CHAPTER 3

EXPORT BILLS FOR COLLECTION / URC 522

1
CHAPTER 3

EXPORT BILLS FOR COLLECTION / URC 522

INDEX

Para No TOPIC Page No

3 Introduction 4

3 1 General Provisions and Definitions 4

3 2 Definition of Collection 4

3 3 Parties to a collection 5

3 4 Form and Structure of Collections 5

3 4 1 Collection Instruction 5

3 5 Form of Presentation 6

3 5 1 Presentation 6

3 5 2 Sight/ Acceptance. 7

3 5 3 Release of Commercial Documents Against Acceptance 7

(D/A) vs. Documents Against Payments(D/P)
3 6 Liabilities and Responsibilities 8

3 6 1 Documents vs. Goods/Services/Performances 8

3 6 2 Disclaimer For Acts of an Instructed Party 8

3 6 3 Disclaimer on Documents Received 9

3 6 4 Disclaimer on Effectiveness of Documents 9

3 6 5 Disclaimer an Delays, Loss in Transit and Translation 9

3 6 6 Force Majeure 9

3 7 Payment 9

3 7 1 Payment Without Delay 9

3 7 2 Payment in Local Currency 10

3 7 3 Payment in Foreign Currency 10

3 7 4 Partial Payments 10

3 8 Interest, Charges and Expenses 10

2
3 8 1 Interest 10

3 8 2 Charges and Expenses 11

3 9 Other Provisions 11

3 9 1 Acceptance 11

3 9 2 Promissory Notes and Other Instruction 11

3 9 3 Protest 12

3 9 4 Case -of-Need 12

3 9 5 Advises 12

3
3. Introduction

In simple terms, export bill collection means sending of export bills to overseas buyer through his
bank to collect payment under export bills. Where in export bill discounting , the exporter get
amount from his authorized bank while submitting export documents.

Once after completion of necessary export procedures and formalities the exporter prepares
necessary documents to send to his overseas buyer to take delivery of cargo. These documents
includes Commercial invoice, Packing list, certificate of origin, Bill of lading or Airway bill, bill of
exchange, quality certificate, and other documents specifically mentioned by the buyer at the time
of placing purchase order.

Once after preparing such export documents, the exporter submits them with his authorized bank
to send to his overseas buyer. If exporter needs to send the export bill for collection, he advises his
bank to send the documents for collection of payment from overseas buyer. Once after paying
export invoice amount by overseas buyer to exporter’s bank through overseas buyer’s bank, the
exporter’s bank credits the said amount received with exporter’s account.

Documentary collections may be more competitive than letter of credit terms because they are less
costly and do not require the buyer to tie up his/her local bank credit lines.

All the documents received should be properly acknowledged by the desk officer and a specific
number should be given to each bill as per serial allotted by IBD with the year prefix. All the
foreign bills under collection to be lodged under FBM menu . All the documents of each collection
bill should be stamped with this number.

3.1. General Provisions and Definitions

a. Bank will have no obligation to handle either a collection or any collection instructions or
subsequent related instructions.

c. If a bank elects, for any reason, not to handle a collection or any related instructions
received by it, it must advise the party from whom it received the collection or the
instruction by telecommunication or, if that is not possible, by other expeditious means,
without delay.

3.2. Definition of Collection

a) "Collection" means the handling of documents by bank, in accordance with instructions
received , in order to:
i. obtain payment and /or acceptance or
ii. deliver documents against payment and/or against acceptance or

4
iii. deliver documents on other terms and conditions.

b). "Documents" means financial documents and/or commercial documents.

i. "Financial documents" means bills of exchange, promissory notes, Cheques, or other similar
instruments used for obtaining the payment of money.
ii. "Commercial documents" means invoices, transport doucments, documents of title or other
similar documents, or any other documents whatsoever, not being financial doucments.
c) "Clean collection" means collections of financial documents not accompanied by commercial
documents.
d) "Documentary collection" means collection of:
i. "Financial documents accompanied by commercial documents.
ii. Commercial documents not accompanied by financial documents.

