· Document Number：No. 85 [2017] of the China Banking Association

· Area of Law： Banking & Finance

· Level of Authority： Industry Regulations

· Date issued：06-01-2017

· Effective Date：06-08-2017

· Status： Effective

· Issuing Authority： China Banking Association

Notice of the China Banking Association on Issuing the Guidelines for the Domestic Inter-bank Letter of Credit Products (for Trial Implementation)
(No. 85 [2017] of the China Banking Association)
All member entities:
On May 5, 2016, the People's Bank of China and the China Banking Regulatory Commission have jointly issued the Measures for Settlement by Domestic Letter of Credit (No. 10 [2016], hereinafter referred to as the “Measures”). For the purposes of further promoting the sound development of the domestic letter of credit, advancing the sound and orderly development of the inter-bank, regulating the industrial standards for the domestic inter-bank letter of credit, and improving the business handling efficiency, under these Measures, the Professional Trade Financing Committee of the China Banking Association has completed the Guidelines for the Domestic Inter-bank Letter of Credit Products (for Trial Implementation), which are hereby issued for all banks' diligent study and implementation in light of their reality.
Annex: Guidelines for the Domestic Inter-bank Letter of Credit Products (for Trial Implementation)
June 1, 2017
Annex
Guidelines for the Domestic Inter-bank Letter of Credit Products (for Trial Implementation)
Chapter I General Provisions
Article 1 For the purposes of promoting the development of the domestic letter of credit (“L/C”), regulating the operation of the domestic inter-bank L/C products, strengthening the inter-bank cooperation, and preventing business risks, these Guidelines are developed under the Measures for the Settlement by Domestic Letter of Credit (Announcement No. 10 [2016], PBC and CBRC).
Article 2 For the purposes of these Guidelines, domestic inter-bank L/C means an undertaking made by a bank upon an applicant's application to honor a complying presentation, and one or several business of confirmation, notification, transfer, negotiation, and forwarding documents for reimbursement to be handled by another bank (not the same legal person as the former).
Article 3 No agreement on Domestic Letter of Credit Business is required to be signed for the domestic inter-bank L/C between banks.
Article 4 The issuance, amendment, notification, presentation, negotiation, confirmation, transfer, payment, etc. of domestic L/C shall be handled under the Measures for Settlement by Domestic Letter of Credit.
Chapter II Advantages of the Domestic Inter-bank L/C
Section 1 Advantages of the Buyer and the Seller
Article 5 The domestic inter-bank L/C has broken the monopoly of the business by one bank, has provided more options for the buyers and the sellers, and has further improved the credit level and expanded the bank-enterprise cooperation on the basis of reducing the financial costs and facilitating the handling of business.
Article 6 The differentiation advantages of the buyers and the sellers.
A buyer may independently choose a bank or choose a bank designated by a seller to handle business, accelerate the trade process, improve the efficiency of circulation, and strengthen the maintenance of the trade contact with the seller while meeting the financing needs.
A seller may choose a buyer in a different place by relying on the bank credit effectively reducing the risks, not be subject to the buyer's choice of advising bank, expand the sales market, and avoid opening accounts in multiple banks while expanding the financing channels in multiple banks, to handle business more flexibly and conveniently.
Section 2 Advantages of the Issuing Bank and the Negotiating Bank
Article 7 Domestic inter-bank L/C has more effectively played a role as the settlement tool, enhanced the circulation capacity of domestic L/C, promoted the cooperation and supervision of the issuing bank and negotiating bank in a market-oriented manner, effectively allocated the business resources, enhanced the product competitiveness, and increased banks' revenue. While regulating the business development, the operating risks may be effectively controlled.
Article 8 The differentiation advantages of the issuing bank and the negotiating bank
An issuing bank may, through the differentiated services and the “product chain effect,” further increase the contribution of clients and promote the stable growth of profits. A negotiating bank may provide more diversified settlement and financing channels for beneficiaries, to further expand client resources.
