Bangladesh Bank is assisting local exporters transact on open account terms as a result of recent policy changes in Bangladesh.

Until those changes, exports from Bangladesh were allowed only under irrevocable sight letter of credit (L/C), export contract or advance payment terms.

Open account exports were allowed only for 100 per cent foreign owned entities in the country's special economic zones.

Radical change

This is a radical change, executive director of Bangladesh Bank, Humayun Kabir, told a virtual meeting on open account export transactions and recent policy changes in Bangladesh. "Traditional L/Cs have been practiced here for years," he said.

Bangladesh has amended its policy on export payment terms because it believes the adoption of open account terms in international trade will help local exporters receive payments and will save them time and money compared with traditional L/Cs.

The International Chamber of Commerce (ICC) Bangladesh and Asian Development Bank jointly organised the virtual meeting on open account transactions.

L/Cs and disputes

Managing director of Islami Bank Bangladesh, Mahbub-ul-Alam, told the meeting that about 85 per cent of international transactions handled by his bank were on L/C terms.

Chairman of the ICC Bangladesh Banking Commission and CEO of Bangladesh International Arbitration Centre, Muhammad Ali, recommended that Bangladesh develops options for alternative dispute resolution in open account transactions in case of any disputes.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.