University of Information Technology& Sciences

Termpaper
Foreign Exchange Business
ACT-362: Managerial accounting

Prepared or
Farhana Rahman Faculty School of Business

Prepared !"
#an$it !arua Anend"a cha+ma To-hid !in sa"ed Mita &atta Md/Al +alam a!dul -aha! %& '()3())*) %& '()3(),,3 %& ')*,().2* %&'()3()66( %&'()()636

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Date: 04 JUN 2013

Letter of Transmittal

September, 2013 Farhana Rahman Department of Business Administration UITS Subject: Submission of termpaper. madam, Wit !reat p"easure I am submittin! our termpaper on Foreign Exchange The Prime Bank Limited #T is report as been submitted as a mandator$ re%uirement of BBA pro!ram# I admit t at sti"" t is report is not free from mista&es due to our "ac& of &no'"ed!e# (e)ert e"ess 'e 'ere tr$in! our "e)e" best to ma&e t is report a compre ensi)e one# A"" of us efforts 'ou"d be succeeded un"ess $ou do reject to accept our termpaper# I t erefore, ope t at $ou 'ou"d s o' $our &indness and accept our termpaper#

Sincere"$ $ours,

Ta le of content No

!tems

"a#e

(/( 2#%3%4 2F T5E #EP2#T

The title of the re"ort is $Foreign Exchange Business 67etter o Credit 2peration8 o Prime Ban+ 7td9/ The re"ort entails my internshi" e%"erience at Forei#n &%chan#e De"artment of 'rime Ban( )t*+ ,-ulshan Branch.+

(/2 2B:ECT%;E 2F T5E 1T0&<

The o /ecti0e of the re"ort is to #ather "ractical (no1le*#e an* e%"erience a out the an(in# acti0ities "erforme* y the *ifferent officials into the Forei#n &%chan#e De"artment+ The re"ort is "re"are* 1ith the "ur"ose of #ettin# an o0er0ie1 of Forei#n &%chan#e Business throu#h )2 o"eration at 'rime Ban( )t*+ This stu*y attem"ts to "ursue the follo1in# tas(s: To un*erstan* the im"ort "roce*ure To un*erstan* the e%"ort "roce*ure To (no1 a out the 0arious *ocuments an* "roce*ures 1hich are use* in an(in# ser0ices of !nternational Tra*e+ To #ain the *e"th (no1le*#e of im"ort an* e%"ort "ortfolio of the Ban(+ To fin* out the "erformance of im"ort an* e%"ort usiness in recent years+ To recommen* actions that may e necessary to re*esi#n the forei#n tra*e "roce*ure of 'rime Ban( )t*+

(/3 1C2PE 2F T5E 1T0&<

This stu*y co0ers the *etails of 'rime Ban(3s "ractices a out forei#n e%chan#e acti0ities em"hasi4in# $Acti=ities regarding %mport and Export Procedure under 7etter o Credit at Prime !an+ 7td9/ This stu*y consists the o ser0ations an* on the /o e%"eriences *urin# the internshi" "erio* in the Forei#n &%chan#e De"artments at 'rime Ban( )t*5 -ulshan Branch+ This stu*y also em"hasi4es on the se6uential acti0ities in0ol0e* an* use* y 'rime Ban( )t* for forei#n e%chan#e transaction+ The stu*y also focuses on the im"act of the forei#n e%chan#e acti0ities u"on the client+

(/. MET52&2723<
The re"ort has een "re"are* asically throu#h the "ractical 1or( e%"erience at the ranch+ The information has een collecte* from the most cre*i le sources+ ! ha0e cate#ori4e* it into t1o sections+ The first one is 'rimary Source an* the other is Secon*ary Source+ 7uantitati0e an* 7ualitati0e /u*#ments are also a""lie* in this re"ort 1hich has ma*e the stu*y more meanin#ful an* "resenta le+

Primary Sources:
8a/or sources of information 1ere *one throu#h the *iscussion 1ith the officers of Forei#n &%chan#e De"t+ s"ecially 8r+ 9T8 :a(aria5 ,9ssistant ;ice 'resi*ent.5 8r+ 8oshiur Rahman <han ,First 9ssistant ;ice 'resi*ent.5 8r+ 9 *ullah 9l 8amun ,'rinci"al =fficer.5 Sumya Faye4 ,9ssistant =fficer. an* other res"ecte* officials of that *e"artment+ !nformal con0ersation 1ith the clients+ 'ractical 1or( e%"erience from *ifferent *es(s of Forei#n &%chan#e De"artment of the Branch+

Secondary Sources:
$9nnual Re"orts> of 'rime Ban( )imite*+ Forei#n &%chan#e -ui*elines 'erio*icals 'u lishe* y Ban#la*esh Ban(+ ;arious oo(s+ 9rticles5 re#ar*in# Forei#n &%chan#e o"erations+ 9rticles 1ritten on Ban(in# ?e sites on Ban(in# an* international tra*e+ Ban( ?e site+ Rele0ant *ocuments relate* to the stu*y "ro0i*e* y the officials+

(/, 7%M%TAT%24 2F T5E 1T0&<

&0ery stu*y has its *istinct limitations+ 're"arin# this re"ort ! ha0e also face* some certain limitations 1hich are summari4e* elo1: The main hin*rance ehin* "re"arin# this stu*y 1as time+ The s"an of the internshi" "ro#ram is only three months+ But ! ha0e #ot only t1o months *ue to some una0oi*a le circumstances+ Since Forei#n &%chan#e is a 0ast area5 it is not "ossi le to co0er or #o throu#h 1ithin this short s"an of time+ There is also insufficiency of current information5 rele0ant to the stu*y+ 2onsoli*ate* *ata relate* to the stu*y 1ere not a0aila le for the current year+ So the most of the information is use* from the "re0ious years+ !naccurate or 2ontra*ictory information create* hu#e confusion *urin# "re"aration of this stu*y+ Ban( secrecy "ose* a ma/or "ro lem since *isclosure of some information has een restricte*+ Rele0ant *ocuments 1ere not a0aila le as it is a technical issue+

2/( P#%ME BA4> 7T&/ ?BAC>3#204&@

!n the ac(*ro" of economic li erali4ation an* financial sector reforms5 a #rou" of hi#hly successful local entre"reneurs concei0e* an i*ea of floatin# a commercial an( 1ith *ifferent outloo(+ For them5 it 1as com"etence5 e%cellence an* consistent *eli0ery of relia le ser0ice 1ith su"erior 0alue "ro*ucts+ 9ccor*in#ly5 'rime Ban( )t*+ 1as create* an* commencement of usiness starte* on 1@th 9"ril 1AAB+ The s"onsors are re"ute* "ersonalities in the fiel* of tra*e an* commerce an* their sta(e ran#es from shi""in# to te%tile an* finance to ener#y etc+ 9s a fully license* commercial an(5 'rime Ban( )t*+ is ein# mana#e* y a hi#hly

"rofessional an* *e*icate* team 1ith lon# e%"erience in an(in#+ They constantly focus on un*erstan*in# an* antici"atin# customer nee*s+ 9s the an(in# scenario un*er#oes chan#es so is the an( an* it re"ositions itself in the chan#e* mar(et con*ition+ 'rime Ban( )t*+ has alrea*y ma*e si#nificant "ro#ress 1ithin a 0ery short "erio* of its e%istence+ The an( has een #ra*e* as a to" class an( in the country throu#h internationally acce"te* 298&) ratin#+ The an( has alrea*y occu"ie* an en0ia le "osition amon# its com"etitors after achie0in# success in all areas of usiness o"eration+ 'rime Ban( )t*+ offers all (in*s of 2ommercial 2or"orate an* 'ersonal Ban(in# ser0ices co0erin# all se#ments of society 1ithin the frame1or( of Ban(in# 2om"any 9ct an* rules an* re#ulations lai* *o1n y our central an(+ Di0ersification of "ro*ucts an* ser0ices inclu*e 2or"orate Ban(in#5 Retail Ban(in# an* 2onsumer Ban(in# ri#ht from in*ustry to a#riculture5 an* real state to soft1are+ 'rime Ban( )t*+5 since its e#innin# has attache* more im"ortance in technolo#y inte#ration+ !n or*er to retain com"etiti0e e*#e5 in0estment in technolo#y is al1ays a to" a#en*a an* un*er constant focus+ <ee"in# the net1or( 1ithin a reasona le limit5 our strate#y is to ser0e the customers throu#h ca"acity uil*in# across multi *eli0ery channels+ =ur "ast "erformance #i0es an in*ication of our stren#th+ ?e are etter "lace* an* "oise* to ta(e our customers throu#h fast

chan#in# times an* ena le them com"ete more effecti0ely in the mar(et they o"erate+

2/2 C2MPA4< ;%1%24

&0ery 2om"any has its o1n 0ision+ By fi%in# the 0ision they can forecast their future #ro1th an* "re*ict their "ers"ecti0e+ 'rime Ban( )t* has also a 0ision 1hich states that: To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management and profitability having strong liquidity.

2/3 C2MPA4< M%11%24

To build Prime Bank imited into an efficient, market driven, customer focused institution !ith good corporate governance structure. Continuous improvement in our business policies, procedure and efficiency through integration of technology at all levels.

2/. C2#E ;A70E1:

'rime Ban( nurtures a 0ery "rofile 0alue to all its sta(ehol*ers+ Basically they maintain four (in*s of core 0alues to its *ifferent sta(ehol*ers+ They are as follo1s:

For our Customers

To ecome most carin# Ban( C y "ro0i*in# the most courteous an* efficient ser0ice in e0ery area of our usiness+

For our Emplo"ees

By "romotin# 1ell C ein# of the mem ers of the staff+ For our 1hareholders By ensurin# fair return on their in0estment throu#h #eneratin# sta le "rofit+

 For our Communit"

By assumin# its role as socially res"onsi le cor"orate entity in a tan#i le manner throu#h close a*herence to national "olicies an* o /ecti0es+ an* 0pholding ethical =alues and !est practices

2/, ECPA41%24 %4 T5E 372BA7 A#E4A:

The Ban( has successfully e%"an*e* its ser0ices eyon* cross or*er to "ro0i*e an* esta lish an efficient an(in# system #lo ally+ !t has o"ene* a fully o1ne* su si*iary at Sin#a"ore+ 'rime &%chan#e 2o+ 'te+ )t*+5 a fully o1ne* su si*iary com"any of 'rime Ban( )imite* 1as incor"orate* in Sin#a"ore on :anuar" )6D 2))6 an* commence* its remittance usiness 1ith effect from :ul" )BD 2))6 un*er the remittance license issue* y the 8onetary 9uthority of Sin#a"ore ,89S. un*er section @9,3. of the 8oney 2han#in# an* Remittance Business 9ct ,2ha"ter 1D@.5 Sin#a"ore+

2/6 2#3A4%EAT%24A7 1T#0CT0#E:

'rime an( )imite* is ein# mana#e* y hi#hly s(ille* "rofessionals 1ith lon# e%"erience in an(in#+ They constantly focus in un*erstan*in# an* antici"atin# in customer nee*s an* o"erate accor*in# to it to sur0i0e in the chan#in# mar(et con*ition of the country+ !n the Branch Base* 9""roach5 each in*i0i*ual ranch is treate* as se"arate i*entity an* is hea*e* y a ranch mana#er+ The ranch mana#er is lia le to the to" mana#ement for that "articular ranch+ Before startin# a fiscal year it is the *uty of ranch mana#er to see that tar#ets are ein# fulfille*+ 'rofit Tar#ets5 *e"osit tar#ets5 an* other tar#ets ali(e are all *ele#ate* to these in*i0i*ual ranches+ -i0en elo1 is an or#an #ram of an in*i0i*ual ranch of 'rime Ban( for etter un*erstan*in#+

5ead o Branch
Manager in 2peration

3B %n-Charge 1A;P

Cash in Charge 1E2

Forex %n-Charge A;P

Credit %n Charge FA;P

Fig: ( 2rganiFational hierarch" o an %deal Branch 63ulshan Branch8

The De"artment Base* 9""roach is similar to that of the ranch ase* a""roach5 1here each *e"t+ o"erates as a se"arate unit ut sometimes colla orates in or*er o"erate more efficiently or sol0e a common "ro lem+ Such *e"artment is also treate* as se"arate entity ut is much more s"eciali4e* in one "articular area of usiness unli(e a ranch 1hich has to e in0ol0e* in multi"le tas(s+ &%am"les of fe1 other *e"artment of 'rime Ban( )t* are #i0en elo1: Euman Resource De"artment Financial an* 9*ministrati0e De"artment 8onitorin# 9n* !ns"ection De"artment 8ar(etin# 'ersonal Relation De"artment 8erchant Ban(in# an* !n0estment De"artment Treasury *i0ision !nternational *i0ision -eneral Ser0ice Di0ision !nformation Technolo#y De"artment 2re*it Di0ision 2ar* Di0isio'rime Ban( maintains a stron# or#ani4ational hierarchy in 1hich e0ery in*i0i*ual "erforms their *uty 0ery sincerely+ The full hierarchy of 'rime Ban( )t*+ is #i0en elo1:

()

Managing &irector 6M&8

&eput" managing &irector 1enior Executi=e ;ice President 61E;P8

Executi=e =ice president 6E;P8

1enior ;ice President 61;P8 ;ice President 6;P8 1enior Assistant ;ice President 61A;P8 Assistant ;ice President 6A;P8

First Assistant ;ice President 6FA;P8 1enior Executi=e 2 icer 61E28 Executi=e 2 icer 6E28 Principal 2 icer 6P28 1enior 2 icer 6128 Management Trainee 2 icer 6MT28 Assistant 2 icer 6A28

Fig: 2 5ierarch" o Prime Ban+ 7td/

((
Trainee Assistant 6TA8

2/A P#2&0CT1 A4& 1E#;%CE1 2F P#%ME BA4> 7T&:

'rime Ban( )imite* offers 0arious (in*s of *e"osit "ro*ucts an* loan schemes+ The an( also has hi#hly 6ualifie* "rofessional staff mem ers 1ho ha0e the ca"a ility to mana#e an* meet all the re6uirements of the an(+ &0ery account is assi#ne* to an account mana#er 1ho "ersonally ta(es care of it an* is a0aila le for *iscussion an* Cin6uiries5 1hether one 1rites5 tele"hones or calls+

&EP21%T 1C5EME1
Monthl" Contri!utor" 1a=ings 1chemes 6C118: Un*er this scheme 8inimum si4e of the monthly installment is T(+B00+00 an* multi"les of T(+1000+00+ 8a%imum installment si4e shall e 2B000+00 for li0e year "erio*+ )um" sum amount shall e "ai* after maturity or monthly "ension shall e "ai* for the ne%t B years accor*in# to si4e of *e"osit+

7ac+hopati &eposit 1cheme: Un*er this scheme si4e of the monthly installments are T(+2B0+005 T(+B00+005 T(l2DB+005 T(+2400+00 *e"ositor 1ill recei0e T(+ 15005000+00 after a num er of "erio* *e"en*in# on installment si4e +Ei#her the installment si4e lo1er 1ill e the maturity "erio* +

Prime Millionaire 1cheme: This scheme is similar as )ac(ho"ati *e"osit scheme only the installment amounts is lar#er an* at maturity *e"ositor 1ill #et 105 005000+00+

Education 1a=ings 1cheme ,&SS.: Un*er this scheme "arents can sa0e for their chil*renFs e*ucation y "ayin# a certain amount of monthly installment an* )um" sum amount shall e "ai* after maturity+

Monthl" Bene it &eposit 1cheme 6MB&18: Un*er this scheme customer can *e"osit a fi%e* amount of money for fi0e years the amount has to e 1005000 or multi"le of

(2

1005000 he G she 1ill recei0e A00 "er month as interest on e0ery lac *urin# those fi0e years+ &ou!le Bene it &eposit 1cheme ,DBS.: Un*er this scheme a customer can (ee" a fi%e* amount of money for si% year en* of the maturity "erio* the amount 1ill *ou le +The amount has to e multi"le of 2B000+ ecome

Fixed &eposit #eceipt 1cheme 6F&#8: Un*er this scheme customer can *e0ote a fi%e* amount of money for one month5 three months5 si% months or t1el0e months for interest rate of @+BH5 11 H or 11+BH+

Current Account: 2urrent 9ccount is a non interest earin# chec(a le *e"osit ,Deman* De"osit. 1hich allo1s the o1ner of the an( accounts to 1rite chec(s to thir* "arties+

1a=ings account: Sa0in#s 9ccount is an interest earin# chec(a le *e"osit ,Ne#otia le or*er of 1ith*ra1al. 1hich allo1s the o1ner of the an( accounts to 1rite chec(s to thir* "arties+ Interest rate of Savings Deposit Account is 6.00% for the year 2008.

