The Central Bank of Egypt (CBE) decides to stop dealing with collection documents in implementation of all import operations
The CBE has decided to stop dealing with collection documents in implementation of all import operations and to work with documentary letters of credit only, with exception of branches of foreign companies and their subsidiaries
The Central Bank of Egypt has allowed acceptance of collection documents for goods already shipped prior to this decision.
In its letter, Egypt’s central bank confirmed that this is considered part of the cabinet’s directives on the governance of the import process and the activation of the pre-registration system for shipments, which will be compulsorily implemented starting from the early March, 2022.
Commenting on the CBE decision, some bankers said that the CBE decision to stop dealing with collection documents in the implementation of all import operations and to work with only letters of credits, starting from March 2022, aims to inform banks about the import process completely, to reduce the manipulation of the value of invoices and evasion of customs payment.
According to bankers, some importers prefer collection documents than letters of credit, since the relationship is between the importer and the exporter without any obligation on the bank or monitoring the entire process, which opens the door to evading customs payment.
Also, companies used to deal with collection documents, where the transaction is between the importer and the exporter directly, and the bank is an intermediary in this process. But dealing with letters of credits means that the transaction will be between the importing bank and the exporting bank.
According to some observers, canceling the collection documents will prompt all importers to deal with opening documentary credits only, which helps banks to monitor all import procedures and ensure the true value of imported goods with the aim of paying customs without suspicion of evasion.
However, the Central Bank excluded branches of foreign companies and their subsidiaries from this decision, and allowed banks to accept collection documents received for goods that had already been shipped before the issuance of this decision.