Letter of Credit Disputes in Bangladesh: Legal Remedies for Importers and Exporters (2026)

LC dispute Bangladesh: the 2026 legal framework

Every LC dispute Bangladesh traders bring to court turns on one rule: a letter of credit is a promise by a bank to pay against documents, not against goods. Bangladeshi courts have applied that rule with unusual consistency. Since 2024 the High Court Division has refused, in case after case, to stop an issuing bank from honouring a complying presentation because the goods were defective, the buyer cancelled or export proceeds never arrived. Over the same period Bangladesh Bank has rewritten its import and export rulebooks, tightened the duty to pay accepted bills on the due date and set new limits for deferred payment and back-to-back credits.

This guide is written for importers, exporters, garment manufacturers, foreign suppliers and the banks between them. It explains how documentary credit disputes arise, how discrepancies and refusals work under UCP 600 and ISBP 821, the narrow fraud exception and why injunctions against payment almost always fail, the Bangladesh Bank rules on back-to-back and usance credits, and the remedies that do work: suits in the new Commercial Courts, arbitration, ICC DOCDEX, regulatory complaints and Artha Rin recovery once a bank has paid. Payment-method choice and bank guarantees are covered in companion TRW guides.

Summary: A Bangladeshi issuing bank must pay when the beneficiary presents documents that comply with the credit, and courts will not restrain payment because of a quarrel over the goods or the sale contract. The only recognised exception is clear, established fraud of which the bank has notice, and the courts apply it very strictly. A buyer with a quality claim must sue the seller for damages or arbitrate under the sale contract, while a beneficiary facing a wrongful refusal relies on the strict timetable in UCP 600 and, where needed, a money suit or DOCDEX. Bangladesh Bank's 2026 consolidated circulars require banks to pay import liabilities on the due date and set the tenors for usance and back-to-back credits.

Key point: In August 2025, in Alif Casual Wear v Changzhou Hengwangjia Textile, the High Court Division refused to stop payment under a back-to-back LC that stated "payment will be made after realization of related export proceeds", even though the exporter's buyer had rejected the fabric and no proceeds arrived. The court held that the issuing bank must honour a complying presentation under Articles 4, 7 and 15 of UCP 600, and that judicial restraint is warranted only for clear fraud or forgery.

At a glance

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Table of Contents

How a documentary credit dispute arises

A documentary credit links at least four separate contracts. The buyer and seller agree a sale. The buyer, as applicant, asks its bank to issue a credit. The issuing bank gives the seller, as beneficiary, an undertaking to pay against stipulated documents. A nominated or confirming bank in the seller's country may honour or negotiate the presentation and claim reimbursement from the issuing bank, which under Article 7(c) of UCP 600 undertakes to reimburse a nominated bank that has honoured or negotiated a complying presentation.[1] An LC dispute Bangladesh courts hear can break out on any of these links, and identifying the right link is the first step in any strategy.

Autonomy and the documentary principle

Article 4(a) of UCP 600 states that a credit "by its nature is a separate transaction from the sale or other contract on which it may be based", and Article 5 that banks "deal with documents and not with goods, services or performance".[1] Bangladeshi courts treat these two articles as the core of LC law. The Appellate Division said in Gooryonly (BD) Textile v Chartkar Information Holding, 54 DLR (AD) (2002) 70, that a letter of credit is "independent and unqualified by the contract of sale" and that its autonomy "is required to be protected".[9]

Why the governing rules matter

UCP 600 applies because the credit says so. Bangladesh Bank also makes it compulsory: its consolidated import circular of 13 August 2026 requires authorised dealer banks to follow the prevailing UCP when issuing import credits, the latest URC for collections and Incoterms consistent with the Import Policy Order, with local regulations prevailing in a conflict.[5] The export circular imposes the same duty to keep export credit terms in conformity with the prevailing UCP.[6] In practice, every LC dispute Bangladesh banks handle is therefore read through three layers: the credit's own terms, UCP 600 with ISBP, and Bangladesh Bank's foreign exchange rules.