CA#& &%;%1%24 1E#;%CE

ATM Card: 9utomate* Teller 8achine ,9T8. car* is ne1 conce"t in mo*em an(in#5 has alrea*y een intro*uce* to facilitate su scri ers 24 hour cash access throu#h a "lastic car*+ 'rime Ban( )imite* has starte* their 9T8 car* ser0ices from 1B th 8arch 200D y o"enin# a 9T8 ooth at 8oti/heel Branch+ 9fter that 'rime Ban( )imite* ma*e an a#reement 1ith Dutch Ban#la Ban( to use their 9T8 Booth+

Credit Card: ;ery stiff com"etition "re0ails in cre*it car* mar(et+ 8any "layers ha0e entere* the mar(et an* com"etition is #ro1in#+ 'rime Ban( )t* starte* its cre*it car* o"eration in 1AAA y intro*ucin# 8aster 2ar* an* is no1 "rinci"al mem er of oth

1orl*1i*e acce"te* "lastic money net1or( i+e 8aster2ar* an* ;!S95 thus "ositione* itself

(3

1ith stron# footin# 1ithin the in*ustry5 the ris( of loss to cre*it car* customers+ 2all center of the Ban( "ro0i*es 24 hours ser0ice to the cre*it car* customers+

72A4GA&;A4CE P#2&0CT1:
Fixed term: These are the loans ma*e y the Ban( 1ith fi%e* re"ayment sche*ules Fi%e* tern loans are cate#ori4e* into three ase* u"on its tenure 1hich is *efine* as follo1s:

)oan an* a*0ances ha0e "rimarily een *i0i*e* into t1o ma/or #rou"s:

Short term 8e*ium term )on# Term

: U" to 12 months : 8ore than 12 an* u" to 3I months : 8ore than 3I months

Continuing 7oans: These are the loans ha0in# no fi%e* re"ayment sche*ule5 ut ha0e an e%"iry *ale at 1hich il is rene1a le on satisfactory "erformance of the customer+ Furthermore5 all cate#ories of loans are accommo*ate* un*er the follo1in# "rime sectors:

i Agriculture: 2re*it facilities to the customers of *oin# a#ro usiness falls un*er this cate#ory+

ii/ Term Loan to Large &. Medium Scale Industry: This cate#ory of a*0ances accommo*ate the me*ium an* lon# term financin# for ca"ital formation of ne1 !n*ustries or for an e%istin# units 1ho are en#a#e* in manufacturin# of #oo*s an* ser0ices+

iii/ Term Loam to Small & Cottage Industries: These are the me*ium an* lon# term loans allo1e* to small J cotta#e manufacturin# in*ustries+ No short term or continuous cre*its 1ill e inclu*e* in this cate#ory+

i=/ Working Capital" )oans allo1e* to the manufacturin# units to meet their 1or(in# ca"ital re6uirements5 irres"ecti0e of their si4e C i#5 me*ium or small5 fall un*er this cate#ory+ These are usually continuous cre*its an* as such fall un*er the hea* K2ash 2re*itK

(.

=/ !port Credit: 2re*it facilities allo1e* to facilitate e%"ort of all items a#ainst )etter of 2re*it an*Gor confirme* e%"ort or*ers fall un*er this cate#ory+ !t is accommo*ate* un*er the hea*s K&%"ort 2ash 2re*it ,222.K5 'ac(in# 2re*it ,'2.5 Forei#n Documentary Bill 'urchase* ,FDB'. etc+

=i/ Commercial Lending" Short term )oans an* continuous cre*its allo1e* for commercial "ur"oses other than e%"orts fall un*er this cate#ory+ !t inclu*es im"ort financin# for local tra*e5 ser0ice esta lishment etc+ No me*ium an* lon# term loans arc accommo*ate* here+ This cate#ory of a*0ance is allo1e* in the form of ,i. )oan a#ainst !m"orte* 8erchan*ise ,)!8.5 ,ii. )oan a#ainst Trust Recei"t ,)TR.5 ,iii. 'ayment a#ainst Documents ,'9D.5 ,i0. Secure* =0er*raft ,S=D.5 ,0. 2ash 2re*it etc+ for commercial "ur"oses+

T<PE1 2F C#E&%T FAC%7%T%E1: De"en*in# on the 0arious nature of financin#5 all the cre*it facilities ha0e een rou#ht un*er t1o ma/or #rou"sL ,a. Fun*e* 2re*it an* , . NonCfun*e* 2re*it+ Un*er nonCfun*e* cre*it5 there are asically t1o ma/or "ro*ucts namely )etter of 2re*it an* )etter of -uarantee+

0nder Funded CreditD there are the ollo-ing products: 7oan 63eneral8: Short5 8e*ium J )on# term loans are allo1e* to

in*i0i*ualGfirmGin*ustries for a s"ecific "ur"ose+ But this loan for a *efinite "erio* an* #enerally re"aya le y installments falls un*er this ty"e+ These are mainly allo1e* to accommo*ate financin# un*er the cate#ories ,!. )ar#e J 8e*ium Scale !n*ustry an* ,!!. Small J 2otta#e !n*ustry+

5ousing 7oan 6Commercial8: )oans allo1e* to in*i0i*ualGenter"rises for construction of house for commercial "ur"ose only fall un*er this ty"e+ The amount is re"aya le y monthlyG6uarterly installments 1ithin a s"ecifie* "erio*+

(,

5ome 7oan: )oans allo1e* to in*i0i*uals for "urchase of a"artment or construction of house for resi*ential "ur"ose fall un*er this ty"e+ The amount is re"aya le y monthly installments 1ithin a s"ecifie* "erio*+

5ouse Building 7oan 61ta 8: )oans allo1e* to the em"loyees of 'B) for "urchase of a"artmentGconstruction of house shall e (no1n as Eouse Buil*in# )oan ,Staff. or EB) ,Staff.+

7ease Financing: )ease Financin# is one of the most con0enient sources of ac6uirin# ca"ital machinery an* e6ui"ment 1here y a customer is #i0en the o""ortunity to ha0e an e%clusi0e ri#ht to use an asset usually for an a#ree* "erio* of time a#ainst "ayment of rental+

Consumer Credit 1cheme ,22S.: !t is a s"ecial cre*it scheme of the Ban( to finance "urchase of consumer *ura le y the fi%e* income #rou" to raise their stan*ar* of li0in#+ The loans are allo1e* on soft terms a#ainst "ersonal #uarantee an* *e"osit of s"ecifie* "ercenta#e of e6uity y the customers+ The loan is re"aya le y monthly installments 1ithin a fi%e* "erio*+ The 22S is ecomin# more an* more fa0ora le to consumers ha0in# *ifferent nee*s+ Un*er 22S the follo1in# loans are a0aila le for the customers at the an( in e0ery ranch+

Eousehol* )oan+ Doctors )oan+ 9ny 'ur"ose )oan+ Tra0el )oan+ 2N- 2on0ersion )oan+

(6

 9*0ance a#ainst Salary+ &*ucation )oan+ 8arria#e )oan+ Eos"itali4ation )oan+

12& 6Financial 2!ligation8: S=D ,Financial = li#ation. is allo1e* to in*i0i*ualsGfirms a#ainst financial o li#ations ,F=R5 8BDS5 an* Scheme De"osits of 'B) or similar "ro*ucts of other an(s.+ This is a continuous loan ha0in# usual maturity "erio* of 1 ,one. year an* rene1a le for further "erio*s at maturity+

12& 63eneral8: S=D ,-eneral. is allo1e* to in*i0i*ualsGfirms for miscellaneous "ur"ose+ This is a continuous loan ha0in# usual maturity "erio* of ! ,one. year an* rene1a le for further5 "erio*s at maturity+

12& 6Hor+ 2rder8: 9*0ances allo1e* a#ainst assi#nment of 1or( or*er for e%ecution of contractual 1or(s falls un*er this ty"e+ This a*0ance is #enerally allo1e* for a *efinite "erio* an* s"ecific "ur"ose+ !t falls un*er the cate#ory K=thersK+

12& 6Export8: 9*0ance allo1e* for "urchasin# forei#n currency for "ayment of Bac( to Bac( ,BTB. )G2 lia ility 1here the e%"orts *o not materiali4e efore *ue the *ate of im"ort "ayment+ This is an a*0ance for tem"orary "erio* an* cate#ori4e* K&%"ort FinanceK+

PA&: 'ayment ma*e y the Ban( a#ainst lo*#ment of shi""in# *ocuments of #oo*s im"orte* throu#h )G2 falls un*er this ty"e5 ft is an interim a*0ance connecte* 1ith im"ort an* is #enerally li6ui*ate* a#ainst "ayments usually ma*e by the customer for retirement of the *ocuments to1ar*s release of im"orte* 0 consi#nment from the customs authority+

(A

7%M: This is fun*e* cre*it facility allo1e* for retirement of shi""in# *ocuments an* release of #oo*s im"orte* throu#h )G2 ta(in# effecti0e control o0er the #oo*s y "le*#e in #o *o1ns un*er Ban(Fs Joc( J (ey+ This is a tem"orary a*0ance connecte* 1ith im"ort 1hich is (no1n as "ostCim"ort finance an* falls un*er the cate#ory K2ommercial )en*in#K+

7T#: 9*0ance allo1e* for retirement of shi""in# *ocuments an* release of #oo*s im"orte* throu#h )G2 falls un*er this ty"e+ The #oo*s are han*e* o0er to the im"orter on trust 1ith the arran#ement that sale "rocee*s 1ill e *e"osite* to li6ui*ate the loan account 1ithin the s"ecific time+

ECC: Fun*e* cre*it facility allo1e* to a customer for e%"ort of #oo*s falls un*er this ty"e an* is cate#ori4e* as K&%"ort 2ash 2re*itK+ The a*0ances must e li6ui*ate* out of e%"ort "rocee*s 1ithin !S= *ays+

Pac+ing Credit 6P/C/8: 9*0ance allo1e* to a customer a#ainst ills un*er BTB )G2 an*Gor firm contract for "rocessin#G"ac(in# of #oo*s to e e%"orte* falls un*er this ty"e an* is cate#ori4e* as K&%"ort 2re*itK+ 'ac(in# 2re*it must e a*/uste* from "rocee*s of the rele0ant e%"orts 1ithin 1D0 *ays+

FBP: 'ayment ma*e to a customer throu#h 'urchase or Forei#n 2urrency 2he6uesGDrafts falls un*er this ty"e+ This tem"orary a*0ance is a*/usta le from the "rocee*s of the che6ueG*raft+

Besi*e those ser0ices 'rime Ban( also maintains forei#n currency account an* ser0e the Ban#la*eshi an* forei#n nationals resi*in# home an* a roa*+ Different forei#n currency accounts maintaine* y the an( are as un*er:

(B

4on #esident Ta+a Account #esident Foreign Currenc" &eposit Account 4on #esident Foreign Currenc" &eposit Account Hage Earners de=elopment Bond

Foreign Exchange Business ?7etter o Credit operation@ at Prime Ban+ 7td/

The e%"ort an* im"ort usiness is no1 are e%ecute* throu#h the inter0ention of commercial an(s+ Ban(s ma(e the 1ay throu#h 1hich the e%"orter can #et "ayment from im"orter+ Forei#n e%chan#e is the *e"artment of commercial an(s 1hich facilitates im"orters an* e%"orters in their tra*es+ !t is 0ery si#nificant *e"artment in the financial sector of the country es"ecially in the *e0elo"in# countries+ Ban#la*esh an( has some re#ulations re#ar*in# the forei#n e%chan#e to maintain for the authori4e* *ealer+ 9uthori4e* *ealer is the *ealer of the forei#n currency 1ho is authori4e* y the Ban#la*esh Ban( to e%chan#e forei#n currency+ 'rime Ban( )t* has CCCCCCCCC ranches 1hich are authori4e* y the Ban#la*esh Ban( to e%chan#e forei#n currency+ The Basic functions of forei#n e%chan#e *e"artment are: Facilitatin# !m"ort Tra*e Facilitatin# &%"ort Tra*e 'ro0i*e* fun*e* an* non fun*e* cre*it facility 'ro0i*in# non commercial remittances 8aintainin# forei#n currency accounts Sellin# of forei#n currency+ The a o0e functions are *one y three sections:

(*

 !m"ort Section &%"ort Section The Forei#n Remittance Section No1 the *i0ision of forei#n e%chan#e *e"artment is state* elo1 in a "ictorial format: Foreign Exchange

%mport 1ection

Export 1ection

Foreign #emittance 1ection

Foreign Export

7ocal Export

&irect Export

Export through Bac+ to Bac+

Fig: Foreign Exchange &epartment o Prime Ban+ 7td/

3/( F2#E%34 ECC5A43E T#E4& AT P#%ME BA4> 7T&

The stu*y is ase* on the current Forei#n &%chan#e Tren* for 'rime Ban( )t*+ !t *eals 1ith &%"ort5 !m"ort an* Remittance ser0ices that the an( "ro0i*es5 #i0in# us the current tren* of

2)

usiness in each of this areaFs+ !n a**ition inC*e"th analysis of statistical *ata co0erin# the ty"es of commo*ities5 amount of forei#n currency that is ein# tra*e* has also een co0ere* in this re"ort+ But first let us ta(e a loo( at the role of forei#n tra*e in Ban#la*esh+

Forei#n Tra*e "lays an im"ortant role in the economic a*0ancement of e0ery nation+ So the #o0ernment of almost all *e0elo"in# countries inclu*in# Ban#la*esh focuses on the im"ort an* e%"ort relations of forei#n countries+ !n our country5 the forei#n tra*e is controlle* y

Ban#la*esh Ban( un*er the !m"ort an* &%"ort 2ontrol 9ct5 1AB0+ Eere any im"orter an* e%"orter 1ho are not re#istere* 1ith 22! J& are not allo1e* to im"ort the #oo*s in the country or e%"ort #oo*s to other countries+ ?hile the forei#n &%chan#e Business 1as ecomin# more com"le% an* houn*e* y more rules an* re#ulations5 the )G2 is one ty"e of un*erta(in# that coul* re*uce the ris( an* le#ali4e the contract et1een uyer an* seller+ 9n* throu#h the #C, the contract et1een the im"orter an* e%"orter is #i0en a le#al sha"e y the 9uthori4e* DealerC the an( +9s the an(s are inclu*e* in the "rocess5 the contract ecomes more relia le for oth the im"orter an* e%"orter to oth the "arties+ ?hile throu#h the )G2 a re"ute* an( #uarantees the "ayments for im"orte* #oo*s on the ehalf of the im"orter5 the e%"orter #ets the security for "ayment +ThereforeL the )etter of 2re*it constitutes one of the most im"ortant metho*s of forei#n tra*e+ 9ll *ocumentary cre*it co0erin# im"orts into Ban#la*esh are su /ecte* to the "ro0isions of U2'D2B00 ,Union 2ustoms an* "ractices for *ocumentary cre*it 1AA3 re0ision !22 'u lication B00.+ ?e can see the achie0ement of forei#n e%chan#e *i0ision *urin# the year 200D an* 200@ in a *ia#ram 1ith financial *ata: ,1ee Appendix-AI Page 8

3/2

2PE#AT%24A7

P#2CE11E1

%4

P#%ME

BA4>J1

F2#E%34 ECC5A43E &EPA#TME4T

The !nternational Di0ision "lace* at the 'rime Ban(Fs hea* office at 8oti/heel is the ac( one of all international transaction that is con*ucte* throu#h the 0arious ranches of the an(+ 9 total of 42 ranches of 'rime Ban( ha0e the license to carry KM out international tra*e functions+ &ach of

2(

these 9D ranches ha0e forei#n e%chan#e *e"artment 1hose sole "ur"ose is to carry out cross or*er transaction *eman*e* y the customers+

The functions of such Forei#n &%chan#e De"artment can e *i0i*e* into three sections: ,a. !m"ort Section , . &%"ort Section5 an* ,c. The Forei#n Remittance Section The follo1in# is a rief *escri"tion of each of these sections+

Import Section This section *eals 1ith the im"ort of forei#n commo*ities into Ban#la*esh+ !t starts 1ith the o"enin# of an )G2 till the "ayments arc ma*e to the forei#n e%"orters+ The im"ort section is in turn is *i0i*e* into t1o *i0isions+ =ne *i0ision loo(s after Si#ht )G2 an* another one loo(s after Bac( to Bac( )G2+ The Basic *ifference et1een these t1o ty"es of )G2 is that5 si#ht )G2 re6uires at si#ht "ayment for the im"orte* items5 the uyer shoul* "ay 1ithin three days of *ocuments arri0al+ 9n* on the other han*5 ,the issuance "erio* for Bac( to Bac( cre*it can ran#e from t1o months to e0en a year *e"en*in# on the )G2 terms+

