1. What are the responsibilities of banks in a Documentary collections transaction ?

The remitting bank (i.e., exporter's bank) and the collecting bank (i.e.,
importer's bank) play an essential role in DCs. Although the banks control the
flow of documents, they neither verify the documents nor take any risks. They
can, however, influence the mutually satisfactory settlement of a DC
transaction.
- The bank acts as an agent for the seller (exporter) to present documents to the
buyer (importer) through that party's bank and in exchange receives payment of
the amount owed, or obtains acceptance of a time draft for payment at a future
date.
- The liability of the bank under a documentary collection is primarily restricted
to following the seller's instructions in forwarding and releasing documents
against payment or acceptance.
- Unlike a letter of credit, the bank does not assume any liability to pay if the
buyer does not want or is unable to pay.
2. State the pros and cons of documentary collection transaction to an importer
and exporter
* Benefits to the Exporter 
(1) Collection provide better security than open account trading
as long as the credit status of the importer is confirmed positive
(2) Documentary collection can be used raise finance with the
following ways 
- Export factoring 
- Invoice discounting 
- Overdraft or loan 
...etc... 
* Disadvantages to the Exporter 
Exporter effectively loses control of the goods from that
point onwards and runs following risks: (i) buyer might
refuse payment saying goods not to satisfaction or (ii)
cheat or (iii) become insolvent 
* Benefits to the Importer 
(1) In case of D/A: Importer is granted credit facility in accordance
with the tenor 
(2) Collections are cheaper in term of bank charges than L/C (3)
In term of safety, Collections are better than payment in
advance. 
(4) D/A is good chance for importer to boost his turnover and
profit if he honours all accepted bills at maturity 
(5) Importer can arrange finance with several ways 
- Overdraft or loan 
- D/A 
...etc...
* Disadvantages to the Importer 
(1) In case of D/A: Importer is granted credit facility in accordance
with the tenor 
(2) Collections are cheaper in term of bank charges than L/C (3)
In term of safety, Collections are better than payment in
advance. 
(4) D/A is good chance for importer to boost his turnover and
profit if he honours all accepted bills at maturity 
(5) Importer can arrange finance with several ways 
- Overdraft or loan 
- D/A 
...etc... 

3. State the documents under URC 522, ICC 1995

According to URC 522, ICC 1995:

• Financial documents: bill of exchange, promissory notes, cheques

or other similar instruments used for obtaining the payment of
money 
• Commercial documents: Invoices, transport documents, documents of title or
other similar documents or any other documents whatsoever not being financial
documents