The legal framework for the process of discounting commercial papers by the bank “a comparative study”

Abstract

   The research topic deals with the legal framework for the process of discounting commercial papers by the bank, as it is one of the important banking operations to support commercial credit and provide cash liquidity to the paper holder before its maturity. The research dealt with the definition of discounting commercial papers and explaining their characteristics, while clarifying the papers that can be discounted, such such as bills of exchange, promissory notes, and checks  instrument. The research aswell touched on the legal effects of the discount regarding the relationship between  the bank and the client, and between the bank and the borrower, and the legal and contractual guarantees that the law guarantees to that bank to guarantee the performance of its duties right. The multiplicity of legal characteristics and adaptations of the discount process were also studied. This issue has sparked a jurisprudential controversy over considering it a loan secured by a paper, a sale of debt, or a transfer of a right, with our preference being given to its complex nature that combines more than one legal description.

The research also clarified the similarities and differences between Iraqi legislation and Egyptian legislation in the issue of discounting commercial papers, and pointed to the heavy reliance on banking custom in Egypt versus more detailed texts than in Iraq. We concluded by providing recommendations to develop the legal regulation of discounting, ensuring the protection of banks and customers alike, clarifying the legal adaptation, enhancing transparency in discount conditions, and keeping pace with modern banking developments at the present time.