This report aims toward providing an overview on the Foreign Exchange Banking system in Prime Bank Limited. The report is prepared within the broader framework of Internship Program of the Business Administration Department Asian University of Bangladesh (While preparing this report it has been tried to reveal the insights of the foreign exchange banking system of the bank a few recommendations and suggestions were also prescribed based on the observation and findings).
While discussing the different aspects and functions of the bank, priority has been given to depict the real situation real situation as far as appraisal and management system in Prime Bank Ltd. are concerned by employing the experience gathered during the internship program. Analysis on the findings is basically done to sort out the major aspects of the Foreign Exchange Banking system and to draw some significant inferences. At the same time for easier understanding of the report, supporting topics and terms are explained in light of textbooks and regulatory guidelines.
To examine the efficiency of the Export management system, Letter of credit has been taken as the prime factor. Simultaneously analysis on the foreign exchange, foreign LC advising has also been done. Utmost care has been given to explain all necessary aspects related to the subject matter for easier and quick understanding of the report.
Economic history shows that development has started everywhere with the banking system and its contribution towards financial development of a country is highest in the initial stage Modem banks play an important part in promoting economic development of a country. Bank provide necessary funds for executing various programmers underway in the process Of economic development. They collect savings of large masses of people scattered throughout the country, which in the absence of the banks would have remained ideal and unproductive. These scattered amounts are collected, pooled together and made available to commerce an. industry for meeting the requirements.
Economy of Bangladesh is in the group of world’s most underdeveloped economies. One of the reasons may be its underdeveloped banking system. Government as well as different international organizations have also identified that underdeveloped banking system causes some obstacles to the process of economic development. So they have highly recommended for reforming financial sector. Since 1990, Bangladesh Government has taken a lot of financial sector more transparent, and formulation and implementations of these reform activities also been participated by different international organizations like World Bank, IMF, etc.
In 1996, World Bank published ‘Bangladesh: Agenda for Action’ in which it has suggested t lot of recommendations for economic development of our country. These recommendations include special presentation for reforming banking sector.
Bank is the most important financial institution in the economy. It plays a vital role in the economy by providing means of payment and in mobilizing resources. The economic development of a country depends on the development of banking sector. Today’s modern banks are not providing only traditional banking; rather banks are expanding the menu u financial services.
Background of The Study
The BBA program is designed to focus on theoretical and professional development of people open to take up business as a profession a well as service as a career. The course is designed with an excellent combination of theoretical and practical aspects. This internship provides the students to link up their theoretical knowledge into practical fields. In this connection, I was assigned to Prime Bank Ltd. Motijheel Branch foreign exchange department for my practical orientation.
Students are required to prepare an internship report under the guidance of supervising teachers on a selected subject matter to highlighting his experience and to conduct an in depth analysis on the subject matter. I have tried my level best to present my experience of the practical orientation in this report.
Major Finding :
All the employees of the Prime Bank Limited, Motijheel Branch are very much involved in their service. But employees are deprived of some facilities; those would boost them to work with satisfaction.
Objectives of The Report
- Ø To present an overview of Prime Bank Ltd.
- Ø To appraise the foreign exchange transactions comprising LC advice, Negotiation of export documentary bills, Repatriating of bills proceeds etc.
- Ø To identify problems of foreign exchange transactions comprising LC advice, Negotiation of export document bills, Repatriation of bills proceeds etc.
- Ø To suggest suggestions for the development of foreign exchange transaction pf Prime Bank Ltd.
- Ø To be familiar with day to day functioning and service offered by a commercial bank.
- Ø To observe and analyze the performance of the specific branch and the bank as a whole.
- Ø To make a bridge between the theories and practices on banking operations.
- Ø To know about the international trade financing activities.
- Ø To find out the internal and external lacking in the daily operation that would help to Prime Bank Limited for more progress.
Scope of the study
The scope of this report is limited to the overall description of the company, its services, and its position in the industry and its marketing strategies. The scope of the study is limited to organization setup, functions, and performances.
METHODOLOGY OF THE STUDY :
Exploratory research method is used in writing this report. This type of research is meaningful in any situation in which the researcher does not have enough understanding to proceed with the research project. This research is characterized by flexibility and versatility with respect, t the methods, because formal research method, because formal research protocol and procedures are not employed. It is rarely involves structured questionnaire, large sample and probability sampling plans. Rather researchers are alert to new ideas and insights as the proceed. Once new idea or insight is discovered, they may shift their exploration in that direction. Observation method is used to complete this qualitative research.
Primary Data were collected
The primary data had been collected in various ways. The different sources were :
ü Face to face conversations with the employees and opportunities were given by the management to work in relevant fields in PBL.
ü By personal interviewing and interacting customers at PBL.
ü Observing various organization procedures.
Secondary data were collected:
ü From prior research report
ü From different books and periodicals related to the banking sector.
ü From Newspapers and Internet.
The major limitations of this report are as follows :
ü Large-scale research was not possible due to time constraints.
ü Relevant date and document collection were difficult due to the organization confidentiality.
ü Non availability of data in a systematic way.
ü Time constraint.
ü Availability of the reference book is another limitation.
ü Matijheel Branch is very busy branch. In this branch employees get very little time to teach theoretical knowledge to the trainee.
Prime Bank Limited is a rapidly growing private commercial bank in Bangladesh Keeping pace with its progress; it is expanding its branch network and upgrading service of the existing ones as well. All its branches generate satisfactory income form their inception, Motijheel Branch is one step ahead in this regard. As it is the largest branch of the bank it earns about 40% of the banks total profit. From the very inception it is contributing a large amount to the bank.
Brief Profile of Motijheel Branch :
Date of opening
April 17, 1995.
Md. Mukhter Hossain (Executive Vice-President )
Md. Mozzamal Hassain, (Vice-President)
Mr. Moinuddin (Senior Vice-President)
Foreign Exchange in-charge
Mr. Mohammed. Faruque, (Senior Asst. Vice President).
General Banking in-charge
Mr. Iftekhar (Senior Asst. Vice President).
Total number of employees
75 (Seventy five)
Address of the branch
Admajee Annexed Coart Building-2, 119/120 Motijheel Commercial Area, Dhaka-1000.
Departments of Motijheel Branch :
Prime Bank Motijheel Branch has three main departments. These are as follows :
General Banking Department
Foreign Exchange Department.
Historical Performance of Motijheel Branch in figure :
Historical Performance of Motijheel Branch
Amount in (%)
Amount in (%)
Garments Raw materials
Textile Raw Materials
Strength and Weakness Analysis of Prime Bank, Motijheel Branch.
- Return on Asset is higher than the Bank’s total performance and showing increasing trend.
- Credit / Deposit Ratio is 98%, which higher than the overall bank position.
- Ø Per employee deposit and profit is higher than the total bank performance.
- Ø Employee expense is lower compare to the total Bank ration of employee expense to total expense.
- Ø Fee Income (Commission, Exchange and Brokerage) covered the non-interest expenses and 141% higher than the total Bank position.
- Ø The branch has achieved all the targets set by head office except Deposit.
- Ø Cost of deposit is higher than the overall bank deposit rate.
- Ø Return on Advance is lower than the total Bank position and showing a decreasing trend.
- Ø Classified advance is 3.49% of total advance of the branch, which is higher that the overall Bank Position by 1.74 %
Prime Bank Limited
Prime Bank Limited is a fast growing private sector Bank and the Bank is already at the top slot in terms of quality service to the customers’ ad the value addition to the shareholders. Prime Bank Ltd. was incorporated under the Companies Act, 1994 on February 12, 1995.
Prime Bank Ltd. being a banking company has been registered under the Companies Act 1913 with its registered office at 5, Rajuk Avenue, Motijheel commercial area, Dhaka 1000. Later it was shifted to Adarnjee Court Annex building, 119-120, Motijheel Commercial Area, Dhaka – 1000. Prime Bank Ltd. was established on 17th April 1995 with an authorized capital of Tk.1000 million and paid up capital of Tk.100 million (raised to Tk.700 million in 2OO3) by a group of highly successful entrepreneurs from various fields of economic activities such as shipping, oil, finance, garments, textiles and insurance etc. It is a full licensed scheduled Commercial bank set up in the private sector in pursuance of the policy of the Government to liberalize banking and financial services.
The bank operates as a scheduled bank under banking license issued by Bangladesh Bank, the central bank of the country on April 17, 1995 through opening of its Motijheel branch at Adamjee Court Annex Building, Motijheel commercial area, Dhaka-1000.
The Bank made satisfactory progress over the years after its starting.
Board of Directors :
Board of directors of Prime Bank Limited consists of 19 Directors, Chairman, two Vice-Chairman and Managing Director.
Objective of the Bank
Prime Bank Limited is designed to provide commercial investment bank services to all type of customers ranging from small entrepreneurs to big business firms. In this regard, it gives emphasize on the priority sector of the economy like industry, housing and self employment. Besides, the bank aims to provide different customer friendly deposit and loan products to fulfill the banking needs of the individual customers.
Vision of the bank
To be the most efficient Bank in terms of customer service profitably and technology applicable.
Mission of the Bank :
ü Continuous improvement in Bank’s business policies and procedures;
ü Cost reduction through integration of technology at all level.
Management and Human Resources:
A well educated. skilled and enterprising work force with wide experience in the banking is a precondition for the continued growth and progress of any bank. PBL’s aim is to recruit and retain a competent workforce. In the expectation of continued growth, the bank in 1998 established a training institute for its own staff. Prime bank recruits experienced bankers as well as fresh graduates and trains them through the Training institute. As on 31st December 2000, its human resources strength was 518. This number includes one managing director, one additional managing director, two deputy managing directors, one Senior EVP, two EVPs, nine senior VPs and thirteen VPOs. The chief executive of’ the bank. Mr. Syed Abu Naser Bukhtear Ahmed (Managing Director. Current Charge) has diversified banking and Auditing experience of over 3 years with the Central Bank of 3 Countries viz Pakistan, Bangladesh and the United Arab Emirates and leading Private Commercial Bank in Bangladesh.
