The People’s Bank of Sri Lanka has been blacklisted by the Economic and Commercial Office of the Chinese Embassy in Colombo.
The bank has been blacklisted for failing to make the payment according to the Letter of Credit (LOC) and contracts between the two parties.
Issuing a statement, the Chinese Embassy in Colombo said the decision has also been submitted to the Ministry of Commerce of China.
Recently, the People’s Bank has a vicious letter of credit default, which has caused huge losses to Chinese companies in international trade in Sri Lanka.
The Economic and Commercial Office of the Chinese Embassy in Sri Lanka is now blacklisting the bank, the Embassy said.
The Chinese Embassy further requested all Chinese-funded enterprises to strengthen risk prevention and control, avoid accepting letters of credit issued by the bank in trade with Sri Lanka, and eliminate trade risks.
According to News First, the move comes as a result of an agreement between Chinese fertilizer enterprise Qingdao Seawin Biotech Group Co., Ltd and the People’s Bank of Sri Lanka.
Recently, the Chinese fertilizer enterprise Qingdao Seawin Biotech Group Co., Ltd had requested to get the payment of L/C by People’s Bank of Sri Lanka according to the contracts.
Disregarding the contract obligation, 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, said the Chinese Embassy.
According to the terms of the contract, payment shall be made by means of an Irrevocable and non-transferable Letter of Credit established through the People’s Bank of Sri Lanka upon submission of all the required documents: 75% of the contract value based on the quantity shipped as per the Bill of Lading and the quantity stated in the Commercial Invoice, and the remaining 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.
However, Organic Fertilizer samples from China’s Qingdao Seawin Biotech Group Co., Ltd. tested for the presence of harmful pathogens, not once, by twice in tests carried out by Sri Lanka’s National Plant Quarantine Service.
Sri Lanka’s Agriculture Minister Mahindananda Aluthgamage on Wednesday (27) stressed that the Chinese Organic Fertilizer, already en route to Sri Lanka, will not be re-tested under any circumstance.
Sri Lanka’s Agriculture Ministry not only rejected the Chinese Fertilizer but also went to the extent of issuing an order to deny entry to the ship carrying the consignment from entering Sri Lankan ports.
Against this backdrop, Sri Lanka’s State Fertilizer Companies obtained an Enjoining Order against the Chinese company, Qingdao Seawin Biotech, its local agent, and the People’s Bank.
The Chinese Embassy said the order has prevented the People’s Bank from making any payment under a Letter of Credit opened in favour of the Qingdao Seawin Biotech Group Company Ltd.
As a result, the Economic and Commercial Office of the Chinese Embassy in Colombo has decided to blacklist the People’s Bank of Sri Lanka. (NewsWire)