Treasury and Financial Institutions

Meezan Bank's Treasury has established itself as an active and formidable player in the local foreign exchange and moneymarkets. With the back-drop of competitive market pricing and increasing market presence, the Bank's Trade Finance business for the year increased to Rs. 143 billion. Strong client relationship was evident in the expanding corporate client base and a significant increase in the export business as well as forward cover contracts totaling Rs.20 billion during the year. Meezan Bank remained the largest holder of the Government of Pakistan (GOP) Ijarah Sukuk through successfully bidding in the too much awaited GOP Ijarah Sukuk auctions held during 2010. In line with the initiative of SBP, the Bank's Treasury also introduced the Bloomberg platform (E-bond automated dealing) to create a viable and active secondary market for the GOP Ijarah and foreign currency Sukuks. Issuance of SLR-eligible, government-guaranteed one year Sukuk by SBP remains in the pipeline, which will not only address the ongoing liquidity concern but will also enable greater efficiency and flexibility for managing asset-liability gaps. With the foreign currency deposits on a rise, the Bank also established itself as the largest holder of Shariah-compliant FCY Sukuks. Going forward, Meezan Bank, through its Treasury and Product Development & Shariah Compliance departments, will be in close coordination with SBP for establishment of the lender-of-last-resort facility for Islamic banks. The Financial Institutions / Correspondent Banking unit is responsible for establishing and maintaining institutional / correspondent banking relationships with local and foreign counterparts. The unit aims to facilitate all areas of international banking operations inclusive of trade, treasury, remittances and nostro / vostro account relationships. The Bank has in place Trade Finance Facilitation Agreements with International Finance Corporation (IFC) and Asian Development Bank (ADB). It also has a Trade Finance Facilitation Credit Limit from The Islamic Corporation for the Insurance of Investments and Export Credit (ICIEC), a subsidiary of the Islamic Development Bank. International Correspondents can add confirmation on Letter of Credits issued by Meezan Bank against the support of IFC / ADB / ICIEC, thus bolstering international trade business. The Bank has successfully made arrangements with its valued correspondents for facilitating relay of Letter of Credits (Confirmed and Unconfirmed) of large amounts for import of oil. The Bank is also in the process of

establishing Saudi Riyal nostro account to facilitate Hajj and Umrah remittances. The Correspondent Banking Network and Country Coverage, which the Bank maintains is depicted in the graph. Meezan Bank has internationally renowned banks, such as JP Morgan Chase, Deutsche Bank, Commerzbank, HSBC, Standard Chartered, Citibank, Unicredit, Mashreqbank etc., on its list of Correspondent Banks. The complete list of all Correspondent Banks is given on page 202.

Treasury
Meezan Banks treasury is guided by Shariah with the objective of reviewing, streamlining, and controlling the banks domestic and international Treasury-frelated operations. Treasury caters to the branches and customers for their entire foreign exchange requirement with efficiency and professionalism. Ready/ spot as well as all forward cover services are provided to branches/customers within Shariah guidelines. Customers are also provided advice on a regular basis about the currency movement by the dealing room augmented by market outlook (without any commitment & obligation) Treasury has enhanced its market activity with increased depth and enhanced volumes, making an impact in the inter-bank FX market. Due to its good relationship with other treasuries, the institution has the ability to generate sufficient amount of liquidity at any time through the inter-bank market on Shariah-approved Musharaka basis. Meezan Bank conducts Commodity Murabaha transaction to optimize its returns on its Dollar portfolio, besides participating in local/ international Sukuk issues, e.g. WAPDA, Qatar, Dubai Sukuks, etc. This treasury is the only treasury in Pakistan with a mandate to provide Shariah-compliant investment opportunities in capital market that provides Halal income to the shareholders

Financial Institutions
Financial Institutions, a part of the Treasury and F.I. Group, primarily focuses on building and maintaining relationships within the Financial sector. Relations range from

authenticated communication links by way of SWIFT RMA to Trade, Treasury and account maintenance in different currencies worldwide. With over 258 banks in 80 countries, our 600 globally located correspondents provide all trade services, seeking to add value and service to our branches and functional units. Services include advising, confirmation, discounting of letter of credits, reimbursement undertakings and standby LCs and guarantees. Further, the ever-increasing SWIFT RMA relationships with financial institutions serve to route all kinds of transactions

What is Trade?
Trade is what we call it when people buy and sell things. A producer might sell items or provide a service, and a customer pays them for it. This is trade. That was the general definition of trade which accounts for only exchange of goods and services between a seller and buyer. Trade could be within the boundries of acountry or it could between two countries.