Types of LC dispute Bangladesh traders face

Most documentary credit disputes fall into a small number of recurring patterns. Each calls for a different remedy, so it pays to classify the problem before writing the first letter.

• Refusal for discrepancies: the issuing or confirming bank rejects the presentation, and the beneficiary says the documents comply or the refusal notice was defective.
• Non-payment of accepted bills: the bank accepted the documents or incurred a deferred payment undertaking but does not pay at maturity, often for foreign exchange or liquidity reasons.
• Applicant-driven stop requests: the importer, unhappy with the goods, asks its bank or a court to block payment.
• Fraud: forged or fictitious documents, non-existent shipments or accommodation bills, where the fraud exception may genuinely be in play.
• Back-to-back mismatches: the export order fails, but the input supplier's back-to-back credit still has to be paid.
• Bank-to-bank reimbursement: a nominated bank has paid and the issuing bank refuses to reimburse.
• Post-payment recovery: the bank has paid the beneficiary and now pursues its own customer for the liability.

The first, second and sixth patterns are fought largely on UCP 600 and the bank's regulatory duties. The third and fourth are where injunctions are sought, and where the case law is decisive. The fifth and seventh engage Bangladesh Bank's back-to-back rules and the Artha Rin Adalat Ain 2003.

Discrepancies, refusal and the UCP 600 timetable

A bank must examine a presentation "on the basis of the documents alone" to decide whether it appears on its face to comply, and it has "a maximum of five banking days following the day of presentation" to do so.[1] Data in a document "need not be identical to, but must not conflict with" data in the same or another required document or the credit.[1] Where transport documents are required, presentation must be made no later than 21 calendar days after shipment, and in any event within the expiry of the credit.[1]

The single refusal notice and preclusion

When a bank decides to refuse, Article 16(c) requires it to give "a single notice to that effect to the presenter", stating each discrepancy and what it is doing with the documents. The notice must be given by telecommunication or other expeditious means within the five-day period. If the bank fails to act in accordance with Article 16, Article 16(f) provides that it "shall be precluded from claiming that the documents do not constitute a complying presentation".[1] For a beneficiary, preclusion is often the strongest argument in the file: a late, piecemeal or incomplete refusal turns a discrepant presentation into one the bank must pay.

ISBP 821 and what counts as a discrepancy

The International Standard Banking Practice for the examination of documents was revised in 2023 as ISBP 821, replacing ISBP 745 of 2013. It does not amend UCP 600 but explains how its practices apply, and the two are read together.[2] Among the new paragraphs, a missing or mistyped credit reference number is not a valid reason for refusal, and issuing banks are told not to include administrative conditions such as requests for extra photocopies or bans on stapling.[2] Many refusals in Bangladesh still rest on spelling, abbreviation or address points of exactly this kind. Testing each listed discrepancy against ISBP 821 should be the first step in contesting a refusal.

Applicant waiver and Bangladesh Bank's rule

Under Article 16(b) the issuing bank may approach the applicant for a waiver, but the decision whether to pay stays with the bank.[1] Bangladesh Bank allows authorised dealers to treat discrepant import bills that the importer has waived on reasonable grounds as payable, provided the waiver does not cause material changes. Before releasing goods against copy documents received directly by an importer, the bank must carry out due diligence so that no discrepancy arises with the originals.[5]

For inland foreign-currency credits, the 2026 circular also tells issuing banks to avoid conditions that cannot be met within the credit's validity and to examine documents themselves rather than sending them to applicants for acceptance.[5] A bank that lets its customer decide compliance is exposed under both UCP 600 and the circular.

