INTRODUCTION
1.1
Background of the report
Any
academic course of study has a great value when it has practical application in
real life. Only a lot of theoretical knowledge will be little important unless
it is applicable in practical life. Therefore, it is an opportunity for the
students to know about real life situation through this internship program.
This program consists of three phases:
·
Orientation to Organization:
To accustom the internee with the structure, functions, and performance of the
organization.
·
The Project Work:
Pertaining to a particular problem matching with the internee’s capacity and
organization’s requirement.
·
The Report writing:
To epitomize the internee’s analysis, findings and achievements, in the
proceeding one phase.
In
this connection, I was assigned to EXIM Bank Ltd. Karwanbazar Branch Foreign
Exchange Department for my practical orientation. The title “A Study on Foreign Exchange
Services of EXIM Bank Ltd”
was selected by my supervisor teacher. I have prepared this report under the
supervision of Dr. Riazur Rahman Chowdhury Professor of AIS department of Dhaka
University.
1.2 Objective of the report
Behind this report, obviously there have
some objectives which must have to be fulfilled. There both have some general
objectives and specific objectives.
1. General objectives-
1. To fulfill the academic
requirements of internship report.
2. To acquire practical
experience in Overall banking services of EXIM Bank.
2. Specific objectives
1. To have an overall idea about Islamic Banking System
that is based on the Al-Quran and Sunnah.
2. To get a clear idea about Banks and how it runs and
what function it does.
3. To gather theoretical knowledge of the banking
function.
4. To evaluate the financial performance of EXIM bank
over last five years (FY2009- FY2010).
5. To suggest my findings for continuous improvement of
the Bank.
1.3 Scope of the reportt
This
report titled “A
Study on Foreign Exchange Services of EXIM Bank Ltd”- Karwanbazar
Branch, is an outcome of B.B.A.’s 6th week extensive banking
environment –familiarization program. This program was started from 3th
July 2011 and ended on 15th August 2011. As it has been directed to
present the report in a way reflecting the understanding of the nature of jobs
in a banking desk combined with personal observation. The scope of the study is
to find the financial aspect of the operation of the bank. In addition, the
report is done to find the operation and effectiveness of the EXIM Bank’s
foreign exchange services. The scope of the project is very limited since we
are working with a particular Bank only – which is EXIM Bank Limited. So, the
results of the report may not be reflective of the total industry scenario.
1.4
Methodology of the study
Methodology
of the study includes direct observations, face to face conversation with the
employees of different desk, study of files, circular etc. & practical
deskwork. I have covered different desk of the branch. In conducting this
report basically, there have been two types of data and information used.
1. Primary Data
Collection
2. Secondary Data Collection
1.5 Limitations of the study
The main limitations of the study are as follows:
¨ It
was very difficult to collect the information from various personnel for their
job constraint.
¨ Sometimes
officials deny disclosing some information as to maintain secrecy.
¨ Some
internal data which bank does not publish for strong reason.
¨ Bank
policy was not disclosing some data and information for obvious reasons.
¨ Due
to the limitation of the information some assumptions are made so there may be
some personal mistakes in this report.
1.6 Benefits of Islamic Banking:
v Islamic banking
and financing is not centered only on credit worthiness and ability to repay
the loans and interest; instead the worthiness and profitability of a project
are the most important criteria of Islamic financing while the ability to repay
the loan is sub-segmented under profitability.
v One of the
unique and salient characteristics of Islamic banks is that the integration of
ethical and moral values with its banking operation. The ethical and moral
consideration of Islamic banks cannot be detached and their behavior should be
consistent with the moral and ethical standards laid down by the Islamic
Shari'ah.
v Unlike the conventional
banks, the financing of Islamic banks are restricted to useful goods and
services and refrain from financing alcoholic beverages and tobacco or morally
unacceptable services such as casinos and pornography, irrespective of whether
or not such goods and services are legal or not in a given country.
v In contrast with
conventional banks, Islamic banks do not consider only the credit worthiness
and interest rate as standards; instead they must apply Islamic moral/ethical
criteria in their provision of financing. This adds another merit for Islamic
banks since there is a benefiticial impact on the productivity in the economy
as it reduces the social and economic cost of such harmful products and activities.
1.7
Difference between Islamic and conventional
banks
conventional
banks
|
Islamic banks
|
1. The
functions and operating modes of conventional banks are based on fully
manmade principles.
|
1. The
functions and operating modes of Islamic banks are based on the principles of
Islamic Shariah.
|
2. The
investor is assured of a predetermined rate of interest.
|
2. In
contrast, it promotes risk sharing between provider of capital (investor) and
the user of funds (entrepreneur).
|
3. It
aims at maximizing profit without any restriction.
|
3. It
also aims at maximizing profit but subject to Shariah restrictions.
|
4. It
does not deal with Zakat.
|
4. In
the modern Islamic banking system, it has become one of the service-oriented
functions of the Islamic banks to be a Zakat Collection Centre and
they also pay out their Zakat.
|
5.
Lending money and getting it back with compounding interest is the
fundamental function of the conventional banks.
|
5.
Participation in partnership business is the fundamental function of the
Islamic banks. So we have to understand our customer’s business very well.
|
6. It
can charge additional money (penalty and compounded interest) in case of
defaulters.
|
6. The
Islamic banks have no provision to charge any extra money from the
defaulters. Only small amount of compensation and these proceeds is given to
charity. Rebates are give for early settlement at the Bank’s discretion.
|
7.
Very often it results in the bank’s own interest becoming prominent. It makes
no effort to ensure growth with equity.
|
7. It
gives due importance to the public interest. Its ultimate aim is to ensure
growth with equity.
|
8. For
interest-based commercial banks, borrowing from the money market is
relatively easier.
|
8. For
the Islamic banks, it must be based on a Shariah approved underlying
transaction.
|
9.
Since income from the advances is fixed, it gives little importance to
developing expertise in project appraisal and evaluations.
|
9.
Since it shares profit and loss, the Islamic banks pay greater attention to
developing project appraisal and evaluations.
|
10.
The conventional banks give greater emphasis on credit-worthiness of the
clients.
|
10.
The Islamic banks, on the other hand, give greater emphasis on the viability
of the projects.
|
11.
The status of a conventional bank, in relation to its clients, is that of
creditor and debtors.
|
11.
The status of Islamic bank in relation to its clients is that of partners,
investors and trader, buyer and seller.
|
12. A
conventional bank has to guarantee all its deposits.
|
12.
Islamic bank can only guarantee deposits for deposit account, which is based
on the principle of al-wadiah, thus the depositors are guaranteed
repayment of their funds, however if the account is based on the mudarabah
concept, client have to share in a loss position.
|
|
|
2. COMPANY PROFILE OF EXIM BANK
2.1
Historical Background of EXIM
Bank Ltd.
Export Import Bank of Bangladesh Limited was
incorporated in Bangladesh on 2 June 1999 as Banking Company under the
Companies Act 1994. The Bank was established under the
leadership of Late Mr. Shahjahan Kabir, founder chairman who had a long dream
of floating a commercial bank which would contribute to the socio-economic
development of our country. He had a long experience as a good banker. A group
of highly qualified and successful entrepreneurs joined their hands with the
founder chairman to materialize his dream. Indeed, all of them proved
themselves in their respective business as most successful star with their
endeavor, intelligence, hard working and talent entrepreneurship. Among them,
Mr. Md. Nazrul Islam Mazumder became the honorable chairman after the demise of
the honorable founder chairman.
Of
its very beginning, EXIM Bank of Bangladesh limited was known as BEXIM Bank,
which stands for Bangladesh Export Import Bank Limited. But for some legal
constraints the bank renamed as EXIM Bank, which means Export Import Bank Of
Bangladesh Limited. This bank starts functioning from 3 August, 1999 with Mr.
Alamgir Kabir, FCA as the advisor and Mr. Mohammed Lakiotullah as the Managing
Director. Both of them have long experience in the financial sector of our
country. By their pragmatic decision and management directives in the
operational activities, this bank has earned a secured and distinctive position
in the banking industry in terms of performance, growth, and excellent
management. The authorized capital and paid up capital of the bank are Tk.
350.00 crore and Tk. 267.77 crore respectively.
The
Bank converted its banking operation into Islamic Banking based on Islamic
Shariah from traditional banking operation on 1 July 2004 after obtaining
approval from Bangladesh Bank. The Bank went for public issue of shares in the
year 2004 and its shares are listed with Dhaka Stock Exchange and Chittagong
Stock exchange. The commercial Banking activities of the Bank consist of
services including mobilizing deposits, providing investment facilities,
discounting bills, conducting money transfer, foreign exchange transactions and
providing services i.e. issuing guarantees, safe keeping, acceptances and
letters of credit etc. The Bank
carries
its banking activities through thirty branches operating as per Islamic Shariah
in the country.
2.2
Corporate Profile:
(Information as per last Annual Report 2011)
Registered
Name : Export
Import Bank of Bangladesh Limited
Status
: Public Limited Company
Slogan : Shariah
Based Islami Bank
Vision
Statement : “Together
Towards Tomorrow”.
Date
of Incorporation : June 02, 1999.
Inauguration
of First Branch : August 03, 1999. (Motijheel Branch)
Registered
HO Address : "SYMPHONY"
Plot # SE (F): 9, Road # 142
Gulshan Avenue, Dhaka- 1212
Plot # SE (F): 9, Road # 142
Gulshan Avenue, Dhaka- 1212
Phone: +880-2-9889363, 9891489
Fax:
+880-2-8828962
Email: itd@eximbankbd.com
SWIFT :
EXBKBDDH.
