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Assignment on

Foreign exchange operations & Remittance dealing procedures of SJIBL


Course Name: Foreign Exchange and International Banking Course Code: IB-408

Prepared for:
Subarna Barua, Lecturer, Department of International Business, University of Dhaka

Prepared By:
Serial No. 01 02. Name Md. Sajib Hossain Md. Mizanur Rahman Students of BBA (2nd Batch) Department of International Business University of Dhaka Roll No. 33 51

Submission Date: October 1, 2012

April 15, 2013 Subarna Barua, Lecturer, Department of International Business, University of Dhaka

Subject: Submission of an assignment.

Honorable Sir; I am pleased to submit assignment on Foreign Exchange Operations & Remittance Dealing Procedures of SJIBL the course Foreign Exchange and International Banking (IB: 408). I have prepared the paper based on learning and your instructions. I am confident that the presentation of this term paper has enhanced both my practical experience and theoretical knowledge to a great extent. It would be helpful for me if this term paper serve the purpose and fulfill your Requirements.

Thanking you, Sincerely yours,

Md. Mizanur Rahman, (On behalf of group) Fourth Year, Second Semester, Department of International Business, University of Dhaka

Table of Contents

Serial No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Executive Summary Introduction

Contents

Page No. 5 6

Executive Summery

Overview of SJIBL: Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in accordance with principle of Islamic Shariah on the 10th May 2001 under the Bank Companies Act, 1991. During last eleven years SJIBL has diversified its service coverage by opening new branches at different strategically important locations across the country offering various service products both investment & deposit. Islamic Banking, in essence, is not only INTEREST-FREE banking business, it carries deal wise business product thereby generating real income and thus boosting GDP of the economy. Board of Directors enjoys high credential in the business arena of the country, Management Team is strong and supportive equipped with excellent professional knowledge under leadership of a veteran Banker Mr. Md. Abdur Rahman Sarker. Vision of SJIBL: To be the unique modern Islami Bank in Bangladesh and to make significant contribution to the national economy and enhance customers' trust & wealth, quality investment, employees' value and rapid growth in shareholders' equity. Mission Statement of SJIBL: To provide quality services to customers. To set high standards of integrity. To make quality investment. To ensure sustainable growth in business. To ensure maximization of Shareholders' wealth. To extend our customers innovative services acquiring state-of-the-art technology blended with Islamic principles. To ensure human resource development to meet the challenges of the time.

Major Strategies of SJIBL: To strive for customers best satisfaction & earn their confidence.

To manage & operate the Bank in the most effective manner. To identify customers needs & monitor their perception towards meeting those requirements.

To review & updates policies, procedures & practices to enhance the ability to extend better services to the customers.

To train & develop all employees & provide them adequate resources so that the customers needs are reasonably addressed.

To promote organizational efficiency by communicating company plans, polices & procedures openly to the employees in a timely fashion.

To cultivate a congenial working environment. To diversify portfolio both the retail & wholesale markets.

Motto of SJIBL: Committed to Cordial Service

Corporate Information of SJIBL: Name of the Company Legal Form Shahjalal Islami Bank Limited A public limited company incorporated in Bangladesh on 1st April 2001 under the companies Act 1994 and listed in Dhaka Stock Exchange Limited and Chittagong Commencement of Business Head Office Telephone No. Fax No. Website SWIFT E-mail Chairman Managing Director Auditors Stock Exchange Limited. 10th May 2001 Uday Sanz, Plot No. SE (A) 2/B Gulshan South Avenue, Gulshan - 1, Dhaka-1212. 88-02-8825457,8828142,8824736,8819385,8818737 88-02-8824009 www.shahjalalbank.com.bd SJBL BD DH sblho@shahjalalbank.com.bd Alhaj Anwer Hossain Khan Md. Abdur Rahman Sarker M/S.Hoda Vasi Chowdhury & Co. Chartered

Accountants Ispahani Bhaban 14-15 Motijheel C/A Dhaka-1000 No. of Branches No. of ATM Booth No. of SME Centers Off-Shore banking Unit No. of Employees Authorized Capital Paid up Capital Face Value per Share Phone: 88-02-9555915, 9560332 79 29 06 01 1,811 Stock Summery Tk. 6,000 million Tk. 5,566 million Tk. 10