Chapter III Basic Process of the Domestic Inter-bank L/C
Section 1 Issuance, Amendment and Delivery of the Domestic Inter-bank L/C
Article 9 Domestic inter-bank L/C shall be issued uniformly “by post plus by confirmation telex.” The specific process: the issuing bank issues a L/C by post, affix the business seal (special L/C seal or special business seal) to it, forward it to the advising bank, and issue a confirmation telex to the advising bank by SWIFT MT799 tested telex or the telex of the High Value Payment System of the People's Bank of China (“PBC”). A confirmation telex may be issued with reference to the text of a telex (see Annex), and the contents include but are not limited to the date of issuance, the amount of issuance, the L/C number, etc. In the event of any inconsistency between the confirmation telex and the domestic L/C, an issuing bank shall actively, or upon receipt of the application of the advising bank for inquiry, issue a L/C amendment form or a confirmation telex amendment form to the advising bank.
Article 10 A domestic inter-bank L/C shall be issued in Chinese and indicate that “This letter of credit is issued under the Measures for Settlement by Domestic Letter of Credit.”
Article 11 Where the amendment to and the issuance method of a domestic inter-bank L/C are consistent, the aforesaid issuance method “by post plus by confirmation telex” shall be taken. A L/C amendment form issued by an issuing bank shall indicate the times of this amendment.
Section 2 Notification, Presentation and Negotiation of the Domestic Inter-bank L/C
Article 12 The advising bank shall be determined for a domestic inter-bank L/C under the Measures for Settlement by Domestic Letter of Credit. After receiving the original of a L/C issued by post or an amendment form of a L/C issued by post, verifying the confirmation telex to be correct, and verifying the basic elements of the seal, an advising bank shall notify the beneficiary no later than the close of the third business day following the date of receipt of the L/C or the L/C amendment form, if it agrees to give notification, and shall notify the issuing bank no later than the close of the third business day following the date of receipt of the L/C or the L/C amendment form by SWIFT MT799 tested telex or the telex of the High Value Payment System of the PBC, if it disagrees to give notification. Notification on the L/C amendment form issued by an issuing bank shall be given through the advising bank of the original L/C.
Article 13 A beneficiary that authorizes the presenting bank to make presentation of documents shall submit the letter of authorization on presentation of documents under a L/C to the issuing bank, and submit the documents, the original of the L/C, the L/C advise, the original of the L/C amendment form, and the L/C amendment notification (if any). The presenting bank shall, under the Measures for Settlement by Domestic Letter of Credit, undergo the formalities of forwarding documents for reimbursement.
Article 14 The presenting bank shall, when making presentation, attach a presentation letter (forwarding notice), besides the original of the documents.
A presentation letter (forwarding notice) shall indicate the amount on the document, amount of claimed reimbursement, copies of the documents, document forwarding number, route for claiming reimbursement, number of account receiving the payment, name of the beneficiary, name of the applicant, L/C number and other information, and indicate that the presentation is made under the original of the L/C and the presentation has been indicated on the reverse side of the original of the L/C.
The presenting bank shall affix a special L/C seal or special business seal to the presentation letter (forwarding notice).
Article 15 When the presenting bank forwards documents for reimbursement, the amount of claimed reimbursement shall not exceed the amount on the document (except as otherwise agreed in the L/C).
Article 16 After forwarding documents, the presenting bank shall indicate the date of presentation, the amount of presentation, the balance of the L/C and other presentation information on the reverse side of the original of the L/C.
Article 17 To apply to the negotiating bank for negotiation, a beneficiary shall submit the letter of authorization on presentation of documents and the negotiation application form (the bank may, in light of the reality, integrate two applications into one), and all materials as prescribed in Article 13 to the negotiating bank. The negotiating bank shall, under the Measures for Settlement by Domestic Letter of Credit, undergo the formalities of negotiation and forwarding documents for reimbursement.
