Author
KAZANCI, Fatih
Publication Place
University of Afyon Kocatepe -
University of Afyon Kocatepe
Subject
International trade
Type
kitap
Language
ara,eng
Digital
Yes
Manuscript
No
Library
Leitir Library
Library Asset ID
ISSN: 2757-8399, EISSN: 2757-8399, DOI: 10.52637/kiid.1295665
Record ID
cdi_doaj_primary_oai_doaj_org_article_32a2a282c1a0488ebfa9d4d39fedfed9
Library Location
DOAJ Directory of Open Access Journals
Notes
The subject of the article is about the compliance of UCP 600 rules with participation banking, which is one of the problems specific to participation banking (Islamic banking) in the form of payment by letter of credit. Participation banks, similar to conventional banks in international trade transactions, open letters of credit on behalf of importers and in favor of exporters or act as advising banks or confirming banks within a letter of credit. The booklet titled Uniform Procedures and Implementation Rules for Letters of Credit prepared by the International Chamber of Commerce (ICC) was published in 2007 under the name UCP 600. UCP 600 is a directory of rules created without distinguishing between conventional banking and participation banking. Since these rules are generally accepted by all banks around the world, they are strictly implemented by both conventional banks and participation banks today. However, some articles of this directory of rules do not comply with Islamic finance standards. Researchers suggest that in order for UCP 600 to be implemented by participation banks in a jurisprudential manner, some of its articles should be evaluated and a different UCP document specific to Islamic banking should be prepared. Some researchers have also stated that these rules regarding letters of credit applied on a global scale are not suitable for Islamic banks. Researchers have suggested that an Islamic organization specific to this subject should be established and this organization should publish a separate standard for Islamic banks, that the Islamic banking network should be expanded, that Islamic letters of credit should be applied differently in practice, and that fiqh rules should be observed simultaneously while applying UCP 600, and that ICC should publish a standard that can be used jointly for both conventional and Islamic banks. The purpose of writing the article is to analyze whether participation banks need a fiqh-compliant UCP 600 rules directory and to find and detail the issues that participation banks should pay attention to in terms of fiqh in their letter of credit applications. For this purpose, qualitative research method based on literature review, comparison, evaluation and analysis was used in the article. First of all, a literature review was conducted and the findings of the research conducted on the subject were summarized. Afterwards, some articles of both documents were evaluated comparatively in order to determine the compliance of the UCP 600 rules index with the AAOIFI Letter of Credit Standard published by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in 2003. Subsequently, the evaluation results were analyzed and findings were reached. The findings obtained in the article are to guide participation banking on which articles of UCP 600 they should exclude from practice when implementing letter of credit payment methods, and the study is important in this respect. No study similar to the analysis conducted in the article was found in the literature review. The reason for using the AAOIFI Letter of Credit Standard in the analysis phase is that AAOIFI standards are generally accepted by Islamic banks around the world and the standard prepared by AAOIFI is the most comprehensive standard published in the field of Islamic banking regarding letters of credit. In the article, the articles of UCP 600 and AAOIFI Letter of Credit Standard, which are thought to be contradictory with each other, were mutually analyzed. As a result of the analysis, among the articles of UCP 600; It has been determined that the "relationship of contracts between the parties with the letter of credit", "relationship of goods and services with the letter of credit", "interest payments" and "policy and document signing" standards are incompatible for participation banks. It has been concluded that preparing a jurisprudently compatible UCP rules directory that will eliminate these incompatibilities cannot fully solve the problems. The findings can be summarized as follows: Participation banks should continue to open letters of credit in accordance with the current UCP 600 rules. One should not open letters of credit based on contracts that are not compatible with the jurisprudence, or should not be a party to letters of credit opened in this way. They must take all measures to ensure the availability of the goods in the Murabaha letters of credit they open. The clauses in UCP 600 that are legally incompatible must be removed from the letter of credit text and after having the counterparties accept them, they must proceed to the operational phase. The subject of the article is related to the compliance of UCP 600 rules with participation banking, which is one of the problems specific to participation banking (Islamic banking) in the form of letters of credit. Participation banks, similar to traditional (conventional) banks, issue letters of credit on behalf of importers and in favor of exporters in international trade transactions, or act as an advising bank or confirmation bank in a letter of credit. A Sample Procedures and Application Rules booklet on Letters of Credit prepared by the International Chamber of Commerce (ICC) was published in 2007 under the name UCP 600. UCP 600 is a set of rules prepared without envisaging a deciency between traditional banking and participation banking. Since these rules are generally accepted by all banks worldwide, they are strictly applied by both traditional banks and participation banks today. However, some of the articles of this directory of rules are not rules that comply with Islamic financial standards. Some researchers suggest preparing a different UCP document specific to Islamic banking by evaluating some of the articles of the UCP 600 in order for it to be applied in a fiqh-appropriate manner by participating banks. Some researchers have suggested that the following rules should be applied. Since these rules applied globally regarding letters of credit are not suitable for Islamic banks, an Islamic organization specific to this issue should be established. This organization should publish a separate standard for Islamic banks. The Islamic banking network should be expanded. Islamic letters of credit should be applied differently in practice. For this reason, while applying UCP 600, the fiqh rules should also be observed simultaneously. The ICC should publish a standard that can be used jointly for both traditional and Islamic banks. The purpose of writing the article is to analyze whether participation banks need a jurisprudence-compliant UCP 600 rules directory and to detail by finding the issues that participation banks should pay attention to in terms of jurisprudence in letter of credit applications. For this purpose, the qualitative research method based on literature review, comparison, evaluation and analysis was used in the article. First of all, the findings of the research conducted on the subject were summarized by conducting a literature review. Subsequently, in order to determine the compliance of the UCP 600 rules index with the AAOIFI Letter of Credit Standard published by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in 2003, some items of both documents were subjected to comparative evaluation. Subsequently, the results of the evaluation were analyzed and the findings were reached. Since the findings obtained in the article are to guide participation banking on which items of UCP 600 should be excluded from practice when applying with letter of credit paying methods, the study is important from this point of view, and a study similar to the analysis study conducted in the article was not found in the literature review. The reason for using the AAOIFI Letter of Credit Standard at the analysis stage is because the AAOIFI standards are generally accepted by Islamic banks worldwide and the standard prepared by AAOIFI is the most comprehensive standard published in the field of Islamic banking in relation to letters of credit. In the article, the articles of UCP 600 and AAOIFI Letter of Credit Standard, which are considered to be contradictory with each other, are analyzed mutually. As a result of the analysis, the following items are included in UCP 600; pays decrees, ”relationship of contracts between the parties with letter of credit“, ”relationship of goods and services with letter of credit“, ”interest payments“ and ”policy and documents negotiation” standards have been found to be incompatible for participation banks. It has been concluded that the preparation of a fiqh-compatible UCP rules index to eliminate these incompatibilities cannot fully solve the problems. We can summarize the findings reached as follows. Participation banks must continue to open letters of credit subject to the current UCP 600 rules. They should not open letters of credit based on contracts that are not compatible from a fiqh point of view, or they should not be a party to letters of credit opened in this way. They should take all measures to ensure the availability of the goods in the murabaha letters of credit they open. They should proceed to the operational stage after removing the articles of non-compliance with the law contained in UCP 600 from the text of the letter of credit and having them accepted by the other parties.
Detaylı Başlık
Akreditiflerde Katılım Bankacılığına Özgü Sorunlar: UCP 600 Kurallarının Katılım Bankacılığına Uyumu
