Documentary collection is one of the widely used payment methods in international trade. Partes involved in collections, types etc are discussed further in the presentation.

1. DOCUMENTARY
COLLECTION
Ajith V A
MBA ITLM
IMU Cochin

2. Agenda
» What is Documentary Collection?
» Parties in Documentary Collection.
» Collection Rules
» Collection Process
» Types of Collection

3. What is Documentary Collection?
A Documentary Collection is a method of payment used in
international trade whereby the exporter entrusts the handling
of trade documents to banks and gives the banks instructions
concerning the release of these documents to the importer.
The two most common ways of releasing documents to the
importer are:
» Documents against payment (D/P)
» Documents against acceptance (D/P)

4. Parties in a Documentary Credit
» Principal/ Drawer – exporter or seller
» Drawee – importer or buyer
» Remitting Bank – seller’s bank: receives documents
from the drawer.
» Presenting Bank – buyer’s bank: receives documents
and makes a presentation to the buyer.
» Collecting bank – any bank, other than the remitting
bank.

5. Collection Rules
» International trade – different types of goods, modes
of transport and documents.
» Buyers and sellers from various nationalities.
» International Chamber of Commerce (ICC) has drawn
up rules governing both collections and LC.
» For collections, Uniform Rules for Collection – ICC
publication No. 522 or URC 522

6. Cont…
» The set of rules are revised over the years.
» Current version has been in effect from 01 January
1996.
» These rules guide banks with the procedure to be
followed while handling collection.
» Consists of 26 Articles.

7. Collection Process
DrawerDrawee
Presenting/Collecting bank Remitting bank

8. Types of Collection
» Clean Collection
- collection documents could consist of a bill of
exchange/ promissory note( or other financial
instrument) with no other commercial documents
attached.
» Documentary Collection
- involves commercial documents that may (or may
not) be accompanied by financial documents.

9. All documents sent for
collection must be
accompanied by a collection
instruction indicating that the
collection is subject to URC
522 and giving complete
and precise instructions.
Banks are only permitted to
act upon the instructions
given in such collection
instruction, and in
accordance with these
Rules
9Collection instruction

10. Thank You 😉