantee are to be specified in field 77C.
- Since a SWIFT message is restricted to the maximum input message length, more than one MT 760 may be required to accommodate all the details of the guarantee.
What Does Current Bank Guarantee Rules (URDG 758) or Standby Letter of Credit Rules (ISP 98) Say About the Issuance of a Bank Guarantee or a Standby Letter of Credit?
According to URDG 758 a guarantee is deemed to be issued when it leaves the control of the guarantor.
URDG 758 states that a guarantee is irrevocable on issue even if it does not state this.
As per URDG 758 a guarantee may be advised to a beneficiary through an advising bank. By advising a guarantee, the advising bank certifies to the beneficiary, that it has satisfied itself as to the apparent authenticity of the guarantee. Advising bank also certifies that the advice accurately reflects the terms and conditions of the guarantee as received from the issuing bank.
According to ISP 98 a standby letter of credit is an irrevocable, independent, documentary, and binding undertaking when issued and need not so state.
ISP 98 states that unless an advice states otherwise, it signifies that:
- (i) the advisor has checked the apparent authenticity of the advised message in accordance with standard letter of credit practice; and
- (ii) the advice accurately reflects what has been received.