The International Finance Corporation (IFC) has announced that two banks in Bangladesh have joined its recently introduced scheme to boost global trade by making letters of credit (L/Cs) more widely available.

The Global Trade Finance Programme (GTFP) should allow Eastern Bank and Dhaka Bank to increase their trade volumes and improve their trade finance capacity to support private sector importers, especially small- and medium-sized businesses.

First banks

The two banks are the first issuing banks in Bangladesh to join the GTFP, which is essentially a revolving guarantee facility.

The IFC, the private sector arm of the World Bank Group, says it is also in discussions with other select banks in Bangladesh for their participation in the programme.

Programme aims

The programme aims to help importers and banks in Bangladesh in several ways. The IFC provides guarantee coverage of bank risk in emerging markets, allowing recipients to expand their trade finance transactions within an extensive network of countries and banks and to enhance their trade finance coverage.

The programme also aims to improve trade finance capabilities in banks based in emerging markets.

Better L/C access

The programme essentially provides importers better access to L/C confirmations and it extends the geographical reach and availability of confirmation lines for documentary credits originated by these banks through a network of confirming banks that are also part of the programme.

The IFC approved US$500 million funding for GTFP in 2004 (DCWorld News, 24 November 2004). In October 2005 it completed its first transaction in the programme when ABN AMRO confirmed an L/C issued by Pakistan's Metropolitan Bank for the import of agricultural commodities into Pakistan (DCWorld News, 19 October 2005).

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.