Hierarchy of Prime Bank :
Managerial Hierarchy of Prime Bank Limited Comprises 4 (four) significant levels. These are as follows :
- Ø Top-level Management
- Ø Executive level Management
- Ø Mid level Management
- Ø Junior level Management
Department of Prime Bank Limited :
Total division and departments of Prime Bank Limited can be classified under three main aspect of banking.
- Ø Administrative department
- Ø Operational department
- Ø Miscellaneous / Other department
Under the Administrative Department the following divisions of Prime Bank Limited usually operate.
Human Resource Division:
Human Resource Division of Prime Bank Limited is one the most important divisions. I his division is assigned to the responsibilities of recruitment. posting, transfer, promotion, and development of’ human resources of the bank. They also maintain personal files. service record of the employees, takes disciplinary actions when necessary , looks for the emplyees welfare, salary reconciliation, specimen signature, correspondence etc. At present a senior vice president heads this division.
Branch control and Expansion Division:
The duties of this division are to preparing test key arrangement among the branches to maintain inter branch accounts and overall control of the branches. Another most duties of this division is to study the feasibility of opening new branches,
Public Relation Division:
Another important division under Administration Department is Public Relation Division. The main activity of’ this division is to maintain public relation in terms of customer relation through its operating all over the country.
General Service Division :
This department maintains administrative activities regarding General Banking. The activities of this division are as follows:
- Ø Circulation of important notices.
- Ø Issuance of’ Power of Attorney to the officers of the bank.
- Ø Customer Service.
- Ø Legal affairs.
- Ø General correspondence within Bangladesh.
- Ø Cash affairs of the Bank.
Financial Administration Division (FAD)
This division can be cal led as the Central Accounts Division because all the account related are done here. All the branches send their monthly statements to the Head office and this division prepares a consolidated statement by using those branch statements., which shows monthly position of the bank in cumulative basis.
Audi and Inspection Department:
This division works directly under the control of the Managing Director. This division is responsible to arrange periodical internal audit in each branch, to conduct spec ii audit. and to follow-up and monitor the banks overall activities.
Under the operational department the following divisions o~ Prime Rank tim It’d conduct their respective works.
- Ø Credit Division
- Ø Investment Division
- Ø International Division
- Ø Card Division
- Ø Treasury Operation Division
- Ø Computer and Engineering Division
All activities related the loans and advances of the bank are directed and controlled by the Credit Division. This division deals with different kinds of’ credit products of the bank. These are
- Ø Commercial Credit: Secured overdraft (SOD), cash credit (Hypo/Pledge), Consumer Credit. Small And Medium Enterprise Credit.
- Ø Industrial Credit
- Ø I case Finance
- Ø I Ii ‘c Purchase
- Ø Real Slate Credit etc.
Prime Rank Limited has started its operation with an objective, exceptional to other commercial banks. to take part in the Capital Market and Money Market in the country. To achieve this objective bank has established a separate division named investment and monitoring of those investments.
International Division :
International Division of Prime Bank Limited performs the responsibilities of foreign exchange business on behalf of its branches.
Alter being the member of Master Card, under credit service Prime Bank Limited set up this division and it controls all activities related with the operation of Credit Card from issuing to bill collection.
Treasury Operation Division:
This unit performs the works of money market operation. They borrow and lend money on call basis.
Computer and Engineering Division:
The division is assigned the duty to lead the computerization of the bank. They procure and maintain computer hardware and software. Conduct computer training for the employees. Operation and maintenance of all electrical and mechanical appliance such as note counting machine, telephone. PABX. FAX. Telex etc. also the works of this division.
There are some other important divisions performing their respective works to the success of Prime Bank Limited which are as follows :
Research and Development:
Research and Development is the key factor for the success of any organization in this competitive market. Considering this impotency Prime Bank Limited is maintaining a separate division of Research and Development to innovate new products and services. to improve existing products and services or in a word to open a new innovative horizon of modern banking.
Marketing division is directly related to the marketing of the banks products and Services to the customers. it takes all the arrangements in deposit mobilization, customer service related activities and all other marketing related activities. The main task of this division is to formulate strategies for achieving banks corporate goals and objectives.
Prime Rank Limited maintains its own training institute to develop its employees as prominent banker.
In order to render prompt and efficient service bank needs skilled human resources. This can be done only through structured modular program.
Keeping this end in view, Prime Bank Training Institute (PBTI) conducts various courses workshops, and seminars every year.
Branches of Prime Bank Limited
As a first growing commercial bank in Bangladesh Prime Bank Limited is committed to extend its services all over the country. At Present it has 26 branches that market all the products and services of the bank. Out of these 26 branches 18 are licensed as “Authorized Dealer in Foreign Exchange”.
Table : Branches of BPL
|No.||Name of the Branch||Date of Opening|
|Motijheel Branch, Dhaka||April 17, 1995|
|Khatungonj Branch, Chittagong.||June 25, 1995|
|Moulovi Bazar Branch, Dhaka||July 18, 1995|
|Khulna Branch, Khulna.||November 20, 1995|
|Islamic Banking Branch, Dhaka||December 18, 1995|
|Sylhet Branch, Sylhet,||January 10, 1996|
|Mohakhali Branch, Dhaka||May 20, 1996|
|Barishal Branch, Barishal||July 20, 1996|
|Rajshahi Branch, Rajshahi.||August 25, 1996|
|Kawran Bazar Branch, Dhaka||October 14, 1996|
|Elephant Road Branch, Dhaka||March, 1997|
|Islamic Banking Branch, Sylhet||December 17, 1997|
|Court Road Branch, Sylhet,||December 18, 1997|
|Mouchak Branch, Dhaka||December 28, 1997|
|Gulshan Branch, Dhaka||March 14, 1998|
|Narayanganj Branch, Narayanganj.||March 15, 1998|
|Agrabad Branch, Chaittagong||June 25, 1998|
|Jubilee Road Branch, Chittagong||July 30, 1998|
|Bangshal Branch, Dhaka||March 23, 1999|
|Jessore Branch, Jessore.||April 02, 1999|
|Savar Branch, Savar||September 28, 2000|
|Uttara Branch, Dhaka||January 28, 2000|
|Foreign Exchange Branch, Dhaka||Januray 31, 2000|
|Dhanmondi Branch, Dhaka||May 07, 2000|
|New Eskaton Branch, Dhaka||December 24, 2001|
|Bogra Branch, Bogra.||December 22, 2001|
|Mirpur Branch, Dhaka||Proposed|
|Madhobdi Branch, Narshingdi||Proposed|
|Asad Gate Barnch, Dhaka||Proposed|
|Fatick Chari, Chittagong||Proposed|
|Tongi Barnch, Gazipur.||Proposed|
|Panthopath Branch, Dhaka||Proposed|
|P.B.B. Pahar toli Branch , Chittagong.||Proposed|
Products and services of Prime Bank Limited :
Since commencement of banking operation. Prime bank Limited has not yet only gained enormous popularity but also been successful in mobilizing deposit and loan products. The bank has made significant progress within a very short time period due to is dynamic management and introduction of various consumer-friendly loan and deposit products. All the products and services offered by the hank can be classified under three major heads:
- Ø Contributory Savings Scheme
- Ø Monthly Benefit Deposit Scheme
- Ø Special Deposit Scheme
- Ø Education Savings Scheme
- Ø Fixed Deposit Scheme
- Ø Prime Bank Money Scheme
- Ø Prime Bank Ensured Fixed Deposit Scheme
- Ø Saving Deposit Account
- Ø STD Account
- Ø Multi Currency Account
- Ø Foreign Currency Deposit Account
- Ø Non Resident Taka Account
- Ø NFCD (Non Resident Foreign Currency Deposit Account)
- Ø NITA (Non Resident Investor’s Taka Account)
- Ø Consumers’ Credit Scheme
- Ø Lease Finance
- Ø Hire Purchase
- Ø Small and Medium Enterprise Credit Scheme
- Ø Loan Against Shares and Securities
- Ø House Building Financing Scheme
- Ø Financing Scheme For Contractors
- Ø Computer Software Financing Scheme
- Ø Prime bank Maser Card Credit Card
- Ø Prime Bank VISA Credit Card
- Ø Working Capital Financing
- Ø Import Financing
- Ø Export Financing
- Ø Industrial Financing
Consistent with the modern edge and competing in a per1~ctIy competitive market, Prime Rank Limited has introduced some innovative banking services that are remarkable in a country like Bangladesh. The services offered the batik are as follows :
The bank has set up Wide Area Network (WAN) across the country within is all branches to provide on-line branch banking facility to tits valued customers. The service named “PRIMELINE” has opened up several possibilities of improved customer services. Under this facility client of one branch arc able to do banking transaction at any other branch of the bank. The hank hosted its Web S (www.prime-bank.com) to facilitate dissemination of information about the banking services and facilities of Prime Bank Limited all over the world.
Information Technology in Banking Operation :
Prime Bank Limited has adopted automation in banking operation from the first day of its business. The main objective of this automation is to provide efficient and
prompt services to its valued clients. At present all the branches of the bank are computerized under UNIX operating system to provide best security to the Information. Prime Bank Limited is providing comprehensive range of banking services with utmost care and efficiency to its customers. Auto Teller Machine is used to count money properly to save clients valuable time as well. The customer can draw money / cash from their account within a minute.
SWIFT Service :
Prime Bank Limited is one of the first few Bangladesh Banks to obtain membership of SWIFT (Society for Worldwide Inter- bank Telecommunication). SWIFT is a members’ owned cooperative which provide a first and accurate communication network for Financial transactions such as letter of Credit, Fund Transfer etc. By being a member of SEIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5700 user institutions in 150 countries all over the world.
