Monday, April 21, 2014

An enigma called draft[1]

Of all the documents used in international trade, the bill of exchange (BoE) – also referred to as draft – continues to evoke intense debate among the documentary credit practitioners. Some say that it adds no value, that it’s a huge irritant instead. Others claim that it’s irrelevant in documentary credit transactions. This article discusses some of the issues that continue to engage the attention of the experts within the international trading community.

BoE and collection bills
Is the BoE an essential element in international trade operations? The utility of transport documents is easily appreciated; also that of commercial invoices, packing lists, or quality certificates.  The trading community has specific uses for each of these “shipping documents”.But drafts or bills of exchange? Although a draft is not a “shipping document”, it has been in use for over a hundred years, especially by the merchants of yore.

As a payment mechanism, .... (contd...)

[The complete article is available in the book 'Beyond Trade Finance', published on 13-Apr-2021 by Notion Press, and available at https://notionpress.com/read/beyond-trade-finance or at https://www.amazon.in/dp/1638508666]



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[1][ DC  Insight, Vol. 19 No. 4; October-December 2013.
[2] Refer to this author’s article titled, “Pre-payment, honour, and bills of exchange” published in Trade & Finance, (under The State Administration of Foreign Exchange), March 2013, China. Also available at http://rnbose.blogspot.in/2013/05/pre-payment-honour-and-bills-of-exchange.html