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7. DIRECT PAYMENT PROCEDURE

Description

7.1 The direct payment procedure is a disbursement procedure where the Asian Development Bank (ADB), at the borrower's[1] request, pays a designated beneficiary (e.g., supplier, contractor, or consultant) directly.

Basic Requirements

7.2 A signed withdrawal application (WA) (Appendix 7A) must be submitted to ADB together with a summary sheet (Appendix 7B) and the required supporting documents.

7.3 A separate WA is required for each different currency. Supporting Documents

7.4 To prove the requested disbursement is for eligible project expenditures incurred, the supporting documents[2] listed in the following table must be submitted to ADB together with the WA. ADB will return WAs that do not meet the requirements. Additional supporting documents may be required depending on the transaction involved.

Payment for

Payment Type

Required Supporting Documents

Goods

One time or installment payment

Supplier's invoice, or purchase order (indicating date, amount, and bank account details)

Services

Advance payment

Consultant's or service provider's invoice (indicating amount of advance payment and bank account details)

Progress payment

Consultant's or service provider's invoice (indicating date, amount, and bank account details)

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Civil works

Advance payment

Contractor's invoice (indicating date, amount, and bank account details)

Progress payment

Contractor's invoice and interim payment certificate" or summary of work progress (indicating period covered, amount, and bank account details)

Release of retention money

Contractor's invoice (indicating date, amount, and bank account details) and unconditional bank guarantee (if required under Section 4.24 of this handbook)

7.5 In addition, supporting documents summarized in the following table should be retained by the borrower for annual audit of project financial statements and/ or ADB's review (see Section 4.29 for retention period of supporting documents). ADB reserves the right to request submission of such documents if deemed necessary.

Supporting Documents to be Retained by

Executing and/or Implementing Agency

Goods

One time or installment payments

Bill of lading or delivery receipts, bank guarantee if required under the contract, and other documents as required in the contract

Services

Advance payment

Contract terms and conditions which refer to payment of advance and progress payments, breakdown of amount due, and other documents as required in the contract

Progress payment

Civil works

Advance payment

Contract terms and conditions which refer to payment of advance, bank guarantee if required under the contract, and other documents as required in the contract

Progress payment Breakdown of amount due and other documents as required in the contract

Release of retention money

Contract terms and conditions which refer to release of retention money, and other documents as required in the contract

7.6 The narrative procedures and the check list for the direct payment procedure are shown in Appendix 7C.

8. COMMITMENT PROCEDURE

Description

8.1 Under the commitment procedure, the Asian Development Bank (ADB), at the borrower's[1] request, irrevocably agrees to reimburse a commercial bank for payments made or to be made to a supplier against a letter of credit (LC). ADB's commitment procedure may not be used for cofinancier's funds held by the cofinancier (Chapter 12).

8.2 ADB's payment assurance under this procedure is limited to the amount available in the loan account.

8.3 Under this procedure, the LC issued by the borrower's bank (LC issuing bank) becomes operative only if and when ADB issues its commitment letter to the advising or negotiating bank.

8.4 A commitment letter issued by ADB under this procedure is irrevocable in the sense that ADB's obligation to make the disbursement from the loan account is not affected by the suspension or cancellation of the loan.

  • [1] "Borrower(s)" in this handbook refers to borrowers, recipients (of grants), and/or their executing agencies unless the context requires otherwise.
  • [2] If supporting documents are written in local language, there should be an English translation of important words and items in the documents (e.g., the title of the document, name of the supplier and/ or contractor, description of goods and services, amounts, and dates).
  • [3] "Borrower(s)" in this handbook refers to borrowers, recipients (of grants), and/or their executing agencies unless the context requires otherwise.
 
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