CAN THE ISUING BANK INCLUDE REIMBURSEMENT AUTHORITY IN FIELD 78 UNDER A ‘MAY ADD’ LC?

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QUESTION

Hi sir,

Hope this mail finds you well.

I wanted to confirm regarding an L/C that allows reimbursement authority under Field 49 marked as “MAY ADD.”

Our bank maintains a Nostro account, and we usually issue MT740 to authorize the reimbursing bank to pay when claimed by the nominated or negotiating bank.

Can we also add reimbursement authorization in Field 78 in such cases, so that the concerned nominated/negotiating bank can claim the funds?

Looking forward to your usual support.

Thanks and best regards

Jawad

Askari Bank Pakistan

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ANSWER

Hi,

Thank you for the question. I understand your bank is the issuing bank, and you’re asking whether reimbursement authority can be included in Field 78 under an LC with Field 49 = “MAY ADD.”

 Yes, you can.

Even when an LC is issued with optional confirmation (“MAY ADD”), the issuing bank can include reimbursement instructions in Field 78 for the benefit of the nominated or negotiating bank. This is independent of whether the advising bank decides to add its confirmation.

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 Key Clarifications:

• Field 78 provides instructions to the nominated/negotiating bank, such as:
  • “Negotiating bank is authorized to claim reimbursement from [Reimbursing Bank] under our MT740.”
  • “Upon receipt of complying documents, we will authorize reimbursement.”
• MT740 is a separate SWIFT message sent to the reimbursing bank, authorizing it to debit your Nostro account upon compliant presentation.
• These two mechanisms—Field 78 and MT740—should work together but serve different audiences.

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Important Consistency Checks:

Ensure the LC’s reimbursement structure is coherent across related fields:

• Field 41a: Availability should match the nominated or confirming bank.
• Field 53a: Clearly name the reimbursing bank.
• Field 78: Include clear reimbursement authorization to the negotiating bank.
• MT740: Sent in line with the instructions in Field 78.

If the advising bank adds confirmation, they may request additional amendments for reimbursement security—as discussed in our earlier guidance.

Best regards,

Mr. Old Man