Chairman : Mr. Md. Nazrul Islam Mazumder
Managing
Director : Mr. Kazi Masihur Rahman
Company
Secretary : Md. Golam Mahbub
Auditor : M/S. Pinaki & Co.
Credit
Rating : Long Term- A- (Adequate Safety)
Short Term- ST-3 (Good Grade)
Authorized
Capital : TK. 350.00 Crore
Paid
up Capital : Tk. 267.77 crore
Number
of Branches : 44
Number
of Proposed Branches : 09
Official LOGO
2.3 Values of
EXIM Bank
z
To be one
EXIM by holding and guiding the following values.
z
To have
strong customer focus and build relationship based on integrity and superior
service and mutual benefit.
z
To strive for
private and sound growth.
z
To work as a
team to serve the best interest of the organization.
z
To work for
continuous business innovation and improvements.
z
To value and
respect people and make decision based on merit.
z
To provide
recognition and communication.
3. KARWAN BAZAR
BRANCH OF EXIM BANK
3.1
Background
EXIM Bank KARWAN BAZAR branch is one of the important branches for EXIM Bank. From the very
beginning of the branch it has proved the necessary of itself. The Bashundhara
road branch was continuing from the year of 27th December 2006. At
the beginning of the branch it has small deposit and profit is also small. But
at present the deposit is increasing and operating and net profit is also
increasing. In the year of 2008 the deposit target of the branch was 80 crores
and the bank achieves 81.47 crores.
3.3 Departments within Karwan Bazar Branch
This
branch has four departments as the following.
1. General
Banking (GB) Department
2. Credit
Department
3. Cash
Department &
4. Foreign Exchange Department
4. FOREIGN EXCHANGE SERVICES
4.1
Foreign Exchange:
In the modern world no country is self-sufficient,
one country is to depend on other countries and from this point of view there
arises the question of foreign trade and foreign currency transactions. That
is, the international trade involves foreign exchange transactions particularly
for receipt and payment against export and import of goods and services from
one country to another. Without foreign exchange transactions we cannot think
of foreign trade. Of course, various rules and regulations are to be followed
in connection with the foreign trade and foreign exchange transactions.
Foreign Exchange means exchange foreign currency
between two countries. If we consider ‘Foreign Exchange’ as a subject, then it
means all kind of transactions related to foreign currency.
Some definitions of foreign exchange are given below:
v Foreign exchange means foreign currency and includes
all deposits, credits and balance of payable in foreign currency as well as
Draft, Traveller’s checks, Letter of Credit, Bills of Exchange drawn in local
currency but payable in foreign currency.
─ Foreign Exchange Regulation Act, 1947, Sec 2 (a)
v “Foreign
Exchange” as the means and methods by which rights to wealth expressed in terms
of the currency of one country are converted into rights to wealth in terms of
the currency of another country.
─ H.E. Evitt
That is, the
mechanism through which payments are effected between two currencies having
different currency systems is termed as foreign exchange. It is related with
the exchange method & mechanism through which the payments in connection
with international trade are transacted..
4.2.
Activities of foreign exchange
There
are three kinds of foreign exchange transactions:
v
Import.
v Export.
v
Remittance.
Import may be defined as bringing of visible item to
the country from abroad through letter of credit or the Authorization form
(LCAF) paying foreign currency to that of exporting country.
Export may be defined as sending of visible and
invisible things outside the country for sale through letter of credit or
against firm contract in exchange of Foreign Exchange.
Foreign Remittance refers remittance or transfer of foreign currency
that are received in and made out abroad. Foreign Remittance also includes
purchase and sale of freely convertible foreign bills and currencies.
4.3
Fundamentals of Foreign exchange
There
are 3 fundamental aspects of the general mechanism of foreign exchange-
¨
Every country has its own currency legal
tender distinctive unit of account.
¨
The conversion of one currency into
another is effected by banks by book keeping entry carried out in the two
centers concerned.
¨
These exchanges are affected by means of
credit instruments like Draft, Mail transfer, Telegraphic transfer etc.
4.4 Letter of Credit (L/C)
In
an international business environment, buyers and sellers are generally unknown
to each other. So seller of goods always seeks security for the payment of his
exported goods. Bank gives guarantee to the exporter that it will pay for the
goods on behalf of the buyer if the buyer fails to pay. This guarantee is
called Letter of Credit. Thus the contract between importer and exporter is
given a legal shape by the guarantee of bank by ‘Letter of Credit’.
A letter of
credit is a letter issued by a bank (known as the opening or the issuing bank)
at the instance of its customer (known as the opener or applicant) addressed to
a person (beneficiary) undertaking that the bills drawn by the beneficiary will
be duly honored by it (opening bank) provided certain conditions mentioned in
the letter have been complied with.
Letter of credit (L/C) can be defined as a “Credit Contract”
whereby the buyer’s bank is committed (on behalf of the buyer) to place an
agreed amount of money at the seller’s disposal under some agreed conditions.
Since the agreed conditions include, amongst other things, the presentation of
some specified documents, the letter of credit is called Documentary Credit.
Any
arrangement however named or described whereby a bank (the “issuing bank”)
acting at the request and on the instructions of a customer (the “Applicant”)
or on its own behalf,
] to make a payment or to the
order of a third party(the beneficiary) or to accept and pay bills of
exchange(Drafts)drawn by the beneficiary, or
] authorizes another bank to effect such payment or to accept and
pay such bills of exchange (Drafts)
] Authorizes another bank to negotiate against stipulated documents
provide that terms and conditions are complied with.
] The
L/C is a superior method devised for settlement of debts which could assure the
exporter that if he exports the goods as per the contract entered into with the
Back
to Back L/C:
A
back to back L/C is essentially a secondary L/C opened by a bank on behalf of
the beneficiary of the original L/C in favor of a supplier located inside or
outside the original beneficiary’s country. Under this concept the seller as
the beneficiary of the first credit manages to open another L/C for the supply
of the goods on the strength of the first credit. The two L/C operate “Back to
Back” the one being issued not the security of the other. Thus a “Back to Back”
L/C transaction involves two separate credits, where the beneficiary of the
first L/C becomes the applicant of the second L/C.
4.9 Concern parties to an L/C
Importer or applicant
|
Buyer
who applies for L/C & imports goods from abroad.
|
Exporter or beneficiary
|
Seller
who sells & exports goods and gets the payment.
|
Issuing Bank or opening Bank
|
The
bank that opens/issues a L/C on behalf of the importer.
|
Confirming Bank
|
The
bank, which adds its confirmation to the credit and it, is done at the
request of issuing bank. Confirming bank may or may not be advising bank.
|
Advising Bank or Notifying Bank
|
The
bank through which the L/C is advised to the exporters. This bank is actually
situated in exporter’s country. It may also assume the role of confirming and
/ or negotiating bank depending upon the condition of the credit.
|
Negotiating Bank
|
The
bank, which negotiates the bill and pays the amount of the beneficiary. The
advising bank and the negotiating bank may or may not be the same. Sometimes
it can also be confirming bank.
|
Accepting Bank
|
The
bank on which the bill will be drawn (as per condition of the credit).
Usually it is the issuing bank.
|
Reimbursing Bank
|
The
bank, which would reimburse the negotiating bank after getting payment –
instructions from issuing bank.
|
5. IMPORT SERVICE
5.1 Import
Imports of goods into Bangladesh is regulated by
the ministry of commerce and industry interims of the Import and Export
(Control) Act, 1950, with import policy orders issued by annually, and Public Notices issued from time to time by the
office of the Chief Controller of Import and Export (CCI & E). Through the
process of import some vital but which are inadequate in our country products
are imported to meet the local needs of the people.
L/C Opening
|
→
|
Lodgment
|
→
|
Negotiation
|
→
|
Import Related Investment
|
→
|
Payment
|
Figure
2: Functions
of Import Division
in EXIM Bank, Elephant Road
Branch
5.2 Functions of the import Department of EXIM Bank
The followings are the main functions performed by the import
Department:
§
Total supervision of import
department (back to back/cash)
§ Payment of Back to Back L/C and endorsement of Export L/C against
payment
§ Follow-up of Back to back overall bill
§ Correspondence regarding, Back to back L/C and cash L/C
§ Maintenance of Due date dairy
§ Maintenance and L/C Documents
§ Audit Compliance
§ Matching of bill of Entry with IMP, Follow-up of pending Bill of
Entry Quarterly statement
§ Batch checking
§ L/C opening and Amendment.