Article 18 The applicable standards for the negotiation business: the domestic L/C shall be a negotiable L/C, and the negotiating bank shall be the negotiating bank as designated in the L/C or any bank may be the negotiating bank as prescribed in the L/C.
Article 19 Applicable prerequisite for the negotiation business: The documents comply with the L/C or the issuing bank/ confirming bank has confirmed payment at maturity.
Article 20 After the negotiation, the negotiating bank shall specify on the reverse side of the original of the L/C the date of negotiation, business serial number, amount of negotiation, and maturity date, and affix its special L/C seal or special business seal thereto.
Article 21 Negotiation shall be divided into the negotiation with the right of recourse and the negotiation without the right of recourse. In principle, when handling negotiation without the right of recourse, the negotiating bank is not required to submit the information on clients' negotiation without the right of recourse to the credit investigation system of the PBC.
Section 3 Confirmation of the Domestic Inter-bank L/C
Article 22 A confirming bank that adds its confirmation to a L/C is not required to sign any confirmation agreement with the issuing bank.
Article 23 A bank that is authorized or requested by an issuing bank to add its confirmation to a L/C and that refuses to add its confirmation to a L/C shall notify the issuing bank through SWIFT MT799 tested telex or telex of the High Value Payment System of the PBC.
Article 24 A designated bank that agrees to add its confirmation to a L/C as authorized or requested by the issuing bank shall indicate that the L/C has been confirmed by it in the L/C advice (or a separate letter of confirmation). The confirming bank has the right to choose whether to extend its confirmation to the amendment. The confirming bank that extends confirmation to the amendment shall be bound by the amendment as of the moment when such extension notification is given; and the confirming bank that agrees or refuses to add its confirmation to the amendment shall inform the issuing bank in a timely manner and inform the beneficiary in the notification to the beneficiary.
Article 25 The issuing bank may reach agreement with the confirming bank on the examination time for reimbursing the confirming bank/confirming payment /refusing to make payment (for example, two business days), otherwise the issuing bank shall, no later than the close of the fifth business day following the date of receipt of the documents from the confirming bank, reply the handling opinions for the documents and accordingly reimburse the confirming bank/confirm payment/refuse to make payment.
Section 4 Transfer of the Domestic Inter-bank L/C
Article 26 The transferring bank shall handle transfer in strict accordance with the relevant provisions of the Measures for Settlement by Domestic Letter of Credit.
Article 27 When transferring a L/C, the transferring bank shall request the first beneficiary to submit the following materials:
(1) The originals of the transferable L/C and its amendment form (if any), the originals of the transferable L/C advice or its amendment notification (if any).
(2) An application for Transfer of A Domestic L/C.
Article 28 When transferring a L/C, the transferring bank shall indicate in a transferred L/C whether the first beneficiary allows or under what conditions the first beneficiary allows to inform the second beneficiary of the amendment.
Article 29 Where the documents received by the transferring bank include the documents not required by the L/C, the transferring bank is not required to verify them, and may return them to the forwarding bank/the second beneficiary as the case may be, or transfer them to the issuing bank.
Article 30 Handling of payment
Where there is difference arising from the substitution of the documents after the payment is received from the issuing bank, the amount of difference shall be remitted to the account of the first beneficiary, and the balance shall be remitted to the account of the transferee (the second beneficiary) or its presenting bank; and where no documents are substituted or there is no difference arising from the substitution of the documents, all the funds received shall be remitted to the account of the transferee (the second beneficiary).
Article 31 Refusing to make payment/confirming payment/returning the documents
(1) Refusing to make payment: when the issuing bank or the confirming bank refuses to make payment on the basis of the documents, the transferring bank shall immediately notify the first beneficiary and the second beneficiary.
(2) Confirming payment: the transferring bank shall, no later than the close of the second business day following the date of receipt of the payment confirmation telex from the issuing bank or the confirming bank, notify the first beneficiary and the second beneficiary.
