Executive Summary

Imports in Bangladesh increased to 248.37 BDT Billion in August from 225.41 BDT Billion in
July of 2015. Imports in Bangladesh averaged 58.03 BDT Billion from 1976 until 2015, reaching
an all time high of 284.13 BDT Billion in March of 2014 and a record low of 0.57 BDT Billion
in November of 1976. Imports in Bangladesh is reported by the Bangladesh Bank.
Import of goods into Bangladesh is regulated by the Ministry of Commerce in terms of the
Import and Export (Control) Act, 1950; with Import Policy Orders issued biannually, and Public
Notices issued from time to time by the office of the Chief Controller of Imports and Exports
(CCI&E). The instructions contained in given guidelines apply to sales of foreign exchange or
transfers to non-resident taka accounts against import of goods into Bangladesh.

The major import items of the year 2015 is : Capital Machinery, Iron, steel and other base
metals, Staple fiber , Raw cotton , Plastics and rubber articles thereof , Dyeing, tanning etc.
materials, Pharmaceutical products , Chemical, Edible oil , Oil seeds .

Table of Content :
Item No.

Content
Executive Summary
Table Of Content
Introduction

Theoretical Part of Import procedure in Bangladesh:

1

Definition of Import:

1.1

General Provision for Import

1.2
1.2.1

DOCUMENTS USED IN FOREIGN

EXCHANGE
LETTER OF CREDIT (L/C):

1.2.2

BILL OF EXCHANGE

1.2.3

BILL OF LADING

1.3

Import Procedure

1.3.1

Import Registration Certificate

1.3.2

Preliminary Steps for Opening L/C

1.3.3

Application of the client to open the L/C

1.3.4

Permission From Ministry of Commerce:

2.3.5

Presentation of the Documents

1.3.6

Steps Involved in Import procedures

Import L/C Opening procedure in a Bank

2

Import Business

2.1.1

Import L/C opening Procedure

2.1.2

Lodgment of the Documents

2.1.3

Retirement of the Documents

2.1.4

Procedure of Acceptance (Import):

2.1.5

Presentation & examination of shipping

document:

Page No.

2.2

Post-Import financing

2.2.1

Procedure of payments

2.3

Import collection services & Shipping Guarantees

Introduction
Foreign trade operation plays a pivotal role in our country for overall business development. An
Importer have to maintain rules and regulation provided by Bangladesh government to import
product from foreign country.
1

Definition of Import:

Buying of goods & services from foreign countries for sales is considered as import. The person
or organization who import the goods & services from foreign countries is known Importer and
from which goods & services are imported is known as Exporter. In case of Import, the importers
are asked by their Exporters to open a Letter of Credit (L/C). So that there payment against
goods & services is ensured.
1.1 General Provision for Import
Regulation of Import Import of goods under this order shall be regulated as under:
Banned list: Banned goods are not allowed to import through the foreign exchange
transaction. Such as Live Swine, Eggs of shrimps and prawns etc.
Restricted list: Any item, which is restricted by the Import Policy Order 1997-2002 in
Annexure 1(b) shall be importable only on fulfillment of the conditions (b) specified therein
against the item.
Free Importable Items: The items which are not included either in the Banned list or
Restricted list shall be freely importable:
In addition to the conditions mentioned in the Restricted and Banned Lists the
conditions restrictions and procedures for import of various items mentioned in the test portion
of this Order, shall as usual apply in case of import of those items.
Types of Importer
Goods are imported for personal use, commercial or industrial purpose. So there are three kinds
of importer such as:
Personal Importer.
Commercial Importer.
Industrial Importer.
1.2 DOCUMENTS USED IN FOREIGN EXCHANGE