Import LC disputes with the opening bank

The typical import LC dispute Bangladesh importers bring begins after the goods arrive. The machinery underperforms, the fabric fails inspection or the quantity is short, and the importer asks the opening bank not to pay. The answer, in both banking practice and law, is that the bank cannot refuse a complying presentation for that reason. Article 15(a) of UCP 600 states: "When an issuing bank determines that a presentation is complying, it must honour."[1]

Quality complaints do not stop payment

In Rubeda Trading v U M Cables, decided on 5 September 2024, an importer opened a USD 154,830 credit for optical fibre cable from India, alleged inferior goods and sued for Tk 2.68 crore in compensation. Both lower courts refused an injunction and the High Court Division discharged the Rule. It noted that the importer had not raised any discrepancy with the bank under UCP 600 and had alleged fraud only after taking delivery, and held that "the mere allegation of fraud is not sufficient".[9] The same result followed in Silver Composite Textile Mills v Fashion Options on 25 January 2024, where the High Court Division also directed the opening bank to pay the LC value "forthwith".[11]

The opening bank's own obligations

The importer's dispute is with the seller, but the opening bank has duties of its own. Bangladesh Bank requires authorised dealers to pay import liabilities on the due date. Banks that fail to settle may face punitive action, including revocation of their authorised dealer licence, and officials responsible for late payment may be held personally accountable.[5] Banks must also confirm credit lines before issuing credits and review overdue accepted bills under an action plan. Where a bill under litigation is not payable, the supplier's bank must be told so.[5] For a foreign supplier chasing an accepted bill, these rules are a lever: a written demand that cites the circular and the maturity date is often more effective than a lawsuit.

What the importer should do instead

An importer with a genuine complaint should protect evidence at once: joint survey, inspection reports, photographs, port and customs records. It should then pursue the seller under the sale contract's dispute clause and consider whether the credit itself offers any document-based ground. Rubeda shows the cost of skipping that step. The court held that even proven fraud would not justify an injunction if damages were an adequate remedy, relying on American Cyanamid and Uttara Bank v Macneil and Kilburn, 33 DLR (AD) (1981) 298.[9] Commercial protections such as inspection certificates by a named agency belong in the credit at issuance, not in a plaint after delivery.

Export LC disputes and getting paid from abroad

An export LC dispute Bangladesh exporters face usually runs in the opposite direction: a foreign issuing bank rejects documents, delays payment or refuses to reimburse the Bangladeshi negotiating bank. The exporter's position is strongest when it uses UCP 600 discipline: copies of the presentation schedule, the exact time of receipt, the refusal notice and its date. A refusal that lists discrepancies in more than one message, arrives after five banking days or fails to state how the documents are held can trigger preclusion under Article 16(f).[1]

The four-month repatriation clock

The exporter carries a regulatory risk the foreign bank does not. Bangladesh Bank's consolidated export circular of 30 July 2026 sets the prescribed period for repatriating export proceeds at four months, and failure to receive full proceeds within it, without authorisation, exposes the exporter to action under the Foreign Exchange Regulation Act 1947.[6] Authorised dealers must upload overdue export information to the Online Export Monitoring System by the tenth day of each month, including the reason for delay, recovery steps and litigation status.[6] A documented dispute file therefore protects the exporter twice: it supports the claim abroad and explains the delay to the regulator.

Practical routes for exporters

Where problems arise in a transaction, the export circular tells authorised dealers to guide exporters to change the importer's bank, obtain external payment guarantees or make other arrangements.[6] For a live export LC dispute Bangladesh exporters usually do best with a three-step sequence: a reasoned rejection of the refusal through the negotiating bank, a DOCDEX request if the foreign bank will engage, and, failing that, proceedings against the buyer under the sale contract's arbitration clause. Suing a foreign issuing bank in Bangladesh is possible in principle but raises jurisdiction, service and enforcement questions that usually make the buyer the better target.

