UCP 600 will ensure fewer rejections: Experts
 |
| Mr. Ajay Sahai, Director General, FIEO (3rd from right) addressing the participants. Others, from right, are Prof. Harkirat Singh, Consultant, IIFT; Dr. R K Dhawan, Chairman, FIEO (NR) and Mr. Sunil Agnihotri, Director, FIEO (NR). |
There is an immediate need for the exporting community to understand the revised UCP 600 which will be applicable from July 1, 2007 worldwide, the Northern Region Chairman of FIEO, Dr R. K. Dhawan said in an interactive session on international trade payment at New Delhi on 17th May. Addressing the session organized by FIEO in association with Indian Institute of Foreign Trade, Dr. Dhawan added that UCP 600 contained important new provisions relating to transport and insurance, and such provisions would influence the terms of letters of credit in the years to come. According to him, around 15% of international trade transactions are based on letters of credit and in value terms these transactions were worth over a trillion dollars.
FIEO Director General Mr. Ajay Sahai also made similar observations while addressing a large number of international traders, bankers, freight forwarders etc. who attended the session. He said understanding of the revisions that have taken place in the UCP 600 is very important from exporter’s perspective since its non-compliance may lead substantial losses not only to exporters but to the nation as well. Commenting on the changes made under UCP 600, Mr. Sahai observed that the inclusion of definitions of jargons, Article on interpretation and balance between literal compliance and substantial compliance, etc. would lend more transparency to the terms of letters of credit and thus secure the interest of users.
|
The technical experts while speaking on the subject clarified that the prime objective of UCP 600 was to make the transactions simpler and more user friendly. According to them, the compliance of UCP 600 will lead to fewer rejections when the documents are presented to the banks. The experts also informed that new UCP 600 had 39 articles as compared to 49 in UCP 500 and was more clear and easy to understand. |
 |
|
A cross-section of the gathering. |
Global surveys have indicated that on account of perceived discrepancies, approximately 70% of the documents under letters of credit were rejected by the banks on first presentation. The new UCP 600 seeks to reduce this percentage significantly.