Foreign Exchange Operation (Overview): Foreign exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country. Foreign exchange is the means and methods by which rights to wealth in a countrys currency are converted into rights to wealth in another countrys currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country into that of another. Foreign trade gives rise to foreign exchange. Modern banks facilitate trade and commerce by rendering valuable services to the business community. Apart from providing appropriate mechanism for making payments arising out of trade transactions, the banks gear the machinery of commerce, specially in case of international commerce, by acting as a useful link between the buyer and the seller, who are often too far away from and too unfamiliar with each other. According to foreign exchange regulation act 1947, Any thing that conveys the right to wealth in another country is foreign exchange. Foreign exchange department plays significant roles through providing different services for the customers. Opening or issuing letters of credit is one or the important services provided by the banks. Different Types of foreign exchange operation: There are three kind of foreign exchange transaction: Import Export Foreign Remittance. The following chart is showing different types of activities of foreign exchange operation:

Foreign exchange Foreign exchange


IMPORT EXPORT FOREIGN REMITTANCE

Opening of LC PAD LIM LTR

Advising Export LC Pre- shipment finance Post- shipment Post- shipment

Endorsement FDD Traveler cheque Moneygram

Import: Import trade in Bangladesh is controlled under the Import and Export control Act 1950. Authorized Dealer Banks will import the goods into Bangladesh following the import policy, public notice, F.E. circular and other instructions from competent authorities from time to time. The whole import functions of the branch as far I have understood are discussed bellow: Procedure of import Import of merchandise essentially involves two things: Bringing of goods physically into the country Remittance of foreign exchange towards the cost of the merchandise The Ministry of Commerce through the Chief Controller of Import regulates physical import and Exports being office at the important trade center while Bangladesh Bank regulates the payment for the imports through its various departments. The following are the steps involved in import of merchandise into Bangladesh. Registration of importer: In terms of the Importers, Exporters and Indenters (Registration) Order 1981, no person can import goods into Bangladesh unless he is registered with the Chief Controller of Import and Export or exempted from the provisions of the said order. So the following documents are required to be submitted to the licensing authority for registration as importers: Questionnaire form duly filled in and signed Income tax registration certificate Trade License from the Municipal or Local Authority Bank certificate Nationality certificate Partnership Deed where applicable Certificate of Registration with the Registrar of Joint Stock Companies, Certificate from the Chamber of Commerce/Registered Trade Association Ownership documents or rent receipts of the place of business Any other documents required under the relevant import policy.

Licensing for Imports: Most imports into Bangladesh require a license from the Licensing Authority. In recent years, the task of licensing has been delegated to the commercial banks. It is done by LCA (Letter of Credit Authorization Form). Blank LCA forms can be obtained by the importer from their banker. The following documents are required to be submitted by the import to his banker. o LCA Form property filled-in and signed. o LC Application o Purchase Contract in the shape of an Indent or Proforma Invoice. o Insurance Cover Note o Membership Certificate from a chamber of Commerce and Industry or Registered Trade Association o Import Registration Certificate (IRC). An Opening of Letter of Credit: o Importer applies to the bank to open L/C in favor of foreign supplier. The bank has its printed application form and the importer should carefully fill in this form. On receiving this application, the bank scrutinizes it to ensure that: o Whether the customer fulfils all the required conditions/criteria to be eligible as an importer as per provisions of the Import Policy Order and Guidelines for Foreign exchange Transactions in force and the supporting documents/papers required are submitted. o Whether the items for import of which the documentary credit need to be opened is permissible i.e. not included in the negative/restrictive list as per Import Policy order in force. o Whether we are holding satisfactory credit report on the beneficiary to satisfy the relevant provisions of the guidelines for Foreign Exchange transactions o On receipt of the L/C application over the counter or through dispatch/mail section, the receiving date and time to be recorded on the L/C application.