(3) Returning the documents: after receiving the documents returned by the issuing bank or the confirming bank and checking the documents to be correct, the transferring bank shall return the value-added tax invoice issued by the first beneficiary to the first beneficiary and concurrently return the documents of the second beneficiary to the second beneficiary and its presenting bank in a timely manner.
Section 5 Payment of the Domestic Inter-bank L/C
Article 32 The issuing bank or the confirming bank shall, no later than the close of the fifth business day following the date of receipt of the documents and presentation letter (or forwarding notice) forwarded by the presenting bank or the documents directly submitted by the beneficiary, verify in a timely manner whether they are complying presentation.
Article 33 If the documents comply with the L/C or the documents do not comply with the L/C but the issuing bank or confirming bank accepts all discrepancies, for a sight L/C, the issuing bank or the confirming bank shall, no later than the close of the fifth business day following the receipt of documents, pay the corresponding amount of money to the presenting bank or the beneficiary (when the beneficiary directly submits the documents, here and below in this Section); and for a usance L/C, the issuing bank or the confirming bank shall, no later than the close of the fifth business day following the date of receipt of documents, send a confirmation of payment at maturity, and make payment to the presenting bank or the beneficiary on the date of maturity.
Article 34 The issuing bank or the confirming bank that finds any discrepancy in the documents upon examination and decides to refuse to make payment shall, in an electronic form or by other expeditious means, notify the presenting bank or the beneficiary of all discrepancies at one time no later than the close of the fifth business day following the date of receipt of the documents. If the issuing bank or the confirming bank fails to notify the discrepancies as required, it does not have the right to claim that the documents do not constitute a complying presentation.
Article 35 Where the applicant accepts all discrepancies after the issuing bank or the confirming bank finds any discrepancy in the documents upon examination and refuses to make payment and before it receives the document return request of the presenting bank or the beneficiary, the issuing bank or the confirming bank shall in its sole judgment decide whether to make payment, issue the confirmation of payment at maturity or return the documents; and if the applicant does not accept the discrepancies, the issuing bank or the confirming bank may return the documents to the presenting bank or the beneficiary.
Section 6 Inquiry Reply, Letters and Telegrams of Domestic Inter-bank L/C
Article 36 All parties to a domestic inter-bank L/C shall, under the principles of “reply upon request for inquiry” and “reply in detail,” and before the close of the second business day following the date after receiving an inquiry request, reply to the inquiring bank or provide the necessary contents required to be provided, for the business whose time limit of handling is not specifically prescribed in the Measures for Settlement by Domestic Letter of Credit. The reply shall be made by the telex of the same system as that of inquiry in principle.
Article 37 The letters and telegrams of domestic inter-bank L/C shall be made in the format text as prescribed in the Measures for Settlement by Domestic Letter of Credit. Letters and telegrams include, but are not limited to confirmation telex, confirmation telex for payment at maturity, telex for refusal to make payment, among others, which shall be sent by SWIFTMT799 tested telex or the means of the High Value Payment System of the PBC. See Annex for the reference telex text.
Chapter IV Forfeiting Resale of Domestic L/C
Article 38 Forfeiting resale of domestic L/C means that a bank assigns the unmature credit that it accepts and for which the issuing bank/confirming bank confirms to make payment to another bank without recourse under a usance domestic L/C.
The forfeiting resale of domestic L/C may be divided into the following two models:
(1) resale after buyout without recourse from the beneficiary of a domestic L/C; and
(2) resale after buying the forfeiting assets under a domestic L/C from the secondary market.
Article 39 The cooperative banks of a domestic L/C in forfeiting resale generally involve three parties, respectively the issuing bank of a domestic L/C, the forfeiting buying bank on the primary market and the forfeiting buying bank on the secondary market. Where a L/C involves a confirming bank and the confirming bank makes a payment commitment for a bank other than the issuing bank according to the authorization or requirements of the issuing bank, the confirming bank of the L/C shall also be a party to the cooperative bank of a domestic L/C in the forfeiting resale.
