The International Finance Corporation (IFC) has concluded the first transaction in Bangladesh under its Global Trade Finance Programme (GTFP).

The transaction supports the confirmation by American Express Bank of a letter of credit (L/C) issued by Dhaka Bank.

Efficient transaction

A guarantee written by the IFC under the programme provided 100 per cent risk coverage for a transaction involving the import of cotton into Bangladesh.

According to the private sector arm of the World Bank Group, its GTFP support enabled the transaction to proceed quickly and efficiently at commercial pricing, benefiting the importer as well as both banks.

Programme scope

The GTFP is a US$500 million programme to support trade with emerging markets worldwide and promote flows of goods and services between developing countries.

Guarantee coverage provided by the IFC covers bank risk in emerging markets, allowing recipients to expand their trade finance transactions within an extensive network of countries and banks.

Dividends

Banks participating in the programme expect future dividends from the GTFP. "We look forward to using this programme to increase our transaction volume and serve our clients better," says deputy managing director of Dhaka Bank, Mohammad Abu Musa.

"Our partnership with IFC's GTFP will enhance our trade finance business worldwide as well as complement our ability to provide efficient trade solutions to our customers," says head of global banking at American Express Bank, John Ruane.

Background

The 28-branch Dhaka Bank was established as a public limited company in 1994 and began commercial operations in July 1995. It has a trade finance focus on corporate as well as small- and medium-sized enterprise clients.

The IFC approved the largely L/C-based GTFP in late 2004 (DC World News 24 November 2004) and announced the first transaction under the programme worldwide - in Pakistan - around a year later (DC World 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.