Back-to-back and deferred payment LCs under Bangladesh Bank rules

Back-to-back credits sit at the heart of the export garment sector and of many disputes. Under the 2026 import circular, only recognised export-oriented units under the bonded warehouse system, with valid import-export registration and a bonded warehouse licence, may open back-to-back credits. The master export credit must stay valid long enough for import, manufacture and shipment, and the back-to-back value is capped at a permitted percentage of the master credit's net FOB value.[5] Usance back-to-back bills are settled at maturity from export proceeds held in a separate foreign currency account. If exports fail or proceeds fall short, post-facto Bangladesh Bank approval must be sought within 15 days of the following month.[5]

Usance tenors in 2026

Part D of the August 2026 circular sets maximum deferred payment periods by category. Industrial raw materials for the importer's own use may be imported on usance terms up to 270 days or the cash conversion cycle, whichever is shorter, and for back-to-back credits the statutory repatriation period applies. Spares, active pharmaceutical ingredients and certain other inputs may run to 360 days, life-saving drugs to 180 days, and capital machinery up to three years.[5] The all-in cost of usance financing may not exceed the benchmark rate, such as SOFR or Euribor, by more than three percentage points.[5] Authorised dealers may also purchase accepted usance bills under back-to-back credits before maturity.[5]

When the export order collapses

The commercial chain of a back-to-back credit invites the argument that the supplier should not be paid if the garment exporter is never paid. The courts reject it. In Alif Casual Wear, the exporter's UK buyer rejected the fabric, no garments were shipped and the credit stated that payment would follow realisation of export proceeds. The High Court Division held that the clause did not create a ground for withholding payment, that UCP 600 "does not recognize non-realization of export proceeds as a valid ground" once conforming documents are presented, and that quality allegations belonged in the underlying suit.[10]

The same reasoning applies to inland credits. In Meejab v AA Knitspin the exporter argued that the Appellate Division's principles for international credits did not apply to local suppliers. A three-judge bench disagreed, holding that issuing and negotiating banks deal in documents "no matter they are local LC or international LC".[8] Exporters who need protection against a failed master credit must build it into the commercial terms with the supplier, not rely on a court to rewrite the bank's undertaking.

The fraud exception in Bangladesh courts

The fraud exception is the only recognised exception to autonomy, and Bangladeshi courts confine it tightly. Its foundation is Uttara Bank v Macneil and Kilburn, 33 DLR (AD) 298, as summarised in a 2024 judgment: the obligation to pay is "absolutely obligatory", no direction to withhold payment can be passed, and the "only exception is in case of fraud of which the bank has notice".[8] In Centex Fashions v MIM, 2018 (1) LNJ 13, the High Court Division described the exception as applying where the bank knows that the documents presented are forged and fraudulent.[7]

The Appellate Division line

Four Appellate Division authorities are cited in almost every recent judgment. Zyta Garments v Union Bank, 55 DLR (AD) 56, holds that the credit is an independent contract that creates no right in a stranger and is "not affected by any dispute between the buyer and the seller". Smart Apparels v Hanvit Bank, 57 DLR (AD) 194, is quoted for the proposition that "no Court can pass any restraining order on any issuing bank from making payment under letter of credit".[8] Standard Bank v Tripos Engineering, 9 MLR (AD) 309, applies the rule to back-to-back credits, and Gooryonly rejected attachment of credit proceeds before judgment under Order XXXVIII, rule 5 of the Code of Civil Procedure.[8] [9]

What a fraud case needs

The decided cases show what does not work. A quality complaint dressed as fraud fails. A fraud allegation raised for the first time on appeal, or in an application for additional evidence two years later, fails as an "afterthought", as in Meejab.[8] A party that took and used the goods without objection will struggle to show fraud at all.[8] [12] Fraud that the courts will act on goes to the documents or the transaction itself: a forged bill of lading, a fictitious beneficiary or a shipment that never existed. The evidence must be clear and contemporaneous, and the bank must have notice of it before payment.[7] [9]

A tension worth noticing

The formulations are not perfectly aligned. Rubeda Trading and Alif Casual Wear accept that clear fraud or forgery can justify restraint.[9] [10] Paragraph 31 of Meejab, however, says that "under no circumstances" can an issuing bank be restrained "even if fraud has been alleged" and the bank has been put on notice, before relying on the Uttara Bank exception in the same paragraph.[8] The better reading is that an allegation of fraud, even one notified to the bank, is not enough; established fraud of which the bank has knowledge remains the exception. Until the Appellate Division addresses the point directly, a party relying on fraud should assume the strictest version of the test.