3.3. Parties to a collection

a) The various parties related to collection bills are as under
i. the" principal" who is the party entrusting the handling of a collection to a bank;
ii. the " remitting bank" which is the bank to which the principal has entrusted the
handling of a collection.
iii. the " collecting bank " which is any bank , other than the remitting bank, involved
in processing the collection.
iv. the " presenting bank" which is the collection bank making presentation to the
drawee.
b) The "drawee" is the one to whom presenting is to be made in accordance with the
collection instruction.

3.4. Form and Structure of Collections

3.4.1. Collection Instruction
a) i. All documents sent for collection must be a accompanied by a collection instructions
indicating that the collection is subject to URC 522 and giving complete and precise
instructions. Bank is only permitted to act upon the instruction given in such collection
instruction and in accordance with these Rules.
ii. Bank will not examine documents in order to obtain instructions.
iii. Unless otherwise authorized in the collection instruction, bank will disregard any
instructions from any party/bank other than the party/bank from whom they
received the collection.
b) A collection instruction should contain the followed items of information, as appropriate.
i. Details of the bank from which the collection was received including full name,
postal
and SWIFT address, telex, telephone, facsimile numbers and reference.

5
 ii. Details of the principal including full name, postal address, and if applicable telex,
telephone and facsimile numbers.
iii. Details of the drawee including full name, postal address, or the domicile at which
presentation is to made and if applicable telex, telephone and facsimile numbers.
iv. Details of the presenting bank, if any, including full name, postal address, and if
applicable telex, telephone and facsimile numbers.
v. Amount(s) and currency(s) to be collected.
vi. List of documents enclosed and the numerical count or each document.
vii. a.Terms and conditions upon which payment and/or acceptance is to be obtained.
b.Terms of delivery of documents against;
1. payment and/or acceptance
2. other terms and conditions
It is the responsibility of the party preparing the collection instruction to ensure
that the terms for the delivery of documents are clearly and unambiguously stated,
other wise bank will not be responsible for any consequences arising there from.
. viii Charges to be collected , indicating whether they may be waived or not
ix Interest to be collected , if applicable indicating whether it may be waived or not
including:
a. rate to interest
b. interest period
c. basis of calculation (for example 360 or 365 days in a year) as applicable.
x. Method of payment and form of payment advice.
xi. Instruction in case of non-payment, non-acceptance and/or non-compliance with
other instructions.
c. i.Collection instructions should bear the complete address of the drawee or of
the domicile at which the presentation is to be made If the address is in complete
or incorrect the collecting bank may , without, any liability and responsibility on
its part, endeavour to ascertain the proper address.
ii.The collecting bank will not be liable or responsible for any ensuing delay as a
result of an incomplete/incorrect address being provided.

3.5. Form of Presentation

3.5.1.Presentation.
a. Presentation is the procedure whereby the presenting bank makes the documents available
to the drawee as instructed.

b. The collection instruction should state the exact period of time within which any action is
to be taken by the drawee.
Expression such as "first", "prompt", "immediate", and the like should not be used in connection
with presentation or with reference to any period of time within which documents have to be taken

6
up or for any other action that is to be taken by the drawee. If such terms are used bank will
disregard them.

c. Documents are to be presented to the drawee in the form in which they are received,
except that bank is authorized to affix any necessary stamps, at the expense of the party
from whom they received the collection unless otherwise instructed, and to make any
necessary endorsements or place any rubber stamps or other identifying marks or
symbols customary to or required for the collection operation.
d. For the purpose or giving effect to the instruction of the principal the remitting bank will
utilize the bank nominated by the pricipal as the collecting bank. In the absence of such
nomination ,the remitting bank will utilize any bank of its own, or another bank's choice in
the country of payment or acceptance or in the country where other terms and conditions
have to be complied with.
e. The documents and collection instruction may be sent directly by the remitting bank to the
collecting bank or through another bank as intermediary
f. If the remitting bank does not nominate a specific presenting bank the collecting bank
may utilize a resenting bank of its choice.

