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Lesson 19 of 42 · Part F · Level 2 · Explained

The legal base and e-documents in collections and LCs

An electronic document is only as strong as the agreement behind it and the system that guards it. What contracts, LCs and collection instructions must say, how ETRs stay unique and safe, how e-documents are endorsed and transferred, and how exporters send them to their AD.

In Lesson 18, Digital trade corridors: the pilot and its principles, Dr Omar explained why Bangladesh Bank set up a pilot for digital trade documents, and the five principles every participant must follow. Evelyn liked the big picture. Tanvir, her export assistant, liked it even more. "So from now on I email everything and go home early?"

Habib laughed. "Principles are the map. Now we need the road rules. What must the contract say? How do we stop an electronic bill of lading from being in two places at once? Who holds it, and how do we prove it?"

For those questions, Habib called someone Evelyn had met before: Shabnam, the Supreme Court advocate in banking and commercial law who had explained paperless collections in Lesson 16.

Shabnam listened and nodded. "Paper protects itself in a simple way. There is one original, and you can hold it in your hand. An electronic document has to earn that same trust, first through the contract and then through the system. Let's look at both."

Para F-5New to the master circular

Legal and contractual arrangements

In plain words

F-5 lays the legal and contractual base for e-documents in the pilot. It has four parts.

(1) Write it down. Sales contracts, LCs and collection instructions must explicitly provide for the electronic issuance, transmission and acceptance of trade documents. "Explicitly" means in clear words. Silence, or a vague hint, is not enough.

(2) Agree what e-documents count for. The parties must agree that electronic documents are:

  • (a) operationally valid and binding; and
  • (b) acceptable for settlement, acceptance and delivery purposes within the pilot framework.

In plain words, everyone agrees in advance that an e-document counts: for paying, for accepting a bill, and for handing over the goods.

(3) Choose the rule books. The applicable rules, URC 522, UCP 600, eURC and eUCP, govern the transactions to the extent mutually agreed among the parties. So the parties decide together which rules apply, and how far.

(4) Look to international standards for ETRs. ADs must ensure that ETRs comply, to the extent practicable, with principles consistent with internationally recognised legal frameworks for electronic transferable records. "To the extent practicable" means as far as can reasonably be done. The circular doesn't name any particular framework.

Shabnam puts it simply: "A contract is a promise both sides wrote down. If the e-document isn't in the promise, someone can later say, 'I never agreed to a file.'"

At the desk

Evelyn's contract with her Hamburg buyer says only that documents will be "presented through banks". Shabnam explains that under F-5(1) the contract must explicitly provide for electronic issuance, transmission and acceptance of the documents. Evelyn and the buyer add a clause saying so, and agreeing that e-documents are valid and binding, and acceptable for settlement, acceptance and delivery within the pilot.

Key words
Sales contract
The agreement between buyer and seller on goods, price, delivery and payment.
Collection instruction
The seller's bank's written instructions to the foreign bank, saying how to release the documents, who pays charges and what to do if the buyer refuses.
eUCP
The electronic add-on to the UCP: the rules that cover presenting documents under an LC in electronic form.
Read the rule as written (Para F-5)

(1) Sales contracts, LCs, and collection instructions shall explicitly provide for electronic issuance, transmission, and acceptance of trade documents.

(2) Parties shall agree that electronic documents shall be:

(a) Operationally valid and binding; and

(b) Acceptable for settlement, acceptance, and delivery purposes within the pilot framework.

(3) Applicable rules (URC 522, UCP 600, eURC, eUCP) shall govern transactions to the extent mutually agreed among parties.

(4) ADs shall ensure that ETRs comply, to the extent practicable, with principles consistent with internationally recognized legal frameworks for electronic transferable records.

Source: Bangladesh Bank, FEPD-1 Circular No. 26, 30 July 2026, Part F, paragraph 5 (page 28). The original circular is the authority.

