Why an exporter needs ECGC cover
An exporter needs ECGC cover for the risk of non-payment by the buyer. The risk of non-payment may be due to political and economic changes all over the world. Political changes like an outbreak of war, civil war, a coup or an insurrection may block or delay payment for goods exported. Likewise economic difficulties or…
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What is forfaiting?
The term forfaiting refers to a form of trade finance involving discounting of export bills receivables such as drafts drawn under LC, bills of exchange, promissory notes, or other instruments on without recourse basis. The export of capital goods involves account receivables of medium and long term maturities. It is a general practice that the…
Read articleRisk Management in Letter of Credit (LC) Transactions
Objective:To provide bank staff with a comprehensive understanding of the various risks involved in Letter of Credit (LC) transactions and equip them with strategies to identify, assess, and mitigate these risks effectively. 1. Introduction Letters of Credit (LCs) are widely used instruments in international trade, providing a secure payment mechanism for both buyers (applicants) and…
Read articleUnderstanding ISBP 745 and Incoterms in Documentary Credit Operations – Case Study Approach
Objective:To equip trade finance staff with practical knowledge of International Standard Banking Practice (ISBP 745) and Incoterms, highlighting their interaction within documentary credit transactions and illustrating real-world implications through case studies. 1. Overview of ISBP 745 What is ISBP 745?The International Standard Banking Practice (ISBP 745) is a publication by the International Chamber of Commerce…
Read articleUniform Rules for Bank-to-Bank Reimbursements (URR 725)
Objective:To familiarize bank staff with the purpose, scope, and operational framework of the Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits (URR 725) issued by the International Chamber of Commerce (ICC). These rules provide clarity, consistency, and efficiency in processing reimbursements between banks under documentary credit arrangements. 1. Introduction to URR 725 URR 725 is…
Responsibilities and Rights of Parties in a Letter of Credit (LC) Transaction
Objective:To provide bank staff with a clear understanding of the roles, responsibilities, and rights of each party involved in a Letter of Credit (LC) transaction, in accordance with international banking practices and regulatory frameworks. 1. Introduction to Letter of Credit (LC) A Letter of Credit (LC) is a financial instrument issued by a bank on…
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