!port Section

9ll &%"ort *e"artments of 'rime Ban(Fs ranches are e6ui""e* 1ith facilities that 1oul* hel" an e%"orter shi" their #oo* eyon* the nationFs oun*ary5 thus earnin# forei#n

currency for the country+ 9n* ma/ority of such customers for 'rime Ban( )t* are in0ol0e* in the Rea*y 8a*e -arment sector 1ith only a fe1 e%"ortin# other *ifferent commo*ities+

"oreign #emittance Section Forei#n remittance can e state* as the "urchase an* sale of freely con0erti le forei#n currency as a*missi le un*er &%chan#e 2ontrol Re#ulations of the country+ !n1ar*

22

remittance is the "urchase an* out1ar* remittance is the sale of forei#n currency+ )ater this section 1ill e *iscusse*+

3/3 24CEPT 2F 7ETTE# 2F C#E&%T

9 letter of cre*it is an instrument issue* y a an( to a customer "lacin# at the letters *is"osal such a#ree* sums in forei#n currency as sti"ulate*+ 9n im"orter is a country re6uests his an( to o"en a cre*it in forei#n currency in fa0or of his e%"orter at a an( in the letters country+ The letter of cre*it is issue* a#ainst "ayment of amount y the im"orter or a#ainst satisfactory security+ The )G2 authori4es the e%"orter to *ra1 a *raft un*er is terms an* sell to a s"ecifie* an( in his country+ Ee has to han* o0er to the an(5 1ill the Bill of e%chan#e5 shi""in# *ocuments an* such other "a"ers as may e a#ree* u"on et1een the e%"orter an* the im"orter+ The e%"orter is assure* of his "ayment ecause of the cre*it 1hile the im"orter is "rotecte* ecause *ocuments in res"ect of e%"ort of #oo*s ha0e to e *eli0ere* y the e%"orter to the "ayin# an( efore the "ayment is ma*e+ !n the !m"ort 'olicy =r*er 2))3-2))6 )etter of 2re*it *enote* as C F K7etter o CreditK means a letter of cre*it o"ene* for the "ur"ose of im"ort un*er this =r*erF The KDocumentary 2re*itN.K an* KStan* y )etter,s.> means e%"ression

any arran#ements5 ho1e0er

name* or *escri e*5 1here y a an( ,Kthe issuin# an(K. actin# at ,he re6uest an* on me instruction of Li customer ,the K9""licantK. or on its o1n ehalf+

!s to ma(e a "ayment to or the or*er of a thir* "arty ,Kthe BeneficiaryK.5 or is to acce"t an* "ay ills of e%chan#e ,DraftFs. *ra1n y the Beneficiary5 =r

authori4es another an( to effect such "ayment5 or to acce"t an* "ay such ills of e%chan#e Draft,s.5=r

authori4es another an( to ne#otiate5 9#ainst sti"ulate* *ocument,s.5 "ro0i*e* that the terms an* con*itions of the 2re*it arc com"lie* 1ith+

23

 The uniform customs an* "ractices for *ocumentary 2re*it ,U2'D2. "u lishe* y !nternationalO 2ham er of 2ommerce ,200@. re0ision5 "u lication no5 I00 *efine Documentary 2re*it:

9ny arran#ement ho1e0er name* or *escri e* 1here y a an( ,the issuin# an(. actin# at the re6uest an* on the instructions of a customs ,the 9""licant. or on itFs o1n ehalf5

!s to ma(e a "ayment to or to the or*er of a thir* "arty ,the eneficiary. or is to acce"t an* "ay ills of e%chan#e ,Drafts. *ra1n y the eneficiary or

9uthori4e another e%chan#e ,Drafts.

an( to effect such "ayment or to acce"t an* "ay such

ills of

9uthori4e another an( to ne#otiate a#ainst sti"ulate* *ocuments "ro0i*e that terms an* con*itions are com"lie* 1ith+

3/. T<PE1 2F 7ETTE# 2F C#E&%T

There are many ty"es of )etter of 2re*its that are use* in *ifferent countries of the 1orl*+ But !nternational 2ham er of 2ommerce ,!22. 0i*es their U2'D2C I005 1hich *enotes only t1o ty"es of )&TT&R =F 2re*itsL mentione*:

#e=oca!le 7etter o Credit 9 re0oca le cre*it may e amen*e* or cancelle* y the issuin# an( at any moment an* 1ithout "rior notice to the eneficiary+ This ty"e of letter of cre*it can e re0o(e* or cancelle* at any time 1ithout consent of5 or notice to the eneficiary+ The uyer ma%imum fle%i ility5 as it can he amen*e* or cancelle* 1ithout "rior notice to the seller u" lo the moment of "ayment ut the issuin# an( at 1hich the issuin# an( has ma*e the cre*it a0aila le+ !n the mo*ern an(in# the use of re0oca le cre*it is not 1i*es"rea*+

%rre=oca!le 7etter o Credit

2.

9n irre0oca le cre*it is a *ocumentary cre*it5 1hich cannot he re0o(e*5 0arie* or chan#e*Gamen*e* or cancelle* 1ithout the consent of all "artiesC uyer ,9""licant.5 seller

,Beneficiary.5 !ssuin# Ban(5 an* 2onfirmin# Ban( ,in case of confirme* )etter of 2re*it.+ !rre0oca le 2re*it #i0es the seller #reater assurance of "ayments5 ut heGshe remains *e"en*ent on an un*erta(in# of a forei#n an(+ !n the issuance of !rre0oca le )etter of 2re*it oth the !ssuin# an* 2onformin# Ban( ha0e some lia ility+

3/, 12ME 1PEC%A7 7ETTE# 2F C#E#&%T

#e=ol=ing 7etter o Credit Re0ol0in# )G2 can e use* 1hen #oo*s are to e *eli0ere* in installment at s"ecifie* inter0als+ The amount a0aila le at any one time is e6ui0alent to the 0alue of one "artial *eli0ery+ 9 re0ol0in# cre*it can e cumulati0e or nonCcumulati0e means that amount from unuse* or incom"letely use* "ortions can e carrie* for1ar* to su se6uent "erio*+ 1tand!" 7etter o Credit Stan* y cre*it are encountere* "rinci"ally in the US+ Un*er the la1s of most US states5 an(s are "rohi ite* from issuin# re#ular 6uarantines5 so cre*its are use* instea*+ !n &uro"e5 too the use of this ty"e of cre*it is increasin# y 0irtue of their *ocumentary cre*it5 stan*C y cre*it are #o0erne* y the U2'+ Eo1e0er5 their function is that of a #rantee+ Bac+ to Bac+ 7etter o credit: The Bac( to Bac( letter of 2re*it is a 1in# of &%"ort *e"artment at the a*0isin# an( on ehalf of eneficiary+ !f the eneficiary e%"orts rea*yma*e #arments "ro*ucts then he may ha0e to o"en this letter of cre*it for im"ort of ra1 materials+ !t is a sort of 'reCshi"ment finance efore e%"ort of "ro*ucts+ Trans era!le 7etter o Credit:

2,

Transfera le cre*it is "articularly 1ell a*a"te* to the re6uirements of international tra*e+ 9 tra*er 1ho recei0es "ayment from a uyer in the form of a transfera le *ocumentary cre*it can use that cre*it to "ay his o1n su""lier+ This ena les him to carry out the transaction 1ith only a limite* an* lay of his o1n fun*s+ The costs of the transfer are usually char#e* to the tra*er an* the transferrin# an( is entitle* to *elete them in a*0ance+ #ed Clause !n the case of a re* clauses cre*it5 the seller can o tain an a*0ance for an a#ree* amount from the corres"on*ent an(5 #oo*s that are #oin# to e *eli0ere* un*er the *ocumentary cre*it+ =n recei0in# the a*0ances5 the eneficiary must #i0e a recei"t an* "ro0i*e a 1ritten un*erta(in# to "resent the re6uire* *ocuments efore the cre*it e%"ires+ The a*0ance is "ai* y the corres"on*ent an(5 ut it is the issuin# an( that assumes lia ility+ !f the sellers *oes not "resent the re6uire* *ocuments in time an* fails to refun* the a*0ance5 the corres"on*ent an( *e its the issuin# an( 1ith the amount of the a*0ance "lus interest+ The issuin# an(5 in turn5 has re0eres to the a""licant5 1ho therefore ears the ris( for the a*0ance an* the interest accrue*+ 3reen Clause The clause 1hich is "rinte* Gty"e* in #reen is an e%tension of Re* $Re* 2lause>+ This clause authori4es the ne#otiatin# an( to #rant a*0ance to the eneficiary for stora#e facilities at the "ort in a**ition to the earlier state* "re shi"ment a*0ances+

The follo1in# ty"es of )etter of 2re*its arc use* in the 'rime Ban(+ -ulshan Branch:

Cash or 1ight 7etter o Credit:

The most commonly use* cre*its are 2ash )etter of 2re*it or si#ht "ayment cre*its+ These "ro0i*e for "ayment to e ma*e to the eneficiary immo*estly after "resentation of the ssti"ulate* *ocuments on the con*ition that the terms of the cre*it ha0e een com"lie* 1ith+ The an(s are allo1e* reasona le time to e%amine the *ocuments+ &e erred 7etter o Credit:

26

9 *eferre* letter of cre*it is a cre*it in 1hich the seller 1ill e "ai* on a fi%e* or *etermina le future time+ The uyer is o li#ate* to "ay the face amount at maturity+

The only *ifference et1een cash )etter of 2re*it an* *eferre* letter of 2re*it lie* in the terms of "ayment+ 'ayment un*er *eferre* )etter of 2re*it is ma*e after certain *ays of "resentation of the e%"ort ill+

Deferre* )etter of 2re*it may e o"ene* for the follo1in# cases:

Items !n*ustrial Ra1 8aterials ,For o1n use. Bac( to Bac( !m"orts 9#ricultural !m"lements J 2hemical Fertili4er 2a"ital 8achinery 2oastal ;essel )ife Sa0in# Dru#s

Period 8a%imum 1D0 Days 8a%imum 1D0 Days 8a%imum 1D0 Days 8a%imum 3I0 Days 8a%imum 3I0 Days 8a%imum 3I0 Days+

Acceptance Pa"ment at Maturit":

?ith an acce"tance cre*it "ayment is ma*e in the form of a tern ill of e%chan#e *ra1n on the uyer5 the issuin# Ban(er the "en*ent an(+ =nce he has fulfille* the cre*it re6uirements5 the eneficiary can *eman* that the ill of e%chan#e e acce"te* an* returne* to him+ Thus the acce"te* ill ta(es the "lace of a cash "ayment+ Bill of e%chan#e *ra1n un*er acce"tances cre*it usually has a term of I0C1D0 *ays+

2A

The "ur"ose of an acce"tance is to #i0e the im"orter time to ma(e "ayment+ !t he sells the #oo*s efore "ayments fall *ue5 he can use the "rocee*s to meet the ill of &%chan#e in this 1ay5 he *oes not ha0e to orro1 money to finance the transaction+

3/6 PA#T%E1 %4;27;E& %4 7ETTE# 2F C#E&%T:

MA%4 PA#T%E1:
%/ The issuing Ban+: !ssuin# Ban( is the an( 1hich o"ens G issues a )G2 on ehalf of the im"orter+ !t is also calle* im"orter3sG uyer3s an(+ %%/ The Con irming Ban+: 2onfirmin# is a an( 1hich a**s its confirmation to the cre*it an* it is *one at the re6uest of issuin# an(+ The confirmin# an( may or may not e the a*0isin# an(+ %%%/ The Bene iciar" The e%"orter in 1hose fa0or the cre*it is o"ene* an* to 1hom the letter of cre*it is a**resse* is (no1n as the eneficiary+ 9s the seller of #oo*s he is entitle* to recei0e "ayment 1hich he *oes y *ra1in# ills un*er the letter of cre*it ,)G2.+ 9s soon as he has shi""e* the #oo*s an* has collecte* the re6uire* *ocuments5 he *ra1s a set of "a"ers an* "resents it 1ith the *ocuments to the o"enin# an( or some other an( mentione* in the )G2+

2B

2T5E# PA#T%E1:
%/ The Applicant: The im"orter at 1hose re6uest a letter of cre*it is issue* is (no1n as the a""licant or uyer+ =n the stren#th of the contract he ma(es 1ith the e%"orter for the "urchase of some #oo*s that the letter of cre*it is o"ene* y the o"enin# an(+ %%/ The Ad=ising Ban+: 9*0isin# Ban( is the an( throu#h 1hich )G2 is a*0ise* to the e%"orter+ !t is a an( situate* in the e%"orter3s country an* it may e a ranch of the o"enin# an( or a corres"on*ent an(+ !t may also assume the role of confirmin# an( an* Gor ne#otiatin# an( *e"en*in# u"on the con*itions of the cre*it+ %%%/ The 4egotiatingGPa"ing Accepting Ban+: The an( 1hich ne#otiates the ill an* "ays the amount to the eneficiary is referre* to the Ne#otiatin# Ban(+ !t has to carefully scrutini4e the *ocumentary cre*it efore ne#otiation in or*er to see 1hether the *ocuments a""arently an* in or*er to see 1hether the *ocuments a""arently an* in or*er+ The a*0isin# an( an* ne#otiatin# an( may or may not e one an* same+ Sometimes it can e the confirmin# an(+ %;/ #eim!ursing Ban+: The Reim ursin# or "ayin# an( only "ays the *rafts *ra1n un*er the cre*it ut un*erta(es no o"enin# an(5 y *e atin# the latter3s accounts 1ith it if there is such an account or y any other measure* u"5 et1een the t1o an(ers+ 9s soon as the eneficiary has recei0e* "ayment for the *raft5 he is out of the "icture an* the rest of the o"eration concerns only the "ayin# an( an* the o"enin# an(+

2*

%mport Procedure through 7etter 2 Credit 2peration o Prime Ban+ 7td/

!m"ort is the "rocess of "urchasin# #oo*s an* ser0ices from forei#n countries into Ban#la*esh+ !t is the flo1 of #oo*s an* ser0ices "urchase* y economic a#ents stayin# in the country from economic a#ents stayin# a roa*+ !n*i0i*uals5 firms an* -o0ernment of Ban#la*esh im"ort forei#n #oo*s to meet their 0arious necessities+ !n ease of international tra*e5 uyers an* sellers are mostly un(no1n to each other+ Therefore5 seller al1ays see(s #uarantee for that is "ayment of his #oo*s e%"orte* an* an( "lays the role e%actly at this "hase+ Ban( #i0es e%"ort #uarantee that it 1ill "ay for the #oo*s on ehalf of the uyer+ This #uarantee is calle* )etter of 2re*it+ Thus5 the contract et1een im"orter an* e%"orter is #i0en a le#al sha"e y the an(er throu#h F)etter of 2re*itF+ ?hen a uyer #oes to im"ort some #oo*s from a forei#n uyer5 he re6uests his an( to ma(e "ayments to the e%"orter of #oo*s5 an* the an( reco0ers the amount from the im"orter+ The im"ort "roce*ure un*er )G2 is *iscusse* elo1:

./( 7E3%17AT%24 2F %MP2#T P27%C<:

!m"orts are forei#n #oo*s an* ser0ices "urchase* y consumers5 firms J

-o0ernments in Ban#la*esh+ 9ccor*in# to !m"ort an* &%"ort 2ontrol 9ct5 1AB05 the =ffice of 2hief 2ontroller of !m"ort an* &%"ort ,22l J &. "ro0i*es the re#istration ,!R2. to the im"orter+ !m"ort of #oo*s in Ban#la*esh is re#ulate* y the

8inistry of 2ommerce in terms of the !m"ort an* &%"ort 2ontrol 9ct 1AB0L !m"ort 'olicy =r*er an* the 'u lic Notice issue* y the =ffice of the 2hief 2ontroller of !m"orts an* &%"orts ,22!J&.L

3)

9t "resent it is re#ulate* y the !m"ort 'olicy =r*er ,2003C200I.5 1hich 1as come into effect on 8arch 145 2003+ 9n* !m"ort 'olicy *irects certain !m"ort 'roce*ure5 1hich a*ministers the 1hole acti0ity+

!m"ort section of Forei#n &%chan#e De"artment facilitates im"ort relate*

an(in# ser0ices

concerne* to im"ort of #oo*s in cash forei#n e%chan#e+ The main facilities "ro0i*e* y the im"ort section areL

="enin# of )etter of 2re*itL Facilitatin# 'ayments to the &%"orter on ehalf of the !m"orter 'ro0i*in# Fun*e* an* NonCfun*e* 2re*it FacilityL !ssuin# Ban( -uarantee in forei#n currency on ehalf of Forei#n 2om"anies+ Recei0e an* Scrutini4e of &%"ort Documents sent from eneficiary3s country+