International trade
International trade includes exchange of goods and services between two countries Basically there are two major components of international trde
1. Export 2. import

Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer". In International Trade, "exports" refers to selling goods and services produced in home country to other markets. Exports play very vital role in improving a countrys balance of payment. For efficient balance of payment exports should be increased.

Current account of balance of payment Credit + DebitExport of goods Exprt of services Transfer receipts Import of goods Import of services Transfer payments

Foreign currency
Through exports a country earns foreign currency and central bank of any country wants to control this foreign currency by controlling imports, in this way foreign currency reserves are maintained and are used vigilantly. Other ways of earning foreign currency are following Foreign remittences Rebates Gifts Loans etc

Imports
The term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus an import is any good (e.g. a commodity) or service brought in from one country to another country in a legitimate fashion, typically for use in trade. It is a good that is brought in from another country for sale. Import goods or services are provided to domestic consumers by foreign producers. An import in the receiving country is an export to the sending country.

Need of international trade

International trade is needed so that all countries can avail themselves of the things that they need (and want), and that are not available in their own country. The most common example is oil, which is needed throughout the world, but it is limited to particular areas, and so is traded internationally.

International trade accounts for a huge part of a country's gross domestic product (GDP) and is a vital source of revenue for all countries, particularly those that are developing, though it is the nations that have the strongest international trade, and who have prospered by it, that have become the driving force behind world economy. It is usually accepted that the benefits of international trade, and therefore, the reasons why it is needed are: It enhances domestic competiveness. it increases sales and profits; it takes advantage of international trade technology. it extends the sales potential of existing products; it maintains cost competiveness in the domestic market. it increases the potential for business expansion; it achieves a global market share. it reduces the dependency on markets that already exist; and it stabilizes seasonal market fluctuations. For any transaction buyer and seller plays a very important role, it is possible that buyer and seller know each other before hand If they are stranger to each other than services of an agent or an indenter could be taken, who would facilitate both buyer and seller in whole procedure. Firstly buyer would inquire about sellers products, to observe whether the products offered by the seller meets his specifications or not. If the buyer is satisfied with the quality of product offered by the seller

Methods of payment in international trade

To succeed in todays global marketplace, exporters must offer their customers attractive sales terms supported by the appropriate payment method to win sales against foreign competitors. As getting paid in full and on time is the primary goal for each

export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. As shown below, there are four primary methods of payment for international transactions. During or before contract negotiations, it is advisable to consider which method in the diagram below is mutually desirable for you and your customer
Key Points

International trade presents a spectrum of risk, causing uncertainty over the timing of payments between the exporter (seller) and importer (foreign buyer). To exporters, any sale is a gift until payment is received. Therefore, the exporter wants payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer. To importers, any payment is a donation until the goods are received. Therefore, the importer wants to receive the goods as soon as possible, but to delay payment as long as possible, preferably until after the goods are resold to generate enough income to make payment to the exporter.

Cash-in-Advance
With this payment method, the exporter can avoid credit risk, since payment is received prior to the transfer of ownership of the goods. Wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. However, requiring payment in advance is the least attractive option for the buyer, as this method creates cash flow problems. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters that insist on this method of payment as their sole method of doing business may find themselves losing out to competitors who may be willing to offer more attractive payment terms.

Letters of Credit
Letters of credit (LCs) are among the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter provided that the terms and conditions have been met, as verified

through the presentation of all required documents. The buyer pays its bank to render this service. An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but you are satisfied with the creditworthiness of your buyers foreign bank. An LC also protects the buyer since no payment obligation arises until the goods have been shipped or delivered as promised.

