A Standby Letter of Credit (SBLC / SLOC) is a guarantee that is made by a bank on behalf of a client, which ensures payment will be made even if their client cannot fulfill the payment. It is a payment of last resort from the bank, and ideally, is never meant to be used.
SBLCs, unlike other types of LCs, are a type of contingency plan. In the case of other LCs, the bank makes the payment first, and then the applicant pays to the bank at a later date. However, when a bank issues an SBLC, they are only required to make the payment if the buyer or the applicant defaults.
The Standby LC Application is sent by the corporate (Applicant) to its bank to request the bank to submit an application for bank review to issue a Standby LC on behalf of the corporate in favor of the Beneficiary. If applicable, the request may indicate that the Standby LC is to be advised to the Beneficiary through a third-party bank, normally in the beneficiary's country of domicile (i.e. Advising Bank).
In RIVO, the Standby LC Issuance Application step allows the user(s) to draft a Standby LC Application and send it to Bank.
How Standby LC created in RIVO
The RIVO registered users are allowed to initiate a new Standby LC transaction request in a simple way .
To start a new SBLC, go to the Home screen and click on the New [+] icon and select the Standby LC option. Now click on Start and then navigate through all the screens giving the correct information. The required details are entered to complete the process of new Standby LC issuance request.
Home -> Standby LC -> Issuance
Note : According to SWIFT SR2023 changes, the screens remain unchanged, however, the field Additional Address Information will be enhanced as follows:
- The size of the field should be expanded from max 6*35 (210 characters) to max 12*65 (780 characters) **
- The Z-character set should be supported for this free text field.
The data entered in RIVO field "Additional Address Information" should be validated as per the SWIFT Z characters set mentioned above.
When data entered in the above-mentioned fields do not follow the rule of the Z characters set, RIVO should throw a warning message.
The warning message here shouldn't be a usual toast message. It should be similar to error messages displayed in RIVO. But the user should still be allowed to save and continue to the next card. RIVO shouldn't stop the user from proceeding with processing the deal.
WARNING message "The highlighted characters are supported by RIVO but might not be supported by the industry channel. Please consider rephrasing." should appear in orange and the characters which are not part of the SWIFT Z character set should be highlighted in red.
Also you can add Include "Contact Person" under Beneficiary details in Download Details template.
This is useful for the bank to key-in the contact details of beneficiary while processing it in Back office system. The updated templates are attached in this story.
To add a contact person please follow the steps below
- Create an stanby LC
- Provide necessary information in the 'Tell us some basic details' card and proceed to the 'Beneficiary details' card.
- Enter the beneficiary's Name, Address, City, Country, and Contact Person.
- Ensure all mandatory fields in all other cards are completed, and then sign the issuance transaction.
- The status will be updated to 'Issuance - Approved.'
- Access the context menu options and select 'Download Details.'
- The downloaded document will display the contact person of the beneficiary.