§ Endorsement of export L/C when opening
§ Balancing of L/C Contingent liability
§ Follow-up sub-Judaic bills and maintaining liaison with Head
Office and Foreign Correspondent
§ All correspondence related to Back to Back L/C both with Head
Office and Foreign Correspondents
§ Supervision of checking Lodgment and attestation of papers of
under to back L/C
§ Checking, lodgment, retirement of import documents under Back to
Back L/C
§ Issuance shipping guarantee
§ IMP form Fill-up
§ Inform negotiating bank about maturity date of back to back L/C
§ Quarterly statement for bonded ware house
§ Balancing of accepted liability
§ Statement of outstanding accepted import bills under back to back
L/C
§ Maintenance and record of pass Book and IRC
§ Maintenance and record of related L/C s Documents
§ Credit report to CIB Bangladesh Bank
§ Statement of IRC Renewal fees to CCI&E
§ Preparation of monthly foreign exchange business position
§ L/C lodgment (Import bill paid)
§ Checking of cash L/C documents
§ L/C retirement
§ LAC issue
§ BLC statement
§ Differed payment
§ Follow-up of outstanding BLC
§ Correspondent (Cash L/C)
§ Proof sheet of L/C margin and continent liability (Cash L/C)
§ Issuance of shipping guarantee (cash) IMP form fill-up (Cash)
5.3 Steps for import L/C
operation – 8 steps operation
Step 1 -
Registration with
CCI&E:
q For
engaging in international trade, every trader must be first registered with the
Chief Controller of Import and Export (CCI&E).
q By
paying specified registration fees to the CCI&E. the trader will get
IRC/ERC (Import/Export Registration
Certificate), to open L/C with bank, this IRC is must.
q Documents
to be required for IRC are as follows:
- Nationality
Certificate
- Certificates
from the Chamber of Commerce & Industry / Registered Trade
Association
- Bank
Solvency Certificate
- Trade
License
- Income tax
paid certificate
- Any other
documents required by CCI&E.
Step 2 – Determination
terms of credit:
The
terms of the letter of credit are depending upon the contract between the
importer and exporter. The terms of the credit specify the amount of credit,
name and address of the beneficiary and opener, tenor of the bill of exchange,
period and mode of shipment and destination, nature of credit, expiry date,
name and number of sets of shipping documents etc.
There
are 8 steps in import L/C operation but the operations of any bank start from
step 3, i.e. the operation of foreign exchange department of EXIM Bank starts
from there:
Step
3 - Proposal for
Opening of L/C:
To
have an import L/C limit, an importer submits an application to foreign
exchange department of any branch of EXIM Bank. The proposal contains the
following particulars:
z
Full particulars of the bank account
z
Nature of business
z
Required amount of limit
z
Payment terms and conditions
z
Goods to be imported
z
Offered security
z
Repayment schedule
Requirements
of opening L/C:
To open an L/C, the requirements of an importer are:
¨ He must have an account in EXIM Bank.
¨ He must have Importers Registration Certificate (IRC).
¨ Report on past performance with other bank. EXIM Bank collects
this report from Bangladesh Bank.
¨ CIB (Credit Information Bureau) report from Bangladesh Bank.
¨ A proposal approved by the meeting of executive committee of the
bank. It is necessary only when the L/C amount is small or there is no limit.
¨ If the L/C amount is large or there is a limit, then an approval
from Bangladesh Bank is needed. Usually this approval is needed for amount more
than one crore.
This
step is required for a new importer. But an existing importer starts its
functions directly from step 4.
Step 4 - Application
by importer to the banker to open an L/C:
v Forms of L/C:
1.
EXIM Bank provides a
printed form for opening L/C to the importer. This form is known as Letter of Credit Application form.
- name and address of the applicant &
beneficiary,
- draft amount,
- availability of the credit by sight payment
accept/ negotiation/ deferred payment, country of origin,
- insurance cover note/policy number, date,
amount,
- Bangladesh Bank Registration number,
- import license or LCAF number,
- IRC number,
- Account number,
- Document required,
- last date of shipment,
- source to destination of shipment,
- last date negotiation, other terms and
conditions if any etc.
2.
Another form is Letter of Credit Authorized (LCA) Form.
The LCA form contains the followings:
¨
Name and the address of the
importer
¨
IRC No. and year of renewal
¨
Amount of L/C applied for
¨
Description for items that
is imported
¨
ITC number(s) / HS code
¨
Signature of the importer
with seal.
v Document Submission:
A valid importer will
submit the following paper/documents to EXIM Bank to open L/C:
1.
L/C Application form duly signed by the importer;
with adhesive Stamp for TK. 150/-
2.
Indent / proforma invoice
3.
Insurance cover note with money receipt
4.
LCA form duly filled in & signed by
the importer
5.
Membership Certificate from Chamber of
Commerce/Trade Association
6.
TIN Certificate and up to date Tax
payment declaration
7.
Charge documents, including Musharaka /
Murabaha agreement
8.
IMP & TM form
9.
Import Registration Certificate (IRC)
10. VAT
Certificate
11. Export
L/C in case of Back-to-Back L/C
12. Trade
license
13. Memorandum
& Articles of Association
14. Partnership
Deed
15. Resolution
of the Board
16. Photograph
17. Others,
if any
Step 5 - Opening
of L/C by the bank for the applicant:
§
Taking filled up application form from
the importer.
§
Upon receipt of the application dealing
officer will issue office note the following:
o
whether the client has valid Head Office
Sanctioned limit
o
whether the proposal is within the limit
or within the power of Branch incumbent
o
the item to be imported is permissible
§
If the bank satisfies then it will issue
a letter of credit on behalf of the importer, to the beneficiary, through an
Agent/Correspondent bank in supplier’s country.
§
L/C may be sent by Airmail duly signed
by Authorized officials or by Telex authenticated by test number or SWIFT (Society for World Wide Inter-bank Financial Transaction).
Step 6 – Shipment
of goods and lodgment of documents by exporter:
] Then
exporter ships the goods to the destination of the importer country
] Sends
the documents to the L/C opening bank through his negotiating bank.
Generally the following documents are
sent to the Opening Bank with L/C:
1.
Bill of Exchange
|
6.
Packing List
|
2.
Bill of Lading
|
7.
Advice Details of Shipment
|
3.
Commercial Invoice
|
8.
Pre-shipment Inspection Certificate
|
4.
Certification of Origin
|
9.
Vessel Particular
|
5.
A certificate stating that each packet contains the description of goods over
the packet.
|
10.Shipment
Certificate
|
Step 7 - Lodgment of Documents
by the opening Bank from the negotiating bank:
After
receiving the documents, the opening banker scrutinizes the documents. If any
discrepancy found, it informs the importer. If importer accepts the fault, then
opening bank will
call importer for retiring the document. At
this time many thing can happen.
Step 8 - Retirement:
The importer receives the intimation
and gives necessary instruction to the bank for retirement of the import bills
or for the disposal of the shipping document to clear the imported goods from
the customs authority. The importer may instruct the bank to retire the
documents by debiting his account with the bank or may ask for LTR (Loan
against Trust Receipt)
6. EXPORT SERVICE
6.1
Export
Generally the goods and services sold by Bangladesh to foreign households,
businessmen and Government are called export. Exporter means
any person lawfully exporting goods from Bangladesh to any other country.
The export trade of the country is regulated by the Imports and Exports
(control) Act, 1950. There are a number of formalities, which an exporter has
to fulfill before and after shipment of goods. The exports from Bangladesh
are subject to export trade control exercised by the Ministry Of Commerce
through Chief Controller of Imports and Exports (CCI & E). No exporter is
allowed to export any commodity permissible for export from Bangladesh unless he is registered
with CCI & E and holds valid Export Registration Certificate (ERC). The ERC
is required to be renewed every year. The ERC number is to be incorporated on
EXP forms and other documents connected with exports.
v Types of Export:
Export must be done as under:
1.
Export against L/C or firm contract
2.
Export against advance payment
3.
Export under consignment basis
Export
L/C operation is just reverse of the import L/C operation. For exporting goods
by the local exporter, bank may act as advising banks and collecting bank
(negotiable bank) for the exporter.
6.2 Functions of the
Export Department of EXIM Bank:
The following are the main
functions performed by the Export Department:
¨
Scrutiny of Export Shipping
Documents.
¨
Follow -up for realization
of Export Proceeds.
¨
All Correspondence relating
to export Department
¨
Compliance of audit and
inspection
¨
Authentication of L/Cs to
the beneficiary
¨
Authentication of L/C and
amendments from other Correspondent bank.
¨
Transfer of Export L/C to
the beneficiary (exporter) and issuance of notice of transfer to L/C issuing
Bank.
¨
Recording of export L/C
particulars in export L/C transfer register.
¨
Realization of precedes
realization certificates. 4 Issuance of
precedes realization certificates.
¨
And other related works as
and when directed by the manager and assistant -manager.
¨
Certificate of EXP Forms.
¨
Posting of Tickets.
¨
Lodgment of exports bills
(FBP, FDBC, IBP & IBC)
¨
Preparation tickets exciting
to negotiation of documents.
¨
Negotiating in land Bills.
6.3 Export Procedures
The
import and export trade in our country are regulated by the Import and Export
(Control) Act, 1910.Under the export policy of Bangladesh the exporter has to get
valid Export registration Certificate (ERC) from Chief Controller of Import
& Export (CCI&E). The ERC is required to renew every year. The ERC
number is to incorporate on EXP forms and other papers connected with exports.
a)
Registration of Exporters:
For obtaining ERC, intending Bangladeshi
exporters are required to apply to the controller/ Joint Controller/ Deputy
Controller/ Assistant Controller of Imports and Exports, Dhaka/ Chittagong/
Rajshahi/ Mymensingh/ Sylhet/ Comilla/ Barishal/ Bogra/ Rangpur/ Dinajpur in
the prescribed form along with the following documents:
] Nationality
and Assets Certificate;
] Memorandum
and Article of Association and Certificate of Incorporation in case of Limited
Company;
] Bank
Certificate;
] Income
Tax Certificate;
] Trade
License etc.
b) Securing the Order:
After
getting ERC Certificate the exporter may proceed to secure the export order. He
can do this by contacting the buyers directly or through agent. In this purpose
the exporter may get help from
] License
Officer;
] Buyer’s
Local Agent;
] Export
Promoting Organization;
] Bangladesh
Mission Abroad;
] Chamber
of Commerce (local & foreign)
] Trade
Fair etc.
c) Signing the Contract:
After
communicating buyer, exporter has to get contracted (writing or oral) for
exporting exportable items from Bangladesh detailing commodity, quantity,
price, shipment, insurance and marks, inspection and arbitration etc.
d)
Receiving Letter of Credit:
After getting contract
for sale, exporter should ask the buyer for Letter of Credit (L/C) clearly
stating terms and conditions of export and payment.
