Citi Sri Lanka holds ‘Banks Knowledge Sharing Session’

Tuesday, 4 November 2014 01:55 -     - {{hitsCtrl.values.hits}}

By Kiyoshi J. Berman Citi Sri Lanka held a ‘Banks Knowledge Sharing Session’ on 27 October at the Cinnamon Grand, Colombo. There were two events organised on the same day but targeting different audiences. The first event held in the morning was attended by operational teams in the banking sector. Welcoming the participants, Ravin Basnayake, Citi Country Officer, Sri Lanka spoke briefly about the role played by Citibank in the industry and introduced the Citi Trainer, Prabhu Karunakaran. “Being an institutional and corporate group bank, we provide our services to banks, Top tier local corporations, multinational companies and public sector companies. We have a very select niche client base in Sri Lanka. One thing we also want to do in Sri Lanka is to share the knowledge our teams have gained by operating in over 100 countries around the world,” he said. Prabhu Karunakaran is a Vice President and Regional Trade Advisor for Asia Pacific at Citi. He is a CDCS qualified management professional and a techno-domain expert with over 11 years of experience in the field of trade finance, process management, migrations, audit, system and training. Understanding main rules of UCP 600 The topic of the first trade training session of this event was ‘Understanding main rules of UCP 600’. “UCP [Uniform Customs and Practice] was revised in 2007 but is still a popular topic. The reason is the interpretation issues and queries associated with application of provisions,” Prabhu said as he began the session. The objective of the International Chamber of Commerce (ICC) introducing the UCP 600 is not to create uncertainty but to facilitate the Letter of Credit business, Prabhu said. “Unfortunately a lot of practitioners have tried to be safe, and have interpreted it [UCP] the way they want it to be interpreted. If you consider the global trade volume today, only about 10% are handled through the LC mechanism,” he added. This session focused on the main articles of UCP that are particularly complex and have had the most number of queries coming in. “First of all UCP is a rule and not a law. One of the significant provisions which got changed in the 2007 roll out is, if you want to apply UCP to a letter of credit it must be incorporated into the text. This also extends to a standby letter of credit to the extent it is applicable; but if it calls for documents of shipping and so on, you might have confusions interpreting it. Therefore, it’s recommended you use ISP [International Standby Practices] which is more of a governing rule for standby letters of credit”, he explained. Prabhu continued to discuss in detail many articles of UCP 600 alongside cases and Q&As in order to make sure the audience understood the significance of these articles and most importantly their correct usage. He left the audience with his insights and knowledge of how to make use of UCP 600 to facilitate better implementation of Letter of Credit transactions. Understanding changes to ISBP The second trade training session was on the topic ‘Understanding changes to International Standard Banking Practice (ISBP)’. Prabhu explained that after UCP 600 was revised in 2007, two publications of ISBP were issued. The first was ISBP 681 revised in 2007 and second was ISBP 745 revised in 2013; the latter is the recent one which has come in to effect in 2013. The latest publication expands some of the provisions for better clarity and also includes standards for other documents not considered in ISBP 681, such as P/List, W/List, beneficiary certificates and other types of certificates. He continued to describe the scope of the publication while shedding light on some common misconceptions about the ISBP. “It’s important to understand that ISBP supplements UCP and is not intended to conflict or substitute UCP. The preliminary considerations of this publication are the following. ISBP 745 is to be read in conjunction with UCP 600 and not in isolation. Also, the practices described highlight how articles of UCP 600 are to be interpreted and applied to credit and do not expressly modify or exclude an applicable article in UCP 600,” he said. He further explained the general principles of ISBP. This included the specifics of how abbreviations and punctuation marks should be used, and how certificates, declarations and statements should be dated and so on. He drew many practical examples to illustrate each point that was explained. He moved on to discussing expressions not defined in UCP 600, thus restating why both UCP and ISBP need to be taken into consideration. He further explained many more changes to the provisions of the ISBP and at the end of the session the participants were given a few case studies to help them question and absorb the information discussed. The afternoon event was a training session for relationship managers in banks. The subject of this session was ‘Trade Payment Methods and LC Settlement Process’. This training was also conducted by Prabhu Karunakaran. The primary focus of this session was to provide a trade refresher to the relationship managers present with the ultimate intention of enhancing the trade conversations they have with their clients. The session was brought to a close with a brief recap of Citi’s global trade capabilities in the region. In specific, Prabhu spoke about the role played by the Asia Trade Hub in Singapore (ATHS) in proving a single entry transactional gateway for cross border trade flows under letters of credit with counterparties in Asia. Pix by Upul Abayasekara