Terms of International Trade

Terms of International Trade

Trade finance signifies financing for trade, and it concerns both domestic and international trade transactions. A trade transaction requires a seller of goods and services as well as a buyer. Various intermediaries such as banks and financial institutions can facilitate these transactions by financing the trade(Source Wikipedia).Banks have been providing trade finance services through various products .This service consists of processing information, managing documents, providing financing, and facilitating payments related to trade transactions. Trade products are short-term, self-liquidating transactions that are typically documentary in nature.

In most cases these transactions are contingencies that remain off balance sheet. Trade products are widely accepted and are documented in publications from the International Chamber of Commerce (ICC) including:

Uniform Customs & Practice (UCP 600)

   UCP is the rule which govern documentary credit and it was established under international chamber of commerce (ICC) in order to mitigate doubts created by individual countries promoting their own rules.

• International Standby Practices (ISP 98)

It was developed under the auspices of the institute of International Banking Law & Practice, Inc.

• Uniform Rules for Collections (URC 522)

It is set of rules which helps to assist the process for collecting debts or owed money of assets

• Uniform Rules for Bank-to-Bank Reimbursements (URR 725)

It is uniform rules under documentary credits ICC publication no 725

• Uniform Rules for Demand Guarantees (URDG 758)

• Uniform Rules for Forfaiting (URF 800)

Compiled by: Mr. Roshan Dangol