A Case Study on-Foreign Exchange of the Export Import Bank of Bangladesh Limited

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 6^th week extensive banking environment –familiarization program. This program was started from 3^th July 2011 and ended on 15^th 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

                                                                    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 27^th 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:

1. Nationality Certificate

2. Certificates from the Chamber of Commerce & Industry / Registered Trade Association
3. Bank Solvency Certificate
4. Trade License
5. Income tax paid certificate
6. 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:

1. Inward remittance
2. 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                                             *

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 *

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                                             * 

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 * 

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                                             *

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 *

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                                             *

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 *

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                                             *

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 *

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                                             *

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 *

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, 1^st Edition, Fair Corporation, Dhaka, 2000
• Donald R. Cooper, Pamela S. Schindler, ‘Business Research Methods’, 9^TH 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 (6^th 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