28 August 2004	Saturday	11 Rajab 1425

KARACHI, Aug 27: The chairman ICC Pakistan Banking Commission Ahsan Aziz, on Friday said the trend to use letter of credit as mode of trade transactions was declining world over , necessitating extra effort on the part of the bankers to create awareness and make it simpler.

Ahsan, who is also the Chairman ICC (International Chamber of Commerce) Paris Banking Commission, was talking to APP after delivering his inaugural address for 2-day course on, 'UCP-500 and eUCP', organized by Institute of Bankers Pakistan (IBP) in collaboration with ICC.

Responding to a question, he said the LC mode of transaction was the safest especially for the eastern countries where the importers, exporters and the host country bank are not familiar to each other and lack any guarantee against their money or goods.

Out of a total of $13 trillion trade transactions world over, only 15pc are executed through LCs, he said adding that 75pc LC transactions are made in Asian countries where the English is not the mother tongue.

He said State Bank Governor Dr Ishrat Husain has asked him to initiate work for the simplification of eCommerce Law. He said the governor said the most of the systems in banks were computerized.

The banks cover their risk by making their depositors/clients' sign for every sort of loss, but the customers are not covered under the law that is in place but was not in use.

Earlier addressing the course participants, he said the Uniformed Customs Practices (UCP) needed simplification so that importers/exporters as well as the bankers could understand and interpret the every section of the UCP perfectly in the same way as is done elsewhere.

Now the interpretation of the UCP is different in different countries. He also revealed that 60 to 70pc of documents are rejected world wide on the basis of negligible variations, which hardly impact upon the trade or its transaction like full stop, coma, semi colon etc or code of any branch of the same bank in same city, etc.

"We need to change the mind-set of the bankers and train them to accept the documents with variations that do not impact upon the transaction", but, he said it was difficult task. It took one year in India and one and half year in Australia, he added.

He said the bankers have a responsibility to create awareness about the UCP and its electronic version i.e., eUCP in their clients and customers. Though the number of electronic documentation from the businessmen to the Customs authorities is increasing gradually but the opening and executing of the LCs was very poor.

So far only 100 eLCs have been opened world wide, he told and held the ignorance to use the electronic mode responsible for the poor response to the facility. He said the ICC was actively working on simplification of the UCP and out of 45 articles, 19 have so far been reviewed.

He explained that under the revised form, while discounting a document, the approval of the issuing bank would be required first so that the chances of emergence of any forged document could be checked. -APP