1.2.1 LETTER OF CREDIT (L/C):

Letter of Credit (L/C) is a payment guarantee to the seller by the issuing bank on behalf of the
importer. In other words, it is a letter of the Issuing Bank to the beneficiary undertaking to effect
payment under some agreed conditions. L/C is called documentary Letter of Credit, because the
undertaking of the Issuing Bank is subject to presentation of some specified documents. Through
the L/C Buyers & Sellers enter into a contract for buying and selling goods/ services and the
buyer instructs his bank to issue L/C in favor of the seller. Here bank assumes fiduciary function
between the buyer and seller.
1.2.2 BILL OF EXCHANGE
A Bill of Exchange is an instrument in writing, containing an unconditional order, signed by the
maker, directing a certain person to pay on demand or on fixed or determinable future time a
certain sum of money only to or to the order of a certain person or to the bearer of the
instrument. From the definition - we get the features of bill of exchange. In generally there are
three parties like- Drawer: The person who prepare the bill; Drawee: The person who is ordered
for the payment in future specified time; Payee: The person who is the amount of bill receiver as
per the order of the drawer to the drawee.
1.2.3 BILL OF LADING
A bill of lading is a document that is usually stipulated in a credit when the goods are dispatched
by sea. It is evidence of a contract of carriage, is a receipt for the goods, and is a document of
title to the goods. It also constitutes a document that is, or may be, needed to support an
insurance claim. The detail on the bill of lading should include:
A description of the goods in general terms not inconsistent with that in the credit.
Identifying marks & numbers (if any).
The name of the carrying vessel.
Evidence that the goods have been loaded on broad.
The ports of shipment & discharge.
The names of shipper, consignee and name & address of notifying party.
The number of original bills of lading issued.
The date of issuance.
A bill of lading specifically stating that goods are loaded for ultimate destination specifically
mentioned in the credit.
1.3 Import Procedure
To import a person should be an importer. In accordance with Import & Export Control Act,
1950 the office of chief Controller of Import & Export provides the registration to the importer.
After getting this person has to secure a letter of credit authorization from Bangladesh Bank.
Then he becomes a qualified importer; He is the person who requests or instructs the opening
bank to open an L/C. He is also called opener or applicant of the Letter of Credit.
1.3.1

Import Registration Certificate

Import Registration Certificates are issued by the office of chief controller of imports and
exports. Intending importers are to submit applications to CCI & for registration along with
required documents are as follows:
Application
Trade License
Nationality Certificate
Income tax certificate along with TIN
Bank Certificate
Membership certificate from Trade Association Certificate of incorporation, Article and
Memorandum of Association. Partnership Deed for partnership firm.
1.3.2 Preliminary Steps for Opening L/C
Before opening the L/C Bank will takes the subsequent steps:
Applicant to be Banks A/C Holder: Bank will open the L/C on behalf of an entity who
has an account with the Bank. Unknown person will not be allowed to open L/C.
Registered importer: Before opening the L/C bank must confirm that the L/C applicant
is a registered importer or personal user, and the IRC of the importer has been renewed for the
current year.
Permissible item: The item to be imported must be permissible and not banned item. If
the item is from conditional list, the condition must fulfill to import the same.
Market Report: Bank will verify the marketability of the item & market price of the
goods. Sometimes the importer may misappropriate the Banks money through over invoicing.
Sufficient Security or margin: Price of some items fluctuates frequently. In case of
those items Bank will be more careful to take sufficient cash margin or other security.
Business Establishment: Bank should not open an L/C on behalf of a floating
businessman. The importer must have business establishment, particularly he must have business
network for marketing the item to be imported.
Restricted Country: Goods not to be imported from Israil.
Credit report of the beneficiary: It the amount of L/C in one item exceeds TK. 5.00 lac,
suppliers credit report is mandatory. Bank will collect credit report of the beneficiary through its
correspondent in abroad
1.3.3 Application of the client to open the L/C:
The client will approach to open the L/C in Banks prescribed form, duly stamped & signed,
along with the following paper & documents: Such as
Indent / Performa invoice.
Insurance cover note with money receipt.
Membership certificate form chamber of commerce / Trade Association.
Tax payment certificate / declaration.
IMP & TM form signed by the importer
Charge documents
IRC, Pass book, Trade license Membership certificate & VAT, registration certificate in
case of new client.
Export L/C in case of back-to-back L/C.
1.3.4 Permission From Ministry of Commerce:

