LC default by local banks to affect int'l trade

In the face of increasing LC (letters of credit) default by local banks, leading Bangladeshi bankers warned yesterday such breach of international trade payment will adversely affect international trade.

Such non-payments against documentary agreements tarnish the image of Bangladesh in foreign countries, they added.

They said Bangladesh may lose for good its credibility among foreign clients if such breaching of international trade payment rules continue.

Bangladesh may lose its international trade privileges and overseas clients which will surely hamper import and export, they said at the opening session of a workshop on 'International Standard Banking Practice (ISBP) and Documentary Credit Management'.

International Chamber of Commerce (ICC)-Bangladesh organised the two-day workshop at Metropolitan Chamber of Commerce and Industry (MCCI) auditorium in Dhaka to help banking professionals get updated about developments taking place in international trade transactions.

They urged all banks to strictly adhere to international banking rules so that such breaching incidents do not repeat again.

Addressing the workshop, ICC-B President Mahbubur Rahman said letters of credit are classic means for import and export payments so international rules must be followed in this regard to keep the trade going.

For uniformity and clarity, banks and traders should rely on Uniform Customs and Practices (UCP 500) enshrined in ICC rules, said Mahbubur Rahman, former chairman and incumbent director of National Bank Ltd.

ICC's international commercial, legal and banking standards are widely applied throughout the world by bankers, insurers, importers, exporters and carriers. Because of ingenuity of these standards they have become an integral part of global trade fabric, he said.

CEO of Citibank NA Bangladesh Mamun Rashid said local banks must adopt International Standard Banking Practices to earn confidence of foreign traders.

He urged banks to maintain ethical standard in banking transitions.

Mamun Rashid, who is also chairman of ICC-B standing committee on banking, said banks must comply with international rules to keep abreast with changing global banking services.

"We must speak in the same language in the modern world of banking so that clients in any place in the world get the same service and do not fall victim to unethical banking practice." he noted.

Addressing the workshop, Latifur Rahman, vice-president of ICC Bangladesh, said bank officials should engage extra efforts to reduce non-performing assets.

Citing example of Thailand, he said banks may hand over non-performing assets to asset management companies to save time and energy.

Terming the prevailing interest rate so high, he said high interest is impeding industrialisation in Bangladesh.

Welcoming the ongoing financial sector reforms, he said it should not be limited only to banking sector. Reforms should be spread up to other key sectors such as insurance, non-banking financial institutions and capital market, he added.

Vincent O'Brien, international trade finance examiner of Institute of International Trade, Ireland, is conducting the workshop, participated by 74 officials from different banks.