Banks that pay and then allege fraud

The exception does not protect a bank that sleeps on its rights. In Tripos, the issuing bank paid the bulk of the credit and only later claimed that the beneficiary did not exist; the Appellate Division held that it had no right to withhold the balance.[8] The High Court Division has also refused to let a bank decline reimbursement on a plea of fraud it had not raised when it accepted the documents.[8] Accepting bills without proper examination and disputing them afterwards is a losing position.

Injunctions against LC payment: how the courts handle them

An application to restrain payment is made under Order XXXIX, rules 1 and 2 of the Code of Civil Procedure, and the applicant must show a prima facie case, balance of convenience and irreparable loss.[9] In LC cases the autonomy principle and the narrow fraud exception overwhelm all three. In every recent reported case we reviewed, the trial court refused relief and the High Court Division upheld it.[8] [9] [10] [11] Our guide to the temporary injunction in Bangladesh explains the general tests; this section covers what is specific to credits.

Interim orders that do not last

The practical reality is more nuanced than the final judgments suggest. In Meejab, a Division Bench restrained payment for eight weeks when it issued the Rule in March 2021 and extended the order for six months; the injunction was vacated only in July 2024.[8] In Rubeda and Alif, interim status quo orders were in force until the Rules were discharged.[9] [10] Beneficiaries should therefore appear at the first hearing, oppose any ad interim order with the credit, the presentation and the bank's acceptance, and ask for an early hearing. When the injunction falls, ask the court to direct payment, as the court did in Silver Composite.[11]

The Commercial Courts Act 2026 changes the procedure

Most LC suits are now commercial disputes. The Commercial Courts Act 2026, Act No. 23 of 2026, dated 10 April 2026 and deemed effective from 1 January 2026, defines commercial disputes to include the ordinary dealings of traders, bankers, financial institutions and merchants, including the interpretation of commercial documents, and disputes over the export or import of goods and services.[13] Section 6(1) bars appeals against any order other than the final judgment, while preserving revision and review under the Code of Civil Procedure. An appeal or revision to the High Court Division must be filed within 60 days.[13]

Two further provisions matter. Section 7(1) requires pre-suit mediation before filing, but not where the suit involves urgent interim relief, and only if government rules for the process exist when the suit is filed.[13] Section 10 allows summary judgment where there is no real defence or claim and no oral evidence is needed, which suits a beneficiary's claim on a dishonoured complying presentation.[13]

Legal remedies in an LC dispute Bangladesh parties can use

The remedy depends on who is complaining and about what. The table compares the main routes. On a phone, scroll it sideways.

Money suit for damages or the LC value

A buyer with a quality claim sues the seller for compensation; a beneficiary facing wrongful dishonour sues the issuing or confirming bank for the credit amount. After the 2026 Act these claims belong in the Commercial Court where they fall within the definition, with summary judgment available for clear cases and contractual or court-fixed interest under section 9(11).[13] Courts have repeatedly directed trial courts to decide the underlying LC suit quickly, within six months in Centex and preferably within a year in Alif.[7] [10]

Arbitration under the sale contract

Credits themselves rarely contain arbitration clauses, but sale contracts and buying-house agreements often do. Where they do, the quality or non-delivery claim belongs in arbitration, and the Commercial Courts Act lists disputes over arbitration agreements, arbitrations and awards as commercial disputes.[13] For cross-border sales the choice is usually between BIAC, SIAC and ICC rules. Our guides to ICC arbitration for Bangladeshi parties and arbitration law in Bangladesh explain procedure, interim relief and enforcement, and we do not repeat them here.

