Following January 20, the Economic and Commercial Counselor's Office of the Chinese Embassy in Bangladesh issued a security risk warning on the official website of The Farmers Bank Limited, officially blacklisting the bank. On February 11, China's Economic and Commercial Counselor's Office in Bangladesh issued another letter of credit update on major risks. Foreign trade freight forwarders who do import and export business in Bangladesh should pay attention!
Recently, Bangladesh's central bank has approved the former Farmers Bank Limited to be renamed Padma Bank.
The bank was established in 2013. Since its establishment, violations and loan fraud have been frequent. Especially since last year, the bank has seen more frequent vicious incidents of credit default, causing huge losses to Chinese enterprises in Bangladesh's international trade. Earlier, the Economic and Commercial Counselor's Office of the Chinese Embassy in Bangladesh had blacklisted the bank. However, this time the bank has changed its face and intends to refuse to pay all the letters of credit that were previously in default and continue to conduct business with Chinese enterprises.
The Economic and Commercial Counselor's Office of the Chinese Embassy in Bangladesh once again solemnly reminds all Chinese enterprises to strengthen risk prevention and control, avoid accepting letters of credit issued by Padma Bank in their trade with Bangladesh, and eliminate trade risks.
According to relevant regulations of Bangladesh's foreign exchange management, except for special circumstances, foreign payment for import and export must generally be made by bank letter of credit.
However, whether the letter of credit issued by the Bangladesh bank can be accepted by foreign traders needs to be carefully considered. There is a passage that says: there are two kinds of letters of credit in the world, one is a letter of credit, the other is a letter of credit from Bangladesh.
As the credit standing of Bangladesh Commercial Bank is generally poor, many issuing banks have violated regulations. In the business of Chinese companies exporting to Bangladesh, they often encounter delays in payment under sight L / C documents without any discrepancies, or when customers fail to go through payment procedures, they file quality claims with exporters after picking up or seeing the goods, forcing exporters to reduce prices, resulting in economic losses. This situation mainly occurs in the export of fruits and vegetables ( ginger, apple ), chemical raw materials and textile raw materials.
The main problems encountered in the letter of credit in Bangladesh are:
1. After the importer takes delivery of the goods, the bank delays the payment time without any reason, even if the negotiation bank urges it repeatedly.
2. After the bank releases the bill to the importer, it does not immediately pay for the goods. It allows the importer to lodge the so-called quality claim with the exporter after taking delivery of the goods, forcing the exporter to reduce the price at a discount. Then the negotiating bank instructs the issuing bank to deduct the discount from the payment.
3. After the importer takes delivery of the goods, he appeals to the local court about the quality of the goods. The court notifies the bank to stop payment. The bank cannot make external payment during the court hearing, thus delaying the payment time.
4. The bank still does not pay the purchase price after the customer accepts the non-conformity to pick up the goods.
If there are discrepancies in the documents, the market price at that time will drop, and some customers will refuse to pay the bill, or take the opportunity to lodge high claims with exporters, forcing exporters to reduce prices, thus incurring greater economic losses. After the bank returned the order, the handling of the goods was very difficult. The return and transfer of goods can only be handled with the consent of the original customer. The procedures are complicated, and customers generally do not adopt a cooperative attitude. Therefore, the return of goods is rare, and even if the goods are returned, the losses are very serious. According to Bangladeshi customs regulations, the goods will be auctioned by the customs and the auction proceeds will be turned over to the state treasury if they stay in the port for more than 3 months ( 45 days for fruits and vegetables ).
In recent years, the Economic and Commercial Counselor's Office of the Chinese Embassy in Bangladesh has received a significant increase in the number of complaints from domestic enterprises against Bangladeshi enterprises and banks. In order to prevent economic losses caused by the above situation, it is suggested that Chinese enterprises should pay attention to the following points in their trade with Bangladesh:
1. Carefully select partners and resolutely reject any illegal and unreasonable demands made by Bangladesh during the cooperation process. For example, Bangladesh importers demand lower prices to help them evade taxes. The Bangladesh exporter claimed that he lacked funds to stock up the goods and asked my importer to pay in advance.
2. Strengthen the awareness of wind control, strictly regulate their own trade behavior, and sign contracts in strict accordance with the formal procedures for each cooperation, requiring the Meng side to open a letter of credit at sight and arrange a bill after delivery. Even if the other side is a partner for many years, the above procedures should be followed to prevent illegal businessmen from taking advantage.
3. When issuing the credit card, Meng Fang must first understand the credit standing of the issuing bank, select the bank with good credit and strong strength to issue the credit card, and try not to accept the credit cards issued by banks and branches with poor credit.
4. Strictly do a good job of examining and approving letters of credit to ensure that there are no soft clauses. If soft terms are found, the certificate must be changed before delivery, especially the delivery date, so as to make it conform to the stipulations of the letter of credit. even if the customer offers to accept documents against discrepancies, it cannot be accepted, and the shipment must be made after the certificate is changed.
5. The goods under the letter of credit shall be delivered once, and partial delivery shall be avoided as far as possible, so as to prevent the customer from delaying the redemption order for the next batch of goods on the grounds of the quality problem after the first order is taken, thus requiring the exporter to reduce the price.
6. When signing the contract, if possible, the customer shall be required to have a certain proportion of advance payment as far as possible. In case of advance payment, even if there are discrepancies in the documents, it is relatively easy to solve and will not cause the unfavorable situation of customer's refusal to pay back the bill.
7. Establish legal awareness, report and prosecute problems in a timely manner, and actively safeguard their own interests through legal means.
8. In the event of disputes, we must strive to defend our own interests. Some illegal importers in Bangladesh have threatened not to pay or take delivery of the goods on the pretext that the quality of the goods is wrong or the specifications are not in conformity with the requirements, and have demanded price reduction and compensation. In view of the above situation, we cannot blindly comply with its requirements to prevent Meng's enterprises from intensifying their efforts, thus causing greater losses and ultimately losing all their money.
9. For large export contracts, it is recommended to take out export credit insurance.
I would like to remind our foreign trade forwarders who do import and export business in Bangladesh that they must be more vigilant and avoid unnecessary losses. Please pay attention to it and tell each other ~