3.5.2.Sight/ Acceptance.
In the case of documents payable at sight the presenting bank must make presentation for payment
without delay.
In the case of documents payable at a tenor other than sight the presenting bank must, where
acceptance is called for, make presentation for acceptance without delay, and where payment is
called for, make presentation for payments not later that the appropriate maturity date.

3.5.3.Release of Commercial Documents

Documents Against Acceptance (D/A) vs.
Documents Against Payments(D/P)
a. Collections should not contain bills of exchange payable at a future date with instructions
that commercial documents are to be delivered against payment.
b. If a collection contains a bill of exchange payable at a future date, the collection
instruction should state whether the commercial documents are to be released to the
drawee against acceptance (D/A) or against payments (D/P)
In the absence of such statement commercial documents will be released only against
payments and the collecting bank will not be responsible for any consequences arising out
of any delay in the delivery of documents.
c. If a collection contains a bill of exchange payable at a future date and the collection
instruction indicates that commercial documents are to be released against payment,
document will be released only against such payment and the collecting bank will not be
responsible for any consequences arising out of any delay in the delivery of documents.

7
3.6. Liabilities and Responsibilities

3.6.1. Documents vs. Goods/Services/Performances

a. Goods should not be dispatched directly to the address of a bank or consigned to or the
order of a bank without prior agreement on the part of that bank.
Nevertheless in the event that good are dispatched directly to the address of a bank or
consigned to or to the order of a bank for release to a drawee against payment or
acceptance or upon other terms and conditions without prior agreement on the part of that
bank, such bank shall have no obligation to take delivery of goods which remain at the risk
and responsibility of the party dispatching the goods.
b. Bank has no obligation to take any action in respect of the good to which a documentary
collection relates, including storage and insurance of the goods even when specific
instruction are given to do so. Bank will only take such action, if , when, and to the extent
that they may agree to do so in each case. This rule applies even in the absence of any
specific advice to this effect by the collecting bank.
c. Nevertheless, in the case that bank takes actions for the protection of the goods whether
instructed or not, they assume no liability or responsibility with regard to the fate and/or
conditions of the goods and/or for any acts and /or omissions on the part of any third
parities entrusted with the custody and/or protections of the goods. However the collecting
bank must advise without delay the bank from which the collection instruction was received
of any such action taken.
d. Any charges and/or expenses incurred by bank in connections with any action taken to
protect the goods will be for the account of the party from whom they received the
collection.
e. i where the goods are consigned to or to the order of the collecting bank and the
drawee has honored the collection by payment, acceptance or other terms and
conditions, and the collecting bank arranges for the release of the goods, the
remitting bank shall be deemed to have authorized the collecting bank to do so.
ii Where a collecting bank on the instructions of the remitting bank, arranges for the
release of the goods, the remitting bank shall indemnify such collecting bank for all
damages and expenses incurred.

3.6.2. Disclaimer For Acts of an Instructed Party

a. Bank utilizing the services of another bank for the purpose of giving effect to the
instructions of the principal, do so for the account and at the risk of such principal.

b. Bank assumes no liability or responsibility should the instructions they transmit not be
carried out, even if they have themselves taken the initiative in the choice of such other
bank(s)

8
c. A party instructing another party to perform services shall be bound by and liable to
indemnify the instructed party against all obligation and responsibilities imposed by
Foreign laws and usage's.

3.6.3. Disclaimer on Documents Received

a. Bank must determine that the documents received appear to be as listed in the collection
instruction must advise by telecommunication or, if that is not possible, by other
expeditious means, without delay, the party from whom the collection instruction was
received of any documents missing, or found to be other than listed.
Bank has no further obligation in this respect.
b. If the documents do not appear to be listed the remitting bank shall be precluded from
disputing the type and number of documents received by the collecting bank.
c. bank will present documents as received without further examination.