ICC DOCDEX

DOCDEX is the ICC's expert procedure for disputes over documentary credits, collections, guarantees and other trade finance instruments. A panel of three experts appointed from a list maintained by the ICC Banking Commission decides the case, and a Technical Adviser reviews the draft for consistency with ICC rules and practice.[3] The draft decision is due within 30 days of the experts receiving all necessary materials. The standard fee is USD 5,000 for disputes of USD 1 million or less and USD 10,000 above that, and the decision is not binding unless all parties agree in writing; it is expressly not an arbitral award.[3] Because it reflects ICC banking practice, a DOCDEX decision carries real weight in negotiations between banks.

Bangladesh Bank complaint and writ petitions

A complaint to Bangladesh Bank works best for regulatory failures: an accepted bill left unpaid at maturity, a bank releasing goods against copy documents without due diligence, or failure to report overdue bills. The circular gives the regulator express powers against non-paying banks.[5] It is not a route to stop payment. In Silver Composite v Bangladesh Bank, decided on 29 May 2024, an importer sought mandamus directing the central bank to use sections 45 and 49(1)(cha) of the Bank Company Act 1991 to hold payment under a USD 81,321.41 credit. The High Court Division discharged the Rule: no provision allowed Bangladesh Bank to intervene over a discrepancy in goods, and "payment for the commercial contract cannot be stopped".[12]

Criminal complaints

Where documents are forged or a shipment is fictitious, cheating and forgery offences under the Penal Code 1860 and money laundering rules may be engaged, and banks must report suspicious trade transactions. A criminal case can freeze assets and change the balance in negotiations. It should not be used as leverage in a purely commercial quarrel, because courts and investigators quickly recognise a quality dispute presented as a crime.

Artha Rin recovery after the bank has paid

This is the stage at which an LC dispute Bangladesh importers thought was about the seller becomes a dispute with their own bank. Once the issuing bank honours a complying presentation and the importer does not retire the documents, the claim lies between the bank and its customer. The Artha Rin Adalat Ain 2003 defines "loan" in section 2(গ) to include any guarantee, indemnity, letter of credit or other financial arrangement that a financial institution issues on behalf of a borrower or accepts as a liability.[14] The bank's claim for an unpaid LC liability is therefore an Artha Rin claim, with its own pre-suit sale, mediation, deposit and execution rules.

The Commercial Courts Act draws the boundary expressly: the definition of commercial dispute excludes matters within the Artha Rin Adalat's jurisdiction.[13] An importer's quality claim against a foreign seller goes to the Commercial Court or arbitration, while the bank's recovery against that importer goes to the Artha Rin Adalat. An importer who stops paying the bank because the seller was at fault will lose on both fronts. Our guide to the Artha Rin Adalat in Bangladesh covers the recovery process and borrower defences in detail, and our overview of banking law in Bangladesh explains the wider regulatory framework.

Working with an LC dispute lawyer in Bangladesh

Documentary credit disputes are won or lost on dates and documents, and the first week usually decides the outcome. A specialist adviser reviews the credit, every amendment, the presentation schedule, the refusal or acceptance messages and the underlying contract together, and identifies which link in the chain carries the claim. The sequence we follow is set out below.

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For a bank, the same discipline applies in reverse: examine within five banking days, refuse once and completely, never let the applicant decide compliance, and pay accepted bills on maturity. For a buyer, the best protection is upstream: inspection certificates by a named agency, clear document descriptions and a sale contract with a workable dispute clause. Where a demand guarantee or standby credit is involved rather than a documentary credit, see our analysis of bank guarantees in Bangladesh and whether a performance guarantee can be stopped.

Where each LC dispute Bangladesh parties run is decided

The forum depends on the claim, the parties and the contract. The main decision-makers are summarised below.

2025 and 2026 developments to watch

Four developments shape how an LC dispute Bangladesh courts and regulators handle will play out for the rest of 2026.