Among the aforesaid parties, the forfeiting buying bank on the primary market means the bank that buys the unmature credit under a domestic L/C without the right of recourse from the beneficiary of the domestic L/C; and the forfeiting buying bank on the secondary market means the bank that buys the unmature credit under a domestic L/C without the right of recourse from the forfeiting buying bank on the primary market or from the secondary market.
Article 40 The rights and obligations of the issuing bank/confirming bank of domestic L/C
In the forfeiting resale, both the forfeiting buying bank on the primary market and the forfeiting buying bank on the secondary market buy unmature credit without the right of recourse on the basis of the payment commitment of the issuing bank/confirming bank. After the complying presentation by the beneficiary or the issuing bank issues the payment commitment, the issuing bank shall make payment within the prescribed time limit. From the time when adding confirmation to a L/C, the confirming bank shall irrevocably assume the liability for making payment upon complying presentation, confirming payment at maturity or negotiation. After making payment commitment for a bank other than the issuing bank, the confirming bank shall also assume the same rights and obligations as those of the issuing bank. No matter whether the credit is resold and how the creditor is changed, the issuing bank/confirming bank shall fulfill its payment commitment.
A forfeiting buying bank on the primary market becomes a new creditor immediately after it buys credit from the beneficiary and it will generally notify the issuing bank/confirming bank of the matters on credit assignment when it resells credit to the forfeiting buying bank on the secondary market without the right of recourse. Upon receipt of a notice on assignment of credit, the issuing bank/confirming bank may make payment on the maturity date according to the notice on assignment of credit and the payment instruction (if any) of the forfeiting buying bank on the secondary market.
Article 41 The rights and obligations of the forfeiting buying bank on the primary market
After signing a forfeiting business agreement with the beneficiary of a domestic L/C, a forfeiting buying bank on the primary market shall determine the price of a single forfeiting business in the form mutually agreed (such as business application, forfeiting transaction confirmation, etc.), buy the forfeiting assets from the beneficiary of a domestic L/C, and assume the credit risk of the issuing bank/confirming bank. If a forfeiting buying bank on the primary market fails to receive the payment made by an issuing bank/confirming bank at maturity (including the inadequate payment of the issuing bank/confirming bank, and the difference is not the bank fee of the issuing bank/confirming bank), except when a recourse event as agreed in a forfeiting agreement occurs, the forfeiting buying bank on the primary market has no right of recourse over the beneficiary of a domestic L/C.
When reselling the purchased unmature credit to a forfeiting buying bank on the secondary market without the right of recourse, a forfeiting buying bank on the primary market shall, according to the forfeiting business agreement signed with the forfeiting buying bank on the secondary market, fulfill the necessary responsibilities and obligations:
(1) Before handling the forfeiting resale transaction, the forfeiting buying bank on the primary market as the bank of the beneficiary of the domestic L/C that has the first-hand information of the beneficiary shall, under the requirements for internal risk management and control, conduct necessary investigations of KYC and KYB (know your client and know your business), examine the credit standing of the beneficiary, verify the authenticity of the trade background of the underlying transaction, verify the authenticity and validity of the value-added tax invoices, and ensure that the unmature credit owned is authentic, effective, incontestable and freely transferable. To meet the needs of the forfeiting buying bank on the secondary market for examining the underlying transaction, the forfeiting buying bank on the primary market also needs to provide necessary documents that have been checked by it for the forfeiting buying bank on the secondary market, and assist the forfeiting buying bank on the secondary market in examining the transactions.
(2) During the period of the forfeiting transaction, according to the provisions on the lawful and valid transfer of credit, a forfeiting buying bank on the primary market shall not agree with the issuing bank, confirming bank or beneficiary to extend the date of payment for any principal or interest or agree with the issuing bank, confirming bank or beneficiary to reduce the amount of payment for principal without the prior consent of the forfeiting buying bank on the secondary market.