If the goods to be imported under CIF (cost insurance & freight), then permission form ministry
of commerce to be obtained.
1.3.5 Presentation of the Documents
The seller being satisfied with the terms and the conditions of the credit proceeds to dispatch the
required goods to the buyer. Then he has to present the documents evidencing dispatching of
goods to the negotiating bank on or before the stipulated expiry date of the credit. After receiving
all the documents, the negotiating bank them checks the document against the credit. If the
documents are found in order the bank will pay accept or negotiate to Bank. Then bank checks
the documents.
The usual documents are:
Invoice
Bill of lading
Certificate of origin
Packing List
Shipping Advice
Nor negotiable copy of bill of lading
Bill of exchange
Pre-shipment inspection report
Shipment Certificate
1.3.6 Steps Involved in Import procedures
Procurement of IRC from the concerned authority
Signing purchase contract with the seller
Requesting the concerned bank (importers bank) to open an L/C on behalf of the importer
favoring the exporter/seller/beneficiary.
The issuing bank opens/issues the L/C in accordance with the instructions/request of the
importer & request another bank (advising bank) located in sellers exporters country to advice
the L/C to the beneficiary. The issuing may also request the advising bank to confirm the credit,
if necessary.
The advising bank advises the seller that the L/C has been issued.
As soon as the exporter /seller receives the L/C & is satisfied that he can meet L/C terms &
conditions, he is in a position to make shipment of the goods.
After making shipment of the goods in favor of the importer the exporters submit the documents
to the negotiating bank for negotiation.

2. Import Business
Most of Bangladeshi Bank supports its customers by providing facilities
throughout the import process to ensure smooth running of their business.
The facilities are:
a. Import Letter of Credit
b. Post Import Financing (LIM, LTR etc)
c. Import collection services & Shipping Guarantees

2.1.1 Import L/C opening Procedure:

First, Company has to open a current account in Bank. To open an A/C in
bank need some essential necessary Documents are TIN, VAT, IRC (Import
register certificate), ERC (Export register certificate), Board of investment
(BOI), bonded ware house Licenses and Import clause during shipment. In
case of import L/C Bank want to know which PSI agency will inspect the
International trade, pre shipment procedure and who will bear that cost. After
receiving documents through Branch a relationship Manager will inspection
all the Documents and applicant company. Next RM (relationship Manager)
reports to head of department and Head office Sanction L/C amount for that
Particular Company according to RM report.
After opening a current account company apply for L/C to Bank. In that case
company need to fill up an application from and need to send pro-forma
invoice to Bank .

2.1.2 Lodgment of the Documents

After receiving the documents from the exporters, at first BANK write it in the
PAD Registrar. PAD Register contains date, PAD number, L/C number, and
name of the drawer, name of the drawee, amount, and number of copies of
various documents, name of the imported items. This written procedure is
called Lodgment.
2.1.3 Retirement of the Documents
The process of collecting documents from bank by the importer is called
retirement of the documents. The importer gives necessary instructions to
the bank for retirement of the import bills or for the disposal of the shipping
documents to clear the imported goods from the customs authority. The
importer may instruct the bank to retire the documents by debiting his
current account with the bank or by creating Loan against Trust Receipt
(LTR). Following steps are taken while retiring the documents
Calculation of interest.
Calculation of other charges. Passing vouchers.
Entry in the register.
Endorsement in the Bill of Lading and other transport documents
and in the bill of exchange.

