Dhaka, Bangladesh (BBN) - The central bank of Bangladesh on Tuesday asked the commercial banks to incorporate the international commercial terms, generally known as Incoterms, appropriately to facilitate exporters, officials said.
The central bank’s move is aimed at reducing the costs of transportation as well as risk of the exporters using such international commercial terms properly, they added.
Incoterms or international commercial terms are a group of international sales terms, published by the International Chamber of Commerce (ICC), that defines, who will bear transportation costs, insurance and risks in case of export during the passage of goods.
The country's exporters welcomed the BB's latest move, saying that the measure would facilitate their businesses despite the ongoing global meltdown.
"The BB's measure will minimize our transportation costs as well as risks of exports," President of the Bangladesh Garment Manufactures and Exporters Association (BGMEA) Abdus Salam Murshedy told BBN in the capital, Dhaka on Tuesday.
Incoterms require letters of credit (LCs) to be opened on free carrier (FCA) basis if goods are to be delivered by exporters to the buyer's nominated person.
"Contrary to this, it has been observed that authorized dealer banks (ADs) are advising free on board (FOB) stipulated LCs with condition to deliver the goods to the carrier or to the buyer's nominated person prior to loading on board a vessel," the central bank said in a circular, issued on Tuesday.
In such case exporters face additional risks and incur extra costs, the BB added.
The commercial banks are, therefore, asked to satisfy themselves that LCs reflect accurate terms and conditions of the Incoterms stipulations before advising the same to the beneficiaries, the circular said.
"Inconsistency, if any, should be informed immediately to the LC issuing bank for necessary amendment with intimation to the beneficiary," the circular said, adding that ADs are also advised to keep their exporter customers informed of the appropriate terms and conditions against applicable Incoterms for export so that they can insist foreign buyers to get LCs issued accordingly.
BBN/SS/SI/AD-01July09-1:03 am (BST)