./2 3E4E#A7 C24&%T%241 2F %MP2#T 2F 322&1

%mport Trade Control 1chedule 4um!er

For im"ort "ur"ose5 use of !T2 Num er ,E+S+ 2o*e. 1ith at least si% *i#its corres"on*in# to the classification of #oo*s as #i0en in the !m"ort Tra*e 2ontrol Sche*ule !AD+S5 ase* on the Earmony 2ommo*ity Descri"tion an* 2o*in# System5 shall e man*atory+ But in cases 1here a "articular aim has een classifie* un*er a E+ S+ 2o*e Num er ,ha0in# more than si% *i#its.+ The se0en Di#it E+S5 2o*e "u lishe* y Ban#la*esh Bureau of Statistics may also e mentione* in the )etter of 2re*it 9uthori4ation Form5 )etter of 2re*it an* other rele0ant "a"er 1ithin a rac(et in a**ition to normal E+ S+ 2o*e as mentione* a o0e+ No an( shall issue )etter of 2re*it 9uthori4ation form or o"en )etter of 2re*it 1ithout "ro"erly mentionin# !+ T+ 2+ num er ,E+ S+ 2o*e. thereon+

42C 64o 2!$ection Certi icate8 2n the !asis o #2# 6#ight o #e usal8

3(

A/ No = /ection 2ertificate on the asis of Ri#ht of Refusal ,R=R. form any authority shall not e re6uire* for im"ort of any freely im"orta le item y any 'u lic Sector a#ency+ Eo1e0er5 in case 1here a "u lic sector a#ency is re6uire* to im"ort anne*Grestricte* items inclu*e* in the 2ontrol )ist5 "rior "ermission of the 8inistry of 2ommerce +shall ha0e to e o taine* on the asis of R=R issue* the 8inistry of !n*ustries or y S"onsorin# 8inistryGDi0ision5 or y oth as the case may e+

B/ !n case of im"ort of anne*Grestricte* items for a""ro0al "ro/ects finance* un*er forei#n ai* the concerne* -o0ernment De"artmentG9#ency 1ill a""roach the 2hief 2ontroller of the !m"ort an* &%"ort *irectly for necessary "ermission to#ether 1ith a list of items *uly certifie* un*er "ro"er seal an* si#nature #i0in# K*escri"tion5 6uantityGnum er5 "rice an* E+S+ 2o*e Num er a#ainst each item re6uire* to e im"orte*+ The *etails a out the ai*e* "ro/ect an* s"ecific "ro0ision of the rele0ant contract an* other necessary information shall also ha0e to e furnishe* alon# 1ith the list of the items+ The 2hief 2ontroller shall issue "ermissionG"ermit on the asis of a o0e *ocuments+

#estriction regarding source o procurement o goods

a+ -oo*s from !srael or #oo*s ori#inatin# from that country shall not e im"orta le+ -oo*s are not also im"orta le in the fla# 0essels of that country+

!/ 9ll (in*s of im"ort from an* e%"ort to Ser ia an* 8ontene#ro5 fra#ments of former Socialist Re"u lic of Pu#osla0ia5 shall e anne*+

Pre-shipment inspection

Unless other1ise s"ecifie*5 "reCshi"ment ins"ection of im"orte* #oo*s shall not e o li#atory in case of im"ort y "ri0ate sector im"orters+

32

1hipment o Bangladesh Flag ;essels elo1 shi"ment of #oo*s shall not e ma*e on Ban#la*esh

Su /ect to 1ai0er s"ecifie* Eu# 0essels:

a+ !m"orts of #oo*s u" to ma%imum t1enty metric tons in case of sin#le in*i0i*ual consi#nee or u" to ma%imum 100 ,one hun*re*. metric tons in case of #rou" im"ort may e ma*e in non Ban#la*eshi fla# 0essels+ Eo1e0er the Director -eneral of Shi""in# may notify #eneral 1ai0ers in the follo1in# cases5 such as ,1. shi"ment of #oo*s from forei#n "orts 1hich are not 0isite* y Ban#la*eshi ;essels5 an* ,2. im"ort of #oo*s on the asis of s"ecific a#reement 1hich "ro0i*es 2 J F ,2ost J Frei#ht. contract+ !n all other eases a certificate of 1ai0er shall e o taine* from the Director -eneral of Shi""in# of !m"ortation of #oo*s in nonCBan#la*eshi fla# 0essels5 Qf there a""ears to e "ossi ility of any Ban#la*eshi Ea# 0essels5 0isitin# a "ort 1ith in ne%t se0en *ays5 1ai0er shall e #i0en 1ithin t1entyCfour hours of a""lication for 1ai0er+ =ther1ise5 it 1ill e consi*ere* that 1ai0er has een #i0en+ Eo1e0er5 the s"ecific con*ition of com"ulsory

shi"ment of #oo*s on Ban#la*eshi fla# 0essels5 or the con*ition of o tainin# certificates of 1ai0er form the DirectorC-eneral of Shi""in# shall not a""ly in cases of im"ort un*er such forei#n ai*s5 loans or #rants 1hich contain s"ecific "ro0isions re#ar*in# shi"ment of #oo*s+

!/ !n case of im"ort an* e%"ort of #oo*s y e%"ort oriente* in*ustries shi"ment may e ma*e in nonCBan#la*eshi Fla# 0essels+

%mport at competiti=e rate

a/ !m"ort shall e ma*e at the most com"etiti0e rate an* im"orters may e recruite*5 at any time5 to su mit *ocuments re#ar*in# the "rice "ai* or to e "ai* y them+

!/ !n case of im"ort un*er Unite* 2ommo*ity 9i* in the 'ri0ate sector5 #oo*s shall e im"orte* at the most com"etiti0e rate y o tainin# 6uotations from a minimum of three su""liers in*enters re"resentin# at least t1o countries a roa*+ This con*ition shall ho1e0er not a""ly for o"enin# of ! +)etter of 2re*it u" T<+ =ne lac+ For im"ort at most com"etiti0e rate y the 'u lic Sectors the con*ition mentione* at 'ara 2@,D. of this or*er shall a""ly+

33

%mport on C L F and F2B 6 ree on Board8 !asis

9ll im"orts y sea5 air an* lan* route shall e ma*e either on 2 J F or F=B asis+ Eo1e0er in ease of im"ort on F=B asis the concerne* im"orter shall ha0e to "ro"erly com"ly 1ith the circular issue* y Ban#la*esh Ban( in this re#ar*+ Before o"enin# )+2 necessary insurance co0er note shall ha0e to e "urchase* form the Sha*haran Bima 2or"oration or any other Ban#la*eshi insurance com"any+ Unless there are s"ecifie* "ro0isions in the rele0ant loan a#reementG"ro/ects a#reement conclu*e* 1ith the forei#n *onors for im"ort of 2!F ,2ost5 !nsurance J Frei#ht. asis5 no im"ort shall e allo1e* on 21F asis 1ithout "rior a""ro0al from the 8inistry of 2ommerce+ Eo1e0er5 Ban#la*esh nations5 li0in# a roa*5 for sen*in# #oo*s a#ainst their earne* forei#n e%chan#e an* forei#n in0estors5 for sen*in# ca"ital machines an* ra1 materials a#ainst their e6uity share "ortion shall e allo1e* on 21F asis+

%mport !" Mentioning KCountr" o 2riginK e mentione* clearly on #oo*s5 y the concerne*

a/ !n all cases of im"ort5 Kcountry if ori#in shall

"ac(a#eGcontainer+ 9 certificate re#ar*in# Kcountry of ori#inK issue*

-o0ernment a#encyGa""ro0e* authorityGor#ani4ation of the e%"ortin# country must e su mitte*5 alon# 1ith im"ort *ocuments to the 2ustomer 9uthority at the time of release of #oo*s+ Eo1e0er5 the "ro0isions of Kcountry of ori#inK shall not e a""lica le to coal an* e%"ort oriente* #arments in*ustries+ !n case of this cotton im"ort5 it shall not e re6uire* to mention the country of ori#in on each ale+ But Kcountry of ori#inK shall e mentione* in the "hyto sanitary certificate+ Besi*es5 100H e%"ort oriente* in*ustries5 1hich arc reco#ni4e* y 2ustom 9uthority5 shall e 1ai0e* from the restriction of Kcountry of ori#inK su /ect to the con*itions im"ose* y the Forei#n &%chan#e Re#ulation 9ct5 Ban#la*esh Ban( an* 2ommercial an(5 !+ !n case of im"ort of )imestone5 in *ifferent consi#nmentsGlot y the ro"eC1ay or y ri0er5 as ra1Cmaterials for 2hatta( 2ement Factory5 Kcountry of ori#inK certificate from the e%"ortin# countryFs -o0ernmentGa""ro0e* authorityGor#ani4ation shall e su mitte* once to the customs authority at the time of release of #oo*s5 instea* of each consi#nmentGJot for the 6uantity

3.

mentione* in )etter of 2re*it5 in case of ri0erC1ay an* as "er su""lie* carryin# list as case of roa*C1ay+

./3 %41T#0CT%241 %110E& B< BA437A&E15 BA4> F2# 2PE4%43 A4& 2PE#AT%24 2F 7GC 322&1 F2# %MP2#T 2F

9ll )etter of 2re*its an* similar un*erta(in#s co0erin# im"orts into Ban#la*esh must e *ocumentary )etter of 2re*its an* shoul* "ro0i*e for "ayment to e Fma*e a#ainst full sets of on oar* ,shi""e*. trans"ort *ocuments ,B)5 9!B5 TR etc+. sho1in# *is"atch of #oo*s co0ere* y 2re*it to a *estination in Ban#la*eshL

They must ensure that they *eal only 1ith (no1n customers ha0in# a "lace of usiness in Ban#la*esh an* can e trace* easily if any occasion arise for this "ur"oseL

They shoul* esta lish )etter of 2re*it a#ainst s"ecific authori4ation on ehalf of their o1n customers 1ho maintain accounts 1ith them 1ith an* (no1 to e "artici"ate* in the tra*eL

!t is not "ermissi le to o"en to clean or re0ol0in# cre*itsL They are allo1e* to o"en *i0isi le5 transfera le )etter of 2re*its for im"ort into Ban#la*esh un*er cash )29F ,)etter of 9uthori4ation Form.L

!t is not "ermissi le to o"en )etter of 2re*its in fa0or of eneficiaries in countries from 1hich im"ort into arc anne* y the com"onent authorityL

)etter of 2re*its to e o"ene* only a#ainst firm contract et1een the 9""licant an* eneficiary+ Ban(ers shoul* sec *ocumentary e0i*ence5 efore o"enin# )etter of 2re*it5 that a firm or*er for the #oo*s to e im"orte* has een "lace* an*

acce"te*L

3,

The full *escri"tion of #oo*s to e im"orte* alon# 1ith unit "rice an* 6uantity to e #i0en in the )etter of 2re*itL

2onfi*ential re"ort of the e%"orter to e o taine* y the an(5 1here the amount of )etter of 2re*it e%cee*s T<+ 25005000 in case of im"ort a#ainst "ro forma in0oices issue* *irect y forei#n su""lier an* T<+ B5005000 a#ainst in*ent issue* su""liersL y local a#ents of the

'ayments a#ainst *iscre"ant *ocuments may e ma*e after the #oo*s ha0e een cleare* from the customs on the asis of the locati0e )29FL

9*0ance* remittance a#ainst im"ort may e ma*e after #ettin# "rior "ermission from Ban#la*esh Ban( 1here the #oo*s arc of s"eciali4e* or ca"ital nature+

./. &2C0M4T1 #EM0%#E& F2# 2PE4%43 2F 7GC:

)G2 a""lication an* a#reement Form ,Ban(Fs "rescri e* a""lication form. 1ith a*hesi0e stam" of T(+ 1B0 ,Fle%i le. QFrom June 3r* 1AADR )etter of 2re*it authori4e* Form ,)29F. 2!B+ 'roforma !n0oice ,9""ro0e* y BRT2 in case of 8o ile Set. !m"ort Re#istration certificate+ Ta% !*entification Num er5 ;9T ,!R2 rene1. 8em ershi" 2ertificate+ )ast tear income ta% assessment+ Earmoni4e* System 2o*e ,ES 2o*e. 2har#e* Documents+

Un*er Charged &ocuments the follo1in# letters are re6uire*: o Deman* 'romissory Note+ o )etter of Dis ursement o )etter of 9#reement

36

o )etter of 9uthority+ o )etter of Un*erta(in# o )etter of 2ontinuity+ o )etter of Re0i0al o )etter of -uarantee+ ,Si#nature 1ithout Seal. 1ome Exemption: No !R2 re6uire* for im"ortation of ca"ital machinery for settin# u" ne1 in*ustry+ =nly B=! a""ro0al re6uire*+ $2ountry of ori#in> issue* y #o0ernmentGcom"etent o*y+ Tra*e o*y 2= is not

re6uire* in case of im"ortation of ra1 materials for 2oal J R8- in*ustry

./, MA#3%4 A4& 2T5E# C5A#3E1

Before issuin# )etter of 2re*it5 an( as(s the a""licant to *e"osit )etter of 2re*it mar#in accor*in# to the terms of sanction an* other necessary char#es 1hich inclu*es commission5 han*lin# char#es5 forei#n corres"on*ence char#e5 tele%GS?!FT char#e etc5 as "er terms an* con*itions of sanction+ Before issuin# )etter of 2re*it Ban( as(s the a""licant to *e"osit the follo1in#5 as "er the terms of the sanction:

7etter o Credit Margin 2ommission

As per 3o=ernment/ Circular 9s "er internal "olicy ,)etter of 2re*it 0alue +00B for first 6uarter5 Su se6uent

Document Ean*lin# 2har#e S?!FT 2har#e 2ourier 2har#e ,e%ce"t !n*ia. 2ourier ,!n*ia.

7uarter +003 1B00 3B00 1B00 300

3A

;9T

1BH on 2ommission an* S?!FT char#e

8ar#in char#e* a#ainst any "articular )etter of 2re*it *e"en*s u"on the !tem or -oo*s of the im"ort+ 8ar#in 0aries et1een nil to 100H+ -enerally the hi#her 0alue of mar#in5 the hi#her it means that Ban#la*esh Ban( *iscoura#es to im"ort that #oo*s or items+ Some #oo*s are im"orte* at 100H mar#in5 as "er the circular of 14th No0em er5 2001

./6 %110%43 T5E 7ETTE# 2F C#E&%T

!n this sta#e5 the issuin# an( fills the an(Cs"ecifie*Cform for issuin# )etter of 2re*it+ -enerally a )etter of 2re*it contains the follo1in# information an* terms an* con*itions:

2har#esL 2ountry of ori#in of #oo*sL 2urrency an* amountL Date an* "lace of the e%"iry of the Documentary 2re*its L Descri"tion of #oo*s an* 6uantity L Documents re6uire* for ne#otiationL !nstruction for ne#otiatin# an(L )ast *ate of shi"mentL )etter of 2re*it 9uthori4ation Form ,)29F. num er5 !R2 ,!m"ort Re#istration 2ertificate. num er an* Earmoni4e* System ,ES. co*eL

8o*e of 2arryin# C9irGShi"GTruc(L Name an* a**ress of eneficiary L Name an* a**ress of the a*0isin# an(L Name an* a**ress of the a""licantL

3B

Name of the issuin# Ban( an* BranchL Ne#otiatin# an( "refera ly freely ne#otia le in any an(L Num er of )etter of 2re*it an* *ate of o"enin# L 'ayment TermCSi#ht 'erio* of Ne#otiation L 'erio* of "resentation L 'ort of )oa*in# an* "ort of Dischar#eL Reim ursin# Ban( an* "ayment mo*eL Terms an* con*itions re#ar*in# Transshi"ment an* 'artial Shi"mentL

De"en*in# on the s"ecific "ro0ision in the un*erlyin# salesCcontract ,mentione* elo1.5 it may e necessary to incor"orate one or more of the follo1in# a**itional terms in the )etter of 2re*itC ?hether the "ay of the an( char#es is on account of the o"ener or seller ?hether short from of Bill of )a*in# ,BG). is acce"ta le ?hether5 in case of ul( im"ort5 charterC"arty Bill of )a*in# ,BG). is acce"ta le or not ?hether shi"ment y chartere* 0essel is allo1e*5 the follo1in# causes must e sti"ulate* in the )etter of 2re*it+

Shi""in# *ocuments must inclu*e co"ies of 2harterC"arty a#reements+ Bill of )a*in# must e si#ne* y name* carrier or his authori4e* a#ent+

./A &%FFE#E4T MEA41 2F PA<ME4T

!m"orter settles the means of "ayment 1ith the seller after ma(in# the "urchase contract+ !m"ort "roce*ure *iffers 1ith relation to *ifferent means of "ayment+ !n our country in most cases5 the

3*

DocumentaryG)etter of 2re*it ma(es im"ort "ayment+ 'urchase 2ontract contains 1hich "ayment "roce*ure has to e a""lie*+

a8 Cash in Ad=ance: !m"orter "ays lull5 "artial or "ro#ressi0e "ayment y a forei#n DD5 8T or TT+ 9fter recei0in# "ayment5 e%"orter 1ill sen* the #oo*s an* the trans"ort recei"t to the im"orter+ !m"orter 1ill ta(e *eli0ery of the #oo*s from the trans"ort com"any+

!8 2pen Account: &%"orter shi"s the #oo*s an* sen*s trans"ort recei"t to the im"orter+ !m"orter 1ill ta(e *eli0ery of the #oo*s an* ma(es "ayment y forei#n DD5 8T5 or !T at some s"ecifie* *ate+

c8 Collection Method: 2ollection metho*s are either clean collection or *ocumentary collection+ 9#ain5 Documentary 2ollection may e Document a#ainst 'ayment ,DG'. or Document a#ainst 9cce"tance ,DG9.+ The collection "roce*ure is that the e%"orter shi"s the #oo*s an* *ra1s a *raftG ill on the uyer+ The e%"orter su mits the *raftG ill ,only or 1ith *ocuments. to the remittin# an( for collection an* the an( ac(no1le*#es this+ Then the remittin# an( sen*s the *raftG ill ,1ith or 1ithout *ocuments. an* a collection instruction letter to the collectin# an(+ 9ctin# as an a#ent of the remittin# an(5 the collectin# an( notifies the im"orter u"on recei"t of the *raft+ The title of #oo*s is release* to the im"orter u"on full "ayment or acce"tance of the *raftG ill+

d8 7etter o Credit: )etter of cre*it is the 1ellCacce"te* an* most commonly use* means of "ayment+ !t is an un*erta(in# for "ayment y the issuin# an( to the eneficiary5 u"on

su mission of some sti"ulate* *ocuments an* fulfillin# the terms an* con*itions mentione* in the letter of cre*it+

./B T#A41M%11%24 2F 7ETTE# 2F C#E&%T PA<ME4T

The )etter of 2re*it *uly si#ne* y the authori4e* "ersons of the an( is then sent to the a*0isin# an(+ There are three mo*es of sen*in# the )etter of 2re*its 1hich are as follo1s:

.)