(3) At the time of payment collection at maturity, if the issuing bank/confirming bank still make the relevant payment under the credit to the forfeiting buying bank on the primary market, instead of the forfeiting buying bank on the secondary market, the forfeiting buying bank on the primary market shall immediately pay all the funds received to the forfeiting buying bank on the secondary market, otherwise it will assume the interests and expenses for late payment of the forfeiting buying bank on the secondary market caused by failure to remit funds in a timely manner or operation errors. Where the forfeiting buying bank on the primary market fails to remit funds to the forfeiting buying bank on the secondary market on the current day when it collects the payment made by the issuing bank/confirming bank as the issuing bank/confirming bank makes payment at a later time, the forfeiting buying bank on the secondary market may, at the time of purchase on the secondary market, leave a period of grace of one working day to avoid the interests of late payment. If the event of default of the issuing bank/confirming bank, the forfeiting buying bank on the primary market shall have the obligation to provide necessary assistance according to the requirements of the forfeiting buying bank on the secondary market, and assist in the recovery of arrears under the premise that the forfeiting buying bank on the secondary market assumes relevant expenses.
Article 42 The rights and obligations of the forfeiting buying bank on the secondary market
After signing a forfeiting business agreement with the forfeiting buying bank on the primary market, the forfeiting buying bank on the secondary market shall determine the specific buying price for a single forfeiting business in the form (such as by telex, etc.) mutually agreed, buy the forfeiting assets from the forfeiting buying bank on the primary market, and assume the credit risks of the issuing bank/confirming bank. If a forfeiting buying bank on the secondary market fails to receive the payment made by an issuing bank/confirming bank at maturity (including the inadequate payment of the issuing bank/confirming bank, and the difference is not the bank fee of the issuing bank/confirming bank), except when a recourse event as agreed in a forfeiting agreement occurs, the forfeiting buying bank on the secondary market has no right of recourse over the forfeiting buying bank on the primary market.
A forfeiting buying bank on the secondary market shall credit entirely based entirely on its own decisions. Therefore, before buying credit, the forfeiting buying bank on the secondary market shall conduct necessary examination on the basis of the trade background of the underlying transaction, and may, if necessary, request the forfeiting buying bank on the primary market to offer assistance, including providing the documents not specified in the business agreement.
For the transactions between the secondary markets on which the forfeiting assets are brought, the rights and obligations of the buyers and sellers shall be governed by the forfeiting business agreements signed by and between the two parties.
Chapter V Main Risks of the Domestic Inter-bank L/C and Prevention Thereof
Section 1 Examination Focus of the Authenticity of Trade Background
Article 43 Examination Focus of the Authenticity of the Issuing Bank's Trade Background
(1) The examination of the credit standing of the applicant
The issuing bank shall ensure that the applicant has the payment capacity and willingness to make payment under a domestic L/C issued, and sustainability of business operation, through examining the applicant's business license for an enterprise legal person, the legal person certificate for public institution, and the license for production and operation, in consideration of the payment information of the applicant under the credit records and trade items.
(2) The examination of the applicant's trade background
The issuing bank shall confirm that the goods purchased under the L/C fall within the scope of the main business of the applicant and the services purchased are truly needed. The quantity of the goods or services purchased shall match with the business scale and actual needs of the applicant.
(3) The examination of the affiliation relationship between the buyer and the seller
The issuing bank shall have in-depth understanding of the affiliation relationship between the buyer and seller. Buyers and sellers shall be prevented from using any false trade background to fraudulently obtain bank credit.
(4) The examination of the trade contracts
The issuing bank shall examine the underlying trade contract. Whether the contract amount, subject, number, settlement method, and account period are consistent with the business operation information of the buyer and seller, and whether the unit contract price is basically consistent with the general market price shall be examined. Banks shall prudently intervene in the goods with frequent fluctuations in prices.