The following are the main points to be
looked into for receiving/ collecting export proceeds by means of Documentary
Credit:
(1) The
terms of the L/C are in conformity with those of the contract;
(2) The
L/C is an irrevocable one, preferably confirmed by the advising bank;
(3) The
L/C allows sufficient time for shipment and negotiation.
(Here the regulatory framework is
UCPDC-100, ICC publication)
Terms and conditions should be stated in
the contract clearly in case of other mode of payment:
F Cash
in advance;
F Open
account;
F Collection
basis (Documentary/ Clean)
(Here the regulatory framework is
URC-121, ICC publication)
e)
Procuring the materials:
After
making the deal and on having the L/C opened in his favor, the next step for
the exporter is to set about the task of procuring or manufacturing the
contracted merchandise.
f)
Shipment of goods:
Then
the exporter should take the preparation for export arrangement for delivery of
goods as per L/C and in terms, prepare and submit shipping documents for
Payment/ Acceptance/ Negotiation in due the time.
Documents for shipment
- EXP form,
- ERC
(valid),
- L/C
copy,
- Customer
Duty Certificate,
- Shipping
Instruction,
- Transport
Documents,
- Insurance
Documents,
- Invoice,
- Other
Documents,
- Bills
of Exchange (if required)
- Certificate
of Origin,
- Inspection
Certificate,
- Quality
Control Certificate,
- G.S.P.
Certificate,
- Phyto-sanitary
Certificate.
g) Final Step:
Submission
of the documents to the Bank for negotiation.
6.4 Preparation of Export documents
1.
Bill of exchange or Draft. 10. Phytosanitary
Certificate
2.
Commercial Invoice. 11. Certificate
of Analysis
3.
Bill of Landing. 12. Quality Certificate
4.
Inspection Certificate. 13. EXP Form.
5.
Weight Certificate 14. DHL courier Receipt
6.
Packing List.
7.
Export License.
8.
Shipment Advice.
9.
Certificate of Origin.
6.5 Back To Back L/C (BTB)
A
L/C which is opened annalist an Export L/C is called Back to Back L/C. It is
simply issued to the clients against an Export L/C. Back-to-Back mechanism
deals with 2 separate L/Cs. One is master Export L/C and another is
Back-to-Back L/C. On the strength of Master Export L/C bank issues bank to Back
L/C. Back-to-Back L/C is commonly known as Buying L/C. On the contrary, Master Export L/C is known as
Selling L/C.
2. Features of Back-To-Back L/C
o
An
Import L/C to procure goods /raw materials for further processing.
o
It
is opened based on Export L/C.
o
It
is a kind of Export Finance.
o
Export
L/C is at Sight but back to Back L/C is at issuance.
o
No
margin is required to open Back to back L/C
o
Application
is registered with CCI&E
o
Applicant
has bonded warehouse license.
o
L/C
value shall not exceed the admissible percentage of net FOB value of relative
Master L/C.
o
Issuance
period will be up to 180 days.
o
The
import L/C is opened for 75% of the value of Export L/C.
o
Here
L/C issued against the lien of export L/C.
o Arrangements are
such that export L/C matures first then out of this export profit, import L/C
is paid out.
3. Types of BTB
1.
Local BTB 2. Foreign BTB
3. EPZ BTB
4. EDF BTB
4. Processing and opening of BTB L/C
An
exporter desired to have an import L/C limit under Back to Back arrangement. In
that case the following papers & documents are required:-
] Full
particulars of Bank account,
] Balance
Sheet.
] Statement
of Assets & liabilities.
] Trade
License.
] Valid
Bonded Warehouse License.
] Membership
Certificate.
] Income
tax Declaration.
] Memorandum
of Articles.
] Partnership Deed.
] Resolution.
] Photographs
(all Directors).
On receipt of above
documents and papers the Back to Back L/C Opening section will prepare a credit
report. Branch must obtain sanction from Head Office for opening of
BB L/C. Exporters
prepare the documents and submit the same to the bank for negotiation.
7. FOREIGN REMITTANCE SERVICE
7.1 Foreign Remittance
This bank is authorized dealer to deal
in foreign exchange business. As an authorized dealer, a bank must provide some
services to the clients regarding foreign exchange and this department provides
these services.
The
basic function of this department are outward and inward remittance of foreign
exchange from one country to another country. In the process of providing this
remittance service, it sells and buys foreign currency. The conversion of one
currency into another, takes place at an agreed rate of exchange where the
banker quotes one for buying and another for selling. In such transactions the
foreign currencies are like any other commodities offered for sales and
purchase, the cost (convention value) being paid by the buyer in home currency,
the legal tender.
7.2 Foreign
Remittance Process
Fund transfer
from one country to another country goes through a process which is known as
remitting process. Suppose a local bank
has 200 domestic branches. The bank has
corresponding relationship with a foreign bank say-“X”, and maintaining “Nostro
Account” in US $ with the bank.
Bangladeshi expatriates are sending foreign remittances to their local
beneficiary, through that account. Now,
when the Bangladeshi expatriates through other banks of different countries
remit the fund to their “Nostro Account” with “X”, then the local bank’s Head
Office international division will receive telex message and the remittance
section will record the advice and generate the advice letter to the respective
branch of the bank. The branch will
first decode the test, verify signature and check the account number and name
of the beneficiary. After full
satisfaction, the branch transfers the amount to the account of the beneficiary
and intimate the beneficiary accordingly.
But some times the complexity arises, if the respective local bank has
no branch where the beneficiary maintains his account. Then the local bank has to take help of a
third bank who has branch there.
7.3 Remittance procedures of foreign currency
There
are two types of remittance:
- Inward remittance
- Outward remittance.
7.3.1 Inward Remittance
Remittance
comes from foreign countries to our country is called inward remittance. To the bankers or ADs inward remittance means
purchase of foreign currency by authorized dealers. Generally, inward remittances are received by
draft, mail transfer, TT, purchase of foreign bills & travelers Cheque,
export bills. Basically, these are the
formal channels of receiving inward remittance.
A local bank also receives indenting commission of local firm also comes
under purview of inward remittance.
Figure:
“ Modes of Inward Remittance”
7.3.2 Outward Remittance
Remittance
from our country to foreign countries is called outward foreign
remittance. On the other word, sales of
foreign currency by the authorized dealer or formal channels may be addressed
as outward remittance. The authorized
dealers must utmost caution to ensure that foreign currencies remitted or
released by them are used only for the purposes for which they are
released. Out ward remittance may be
made by appropriate method to the country to which remittance is
authorized. Most outward remittance is
approved by the authorized dealer on behalf of Bangladesh Bank.
Outward remittance may be made for
following purposes-
1. Travel
2. Medical treatment
3. Educational purpose.
4. Attending seminar etc.
5. Balance amount of F.C account.
6. Profit of foreign companies.
7. Technical assistance
8. New exporters up to USD 6,000/- for business promotion
9. F.C. remittance can be made for fare, exhibition from export retention quota.
7.3.4 Formal channel
Fund
transfer from one country to another country through official channels, i.e.
banking channel, post office, and other private service channels, such as –
Western money order, Neno money order etc.
The legitimate purposes
for moving money abroad through formal channel are-
o
To invest
o
To lend
o
To meet trading/ Personal obligations
o
To safeguard assets against theft or
seizure by repressive regimes.
7.3.5 Informal Channel
Fund transfer from one country to another
country through hand by hand or over telephone in an unofficial channel like as
“Hundy”. Haque (1992) comments, that remittance
collected by informal “Hundi” rings operating in middle East countries and UK
are also used to finance illegal trade and transactions.
Islam
(2000) observes that as informal channel is needed for illegal trade of goods,
as well as gold and drugs into Bangladesh, and therefore, helping the
ever-present problem of capital flight out of Bangladesh.
Criminals use informal
channel for moving money abroad because of-
F Dealing
in arms & ammunition
F Drug
trafficking
F Financing
terrorist activities
F Evasion
of exchange regulations/ control
F Evasion
of taxation
F Disguise
or remove proceeds of threat/ fraud/ bribe.
F Making
blackmail payments
F Paying
random for kidnappers.
Analytical Part: (CASE STUDY)
Any
Literature Review has a great value when it has practical application in real
life. Only a lot of theoretical knowledge
will be little important unless it is applicable in practical life. Therefore,
it is an opportunity for the students to know about real life situation through
this Literature Review.
The
Literature Review is described by analytical part. The analytical part is
consists of case study. The case study is contains some importer & exporter
activities, who are doing business through the EXIM Bank. All the documents
& information of case study are providing by the EXIM Bank, Karwan Bazar
branch. Due to their inherent secrecy, they do not provide information
properly. They provide such documents that are incurred by FY: 2008-09. In the
case study I have discussed some importer such as, DHAKA RICE AGENCY, MIDWAY AUTO SELECTION , RATANPUR KNITTING MILLS & exporter such as, MITHILA TEXTILE , SAVAR TEXTILE , MEEK TEXTILE. I have also
discussed their import & export procedure, L/C opening process, facilities
given by the EXIM Bank.
