The Bank of Bangladesh has instructed local banks to adhere to international standards governing import and export transactions outlined in sales agreements.
Specifically, when utilizing documentary collection methods, banks are required to follow the Internationally Recognized Uniform Rules (URC) for Collections closely.
In a circular issued today (July 13th), the central bank emphasized the importance of regulatory compliance across all trade transaction methods.
Previously, banks were required to follow documentary credit (UCP 600) uniform customs and practices for all letters of credit (LC) related to both imports and exports.
Reaffirming its dedication to aligning domestic banking practices with global norms, the central bank noted that compliance is necessary for alternative trade financing methods.
The latest guidance confirms that banks can engage in accepted international trade transactions via various payment options, such as advance cash, documentary collections, and open accounts, alongside traditional LC-based formats, all of which align with existing import and export policies and foreign exchange regulations.
The circular specifies that if trade transactions are executed through a documentary collection method as defined in a sales agreement, banks must adhere to the URC set forth by the International Chamber of Commerce (ICC).
Insights from industry experts suggest that this move by the Bank of Bangladesh clarifies the regulatory landscape surrounding diverse trade practices.
While UCP continues to govern LC-based transactions, URCs specifically apply to documentary collections involving contracts.
This clarification aims to minimize operational uncertainty, boost compliance, and enhance the reliability and efficiency of the trade payments ecosystem.
