MT740 — Authorisation to Reimburse
Authorisation from the issuing bank to the reimbursing bank to honour the payment claims of the negotiating bank under a documentary credit. Governed by ICC URR 725 (2008).
Purpose
On an L/C issued via MT700, the issuing bank does not always have a direct account with the negotiating bank. It designates a third bank (reimbursing bank), often in the L/C's currency (Chase NYC for USD). MT740 authorises that third bank to debit the issuing bank's account to reimburse the negotiating bank when the latter presents its claim (MT742).
Block 4 tags
| Tag | Name | Status |
|---|---|---|
:20: | Reimbursement Authorisation Number | Mandatory |
:21: | Documentary Credit Number (link L/C) | Mandatory |
:25: | Account Identification (issuing bank's account) | Mandatory |
:31D: | Date and Place of Expiry | Mandatory |
:58A: | Negotiating Bank (will claim) | Conditional |
:32B: | Currency / Amount (cap) | Mandatory |
:39C: | Additional Amounts Covered (tolerance, charges) | Optional |
:42A: | Drawee (issuing bank) | Mandatory |
:71B: | Charges | Optional |
Real-world example
BNP Paribas authorises Chase NYC to reimburse Bank of China Beijing for the main L/C:
{1:F01BNPAFRPPAXXX0000000000}{2:I740CHASUS33XXXXN}{4:
:20:RBT2026LC001
:21:LC2026MAIN001
:25:USD9876543210
:31D:260815NEWYORK
:58A:BKCHCNBJXXX
:32B:USD250000,00
:39C:UP TO 10 PERCENT TOLERANCE
:42A:BNPAFRPPXXX
:71B:ALL REIMBURSEMENT CHARGES FOR ACCT OF ISSUING BANK
:78:DOCUMENTARY CREDIT CHARGES OUTSIDE THE COUNTRY OF THE ISSUING BANK
ARE FOR ACCOUNT OF THE BENEFICIARY
:72:/ACC/REIMBURSEMENT AS PER URR 725
-}{5:{CHK:1234567890AB}}Common pitfalls
- No MT747 pre-aviso: amending an existing authorisation goes through MT747 (Amendment to Authorisation), not a new MT740.
- Expired :31D:: the reimbursing bank will no longer pay past that date, even if the L/C itself is valid.
- :32B: too low vs L/C: if :32B: < L/C amount, coverage is partial ; document clearly to the negotiating bank.
- MT740 / MT710 confusion: MT710 informs a third bank of the L/C ; MT740 authorises a bank to reimburse.