Tag 50a in MT103 for export bill payment

divyaparthas · Post by **divyaparthas** » Tue Sep 22, 2009 12:24 pm

Dear All,
Have a query with respect to ordering customer tag in swift MT103 payment.
According to swift standards the defintion for ordering customer tag 50a is "This field specifies the customer ordering the transaction.".
My query is in case of export payments,-
The beneficiary is not holding account with the bank that has recieved funds from importer.
The bank wants to send a swift remitance to the customer through MT103. or through cover payment (MT103 and MT202Cov).
In this case can you please let know as to who will be the 50a(Ordering institution) – Importer or Exporter.
According to my understanding I feel it should be the importer as he is the party from whom the funds are originating.
Kindly confirm if my understanding is right.
Looking forward for your reply.

Regards
Divya

Judith · Post by **Judith** » Wed Sep 23, 2009 6:10 pm

Under an LC structure, the applicant (importer) is not really part of the transaction.

So, in rare cases when an MT 103 is used to remit funds to the beneficiary, 50a is usually the Nominated Bank / Confirming Bank / Issuing Bank. This is because the funds remitted "belong to these parties" under LC scenarios. That is, the remittance is a fulfillment of the obligations of these banks.

divyaparthas · Post by **divyaparthas** » Thu Sep 24, 2009 10:15 am

Hi Judith,

Thanks a lot for that reply, agreed from the perspective of the LC transaction but in case of payment not under LC, will the exporter be the ordering party ?

Regards,
Divya

iLC · Post by **iLC** » Thu Sep 24, 2009 11:30 am

it would be the name of the importer. the bank that has received the fund is acting as an intermediary only; not the ordering customer. but i was wondering why would a bank would do that. the best idea should be to return the fund to the ordering institution.

divyaparthas · Post by **divyaparthas** » Thu Sep 24, 2009 11:49 am

Even I was under strong belief that it should be importer

. Actually, in case of beneficary being a non account holder of the bank the swift payment message is sent to remit funds.
For example if a exporter is holding account with a Local bank( eg., Korea excahange bank, Korea) and t
he importer wants to remit funds to this guy through an international bank (Eg., CitiBank,Seoul,Korea)who has a branch in that country.

The importer is holding account with CITIBank Hongkong.
According to a pre arranged agreement.
The exporter will present his bills to Korea exchange bank, Busan who in turn will present to CitiBank Korea
CitiBank korea will send the documents to CitiBank Hongkong

In that case the importer's bank Citi Bank HongKong will send funds to CitiBank Korea who will remit funds to importer through SWIFT MT103 to Korea exchange bank ,Korea to credit the exporter by debiting Citi Bank Korea account with itself.

Trust this example will explain the flow of transaction, kindly let me know if i have made it look more confusing

Tag 50a in MT103 for export bill payment

Tag 50a in MT103 for export bill payment

Payment under LCs?

In case of Payment not under LC

importer

In case of Payment not under LC