(5) The examination of the clauses and term of the domestic L/C
The issuing bank shall examine the contents of the domestic L/C issued and ensure that the clauses on the documents, expenses, and other items satisfy the requirements of the trade contract, and the payment period, validity period, presentation period and valid place of the L/C shall satisfy the requirements of the trade contract and be specified rationally and prudently.
Article 44 Examination focus of the authenticity of the negotiating bank's trade background
The negotiating bank divides the examination of trade background into the following two respects:
(1) The examination of the documents submitted
The negotiating bank shall examine the documents submitted. While conducting the examination of the surface consistency, the examination of the authenticity of the documents shall be focused on.
The negotiating bank that examines the documents as prescribed in the L/C and decides to conduct negotiation no later than the close of the fifth business day following the date of the acceptance of the application for negotiation shall specify on the reverse side of the original of the L/C the date of negotiation, business serial number, amount of negotiation, and maturity date, and affix its business seal thereto.
(2) The examination of the underlying trade contract
The negotiating bank shall examine the underlying trade contract, and the contract amount, subject, quantity, settlement method, and account period shall be consistent with the business operation information and settlement custom of the seller.
Section 2 Key points of risk prevention
Article 45 Process management shall be strengthened and credit risks shall be prevented.
(1) The qualifications and credit status of the applicants shall be strictly examined and the credit management shall be strengthened.
(2) The examination of the authenticity of trade shall be strengthened. The trade background, trading relationships, whether the price of the goods in the contract is reasonable, and the process of trading, goods, and funds shall be understood in a detailed manner.
(3) Payment guarantee shall be strictly implemented.
(4) Banks shall strengthen the internal transition and cooperation, follow the upstream and downstream relationships of trade under a L/C, and effectively monitor the financing capital flows and repayment sources.
Article 46 The legal risks shall be avoided reasonably.
(1) By strengthening the communication with the clients, the rights and obligations of both parties shall be clarified in writing, to minimize and avoid the risks arising from the policy system.
(2) The verification and management of the contract text shall be strengthened, to ensure complete procedures and compliance.
(3) The business process of a domestic L/C shall be effectively combed, and the relevant requirements shall be implemented in the internal rules and regulations through thorough study of the business theory, process, risk points and risk control measures of the domestic L/C, to specify the scientific and effective internal risk prevention and control system and the operation manual.
Article 47 Verification shall be strengthened and operating risks shall be avoided.
(1) The verification of the contract text shall be strengthened before the issuance of a L/C and the clauses of a L/C shall be reasonably specified on the basis of understanding the basic business information.
(2) Business exchange between banks shall be strengthened. Inquiry reply, discrepancy notice, among others, shall be conducted in strict accordance with the rules; and exchange and communication shall be strengthened in a timely manner, to reach consensus for the handling of the problems as far as possible and prevent the operating risks.
(3) The training of practicing personnel shall be strengthened, and the professional competence and operating skills of the documents and L/C handling personnel and marketing personnel, to prevent compliance and operating risks.
Article 48 Process management, and specific powers and responsibilities
The banks shall specify the functions of each department. A strict accountability mechanism shall be established to eliminate the phenomenon of shifting duties onto each other in the event of risks.
Chapter VI Supplementary Provisions
Article 49 All banks may use the formats of the SWIFT MT799 confirmation telex and confirmation telex for payment at maturity for a domestic L/C, and the confirmation telex of the High Value Payment System of the PBC and confirmation telex for payment at maturity for a domestic L/C affixed to these Guidelines for reference.
Article 50 The disputes, arbitrations and litigations, if any, between the domestic banks when providing domestic inter-bank L/C services shall be handled under the requirements of the relevant laws, regulations, and policies of the state.
Article 51 The power to interpret these Guidelines shall remain with the China Banking Association.
Article 52 These Guidelines shall come into force on June 8, 2017.