URR 725 Discrepancies Solved

URR 725 Discrepancies Solved

Real-Life Case Studies for IIBF Exams & Trade Pros

Introduction: Why Discrepancies Matter in Bank Reimbursements

Imagine this: You’ve shipped goods worth $500,000, submitted all documents, and your bank confirms compliance. But the payment gets stuck because of a typo in the invoice number. Frustrating, right? Under URR 725, even minor discrepancies can derail reimbursements. Let’s explore real case studies to understand how banks handle such issues and how you can avoid them.

Case Study 1: The “Missing Certificate of Compliance” Disaster

Scenario (2023):

A Bangladeshi exporter shipped garments to France under an LC issued by Bank X (France). The Claiming Bank (Bank Y, Bangladesh) paid the exporter but forgot to include the Certificate of Compliance in its reimbursement claim to the Reimbursing Bank (Bank Z, USA).

What Went Wrong:

Bank Y assumed the Reimbursing Bank would process the claim without the certificate.

Bank Z (Reimbursing Bank) rejected the claim immediately, citing URR 725 Article 6(d), which mandates a Certificate of Compliance.

Resolution:

Bank Y resubmitted the claim with the certificate, but payment was delayed by 10 days, causing cash flow issues for the exporter.

Takeaway:

❗ Always double-check URR 725’s documentary requirements. The Reimbursing Bank doesn’t tolerate missing documents, even if the LC is compliant.

Case Study 2: The “Mismatched Currency” Crisis

Scenario (2022):

A South Korean exporter sold machinery to Brazil under an LC in USD. The Claiming Bank (Bank A, South Korea) submitted a reimbursement claim in KRW (Korean Won) instead of USD, as specified in the Reimbursement Authorization (RA).

What Went Wrong:

Bank A overlooked the RA’s currency clause.

The Reimbursing Bank (Bank B, USA) rejected the claim, forcing Bank A to re-route funds through a currency converter, losing $15,000 in forex fees.

Resolution:

Bank A absorbed the loss to maintain client trust.

Takeaway:

❗ Cross-verify the RA’s terms – currency mismatches are common yet costly.

Case Study 3: The “Expired Reimbursement Authorization” Blunder

Scenario (2023):

An Indian pharmaceutical company exported medicines to Germany under an LC with a 3-month validity. The Claiming Bank (Bank C, India) submitted the reimbursement claim 2 days after the RA’s expiry date.

What Went Wrong:

Bank C assumed the LC’s validity extended to the reimbursement claim.

The Reimbursing Bank (Bank D, UK) rejected the claim, citing URR 725 Article 6(c), which ties claims to the RA’s validity.

Resolution:

The Issuing Bank had to issue a new RA, delaying payment by 3 weeks.

Takeaway:

❗ Track RA deadlines like your paycheck date – no extensions allowed!

How to Avoid Discrepancies: Pro Tips

Check, Recheck, Triple-Check: Verify invoice numbers, dates, and currencies.

Use Checklists: Follow URR 725 Article 6’s documentary requirements.

Train Teams: Human errors drop by 70% with regular URR 725 workshops.

URR 725 MCQs on Discrepancies (IIBF Exam Style)

Who bears responsibility for discrepancies in a reimbursement claim?
a) Reimbursing Bank
b) Issuing Bank
c) Claiming Bank
Answer: c
A reimbursement claim is rejected due to a missing document. Which article of URR 725 applies?
a) Article 6
b) Article 9
c) Article 3
Answer: a
True or False: The Reimbursing Bank checks LC compliance before paying a claim.
Answer: False
A Claiming Bank submits a claim in EUR instead of USD as per the RA. What happens?
a) Payment is processed after currency conversion.
b) Claim is rejected.
c) Issuing Bank intervenes.
Answer: b
What is the deadline for resolving a discrepant claim under URR 725?
a) 5 banking days
b) No fixed deadline
c) 3 banking days
Answer: b

👉Discrepancies aren’t just exam topics – they’re real-world hurdles that cost time and money. By studying these cases, you’ll not only crack IIBF exams but also become a proactive trade finance professional.

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