2.1.4 Procedure of Acceptance (Import):

In case of acceptance Like B2B L/C First, MTB consider the clients
confirmation that who opened L/C for the beneficiary. Here client
should send confirmation Documents such as Invoice, Bill of Lading,
Certificate of Origin, Packing List, Shipping Advice, on-negotiable Copy
of Bill of Lading, bill of exchange, Pre-shipment Inspection Report and
Shipment Certificate to MTB that they received goods from the
beneficiary. Then BANK check pre-shipment report of PSI agency.
After receiving Documents and report it is been entry to the Inward
register. In this stage they input in the software what are the
documents MTB has received then they compiling data.

Next step MTB input in the Bill of acceptance. Here they input Date of
negotiation, Date of shipment, Maturity Date, Beneficiary bank,
Beneficiary name. In this stage they got ABP number.

After that they deduct 15% VAT and commission and make a bill.
Commission percentage (%) is predetermined when Head office
sanction L/C amount.

After giving acceptance they send swift SMS to beneficiary bank. Swift
contain amount in BDT and USD and date of maturity. In swift SMS
there will be reference number that is system generated. SWIFT sms
need to be authorized by any of other senior executives.

2.1.5 Presentation & examination of shipping document:

The seller being satisfied with the terms and the conditions of the credit
proceeds to dispatch the required goods to the buyer and after that, has
to present the documents evidencing dispatching of goods to the
Negotiating Bank on or before the stipulated expiry date of the credit.
After receiving all the documents, the Negotiating Bank then checks the
documents against the credit. If the documents are found in order, the
bank will pay, accept or negotiate the documents and will dispatch to
MITS Dhaka Centre. The branch checks the documents. The usual
documents are
Invoice
Bill of Lading
Certificate of Origin Packing List
Shipping Advice
Non-negotiable Copy of Bill of Lading Bill of exchange
Pre-shipment Inspection Report of PSI agency Shipment Certificate
2.2 Post-Import financing
1. Receipts is fully paid off.

The Trust Receipt is a document that creates the Bankers lien on the goods
and practically amounts to hypothecation of the procIf there is no available
in cash in importers hand, he can rrequest the bank to grant loan against
the documents for the purpose of post import finance. There is one following
forms of post import finance available in MITS Dhaka center.
LTR (Loan against trust receipt).
On the arrival of goods and lodgment of import documents, importeer may
request the bank for clearance of goods from the port (custom) and keep the
same to bank godown. Propeer sanction from the cxompetent authority is to
be obatained before clearance of consignment. For giving these types of
loan, officer makes loan proposal and sends it to H/O for approval. After
getting approval from H/O, bank grants loan in the form of LTR.
1. Advance against a Trust Receipt obtained from the Customers are
allowed to only first class tested parties when the documents covering
an import shipment or other goods pledged to the Bank as security are
given without payment. However, for such advances prior
permission/sanction from Head Office must be obtained.
2. The customer holds the goods or their sale-proceeds in trust for the
Bank, till such time, the loan allowed against the Trust eeds of sale in
discharge of the lien.
2.2.3 Procedure of payments:
After receiving goods from exporter importer send documents to the BANK.
And they pay the payment of exporter to BANK. After receiving payments
BANK can pay the payment of beneficiary before the maturity date. They in
put in the register and create LDBC (local bill for payment). They made a
payment in current USD rate for this reason BANK earn some gain and that
called treasury Exchange Gain. After bill payment to beneficiary bank they
send SWIFT to the beneficiary bank.
2.3 Import collection services & Shipping Guarantees
In this stapes , Importer Collect the goods . bank make payment behalf of
the Importer , Although if Importer unable to pay the Order Money.
In certain situations your goods may arrive in port before the original
shipping documents have been processed through the banking system. Bank
can issue a shipping guarantee, allowing you to take control of the goods
from the shipping company without the bill of lading.
3. Conclusion

The last step in the import trade procedure is closing the transaction. If the goods are to the
satisfaction of the importer, the transaction is closed. But if he is not satisfied with the quality of
goods or if there is any shortage, he will write to the exporter and settle the matter. In case the
goods have been damaged in transit, he will claim compensation from the insurance company.
The insurance company will pay him the compensation under an advice to the exporter.