US UCC Article 5’s Non-Variable Provisions
How UCC Article 5 governs letters of credit in the US, its non-variable provisions, and the legal nuances that affect issuers and beneficiaries.
Starting March 1, 2022, Egypt's Central Bank now mandates the use of documentary credits for import operations, discontinuing documentary collections, except for certain exceptions.
Within the framework prescribed by Egypt’s Council of Ministers on governance of the importation process and activation of a pre-registration system for shipments which became mandatory on 1 March 2022, the Central Bank of Egypt (CBE) has stopped dealing with documentary collections backing import operations and instead mandate use of documentary credits only as of this date. Exceptions exist for branches of foreign companies and their subsidiaries and banks are permitted to accept documentary collections related to goods already shipped prior to this decision.
To mitigate adverse effects of its decision, CBE launched an initiative in mid-February to guarantee the import operations of banks to cover risks associated with documentary credits issued by Egyptian banks as of 22 February 2022 and going forward. The initiative was directed at bank customers with previous dealings for imports through documentary collections only and from an existing bank relationship.
The credit risk guarantee company guarantees a bank’s portfolio under the initiative for 100% of the unsecured portion of those documentary credits and banks are exempt from paying the guarantee risk commission for six months from the date of activation of the initiative. The credit risk guarantee company will keep banks informed of the specifics and framework of the initiative.
On the other hand, CBE stressed the importance of a bank’s commitment to provide the credit risk assurance company with the necessary data on its portfolio on a weekly basis and requirements to be shared by the company. Moreover, CBE made some exceptions to its decision by exempting certain items from application of its importation decision. Exceptions include:
In addition, other procedures in place to support the importation of goods via documentary credits aim to:
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