The People's Bank of Sri Lanka has been blacklisted by the Economic and Commercial Office of the Chinese Embassy in Sri Lanka for failing to make the payment according to the Letter of Credit and the contacts between two parties.
The decision has also been submitted to the Ministry of Commerce of China. All Chinese enterprises are reminded to tighten risk control and avoid accepting L/C issued by People’s Bank of Sri Lanka in international trade with Sri Lanka.
In recent weeks, the Chinese fertilizer enterprise Qingdao Seawin Biotech Group Co., Ltd requested to get the payment of L/C by People’s Bank of Sri Lanka according to the contracts.
Ignoring the contract, the business rules and international trade customs, the People’s Bank of Sri Lanka defaulted the payment of L/C and caused huge losses to the Chinese enterprise, sources said.
According to the contracts terms, payment should be made by means of a Letter of Credit established through the People's Bank of Sri Lanka upon submission of all the required documents:
75% of the contract value is based on the quantity shipped as per the Bill of Lading and the quantity stated in the Commercial Invoice.
25% on a final acceptance certificate issued by the purchaser to the Bank confirming delivery of the quantity of fertilizers in complete conformity with the specifications.