A/ B" MailGCourier )etter of cre*it can e sent to the a*0isin# an( y mail Gcourier+

B/ B" TE7EC: !t 1as "ractice* earlier in the other ranches5 ut from the 0ery e#innin# of the -ulshan ranch it *i* not transmit )etter of 2re*it thou#h Tele%+

C/ B" 1H%FT: S?!FT Stan*s for Society of ?orl* ?i*e !nter an( Financial Telecommunication+ This is s"ecial format maintaine* roun* the 1orl*+ Throu#h this facility "arty can communicate 1ithin fe1 minutes 1ith other "arty stayin# any "art of the 1orl*+ 'rime Ban( )imite*5 -ulshan Branch 'ro0i*es this facility to the clients+ The a*0isin# an( 0erifies the authenticity of the )etter of 2re*it+

'rime Ban( has corres"on*in# relationshi" or arran#ement throu#hout the 1orl* y 1hich the )etter of 2re*it is a*0ise*+ 9ctually the a*0isin# an( *oes not ta(e any lia ility if other1ise not re6ueste*+

./* #ECE%PT 2F &2C0ME4T1

9fter o"enin# the )etter of 2re*it the ne%t ste" 1oul* e to a1ait shi"ment follo1e* y ne#otiation of *ocuments y a an( a roa*+ The eneficiary of the )etter of 2re*it ,su""lier.5 after effectin# shi"ment of the #oo*s as "er )etter of 2re*it terms5 "re"are or collect necessary *ocuments as re6uire* un*er the terms of )etter of 2re*it an* "resents the *rafts to the ne#otiatin# an( alon# 1ith the su""ortin# *ocuments for ne#otiation+

The ne#otiatin# an( ne#otiates the *raft if the *ocuments are foun* in or*er as "er terms of the )etter of 2re*it5 "ays the eneficiary+ The ne#otiatin# an( 1ill reim urse itself either y *e itin# 'rime Ban(Fs 9ccount5 if any5 maintaine* 1ith them ,the N=STR= 9ccount. or 1ill see( reim ursin# an( mentione* in )etter of 2re*it5 if there is no account+ Simultaneously5 the

.(

an( 1ill sen* the *ocuments to 'rime Ban(+ The nature of *ocuments has to e sent y the ne#otiatin# an( 1ill *e"en* "rimarily on the terms of the )etter of 2re*it an* secon*ly the sales contact et1een the uyer an* seller+ Eo1e0er5 #enerally the follo1in# *ocuments are as(e* to sen*:

Bill of )a*in# or 9ir1ay Bill or other e0i*ence of shi"ment ,e+#+ Rail1ay Recei"t5 Truc( Recei"t5 Bar#e Recei"t. 2ertificate of =ri#inL 2ommercial !n0oiceL Draft or Bill of &%chan#eL !ns"ection of Sur0ey 2ertificateL 8arine !nsurance 'olicyL 'ac(in# )istL 7uality 2ontrol 2ertificate+

./() 1C#0T%4< 2F &2C0ME4T1

=n recei"t of the *ocuments5 the ranch shall imme*iately set itself to the tas( of +scrutini4in# the *ocuments5 ?hat they 1oul* ensure is that the *ocuments recei0e* from the ne#otiatin# an( are *ra1n strictly in conformity 1ith the terms of the )etter of 2re*it an* res"on* to the re6uirement of the un*erlyin# )etter of 2re*it in e0ery res"ect5 e%amination of the *ocuments #enerally inclu*es the follo1in# "oints:

2om"leteness of the *ocumentsL 2onsistency of the *ocuments 1ith each otherL 2om"liance 1ith the Uniform 2ustoms an* 'ractices for Documentary 2re*its ,U2'D2. issue* y the !nternational 2ham er of 2ommerce5 'aris+

.2

=ne of the asic "rinci"les of *ocumentary cre*it is that all "arties *eal 1ith *ocument an* not 1ith #oo*s ,9rticles I of U2'D2CI00.+ That is 1hy the *ocuments shoul* e scrutini4e* "ro"erly+ !f any *iscre"ancy in the *ocuments is foun*5 that is to e informe* to the "arty+ 9 chec(list may e follo1e* for e%aminin# the *ocuments+

!n the U2'D2 the 1tandard or Examining o &ocuments is mentione* as follo1s:

a8 Ban(s must e%amine all *ocuments sti"ulate* in the 2re*it 1ith reasona le care5 to ascertain 1hether of not they a""ear5 on their face5 to e in com"liance 1ith the terms an* con*itions of the 2re*it+ 2om"liance of the sti"ulate* *ocuments on their face 1ith the same terms an* con*itions on the 2re*it shall e *etermine* y international stan*ar* an(in# "ractice as

reflecte* in these 9rticles+ Documents 1hich a""ear in their face to e inconsistent 1ith one another 1ill e consi*ere* as not a""earin# on their face to e in com"liance 1ith ,he terms an* con*itions of the cre*it+ Documents not sti"ulate* in the cre*it 1ill not e e%amine* y an(s+ !f they recei0e such *ocuments5 they shall return them to the "resenter+

!8 The !ssuin# Ban(5 the 2onfirmin# Ban(5 if any or a Nominate* an( actin# on their ehalf5 shall each ha0e a res"onsi le time5 not to e%cee* fi0e an(in# *ays follo1in# the *ay of recei"t of the *ocuments5 to e%amine the *ocuments an* *etermine 1hether to ta(e u" *ocuments an* inform the "arty from 1hich it recei0e* the *ocuments accor*in#ly+

c8 !f a cre*it contains con*itions 1ithout statin# the *ocument,s. to e "resente* in com"liance there 1ith5 an( 1ill *eem such con*itions as not state* an* 1ill *isre#ar* them+

./(( 72&3ME4T
9fter the scrutiny the follo1in# ste"s are ta(en ste"C yCste" to "rocess for lo*#ment of im"ort *ocuments recei0e* form the ne#otiation an(+ )o*#ment means retirement of fun*s+ Usually "ayment is ma*e 1ithin fi0e *ays after the *ocuments ha0e een recei0e*+ !f the "ayment is ecome *eferre*5 the ne#otiatin# an( may claim interest ,)!B=R. for ma(in# *elay+ Eo1e0er5

.3

after recei0in# the *ocuments -ulshan ranch authority contacts 1ith an im"orter5 in 1hich "roce*ure they 1ant to collect the *ocuments+ !f re6ueste* '9D is facilitate* for t1enty one *ays only+

7odgment Constitutes the Follo-ings: 2on0ersion of forei#n currency amount of the ill an* the forei#n an( char#es se"arately into Ta(a y a""lyin# Bills 2ollection ,B+2+. sellin# rate rulin# on the *ate of lo*#ment is *one+ !f for1ar* e%chan#e 1as5 the oo(e* rate is a""lie*+T24 'ayment a#ainst Documents ,'9D. is create* y De itin# '9D 9ccount an* 2re*itin# ! lea* =ffice 9ccount Full "articulars of the *ocuments are entere* in the "rescri e* '9D Re#ister allottin# a consecuti0e serial num er in the re#ister+ !f the for1ar* e%chan#e rate is oo(e* then the oo(e* rate is a""lie*+ 'ayment a#ainst Documents ,'9D. is create* y De itin# '9D 9ccount an* 2re*itin# Eea* 9ccount+ Full "articulars of the *ocuments are entere* in =ffice

the "rescri e* '9D Re#ister

allottin# a consecuti0e serial num er in the re#ister+

Documents are en*orse* y "uttin# seal an* si#nature+ &T29 K&%chan#e Transaction 2re*it 9*0iceK is sent to the Eea* =ffice alon# 1ith a "rescri e* statement to "ro0i*e them cre*it for the "ayment from their o0erseas account throu#h 'rime Ban( )imite* -eneral 9ccount+

Eea* =ffice ,!nternational Di0ision. in recei"t of the !!J29 an* the statement 1ill res"on* the entry y *e it to ranch account ,throu#h 'rime Ban( )imite* -eneral

9ccount. an* contra cre*it to N=STR= 9ccount of the ne#otiatin# an( a roa*+ To arran#e necessary fun* for "ayment5 a re6uisition is sent to the !nternational De"artment+ 9s the T+T J =+D rate is "ai* to the !D5 the *ifference et1een these t1o rates remains as e%chan#e #ain for the Branch+ 9s soon as a o0e formalities are com"lete* the im"orters are ser0e* 1ith '9D ill intimations for retirement of concerne* im"ort *ocument+ 9 letter of intimation ,'+9+D+ intimation. re#ar*in# recei"t of the *ocuments shoul* e sent to the a""licant

..

1ith a re6uest to la(e *eli0ery of the *ocuments on settlement of all *ues a#ainst it an* mentionin# the maturity *ate of '+9+D+

./(2 #ET%#EME4T 2F T5E &2C0ME4T1

=n recei"t of cost memoGlo*#ment 0oucher the im"orter "ays the necessary amount+ This sta#e of the *ocumentary cre*it o"eration is (no1n as $Retirement of !m"ort Bills >+ The ranch 1ill "re"are the retirement 0oucher to reflect the amount of cost an* other char#es to e collecte* from the im"orter5 a*/ustments of mar#in an* '9D 9ccount+ Thereafter the *ocuments may e han*e* o0er to the im"orter a#ainst "ro"er ac(no1le*#ement after certification an* en*orsement+ The certifications y authori4e* "ersonnel of the an( are as follo1s:

The in0oice is certifie* y the authori4e* officer of the an( 1ith the e%chan#e rate as a""lie* in lo*#mentL

The Bill of &%chan#e recei0e* from ne#otiatin# an( on issuin# an( y the eneficiaryL The Trans"ort Documents e0i*encin# the carryin# of #oo*s as "er )etter of 2re*it term has to the en*orse* y the 9D ranch+

=n recei"t of intimation5 the im"orter is #i0en necessary instructions 1ith re#ar* to retirement of the ill5 *is"osal of the shi""in# *ocuments an* clearance of the #oo*s from the

2ustoms Cauthorities+ The im"orter may as( the an( to retire the ill y *e itin# his account or may re6uest for the "ro0i*in# )!8 or )TR facility5 if arran#e* earlier+

=n intimation the im"orter a""roaches 1ith a letter for retirement of the *ocument a#ainst full "ayment 1ith u" to *ale interest an* char#es "aya le+ Ean( "re"ares cost memo in "rinte* form on account of the concerne* "arty #i0in# *etails hea* of char#es "aya le+

.,

9s the 0ouchers are "asse* an* necessary entries are #i0en in '9D )e*#er en*orsements arc ma*e fe1er than t1o authori4e* si#nature of the Ban(3s officers ,'+9+ Eol*er.+ Then the *ocuments are *eli0ere* to the im"orter+

./(3 &E7%;E#< 2F 15%PP%43 &2C0ME4T1

!f the ill is to e reali4e* y *e it to ,he im"orterFs account5 the *ocuments are han*e* o0er lo the im"orter to his *uly authori4e* clearin# un* for1ar*in# a#ent for clearance of the #oo*s form customs at his o1n account+

./(. PA<ME4T T2 T5E F2#E%34 BA4> %MP2#T 2F 322&1

Ne#otiatin# Ban( is authori4e* to De it Eea* =ffice 9ccount ,'B). *irectly5 if the account is maintaine* 1ith them+ Ne#otiatin# Ban( is authori4e* to o tain reim ursement claim form forei#n corres"on*ent 1ith 1hich account is maintaine* y Eea* =ffice ,'B).

?here reim ursement is "ro0i*e* su se6uent to the recei"t of *ocuments5 an authority )etter is to sen* to corres"on*ent a roa* 1ith 1hom account is maintaine* y Eea* =ffice to ma(e "ayment to the Ne#otiatin# Ban( to *e it of 'B) account maintaine* 1ith them for the amount of the *ocuments+

./(, %MP2#T P2#TF27%2 2F P#%ME BA4> 7T&/

!m"ort "ortfolio consists of the #oo*s or items are ein# im"orte* throu#h the an(5 total letter of cre*it o"ene* y the an(5 0olume of #oo*s etc+ !n =ur 2ountry fast mo0in# consumer #oo*s to 2a"ital machinery are im"orte*+ There are asically t1o ty"es of im"orter+ They are as follo1s:

.6

 %ndustrial %mporter: !n*ustrial im"orter asically im"orts ra1 materials for further "rocessin#+ They sell the finishe* #oo*s to the a roa* or in Ban#la*esh+ =ther than ra1 materials they im"orts $2a"ital 8achinery> for *ifferent in*ustrial "ur"ose+ Commercial %mporter: 2ommercial im"orters im"ort finishe* #oo*s+ They im"ort those #oo*s *irectly for sellin# into the mar(et+ But they are 0ery limite* in num er+ Throu#h this ranch the ma/ority of the #oo*s im"orte* are ra1 materials y the in*ustrial users+ No1 1e can see from the follo1in# ta le that ho1 many commo*ities are im"orte* y this ranch:

4ame o the Commodities

%ndustrial %mport
%ndustrial #a- Materials Parn Dyes 9luminum !n#ot 2hemicals 'harmaceutical Ra1 8aterials

Commercial %mport
8o ile 'hone Diesel #enerator )a oratory Rea#ents S"are 'arts -as 'ressure Re#ulator 9ir 2ooler Toiletries 'assen#er &le0ator )i#htin# Fi%ture

Pharmaceuticals Pac+ing materials Capital Machiner"

Foo* 'ro*ucts
Recon*itione* ;ehicle+ 'rintin# !n(+

9s the most num ers of !m"orters are !n*ustrial !m"orters+ The "ercenta#e of im"orte* ra1 materials is the ma%imum 0olume of im"orts all o0er the year+ ?e can easily trace the "ercenta#e of total )G2 o"ene* at this ranch at 200IJ 200@ throu#h the follo1in# t1o 'ie

.A

2harts5 1here !n*ustrial Ra1 8aterials secure* almost half of the )G25 an* the remainin# secure* *ifferent "ercenta#es accor*in# to the *eman*s of those years+ 61ee Appendix B and Appendix C at Page no: 8

!n the

ranch ! ha0e also o ser0e* the fre6uency of im"orte* #oo*s+ The !n*ustrial Ra1

8aterials 9l1ays staye* at the to" "osition+ But the most intereste* thin# is that the ne%t fre6uent item of im"orte* #oo* is $8o ile 'hone>+ The im"ortation of mo ile "hones throu#h this ranch is *one only y one com"any 1hich is &lectra Telecom BD )t*+ &lectra is the authori4e* *ealer of Samsun# 8o ile 'hone+ The fre6uency of im"orte* ca"ital machinery is 0ery lo15 ut the 0alue of im"ort of ca"ital machinery throu#h each )G2 is 0ery hi#h com"are* to all other im"orte* #oo*s+ The total scenario 1ill e trans"arent throu#h a #ra"h: 61ee Appendix-& at page no: 8