Para F-6New to the master circular

Electronic documents under documentary collections and LCs

In plain words

Which documents can go electronic, and how are the special ones kept safe? F-6 has four parts.

(1) What may go electronic. ADs may process trade documents in electronic form, including but not limited to:

  • (a) commercial invoices;
  • (b) transport documents, including electronic bills of lading where applicable; and
  • (c) bills of exchange (drafts).

"Including but not limited to" means these are examples, not a closed list.

(2) Extra care for ETRs. Where documents are ETRs, the AD must make sure that mechanisms are in place to preserve three things:

  • (a) Singularity: there is one unique, authoritative version of the document. No twins.
  • (b) Control: it is possible to identify, and transfer, exclusive control to a single holder.
  • (c) Integrity: the document is protected against unauthorised alteration, including by cryptographic methods or equivalent safeguards.

Why so strict? Whoever holds a bill of lading can claim the goods. If two "originals" of an electronic one were floating around, two people could claim the same container. Shabnam laughs: "One cow, two owners. That's a case I'd rather not take."

(3) Digital fingerprints. Unique identifiers, such as digital fingerprints or hashes, must be used where feasible to protect the document's integrity. A hash is a short code worked out from a document's contents; change even one figure and the code changes.

(4) A paper safety net. Where full electronic handling of title documents is not feasible, hybrid arrangements with physical fallback may be used. The circular doesn't spell out how a hybrid arrangement should be set up.

At the desk

Evelyn's electronic bill of lading reaches Habib as an ETR. Before sending it on, he checks that the platform keeps one authoritative version, shows clearly who holds control, and protects the document with a hash so that any change would show. For another buyer, where full electronic handling of the title documents is not feasible, the bank uses a hybrid arrangement with a physical bill of lading as the fallback.

Key words
Commercial invoice
The seller's actual bill for the goods shipped.
Singularity
For an ETR, the existence of one unique, authoritative version of the document.
Hash
A unique code worked out from a document's contents, like a digital fingerprint; if the document changes, the code changes.
Hybrid arrangement
Handling documents partly electronically, with physical (paper) documents as a fallback where full electronic handling of title documents is not feasible.
Read the rule as written (Para F-6)

(1) ADs may process trade documents in electronic form, including but not limited to:

(a) Commercial invoices;

(b) Transport documents (including electronic bills of lading where applicable); and

(c) Bills of exchange /drafts.

(2) Where documents constitute ETRs, ADs shall ensure that mechanisms are in place to preserve:

(a) Singularity: Existence of a unique authoritative version of the document;

(b) Control: Ability to identify and transfer exclusive control to a single holder; and

(c) Integrity: Protection against unauthorized alteration, including use of cryptographic methods or equivalent safeguards.

(3) Unique identifiers (e.g., digital fingerprints or hashes) shall be used where feasible to ensure document integrity.

(4) Where full electronic handling of title documents is not feasible, hybrid arrangements with physical fallback may be applied.

Source: Bangladesh Bank, FEPD-1 Circular No. 26, 30 July 2026, Part F, paragraph 6 (page 28). The original circular is the authority.

Para F-7New to the master circular

Endorsement, transfer and control mechanism

In plain words

F-7 explains how e-documents change hands, and how that is proved.

(1) Ways to endorse. Electronic endorsement may be done through:

  • (a) digital signatures;
  • (b) secure platform-based transfer mechanisms; and
  • (c) authenticated interbank messaging systems, where required for sending settlement instructions, endorsements or operational messages, particularly where platform-based electronic channels are not available or not mutually agreed.

These tools may be used individually or in combination, for issuing, sending, endorsing, authenticating and otherwise processing e-documents under the approved pilot framework. So a bank might sign a document digitally and also confirm by bank message: belt and braces.

(2) The record is the proof. Platform-generated audit trails and system logs count as evidence of:

  • (a) endorsement;
  • (b) transfer of control; and
  • (c) receipt and acceptance.

