Foreign traders noticed, major risks prompted, another bank was pulled into the blacklist!

Foreign traders noticed, major risks prompted, another bank was pulled into the blacklist!

Since last year, the Bank of Bangladesh The Farmers Bank Limited has caused huge losses to Chinese companies due to frequent defaults on letters of credit. On January 20, 2019, the Economic and Commercial Counsellor's Office of the Chinese Embassy in Bangladesh issued a security risk reminder on the official website, officially blacklisting the bank.

According to the relevant regulations of Bangladesh foreign exchange management, except for special circumstances, the external payment of import and export must generally adopt the method of bank letter of credit.

Due to the generally poor reputation of Bangladeshi commercial banks, many issuing banks operate illegally. In the case of Chinese companies exporting to Bangladesh, they often encounter delays in payment of unpaid spot letters, or The customer placed the order without the payment procedure, and the customer submitted a quality claim to the exporter after picking up the goods or looking at the goods, and forced the exporter to cut the price, resulting in economic losses. This situation mainly occurs in the export of fruits and vegetables (ginger, apple), chemical raw materials and textile raw materials.

If there is a discrepancy in the document, the market price at that time falls, and some customers refuse to pay the bill, or take the opportunity to file a high claim with the exporter, forcing the exporter to cut the price, thus suffering a large economic loss. After the bank returns the order, the handling of the goods is very difficult. The return and transfer of the goods must be handled with the consent of the original customer. The procedures are cumbersome, and the customers generally do not adopt a cooperative attitude. Therefore, there are very few cases of returning the goods. Even if the goods are returned, the losses are very serious. According to the Bangladesh Customs regulations, the goods are stranded in the port for more than 3 months (45 days for fruits and vegetables) and will not be cleared. The goods will be auctioned by the customs and the auction proceeds will be turned over to the state treasury.