o Signature of the customer on the L/C application to be verified by authorized/ designated officer. L/C application with all supporting papers to be checked to ensure that the required papers are as per requirement of Guidelines for Foreign Exchange Transactions and are consistent to each other L/C application must show the following clearly: Full name & address of the beneficiary The amount of the credit The Credit whether to be irrevocable or confirmed irrevocable. Whether the credit is available by payment, acceptance or negotiation On which party the drafts are to be drawn and the tenure of such drafts A brief description of the goods, including details of quantity and unit price Whether freight is to be prepaid or not The port of shipment and the destination Whether the transfer of the goods from one vessel to another, or from one mode of transport to another, route, is prohibited. The last date for shipment The date and place of expiry of the credit Negotiation period Details of the documents required and how those are to be dispatched to the issuing bank i.e. by ordinary mail/courier. Whether the credit is to be a transferable one. How the credit is to be advised i.e. by mail/telex.

Letter of Credit authorization form duly filled in and signed. Indent or Proforma Invoice issued by Seller or his agent (Indenter) duly counter signed by the customer.

Insurance certificate or policy (Marine/Air/Mail/Truck) covering the goods at 10% above L/C value for the whole journey/shipment together with unconditional premium paid receipt.

Prior permission/registered LCA form, No objection/any other certificates from the concerned authority as required as per provision of the Import Policy Order. I.M.P. form duly filled in and signed. In case the L/C application is not complete or in consistence or the required papers are not submitted, the customer should be promptly contacted for rectification of the defects.

Before Dispatching/ Transmitting the L/C: Check whether the opening of the Letter of Credit is approved by the competent authority. Review all documents including the Letter of Credit and vouchers. If found in order, sign the letter of credit including the accounting vouchers. The original L/C must be signed jointly by two authorized signatories.

Verification and Lodgment of Documents by the L/C Opening Bank: On receipt of the shipping documents from the negotiating bank, the L/C Opening Bank should carefully examine these to ensure that they confirm to the term of the credit: The documents have been negotiated within the stipulated date. The amount drawn does not exceed the amount authorized in to credit. The merchandise is properly invoiced. The bill of Lading is clean, shipped on board, showing freight prepared and endorsed to the order of the issuing bank shows the port of shipment, the port of destination, the name of the consignee and the date of shipment are in keeping with the term of the credit. It is properly signed by the shipping company The Certificate of Origin

Other documents like weight list, packing list, pre-shipment Inspection Certificate etc.

After the lodgment, the bank asks the importer to retire the bill. After retirement the amount of remittance towards cost of the merchandise is reported to Bangladesh Bank on Form IMP.

Shipping Guarantee: Shipping guarantee is a Letter of Guarantee/Indemnity issued jointly by importer (consignee) together with a bank (L/C opening Bank) in favor of a commercial carrier or their agent whereby they are authorized to release imported merchandise (title being in favor of the co-issuer Bank) to a consignee in the absence of original shipping bill i.e. bill of Lading/airway bill while the coissuer furnish an assurance/undertaking to submit the original Bill of Lading/airway Bill to the carrier as soon as the same is in their possession. However against the issuance of a letter of indemnity, the bank should obtain a counter indemnity signed by the importer in favor of the issuing bank whereby they assume full responsibility for any obligation the bank assume in issuing the shipping guarantee and also undertake acceptance/payment of documents/draft under the related Letter of Credit irrespective of whether those are discrepant or not. Before Issuing the Shipping Guarantee: Head Office approval is essential in cash where the customer has not adjusted related import liabilities or do not have approved LIM/LTR facility limit. The Branch shall obtain counter indemnity from the customer in favor of the Bank. The customer shall submit an unconditional undertaking to accept the related shipping documents even with any discrepancies. The Shipping Guarantee/Letter of indemnity must be signed jointly by two authorized signatories. Important points to prepare an L/C: To prepare an L/C the branch takes care on the following points: the