SWOT Analysis of Prime Bank Limited :
SWOT is an acronym for the internal strength and weakness of a firm and the environmental Opportunity and Threat facing that firm. So if we consider Prime Bank as a business firm and analyze the its strength, weakness, opportunity and threats the scenario will be as follows :
- Ø Energetic as well as smart team work.
- Ø Good Management
- Ø Cooperation with each other
- Ø Usage of faster pc bank software
- Ø Membership with SWIFT
- Ø Good banker-customer relationship
- Ø Strong Financial Position
- Ø Online Banking Services
- Ø Strong position in CAMEL rating.
- Ø Huge business area
- Ø Lack of proper motivation, training and job rotation
- Ø Lack of experienced employees in junior level management.
- Ø Lack of own ATM services.
- Ø Tendency to leave the bank in quest of flexible environment.
- Ø Growth of sales volume
- Ø Change in political environment
- Ø Launching own ATM card services.
- Ø Different services of FCB’S (Phone Banking/Home Ban king)
- Ø Existing card services of Standard Chartered Gridlays Bank
- Ø Daily basis interest on deposit offered by HSBC
- Ø Entrance of new PCB’s
Facts and Figures of Prime Bank :
|Head office||Adamjee Court Annex Building-2|
119-120, Motijheel C/A, Dhaka-1000.CablePrime BankPhone9567265Telex642459 Prime BJ
671543 pbl mj bjFax no.88-02-9567230
Foreign Trade :
No country can produce all kinds of goods and another country, From this sense, mainly this is the origin of foreign trade. When two countries exchange goods or services between them we can called it foreign trade. Many writer define it in many way. Some of them are given below-
“International trade is the transaction of goods and services between two or more countries”
Prot. C.P. Kridleberger
According to prof O.M. Amos- “International trade is the exchange of goods across nation trade is the exchange of goods across nation al boundaries”.
“ International trade is a trade among different countries or trade across political frontiers”.
Foreign Exchange Department
Foreign Exchange refers to the process or mechanism by which the currency of’ one country is converted into the currency of another country. Foreign exchange IS the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency.
Foreign Exchange Accounts:
Nostro Account :
Nostro account means “our account with you”. A Nostro account is a foreign currency account of a bank maintained its foreign correspondents abroad. For example. US Dollar Account of Prime Bank Limited maintained with Citibank. New York. USA is a Nostro account of Prime Bank Limited i.e. from the point of V IC\ of Prime Bank Limited, it is their Nostro Account.
Vostro account means “your account with us”. The account maintained with foreign correspondent in a bank of a particular country is known as Vostro account. For example. State o India’s Taka account maintained with Prime Bank Limited Dhaka is the vostro a/c i.e. from the point of view of’ Prime Bank Limited. It’s a vostro account held for state bank of India. What is the nostro account for a bank in a particular country is a vostro account for
the bank abroad maintaining the account thus the account of Prime bank Limited with Citi Bank N.A New York is regarded as it’s nostro account held with Citi Bank, while Citi Bank N.A. New York regards it as a it’s vostro account held for Prime Bank Limited.
Loro Account :
Loro account means ‘’their account with you”. Account maintained by third part is known as loro account: suppose Prime Bank Limited is maintaining an account with Citi Bank N.A New York and at the same time Janata Bank is also maintaining a nostro account with City Bank N.A New York. From the point of view of Prime Bank Limited Janata Bank’s account maintained with Citi Bank N.A New York is the loro account.
Foreign Remittance Section
Foreign remittance of Prime Bank Limited, Motijheel branch is an integral part of Foreign Exchange Department. And this section of Foreign Exchange Department deals with
- Inward foreign remittance
- Outward foreign remittance
- Opening Foreign Currency Accounts.
- Governing Wage Earner’s Bond.
- Opening Student File etc.
Inward Foreign Remittance:
Normally, Inward Foreign Remittance comprises all incoming foreign currencies Remittances issued by the correspondent banks situated iii the foreign countries and thereby drawn on PB L, Motijheel branch are considered to be its Inward Foreign Remittance’ Followings are the inward Foreign Remittances of PBL. Motijheel branch.
- Ø FDD Payable
- Ø FTT Payable
- Ø TC Payable
- Ø Encashment of foreign currencies endorsed in the passport.
- Ø Purchase of’ foreign currencies.
Outward foreign Remittances :
Remittances issued by Prime Bank. Motijheel Branch to there foreign correspondents to fulfill there customers needs are considered to be the Outward Foreign Remittances. It comprises the following :
- Ø FDD Issued
- Ø FTT Issued
- Ø TC Issued
- Ø Endorsement of foreign currencies in the passport.
- Ø Sale of foreign currencies.
foreign Demand draft (fdd) issued
People have to send money to abroad for Various purposes. PB I issues most of the FDD for the purpose of payment of the application fees to the foreign universities, For the issuance of FDD, FORM T/M has to be filled-in duly. This form is filled up under the foreign Exchange Regulation Act. 1947. This form contains :
- Ø The purpose of travel.
- Ø Name of the country where the applicant will go.
- Ø Name of the air or shipping company.
- Ø Passport number
- Ø Date and place of Issue of the passport are given.
this form has to be duly signed by the applicant. In case of application tee, the applicant has to mention the name of the university in whose favor the FDD is issued. PBL. charges Tk. 400 for each FDD.
Accounting Treatment :
PBL gives the following entries while issuing FDD.
Client’s Account / Cash Dr.
PBL issues only American Express Traveler’s Cheque (T’C). For TC customer has to fill up T/M form. He has to flit up the purchase from also. Purchase from has four copies. One copy for American Express Bank, one copy for PBL. and two copy for the customer. For TC PBL charges 1% as commission.
Requirements for purchasing TC.
There are some requirements that that are to be fulfilled by the Traveler’s Cheque purchaser. The requirements are.
- Passport holder himself has to be present while issuing Traveler’s cheque.
- The passport must be a valid one.
- Air ticket has to be confirmed.
Steps involved in issue of Traveler’s Cheque.
I) After verifying all these document the customer is asked to fill up prescribed application form.
2 ) In the application the customer states the amount he is willing to endorse and it is be verified that his required amount is within the stipulated.
3). Then the customer pays cash or by debiting his account the Traveler’s Cheque is issued.
4). Endorsement is given one the passport and on the ticket, Customer fills up the T/M Form.
5). Purchased application form has to be filled up by the purchaser.
6). Entry has to be given in the Foreign Currency Register and in the Traveler’s Cheque
Endorsement of Cash
Cash foreign currency can also be remitted through the cash endorsement in the passport. In case of endorsing cash in the passport. the requirements are similar to those of Travelers Cheque. But according to the foreign exchange Regulation Act. I 947 an individual cannot take more than $ 1000 in cash in a year. Thats why, the concerned officer checks the last voyage of the purchaser. If he /she made any voyage and if he/she purchase dollar at that time, then the offer will deduct the amount and will give the lest to the purchaser.
PBL, cannot endorse more than $600.00 as cash at a time. For more than $ 600.00 the customer has to purchases TC. For cash endorsement PBL maintains a separate register. For giving cash foreign currency, PBL charges Tk. 100.00 as service charge.
Foreign TT Payable
Foreign remittance section also payS the claim of the foreign TT, A tier receiving TT payable.
PBL performs the following functions :
- Customer has to fill up a ‘C Form” if the amount exceeds $ 2000.00 “C From” describes the purpose of sending the TT.
- The dollar amount comes to the Head office of PBL, through American Express, New York.
- PBL, Motijheel branch sells the dollar to Head Office @ Tk. 65.55 (this rate was applicable when I was in Foreign Remittance Section) and collects the money in local currency.
Opening foreign currency account opening :
BPL opens foreign currency account, which is used for receiving foreign currency from abroad or for sending the currency to abroad. It can be used in favor of a person or in favor of exporters. Prime Bank Limited offers the following foreign currency accounts :
Letter of Credit :
Letter of credit can be defined as a “Credit Contract” whereby the buyer’s bank is committed (on behalf’ of the buyers) to place an agreed amount of money at the seller’s disposal under some agreed conditions. Since the agreed conditions include amount other things, the presentation of some specified documents, the letter of credit is called documentary letter of credit. The uniform Customs and practices for documentary (UCPDC) published by international Chamber of Commerce (1993) revision, publication on 500 defines Documentary Credit.
a) Any arrangement however named or described whereby a bank (the issuing bank) acting at the request and on the instructions of a customs (the Applicant) or on it’s own behalf.
b) Is to make a payment to or to the order of’ a third part (the
beneficiary) or is to accept and pay bills of
exchange (Drafts) drawn by the beneficiary or
e) authorize another bank to effect such payment or to accept and pay such bills of exchange (Drafts)
d) authorize another bank to negotiate against stipulated documents provide that terms and conditions are complied with.
Types of Documentary Letter of Credit
Documentary letter of credit, basically, can be classified into two segments:
a) Revocable letter of credit.
b) Irrevocable letter of’ credit.
Revocable Letter of Credit :
This type of letter of credit can he revoked or cancel led at any time without consent of, or notice to the beneficiary. As per article 8 (a) of’ UCPDC-5OO “A revocable credit may be amended or cancelled by the issuing bank at any moment and without prior notice to the beneficiary” In case of seller (beneficiary), revocable credit involves risk, as the credit may he amended or cancel led while the goods are in transit and before the documents are. presented, or although presented before payments has been made. The seller would then face the problem of obtaining payment on the other hand revocable credit gives the buyer maximum flexibility, as it can be amended or cancelled without prior notice to the seller up to the moment of payment buy the issuing bank at which the issuing bank has made the credit available. In the modern banking the use of revocable credit is not widespread.
Irrevocable Letter of Credit:
An irrevocable credit is a documentary credit, which can not be revoked, varied or changed/amended or cancelled without the consent of all parties- buyer (Applicant), seller (Beneficiary), Issuing Bank, and Confirming Bank (in case of confirmed L/C). As per Article 9(a) of UCPDC 500, an irrevocable credit constitutes a definite undertaking of the Issuing Bank, provided that the stipulated documents are presented to the Nominated Bank or to the Issuing Bank and that the terms and conditions of the credit are complied with. Irrevocable Credit gives the seller greater assurance of payments, but he/she remains dependent on an undertaking of a foreign bank.
