EBL signs master forfaiting agreement with ADCB

Eastern Bank Ltd (EBL) and Abu Dhabi Commercial Bank (ADCB) have signed a Master Forfaiting Agreement with ADCB and successfully completed a pilot forfaiting transaction, under "the Uniform Rules for Forfaiting (ICC Publication no. 800)", recently.

Ali Reza Iftekhar, managing director and CEO, Eastern Bank Ltd said, "This transaction will facilitate exporters immensely in terms of balance sheet and cash flow management, getting early payment on without recourse basis for LC transactions. URF 800 provides necessary rules for the sale of financial claim, and it is also designed to facilitate the sale of those instruments in the secondary market."

Mehdi Zaman, DMD and Head of Treasury, FI and OBU, EBL said, "The first pilot forfaiting transaction secured the Export Proceed realization. This product will enhance export proceeds realization framework. EBL deeply acknowledges ADCB as a partner in this transaction, which will transform export business in Bangladesh."

In the pilot transaction, ADCB purchased an export LC risk under the forfaiting agreement with Eastern Bank and provided immediate cash on a without recourse basis while Eastern Bank handled all the documents under the LC for the exporter. This solution is beneficial to both Exporters as well as Bangladesh as a country in terms of quicker realization of export proceeds, especially in the current situation where foreign currency is in demand to manage growing imports. 

Eastern Bank and ADCB have agreed to work together in converting the pilot transactions into a commercialised flow of business between both banks.