L/C number: The branch will put a number for each L/C., which is the serial number of the L/C for a particular year. First L/C of SJIBL SKB branch in 2009 may be numbered like SJIBL / SKB /1742010401. Place and date of issue: L/C must indicate the place and date of issue. Date and place of expiry: L/C must have an expiry date. This is the last date of presentation of document under the L/C. Place of expiry of the L/C also to be mentioned in the L/C. Normally it should be the counter of the Negotiating Bank. Shipment date: There should be a last shipment date after which shipment is not allowed. Bank may also fix-up a first shipment date before which shipment will not be allowed. Presentation period: Issuing bank will allow a period within which exporter must present the export documents to the negotiating bank or to any other nominated bank. This may be 15 days from the date of shipment. Maximum may be allowed one month, but within the expiry date of the credit. Applicant: Name of the applicant with business address to be put in the L/C. Beneficiary: Name of the beneficiary with address also to the indicated in the L/C. Advising Bank: Name of the advising bank with address to be mentioned in the L/C. Amount: Every L/C must show the amount of the L/C. The word About may be used with amount, which means 10% more or less of the said amount. Part-shipment and Trans shipment: Issuing bank also clearly indicate in the L/C whether partshipment and trans shipment are allowed or not. Availability: L/C must indicate whether the credit is available by payment, by negotiation or by acceptance. Port of shipment and port of destination: L/C will also indicate from where shipment to be made and where goods to be delivered. Tenure of the draft: Whether the draft to be drawn at sight or usance, also to be cleared in the L/C. Documents required: Bank will give the list of required documents and data content therein. Each and every term must be supported by the documents, because any term without asking document is valueless. Payment: When, where and by whom payment is to be made, also to be indicated in the L/C.

Bill of lading: B/L must be issued or endorsed to the order of the Issuing Bank. It should be clean and freight prepaid if L/C is on CFR basis short form and charter party B/L to be avoided. All these terms must be incorporated in the B/L clause of the L/C. Bill of exchange: bill of exchange to be drawn on the Issuing Bank. Pre-shipment Inspection: Pre-shipment inspection certificate is compulsory for both government and private import except in few cases. Data content: Invoice and other documents if required should indicate the H.S. code number. LCAF No with description of the item and country of origin. Special conditions: Special conditions, such as in case of food, machineries, vehicles and any other items should be incorporated in the L/C where required. Authenticity of the credit: L/C to be authenticated by putting a test number or signing by two authorized officers. L/C advising: The L/C duly signed by two authorized officers, whose specimen signatures are already recorded with the correspondent banks, must be addressed to the beneficiary. Bank generally does not enter into direct contact with the beneficiary. Instead they utilize the services of its own branch office (if any) or correspondent bank at sellers country for the purpose of advising it to the seller (beneficiary). Thus the correspondent bank becomes the Advising Bank. The process of advising a credit consists of forwarding the original credit to the beneficiary to whom it is addressed. Before forwarding/advising the credit to the seller under appropriate forwarding coverage, the advising bank has to verify the signatures of the officers of the opening bank and ensure that the terms and conditions of the credit are not in violation of regulations relating to export. While advising, the advising bank does not undertake any liability. Lodgment: If import documents are found in order, they are to be made entry in the bill register and necessary vouchers to be passed, putting Bill number on the documents. This process is called Lodgment of the bill. The word Lodgment means temporary stay. Since the documents stays at this stage for a temporary period i.e. up to retirement of the documents, the process is called

lodgment. Bank must lodge the documents immediately after receipt of the same, not exceeding 7 banking days, following the day of receipt of the documents, (Article 14, UCPDC-500). Retirement: When the importer release the import documents from the bank by acceptance/cash payment or under post import bank finance, it is known as retirement of the import document. Post import finance: When the importer does not come forward to retire the import documents, or requests the bank for finance against the imported consignment, then arises the necessity of post import investment. If the consignment is not cleared within 45 days, from the date of arrival, custom authority may auction the consignment under section 167 (8) and amended section 82 of the Custom Act 1969. Under such a situation bank becomes compelled for forced clearance of the consignments under Murabaha post import investment. If the documents are discrepant, partys acceptance is required for clearance of the goods. Export: Export means outflow of goods and services produced in one country, which purchase by Government, Firms and individuals of other countries. Development of a country depends on its participation in the international trade by increasing production and export of commodities and service sector. By way of this a country can improve Employment Generation-Income levelSavings-Growth-Economic Development. The imports and exports trade in Bangladesh is regulated by the Import & Exports Control Act 1950. There are number of formalities an exporter has to fulfill before and after execution of export, some of are as under: Benefits of Export: Development of a country depends on its participation in the international trade by increasing production and export of commodities and service sector. By way of this a country can improve Employment Generation-Income level-Savings-Growth-Economic Development.