Documentary Collections
A documentary collection is a transaction whereby the exporter entrusts the collection of a payment to the remitting bank (exporters bank), which sends documents to a collectingbank (importers bank), along with instructions for payment. Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents. Documentary collections involve the use of a draft that requires the importer to pay the face amount either on sight (document against paymentD/P) or on a specified date in the future (document against acceptanceD/A). The draft lists instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients under collections, documentary collections offer no verification process and limited recourse in the event of nonpayment. Drafts are generally less expensive than letters of credit.

Open Account
An open account transaction means that the goods are shipped and delivered before payment is due, usually in 30 to 90 days. Obviously, this is the most advantageous option to the importer in cash flow and cost terms, but it is consequently the highest risk option for an exporter. Due to the intense competition for export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may face the possibility of the loss of the sale to their competitors. However, with the use of one or more of the appropriate trade finance techniques, such as export credit insurance, the exporter can offer open competitive account terms in the global market while substantially mitigating the risk of nonpayment by the foreign buyer.

Letter of credit
Letters of credit are often used in international transactions to ensure that payment will be received. Due to the nature of international dealings including factors such as distance, differing laws in each country and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade. The bank also acts on behalf of the buyer (holder of letter of credit) by ensuring that the supplier will not be paid until the bank receives a confirmation that the goods have been shipped. A letter from a bank undertaking that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

Parties of a letter of credit

1. Importer (Applicant)

2. Importers bank( Issuing Bank)

3. Exporter (Beneficiary)

4. Exporters bank( Advising Bank) Applicant

The applicant is the party who requests and instructs the issuing bank to open a letter of credit (L/C) in favor of the beneficiary. The applicant usually is the importer or the buyer of goods and/or services. The applicant in the sample letter of credit is DEF Imports. The applicant can also be another party acting on behalf of the importer, such as a confirming house. The confirming house is equivalent to a buying office, it acts as an intermediary between importer and exporter, and it can be located in a third country or in

the exporter's country. The confirming house negotiates and books the order on behalf of the importer and guarantees payment to the exporter, and often finances the importer. When dealing with importers in a country with a foreign exchange shortage, for example Nigeria, the exporter may deal with the confirming house in the United Kingdom (U.K.) or in other areas to ensure payment.

Beneficiary
The beneficiary is the party in whose favor a letter of credit (L/C) is opened by the issuing bank. The beneficiary usually is the exporter or the seller of goods and/or services. The beneficiary in the sample letter of credit is UVW Exports.

Issuing Bank

The issuing bank---opening bank---opens a letter of credit (L/C) in favor of the beneficiary, at the request and on the instructions of the applicant. The issuing bank usually is located in the applicant's country. The issuing bank in the sample letter of credit is Meezan Bank.

Advising Bank

The advising bank---notifying bank---advises the beneficiary that a letter of credit (L/C) opened by the issuing bank is available to him/her and informs the beneficiary about the terms and conditions of the L/C. The advising bank is not necessarily responsible for the payment of the credit which it advises. The advising bank can be a branch office of the issuing bank or a correspondent bank, which usually is located in the beneficiary's country. The advising bank in the sample letter of credit is Deutcshe Bank.

Confirming Bank
The advising bank which adds its confirmation to the credit, that is, adds its own promise to pay, upon authorization or request of the issuing bank is known as the confirming bank. The confirming bank in the sample letter of credit is Deutcshe Bank

Nominated Bank
A bank designated by the issuing bank which is authorized to pay, to accept draft(s), to incur a deferred payment undertaking, or to negotiate the letter of credit (L/C) is known as the nominated bank. The nominated bank can be a party other than the advising bank. The nominated bank in the sample letter of credit is Deutcshe Bank.

Paying, Accepting or Negotiating Bank

The nominated bank which: makes payment to the sight draft(s) drawn by the beneficiary is known as paying bank, accepts the term draft(s) drawn by the beneficiary is known as accepting bank, negotiates the draft(s) and/or documents presented by the beneficiary or bona fide holder is known as negotiating bank. When the bank negotiates the draft(s) and/or documents, that is, the negotiation, it gives value to such draft(s) and/or documents, not just examination of the documents.