All
the documents & information of case study are providing by the EXIM Bank
are partially.
CASE
STUDY : 01 DHAKA RICE AGENCY
Company Name *
Address
State *
State *
City *
Zip *
Country
Phone *
Fax *
E-mail address
Website *
Contact Person *
Designation
Member Business Info:
*
established *
Primary business activity
Buying
/ Importer Selling
/ Exporter
Both Buying and Selling *
Both Buying and Selling *
Products / Services
CASE: import Rice
from
PODDER
RICE MILLS, INDIA
DHAKA RICE AGENCY import rice from PODDER RICE MILLS, INDIA at August
7, 2009. Their import procedure & assistance from EXIM Bank are described
bellow:
Importer
Importer Country
Issuing Bank
Applicant
Applicant country
Advising Bank
Negotiating Bank
Goods Type
Quantity
Delivery date
IRC no
Insurance no
L/C no
Total Amount
TIN no
VAT /Duty paid
Chelan no
Bank A/C
|
DHAKA RICE AGENCY
BANGLADESH
EXIM BANK, DHAKA
PODDER RICE MILLS
INDIA
ICICI BANK, INDIA
J P MORGAN, INDIA
RICE
1.25 METRIC TON
AUGUST 7, 2009
IR547896512
INS2589632
L5874165
TK: 52 MILLION
T236589
TK: 80LAC
K214587
KH 120 3520 3692
|
L/C opening process of DHAKA
RICE AGENCY:
To open an
L/C, the requirements of DHAKA RICE AGENCY are:
¨
It must have an account in
EXIM Bank.
¨
It must have Importers
Registration Certificate (IRC).
¨ Report on past performance with other bank. EXIM Bank collects
this report from Bangladesh Bank.
¨
CIB (Credit Information
Bureau) report from Bangladesh Bank.
¨
A proposal approved by the
meeting of executive committee of the bank. It is necessary only when the L/C
amount is small or there is no limit.
¨
If the L/C amount is large
or there is a limit, then an approval from Bangladesh Bank is needed. Usually
this approval is needed for amount more than one crore.
Proposal for Opening of L/C:
To
have an import L/C limit, DHAKA RICE AGENCY submits an application to foreign
exchange department of EXIM Bank. The proposal contains the following
particulars:
KH 120 3520 3692
IMPORT OF RICE.
TK: 52 MILLION
ON THE L/C BASIS.
Not provided
Not provided
Not provided.
|
Full particulars of the bank account
|
Nature of business
|
Required amount of limit
|
Payment terms and conditions
|
Goods to be imported
|
Offered security
|
Repayment schedule
|
Provide by EXIM BANK, Karwan
Bazar Branch
Application by DHAKA RICE AGENCY to the banker to
open an L/C:
1.
EXIM Bank provides a
printed form for opening L/C to the importer. This form is known as Letter of Credit Application form. Usually the importer expresses the desire to open the L/C
quoting the amount of margin in percentage.
Like full name and address of the
applicant & beneficiary,
|
Applicant: DHAKA RICE AGENCY
Beneficiary:
PODDER RICE MILLS, INDIA
|
draft amount,
|
TK:
52 MILLION
|
country of origin,
|
INDIA
|
insurance cover note/policy number,
date, amount,
|
Policy
number: 258369
Date:
August 1,2009
Amount:
TK 30Million
|
Bangladesh Bank Registration number,
|
ADF 21478936
|
Import license or LCAF number,
|
LCAF2368956
|
IRC number,
|
IR547896512
|
Account number,
|
KH
120 3520 3692
|
Document required,
|
Not
provided
|
last date of shipment,
|
August
9,2009
|
source to destination of shipment,
|
Not
provided
|
last date negotiation,
|
August 5,2009
|
Provide by EXIM BANK, Karwan
Bazar Branch
2.
Another form is Letter of Credit Authorized (LCA) Form. The LCA form contains the followings:
Name and the address of the importer
|
DHAKA
RICE AGENCY
79/2
KRISHI MARKET,
MOHAMMADPUR
|
IRC No. and year of renewal
|
IR547896512
|
Amount of L/C applied for
|
TK: 52 MILLION
|
Description for items that is imported
|
RICE.
|
ITC number(s) / HS code
|
BG58965745
|
Signature of the importer with seal.
|
…………………..
|
|
|
Provide by EXIM BANK, Karwan
Bazar Branch
Opening
of L/C by the bank for the applicant:
§ Taking
filled up application form from the DHAKA RICE AGENCY.
§ Upon
receipt of the application dealing officer will issue office note the
following:
o
whether the client has valid Head Office
Sanctioned limit
o
whether the proposal is within the limit
or within the power of Branch incumbent
o
the item to be imported is permissible
§ If
the bank satisfies then it will issue a letter of credit on behalf of the
importer, to the beneficiary, through an Agent/Correspondent bank in supplier’s
country.
§ L/C
may be sent by Airmail duly signed by Authorized officials or by Telex
authenticated by test number or SWIFT (Society for
World Wide Inter-bank Financial Transaction).
Since
Karwan Bazar Branch of EXIM Bank is not the AD, after issuing the office note
for L/C, it sent the documents to the Head Office of EXIM Bank for issuing the
L/C to the supplier.
Shipment of goods and lodgment of
documents by exporter:
] Then
PODDER RICE
MILLS, INDIA ships the goods to the destination of the Bangladesh
] Sends
the documents to the L/C opening bank through his negotiating bank.
Generally
the following documents are sent to the Opening Bank with L/C:
1. Bill of Exchange
|
6. Packing List
|
2. Bill of Lading
|
7. Advice Details of
Shipment
|
3. Commercial Invoice
|
8. Pre-shipment
Inspection Certificate
|
4. Certification of
Origin
|
9. Vessel Particular
|
5. A certificate stating
that each packet contains the description of goods over the packet.
|
10.Shipment Certificate
|
CASE
STUDY
: 02 MIDWAY AUTO
SELECTION
Company Name *
Address
State *
State *
City *
Zip *
Country
Phone *
Fax *
E-mail address
Website *
Contact Person *
Designation
Member Business Info: *
established
*
Primary business
activity Buying
/ Importer Selling
/ Exporter
Both Buying and Selling *
Both Buying and Selling *
Products / Services
CASE: import AUTOMOBILE from
YOUJIZI AUTO, S.KOREA
Importer
Importer Country
Issuing Bank
Applicant
Applicant country
Advising Bank
Negotiating Bank
Goods Type
Quantity
Delivery date
IRC no
Insurance no
L/C no
Total Amount
TIN no
VAT /Duty paid
Chelan no
Bank A/C
|
MIDWAY AUTO SELECTION
BANGLADESH
EXIM BANK, DHAKA
YOUJIZI AUTO
S.KOREA
HSBC,
S.KOREA
CITY BANK NA, S.KOREA
AUTOMOBILE
250 UNIT
JULY 7, 2009
IR457896512
INS5289532
L5874165
TK: 82 MILLION
T236589
TK: 90LAC
K214587
JH 569 3520 3692
|
Provide by EXIM BANK, Karwan
Bazar Branch
MIDWAY AUTO SELECTION import car from YOUJIZI AUTO, S.KOREA at July 7,
2009. Their import procedure & assistance from EXIM Bank are described
bellow:
L/C opening process of MIDWAY AUTO SELECTION:
To open an
L/C, the requirements of MIDWAY AUTO SELECTION are:
¨
It must have an account in
EXIM Bank.
¨
It must have Importers
Registration Certificate (IRC).
¨ Report on past performance with other bank. EXIM Bank collects
this report from Bangladesh Bank.
¨
CIB (Credit Information
Bureau) report from Bangladesh Bank.
¨
A proposal approved by the
meeting of executive committee of the bank. It is necessary only when the L/C
amount is small or there is no limit.
¨
If the L/C amount is large
or there is a limit, then an approval from Bangladesh Bank is needed. Usually
this approval is needed for amount more than one crore.
Proposal for Opening of L/C:
To
have an import L/C limit, MIDWAY AUTO SELECTION submits an application to foreign
exchange department of EXIM Bank. The
proposal contains the following particulars:
JH 569 3520 3692
IMPORT OF AUTOMOBILES.
TK: 82 MILLION
ON THE L/C BASIS.
Not provided
Not provided
Not provided.
|
Full particulars of the bank account
|
Nature of business
|
Required amount of limit
|
Payment terms and conditions
|
Goods to be imported
|
Offered security
|
Repayment schedule
|
Provide by EXIM BANK, Karwan
Bazar Branch
Application
by MIDWAY AUTO SELECTION to the banker to open
an L/C:
1. EXIM Bank provides a printed form for opening L/C to the importer.
This form is known as Letter of Credit
Application form. Usually the importer
expresses the desire to open the L/C quoting the amount of margin in
percentage.
.
Like full name and address of the applicant & beneficiary,
|
Applicant: MIDWAY AUTO SELECTION.
