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Waivers to purchase Iran's oil

In December, the US granted China, India, and a number of other Asian countries waivers on sanctions imposed on Iran. The 180-day waivers technically allowed letters of credit to be opened for purchases of Iranian crude by these countries. Washington has now renewed waivers for all 20 of Iran's major oil buyers. This is the second such renewal since US sanctions were imposed on the Islamic Republic a year ago. In exchange for the waiver, all of the buyers must agree to reduce the amount of oil they purchase from Iran. But reports from one of the countries granted a waiver suggest that it will still be unable to import crude oil from Iran. Sri Lanka's Sunday Times newspaper said state-run Ceylon Petroleum Corporation (CPC) has not been able to buy Iranian crude since June, as banks feared opening L/Cs and insurers refused cover. The report said CPC has asked US diplomats to facilitate L/C or insured transactions by providing banks and insurance firms with assurances they will not be punished. Washington has now renewed waivers for all 20 of Iran's major oil buyers. This is the second such renewal since US sanctions were imposed on the Islamic Republic a year ago.

Bangladesh L/C charge hike

L/C confirmation charges are up to 4 per cent in Bangladesh, according to reports in local media. The reports suggest the hike may have been at least partly caused by L/C irregularities at a state-run bank. Importers now have to pay confirmation fees of 4 per cent of invoice value compared with 2-3 per cent just months ago, according to the Daily Star. Bankers and businesspeople canvassed by the newspaper said that the L/C confirmation charge was between 0.75 per cent and one per cent a year ago. Bankers reportedly told journalists that recent L/C irregularities in the banking sector have raised question marks over some parts of the banking industry and may be part of the reason behind the price hikes. Particular concerns have been expressed over stateowned Sonali Bank, where investigations by Bangladesh's central bank earlier this year found evidence of L/C misuse.

TradeCard client renews agreement

TradeCard, the online platform that claims to provide an alternative to L/Cs, has signed a new agreement with major US-based global fashion retailer and distributor. Guess, which designs, markets, distributes and licenses garments, accessories and consumer goods in North America, Europe, Asia and Latin America, is extending an existing agreement with TradeCard. Guess has been using TradeCard since 2007 to facilitate transactions with trading partners in the US and Asia. The company now wants to extend its use of the online platform into Europe with the aim of standardizing its global supply chain. Chief information officer of Guess, Mike Relich, reckons TradeCard's platform for managing the supply chain from purchase order to settlement eliminates errors, confusion and paper-intensive processes. He also says that European suppliers were asking to move onto TradeCard.

New L/C regulation in Ontario

The Canadian province of Ontario has published a new letter of credit regulation under its Pension Benefits Act (PBA). The new regulation, which came into force on 1 January 2013, amends an existing one with respect to the use of L/Cs in the funding of a pension plan's solvency deficiency. The new regulation, along with other aspects of the PBA, permit L/Cs to be used in the funding of up to 15% of a plan's solvency liabilities. If an L/C is used for such purpose, interest payments on the solvency deficiency must be paid, calculated in accordance with the regulation, unless the L/C includes the amount of such interest payments. The new L/C funding option will apply to most employers who are required to make payments into a pension plan that provides defined benefits. The L/C must be an irrevocable and unconditional standby L/C made payable to the trustee of the pension fund. A bank, a credit union, a caisse populaire or a co-operative credit society must issue the L/C. It must expire not later than one year after it takes effect, although it can be renewed or replaced.