Claiming Bank and Reimbursing Bank

The claiming bank is a paying, accepting or negotiating bank which claims for reimbursement on another party called the reimbursing bank. The reimbursing bank can be a party other than the issuing bank authorized (by the issuing bank) to reimburse the claiming bank. E.g. Meezan bank has maintained its Nostro accounts with Standard Chartered bank Of New York so through SCB Meezan bank reimburses in case of foreign currencies as Dollar amounts. ( Nostro in this example means Meezan account with Standard Chartered bank New York).

Types of letter of credit Revocable

Letter of credit terms or conditions could be amended or canceled without consent of the any of 4 parties of letter of credit. i.e, importer may cancel without the consent of other parties. It is usually avoided in international trade to use revocable letter of credit.

Irrevocable letter of credit

Any of the term of the letter of credit could not be cancelled without the mutual consent of the parties, I.e. if the exporter wants to increase its products price , he cannot increase price without the consent of importer. Mostly irrevocable letter of credit is used in international trade.

Import documents
Now a days import license is no MORE required to import into Pakistan. Only the following initial documents are required to import into Pakistan: -1. National Tax Number Certificate, which is issued by the Income Tax Department on filing of application form accompanied with one attested photocopy of NIC. 2. Current bank account is required for import proceedings and docuemnts 3. Sales Tax Registration is required to import into Pakistan. For registration, Form ST-

1 is required to send to the local sales tax registration office via post with acknowledgment due(courier is preferable). The local registration office shall transmit filled up applications to the Central Registration Office based in CBR Islamabad. The previous requirements of furnishing supporting documents have been done away now there is no need to attach any document with the application. The Central Registration having on line access to database of NTN as well as of NADRA shall verify the particulars declared in the application with database. On verification, it shall generate and issue registration certificate to the applicant directly on his given address. 5. Membership certificate of Chamber of Commerce and Industries or any relevent trade association of Pakistan. But in case where letter of credit is opened following further documents are required by importer.

Customer order form

In that form customer requests to open a specific type of L/C according to certain terms and conditions.

Performa invoice
An abridged or estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of goods. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges. Pro forma invoices are commonly used as preliminary invoices with a quotation, or for customs purposes in importation. They differ from a normal invoice in not being a demand or request for payment.

Insurance documents
When the goods are lost or damaged and the owner of the goods (i.e., the title holder in the goods) suffers a loss, fails to realize an expected profit, or incurs liability from the loss or damage, the owner (the title holder) is deemed to have an insurable interest in the goods. When the exporter delivers the goods, the insurable interest in such goods transfers at the point and time where the risk shifts from the exporter to the importer, as determined by the international commercial terms used. For example, the point and time where the risk shifts in;

CIF (Cost, Insurance and Freight to the named port of destination) --the point the risk shifts is on board the ship at the named port of loading, as such the insurable interest transfers from the exporter to the importer at the time the goods pass over the ship's rail. CIP (Carriage and Insurance Paid To the named place of destination) --the point the risk shifts is at the depot in the country of shipment, as such the insurable interest transfers from the exporter to the importer at the time the goods are loaded on truck or container, rail car, or airplane (or goods placed in the custody of an air carrier) at the named point of departure.

Cargo insurance is a contract of indemnity, that is, to compensate for the loss or damage in terms of the value of the insured goods. The amount insured as agreed between the insurer and the assured forms the basis of indemnity.

Application and agreement for letter of credit

Application and agreement for letter of credit includes Date and place of expiry Name and address of applicant Name and address of beneficiary Currency code and amount Drafts at Partial shipment( Delivery of an order in two or more consignments, if allowed by the customer or under the terms of a letter of credit.) Transshipment ( Shipment by change of shipment mode or from one vessel to another vessel) Latest date of shipment Port of loading Port of discharge Description of goods and services

It is also called IB8 form (indemnity bond) in which bank make it secure if there is any loss on the part of buyer.

