The risks of documentary credit and means of reduction
Abstract
It is difficult to meet the financial risks in a particular institution, as it is in banks. As the banking system develops and the services provided by banks expand and the risks are increasing, the risks facing banks are also increasing. There are many financial risks in banks, but the credit risk comes first because the process of granting credit by the bank is one of the most important and more dangerous of what a commercial bank does, since it is always accompanied by risks, the Bank expects in every credit transaction that customers will not meet their obligations or at least on their specified dates. In some cases, the customer is unable to pay off his debt or maybe late in payment. This process is repeated due to unforeseen circumstances and this may create many difficulties for the bank. Many experiences have shown that there is no risk-free credit whatever the guarantees. Even if the bank is careful in all credit-granting rules, the circumstances may be beyond the will of both the bank and the client, as the credit operations take a period of time to On non-activity, a process with a high degree of risk, and therefore it can not be categorically stated that a particular credit operation is completely risk-free.
References
- IV. LAWS:1. The Iraqi Civil Code No. 40 of 1951.2. The Central Bank of Iraq Law No. 64 of 1976 amending.3. Iraqi Trade Law No. 30 of 1984.4. The Iraqi Banks Law of 2004.5. The Egyptian Civil Code No. 131 of 1948.6. Egyptian Banking Law No. 88 of 2003.7. The Jordanian Banking Law No. 24 of 1971 as amended.8. Jordanian Civil Law No. (43) for the year 1976.
- V. Instructions, reports and bulletins:Instructions of Rafidain Bank No. (2595) for the year 1991.2. Instructions of the Rasheed Bank No. (93) for the year 1993.3. The Iraqi Trade Bank, Annual Report 2005.4. Decision of the Central Bank of Lebanon Decision No. (5913) for the year 1995.5. Circular No. (267) for the year 1994 issued by the Central Bank of Jordan.6. The Central Bank of Jordan, Thirty-fifth Annual Report, 1999.7. International Standard Rules and Customs for Documentary Credits issued by the International Chamber of Commerce, Bulletin No. (600) for the year 2007.8. The French decree issued on 30/10/1975.