Beneficiary: YOUJIZI AUTO, S.KOREA
|
draft
amount,
|
TK: 82 MILLION
|
country
of origin,
|
S.KOREA.
|
insurance
cover note/policy number, date, amount,
|
Policy number: 654369
Date: JULY 1,2009
Amount: TK 50Million
|
Bangladesh
Bank Registration number,
|
ADF 21478936
|
Import
license or LCAF number,
|
LCAF3268956
|
IRC
number,
|
IR457896512
|
Account
number,
|
JH 569 3520
3692
|
Document
required,
|
Not provided
|
last
date of shipment,
|
JULY 9,2009
|
source
to destination of shipment,
|
Not provided.
|
last
date negotiation,
|
JULY 5,2009
|
Provide by EXIM BANK, Karwan
Bazar Branch
2. Another form is Letter of Credit
Authorized (LCA) Form. The LCA form contains the
followings:
Name
and the address of the importer
|
MIDWAY AUTO SELECTION
82, KAMAL ATARTURK ,BANANI
|
IRC
No. and year of renewal
|
IR457896512
|
Amount
of L/C applied for
|
TK: 82 MILLION
|
Description
for items that is imported
|
AUTOMOBILE
|
ITC
number(s) / HS code
|
BG85965745
|
Signature
of the importer with seal.
|
…………………..
|
|
|
Provide by EXIM BANK, Karwan
Bazar Branch
Opening of L/C by the bank for the
applicant:
§ Taking
filled up application form from the DHAKA RICE AGENCY.
§ Upon
receipt of the application dealing officer will issue office note the
following:
o
whether the client has valid Head Office
Sanctioned limit
o
whether the proposal is within the limit
or within the power of Branch incumbent
o
the item to be imported is permissible
§ If
the bank satisfies then it will issue a letter of credit on behalf of the
importer, to the beneficiary, through an Agent/Correspondent bank in supplier’s
country.
§ L/C
may be sent by Airmail duly signed by Authorized officials or by Telex
authenticated by test number or SWIFT (Society for
World Wide Inter-bank Financial Transaction).
Since
Karwan Bazar Branch of EXIM Bank is not the AD, after issuing the office note
for L/C, it sent the documents to the Head Office of EXIM Bank for issuing the
L/C to the supplier.
Shipment of goods and lodgment of
documents by exporter:
] Then
YOUJIZI AUTO,
S.KOREA ships the goods to the destination of the Bangladesh
] Sends
the documents to the L/C opening bank through his negotiating bank.
Generally
the following documents are sent to the Opening Bank with L/C:
1.
Bill of Exchange
|
6.
Packing List
|
2.
Bill of Lading
|
7.
Advice Details of Shipment
|
3.
Commercial Invoice
|
8.
Pre-shipment Inspection Certificate
|
4.
Certification of Origin
|
9.
Vessel Particular
|
5.
A certificate stating that each packet contains the description of goods over
the packet.
|
10.Shipment
Certificate
|
CASE
STUDY
: 03 RATANPUR KNITTING
MILLS
Company Name *
Address
State *
State *
City *
Zip *
Country
Phone *
Fax *
E-mail address
Website *
Contact Person *
Designation
Member Business Info:
*
established *
Primary business
activity Buying
/ Importer Selling
/ Exporter
Both Buying and Selling *
Both Buying and Selling *
Products / Services
CASE: import COTTON from
ZINAMIN COTTONBAR, JAPAN
Importer
Importer
Country
Issuing
Bank
Applicant
Applicant
country
Advising
Bank
Negotiating
Bank
Goods
Type
Quantity
Delivery
date
IRC
no
Insurance
no
L/C
no
Total
Amount
TIN
no
VAT
/Duty paid
Chelan
no
Bank
A/C
|
RATANPUR
KNITTING MILLS
BANGLADESH
EXIM BANK, DHAKA
ZINAMIN COTTONBAR
JAPAN
CITY BANK NA, JAPAN
J P MORGAN, JAPAN
COTTON
0.25 METRIC TON
JUNE8 , 2009
IR547896512
INS2589632
L5874165
TK: 15 MILLION
T236589
TK: 18LAC
K214587
SD120 3520 3692
|
Provide by EXIM BANK, Karwan
Bazar Branch
RATANPUR
KNITTING MILLS import cotton
from ZINAMIN COTTONBAR, JAPAN at June 8, 2009. Their import procedure &
assistance from EXIM Bank are described bellow:
L/C opening process of RATANPUR KNITTING
MILLS :
To open an
L/C, the requirements of RATANPUR
KNITTING MILLS are:
¨
It must have an account in
EXIM Bank.
¨
It must have Importers
Registration Certificate (IRC).
¨ Report on past performance with other bank. EXIM Bank collects
this report from Bangladesh Bank.
¨
CIB (Credit Information
Bureau) report from Bangladesh Bank.
¨
A proposal approved by the
meeting of executive committee of the bank. It is necessary only when the L/C
amount is small or there is no limit.
¨
If the L/C amount is large
or there is a limit, then an approval from Bangladesh Bank is needed. Usually
this approval is needed for amount more than one crore.
Proposal
for Opening of L/C:
To
have an import L/C limit, RATANPUR
KNITTING MILLS submits an application
to foreign exchange department of EXIM
Bank. The proposal contains the following particulars:
SD120 3520 3692
IMPORT OF COTTON
TK: 15MILLION
ON THE L/C BASIS.
Not provided
Not provided
Not provided.
|
Full particulars of the bank account
|
Nature of business
|
Required amount of limit
|
Payment terms and conditions
|
Goods to be imported
|
Offered security
|
Repayment schedule
|
Provide by EXIM BANK, Karwan
Bazar Branch
Application by DHAKA RICE AGENCY to the banker to
open an L/C:
1.
EXIM Bank provides a printed
form for opening L/C to the importer. This form is known as Letter of Credit Application form. Usually the importer expresses the desire to open the L/C
quoting the amount of margin in percentage.
. Like full name and address of the applicant & beneficiary,
|
Applicant: RATANPUR
KNITTING MILLS
Beneficiary:ZINAMIN COTTONBAR, JAPAN
|
draft amount,
|
TK:
15 MILLION
|
country of origin,
|
JAPAN
|
insurance cover note/policy number, date, amount,
|
Policy
number: 258369
Date:
JUNE8,2009
Amount:
TK 3 Million
|
Bangladesh Bank Registration number,
|
ADF 21478936
|
Import license or LCAF number,
|
LCAF2368956
|
IRC number,
|
IR547896512
|
Account number,
|
SD120
3520 3692
|
Document required,
|
Not
provided
|
last date of shipment,
|
August
9,2009
|
source to destination of shipment,
|
Not
provided
|
last date negotiation,
|
August 5,2009
|
Provide by EXIM BANK, Karwan
Bazar Branch
2.
Another form is Letter of Credit Authorized (LCA) Form. The LCA form contains the followings:
Name and the address of the importer
|
RATANPUR
KNITTING MILLS
258/2
KALIAKOIR, GAZIPUR
|
IRC No. and year of renewal
|
IR547896512
|
Amount of L/C applied for
|
TK: 15 MILLION
|
Description for items that is imported
|
COTTON
|
ITC number(s) / HS code
|
BG58965745
|
Signature of the importer with seal.
|
…………………..
|
|
|
Provide by EXIM BANK, Karwan
Bazar Branch
Opening of L/C by the bank for the
applicant
§ Taking
filled up application form from the RATANPUR KNITTING
MILLS .
§ Upon
receipt of the application dealing officer will issue office note the
following:
o
whether the client has valid Head Office
Sanctioned limit
o
whether the proposal is within the limit
or within the power of Branch incumbent
o
the item to be imported is permissible
§ If
the bank satisfies then it will issue a letter of credit on behalf of the
importer, to the beneficiary, through an Agent/Correspondent bank in supplier’s
country.
§ L/C
may be sent by Airmail duly signed by Authorized officials or by Telex
authenticated by test number or SWIFT (Society for
World Wide Inter-bank Financial Transaction).
Since
Karwan Bazar Branch of EXIM Bank is not the AD, after issuing the office note
for L/C, it sent the documents to the Head Office of EXIM Bank for issuing the
L/C to the supplier.
Shipment of goods and lodgment of
documents by exporter:
] Then
ZINAMIN
COTTONBAR, JAPAN ships the goods to the destination of the
Bangladesh
] Sends
the documents to the L/C opening bank through his negotiating bank.
Generally
the following documents are sent to the Opening Bank with L/C:
1. Bill of Exchange
|
6. Packing List
|
2. Bill of Lading
|
7. Advice Details of Shipment
|
3. Commercial Invoice
|
8. Pre-shipment Inspection Certificate
|
4. Certification of Origin
|
9. Vessel Particular
|
5. A certificate stating that each packet
contains the description of goods over the packet.
|
10.Shipment Certificate
|
CASE
STUDY : 04 MITHILA TEXTILE
Company Name *
Address
State *
State *
City *
Zip *
Country
Phone *
Fax *
E-mail address
Website *
Contact Person *
Designation
Member Business Info:
*
established *
Primary business
activity Buying
/ Importer Selling
/ Exporter
Both Buying and Selling *
Both Buying and Selling *
Products / Services
CASE: Export Shirt, Sweater to
KINGMAN
WEAR, USA
Importer
Importer
Country
Issuing
Bank
Applicant
Applicant
country
Advising
Bank
Negotiating
Bank
Goods
Type
Quantity
Delivery
date
ERC
no
Insurance
no
L/C
no
Total
Amount
TIN
no
VAT
/Duty paid
Chelan
no
Bank
A/C
|
KINGMAN WEAR
USA
CITY BANK NA, USA
MITHILA TEXTILE
BANGLADESH
EXIM BANK, DHAKA
J P MORGAN, USA
SHIRT, SWEATER
2500UNIT
JUNE 5 , 2009
ER547896758
INS2589756
L5852165
TK: 25 MILLION
T56589
TK: 88LAC
K564587
SD247 3520 8569
|
Provide by EXIM BANK, Karwan
Bazar Branch
MITHILA TEXTILE export Shirt, Sweater to KINGMAN WEAR, USA at June 5,
2009. Their Export procedure & assistance from EXIM Bank are described
bellow:
a) Registration of Exporters:
For
obtaining ERC, MITHILA
TEXTILE intending required to apply to the controller/ Joint
Controller/ Deputy Controller/ Assistant Controller of Imports and Exports,
Dhaka in the prescribed form along with the following documents:
] Nationality
and Assets Certificate;
] Memorandum
and Article of Association and Certificate of Incorporation in case of Limited
Company;
] Bank
Certificate;
] Income
Tax Certificate;
] Trade
License etc.
