'Discounting' of Letter of Credit (LC) is a short-term credit facility provided by the bank. In the Letter of Credit discounting process, the bank purchases the documents or bills of the beneficiary and in return makes him the payment for a security or a fee. So, LC discounting is a term used for ease in place of ‘LC Bill Discounting’, which means discounting of a bill backed by LC. When the Tenor (Payment Method) is usance, the beneficiary is supposed to get payment only on the maturity date (due date). But beneficiary may need funds immediately for various reasons. So, he will contact his bank and request the bank to discount the documents presented under LC to get the immediate payment. The Beneficiary shall be required to pay a fee or discounting charges to the bank, which is termed a Letter of credit discounting charges; it is like interest. 

Discount Process in RIVO:

In RIVO, Beneficiary's bank / Financier is allowed to discount the documents presented under the Export L/C.

During 'Doc presentation' by beneficiary/corporate, under Document Presentation details, the RIVO card shows an option 'Discount the bill' with the options 'Yes' or 'No'. When the beneficiary/corporate selects 'Yes', then the discounting is to be done by the bank for the documents presented, and selecting 'No' notifies the bank that discounting is not required.

Further deal released by beneficiary, the status changed to 'Doc presentation-approved' and once the bank release the deal, status is updated to 'Doc Presented'

Beneficiary bank proceed with “Doc processing” and the status of the deal now changed to “Doc Processed- Clean”.

When the status of the drawing is 'Doc Processed- Clean', under 'Documents' tab, the Bank/Financier will have an additional menu option 'Discount Doc' for each drawing.

When the user signs the "Discount Doc" transaction, the status should be updated as 'Doc Discounted". After 'Doc Discounted' the Bank/Corp user should be able to see the “View” option under the context menu of drawing.

The list of allowed statuses for Discounting:

• Doc Processed- Clean
• Doc Accepted
• Doc discounted

To proceed with the Docs settlement , Refer How to Settle the Document under Export LC in RIVO