Advising of Letter of Credit
Advising means forwarding of a Documentary Letter of Credit received from the issuing bank to the beneficiary (exporter)
Before advising a L/C the Advising Bank must see the following:
- Signatures of Issuing Bank officials on the L/C verified with the specimen signatures book of the said bank when L/C received by airmail.
- If the Export L/C is intended to be an operative cable L/C, test code on the L/C invariably be agreed and authenticated by two authorized officers.
- L/C scrutinized thoroughly complying with the requisites of concerned UCPDC provisions.
- Entry made in the L/C advising register.
- L/C advised to the beneficiary (exporter) promptly and advising charges recovered.
Export L/C Advising:
At the time of advising an export L/C the following particulars to be recorded in the system.
- Bank reference number / SL No.
- Name & address of the beneficiary.
- Export L/C number (minimum 16 digits)
- Date of issue
- L/C value (USD/URO/Pound sterling)
- Name & address of L/C issuing bank.
- Last date of shipment
- Date of export.
- Date of amendment
- New value after amendment
- Amount of charges realized
- Date of charges realized.
(I) L/C advising forwarding schedule addressed to the beneficiary containing the following particulars :
(a) A letter showing some common instructions regarding L/C advising and charges.
(b) L/C number
(c) Date of issue
(d) L/C value
(e) Name of the issuing bank
(f) A blank space at the bottom of the letter for authorized signature.
(II) An extra copy of the forwarding letter addressed to the L/C issuing bank.
In practice of L/C advising in prime bank :
At first prime bank received L/C through S.W.I.F.T or mail or from any other media. After received the L/C bank check the apparent authenticity of the L/C. If the bank be sure there is no fault then it emphasize on some factors such a L/C value, Date of shipment, expiry date of issue and how to get payment. Then bank entry pass this data into L/C advising issue register. Before it authorized officer give a number of the L/C to maintain their serial. After this a format given by the bank to the beneficiary, Duplicate copy of the format presented by the bank. For this activities to accomplish bank impose a charge. If the beneficiary is an account holder of the Prime Bank he have to pay 750 Tk. only. Otherwise he have to pay 1000 Tk. only.
Guideline described in the UCPDC regarding L/C advising :
The uniform customs and practices for documentary (UCPDC) published by inter national chamber of commerce (1993) revision publication no 500 explain some liabilities of advising bank.
(a) A credit may be advised to a Beneficiary through another bank (the “Advising Bank”) without engagement on the part of the Advising Bank, but that bank, if it elects to advise the Credit, shall take reasonable care to check the apparent authenticity of the Credit which it advises. If the bank elects not to advise the Credit, it must so inform the issuing Bank without delay:
(b) If the Advising Bank cannot establish such apparent authenticity it must inform, without delay, the bank from which the instructions appear to have been received that it has been unable to establish the authenticity of the Credit and if it elects nonetheless to advise the Credit it must inform the Beneficiary that it has not been able to establish the authenticity of the Credit.
Export L/C Transfer :
At the time of transfer authentication of an export L/C, the following particulars to be recorded in the system.
- Bank reference number/SL no.
- Name & address of 2nd beneficiary
- Export L/C number (minimum 16 digits)
- Date of issue
- Transferred amount (USD/URO/Pound sterling)
- Name & address of L/C issuing bank
- Amount of charges realized.
- Date of charges realized
(i) L/C transfer forwarding schedule addressed to the 2nd beneficiary containing the following particulars.
- A letter showing some common instructions regarding L/C transfer.
- L/C number
- Date of issue
- L/C value
- Transferred amount
- A blank space at the bottom of the letter for authorized signature.
(II) An extra copy of the forwarding letter addressed to the L/C issuing bank.
Liabilities of L/C transferring in bank :
There are some liabilities of L/C transferring in bank. Transferring bank receive L/C in order to transferred it from first beneficiary or through any others media. At first transferring bank check the apparent authenticity of the credit. Transferring bank must be check the nature of the credit is it transferable or not. Bank transfer the ownership of L/C from first beneficiary to second beneficiary. But there is a law a L/C can not transfer more than one time. So it must be observed by the transferring bank. First beneficiary can divided the L/C value in many part and he has right to transfer it various person or beneficiary.
Guideline described in the UCPDC regarding L/C transferring :
The uniform customs and practices for documentary (UCDC) publics had by international chamber of commerce (1993) revision Publication no 500 explain some liabilities of transferring bank. These are described in below:-
A Credit can be transferred only if it is expressly designated as “transferable” by the Issuing Bank. Terms such as “divisible”, “fractionable”, “assignable’, and “transmissible” do not render the Credit transferable. If such terms are used they shall be disregarded.
The Transferring Bank shall be under no obligation to effect such transfer except to the extent and in the manner expressly consented to by such bank.
At the time of making a request for transfer and prior to transfer of the Credit, the First Beneficiary must irrevocably instruct the Transferring Bank whether or not he retains the right to refuse to allow the Transferring Bank to advise amendments to the Second Beneficiary (ies). If the Transferring Bank consents to the transfer under these conditions, it must, at the time of transfer, advise the Second Beneficiary (ies) of the First Beneficiary’s instructions regarding amendments.
If a Credit is transferred to more than one Second Beneficiary (ies), refusal of an amendment by one or more Second Beneficiary (ies) does not invalidate the acceptance(s) by the other Second Beneficiary (ies) with respect to whom the Credit will be amended accordingly. With respect to the Second Beneficiary (ies) who rejected the amendment, the Credit will remain unlamented. Transferring Bank charges in respect of transfers including commissions, fees, costs or expenses are payable by the First Beneficiary, unless otherwise agreed. If the Transferring Bank agrees to transfer the Credit it shall be under no obligation to effect the transfer until such charges are paid. Unless otherwise stated in the Credit, a transferable Credit can be transferred once only. Consequently, the Credit cannot be transferred at the request of the Second Beneficiary to any subsequent Third Beneficiary. For the purpose of this Article, a retransfer to the First Beneficiary does not constitute a prohibited transfer.
Fractions of a transferable Credit (not exceeding n the aggregate the amount of the Credit) can be transferred separately, provided partial shipments~/ drawings are not prohibited, and the aggregate of such transfers will be considered as constituting only one transfer of the Credit.
The Credit can be transferred only on the terms and conditions specified in the original Credit, with the exception of:
the amount of the Credit,
any unit price stated therein, the expiry date,
the last date for presentation of documents in
accordance with Article 43,
the period for shipment,
any or all of which may be reduced or curtailed.
The percentage for which insurance cover must be affected may be increased in such a way as to provide the amount of cover stipulated in the original Credit, or these Articles.
In addition, the name of the First Beneficiary can be substituted for that of the Applicant, but if the name of the Applicant is specifically required by the original Credit to appear in any document(s) other than the invoice, such requirement must be fulfilled.
The First Beneficiary has the right to substitute his own invoice(s) (and Draft(s)) for those of the Second Beneficiary (ies), for amounts not in excess of the original amount stipulated in the Credit and for the original unit prices if stipulated in the Credit,
and upon such substitution of invoice(s) (and Draft(s)) the First Beneficiary can draw under the Credit for the difference, if any, between his invoice(s) and the Second Beneficiary’s(ies) invoice(s).
When a Credit has been transferred and the First Beneficiary is to supply his own invoice(s) (and Draft(s)) in exchange for the Second Beneficiary’s (ies’) invoice(s) (and Draft(s)) but fails to do so on first demand, the Transferring Bank has the right to deliver to the Issuing Bank the documents received under the transferred Credit, including the Second Beneficiary’s (ies’) invoice(s) (and Draft (s) without further responsibility to the First Beneficiary
at the place to which the Credit has been transferred up to and including the expiry date of the Credit, unless the original Credit expressly states that it may not be made available for payment or negotiation at a place other than that stipulated in the Credit. This is without prejudice to the First Beneficiary’s right to substitute subsequently his own invoice(s) (and Draft (s) for those of the Second Beneficiary (ies) and to claim any difference due to him.
Line mark :
Line mark is a one kind of security Bank provide loon against asset or document Bank always keep mortgage against loan Bank give a lien mark seal on the asset or document when it provide Loan against the asset or document If Bank give Lien mark seal on any asset or document no body can take loan from any financial institute against that asset or document without NOC. Actually it is a security system of a bank.
Lien mark on export L/C in the prime Bank Ltd:
Generally prime bank give lien mark seal on the export L/C. Beneficiary can open Bank to back L/C against Export L/C. Some time bank purchase the export document and make a payment to beneficiary. So it is too much important to secure the document. For this reason prime bank use a special seal for the lien mark. Bank provide a lien mark seal on the document only for keep secure that document.
Import means purchase of goods and services from the foreign countries into Bangladesh. Normally consumers, firms and Government of Bangladesh import foreign goods to meet their various necessities. So, in brief, we can say that import is the flow of goods and services purchased by economic agent staying in the country from economic agent staying abroad.
Regulation of Import:
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 Order issued periodically and public notices issued time to time by the office of the Chief Controller of Import and Export (CCI&E). At present, it is regulated by the Import Policy (1997-2002), which was come into effect on June14, 1998. And Import Policy directs certain Import Procedure, which administers the whole activity.
Import Procedure Followed by PBL:
As an Authorized Dealer Prime Bank, Motijheel Branch is always committed to facilitate import of different goods into Bangladesh from the foreign countries. Import Section, which is under Foreign Exchange Department of the branch, is assigned to perform this job. And to serve its client’s demand to import goods, it always maintains required formalities that are collectively termed as The Import Procedure.
- 1. At first, the importer must obtain Import Registration Certificate (IRC) from the CCI&E submitting the following papers:
ü Up to date Trade License.
ü Nationality and Asset Certificate.
ü Income Tax Certificate.
