Interactive Meet on UCP 600 at New Delhi
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Dr. R K Dhawan Chairman, FIEO(NR) (3rd from left) addressing meeting. With him, from left, Mr. Sunil Agnihotri, Jt. Dy. Director General, FIEO(NR); Prof Harkirat Singh,IIFT; Mr. Ajay Sahai, Director General, FIEO; and Mr. S R Kumar, Asst. General Manager, Punjab National Bank. |
Understanding the latest revised version of UCP 600, which has now replaced the earlier version, is important for every exporter as over 15% of international trade worth a trillion dollar is transacted through Letters of Credit. FIEO’s Northern Region Chairman Dr R.K. Dhawan said this at an Interactive Session on "Letter of Credit: Issues and Implementation of UCP 600" organised by FIEO on 15 July at New Delhi.
Highlighting some of the changes introduced in the new version, Dr Dhawan said, in article 14(b) of UCP 600, the expression "reasonable time" stands deleted, and the total time available for examination of documents, including that of any advice to the presenter, has now been reduced to five banking days (from seven). "This will reduce the average time taken by the banks in clearing an L/C," he added.
FIEO Director General Mr. Ajay Sahai in his address said that there were many unforeseen circumstances in international trade and it was yet to be seen how effectively the new UCP rule addressed this challenge. He, however, added that the all the articles in the new UCP 600 had been put in a logical sequence and different subjects and sections had been scientifically arranged. He hoped that UCP 600 would restore respect and responsibility amongst users.
Mr. Sahai took the opportunity to inform the participants that the RBI had extended the time limit of 365 days for realization of exports proceeds to all exporters, hitherto available only to status holders. He further informed that in addition to ECGC, private insurance companies had been allowed to settle the claims of exporters and such settlements would be considered final.
Mr. S. R. Kumar, AGM (International Banking Division), Punjab National Bank, New Delhi apprised the participants of how UCP 600 differed from its earlier version. The prime objective of UCP 600 is to make the transactions simpler and more user friendly, he said.
Prof. Harkirat Singh of IIFT said the new UCP 600 has 39 articles as compared to 49 in UCP 500. In his detailed presentation on issues and implications of UCP 600, he emphasized that UCP 600 was easier to understand as compared to its previous versions and urged the participants to comprehend it thoroughly.
UCP has been in existence since 1933 when it was first standardised and published by the International Chamber of Commerce. It helped organise L/C based trading by laying down a set of rules to be followed by various countries. Over the years, UCP has proved to be the most credible set of private rules governing international trade. ICC regularly updates and revises these rules to lend them greater clarity and credibility. The latest revised version, known as UCP 600, was approved by the Banking Commission of the International Chamber of Commerce at a meeting in Paris on 25 October 2006.