Import form
Applications for remittance against imports into Pakistan should be made on Form 'I' which should be signed by the importer or his authorized agent. The signatory should disclose his status/capacity in the concerned firm/company etc., i.e. Director/Partner/Proprietor/Manager etc. In case the form is signed by the agent of the importer, it should be ensured by the Authorized Dealers that he holds a valid legal power of attorney from the importer and the terms of the power of attorney are such that the importer as well as the attorney can be held responsible jointly & severally under the Foreign Exchange Regulation Act, 1947. The form should be submitted to an Authorized Dealer who must sign the certificate as provided therein under his stamp and signature. In cases where the Authorized Dealers are empowered to approve remittances on behalf of the State Bank, they will do so by recording their approval on the form. In all other cases, the forms together with the required supporting documents should be forwarded to the State Bank for approval.

Functional Utility of the various copies of Form I.

Form 'I' consists of four copies. The original copy of the form duly signed by the importer is required to be sent to the State Bank by the Authorized Dealers with their monthly return of sales. In cases where the importers do not retire the documents and the Authorized Dealers fail to get the original copies of the form signed by them, they should themselves sign the quadruplicate copy of the form and send it with the monthly return to the State Bank. All cases where the importers fail or refuse to sign the Form 'I' should be specifically reported to the State Bank.

Opening of letter of credit

First of all negotiation between buyer and seller takes place in which all the terms and conditions are mutually agreed upon. An agreement is signed between both parties Buyer applies to bank for issue of letter of credit. Bank will evaluate buyer's credit standing, and may require cash cover and/or reduction of other lending limits. Issuing bank issues LC in favour of advising bank , sending it to the Advising bank by airmail or electronic means such as telex or SWIFT. Advising bank establishes authenticity of the letter of credit using signature books or test codes, then informs seller (beneficiary). Seller should now check that LC matches commercial agreement and that all its terms and conditions can be satisfied. Seller ships the goods, then assembles the documents called for in the LC (invoice, transport document, etc.).

The Advising bank checks the documents against the LC. If the documents are compliant, the bank pays the seller and forwards the documents to the Issuing bank.

The Issuing bank now checks the documents itself. If they are in order, it reimburses the seller's bank immediately. The Issuing bank debits the buyer and releases the documents (including transport document), so the buyer can claim the goods from the carrier.

PAD Facility
If the buyer dont pay on presentation of documents than usually a cushion of 5 days is allowed to buyer so that he can arrange for payment, if even after 5 days buyer dont pays out than PAD fim is created, under pad buyer avails a type of loan in which his documents are in banks lien although bank has made payment to exporters bank.

Entries
General ledger (bank) ---------------------Dr Non checking account------------------------Cr PAD------------------------------------------Dr Head office------------------------------------Cr Customer-------------------------------------Dr PAD-------------------------------------------Cr Customer (charges) ---------------------------Dr Income ----------------------------------------Cr

IMPORT FINANCING
Musharakah can be used for Import Financing as well. There are two types of bank charges on the letter of credit provided to the importer: 1. Service charges for opening an LC 2. Interest charged on LCs, which are not opened on full margin. Collecting service charges for this purpose is allowed, but as interest cannot be charged in any case, experts have proposed two methods for financing LCs:

1. Based on Musharakah / Mudarabah 2. Based on Murabahah

Musharakah /Mudarabah:
This is the best substitute for opening the LC. The bank and the importer can make an agreement of Mudarabah or Musharakah before opening the LC. If the LC is being opened at zero margin then an agreement of Mudarabah can be made, in which the bank will become Rqb-ul-Maal and the importer Mudarib. The bank will own the goods that are being imported and the profit will be distributed according to the agreement.