ü In case of company, Memorandum & Articles of Association and Certificate of Incorporation.
ü Bank Solvency Certificate etc.
2. Then the importer has to contact with the seller outside the country to obtain the Proforma Invoice. Usually an indenter, local agent of the seller or foreign agent of the buyer makes this communication. Other sources are:
ü Trade fair.
ü Chamber of Commerce.
ü Foreign Missions in Bangladesh.
ü Journals etc.
3. When the importer accepts the Proforma Invoice, he/she makes a purchase contract with the exporter detailing the terms and conditions of the import.
4. After making the purchase contract, importer settles the means of payment with the seller. And import procedure differs with different means of payment. The possible means are Cash in Advance, Open Account, Collection Method and Documentary Letter of Credit. In most cases, the Documentary Letter of Credit in our country makes import payment. Purchase Contract contains which payment procedure has to be applied.
5. Requesting the concerned bank (importer’s bank /issuing bank) to open a L/C (irrevocable) on behalf of importer favoring the exporter/seller.
Application For Opening L/C:
At first, an importer will request banker to open L/C along with the following documents.
q An application
q Indent or Proforma Invoice
q Import Registration Certificate (IRC)
q Taxpayer’s Identification Number (TIN)
q Insurance cover note with money receipt
q A bank account in PBL Motijheel Br
q Membership of chamber of commerce
Indent or Proforma invoice:
Indent or Proforma Invoice is the sale contract between seller and buyer in import- export business. There is slight difference between indent and Proforma invoice. The sales contract, which is direct correspondence between importer and exporter, is called Proforma invoice. There is no intermediary between them. On the other hand, there may be an agent of exporter in importer’s country. In this regard, if the sale contract is occurred between the agent of exporter and importer then it is called indent.
Banker delivers form to importer:
After scrutinizing above-mentioned documents carefully, the authorized officer delivers the following forms to be filled up by importer and banker then check it carefully:
- Whether the goods to be imported is permissible or not.
- Whether the goods to be imported is demanding or not.
L/C Application Form (L/CAF)
L/C Application Form is a sort of an agreement between customer and bank on the basis of which letter of credit is opened. PBL Mothijheel Branch provides a printed form for opening of L/C to the importer. A special adhesive stamp of value Tk.150 is affixed on the form in accordance with Stamp Act currently in force. While opening, the stamp is cancelled. Usually the importer expresses his decision to open the L/C quoting the amount of margin in percentage. Usually the importer gives the following information –
- Ø Full name and address of the importer
- Ø Full name and address of the beneficiary
- Ø Draft amount
- Ø Availability of the credit by sight payment/acceptance/negotiation/deferred payment
- Ø Time bar within which the documents should be presented
- Ø Sales type (CIF/FOB/C&F)
- Ø Brief specification of commodities, price, quantity, indent no. etc.
- Ø Country of origin
- Ø Bangladesh Bank registration no.
- Ø Import License/LCAF no.
- Ø IRC no.
- Ø Account no.
- Ø Documents no.
- Ø Insurance Cover Note/Policy no., date, amount
- Ø Name and address of Insurance Company
- Ø Whether the partial shipment is allowed or not
- Ø Whether the transshipment is allowed or not
- Ø Last date of shipment
- Ø Last date of negotiation
- Ø Other terms and conditions (if any)
- Ø Whether the confirmation of the credit is requested by the beneficiary or not.
- Ø The L/C application must be completed/filled in properly and signed by the authorized person of the importer before it is submitted to the issuing bank.
L/C Authorization Form (L/CAF):
The Letter of Credit Authorization Form (LCAF) is the form prescribed for the authorization of opening letter of credit/payment against import and used in lieu of import license. The authorized dealers are empowered to issue LCA Forms to the importers as per basis of licensing of the Import Policy Order in force to allow import into Bangladesh. If foreign exchange is intended to be bought from the Bangladesh Bank against an LCAF, it has to be registered with Bangladesh Bank’s Registration Unit located in the concerned area office of the CCI&E. The LCA Forms available with authorized dealers are issued in set of five (05) copies each. First Copy is exchange control copy, which is used for opening of LC and effecting remittance. Second Copy is the custom purpose copy, which is used for clearance of imported goods from custom authority. Triplicate and Quadruplicate Copy of LCAF are to be sent to concerned area of CCI&E office by authorized dealer/Registration Unit of Bangladesh Bank. Quintuplicate Copy is kept as office copy by authorized dealer/Registration Unit. The Letter of Credit Authorization Form (LCAF) contains the followings :-
- Ø Name and address of the importer
- Ø IRC no. and year of renewal
- Ø Amount of L/C applied for (both in figure and in word)
- Ø Description of item(s) to be imported
- Ø ITC Number/HS Code No.
- Ø Signature of the importer with seal
- Ø List of goods to be imported
Import Permit Form (IMP):
ü L/C authorization form no
ü Value in taka
ü Registration of LCAF
ü Quantity of goods
ü Invoice value
ü Country of origin
ü Port of shipment
ü Name of the steamer
ü Indentor’s address
PREPARATION OF L/C BY BANKER:
Bank’s officer prepares L/C when above-mentioned forms are to be submitted by customer or importer. Before preparing L/C PBL officer scrutinizes the application in the following areas:
- The terms and conditions of the L/C must be complied with UCPDC 500 and Exchange Control & Import Trade Regulation.
- Eligibility of the goods to be imported.
- The L/C must not be opened in favor of the importer.
- Radioactivity report in case of food item.
Survey reports or certificate in case of old machinery is required. Bank of the importer is called ‘L/C Issuing Bank’. Then issuing bank inform it’s corresponding bank, called “Advising Bank’ or Confirming Bank” located in exporter’s country to advise and the credit forward to the exporter and simultaneously officer makes L/C opening vouchers.
One debit voucher to be passed.
Corresponding credit vouchers to be passed. (Margin, commission, postage, stamps, F.F.C. and others.)
Liability voucher to be passed.
L/C Applicant A/C or Customer’s A/C
F.F.C (foreign corresponding charge) A/C
Telex charge A/C
Customer’s liability A/C
Banker’s liability A/C
The L/C Confirming process:
Issue L/C & request to Add Confirm
Forwarding Documentary Credit By Advising Or Confirming Bank:
There are usually two banks involved in a documentary credit operation. The issuing bank and the 2nd bank, the advising bank, is usually a bank in the seller’s country. The issuing bank asks another bank to advise or confirm the credit.
If the 2nd bank is simply “advising the credit”, it will mention that when it forwards the credit to seller, such a bank is under no commitment or obligation to pay the seller.
If the advising bank is also “confirming the credit”, this mention that the confirming bank, regardless of any other consideration, must pay accept or negotiate without recourse to seller. Then the bank is called confirming bank also.
Scrutinige Import Document.
Submission Of Necessary Documents By Exporter To The Negotiating Bank:
As soon as the seller/exporter receives the credit and is satisfied that he can meet its terms and conditions, he is in position to load the goods and dispatch them. The seller then sends the documents evidencing the shipment to the bank.
Exporter will submit those documents in accordance with the terms and conditions as mentioned in L/C. Generally the documents observed by me in the foreign exchange department are:
- Ø Bill of exchange
- Ø Commercial invoice
- Ø Bill of lading
- Ø Certificate of origin
- Ø Packing list
- Ø Clean report of finding (CRF)
- Ø Weight list
- Ø Insurance cover note
- Ø Pre-shipment certificate
The negotiation process of import L/C:
Bill of exchange:
According to the section 05, Negotiable Instruments (NI) Act-1881, 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 at 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.
It may be either at sight or certain day sight. At sight means making payment whenever documents will reach in the issuing bank.
Commercial invoice issued by exporter is the accounting document by which the seller charges the goods to buyer.
Bill of lading:
A bill of lading is a document usually stipulated in a credit when exporter dispatches the goods. It is an evidence of a contract of carriage, is a receipt for the goods and is a document of title to goods. It also constitutes a document that is or may be, needed to support an insurance claim.
Clean Report of Findings:
This certificate is provided by the Pre Shipment Inspection (PSI) Concerns. The entire world has been brought under the three supervision of the three pre-shipment inspection concerns based on different territory. These are as follows
q Intertek Testing Service
q Instrospect Griffith Ltd.
q Bureau Beritas
The Documents Sent To The Issuing Bank Through The Negotiating Bank:
If Bank become satisfy to check the document bank give acceptance. If Bank can find out any fault bank give discrepancy.
The negotiating bank carefully checks the documents provided by the exporter against the credit, and if the documents meet all the requirement of the credit, the bank will pay, accept, or negotiate in accordance with the terms and conditions of the credit. Then the bank sends the documents to the L/C opening bank.
SENDING L/C DOCUMENTS
Making The Payment Of Foreign Bill Through The Reimbursing Bank:
The L/C issuing bank getting the documents checks immediately and if they are in order and meet the credit requirements, it will arrange to make payment against L/C through reimbursement bank and will send the importer the document arrival notice.
Lodgment & Retirement of shipping documents:
After scrutinizing the import negotiating document, if no discrepancy are found then it is treated to be accepted after the end of seven banking day following the day of receipt of the document under “Article 1(b) of UCPDC –500”. If any discrepancy is found then the banker inform it to the importer that whether he accept the bills with discrepancies or not. If the importer does not accept, the banker (PBL) informs it to the negotiating bank within seven banking days from the date of receipt of the documents, otherwise it is treated to be accepted and the opening bank (PBL) must bound to pay against the bill and no complain against the bill will be accepted more than 4 banking days following the date of receipt of the documents under article no. K1 (d) & article no. 14 (c) of the UCPDC-500.
The local office passes the following vouchers after negotiation.
BLC (payment against document) A/C ——–Dr.
H.O. International Division A/C ———————Cr.
Reverse entry is given.
Banker’s liability A/C
Customer’s liability A/C
The shipping documents then stamped with PAD number and entered in the PAD register. As soon as the above formalities are completed, the importer is served with PAD bill intimations for retirement of concerned import documents.
