MT 740 Explained: Authorization to Reimburse

MT 740 is the issuing bank instructing a reimbursing bank — usually one based in the settlement currency's home country — to honour reimbursement claims from the bank that pays, accepts, or negotiates documents under the LC. This structure lets settlement happen quickly and locally in the credit's currency, without the paying bank needing a direct account relationship with the issuing bank itself.

Key fields

• 20 — Sender's Reference: Reference for this authorization.
• 21 — Documentary Credit Number: The LC this authorization relates to.
• 32B — Currency/Amount: The maximum amount the reimbursing bank is authorized to pay out under this credit.
• 41a — Reimbursing Bank / Claiming Party Details: Who's authorized to claim, and from whom.
• 42a — Drawee: Same meaning as in MT 700, if drafts are involved.
• 72 — Sender to Receiver Information: Any further operational instructions for the reimbursing bank.

The reimbursing bank named here never actually examines the LC's documents — it's just settling claims on the issuing bank's instruction, trusting that the paying bank's claim (an MT 742) is legitimate.