If the LC is being opened with a margin then a Musharakah agreement can be made. The bank will pay the remaining amount and the goods that are being imported will be owned by both of them according to their share of investment. The bank and the importer, with their mutual consent can also include a condition in the agreement, whereby; Musharakah or Mudarabah will end after a certain time period even if the goods are not sold. In such a case, the importer will purchase the banks share at the market price. Murabahah: At present Islamic banks are using Murabahah, to finance LC. These banks themselves import the required goods and then sell these goods to the importer on Murabahah agreement. Murabahah financing requires the bank and the importer to sign at least two agreements separately; one for the purchase of the goods, and the other for appointing the importer as the agent of the bank (agency agreement). Once these two agreements are signed, the importer can negotiate and finalize all terms and conditions with the exporter on behalf of the bank.

Export documents
National Tax Number Certificate, which is issued by the Income Tax Department on filing of application form accompanied with one attested photocopy of NIC. Commercial exporter is not required to register with sales tax department. But if you pay the sales tax on purchasing the goods from local market it will be better for you to get yourself register with sales tax department so that you may claim refund of your input tax deducting on your purchases. Once you are registered in sales tax department you will be obliged to file monthly sales tax return irrespective of the fact that you have been involved in any sales tax activity or not. Current bank account is required for export proceedings and docuemnts. Membership certificate of Chamber of Commerce and Industries or any relevent trade association.

Once the consignment, to be exported arrives at the port, usually a clearing agent's services are sought. The following documents are required to provide to clearing agent to clear the consignment: --

Export form
Form "E" (State bank form): All exports from Pakistan which are subject to Foreign Exchange Regulations are required to be declared on form 'E' which is in sets of four copies each. The exporter should submit the full set of Form 'E' to the bank after it has been completed and signed by the exporter himself or his authorised agent. While certifying Form 'E', bank should ensure that exporters give only one address in Form 'E'. After the form is certified by the bank, it should be submitted to the Customs/Postal authorities at the time of shipment alongwith the shipping bill. The Customs authorities will detach the original copy and after filling in the portion relating to them and affixing their seal and signature thereon forward it to the State Bank. The Customs authorities will return the duplicate, triplicate and quadruplicate copies to the exporter or his authorised agent who will retain the quadruplicate for his own record and submit the duplicate and triplicate copies to the Authorised Dealer alongwith the shipping documents within 14 days from the date of shipment. To receive payment, an exporter or shipper must present the documents required by the letter of credit. Typically, the payee presents a document proving the goods were sent instead of showing the actual goods. However, the list and form of documents is open to imagination and negotiation and might contain requirements to present documents issued by a neutral third party evidencing the quality of the goods shipped, or their place of origin or place. Typical types of documents in such contracts might include;

Financial documents Bill of exchange

A written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum, either immediately (a sight bill) or on a fixed date (a term bill), for payment of goods and/or services received. The drawee accepts the bill by signing it, thus converting it into a post-dated check and a binding contract

 Co accepted draft etc Commercial documents Commercial invoice

Performa invoice when performed is called commercial invoice. Document required by customs to determine true value of the imported goods, for assessment of duties and taxes. A commercial invoice (in addition to other information), must identify the buyer and seller, and clearly indicate the (1) date and terms of sale, (2) quantity, weight and/or volume of the shipment, (3) type of packaging, (4) complete description of goods, (5) unit value and total value, and (6) insurance, shipping and other charges (as applicable).

Packing list
Itemized list of articles usually included in each shipping package, giving the quantity, description, and weight of the contents. Prepared by the shipper and sent to the consignee for accurate tallying of the delivered goods. Also called bill of parcels, packing slip, or unpacking note.

Shipping documents Bill of lading

A document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for transportation, and must be presented for taking delivery at the destination. Among other items of information, a bill of lading contains (1) consignor's and consignee's name, (2) names of the ports of departure and destination, (3) name of the vessel, (4) dates of departure and arrival, (5) itemized list of goods being transported with number of packages and kind of packaging, (6) marks and numbers on the packages, (7) weight and/or volume of the cargo, (8) freight rate and amount. It serves as a proof of ownership (title) of the cargo, and may be issued either in a negotiable or non-negotiable form. In negotiable form, it is commonly used in letter of credit transactions, and may be bought, sold, or traded; or used as security for borrowing money.