On intimation the importer calls on the bank’s counter requesting retirement of the shipping documents against payment to the debit of their account by the bill amount and other charges payable. Bank prepares cost memo in printed form on account of the concerned party giving detailed read of charges payable.
Vouchers passed in retiring documents:
L/C margin A/C ——————Dr.
Party A/C ————————-Dr.
BLC A/C ——————————–Cr.
Income A/C interest on PAD ———-Cr.
Commission on PAD ——————-Cr.
Miscellaneous earning —————–Cr.
After the vouchers are passed, endorsement is made on the back of the bill of exchange as ‘Received Payment’ & bill of leading is endorsed to the effect that ‘Please deliver to the order of M/S’ under two authorized signatures of the bank officials of PBL. Then the documents are delivered to the L/C applicant (importer).
But if there is any discrepancy in the documents, the L/C issuing bank send message to the negotiating bank to rectify it under its risks and responsibilities.
If there is no available in cash in importer’s hand, he can request the bank to grant loan against the documents for the purpose of post import finance. There are two following forms of post import finance available in PBL MJ Br.
- LIM (Loan against imported merchandise).
- LTR (Loan against trust receipt).
LIM: On the arrival of goods and lodgment of import documents, importer may request the bank for clearance of goods from the port (custom) and keep the same to bank warehouse. Proper sanction from the competent authority is to be obtained 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 either LTR or LIM.
LTR/LIM (Importer) A/C
After payment of the loan or delivery of goods:
It’s needless to say that bank only deals with the documents, not with goods & services in case of foreign exchange business.
Exporting is crucial to one nation’s economic health. Increased exports mean business growth, and business growth means bigger profits for the companies- all of which ultimately result in more employment and a socio economic revolution . Yet only a small percentage of potential exporters take advantage of these opportunities. After globalization and free trade policy, now days our manufactures as well as the exporter both are facing acute constrain to meet up the challenge. Our business cannot ignore these international realities. If we intend to maintain our market share and keep pace with our competitors we have to take careful decision and careful assessment of the advantages a~1 disadvantages of expanding into new markets.
In the international marketplace, knowledge not only means power, it means survival. It our companies are going to succeed internationally, we must know as much or more than our customers and our competitors. A single misstep may not only cost our company business, it can lead to big delays and stiff fines.
Unfortunately, most information about international trade is targeted at big companies wit large logistics and legal staffs that know how to navigate the maze of import-export rules and regulations. Small and midsize companies lack the resources – and often the training of larger corporations.
Considering the above fact we should carefully understand its advantages and disadvantages of Export which are as follows:
Advantages and Disadvantages of Export
- Ø Exporting can help our business:
- Ø Enhance domestic competitiveness
- Ø Increase sales and profits
- Ø Gain global market share
- Ø Reduce dependence on existing markets
- Ø Exploit corporate technology and know-how
- Ø Extend the sales potential of existing products
- Ø Stabilize seasonal market fluctuations
- Ø Enhance potential for corporate expansion
- Ø Sell excess production capacity
- Ø Gain information about foreign competition
In comparison, there are certain disadvantages to exporting. Our business may be required to:
- Ø Subordinate short-term profits to long-term gains
- Ø Hire staff to launch the export expansion
- Ø Modify our product or packaging
- Ø Develop new promotional material
- Ø Incur added administrative costs
- Ø Dedicate personnel for traveling
- Ø Wait longer for payments
- Ø Apply for additional financing
- Ø Obtain special export licenses
These disadvantages may justify a decision to forego direct exporting at the present time, although your company may be able to pursue exporting through an intermediary. If our company’s financial situation is weak, attempting to sell into foreign markets may be ill-timed Thus the decision to export needs to be based on careful analysis and sound planning.
Financing Export :
Few would disagree that small businesses should look overseas for profit opportunities. However, to succeed in the international marketplace, small firms must offer their customers competitive payment terms and methods. Therefore choosing the most appropriate international payment method is very essential.
International Payment Methods :
A small business exporter’s principal concern is to ensure that he or she gets paid in full and or time for each export sale. It does little good to make a sale if the buyer delays payment so long that the financing cost eats up the profit. Foreign buyers have concerns as well, such as ensuring that their orders arrive on time and as requested. Therefore, it is important that the terms of payment be negotiated carefully to meet the needs of both the buyer and seller. The payment method used can significantly affect the financial risk of the buyer and seller in an export sale. In general, the more generous the sales terms are to a foreign buyer, the greater the risk to the exporter. As shown below, the primary methods of payment for international transactions, ranked in order of most secure to least secure for the exporter, include:
- Ø Payment in advance
- Ø Letters of credit
- Ø Documentary collections (drafts)
- Ø Consignment
- Ø Open account
Payment in Advance:
Requiring payment in advance as a term of sale is not uncommon, but in many cases is too expensive and too risky for foreign buyers. Requiring full payment in advance is an unattractive option for the buyer and can result in lost sales, especially since a competitor (foreign or domestic) may be willing to offer more attractive terms. Before negotiating payment terms determine whether or not your buyer can obtain a comparable product or service elsewhere arc the terms offered. In some cases, such as when the buyer’s credit worthiness is unknown or r your manufacturing process is specialized, lengthy or capital-intensive, it may be reasonable to insist upon progress payments or full or partial payment in advance.
Documentary Collections :
Documentary collections involve the use of a draft, drawn by the seller on the buyer, requiring the buyer to pay the face amount either on sight (sight draft) or on a specified date in the future (time draft). The draft is an unconditional order to make such payment in accordance with its terms. Instructions that accompany the draft specify the documents needed before title to the goods will be passed from seller to buyer.
When goods are sold subject to consignment, no money is received by the exporter until after the goods have been sold by the purchaser. Title to the goods remains with the exporter until such time as all the purchase conditions are satisfied. As a practical matter, consignment is ver’~, risky. There is generally no way to predict how long it may take to sell the goods. Moreover, if they are never sold, the exporter would have to pay the costs of recovering them from the foreign consignee.
An open account transaction means that the goods are manufactured and delivered before payment is required (e.g., payment could be due 30, 60 or 90 days following shipment or delivery). In international business transactions, this method of payment should not be usec unless the buyer is credit worthy and the country of destination is politically and economically stable, or unless the receivables are covered by export credit insurance. In certain instances it is possible to discount accounts receivable with a factoring company or other financial institution, referred to below.
- Ø agrees to buy products
- Ø agrees to be paid via documentary collection
- Ø ships goods and submits shipping documents to bank for collection or acceptance.
- Ø the documents are released to buyer against payment or acceptance
- Ø seller receives payment at sight or at a time agreed under the acceptance
Procedure of Export Operation
SCRUTINY AND NEGOTIATION OF EXPORT BILL
Bank deals with documents not with goods. The bankers are to ascertain that the documents are strictly as per terms of L/C. Before negotiation of the export Bill the bankers are to scrutinize and examine each and every document’s with care. Negligence on the part of the bankers may result in non repatriation or delay in realization of export proceeds as incorrect documents may put the importers abroad into unnecessary troubles.
The scrutiny of the Bill of Exchange (Draft) and other related documents should ensure that.
- Ø The documents are presented for negotiation before the expiry of the relative credit.
- Ø The amount does not exceed the amount available under the credit.
- Ø All the documents stipulated in the L/C are submitted.
- Ø The corrections and alteration are properly authenticated in all documents.
Export documents checking:
1. General verification :-
a) L/C restricted or not.
b) Exporter submitted documents before expiry date of the credit.
c) Shortage of documents etc.
2. Particular verification:
a) Each and every documents should be verified with the L/C.
3. Cross verification :
a) Verified one documents to another.
After proper examination or checking of a described Export document we may find following discrepancies:
- Ø Late shipment
- Ø Late presentation
- Ø L/C expired
- Ø L/C over-drawn
- Ø Partial shipment or transshipment beyond L/C terms.
BILL OF EXCHANGE(B/E)
- Ø Amount of B/E differ with Invoice.
- Ø Not drawn on L/C issuing Bank.
- Ø Not signed
- Ø Tenor of B/E not identical with L/C.
- Ø Full set not submitted.
COMMERICAL INVOICE (C/I)
- Ø Not issued by the Beneficiary.
- Ø Not signed by the Beneficiary.
- Ø Not made out in the name of the Applicant
- Ø Description, Price, quantity, sales terms of the goods not correspond to the Credit.
- Ø Not marked one fold as Original.
- Ø Shipping Mark differs with B/L & Packing List.
- Ø Gross Wt., Net Wt. & Measurement, Number of Cartoons/Packages differ with B/L.
- Ø Not market one fold as Original.
- Ø Not signed by the Beneficiary.
- Ø Shipping marks differ with B/L.
BILL OF LADING/AIRWAY BILL ETC (TRANSPORT DOCUMENTS)
- Full set of B/L not submitted.
- B/L is not drawn or endorsed to the Order of Prime Bank Ltd.
- “Shipped on Board”, “Freight Prepaid” or “Freight Collect” etc. notations are not marked on the B/L.
- B/L not indicate the name and the capacity of the party i.e. carrier or master, on whose behalf the agent is signing the B/L.
- Shipped on Board Notation not showing name of Pre-carriage vessel/intended vessel.
- Shipped on Board Notation not showing port of loading and vessel name (In case B/L indicates a place of receipt or taking in charge different from the port of loading).
- Short Form B/L
- Charter party B/L
- Description of goods in B/L not agree with that of Invoice, B/E & P/L
- Alterations in B/L not authenticated.
- Loaded on Deck.
- B/L bearing clauses or notations expressly declaring defective condition of the goods and/or the packages.
- Ø N.N. Documents not forwarded to buyers or forwarded beyond L/C terms.
- Ø Inadequate number of Invoice, Packing List, B/L & Others submitted.
- Ø Short shipment Certificate not submitted.
While checking the export documents following things must be taken in consideration.
