BB asks commercial banks to follow UCP-600 from July 1

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FE Report
The Bangladesh Bank (BB) has asked the commercial banks to abide by the Uniform Customs and Practice for Documentary Credit (UCP) 600 from July 1 to facilitate foreign trade.
The central bank issued a circular in this connection Tuesday and directed the banks to follow the new rules and regulations of UCP-600 adopted by the International Chamber of Commerce for making foreign trade related documentations and settlement.
"The authorised dealers (ADs) are, therefore, advised to explicitly mention that UCP 600 shall apply for all letters of credit (LCs) to be opened from July 1, 2007," the central bank said in the circular.
Similarly, in case of exports from Bangladesh against LCs, the ADs must ensure that the terms of the LCs are in conformity with the rules of UCP 600, the circular said, adding "If otherwise, ADs shall get the LCs amended accordingly."
"We have asked the banks to implement the new version of the UCP to facilitate the country's international trading activities," a BB senior official told the FE Tuesday.
He also said the UCP 600 will be able to bring dynamism in the international trade through simplification of the trade related procedures.
The bankers also are looking at the move positively, saying that the UCP 600 will help businessmen through reducing time limit for scrutiny of documents.
"The banks will have to inform their clients about the fate of LCs within five days instead of seven days. This will help boost international trade," a senior official of a foreign commercial bank told the FE.
He also said the new version of the UCP will help reduce the discrepancies in the documentations by providing proper clarifications.
"Overall process of the foreign trade will be expedited through implementation of the UCP 600," the official observed.
The International Chamber of Commerce (ICC) is working for international trade development across the world whose activities cover a broad spectrum from framing rules for facilitating foreign trade to arbitration and dispute resolution to making the case for open trade and market economy system.
The ICC is a United Nations Organisation affiliated body, which has direct access to national governments all over the world including Bangladesh through its national committees.
One of the main functions of the ICC is setting rules and standards for conducting international trade among the nations.
The Uniform Customs and Practice For Documentary Credit (UCPDC), popularly known as UCP, are rules that are used by banks and other related parties in conducting international trade through documentary credits that is LCs and guarantees.
UCP were first issued in 1933 when the ICC, to overcome the conflicting laws on letters of credit in different countries, created a set of rules to bring uniformity in the field of global trade.
Currently, UCP 500 is being followed across the world for foreign trade, which will be replaced by the new version, UCP 600, from July 01, 2007.