Types of bill of lading Clean bill of lading

Bill of lading that shows, the goods has been loaded on vessel in good condition.

Dirty bill of lading

Bill of lading that goods that are shipped are somehow damaged.

Black back bill of lading

Bill of lading that shows absence of any contract between the shipper and the shipping company on its back, mostly bill of lading carry specific type of contract on their back, contract may be of the following; Receipt of shipment Condition for the claim Conditions for the suit on ownership of the goods

Certificate of origin
Document that certifies a shipment's country of origin. It is used between members of a trading block or where special privileges are granted to goods produced in certain countries. Certificate of origin is commonly issued by a trade promotion office, or a chamber of commerce in the exporting country. Also called declaration of origin.

Certificate of beneficiary
BENEFICIARY CERTIFICATE CONFIRMING THAT CARGO HAS BEEN DELIVERED IN CONFORMITY WITH THE TERMS OF L/C.)

Certificate of quality
In which the manufacturer certify that Quality/Quantity weight mention below are in good condition after are fully inspected in our factory.

Shipment advice
Letter or form sent by an exporter to a foreign buyer informing that the shipment of the

ordered goods is on its way. A copy of the invoice and the packing slip (and sometimes a copy of bill of lading) may also be attached. Also called advice note.

Fax of shipment advice Transport documents

Airway bill, Lorry/truck receipt, railway receipt, CMC Other than Mate Receipt, Forwarder Cargo Receipt, Deliver Challan...etc

Courier receipt
The courier's receipt is issued by a courier (or expedited delivery service). The courier's receipt must indicate the name of the courier (or expedited delivery service) and be stamped, signed or otherwise authenticated on its face and indicate a date of pick-up or of receipt. Submission of Export Documents to the bank All shipping documents covering goods exported from Pakistan and declared on form 'E' must be passed through the medium of bank within 14 days from the date of shipment. The exporter must submit the duplicate (bearing Customs seal and signature of Customs Officials with Code number) and triplicate copies of form 'E' alongwith the shipping documents, invoices etc., to the bank who had certified the form 'E'. An extra copy of the shipper's invoice must be attached to the triplicate copy of the form E.

Entries
Export proceeds--------------------------Dr Co name----------------------------------Cr Service charges entry: Co name--------------------------------------Dr Recovery courier--------------------------Cr

Imports on the basis of registration of contracts.

The undernoted procedure will be adopted for making imports of goods not subject to authorisation from the Export Promotion Bureau/Ministry of Commerce as also not

subject to minimum margin restrictions, if the importer wants to make the import on the basis of registration of contract without opening letter of credit: (i) The importer will submit a copy of the contract/purchase order/proforma invoice/indent etc. to the Authorised Dealer for registration. (ii) The Authorised Dealer registering the contract etc. will issue to the importer, a registration certificate. (iii)In case the documents covering imports are received by the branch of the Authorised Dealer which had registered the contract/purchase order/indent/proforma invoice, directly from the bankers of the suppliers abroad, the remittance may be effected where Authorised Dealers may approve, on behalf of the State Bank, applications for remittance against imports into Pakistan provided the documents covering imports, whether under letters of credit or otherwise, are received through them and the conditions are complied with. The relative Form 'I' should be certified accordingly when reporting the sale to the State Bank. (iv) In case the shipping documents are received by the importers directly, or by the Authorised Dealer from the overseas supplier instead of the bankers of the suppliers, remittance should be approved only after the goods have been cleared from the Customs and the Exchange Control copy of Bill of Entry or Customs certified invoices in the case of imports by post, relative invoices, Non-negotiable copies of the Bill of Lading/Airway Bill/Railway Receipt/Truck Receipt etc. and 'I' Form duly completed and signed have been submitted. (v) In case of imports from ACU member countries, remittances will be effected through ACU Clearing Arrangements. (vi) Forward cover will be available to the importers in accordance with the terms and conditions laid down by state bank of Pakistan.

(vii) Authorised Dealers will incorporate the figures of the contracts registered by them/ remittances made thereagainst in the statements.