Each and every clause in the L/C must be complied with meticulously and ensure the following
- Ø that the documents are not state;
- Ø that the documents are negotiated within the L/C validity, It a credit expire on a recognizes bank holiday its life is automatically become valid upto the next works day.
- Ø that the documents value does not exceeds the L/C value.
Draft is to examined as under
- Draft must be dated
- It must be made out in the name of the beneficiary’s bank or to be endorsed to the bank.
- The signature of the drawer must be verified by the negotiating bank.
- Amount must be tallied with the Invoice amount.
- It must be marked as drawn under L/C No. dated issued by—-Bank.
It is to be scrutinized to ensure the following:
- The Invoice is addressed to the Importer
- The full description of merchandise must be given in the invoice strictly as per L/C.
- The price, quality, quantity, etc. must be as per L/C.
- The Invoice must be languaged in the language of L/C.
- No other charges is permissible in the Invoice beyond the stipulation on the L/C.
- The amount of draft and Invoice must be same and within the L/C value.
- If L/C calls for consular invoice, then the beneficiary’s invoice is not sufficient.
- Number of Invoice will be submitted as per L/C.
- The shipping mark and number of packing list shown in the B/L must be identical with those given in the Invoice and other documents.
10.The Invoice value must not be less than the value declared in EXP Forms.
11.Invoice amount must be correct on the basis of price, quantity as per L/C.
12.Invoice amount, indicate sale terms! Inco terms VIZ FOB, CFR, CIF etc.
13.Consular Invoice must be stamped by the local consulate/embassy of the country to which the goods are imported.
Beneficiary statement, VISA/Export License issued by EPB, Certificate of Origin, Weight Certificate, Phytosaitary Certificate, Packing List, Inspection Certificate.
Certificate of analysis, quality certificate, MCD duly signed and any other documents required by L/C each of these certificates/documents conform to the goods invoice and are relevant to L/C.
Negotiating Bank will check the above documents whether it is as per L/C or not. If Negotiating Bank find everything in order or as per export L/C, bank will negotiate the document and will disburse the generated fund as per Banks norms.
If the Negotiating Bank will find any discrepancies in the documents. They will send the documents on collection or they can negotiate under reserve by the request of the exporter or they can seek permission/Negotiation authority from issuing Bank to allow Negotiating Bank to Negotiate the documents despite the discrepancies. L/C issuing Bank will inform the matter to buyer, if the buyer accept the discrepancies mentioned by Negotiating Bank, issuing bank will authorise the Negotiating bank to negotiate the discrepant documents.
Normally negotiating Bank will send the documents on collection basis mainly for the following discrepancies.
- L/C expired;
- Late shipment;
- Late presentation;
- L/C overdrawn;
- Unit price differ between L/C and Commercial Invoice;
- Consignee Name and address differ between L/C and other documents.
- Discrepancies in B/L;
- Any other Major discrepancies.
Recording in the Register.
After checking and disposal instruction/sanction of the competent authority the full details of the shipment and all the relevant documents are recorded in the Bank prescribed FDBP/FDBC register. The following particulars are to be noted
- Ø Date
- Ø Export Bill No.
- Ø Drawer
- Ø Drawee
- Ø Particulars of Goods
- Ø Steamer/Carrier
- Ø Bill Amount in F.C
- Ø Exchange Rate
- Ø Taka Amount
- Ø Amount paid to party with details of deduction
- Ø Tax deducted Tk.
- Ø Initial
- Ø EXP Form No.
- Ø Collecting Bank
- Ø Tenor/Due Date
- Ø Amount realised & Date of Realisation
- Ø Date of reporting to Bangladesh Bank
- Ø Discount paid, if any.
- Ø Date of PRC issued.
- Ø Date adjusted
- Ø Initial
- Ø Export L/C No.
Proposal, Vouching and Accounting, Mechanism for Export Bill purchased / Negotiation are furnished as under:
Example: (1) Document value US$10,000/= i.e. Invoice value US$10,000/=
(2) Beneficiary/Exporter: M/S XYZ APPARELS LTD.
When the Export proceed realized then the following vouchers should be passed.
DR. HO/ ID® OD sight export for BTB and FCAD (Exp) portion (for rest amount)
CR. F.C held against BTB L/C © OD sight export.
CR. FCAD (Exp) A/c. (Retention Quota) © OD sight Intt:. for BTB portion
DR. HO/ ID. (FAD) ID © B. Bank Ready Buying (for purchase amount)
CR. FDBP A/c. (which was created at the time of import bill purchased)
CR. Income A/c. Exchange gain on FBP (difference between B. Bank Ready Buying Rate and OD sight Export Rate)
When Export Bill negotiated under reserve then the following vouchers should be passed.
DR. FDBP A/C. (90% of the Invoice value)
CR. F.C held against BTB L/C A/c.
CR. Marginal deposit A/c.
When Export proceeds realized under reserve following vouchers should be passed.
DR. Marginal deposit A/c.
CR. S/D. A/c. Export Bill courier.
CR. S/D. A/c. Export Bill reserve margin for (FDR)
© 2.5% of the Invoice value)
CR. S/D. A/c. Export against commission (L)
CR. S/D. A/c. Income Tax on Bills © 0.25%/Govt reserve © 0.10% (Only for Jute an: Ju: E goods)
CR. S/D. A/C. Margin on L/C. (Cash)
CR. Packing credit A/c.
CR. Hire purchase A/c. (if any)
CR. Lease Finance A/c. (if any)
CR. SOD (Export) A/c. (if any)
CR. Others (if any)
CR. Customers A/c.
For purchase amount (90%) of Bill value
DR. HO (FAD) ID A/C © B. Bank Ready Buying Rate)
CR. FDBP A/C. (which was created at the time of Bill purchase)
CR. Income A/c (Exchange gain on FBP (Difference between B. Bank Ready Buying Rate and O.D Sight (Export) Rate
DR. Prime General A/C. (FAD) ID. H.O A/C. © OD sight (export) rate
For rest 10% amount/OR less than 10% amount
DR. HO (FAD) ID A/C. © OD sight Export Rate
CR. F.C held against BTB L/C © OD sight (Export)
Now days, the bill purchase under Reserve method has lost its popularity.
When Export documents sent on collection basis, in that case the following vouchers should b passed.
DR. Foreign Bill lodged A/c. (FDBC)
CR. Foreign Bill collection A/C. (FDBC)
When FDBC realized the vouchers are as under.
DR. HO (FAD) ID @ OD sight (export) for BTB portion.
CR. F.C held against BTB L/C. @ OD sight Export for BTB portion.
DR. Prime General A/C. (FAD) ID @B Bank Ready Buying (for rest amount)
CR. S/D. Courier service @ TI (doc)
CR. S/D. A/C. Reserve margin @ TT (doc), FDR @ 2.5% of the invoice value @ TT (doc)
CR. S/D. A/C. Export Bill Agent Commission ) Local) @ TT (doc)
CR. S/D. A/C. Income Tax on Bills/Govt. Reserve @ 0.10% @ TT (doc)
CR. S/D. A/C. Margin o L/C (Cash) if any @ U (doc)
CR. I/A. Comm. On Export Bill © 0.20°k © TT (doc)
CR. I/A. Exchange gain on FBP (difference between B. Bank Ready Buying Rate and TT doc Rate.
CR. Packing credit A/C. (if any)
CR. Hire purchase A/c. (if any)
CR. SOD (Export) A/c. (if any)
CR. Others (if any),.
CR. Customers A/C.
Prime Bank Limited
Proposal for negotiation/collection of export bill
FDBP NO. 01-0001-2000 Value US$10,000.00 Date : 01-01-2000
EXP NO. 1539-0001-2000 A/C M/S Sameen Apparels Limited.
Export L/C No. RGDC FEX 20004399 Export made : US$ 10,000.00
Value : US$ 50,000.00 Outstanding P/C : Tk. 250.000.00
Expiry : 31.03.2000 O/D P/C : –
O/D H/P : Tk. 20,000.00
Subject Export Bill comprising of :
CERTEXPORT LICNSHIP CERTMISCFORST
434243316Doc. Req. as per LC26646+
Upon examination we find following discrepancies in the document/the documents are in order in all respects.
– B/E not signed by the Beneficiary.
– Invoice not marked one fold as original.
– Alteration in B/L not authenticated by shipping lines.
Appropriation of bill Amount:
i) Export Bill value : $ 10,000.00
ii) Less: FC to be retained for payment of accepted bills: $ 6,000.00
iii) Less: FC deposit (Retention Quota) FCAD (Exp) 7.50% : $ 750.00
iv) Less : Commission/charges to Foreign Bank 2% : $ 200.00
v) Less : Our charges :
vi) Net Amount : $ 3,050.00
Dr. 7431 FDBP US$3,05.00 @ 50.6215 : Tk. 1,52,395.00
Cr. 2011429-1 S/D A/C Courier Service : Tk. 1,300.00
Cr. 2011428-4 S/D A/c Export Bill Reserve Margin : Tk. 13,000.00
fro (FDR) @ 2.5% of Invoice value
Cr. 2011410-7 S/D A/C Export Bill Agency commission (L) $150.00: Tk. 7,593.00
Cr. 20114110-4 S/D A/C Income Tax on bills G. Rev. @0.10% (Jute) : Tk.
Cr. 2011417-8 S/D A/c Margin on L/C (Cash) : Tk.
Cr. 7220000-1 Packing Credit : Tk. 50,000.00
Cr. 7220 Packing Credit : Tk.
Cr. 72800000-1 Hire Purchase : Tk. 20,000.00
Cr. 72300000-1 S.O.D. (Export) : Tk. 5,000.00
Cr. Others (if any) :
Cr. CD-5349-2 Customer’s Account : Tk. 57,502.00
Total : Tk. 1,54,395.00
Placed for negotiation of documents for US$ 10,000.00 on above terms against Indemnity.