Export Procedure through 7etter 2 Credit 2peration o Prime Ban+ 7td/

2reation of 1ealth in any country *e"en*s on the e%"ansion of "ro*uction an* increasin# "artici"ation in international tra*e+ By increasin# "ro*uction in the e%"ort sector 1e can Rea*yma*e te%tile im"ro0e the em"loyment le0el of such a hi#hly "o"ulate* country li(e Ban#la*esh+ Ban#la*esh e%"orts a lar#e 6uantity of #oo*s an* ser0ices to forei#n househol*s+ #arments , oth (nitte* an* 1o0en.5 Jute5 JuteCma*e "ro*ucts5 fro4en shrim"s5 tea are the main #oo*s that Ban#la*eshi e%"orters e%"ort to forei#n countries+ -arments sector is the lar#est sector that e%"orts the lion share of the countryFs e%"ort+ Ban#la*esh e%"orts most of its rea*yma*e #arments "ro*ucts to U+S+9 an* &uro"ean 2ommunity ,&2. countries+ Ban#la*esh e%"orts a out 40H of its rea*yma*e #arments "ro*ucts to U+S+9+ 8ost of the e%"orters 1ho e%"ort throu#h 'B) are rea*yma*e #arments e%"orters5 They o"en e%"ort )G2s here to e%"ort their #oo*s5 1hich they o"en a#ainst the im"ort )G2 o"ene* y their forei#n im"orters+

.B

&%"ort )G2 o"eration is /ust re0erse of the im"ort )G2 o"eration+ For e%"ortin# #oo*s y the local e%"orter5 an( may act as a*0isin# an(s an* collectin# an( ,ne#otia le an(. for the
exporter. 'rime Ban( )t* as an authori4e* *ealer ,9D. *eals a lot of letter of cre*it on ehalf of

eneficiary+ Eere 'rime Ban( )t* acts as an a*0isin# or ne#otiatin# an( 1hich a*0ise the )G2s+ No1 the 1hole "rocess of e%"ort in "ictorial format is #i0en elo1:

#egistration -ith CC%LE Recei0in# )G2 from uyer3s Ban( throu#h an a*0isin# Ban( in Ban#la*esh 'reCshi"ment finance ,Bac( to Bac( )G25 '2. 2ertification of &S' form y 9uthori4e* Dealer Shi"ment of #oo*s y &%"orter an* su mission of e%"ort *ocs to ne#otiatin# Ban( Scrutini4in# &%"ort Document y ne#otiatin# Ban( 9re the *ocument in or*erT
P e No

9s( the customer to remo0e *iscre"ancies

.*

9re the *iscre"ancies remo0e*T

No

!nform o"enin# Ban( of the *iscre"ancies

Ne#otiate *ocuments

Pes

Do they allo1 Ne#otiationT

N o

Dis"atch the *ocs an* claim Reim ursement

Sen* the *ocs for collection 2hec( 1hether the Nostro 9G2 is cre*ite* or not
P e N o

s )o*#ement of FDB' Sen* Remin*er to )G2 issuin# Ban(

Fig: Export procedure in pictorial ormat

,/( &2C0ME4T1 #EM0%#E& F2# ECP2#T T#A41ACT%24

There are t1o ty"es of *ocument for e%"ort transaction+ They are Su stanti0e Document an* au%iliary *ocument+ The name of the *ocuments un*er these t1o cate#ories is #i0en elo1:

1u!stanti=e &ocument: o Draft or Bill of &%chan#e+ o 2ommercial !n0oice+ o Bill of )a*in# or 9ir1ay Bill+ o 8arine !nsurance 'olicy+ Auxiliar" &ocument: o 'ac(in# )ist+

,)

o 2onsular !n0oice+ o 2ertificate of =ri#in o 7uality 2ontrol 2ertificate+ o -S' 2ertificate+ o !ns"ection 2ertificate+ 2ther documents and ormalities: For &%"ort of /ute5 /ute #oo*s5 tea an* to acco5 an e%"orter5 in a**ition to &%"ort Re#istration 2ertificate5 nee*s a se"arate license to e issue* y the concerne* a#encies+ Sanitary certificate is re6uire* for all li0estoc( an* "lants an* "lant "ro*ucts ,e%ce"t fruit an* 0e#eta le. certifyin# that they are free of in/urious insects5 "ests an* *iseases+

,/2 #E3%1T#AT%24 2F ECP2#TE#1

Under the export policy of Bangladesh the exporter has to get valid Export registration Certificate (E C! fro" Chief Controller of I"port # Export (CCI#E!. $he E C is re%&ired to rene' every year. $he E C n&"(er is to incorporate on E)* for"s and other papers

connecte* For o tainin# &R25 inten*in# Ban#la*eshi e%"orters are re6uire* to a""ly to the controllerG Joint 2ontrollerG De"uty 2ontrollerG 9ssistant 2ontroller of !m"orts an* &%"orts5 Dha(aG 2hitta#on#G RaishahiG 8ymensin#hG SylhetG 2omillaG Ba*shalG Bo#raG Ran#"urG Dina/"ur in the "rescri e* form alon# 1ith the follo1in# *ocuments: a+ Nationality an* 9ssets 2ertificateC + 8emoran*um an* 9rticle of 9ssociation an* 2ertificate of !ncor"oration in case of )imite* 2om"anyC5 c+ Ban( 2ertificate *+ !ncome Ta% 2ertificate e+ Tra*e )icense etc+ 1ith e%"orts+

,/3 1EC0#%43 T5E ECP2#T 2#&E#:

,(

9fter #ettin# &R2 2ertificate the e%"orter may "rocee* to secure the e%"ort or*er+ Ee can *o this y contactin# the uyers *irectly or throu#h a#ent+ !n this "ur"ose the e%"orter may #et hel" from: a+ )icense =fficer + Buyers )ocal 9#ent c+ &%"ort 'romotin# =r#ani4ation *+ Ban#la*esh 8ission 9 roa* e+ 2ham er of 2ommerce ,local J forei#n. f+ Tra*e Fair etc+

,/.

1%34%43 T5E C24T#ACT L #ECE%;%43 7ETTE# 2F C#E&%T:

9fter communicatin#

uyer5 e%"orter has to #et contracte* ,1ritin# or oral. for e%"ortin#

e%"orta le items from Ban#la*esh *etailin# commo*ity5 6uantity5 "rice5 shi"ment5 insurance an* mar(s5 ins"ection an* ar itration etc+ 9fter #ettin# contract for sale5 e%"orter shoul* as( the uyer for )etter of 2re*it ,)G2. clearly statin# terms an* con*itions of e%"ort an* "ayment+ The follo1in# are the main "oints to e loo(e* into for recei0in#G collectin# e%"ort "rocee*s y means of Documentary 2re*itC+ The terms of the )G2 are in conformity 1ith those of the contractK The )G2 is an irre0oca le one5 "refera ly confirme* y the a*0isin# an(L The )G2 allo1s sufficient time for shi"ment an* ne#otiation+ ,Eere the re#ulatory frame1or( is U2'D2CB005 !22 "u lication. Terms an* con*itions shoul* e state* in the contract clearly in case of other mo*e of "ayment:

,2

,a. 2ash in a*0anceC5 , . ="en account5 ,c. 2ollection asis ,DocumentaryG 2lean. ,Eere the re#ulatory frame1or( is UR2CB2B5 !22 "u lication.

,/, ECP2#T F%4A4C%43:

Financin# e%"orts constitutes an im"ortant "art of a an(Fs acti0ities+ &%"orters re6uire financial ser0ices at four *ifferent sta#es of their e%"ort o"eration+ Durin# each of these "hases e%"orters nee* *ifferent ty"es of financial assistance *e"en*in# on the nature of the e%"ort contract+ 1+ 'reCshi"ment cre*it 2+ 'ostCshi"ment cre*it

(/ Pre-shipment credit: 'reCshi"ment cre*it5 as the name su##ests5 is #i0en to finance the acti0ities of an e%"orter "rior to the actual shi"ment of the #oo*s for e%"ort+ The "ur"ose of such cre*it is to meet 1or(in# ca"ital nee*s startin# from the "oint of "urchasin# of ra1 materials to final shi"ment of #oo*s for e%"ort to forei#n country+ Before allo1in# such cre*it to the e%"orters the an( ta(es into consi*eration a out the cre*it 1orthiness5 e%"ort "erformance of the e%"orters5 to#ether 1ith all other necessary information re6uire* for sanctionin# the cre*it in accor*ance 1ith the e%istin# rules an* re#ulations+ 'reCshi"ment cre*it is #i0en for the follo1in# "ur"osesC a+ 2ash for local "rocurement an* meetin# relate* e%"enses+ + 'rocurin# an* "rocessin# of #oo*s for e%"ort+ c+ 'ac(in# an* trans"ortin# of #oo*s for e%"ort+ *+ 'ayment of insurance "remium+ e+ !ns"ection fees+ f+ Frei#ht char#es etc+

,3

9n e%"orter can o tain cre*it facilities a#ainst lien on the irre0oca le5 confirme* an* unrestricte* e%"ort letter of cre*it in form of the follo1in#sC+ a+ &%"ort cash cre*it ,Ey"othecation. + &%"ort cash cre*it ,'le*#e. c+ &%"ort cash cre*it a#ainst trust recei"t+ *+ 'ac(in# cre*it+ e+ Bac( to ac( letter of cre*it+ f+ 2re*it a#ainst Re*Cclause letter of cre*it+

,/6 P2P07A# F2#M 2F P#E 15%PME4T C#E&%T:

,/6/( Pac+ing Credit:
'ac(in# 2re*it is essentially a shortCterm a*0ance #rante* y a Ban( to an e%"orter for assistin# him to uy5 "rocess5 manufacture5 "ac(s an* shi"s the #oo*s+ -enerally for mo0ement of #oo*s from the hinterlan* areas to the "ots of shi"ment the Ban(s "ro0i*e interim facilities y 1ay of "ac(in# cre*it+ This ty"e of cre*it is sanctione* for the transitional "erio* startin# from *is"atch of #oo*s till the ne#otiation of the e%"ort *ocuments+ 'ractically e%ce"t for sin#le transaction5 most of the "reC shi"ment cre*its are allo1e* in the form of limits *uly sanctione* y Ban( in fa0or of re#ular e%"orters for a "articular "erio*+ The *ra1in#s are re6uire* to e a*/uste* fully once 1ithin a "erio* of 3 to I months+ Suitin# to the ree* an* nature of e%"ort5 sometimes an e%"orter may also e allo1e* to a0ail a com ine* 2ash 2re*it an* 'ac(in# 2re*it limit 1ith fi%e* ceilin# on re0ol0in# asis+ But in no case the orro1er 1oul* e allo1e* to e%cee* in*i0i*ual cre*it limit fi%e* for the "ur"ose+ The *ra1in#s un*er &%"ort 2ash 2re*it limits are #enerally a*/uste* y the *ra1in# in "ac(in# cre*it limit5 1hich is5 in turn li6ui*ate* y the ne#otiation of e%"ort *ocuments+

,/6/2 Charge &ocuments or P/C:

Ban(er shoul* o tain the follo1in# char#e *ocuments *uly stam"e* "rior to *is ursement:

,.

Deman* 'romissory Note )etter of 9rran#ement )etter of )ien of 'ac(in# 2re*it ,=n s"ecial a*hesi0e stam". )etter of Dis ursement 'ac(in# 2re*it )etter

5.6.3 Additional Documents for P.C.

)etter of 'artnershi" alon# 1ith Re#istere* 'artnershi" Dee* in case of 'artnershi" 9ccounts+
esol&tion of the Board of +irectors along 'ith ,e"orand&" # -rticles of association in case of -cco&nts of .i"ited Co"panies. In case of Corporation/ ,eeting along 'ith Charter. *ersonal 0&arantee of all the *artners in case of *artnership -cco&nts and all the +irectors in case of .i"ited Co"panies. -n &nderta1ing fro" the +irectors of the *&(lic .i"ited Co"pany to o(tain prior clearance fro" the Ban1 (efore declaring any intend2final dividend. esol&tion of the Board

5.6.4

Back to Back Letter of Credit B!BL"C#$

Bangladesh is a developing co&ntry. -fter receiving order fro" the i"porter/ very fre%&ently exporters face pro(le"s of scarcity of ra' "aterial. Beca&se/ so"e ra' "aterials are not availa(le in the co&ntry. $hese have to (e collected fro" a(road. In that case/ exporter gives lien of export .2C to (an1 as sec&rity and opens an .2C against it for i"porting ra' "aterials. $his .2C is called Bac1 $o Bac1 .2C. In (ac1 to (ac1 .2C/ *B. 1eeps no "argin. 3o"eti"es there is provision in the export .2C that the i"porter can &se the certain portion of the export .2C a"o&nt for i"porting accessories that are necessary for the "a1ing of the prod&ct. 4nly in that case/ B$B is opened. 5.6.5 Pa%ment of Back to Back LC$

,,

Client gives the pay"ent of the B$B .2C after receiving the pay"ent fro" the i"porters. B&t in so"e cases/ client sells the (ills to the *B.. B&t if there is discrepancy/ the *B. sends it for collection. In case of B$B .2C/ *B. gives the pay"ent to the (eneficiary after receiving the pay"ent fro" the finished prod&ct (i.e. exporter!. Ban1 gives the pay"ent fro" +5C -cco&nt (+eposit 5oreign C&rrency -cco&nt! 'here +ollar is deposited in national rate. 5or B$B .2C/ opener has to pay interest at .IB4 0enerally .IB4 rate fl&ct&ates fro" 6% to 7%. rate (.ondon Inter Ban1 4ffering ate!.

- sched&le na"ed *ay"ent 4rder8 5or'arding 3ched&le is prepared 'hile "a1ing the pay"ent. $his sched&le contains the follo'ings9 eference n&"(er of the (eneficiary:s (an1 and date. Beneficiary:s na"e. Bill val&e. *ay"ent order n&"(er and date. E%&ivalent a"o&nt in $a1a.

,/6/6 Entitlement o BTB 7C as per %mport Polic" 2rder 2))6 N 2))* BTB )2 entitlement of #arments items are assesse* on the asis of 0alue a**ition to e ma*e *e"en*in# on the cate#ory of #arments in line 1ith the im"ort "olicy in or*er5 1hich are as un*er: <nit -arments ?o0en -arments , Non 7uota. ?o0en -arments ,7uota. e%"orta le #oo*s u" to USU+40GD4 Ei#h 0alue -arments , Non 7uota. : ;alue a**ition at least 10H for F=B 0alue of e%"orta le #oo*s at least USU+I0GD4 Ei#h 0alue -arments ,7uota. e%"orta le #oo*s at least USU+I0GD4 : ;alue a**ition at least 1BH for F=B 0alue of : ;alue a**ition at least 20H : ;alue a**ition at least 20H : ;alue a**ition at least 20H for F=B 0alue of

,6

2/ Post 1hipment Credit: This ty"e of cre*it refers to the cre*it facilities e%ten*e* to the e%"orters y the an(s after shi"ment of the #oo*s a#ainst e%"ort *ocuments+ Necessity for such cre*it arises as the e%"orter cannot affor* to 1ait for a lon# time for 1ithout "ayin# manufacturersGsu""liers+ Before e%ten*in# such cre*it5 it is necessary on the "art of an(s to loo( into carefully the financial soun*ness of e%"orters an* uyers as 1ell as other rele0ant *ocuments connecte* 1ith the e%"ort in accor*ance 1ith the rules an* re#ulations in force+ Ban(s in our country e%ten* "ost shi"ment cre*it to the e%"orters throu#hC+ Ne#otiation of *ocuments un*er )G2 Forei#n Documentary Bill 'urchase ,FDB'.C+ 9*0ances a#ainst &%"ort Bills surren*ere* for collectionL 4egotiation o documents under 7GC: The e%"orter "resents the relati0e *ocuments to the ne#otiatin# an( after the shi"ment of the #oo*sL a sli#ht *e0iation of the *ocuments from those s"ecifie* in the )G2 may raise an e%cuse to the issuin# an( to refuse the reim ursement of the "ayment alrea*y ma*e y the ne#otiatin# an(+ So the ne#otiatin# an( must e careful "rom"t5 systematic an* in*ifferent 1hile scrutini4in# the *ocuments relatin# to the e%"ort+

Foreign &ocumentar" Bill Purchase 6F&BP8: Some clients of the an( al1ays en/oy cre*it facilities a#ainst their e%"ort *ocuments+ They su mit the ill of e%"ort to an( for collection an* "ayment of the BTB U2+ !n that case5 an( "urchases the ill an* collects the money from the e%"orter+ 'B) su tracts the amount of ill from BTB an* #i0es the rest amount to the client in cash or y cre*itin# his account or y the "ay or*er+

