Written by The Banking Post
Bangladesh Bank (BB) has issued a directive instructing all scheduled banks to strictly adhere to international standards, specifically the Uniform Rules for Collections (URC), in handling contract-based trade transactions conducted through the documentary collection method.
The central bank released the circular on Sunday (July 13), reinforcing the need for compliance with global trade practices even in non-LC (letter of credit) transactions.
The directive highlights three approved methods for conducting international trade—advance payment, documentary collection, and open account—each of which must comply with prevailing import and export policies, as well as foreign exchange regulations.
While banks have long operated under the Uniform Customs and Practice for Documentary Credits (UCP) for LC-based trade, the central bank now emphasizes that URC must be strictly followed in documentary collections as well.
In a documentary collection transaction, the exporter’s bank forwards shipping and other trade-related documents to the importer’s bank, which then releases them to the importer upon payment or acceptance under agreed terms. Unlike LC-based transactions, the bank merely facilitates document exchange and does not guarantee payment.
“This clarification by Bangladesh Bank will be very helpful for the sector,” said a senior executive at a leading commercial bank. “It will ensure greater transparency and global alignment in trade practices.”
Bankers and trade professionals believe that clear demarcation of UCP for LC-based transactions and URC for documentary collections will enhance the credibility, reliability, and efficiency of cross-border payment systems.