Back to Back Letter of Credit (BTB):
Bangladesh is a developing country. After receiving order from the importer, very frequently exporters face problems of scarcity of raw material. Because some raw materials are not available in the country. These have to be collected from abroad. In that case, exporter gives lien of export L/C to bank as security and opens an L/C against it for importing raw materials. This L/C is called Back To Back L/C. In back to back L/C, PBL keeps no margin.
Sometimes there is provision in the export L/C that the importer can use the certain portion of the export L/C amount for importing accessories that are necessary for the making of the product. Only in that case, BTB is opened.
Payment of Back to Back L/C:
Client gives the payment of the BTB L/C after receiving the payment from the importers. But in some cases, client sells the bills to the PBL. But if there is discrepancy, the PBL sends it for collection.
In case of BTB L/C, PBL gives the payment to the beneficiary after receiving the payment from the L/C of the finished product (i.e. exporter). Bank gives the payment from DFC Account (Deposit Foreign Currency Account) where Dollar is deposited in national rate.
For BTB L/C, opener has to pay interest at LIBOR rate (London Inter Bank Offering Rate). Generally LIBOR rate fluctuates from 5% to 7%.
A schedule named Payment Order; Forwarding Schedule is prepared while making the payment. This schedule is prepared when the payment of L/C is made. This schedule contains the followings:
- Reference number of the beneficiary’s bank and date.
- Beneficiary’s name.
- Bill value.
- Payment order number and date.
- Equivalent amount in Taka.
Advance against Red-clause Letter of Credit:
Under Red clause letter of credit, the opening bank authorizes the Advising Bank/Negotiating Bank to make advance to the beneficiary prior to shipment to enable him to procure and store the exportable goods in anticipation of his effecting the shipment and submitting a bill under the L/C. as the clause containing such authority is printed in red ink, the L/C is called Red clause and Green clause respectively. Though it is not prohibited, yet very rare in Bangladesh.
Post Shipment Credit:
This type of credit refers to the credit facilities extended to the exporters by the banks after shipment of the goods against export documents. Necessity for such credit arises as the exporter cannot afford to wait for a long time for without paying manufacturers/suppliers. Before extending such credit, it is necessary on the part of banks to look into carefully the financial soundness of exporters and buyers as well as other relevant documents connected with the export in accordance with the rules and regulations in force. Banks in our country extend post shipment credit to the exporters through:
- Negotiation of documents under L/C;
- Foreign Documentary Bill Purchase (FDBP):
- Advances against Export Bills surrendered for collection;
Negotiation of documents under L/C:
The exporter presents the relative documents to the negotiating bank after the shipment of the goods. A slight deviation of the documents from those specified in the L/C may rise an excuse to the issuing bank to refuse the reimbursement of the payment already made by the negotiating bank. So the negotiating bank must be careful, prompt, systematic and indifferent while scrutinizing the documents relating to the export.
Foreign Documentary Bill Purchased (FDBP):
Sometimes the client submits the bill of export to bank for collection and payment of the BTB L/C. In that case, bank purchases the bill and collects the money from the exporter. PBL subtracts the amount of bill from BTB and gives the rest amount to the client in cash or by crediting his account or by the pay order.
For this purpose, PBL maintains a separate register named FDBP Register. This register contains the following information:
ü Reference number (FDBP)
ü Name of the drawee
ü Name of the collecting bank
ü Conversion rate
ü Bill amount both in figure & in Taka.
ü Export form number
ü Export L/C number
Advances against Export Bills surrendered for collection:
Banks generally accept bills for collection of proceeds when they are not drawn under an L/C or when the documents, even though drawn against an L/C contain some discrepancies. Bills drawn under L/C, without any discrepancy in the documents, are generally negotiated by the bank and the exporter gets the money from the bank immediately. However, if the bill is not eligible for negotiation, the exporter may obtain advance from the bank against the security of export bill. In addition to the export bill, banks may ask for collateral security like a guarantee by a third party and equitable/registered mortgage of property.
Silent Features of Export Policy-2003-2006.
- Employment generation through increase in export earnings
- Importance of RMG sector and possibility of expanding the market base
- Major change in the post MFA trade environment
- Diversification of the export commodities
- To raise the efficiency and institutional capability of export related institutions like EPB
- Commodity diversification
- Increasing the quality of goods
- Adopting the cutting edge technology! IT technology to expand the export market
- Infrastructure building and develop the backward linkage and forward linkage industry
- Human resource development in the trade sector
- Formation of commodity development council
- Assistance to the producers and exporters in getting high price of the product
- To ensure the product quality by encouraging the building of appropriate institutions
- To assist the producers in applying the modern technology for designing and production of the commodity
Scope of the Policy:
- Priority of National Budget and NBR relating to Tax/Tariff
- Not applicable to EPZ
- Empowerment of commerce ministry to amend any provision of the policy
q 8565.78 million us dollar for the year 2004-5
Classification of the export sector
Most Prioritized Sector
- Software and ICT products
- Agro products and Agro processing
- Light Engineering products
- Leather products
- High valued RMG
Facilities given to the Most Prioritized Sector :
- Project loan at confessional interest rate
- Income tax rebate
- Cash incentive
- Soft loan( Export credit)
- Air carriage at low fare
- Bonded warehouse facility
Special development sector :
- Pharmaceuticals products
- Cosmetics and Toiletries
- Luggage and fashionable items
- C. R. Coil
- Cards and calendar
- Stationary goods
- Herbal products
Foreign currency utilization :
v Exporters can maintain a foreign currency account and utilize that for businesses purposes
Export promotion fund :
v Venture capital at low interest rate for the production
v Giving assistance in acquiring foreign technical consultancy and technology for product diversification and quality development.
v Assistance given to participate in the trade fair Establishing sales and display center outside the country.
- Participation in foreign training program
- Reorganizing the export credit guarantee scheme
Export Financing :
- Duty draw back credit scheme
- Making the import of raw materials and other related goods simple under Export Promotion Bureau
- Back to back L/C for export commodities
- Consideration in giving loan at easy terms for the import of capital machineries goods
EXPORT CREDIT :
- 90% loan from commercial bank under irrevocable letter of credit
- BB to take measures in ensuring the smooth credit flow for the export sector
- Fixing the cash credit limit of the exporter based on the preceding years performance
- Establishing an export credit cell in BB for export financing
- Formation of a high-powered loan monitoring committee
- Waiver of 50% tax of export income
Export procedures :
- Export Registration Certificate from CCI & E
- The ERC number is to be incorporated on EXP forms
Registration of Exporters :
Obtaining ERC requires Bangladeshi Exporters to apply to the Controller/Joint Controller/ Deputy Controller/Assistant Controller of Imports and Exports along with the following documents
Nationality and Asset Certificates
Memorandum and Articles of Association and Certificate of Incorporation in case ct Limited Company
Income Tax Certificate
Trade License etc.
Securing the order
Buyer’s Local Agent
Export Promoting organization
Bangladesh Mission Abroad
Chamber of Commerce (local and foreign)
Trade Fair, etc.
Signing the contract
Receiving the letter of credit
The terms of the L/C are in conformity with those of the contract
The L / C is an irrevocable one, preferably confirmed by the advising bank
Procuring the materials Shipment of Goods
Documents for shipment
Bill of Exchange (if required)
Certificate of origin
Quality control certificate
Submission of the documents to the bank for negotiation
During the time pr preparing report I was learning various procedures form preparing a documentary credit to its successful closing. As the work is completely structured I had very few things to discover for the Prime Bank Limited, Motijheel Branch. But I tried to had a keen look over the various steps of day to day work and found the following for recommendation, that might help to enhance Prime Bank Motijheel Branch’s performance and success, as well as.
Internal Marketing Policy should be applied for the employees, because if they remain satisfied they will willingly involve their fertility for the bank (Internal Marketing is discussed in conclusion part under the heading’ please have a marketing look’)
Regular Performance Appraisal and assuring promotion/reward depending upon that will resist the employees switching tendency.
Scarcity of computers bound the employees to share others’ computer. For up-to-date and quick performance every employee should have a computer as well as upgraded software support.
Software up gradation in very necessary. Because with the present software (telnet) only one person can run posting in a particular account say, Prime General. At that time other person can’t continue posting and has to wait until the person finish. This slows down employees’ performance.
Employee shortage is another factor for which management should think about. Because Motijheel branch a same person prepares vouchers, pots liability and margins in the liability register and takes the amount form the clients’ accounts. This involves a risk of deceiving with the bank if the employees are dishonest. (However, I did not find any one to be so. but prevention is better than cure). This also kills employees’ time. Management can recruit computer operator on contact basis.
For uninterrupted electricity supply a central generator is required. Because due to load shading every day employees can’ not work one to two hours on an average
Space shortage is another major problem for decoration Prime Bank Limited, Motijheel branch is congested than other private banks like, Dhaka Bank,, Eastern Bank, Primer Bank etc Management should consider this for external marketing.
Charges of opening Letter of Credit should be competitively advantageous then other lot private banks.
Some reputed parties crossed their limits, (Like Rahmat Textiles) and some party became classified. This is really risk for the Bank. So, in this case management should he more conscious.
Having passed Three Months in Prime Bank Limited. Motijheel Branch I have observed and learned many activities practiced in the bank. My working areas were General Banking and Foreign Exchange Department of the branch. I am highly satisfied to know many things I did not know earlier.
In General Banking the clearinghouse activities was very enjoying to me. I have worked in this section for about fifteen days and visited Bangladesh Bank Clearing House from time and again. I saw how the claims of a bank upon another one is settled. I have also been acquainted with “PC Ban k” a banking software that they are using.
In Foreign Exchange Department I have known about Import and Export Procedure and other thing related to it. I only knew letter of Credit (L/C) in theory but during my stipulated time though it was very short I have learned the usual procedure related to L/C. Back to Back L/C (BBLC) was a new name in my memory. I have also learned many things related to it. The handling of foreign documents was really something very new to me. I have learned the system of foreign remittance too.
I do believe that these will assist me in my banking career.