3.6.4. Disclaimer on Effectiveness of Documents

Bank assumes no liability or responsibility for form, sufficiency, accuracy, genuineness, falsification
or legal effect of any document(s), or for the general and/or particular conditions stipulated in the
document(s) or superimposed thereon; nor do they assume any liability or responsibility for the
description, quantity. weight, quality, condition packing, delivery, value or existence of the goods
represented by any document(s), or for the good faith or acts and/or omission, solvency,
performance or standing of the consignors, the carriers, the forwarders, the consignees or the
insurers of the goods, or any other person whomsoever.

3.6.5. Disclaimer an Delays, Loss in Transit and Translation

a. Bank assume no liability or responsibility for the consequences arising out of delay and/or
loss in transit of any message(s), letter(s) or document(s), or for delay mutilation or other
error(s) arising in transmission of any telecommunication or for error(s) in translation
and/or interpretation of technical terms.
b. Bank will not be liable or responsible for any delays resulting from the needs to obtain
clarification of any instructions received.

3.6.6.Force Majeure
Bank assumes no liability or responsibility for consequence arising out of the interruption of their
business by Acts of God, Riots, civil commotions, insurrections, wars, or any other causes beyond
their control or by strikes or lockouts.

3.7. Payment
3.7.1. Payment Without Delay

9
a. Amounts collected (less charges and/or disbursements and/or expenses where applicable)
must be made available without delay to the party from whom the collection instruction
was received in accordance with the terms and conditions of the collection instruction.
b. Unless other wise agreed, the collection bank will effect payment of the amount collected
on favor of the remitting bank only.

3.7.2. Payment in Local Currency

In the case of documents payable in the currency of the country of payment (local currency), the
presenting bank must, unless otherwise instructed in the collection instruction, release the
documents to the drawee against payment in local currency only if such currency is immediately
available for disposal in the manner specified in the collection instruction.

3.7.3. Payment in Foreign Currency

In the case of documents payable in a currency other than that of the country of payment (foreign
currency), the presenting bank must, unless otherwise instructed in the collection instruction,
release the documents to the drawee against payment in the designated foreign currency only if
such foreign currency can immediately be remitted in accordance with the instructions given in the
collection instruction.

3.7.4. Partial Payments

a. In respect of clean collection, partial payment may be accepted if and to the extent to
which and on the conditions on which partial payments are authorized by the law in force
in the place of payment. The financial document(s) will be released to the drawee only
when full payment thereof has been received.
b. In respect of documentary collections, partial payments will only be accepted if specifically
authorized in the collection instruction. However, unless otherwise instructed, the
presenting bank will release the documents to the drawee only after full payment has been
received, and the presenting bank will not be responsible for any consequences arising out
of any delay in the delivery of documents.

3.8. Interest, Charges and Expenses

3.8.1. Interest
a. If the collection instruction specifies that interest is to be collected and the drawee refuses
to pay such interest, the presenting bank may delivery for document(s) against payment or
acceptance or on other terms and conditions as the case may be, without collecting such
interest.
b. Where such interest is to be collected , the collection instruction must specify the rate of
interest, interest period and basis of calculation.

10
c. Where the collection instruction expressly states that interest may not be waived and the
drawee refuses to pay such interest the presenting bank will not deliver documents and
will not be responsible for any consequences arising out of any delay in the delivery of
document(s). When payment of interest has been refused the presenting bank must inform
by telecommunication or if that is not possible, by other expeditions means without delay
the bank from which the collection instruction was received.