Procedure/Formalities for Export: The imports and exports trade is regulated by the Import & Exports Control Act 1950. There are number of formalities an exporter has to fulfill before and after execution of export, some of are as under: The intending exporter has to register with CCI&E and obtained Export Registration certificate [ERC]. The ERC number is to be used in all places relating to exports. i. Securing Export Order:

To secure export order the exporters may contact local chamber commerce of potential buyers, the export promotion bureau, Bangladesh mission abroad and by direct contact with foreign buyer through correspondences. ii. Receiving Letter of Credit: After making contact with foreign buyers and reaching on agreed price and terms, conditions the exporters receive Letter of Credit. iii. same. iv. Preparation and procurement of Export Documents: After making shipment the exporter has to prepare documents i.e. Bill of Exchange, Commercial Invoice, Beneficiarys certificates and procure some documents i.e. Transport Documents, Certificate of Origin, Insurance certificate, Inspection certificate and other documents as required as per LC terms. v. Submission of documents to the bank for Negotiation: Procurement and Shipment of Goods:

After receipt of LC the exporter has to procure or manufacture the contracted goods and ship the

After preparation and collection of all documents as per LC terms the exporter has to submit the documents to the bank for Negotiation/Payment/Purchase. vi. Role of Banks in the Export Sector of Bangladesh:

All the financial requirements of an exporter, from the time he enters into a sale contract and start working on it and till he receives final payment from abroad, are met by commercial banks.

In that case banks play an important role in the export sector of Bangladesh and contribute by financing in the export sector by following categories: Pre-Shipment Credit: Pre-shipment credit is given to the exporters, for the activities prior to shipment of goods for export. Some example of Pre-shipment credit: Cash for local procurement of raw materials and its related expenses, Procuring & Processing of goods for export, Packing and transportation of goods for export, Payment of insurance premium, Inspection fees, Freight charges etc. Post-Shipment Finance: Usually the exporter can not afford to wait for a long time for payment to local manufacturer/supplier and other financial obligations. Resulting which the exporters need post-shipment credit facility. Considering the genuine need, and worthiness of export and other security measures bank allow credit facility to exporters. Document required for Foreign Exchange Transactions: Export-Import transactions ask for the following documents: Transport Documents Letter of Credit Insurance Documents Commercial Invoice Other Documents Transport Documents: Transport documents comprises of Bill of Lading, Airway Bills, Truck Receipts, Railway Receipts and Inland Waterway Receipts. Checking points of this document are: The Bill of Lading is issued/endorsed to the order of Negotiating Bank. Bill of Lading is clean, showing Shipped on Board notation, marked Freight Prepaid [For CFR Basis] and Freight Collect [For FOB Basis], not short form, Blank back or pre dated.

The Bill of Lading appears the merchandise covers in Commercial Invoice. The port of Shipment, Destination, Shipment Date, Name of consignee, Shipping Mark [if any] appears on the Bill of Lading are as per LC term.

Bill of Lading is signed by the carrier company or his agent. Letter of credit: A letter of credit is a letter issued by a bank (know as the opening or the issuing bank) at the instance of its customer (known as the opener) 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 gave been complied with. The following diagram brings out clearly the operation of letter of credit: Commercial Invoice: It include all types of information such as description of goods, Port of destination, Port of loading, LC no, Importer name, name of issuing Bank etc. Checking points of this document are: The invoice dated and signed by the beneficiary. The invoice is issued to the party concerned as stated in the LC. Description of goods is as stated in the LC. Unit price mentioned as stated in the LC. Proper Trade-Term is mentioned. Insurance Documents: Checking points of this document are (in case of CIF basis): The Insurance Policy is valid. The policy is issued in the name of LC Issuing bank a/c: importer. The policy is signed by the authorized official of the Insurance Company. The policy is in negotiable form, duly stamped and dated prior the BL date. Description of goods, name of carrying vessel shown in Insurance Policy are same as shown in BL.