b)
Securing the Order:
After
getting ERC Certificate MITHILA TEXTILE may
proceed to secure the export order. He can do this by contacting the buyers
directly or through agent. In this purpose the exporter may get help from:
] License
Officer;
] Buyer’s
Local Agent;
] Export
Promoting Organization;
] Bangladesh
Mission Abroad;
] Chamber
of Commerce (local & foreign)
] Trade
Fair etc.
c)
Signing the Contract:
After
communicating KINGMAN
WEAR, USA, MITHILA TEXTILE has to get contracted (writing or oral) for
exporting exportable items from Bangladesh detailing commodity, quantity,
price, shipment, insurance and marks, inspection and arbitration etc.
d) Receiving Letter of Credit:
After getting contract
for sale, KINGMAN
WEAR, USA should ask the MITHILA TEXTILE for Letter of Credit
(L/C) clearly stating terms and conditions of export and payment.
The
following are the main points to be looked into for receiving/ collecting
export proceeds by means of Documentary Credit:
(1) The
terms of the L/C are in conformity with those of the contract;
(2) The
L/C is an irrevocable one, preferably confirmed by the advising bank;
(3) The
L/C allows sufficient time for shipment and negotiation.
(Here
the regulatory framework is UCPDC-100, ICC publication)
e) Procuring the materials:
After
making the deal and on having the L/C opened in his favor, the next step for
the MITHILA
TEXTILE is to set about the task of procuring or manufacturing the
contracted merchandise.
f)
Shipment
of goods:
Then
the MITHILA
TEXTILE should take the preparation for export arrangement for
delivery of goods as per L/C and in terms, prepare and submit shipping
documents for Payment/ Acceptance/ Negotiation in due the time.
Documents
for shipment
·
EXP
form, Certificate of Origin,
·
ERC
(valid),
Inspection Certificate
·
L/C
copy,
Quality Control Certificate,
·
Customer
Duty Certificate, G.S.P.
Certificate
·
Shipping
Instruction,
Phyto-sanitary Certificate
·
Transport
Documents,
·
Insurance
Documents,
·
Invoice,
·
Other
Documents,
·
Bills
of Exchange (if required)
g)
Final Step:
Submission
of the documents to the Bank for
negotiation.
EXPORT
RELATED INFORMATION
Like full name and address of the applicant & beneficiary,
|
Applicant: KINGMAN WEAR, USA
Beneficiary: MITHILA TEXTILE
|
draft amount,
|
TK:
25 MILLION
|
country of origin,
|
BANGLADESH
|
insurance cover note/policy number, date, amount,
|
Policy
number: 258369
Date:
JUNE 5,2009
Amount:
TK 3 Million
|
Bangladesh Bank Registration number,
|
ADF 21478936
|
Export license or LCAF number,
|
LCAF2368956
|
ERC number,
|
ER547896758
|
Account number,
|
SD247
3520 8569
|
Document required,
|
Not
provided
|
last date of shipment,
|
JUNE
5,2009
|
source to destination of shipment,
|
Not
provided
|
last date negotiation,
|
JUNE 7,2009
|
Provide by EXIM BANK, Karwan
Bazar Branch
CASE
STUDY:
05 SAVAR TEXTILE
Company Name *
Address
State *
State *
City *
Zip *
Country
Phone *
Fax *
E-mail address
Website *
Contact Person *
Designation
Member Business Info:
*
established *
Primary business
activity Buying
/ Importer Selling
/ Exporter
Both Buying and Selling *
Both Buying and Selling *
Products / Services
CASE: Export Sweater to
JHONSON WEAR, UK
Importer
Importer
Country
Issuing
Bank
Applicant
Applicant
country
Advising
Bank
Negotiating
Bank
Goods
Type
Quantity
Delivery
date
ERC
no
Insurance
no
L/C
no
Total
Amount
TIN
no
VAT
/Duty paid
Chelan
no
Bank
A/C
|
JHONSON WEAR
UK
CITY BANK NA, USA
SAVAR TEXTILE
BANGLADESH
EXIM BANK, DHAKA
HSBC, UK
SWEATER
3500UNIT
JULY 5 , 2009
ER741896758
INS8529756
L5963165
TK: 50 MILLION
T65489
TK: 98.5LAC
K658587
HD852 9630 8569
|
Provide by EXIM BANK, Karwan
Bazar Branch
SAVAR TEXTILE export Shirt, Sweater to JHONSON WEAR, UK at June 5,
2009. Their Export procedure & assistance from EXIM Bank are described
bellow:
a) Registration of Exporters:
For
obtaining ERC, SAVAR
TEXTILE intending required to apply to the controller/ Joint
Controller/ Deputy Controller/ Assistant Controller of Imports and Exports,
Dhaka in the prescribed form along with the following documents:
] Nationality
and Assets Certificate;
] Memorandum
and Article of Association and Certificate of Incorporation in case of Limited
Company;
] Bank
Certificate;
] Income
Tax Certificate;
] Trade
License etc.
b)
Securing the Order:
After
getting ERC Certificate, SAVAR TEXTILE may proceed to secure the export order. He
can do this by contacting the buyers directly or through agent. In this purpose
the exporter may get help from:
] License
Officer;
] Buyer’s
Local Agent;
] Export
Promoting Organization;
] Bangladesh
Mission Abroad;
] Chamber
of Commerce (local & foreign)
] Trade
Fair etc.
c)
Signing the Contract:
After
communicating JHONSON
WEAR, UK, SAVAR TEXTILE has to get contracted (writing or oral) for
exporting exportable items from Bangladesh detailing commodity, quantity,
price, shipment, insurance and marks, inspection and arbitration etc.
d) Receiving Letter of Credit:
After getting contract
for sale, JHONSON
WEAR, UK should ask the SAVAR TEXTILE for Letter of Credit
(L/C) clearly stating terms and conditions of export and payment.
The
following are the main points to be looked into for receiving/ collecting
export proceeds by means of Documentary Credit:
(4) The
terms of the L/C are in conformity with those of the contract;
(5) The
L/C is an irrevocable one, preferably confirmed by the advising bank;
(6) The
L/C allows sufficient time for shipment and negotiation.
(Here
the regulatory framework is UCPDC-100, ICC publication)
g) Procuring the materials:
After
making the deal and on having the L/C opened in his favor, the next step for
the SAVAR
TEXTILE is to set about the task of procuring or manufacturing the
contracted merchandise.
h) Shipment of goods:
Then
the SAVAR TEXTILE should take the
preparation for export arrangement for delivery of goods as per L/C and in terms,
prepare and submit shipping documents for Payment/ Acceptance/ Negotiation in
due the time.
Documents
for shipment
·
EXP
form, Certificate of Origin,
·
ERC
(valid),
Inspection
Certificate
·
L/C
copy,
Quality Control Certificate,
·
Customer
Duty Certificate, G.S.P.
Certificate
·
Shipping
Instruction,
Phyto-sanitary Certificate
·
Transport
Documents,
·
Insurance
Documents,
·
Invoice,
·
Other
Documents,
·
Bills
of Exchange (if required)
g)
Final Step:
Submission
of the documents to the Bank for negotiation.
EXPORT
RELATED INFORMATION
Like full name and address of the applicant & beneficiary,
|
Applicant: JHONSON WEAR
Beneficiary: SAVAR TEXTILE
|
draft amount,
|
TK:
50 MILLION
|
country of origin,
|
BANGLADESH
|
insurance cover note/policy number, date, amount,
|
Policy
number: 258369
Date:
JULY 5,2009
Amount:
TK 3 Million
|
Bangladesh Bank Registration number,
|
ADF 85278936
|
Export license or LCAF number,
|
LCAF2368956
|
ERC number,
|
ER741896758
|
Account number,
|
HD852
9630 8569
|
Document required,
|
Not
provided
|
last date of shipment,
|
JULY
5,2009
|
source to destination of shipment,
|
Not
provided
|
last date negotiation,
|
JULY 7,2009
|
Provide by EXIM BANK, Karwan
Bazar Branch
CASE
STUDY:
06 MEEK TEXTILE
Company Name *
Address
State *
State *
City *
Zip *
Country
Phone *
Fax *
E-mail address
Website *
Contact Person *
Designation
Member Business Info:
*
established *
Primary business
activity Buying
/ Importer Selling
/ Exporter
Both Buying and Selling *
Both Buying and Selling *
Products / Services
CASE: Export Shirt, Sweater to
KEVINHOOPER WEAR, USA
Importer
Importer
Country
Issuing
Bank
Applicant
Applicant
country
Advising
Bank
Negotiating
Bank
Goods
Type
Quantity
Delivery
date
ERC
no
Insurance
no
L/C
no
Total
Amount
TIN
no
VAT
/Duty paid
Chelan
no
Bank
A/C
|
KEVINHOOPER WEAR
USA
CITY BANK NA, USA
MEEK TEXTILE
BANGLADESH
EXIM BANK, DHAKA
HSBC, USA
SHIRT, SWEATER
2500UNIT
MARCH 5 , 2009
ER598796758
INS3219756
L5698165
TK: 35 MILLION
T95189
TK: 78LAC
K568587
AD547 3520 8569
|
Provide by EXIM BANK, Karwan
Bazar Branch
MEEK TEXTILE export Shirt, Sweater to KEVINHOOPER WEAR, USA at March 5,
2009. Their Export procedure & assistance from EXIM Bank are described
bellow:
a) Registration of Exporters:
For
obtaining ERC, MEEK
TEXTILE intending required to apply to the controller/ Joint
Controller/ Deputy Controller/ Assistant Controller of Imports and Exports,
Dhaka in the prescribed form along with the following documents:
] Nationality
and Assets Certificate;
] Memorandum
and Article of Association and Certificate of Incorporation in case of Limited
Company;
] Bank
Certificate;
] Income
Tax Certificate;
] Trade
License etc.