3.8.2. Charges and Expenses

a. If the collection instruction specifies that collection charges and/or expenses are to be for
account of the drawee and the darwee refuses to pay them, the presenting bank may
deliver the document(s) against payment or acceptance or on other terms and conditions
as the case may be, without collecting charges and/or expenses. Whenever collection
charges and/or expenses are so waived they will be for the account of the party from whom
the collection was received and may be deducted from the proceeds.
b. Where the collection instruction expressly states that charges and/or expenses may not be
waived and the drawee refuses to pay such charges and/or expenses, the presenting bank
will not deliver documents and will not be responsible for any consequence arising out of
any delay in the delivery of the document(s). When payment of collection charges and/or
expenses has been refused the presenting bank must inform by telecommunication or, if
that is not possible, by other expeditious means without delay the bank from which the
collection instruction was received.
b. In all cases where in the express terms of a collection instruction, disbursements and/or
collection charges are to be borne by the principal, the collection bank(s) shall be entitled
to recover promptly outlays in respect of disbursements, expenses and charges from the
bank which the collection instruction was received, and the remitting bank shall be entitled
to recover promptly from the principal any amount so paid out by it, together with its own
disbursements, expenses and charges, regardless of the fate of the collection.
d. Bank reserves the right to demand payment of charges/and expenses in advance from the
party from whom the collection instruction was received , to cover costs in attempting to
carry out any instruction, and pending receipt of such payment also reserve the right not to
carry out such instructions.

3.9. Other Provisions

3.9.1. Acceptance
The presenting bank is responsible for seeing that the form of the acceptance of a bill of exchange
appears to be complete and correct, but is not responsible for the genuineness of any signature or
for the authority of any signatory to sign the acceptance.

3.9.2. Promissory Notes and Other Instruction

11
The presenting bank is not responsible for the genuineness of any signature or for the authority of
any signatory to sing a promissory note, receipt, or other instruments.

3.9.3. Protest
The collection instruction should give specific instructions regarding protest (or other legal process
in lieu thereof), in the event of non-payment or non-acceptance.
In the absence of such specific instructions, the bank has no obligation to have the document(s)
protested(or subjected to other legal process in lieu thereof) for non-payments or non-acceptance.
Any charges and/or expenses incurred by bank in connections with such protest, or other legal
process, will be for the account of the party from whom the collection instruction was received.

3.9.4. Case -of-Need

If the principal nominates a representative to act as case-of need in the event of non-payments
and/or non-acceptance the collection instruction should clearly and fully indicated the powers of
such case-of-need. In the absence of such indication bank will not accept any instruction from the
case-of- need.

3.9.5. Advises
Collection bank is to advise fate in accordance with the following rules:
a. Form of Advice
All advises or information from the collecting bank to the bank from which the collection
instruction was received, must bear appropriate details including, in all cases, the letter
bank's reference as stated in the collection instruction.

b. Method of Advice
It shall be the responsibility of the remitting bank to instruct the collecting bank regarding
the method by which the advises detailed in (c) i, ( c) ii and (c) iii are to be given. In the
absence of such instruction, the collecting bank will send the relative advices by the
method of its choice at the expense of the bank from which the collection instruction was
received.

c. ADVICE OF PAYMENT
i) The collecting bank must send without delay advice of payment to the bank from
which the collection instruction was received, detailing the amounts collected,
charges and/or disbursements and/or expenses deducted, where appropriate, and
method of disposal of the funds.

ii ADVICE OF ACCEPTANCE
The collecting bank must send without delay advice of acceptance to the bank from which
the collection instruction was received.

12
iii. ADVICE OF NON-PAYMENT AND/OR NON-ACCPETANCE
The presenting bank should endeavor to ascertain the reasons for non-payment and/or non-
acceptance and advise accordingly, without delay, the bank from which it received the
collection instruction.

The presenting bank must send without delay advise of non-payment and/or advice of non-
acceptance to the bank from which it received the collection instruction.

On receipt of such advice the remitting bank must give appropriate instructions as to the
further handling of the documents. If such instructions are not received by the presenting
bank within 60 days after its advice of non-payment and/or non-acceptance, the documents
may be returned to the bank from which the collection instruction was received without
any further responsibility on the part of the presenting bank.

13