Report on Documentary Collection
Chapter One
Introduction
1.1 Background
Documentary Collection is the Collection by a bank of funds due from a buyer against the delivery of documents. Among the different types of payment methods, Documentary Collection is the second most important method.
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders.
International trade is, in principle, not different from domestic trade as the motivation and the behaviour of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture.
1.2 Objectives
This study is basically an attempt of assessing the status of Documentary Collection as an international trade payment methods practiced in Bangladesh.
The specific objectives of the study are: I) To identify the existing practice of Documentary Collection incorporating its procedure, documentation, cost, risks and time involvements. II) To analyze the legal and regulatory aspects of Documentary Collection and deviation in operation in Bangladesh. III) To identify the difficulties from the points of view of traders and bankers while practicing Documentary Collection as international trade payment method.
Introduction
1.1 Background
Documentary Collection is the Collection by a bank of funds due from a buyer against the delivery of documents. Among the different types of payment methods, Documentary Collection is the second most important method.
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders.
International trade is, in principle, not different from domestic trade as the motivation and the behaviour of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture.
1.2 Objectives
This study is basically an attempt of assessing the status of Documentary Collection as an international trade payment methods practiced in Bangladesh.
The specific objectives of the study are: I) To identify the existing practice of Documentary Collection incorporating its procedure, documentation, cost, risks and time involvements. II) To analyze the legal and regulatory aspects of Documentary Collection and deviation in operation in Bangladesh. III) To identify the difficulties from the points of view of traders and bankers while practicing Documentary Collection as international trade payment method.
References: Annual Report (2010), United Commerce Bank Limited Annual Report (2010), IFIC Bank Limited Annual Report (2010), Rupali Bank Limited BIBM Course Materials on “International Trade Payment and Methods”