Seminar on UCP 600 at Chennai
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Mr.A Sakthivel, Vice President addressing the meeting. On the dais from left, are State Bank officials Mr. V Rajagopalan, Relationship Manager; Mr K Arvind, Asst. Gen. Manager; Mr. V Bhaskar, Dy. Gen. Manager; Mr. Rafeeque Ahmed, Past President, FIEO; and Mr. Tapan Chattopadhyay, DDG, FIEO(SR). |
Continuing its efforts to organise a series of seminar on UCP 600 ahead of its scheduled implementation from 1st July, FIEO organized another seminar after Delhi at Chennai on 5th June. The Southern Region office of FIEO organised the seminar in association with the State Bank of India. Besides representatives from various export promotion agencies, more than 100 exporters participated in the seminar.
UCP 600 is said to be an amended version of the earlier guidelines called UCP 500. The amendments are expected to impart greater transparency to documentary credit and further safeguard the interest of exporters vis-à-vis banks. Letter of credit is considered to be a safer mode of international trade payment and it operates under the ICC framed guidelines, called Uniform Customs and Practice for Documentary Credits (UCP).
Addressing the seminar, FIEO Vice President Mr. A. Sakthivel reflected on the significance of letter of credit and said "thorough knowledge of UCP is essential to avoid payment risks in international business and it helps an exporter to negotiate safe payment terms."
FIEO Vice President informed that in order to face the new challenges emerging out of globalization, banks were sensitizing their units towards integrated approach to risk management and advised the exporters to update themselves with various foreign exchange risk management tools available with the banks.
Mr. Sakthivel thanked the publishers of Tamil daily "Dinamalar" for bringing out booklets on UCP 600 in Tamil which were distributed among the participants during the seminar.
Mr. M. Rafeeque Ahmed, a former President of FIEO and currently the Chairman of FICCI’s Tamil Nadu State Council, advised the export managers, credit professionals and all those involved in letter of credit based transactions to fully familiarize themselves with the new rules as early as possible. Speaking about the volatility in forex market, he said, "From 1995 onwards a wide range of products have been introduced in India with respect to derivatives market and traders should use these products to maximize returns and minimize losses."
Mr. V. Bhaskar, Deputy General Manager of State Bank of India advised the exporters to update their knowledge on handling various risk management tools in consultation with their bankers to reduce their losses due to appreciating rupee. His colleague Mr. V. Rajagopalan, who is a Chief Manager with the bank, made a presentation on how UCP 600 was different from its earlier version (UCP 500) and advised the exporters to fully comprehend at least the few new changes brought about in UCP 600.
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According to Mr. Rajagopalan, under UCP 600 the onus is now on the issuing bank to be precise in its terms of contract in the L/C to minimize the scope of interpretation. UCP 600 also spells out the obligation of a confirming bank when a beneficiary presents documents directly to the issuing bank. It lays down comprehensive standards for examining documents and data. It clarifies how UCP affects all parties involved in transactions covered by documentary credits which include the issuing and confirming banks, applicants (buyers) who gets it issued, the beneficiaries (sellers) who are entitled for the payment and the service providers (such as |
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A view of the audience. |
forwarders, carriers, customs brokers) who use the documents. UCP 600 also redefines certain key terms to minimize the scope of interpretation.
As exporters are currently feeling the heat of volatility in foreign exchange market, a presentation on Foreign Exchange Risk Management was also made on this occasion by Mr. K. Arvind, Assistant General Manager of SBI. He explained how exporters could minimise their risks with the help of various derivative products like futures and forwards, options, swaps, forward rate agreement etc.
Mr. Tapan K. Chattopadhyay, Deputy Director General of FIEO’s Southern Region office, while summing up the proceedings of the seminar complained about a wide number of trade disputes arising out of the so called discrepancies in letters of credit. He hoped that UCP 600 would reduce the scope of such disputes.
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Seminar on UCP 600 in Mumbai After Delhi and Chennai, FIEO organized another seminar on UCP-600 at Mumbai on 15 June. The Western Region office of FIEO organized the seminar in association with Foreign Exchange Dealers Association of India (FEDAI). Giving a background to the revised guidelines on documentary credits called UCP 600, FEDAI’s Officer on Special Duty Mr. S G S Manian informed that the revision process started in May 2003 under the Chairmanship of Technical Advisor to ICC Banking Commission Mr. Gary Collyer and 15 meetings were held by the drafting group to finalize the revised provisions. According to him, there were 41 members from 26 countries in the consulting group, including ICC India, which was represented by FEDAI. Among the main features of UCP-600, says Mr. Manian, are the prescribed timeframe for the banks to examine and determine the compliance of the documents presented by the beneficiary with the terms of contract under a letter of credit, redefined standards for checking the documents, exclusion of insurance documents clause, expanded definition of original documents, new SWIFT formats etc. Earlier, while welcoming the participants, Mr. S Jamati, DDG, FIEO(WR) had stressed on the importance of updating one’s knowledge with the proposed changes contained in UCP-600 which is to come into effect from 1st July 2007. |
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| Mr. SGS Manaian, OSD (Forex Market), FEDAI addressing the meet. On his right is Mr. S Jamati, DDG, FIEO (WR) | A view of the participants |