• Consolidated foreign exchange rulebooks: FE Circular No. 33 of 14 August 2025 consolidated the import rules. FEPD-1 Circular No. 30 of 13 August 2026 replaced it and repealed earlier instructions except the GFET Volume 2 reporting rules. FEPD-1 Circular No. 26 of 30 July 2026 consolidated the export rules.[5] [6] The import circular is valid for one year, so a new edition is likely in 2027.
• Digital trade documents: the 2026 import circular creates a pilot for digital processing of trade documents under collections and credits through approved corridors, governed by UCP 600 and eUCP where the parties agree.[5] Electronic presentation disputes will raise new questions about receipt and timing.
• No UCP 700: after surveying ICC national committees, the ICC Banking Commission decided in 2026 not to revise UCP 600. Twenty-one committees rejected a revision; Bangladesh was among those that favoured reform. The Commission set up four working groups on education, simpler procedures and clearer interpretation instead.[4]
• Commercial Courts: the Commercial Courts Act 2026 moves most LC litigation into specialist courts with no interlocutory appeals and summary judgment, while bank recovery stays in the Artha Rin Adalat.[13]

The case law points in one direction. From Uttara Bank in 1981 to Alif Casual Wear in 2025, Bangladeshi courts have protected the payment undertaking and sent the underlying quarrel to trial or arbitration.[8] [10] The open question is whether the Appellate Division will restate the fraud exception in terms that reconcile Meejab with the clear-fraud formulation in Alif. TRW acts for importers, exporters, foreign suppliers and banks in documentary credit disputes. Our banking and finance litigation practice can review a refusal, a stop request or an unpaid acceptance within the time that matters, and our customs and trade compliance team handles the regulatory side. You can also contact TRW directly.

Frequently asked questions

Can a Bangladeshi court stop payment under a letter of credit?

Only in the narrowest case of established fraud of which the bank has notice. The Appellate Division has held that no direction to withhold payment can be passed otherwise, and recent High Court Division judgments have refused every injunction based on quality or contract disputes.[8] [10]

Is poor quality of goods a ground to refuse LC payment?

No. Under Articles 4 and 5 of UCP 600 the credit is separate from the sale contract and banks deal only with documents. A quality claim is pursued against the seller for damages.[1] [9]

How long does a bank have to reject discrepant documents?

A maximum of five banking days following the day of presentation, with a single notice listing every discrepancy. A bank that does not comply is precluded from claiming the documents do not comply.[1]

Can an importer waive discrepancies so the bank pays?

Yes. Bangladesh Bank allows authorised dealers to treat discrepant import bills waived by the importer on reasonable grounds as payable, provided the waiver does not cause material changes. The bank still decides whether to pay.[5]

Does a back-to-back LC have to be paid if the export order fails?

Generally yes, if the supplier's documents comply. In August 2025 the High Court Division refused to stop payment even though the credit linked payment to realisation of export proceeds that never arrived.[10]

What is the maximum usance period for raw material imports in 2026?

Up to 270 days or the cash conversion cycle, whichever is shorter, for industrial raw materials for own use under the August 2026 circular; for back-to-back credits the statutory repatriation period applies.[5]

Can Bangladesh Bank order a bank to hold an LC payment?

The High Court Division refused to compel it to in 2024, holding that the Bank Company Act gave no power to intervene over a discrepancy in goods. Complaints to the regulator are better used against banks that fail to pay accepted bills.[12]

Which court hears an LC dispute in Bangladesh?

Most LC disputes between traders and banks are commercial disputes under the Commercial Courts Act 2026. A bank's claim to recover a paid LC liability from its customer goes to the Artha Rin Adalat.[13] [14]

What is ICC DOCDEX and is it binding?

It is an ICC expert procedure in which three experts decide trade finance disputes, usually for a fee of USD 5,000 or USD 10,000. The decision is not binding unless all parties agree in writing.[3]

How long does an exporter have to bring home LC proceeds?

Four months under Bangladesh Bank's July 2026 export circular. Overdue proceeds must be reported monthly with the reason for delay and any litigation status.[6]