,A

For this "ur"ose5 'B) maintains a se"arate re#ister name* FDB' Re#ister+ contains the follo1in# information: Date Reference num er ,FDB'. Name of the *ra1er Name of the collectin# an( 2on0ersion rate Bill amount oth in fi#ure J in Ta(a+ &%"ort form num er &%"ort )G2 num er

This re#ister

Ad=ances against Export Bills surrendered or collection: Ban(s #enerally acce"t ills for collection of "rocee*s 1hen they are not *ra1n un*er an )G2 or 1hen the *ocuments5 e0en thou#h *ra1n a#ainst an )G2 contain some *iscre"ancies+ The an( #enerally ne#otiates ills *ra1n un*er )G25 1ithout any *iscre"ancy in the *ocuments5 an* the e%"orter #ets the money from the an( imme*iately+ Eo1e0er5 if the ill is not eli#i le for ne#otiation5 the e%"orter may o tain a*0ance from the an( a#ainst the security of e%"ort ill+ !n a**ition to the e%"ort ill5 an(s may as( for collateral security li(e a #uarantee y a thir* "arty an* e6uita leGre#istere* mort#a#e of "ro"erty+

,/A CE#T%F%CAT%24 2F ECP F2#M B< A0T52#%EE& &EA7E#:

Before lo*#in# the &S' Forms 1ith the customsG 'ostal authorities5 the e%"orter shoul* #et co"ies of forms certifie* y an 9D+ No1 the 9D 1ill see an* ensure that each set of the forms is *uly fille* in+ Thereafter5 they 1ill recor* full "articulars of the in the &%"ort Re#ister+ !n or*er

,B

to a0oi* any loss of forei#n e%chan#e to the country5 9D shall not certify any &S' form unless they ha0e satisfie* the follo1in#: %/ %%/ %%%/ 9rran#ements ma*e for reali4ation of e%"ort "rocee*s 1ithin the "rescri e* "erio*+ The &%" form is either si#ne* either y the e%"orter or one hol*in# 0ali* le#al "o1er of attorney from the e%"orter+ For *elay in re"atriation of e%"ort "rocee*s the e%"orter as 1ell as the 9D an* its officials certifyin# the e%"ort form ren*er themsel0es lia le to "uniti0e action un*er the F&R act+ Therefore in their o1n interest oth e%"orters an* the 9*s shoul* e alert an* acti0e in ensurin# timely re"atriation of e%"ort "rocee*s+

,/B

MA>%43

20T

A4&

&E7%;E#<

2F

15%PP%43

&2C0ME4T1:
!n case of e%"ort of #oo*s5 full "ayment for 1hich the 0alue has een recei0e* y the e%"orter in a*0ance throu#h the 9D5 the ill of la*in# an* other *ocuments may e en*orse* y the 9D in fa0or of forei#n im"orters an* the same may e sent *irectly to the im"orters a roa* y the 9D Sometimes the shi""in# *ocuments may reach after the arri0al of the e%"orte* #oo*s to the im"orter3s country+ This cause incon0eniences an* in0ol0es "ayment of *emurra#e+ at the "ort of *estination *ue to *elay in recei"t of the shi""in# *ocuments+ To o0ercome this "ro lem5 shi""in# com"any may at the re6uest of ne#otiatin# an( in Ban#la*esh issue Tele#ra"hic Deli0ery =r*er on their a#ents+ 9 co"y of this *ocument *uly authenticate* y the shi""in# com"any or a#ents shoul* e "asse* on to the rele0ant 9D+ The 9D then sen*s his instruction of tele#ra"hic transfer to hi* o0erseas corres"on*ence to han* o0er it to the consi#nee an* statin# the amount of the consi#nee efore the *eli0ery or*er is release*+ The usual shi""in# *ocuments are Bill of )a*in#5 !n0oice etc 1hich can e *is"atche* to the corres"on*ent an( as 1ell+

,/B/( 1u!mitting o &ocuments to the A&

,*

The e%"orter must su mit all the e%" *ocuments to the 9D+ The &S' *ocuments are four in num er+ Ban( only 1or(s 1ith the three co"ies+ The co"ies are : (+ 2/ 3/ ./ $riginal: %uplicate: Triplicate: Retaine* y customs an* for1ar* to Ban#la*esh an(+ Su mit to Ban#la*esh an( 1ith 14 *ays of shi"ment throu#h 9D alon# 1ith in0oice+ Su mit to the Ban#la*esh an( after reali4e the e%"ort "rocee*s 1ith the usual monthly returns+ &uadruplicate: 2o"y retaine* y 9D for recor*+

,/*

1C#0T%4< 2F &2C0ME4T1:

The authori4e* *ealer scrutini4es the *ocuments 0ery carefully+ Because5 they ha0e to re"ort it to the Ban#la*esh Ban( at the inter0al of e0ery fifteen *ays in a month+ The follo1in# "rocess is *one y the authori4e* *ealer for scrutiny of the *ocuments+ =n recei"t of the &S' form an* *ocuments co0erin# e%"orts the 9D com"ares the authori4e* si#nature 1ith the s"ecimen si#nature of the *uly authori4e* officer of the shi""in# com"any to ensure the #enuineness of the *ocuments+ The 9D shoul* also com"are the relati0e ill an* Gor *ocuments 1ith the relati0e form an* satisfy itself that the *eclaration ma*e on the form is correct an* the amount for 1hich the ill is *ra1n or the in0oice is 1ritten is not less than the in0oice 0alue state* on the form+ !f the *ifference et1een the 0alue state* on the form an* the amount of the ill is small the 9D may acce"t ill G*ocuments for collection+ The *etails of such a*/ustment must e #i0en on the relati0e form an* must e authenticate* y the 9D un*er its stam" an* si#nature+ 9fter ne#otiation of the ill or acce"tance of the *ocuments for collection5 the 9Ds shoul* com"lete the certificates in this ehalf on the s"ace "ro0i*e* on the *u"licate co"ies of the &S' form+ !f the "ayment is recei0e* in forei#n currency or nonresi*ent ta(a account of a an( ranch corres"on*ent a roa* the 9*s shall certify on the re0erse of the tri"licate co"y of

6)

the form retaine* 1ith them an* for1ar* it to Ban#la*esh Ban( 1ith the usual return+ The 6ua*ru"licate 1ill e retaine* y the 9D for recor*+

,/() &E&0CT%24 2F C5A#3E1:

2ommissions5 ro(era#e or other tra*e char#es *ue to e "ai* to forei#n im"orters or a#ents y the e%"orters in Ban#la*esh relatin# to the "articular shi"ment may e *e*ucte* from the relati0e ill or the amount of the sale "rocee*s or remitte* from Ban#la*esh after the full "rocee*s ha0e een reali4e* only u" to a ma%imum of BH y *e*uction from the in0oice 0alue of the #oo*s+ !f the rate e%cee*s then s"ecial or*er must ha0e to e #rante* from Ban#la*esh Ban( 1ith some con*ition+

,/(( F2#E%34 C0##EC< ECC5A43E M02TA: 6FCE#M8

#ETE4T%24

Forei#n &%chan#e retention 6uota is a system 1here authori4e* *ealer retaine* a certain "ercenta#es of the total e%"orte* or ille* amount for meetin# u" the emer#ency nee* of the customers+ 8erchan*ise e%"orters are entitle* to a forei#n e%chan#e retention 6uota of 40H of re"atriate* 0alue F+=+B 0alue of their e%"orts+ Forei#n e%chan#e out of the retention 6uota may e maintaine* in F2 accounts 1ith the concerne* 9*s in US Dollar5 'oun* Sterlin#5 Deutschemar( or Ja"anese Pen u"on the reali4ation of the e%"ort "rocee*s+ Balances in these accounts may e%"orters for onafi*e "ur"oses+ The "ur"ose may e the follo1in#: o Business ;isits 9 roa*+ o 'artici"ation in &%"ort Fairs an* Seminars5 o &sta lishment an* maintenance of offices a roa*+ o !m"ort of ra1 materials+ o 8achineries J S"ares etc+ e use* y the

6(

But Forei#n &%chan#e from the e%"orter3s retention 6uota cannot e use* for in0estment a roa* y the e%"orter+ Forei#n &%chan#e out of e%"orter3s retention 6uota may also e (e"t as interest earin# rene1a le term *e"osits 1ith the concerne* 9*s in Ban#la*esh in US *ollar5 'oun* Sterlin#5 D8 or Ja"anese Pen5 1ith minimum alances of USU 20005 or1B00 'oun* or e6ui0alent+ ,/((/( T#EATME4T 2F FCE#M AT P#%ME BA4> 7T&: 'rime Ban( )t*+5 -ulshan Branch maintains *ifferent amount in e%"ort retention 6uota ase* on the ne#otiation 1ith the customers or sometimes the *e"artment hea* assume* a "articular amount or the full amount that are transferre* to the e%"ort retention 6uota+ The an( maintains its recor* re#ar*in# the ill amount an* the reali4e* amount in the 8aster )G2 file+ !n that file a se"arate column is create* name* F2&R7+ 9fter reali4ation of e%"ort "rocee*s a "articular amount is transferre*5 1hich may e state* in &%"ort 'rocee* Reali4ation Sheet or may e ne#otiate* y the customers later+

,/(2 15%PME4T 24 F/2/B/ TE#M1:

-enerally #oo*s are e%"orte* on F+=+B terms to the e%"orter3s country+ !t means that uyers "ay the carria#e 1hen #oo*s "ass the shi"+ The 9D shoul* 0erify that the ills of la*in# frei#ht has not een "re"ai* in Ban#la*esh+ 9ll cases 1here fri#ht or insurance has een "ai* in Ban#la*esh ut e%"ort *ocuments are ma*e out on F=B asis shoul* e re"orte* to the Ban#la*esh Ban(+

,/(3 152#T 15%PME4T1 2# 2;E# 15%PME4T1:

!f the amount of ill 0alue an* !n0oice 0alue *iffers5 at that time shortGo0er shi"ment arises+ !f the in0oice 0alue is #reater than ill 0alue then o0er shi"ment arises an* if it re0erses then Short shi"ment arises+ The reason may e: The *iffer of 6uantity shi""e* than ori#inal amount ut the rate may e same+

62

 The total "rice of the #oo*s may e increase* or *ecrease*+ !n all cases of short shi"ments5 the e%"orters shoul* #i0e notice of short shi"ment on the "rescri e* form in *u"licate to the 2ustoms 1ho 1ill for1ar* a certifie* co"y of the notice to the Ban#la*esh Ban(+ The notice shoul* ear the num er an* *ate of the relati0e &S' form in res"ect of 1hich #oo*s ha0e een short shi""e*+ ,/(3/( T#EATME4T 2F 152#T 15%PME4T AT P#%ME BA4> 7T&: 'rime Ban( at first chec(s the *ifference et1een Bill ;alue an* !n0oice 0alue+ !f *ifference arises then the an( attaches the certificate 1ith *u"licate as 1ell as at tri"licate after "rocee*s reali4ation an* then re"orts it to the Ban#la*esh Ban(+

,/(. 72&3EME4T 2F F&BP:

)o*#ment of FDB' ,Forei#n Documentary Bill 'urchase. is nothin# ut "urchase of )G2 ta(in# the loan facility "ro0i*e* y the a*0isin# or other an( to the e%"orter a#ainst the *ocument an* )G2 (ee"in# them as mort#a#e+ The loan facility is #i0en u" to a certain "ercenta#es of the )G2 ;alue+ !n case of 'urchase of the )G2 y the a*0isin# an( or other ne#otiatin# an( the an( 1ill (ee" a si#ne* co"y of #uarantee "a"er name* $Set of 2har#e* Documents+> This "ro0i*es #uarantee that the si#ne* "erson on that 1ill e lia le for amount mentione* in )G2 1ith maturity 1ith *ue care an* *ili#ence+ This is only re6uirement for the 0alue* client in certain case+ For safety the an( may see( for other necessary *ocuments 1hich must e su""orte* y the e%"orter+ !n this case *ifferent collateral has also een ta(en as for security+ 'rime Ban( )t* in case of all the a""lication of re#ar*in# FDB' uses Temenous -lo us ,T24.5 1hich5 "urchases an* recei0es the ill at fully automatic system+

,/(, ;E#%F%CAT%24 2F P#2CEE& #EA7%EAT%24 CE#T%F%CATE: 6P#C8

Sometimes e%"orters are re6uire* to su mit to the 0arious -o0ernment a#encies e0i*ence of e%"ort an* of reali4ation of e%"ort "rocee*s+ !n such cases5 'rocee*s Reali4ation 2ertificate may

63

e issue* y the 9Ds in the "rescri e* form after #ettin# them authenticate* y the Ban#la*esh Ban(+ 'rime Ban( )t* at the last "hase of its *ocumentary 1or(5 2hec( the 'R2 from its recor* of 7ua*ru"licate &S' form 0ery carefully an* ma(e necessary amen*ment+ 9fter that necessary amen*ment it su mits the certificate to the Ban#la*esh Ban(+ !n this 1ay all the *ocumentary 1or( relate* )etter of 2re*it is com"lete*

,/(6 ECP2#T P2#TF27%2 2F P#%ME BA4> 7T&/

&%"ort 'ortfolio consists of the items e%"orte*5 the 0alue of e%"ort ills that 'rime Ban( #ets from issuin# an(s from forei#n countries as 1ell as Ban#la*esh+ ;arious sorts of commo*ities are e%"orte* a roa* throu#h 'rime Ban( )t*+ But Rea*yma*e -arments consist of most of the forei#n e%"orts+ =ther e%"orte* items are shrim"5 /ute an* /ute #oo*s5 leather to acco5 ceramic tiles5 fresh 0e#eta les5 tem"ere* coate* #lass5 one crust5 etelC nut etc+ There are t1o mo*es of e%"ort "ayments that are "ractice* in forei#n tra*e 1orl*1i*e+ They are 1+ 1ight Bill: !n this ill the e%"orters are "ai* at si#ht for the "ro*ucts they /ust e%"orte*+ 2+ 0sance Bill: !n this ill the e%"orter #ets "ayment after a certain "erio* of time *e"en*in# on the )G2 terms an* con*ition+ This ill is usually for ra1 materials or semi finishe* "ro*ucts that are e%"orte* from Ban#la*esh an* once the #oo*s reach in final *estination they are em"loye* for further "rocessin#+ From the ta le 1e can reali4e the actual scenario a out the 0alues of e%"ort ills for the year 200I J 200@ ,1ee Appendix E page no: 8 Foreign Export: !n the ranch forei#n e%"ort acti0ities "lay a 0ital role in the e%"ort *i0ision+ 9 out A,O of the total e%"ort comes from this section+ 9t this ranch ma/ority of the forei#n e%"orts are $Rea*y ma*e #arments+> 7ocal Export: )ocal e%"ort in*icates that #oo*s are e%"orte* 1ithin the oun*aries of Ban#la*esh+ )ocal e%"orts consist 2,O of the total e%"ort as it is not 0ery common "ractice

6.

in Ban#la*esh+ $Parn an* 9ccessories> are the main commo*ities of the local e%"ort at this ranch+

Chapter -06
Foreign #emittance 1ection o Prime Ban+ 7td/
The functions of this *e"artment are out1ar* an* in1ar* remittances of forei#n e%chan#e from one country to another country+ !n this "rocess of "ro0i*in# this remittance ser0ice5 it sells an* uys forei#n currency+

6/( Modes o Foreign #emittances:

The remittance "rocess in0ol0es the follo1in# four mo*es:

Cash #emittance:

The an( sells *ollarG"oun* for usin# the a roa* y "urchaser+ The ma%imum amount of such sell is mentione* in the Ban#la*esh an( "u lication of K2on0erti ility of Ta(a for current transactions !n Ban#la*eshK+ They can "urchase *ollar from resi*ent an* nonresi*ent Ban#la*eshi or forei#ner+ 8ost *ollars "urchase* cones from reali4ation of &%"ort Bill of &%chan#e+

Tra=elerPs CheQue:

Tra0elerFs che6ues are useful to "ersons5 1ho fre6uently tra0ele* a roa* this an( issue Tra0elerFs che6ue of 98&S+ 2ustomers can enCcash the T2 in a roa* from the *ra1er3s an(+ 2ustomers uy T2 for use in a roa*+ But some lea0e may e remaine* unuse*+ The customer can surren*er these unuse* lea0es a#ainst "ayment of e6ui0alent amount+ -enerally it ta(es 21 *ays for collection of T2 an* customers can *ra1 cash after one month+

Telex Trans er:

6,

Ban( also remit fun* y teste* tele#ra"hic massa#e 0ia its forei#n corres"on*ence an( in 1hich it is maintainin# its N=STR= account+ !n the same manner5 it ma(es "ayment accor*in# to tele#ra"hic massa#es of its forei#n corres"on*ence an( from the corres"on*in# ;=STR= account+

Foreign &emand &ra t:

Ban( issues *eman* *raft in fa0or of "urchaser or any other accor*in# to instruction of "urchaser+ The "ayee can collect it forC the *ra1er an( is 1hich the issuin# an( of *eman* *raft hol*s it N=STR= account+ Ban( also ma(es "ayment on DD *ra1n on this an( y its forei#n corres"on*ence an( throu#h the ;=STR= account+

6/2 1CE4A#%2 2F F2#E%34 #EM%TTA4CE 2F P#%ME BA4> 7T&:

'rime Ban( )t* maintains strate#ic initiati0e to han*le this *e"artment+ The an( has alrea*y a**e* a #oo* num er rural an* semi ur an ranches 1ith the e%istin# net1or( to ensure 1i*er reach an* co0era#e+

For "urchase of forei#n currency throu#h 'rime Ban( )imite*5 an a""lication must e ma*e to a s"ecific 9D ranch an* Ban#la*esh Ban(+ The a""lication form is calle* !8' ,. form if the "ur"ose is im"ort "ayments or for other "ur"oses5 the T8 Form is use* such as re6uest for forei#n currency in case of *ollar+ T+2 ,Tra0eler che6ue. Forei#n Deman* Draft ,F+D+D.5 Tele#ra"hic Transfer ,T+T.+etc5 !f the an( is em"o1ere* to a""ro0e the a""lication5 it affects the sale of forei#n e%chan#e+ 9n* if the transaction re6uires "rior 9""ro0al from Ban#la*esh Ban(5 the T+8 form is for1ar*e* to Ban#la*esh an(+ !n 'rime Ban(5 ,the mo*e of remittances are an( *raft5 mail transfer an* ta(a remittances+

In'ard #emittances: !n1ar* Remittances inclu*e the TT5 FDD5 "urchase of ills an* *rafts un*er )G25 "urchase of forei#n currency5 etc+ But the most si#nificant amount in

66

the in1ar* remittances of 'rime Ban( )imite* is the remittances from 1a#e earners+ The an( maintains "ro"er recor*s of ail in1ar* remittances an* "ro0i*es "articulars as re6uire* y the &%chan#e 'olicy De"artment of Ban#la*esh Ban( in Returns+

$ut'ard #emittances: The out1ar* remittances inclu*e 8+T5 Draft5 sale of Forei#n &%chan#e un*er )G2 an* a#ainst !m"ort Bills5 etc +To facilitate forei#n e%chan#e transaction5 an* each an( maintains accounts 1ith forei#n an(s in "rinci"al financial centers+ 'rime Ban( also ha0e N=STR= 9ccounts for *ollar "ayments an* other currency accounts for "ayment in currencies li(e "oun*5 yen5 ru"ee 5 etc5 The Ban( has a list of forei#n corres"on*ents an* arran#ements 1ith their a#encies in Ban#la*esh+ ?hen *eci*in# 1hich corres"on*ent ,reim ursin# an( in case of im"ort. is to e chosen for "ayment5 the list is use*+

6/2/( 1ome Measures o %mpro=ing this department per ormances (/ 'rime Ban( )t*+ has arran#e* 24 ,t1enty four hours lea*in# e%chan#e com"anies an* an(s inclu*in# the #lo al money transfer #iant ?estern Union as a "rinci"al a#ent+ 2/ &sta lishes 1i*e 0ariety of ranches from 1here remittance flo1 may e recei0e* easily+ 3+ !ntro*uction of 9T8 as the alternate *eli0ery channel increase in the num er of remittance arran#ements 1ith lea*in# o0erseas e%chan#e com"anies an* an(s+ ./The Ban(3s fully o1ne* e%chan#e com"any in Sin#a"ore ha0e ensure* sustain inflo1 of forei#n remittances su""lementin# e%"ort recei"ts ma(in# im"ort "ayment 1ithout *e"en*in# on the 0olatile forei#n e%chan#e mar(et+ From the follo1in# *ia#rams 1e can easily i*entify the "ie chart *ictates the Countr" -ise %n lo- #emittances rom :anuar" to &ecem!er 2))A an* a line *ia#ram *ictates that %n loo oreign remittance trend 62))3-2))A8

6A

61ee Apendix F L Appendix-38 From the 'ie 2hart5 1e can see that most inflo1 of remittance comes from the U9& ecause 1e su""ly man"o1er at 0ast si4e in the 8i**le &ast 1hich is 2*O an* the ne%t hi#hest remittance comes from U< ,&uro"ian 2ountry. 1hich is 23H+ !n the )ine Dia#ram5 1e see the remittance /um"s from 36BB to (,),) at the year 2)),-2))65 1hich is 0ery much "ositi0e of our economy+ But 1e see stea*y #ro1th from the year 2))6-2))A as o0erall financial recession is #oin# on all o0er the 1orl*+

#ecent Per ormance o Prime Ban+ 7td at Foreign Trade

Ban#la*esh is an un*er*e0elo"e* country+ !ts financial structure is still not soun*+ !t *e"en*s many also many *onor a#encies li(e !8F5 ?orl* Ban( an* so on+ So this is a !m"ort oriente* country+ Thou#h facilities of *ifferent e%"ort incenti0es are #ettin# a0aila le ut the alance of tra*e is al1ays is in ne#ati0e si*e+ 9s a result our national reser0e is in shortfall situation+ Thou#h this "osition in financial sector *ifferent an(s are *oin# 1ell in ser0in# oth the im"orters an* e%"orters as 1ell+ They are no1 a le to such con*ition 1hich is etter con#enial en0ironment to the !m"ort J &%"ort usiness+ 'rime Ban( lt* is one of those an(s 1hose "erformance in this area is satisfactory+ From the financial *ata 200@ ,as 200D is not a0aila le to the 'u lic. Total im"ort an* e%"ort usiness transacte* 1ere T< @05I1I million an* T( B1531I million res"ecti0ely+ The #ro1th rate of the im"ort usiness is 34H+ =n the other han* the #ro1th rate of e%"ort is 23H+ The #ro1th of forei#n tra*e has #i0en the an( a ne1 *imension to #o for1ar*+ This #ro1th rate is 0ery much effecti0e in meetin# the )G2 commitments+ The &%"ort an* !m"ort Business are contri ute* y its cor"orate clients =n the remittance si*e there is also a si#n of increasin# #ro1th rate+ 9s the 1orl* is facin# at se0ere financial crisis the #ro1th of the o0erall remittance 1ill e a milestone to the an(in# in*ustry+ Forei#n 2urrency Balances 1ith an(s outsi*e the country maintainin# N=STR= accounts are also accelerate* 1ith the an(3s efficient mana#ement "olicy+

6B

From the ta le an* the ar *ia#ram it is 0ery e0i*ent that in forei#n tra*e it "ro0es the most efficient "erformance e0er+ 9ccor*in# to an official Pear 200D 1ill e an another milestone re#ar*in# its o0erall "erformance es"ecially in forei#n tra*e+ The o0erall "erformance re#ar*in# forei#n tra*e o"eration from the year 2003C200@ are "lace* in the ta le+ 61ee Appendix-5 page: 8

A/( 1ome %ncoterms used in Foreign Trade :

01 + 02 + 03 + 04 + 0B + 0I + 0@ + 0D + 0A + 10 + 11 + 12 + 13 + ECH FCA FA1 F2B CF# C%F CPT C%P &AF &E1 &EM &&0 &&P : : : &S 1or(s Free 2arrier Free 9lon#si*e shi" Free on Boar* 2ost an* Frei#ht 2ost5 !nsurance an* Frei#ht 2arria#e 'ai* to 2arria#e an* insurance "ai* Deli0ere* at Frontier Deli0ere* &S Shi" Deli0er &% 7uay Deli0ery *uty Un"ai* Deli0ery *uty "ai* Buyer arran#es carria#e from seller3s "remises+ Ris(s n 2ost transfers to uyer+ Buyer arran#es carria#e at name* "lace+ Ris(s n 2ost transfers to uyer+ Buyer arran#es carria#e from alon#si*e shi"+ Ris(s n 2ost transfers 1hen #oo*s "lace* alon#si*e shi"+ Buyer arran#es carria#e+ Ris(s n 2ost transfers 1hen #oo*s "ass shi"+ Seller arran#es carria#e+ Ris( transfer 1hen #oo*s "ass shi"+ 2ost transfer at *estination "ort Seller arran#es 2arria#e an* !nsurance+ Ris( an* cost transfer at *estination "ort Seller arran#es carria#e+ Ris( transfer 1hen #oo*s *eli0ere* shi"+ 2ost transfer at *estination "ort+ Seller arran#es 2arria#e an* !nsurance+ Ris( an* cost transfer at *estination "ort Seller arran#es 2arria#e+ Ris( an* cost transfer 1hen #oo*s *eli0ere* at frontier+ Seller arran#es 2arria#e+ Ris( an* cost transfer 1hen #oo*s at uyer3s *is"osal on shi"+ Seller arran#es 2arria#e+ Ris( an* cost transfer 1hen #oo*s at uyer3s *is"osal on 6uay+ Seller arran#es 2arria#e+ Ris( an* cost transfer 1hen #oo*s at uyer3s *is"osal Seller arran#es 2arria#e an* Duty+ Ris( an* cost transfer 1hen #oo*s at uyer3s

6*

*is"osal+

#eccomendation
Thou#h 'rime Ban( is "ro0i*in# a 0ery efficient Forei#n &%chan#e ser0ices5 there is also room for im"ro0ement to "ro0i*e their ser0ices e0en etter an* of international stan*ar*s+ Some recommen*ations that the Ban( may enefit from are #i0en elo1:

0pgrade the 2nline Ban+ing 1er=ices 'rime Ban( is amon# the fe1 an(s in Ban#la*esh5 1hich "ro0i*es the online an(in# ser0ices to its customers+ By usin# the mo*ern an(in# ser0ices5 a 'rime Ban( customer can 1ith*ra1 or *e"osit an amount of cash un*er the 'rime Ban( account no matter in 1hich ranch the actual account e%ist+ This ser0ice #i0es its customer hu#e fle%i ility+ Eo1e0er5 there is sonic lea(in# in Qheir online un(in# ser0ices+ 'B) shoul* "ay attention to this issue+

Automation 'rime Ban( has alrea*y rou#ht soft1are calle* Temenos 3lo!us an* 2racle s"eciali4e* for ,!m"ort an* &%"ort )etter of 2re*it entry. famous core an(in# soft1are5 1hich is no1 ein# im"lemente* to all of its ranches+ Eo1e0er5 the em"loyees are still stru##lin# to con*uct forei#n e%chan#e ser0ices throu#h this soft1are ecause of its com"le%ity+ 9s a result5 0alua le time an* ener#y are ein# 1aste* 1hile con*uction such forei#n e%chan#e ser0ices+ Some further sim"lification an* mo*ification of this soft1are mi#ht actually hel" the an(ers to 1or( more efficiently in "ro0i*in# international tra*e ser0ices li(e &%"ort5 !m"ort an* Remittance+

%ncrease the num!er o 4ostro Accounts:

A)

Nostro 9ccounts are Forei#n 2urrency accounts that the an(s hol* 1ith forei#n an(s o"eratin# in *ifferent courtiers+ !f they increase the num er of such account then5 "ayments for )G2 coul* e easily ma*e throu#h those accounts rather than for1ar*in# the forei#n currency throu#h other forei#n an(s5 1hich results in hi#her e%"enses+

%ncrease the 7imit on 7GC ;alue &0ery )G2 has limits on its total 0alue5 im"ose* on them accor*in# to the Ban#la*esh Ban(s re#ulations5 an* ase* on the ris( factors+ Eo1e0er5 the Ban( still has the authority to ma(e some chan#es to the limit 1ithin a certain s"ecifie* ran#e+ !f 'rime Ban( ecome more fle%i le5 than it can o"en more )G2Fs 1ith hi#her 0alues thus increasin# their "rofita ilityL ho1e0er in this case there 1ill e more ris(5 *

#educe the #ate o %nterest on 7T# 'ayments for )G2Fs coul* also ma*e throu#h "reCarran#e* cre*it facilities that the customer may ha0e 1ith the Ban(+ Usually5 the rates of interest on these Ccre*its are e%cessi0ely hi#h 1hich actually *iscoura#e the customers+ Re*ucin# interest on such cre*it facilities 1oul* actually in*uce the clients to *o more #lo al tra*e thus increasin# the an(s "rofit as 1ell as the 1ell ein# of the countryFs &conomy+

7GC margin 9 customer is re6uire* to "ay the an( a certain "ercenta#e of the total )G2 0alue in a*0ance efore o"enin# an )G25 1hich is calle* )G2 mar#in+ !f 'rime Ban( )imite* re*uces the rate of mar#in then "erha"s they can attract more customers+ 9t the moment5 com"anies 1ith #oo* relationshi" 1ith the an( only enefits 1ith lo1erCmar#in le0el o0er others+

#educe Charges !n or*er to *o any (in* of forei#n tra*e 1hether e it Remittance5 &%"ort or e0en !m"ort char#es are a""lica le e0ery1here+ 2har#es inclu*es: S?!FT char#es ,2har#e for sen*in# the )G2

A(

electronically.5 Document Ean*lin# 2har#es5 Stam"s 2har#es as 1ell as ;9T+ 'rime Ban( 1ill e a le to attract more customers y re*ucin# these char#es+

Encourage to open smaller 7GC =alue Bein# a 1ell re"ute* Ban(5 'B) no lon#er 1ants to con*uct smaller )G2 re6uest coinin# form S8&Fs+ 9s a result5 they are *isre#ar*in# a hu#e num er of "otential customers+ The an( no1 "ays more attention to i# customers an* if their attitu*e to1ar* smaller usiness *oes not chan#e soon5 they mi#ht fall far ehin* its com"etitor+ Expansion o its 4et-or+ outside &ha+a and Chittagong The an( has not een effecti0e in increasin# the num er of ranches outsi*e Dha(a an* 2hitta#on#+ 8ost of 'rime Ban(Fs raches are tar#ete* at the city "eo"le onlyL they ha0e not concentrate* of the rural "eo"le too much+ ThatFs 1hy the com"any coul* not ca"ture a lar#e "ortion of the mar(et as 1ell as mar(et share+ The authority of the an( nee*s to ta(e this into consi*eration not only for them ut also for the "oor rural "eo"le

B/( C24C701%24

This re"ort is "re"are* ase* on the (no1le*#e an* e%"erience* #athere* 1hile 1or(in# in the 'rime Ban( )t*5 -ulshan Branch+ &0ery "oints an* recommen*ations are ma*e o ser0in# the facts an* fi#ures *urin# my internshi" "ro#ram+ ?or(in# an* #ettin# in0ol0e* in this an( is really a #reat "leasure for me+ 9#ain ! 1ant to than( to all of the officials of the ranch 1ho ha0e #i0en me a""ro"riate o""ortunities to a""ly theoretical (no1le*#e in the "ractical fiel*+

A2

Durin# the internshi" "ro#ram ! 1as assi#ne* to 1or( in the Forei#n &%chan#e De"artment of 'rime Ban( )t* of that ranch+ !n that *i0ision ! es"ecially in0ol0e* to o ser0e the )etter of 2re*it ="eration o"erate* y the im"ort J e%"ort *e"artment+ No matter 1hate0er the challen#es are in the area of Forei#n Tra*e5 the an( is fully e6ui""e* to face any o stacle+ For the last B Pears they ha0e hol* the num er one "osition in the Ban#la*esh Ban(s 298&)3s ratin# an* ho"es to e on to" this year as 1ell+ 9s the economy of Ban#la*esh is s1ellin# an* the im"ortCe%"ort is one of the ma/or sector that "lays im"ortant role in the economy5 'rime Ban( )t* al1ays ha0e "laye* its role in ma(in# a *ifference in the an(in# sector+ The total con*ition of !m"ort an* &%"ort thou#h )G2 is sho1in# a "ositi0e tren* in the last fi0e years+ !t is un*ou te*ly a "ositi0e thou#h the 1orl* is #oin# on a #lo al financial challen#e+ +!f the an( re*uces the mar#in of o"enin# )G2 then it 1ill e a le to attract more customers+ =n the other han* they shoul* ta(e the o""ortunity to o"en the )G2 in smaller amount to encoura#e the S8&s sector+ 9lon# 1ith maintainin# stan*ar* le0el of ser0ices 'rime Ban( is "layin# a lea*in# role in the economic *e0elo"ment of the country+ !ts contri ution to the economy alon# 1ith hi#h le0el of cor"orate social res"onsi ility is "ro0i*in# it a 1ay to mo0e ahea* an* #ro1 faster an* etter than others+

A3

A.