The policy covers Transshipment [if allowed in LC] clause. Policy covers 10% above the value of consignment. Policy indicates where and in which currency the claim [if any] will be settled. Other Documents: As per UCP 600, other documents comprises of all other documents other than Transport Documents, Insurance Documents and Commercial Invoice. Certificate of Origin: Checking points of this document are: The Certificate is issued by the concerned authority of exporting country as stated in the LC [usually such Certificates are issued by the Chamber of Commerce & Industry of exporting country]. Beneficiarys Certificate: Checking points of this document are: The certificate issued by the beneficiary stating the particulars as stated in the LC.

Packing List: Checking points of this document are: The Certificate is issued and prepared by the beneficiary as per instruction given in the LC. Inspection Certificate: Checking points of this document are: The Certificate is issued by the competent authority as approved for that country. The Inspection Certificate can also be issued by the beneficiary/manufacturer if allowed in the LC. The Certificate is signed-sealed certificate the contents as required and issued prior to shipment of the goods. Bill of exchange: Checking points of this document are: The bill of exchange is drawn by the beneficiary as mentioned in the LC duly signed and dated.

The amount is identical with the amount of Commercial Invoice. The amount mentioned in figure and words are consistent. The bill of exchange is in order and/or endorsed properly. Foreign Remittance: 1. Outward remittance: On March 24, 1994 Bangladesh Taka was declared convertible for current international transaction. As a result remittances become more liberalized. Outward remittance include sale of Foreign Currency by TT, MT, Draft, TC or in cash for private, official and commercial purpose. Issuance of outward DD and TT: ADs may also issue DD, TT on their foreign correspondent favoring Bangladesh nationals or foreign nationals as per their entitlement. But foreign TT and DD are not issued in this branch. 2. Inward remittance: The term inward remittance includes not only purchase of foreign currency by TT, MT, Draft etc. but also purchase of bills, purchase of TC. Utmost care should be taken while purchasing notes, TC, DD and similar instrument for protecting the bank from probable loss as well as safety of the bank officials concerned. But this type of purchase is not done in this branch. Collection of foreign currency instrument: The Shahajalal Islami Bank Limited collects F.C. instruments on behalf of their customer. To collect proceed of Foreign Instrument following procedures to be maintained: Receive instrument with deposit slip Affix crossing stamp of the bank Entry in the register putting OFBC number Affix endorsement pay to the order of any bank or trust company, prior endorsement guaranteed. Instrument to be sent to adjacent correspondents.

Different Methods of International Trade Payment: Cash in Advance: Under this arrangement, buyer pays the value to exporter against the goods to be shipped and services to be provided in some future date. After receipt of payment exporter ship the goods and provides services to buyers. But the system is disadvantageous for buyer because buyer blocking his fund in advances having no assurance of receipt of goods and service in time as per contract. So such type of payment is considered as risky and expensive for buyers but favorable for seller. Open Account: Under this method, the sellers are in risky situation because he has to deliver the goods and service to buyer before receiving payment. Buyer makes payment only after receipt of goods and services as per contract terms. So before going such transaction sellers should check the past record, worthiness and business history of the buyer and if it is found satisfactory only seller can proceed further. Collection against Payment [D/P]: Under this method, exporter ship the goods and draw bill of exchange on the buyer and submit the documents to a bank with instruction to collect the proceeds through its correspondent bank located in the buyers country. In this case documents delivered only against payment. Collection against Acceptance [D/A]: Under this method, exporter ship the goods and draw bill of exchange on the buyer and submit the documents to a bank with instruction to collect the proceeds through its correspondent bank located in the buyers country. In this case documents delivered against acceptance of Drafts by the buyer. Documentary Credit: Documentary credit is the classic method. This method reduced payment related risks for both exporter and importer substantially. Because documentary credit is conditional payment undertaking of issuing bank to the exporter against compliance of certain terms and conditions and submission of required documents as per credit terms. So under this payment method both exporter and importers feel safe to deal. Examination and Negotiation of Export Documents:

There are many instances where exporters involve themselves in committing fraud so while exporters tendered export documents for negotiation, special care should be taken in checking the said documents to avoid fraud forgery and protect the interest of the bank. Following are some important checking points: a. Know your exporter: You should know your customer considering his relationship with the bank, previous track record and worthiness. b. Proper checking of Export LC: Export LC is authenticated, irrevocable, valid, Free Negotiable in Bangladesh, Payment instruction is clear, issued under UCPDC. c. Proper checking of Export Documents: Bill of exchange, Commercial invoice, Transport documents and other documents are prepared and presented as per LC terms. Shipment: After the contract the exporter takes all necessary steps to ship the goods. He may procure or manufacture the goods. Failure to maintain the delivery schedule will expose the exporter to claim from the buyers for damages on account of non-shipment or late shipment, and in addition the exporter may also loose the patronage of the buyer for future export orders. While shipment and after shipment the exporter should obtain or prepare the following documents: EXP Form Photocopy of registration certificate Photocopy of the contract Photocopy of the L/C Customs copy of ERF Form for shipment of jute goods and EPC Form for raw jute Freight certificate from the bank in case of payment of the freight at the port of lading is involved Bill of Lading, Railway receipt, Postal receipt, Air way bill or Truck receipt Packing list Certificate of origin Shipping instructions Insurance policy.

Issuance of EXP Forms: All exports must be declared on EXP Form. AD branches supply these forms. The bank certifies EXP form only after confirming the following: Arrangements have been made for realization of export proceeds. Bonfires of the importer/consignees abroad Arrangements have been made for receipt by authorized dealer of documents of title to goods, The exporter has signed the EXP. EXP number should be as under: ADs Code 2 3 5 9 Register Serial No 0 0 2 5 3 Year 1 0

Submission of documents: After the shipment, the exporter submits all these documents to bank for negotiation. The exporter remains in constant touch with the negotiating bank for early negotiation of export bills. If any minor mistake is detected or any document is found missing the same should immediately be corrected or supplied for early settlement of the matter. Export documents checking: After submission of exports documents by the exporter, bank must check, whether all the required documents submitted or not. Bank must examine all documents stipulated in the credit with reasonable care to ascertain whether or not they appear, on their face to be in compliance with the terms and conditions of the credit. Documents not stipulated in the credit will not be examined by the bank. The following points of documents should be carefully scrutinized: Bill of exchange Amount of bill differs with invoice Not drawn on L/C issuing branch Not signed Tenor of C/E not identical with L/C

Full set not submitted Invoice: Not issued by the beneficiary Not signed by the beneficiary Not made out in the name of the applicant Description, price, quantity, sales terms of the goods not correspond to the credit Not marked one fold as original Shipping marks differs with B/L and packing list Packing List: Gross weight, net weight and measurement, number of cartoons/ packages differs with B/L. Not marked one fold as original Not signed by the beneficiary Shipping marks differs with B/L Bill of Lading/Air Way Bill: Full set of bill not submitted B/L is not drawn or endorsed to the order of IBBL Shipping on Board, Fright Prepaid or Freight collect etc. notations are not marked on the B/L. B/L not indicate the name and capacity of the party i.e. carrier or master, on whose behalf the agent is signing the B/L. Shipped on board notation not showing name of pre-carriage vessel/ intended vessel Shipped on board notation not showing port of loading and vessel name (in case B/L. indicated a place of receipt or taking in charge different from the port of lading) Short form B/L. Charter party B/L. Description of goods in B/L. not agrees with that of invoice, B/E.