If anyone later argues, the system's own record of who did what, and when, does the talking.

(3) One holder at a time. Any transfer of an ETR must ensure that only one party exercises control at any point in time. Think of the only key to a locker: the moment you hand it over, you no longer have it. Two people can never hold it at once.

Shabnam sums up: "Endorse it, log it, and make sure only one hand holds it. That's F-7 in one breath."

At the desk

The Hamburg bank in Evelyn's corridor is not on the same platform as Habib's bank, and the two banks have not agreed on one. So Habib's bank signs the endorsement digitally and sends it, with the settlement instructions, through an authenticated interbank messaging system. Later, when the buyer's bank asks for proof of receipt, Habib's team shows the system logs.

Key words
Digital signature
An electronic signature, made with secure technology, that shows who signed a document.
Audit trail
A step-by-step record, kept by a system, of who did what and when.
Transfer of control
Passing the control of an ETR from one holder to the next, so that only one party has control at any time.
Read the rule as written (Para F-7)

(1) Electronic endorsement of documents may be executed through:

(a) Digital signatures;

(b) Secure platform-based transfer mechanisms; and

(c) Authenticated interbank messaging systems, where required for communication of settlement instructions, endorsements, or operational messages, particularly where platform based electronic channels are not available or mutually agreed. These mechanisms may be used individually or in combination for the issuance, transmission, endorsement, authentication, and related processing of electronic trade documents under the approved pilot framework.

(2) Platform-generated audit trails and system logs shall constitute evidence of:

(a) Endorsement;

(b) Transfer of control; and

(c) Receipt and acceptance.

(3) Transfer of ETRs shall ensure that only one party exercises control at any point in time.

Source: Bangladesh Bank, FEPD-1 Circular No. 26, 30 July 2026, Part F, paragraph 7 (page 28). The original circular is the authority.

Para F-8New to the master circular

Export transactions under LC and collection arrangements

In plain words

F-8 brings it all to the export desk with three short rules.

  1. Exporter to AD. Exporters may submit documents electronically to their ADs under LC and collection arrangements.
  2. AD to the bank abroad. ADs must forward the documents electronically to foreign banks through secure and interoperable channels. "Interoperable" links back to the principle in F-3(a): the channel must work with the other bank's systems.
  3. The money still follows the rules. Realisation of export proceeds must be monitored in accordance with the prevailing foreign exchange regulations. Going digital speeds up the documents; it doesn't loosen the watch on the money coming home.

Notice the difference from Lesson 16. Under E-1, the AD went electronic after receiving the paper documents from the exporter. Within this pilot framework, F-8(1) lets the exporter submit electronically too.

F-8 doesn't set its own deadlines for realisation. It points to the foreign exchange regulations already in force.

At the desk

Under the approved pilot, Tanvir uploads Evelyn's invoice, electronic bill of lading and draft to Habib's bank instead of carrying in a paper set. Habib forwards them electronically to the Hamburg bank through the secure, interoperable channel the two banks use. Tanvir asks if the job is done. "Not yet," says Habib. "We still watch the export proceeds until they are realised, as the foreign exchange regulations require."

Key words
Electronic presentation
Sending documents to a bank in electronic form instead of on paper.
Proceeds
The money received from a sale, here the payment for exported goods.
Realisation
Actually receiving the export money, so the bill is settled.
Read the rule as written (Para F-8)

(1) Exporters may submit documents electronically to ADs under LC and collection arrangements.

(2) ADs shall forward documents electronically to foreign banks through secure and interoperable channels.

(3) Realization of export proceeds shall be monitored in accordance with prevailing foreign exchange regulations.

Source: Bangladesh Bank, FEPD-1 Circular No. 26, 30 July 2026, Part F, paragraph 8 (page 29). The original circular is the authority.