b)
Securing the Order:
After
getting ERC Certificate, MEEK TEXTILE may proceed to secure the export order. He
can do this by contacting the buyers directly or through agent. In this purpose
the exporter may get help from:
] License
Officer;
] Buyer’s
Local Agent;
] Export
Promoting Organization;
] Bangladesh
Mission Abroad;
] Chamber
of Commerce (local & foreign)
] Trade
Fair etc.
c)
Signing the Contract:
After
communicating
KEVINHOOPER WEAR, USA, MEEK TEXTILE
has to get contracted (writing or oral) for exporting exportable items from
Bangladesh detailing commodity, quantity, price, shipment, insurance and marks,
inspection and arbitration etc.
d) Receiving Letter of Credit:
After getting contract
for sale, KEVINHOOPER
WEAR, USA should ask the MEEK TEXTILE
for Letter of Credit (L/C) clearly stating terms and conditions of export and
payment.
The
following are the main points to be looked into for receiving/ collecting
export proceeds by means of Documentary Credit:
(7) The
terms of the L/C are in conformity with those of the contract;
(8) The
L/C is an irrevocable one, preferably confirmed by the advising bank;
(9) The
L/C allows sufficient time for shipment and negotiation.
(Here
the regulatory framework is UCPDC-100, ICC publication)
i)
Procuring
the materials:
After
making the deal and on having the L/C opened in his favor, the next step for
the MEEK TEXTILE
is to set about the task of procuring or manufacturing the
contracted merchandise.
j)
Shipment
of goods:
Then
the MEEK TEXTILE should take the
preparation for export arrangement for delivery of goods as per L/C and in terms,
prepare and submit shipping documents for Payment/ Acceptance/ Negotiation in
due the time.
Documents
for shipment
·
EXP
form, Certificate of Origin,
·
ERC
(valid), Inspection Certificate
·
L/C
copy,
Quality Control Certificate,
·
Customer
Duty Certificate, G.S.P.
Certificate
·
Shipping
Instruction, Phyto-sanitary
Certificate
·
Transport
Documents,
·
Insurance
Documents,
·
Invoice,
·
Other
Documents,
·
Bills
of Exchange (if required)
g)
Final Step:
Submission
of the documents to the Bank for
negotiation.
EXPORT
RELATED INFORMATION
Like full name and address of the applicant & beneficiary,
|
Applicant:
KEVINHOOPER WEAR
Beneficiary: MEEK TEXTILE
|
draft amount,
|
TK:
35 MILLION
|
country of origin,
|
BANGLADESH
|
insurance cover note/policy number, date, amount,
|
Policy
number: 258369
Date:
MARCH 5,2009
Amount:
TK 3 Million
|
Bangladesh Bank Registration number,
|
ADF 98778369
|
Export license or LCAF number,
|
LCAF2548956
|
ERC number,
|
ER598796758
|
Account number,
|
AD547
3520 8569
|
Document required,
|
Not
provided
|
last date of shipment,
|
MARCH
5,2009
|
source to destination of shipment,
|
Not
provided
|
last date negotiation,
|
MARCH 7,2009
|
Provide by EXIM BANK, Karwan
Bazar Branch
FINDINGS
Major
findings of the study are:
- The Foreign Exchange Department is very much
Strong. Clauses they use in dealing with the foreign Bank in term of L/C
opening and amendment of L/C, are very much expedient to the foreign Bank.
It is giving a competitive advantage to the EXIM Bank. So
business men like to deal their business with the EXIM Bank Ltd.
- The officers are very helpful to the business
man. Some of our business men do not know exactly the procedures of
opening L/C. The officers of EXIM Bank help them properly to
execute their business.
- Modern
technical equipment such as computer is not sufficient in foreign exchange
department. As a result the exchange process makes delay and it is also
complicated.
- Financing in the international trade is very
crucial for the economy as well as it is risky. Sometimes the government
imposes restriction to import and export some products. As a result the
rate of opening L/C become reduces.
- EXIM bank does not provide
assistance in relation with foreign exchange to the small entrepreneur.
Small entrepreneur has to keep higher margin sometimes 100% regarding
opening a L/C. It mainly give facilitate foreign exchange services to the
big shots. As a result their
services are not diversified in to the small scale portfolios. This may
cause high financial loss in future.
- Absence of online banking
makes the bank difficult to increase profit and efficiency of banking
operation and Foreign Exchange services.
- The marketing strategy adopted
by the bank is effective but not efficient. The appearance of the bank in
the printing media and electronic media has become a matter of fortune.
- The specialization of the
personnel on a particular task is not ensured. It has been found that
executives are transferred from one branch to another without ensuring
other executives being acquainted with the task.
- Anti money laundering
procedures of the bank is not effective.
- EXIM Bank Limited presently
has 44 branches to operate its business. But it is quite hard for EXIM
bank to cover the whole Bangladesh with this small number of branches.
- The products offered by the
EXIM Bank are very limited in range comparing to the contemporary banks.
The clients can hardly find the best alternative of particular products.
- The number of exchange house
through which EXIM Bank remitted money is only 5. EXIM is known as one of
the leading local bank of Bangladesh but they don’t have enough exchange
houses to remit money.
- EXIM bank Ltd has to give more
emphasize in their remittance process. It needs 2-3 days for reaching the
remitted amount to the customer account. But customer may need the amount
in one day but at that time EXIM bank Ltd can not provide the service to
this particular customer. As a result the customer has to suffer.
- According
to some clients opinion introducer is one of the problems to open an
account. If a person who is new of the city wants to open account, it is a
problem for him/her to arrange an introducer of SB or CD accounts holder.
- The Bank demanded that they
are doing their banking services according to Islamic Shariah and
Principles but the atmosphere of the Bank is not match with this
principle.
- Internal control system of
EXIM Bank is not so much strong.
- The Bank has no specific
“SLOGAN” which is very effective in service marketing in this competitive
business arena.
- The Bank does not provide any
allowance to interns. So most of the interns do not get any motivation for
doing their internship in the Bank.
CONCLUSION
In the financial world banking sector is the heart
of a developing country. In order to develop a country’s economy, a good
banking plays a very important role through their modern products and services.
Among a large number of services, remittance management is one of the most
important factors that directly hit a country’s economy. The growing competition bound The
Export Import Bank of Bangladesh Limited not only to compete with the other
commercial bank but also with the public banks. For the future planning and the
successful operation in achieving its prime goal in this current competitive
market, this can be helpful in international trade financing that suggested
mostly for the betterment of country.
To
the gateway to practical professional life, an experience at EXIM Bank Limited
as an intern was a privilege for me. EXIM Bank Ltd. does offer a real practical
orientation to the new comers with typical corporate culture. This three months
internship orientation with EXIM Bank Ltd. undoubtedly will help me a lot to
understand and cope with any future typical corporate culture.
REFERENCE
- Ali
Syed Asraf, Foreign Exchange and Financing of Foreign Trade.
- Bangladesh Bank
Focus Group “Foreign Exchange Management” Dhaka,
Bangladesh Bank,
2004.
- Brochures
of EXIM Bank
- Chakma.
Pradanendu, Managerial performance of Islamic banking: A critical review,
EXIM Bank:
- Chowdhury
L. R. A Text Book on Foreign Exchange, 1st Edition, Fair
Corporation, Dhaka, 2000
- Donald
R. Cooper, Pamela S. Schindler, ‘Business Research Methods’, 9TH
Edition (Singapore, McGraw Hill, 2006).
- EXIM Bank Limited, Annual Report, 2008 – 2009
- Gosh, B.N, Scientific Methods and Social
Research, Sterling Publishers Ltd.
- Hand books of Foreign Exchange Division of EXIM
Bank Limited.
- Lesikar, R.V and J.D Pettit, Business
Communication theory and Application (6th Edition) IRWIN INC
U.S.A.
- Miah
Al-hajj Mohammad Haider, A hand book of Islamic banking and Foreign
exchange operation.
- Operational
guidelines for Foreign Exchange transactions of EXIM Bank Ltd
- Oxford
Dictionary of Finance and Banking.
- Rose, P. Commercial Bank
Management, McGraw-Hill Companies Inc., Boston, 1996
- Report of the National
Commission on Money, Banking and Credit. Chairman A.F.A. Husain, June 19,
1986.
- Web
site:
- http://www.eximbankbd.com.
- http://www.bangladesh-bank.org
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