Putting it together

So far: under F-5, sales contracts, LCs and collection instructions must clearly provide for e-documents; the parties agree that e-documents are valid, binding and acceptable for settlement, acceptance and delivery within the pilot; URC 522, UCP 600, eURC and eUCP apply as mutually agreed; and ETRs follow international legal principles as far as practicable. ADs may process invoices, transport documents and drafts electronically, keeping ETRs singular, controlled and intact, using hashes where feasible and a physical fallback where needed. Endorsement may use digital signatures, platforms or authenticated interbank messages; audit trails and logs are the evidence; only one party controls an ETR at a time; and exporters may submit electronically while proceeds are still monitored under the foreign exchange regulations.

Next: Lesson 20, Security, service providers and the start. How banks keep the system and its data safe, how they handle service providers and reporting, and how the pilot gets under way.

Check yourself

30 questions, in 3 sets of up to 10. Nobody sees your answers but you.

Set 1 of 3

1. Under F-5(1), which documents must explicitly provide for electronic issuance, transmission and acceptance of trade documents?
2. Under F-5(2), the parties must agree that electronic documents are:
3. How far do URC 522, UCP 600, eURC and eUCP govern transactions under F-5(3)?
4. Under F-5(4), what must ADs ensure about ETRs?
5. True or false: under F-5(1), a sales contract may stay silent about e-documents, as long as the banks have agreed between themselves.
6. True or false: under F-5(2), the parties agree that electronic documents are acceptable for settlement, acceptance and delivery purposes within the pilot framework.
7. Evelyn's contract with her Hamburg buyer says only that documents will be "presented through banks". What does F-5(1) require?
8. Tanvir asks Shabnam whether UCP 600 automatically governs every pilot LC, whatever the parties agree. What does F-5(3) say?
9. Habib's bank receives an export LC for Evelyn that is meant to run under the pilot, but the LC says nothing about electronic documents. What does F-5(1) require?
10. Which documents does F-6(1) list as examples that ADs may process in electronic form?

Set 2 of 3

11. What does 'singularity' mean under F-6(2)?
12. What does 'control' mean under F-6(2)?
13. Under F-6(2)(c), integrity means protection against what?
14. Under F-6(3), what shall be used, where feasible, to ensure document integrity?
15. True or false: F-6(1) is a closed list, so ADs may process only invoices, transport documents and drafts in electronic form.
16. Habib finds two versions of Evelyn's electronic bill of lading in the system, each marked as the authoritative one. Which F-6 requirement is not being met?
17. A platform lets two different banks each act as holder of Evelyn's ETR at the same time. Which mechanism under F-6(2) is missing?
18. For one buyer, full electronic handling of the title documents is not feasible. What may Habib's bank use under F-6(4)?
19. Tanvir notices that each e-document carries a long code that changes if even one figure is edited. He asks Habib what it is for. What should Habib say?
20. Which of these does F-7(1) list as a way to carry out electronic endorsement?

Set 3 of 3

21. When does F-7(1)(c) particularly point to authenticated interbank messaging systems?
22. Under F-7(2), platform-generated audit trails and system logs constitute evidence of what?
23. Under F-7(1), how may the endorsement mechanisms be used?
24. True or false: under F-7(3), a transfer of an ETR may leave two parties exercising control for a short time.
25. Habib's bank and the Hamburg bank have no platform-based channel they both agree on. How can Habib's bank send endorsements and settlement instructions under F-7?
26. The buyer's bank says it never received Evelyn's ETR. What can Habib's bank show as evidence of receipt and acceptance?
27. Under F-8(1), how may exporters submit documents to ADs under LC and collection arrangements?
28. Under F-8(2), how must ADs forward documents to foreign banks?
29. True or false: under F-8(3), realisation of export proceeds is monitored in accordance with prevailing foreign exchange regulations.
30. After Habib forwards Evelyn's documents electronically to Hamburg, Tanvir asks whether the bank's job is finished. What does F-8(3) say?
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