Alterations in B/L. not authenticated Loaded on deck Modes of payment:

The most common methods of payment under a L/C are as follows: Sight or Payment credit: When the credit stipulates that drafts (bill of exchange) should be drawn under it on DP terms involving payment to the beneficiary on presentation of documents, it is known as a Sight or Payment Credit. In this credit the issuing bank nominates a bank in the exporters country as the paying bank. If the paying bank accepts its nomination, its position is that of an agent of the issuing bank. When the documents under the credit are presenter to it, it pays the beneficiary provided all the terms and conditions of credit have been complied with. It gets reimbursement from the issuing bank for the amount paid. Deferred Payment Credit: The term Deferred means postponed to a future period or date. When a credit does not require the payment to the beneficiary immediately on presentation of the documents but after a specified period has elapsed, it is known as Deferred Payment Credit. According to this type of credit, the payment is hot made in full on the tender of documents but by installments at pre-determined future dates. Deferred payment credit may be used where the beneficiary wishes to allow the importer time to pay for the document. Acceptance Credit: When under the terms of a letter of credit drafts are drawn on DA terms involving payment to the beneficiary on the maturity of the accepted Bill of Exchange drawn under it, the letter or credit is referred to as an Acceptance Credit or a Term Credit. In this form of credit the beneficiary draws a draft for particular usance (e.g. 30, 60, 90 days sight or even longer), payable upon either the correspondent bank or the issuing bank. Negotiation Credit: In a negotiation credit the documents are accompanied by a sight draft (bill of exchange). The bill of exchange may be drawn on the issuing bank or the importer or any other bank stipulated in the credit. The bank, which negotiates documents under the credit, purchases the bill of exchange and pays the amount to the beneficiary who tenders the documents. The issuing bank reimburses the negotiating bank.

Settlements of claim: Exporter very often claims of various natures from the foreign buyers against their exports. It should be ensured that genuine claims of the foreign buyers are settled expeditiously by the exporters concerned so that the reputation of the country is not jeopardized in the international market. Under the Exchange Control instructions in force, Bangladesh banks prior approval in individual case is necessary for making remittances against export claims. General permission has, however, been accorded to the ADs to make remittances in foreign exchange towards claims against exports of non-traditional items, provided the exporters are willing to make such remittance from the exchange market. Settlement of claims against cash foreign exchange resources of the country will, however, require Bangladesh Banks prior approval . Foreign Currency Accounts: The Trust Bank Ltd opens the following accounts for dealing remittances NFCD Accounts:

Non-resident Foreign Currency Deposit (NFCD) accounts may now be maintained as long as the account holders desire. Amounts brought in by non-resident Bangladeshis can be deposited in foreign currency account any time after return to Bangladesh F.C Accounts of non-resident Bangladeshis:

Foreign currency accounts opened in Bangladesh in the names of Bangladesh nationals or persons of Bangladesh origin working or self employed abroad can now be maintained as long as the account holders' desire. RFCD Accounts:

Persons ordinarily resident in Bangladesh may maintain foreign currency accounts with foreign exchange brought in at the time of their return to Bangladesh from visits abroad. These accounts are termed as Resident Foreign Currency Deposit (RFCD) accounts. The amount brought in with

declaration to customs authorities on form FMJ and up to US $ 5000 brought in without declaration may be credited to this account. RFCD accounts may be opened in US Dollar, Euro, Pound Sterling, Deutsche Mark or Japanese. Interest may be paid on these deposits if these are for a term of not less than one month and the balance is not less than US $ 1000 or Pound Sterling 500 equivalent. F.C Accounts of other entities:

ADs do not require prior permission of Bangladesh Bank for opening of foreign currency accounts of: o Non-resident foreign persons/firms; o Diplomatic missions in Bangladesh and their expatriates; o Diplomatic bonded warehouses (duty free shops); o Local and joint venture contracting firms employed to execute projects financed by foreign donors/international donor agencies;

Foreign Remittances occurs for the following reasons:

Investment in shares/securities by non-residents Remittance of profits Remittance of dividend/capital gain Remittance of salaries and savings by expatriates Remittance on account of training and consultancy Remittance by shipping lines, airlines, courier service companies Visit Abroad: Booking of Passage Private Travel Business travel quota for importers and manufacturers producing for domestic markets Education Medical treatment Taking out/bringing in of Bangladesh Taka

Taking out/bringing in of personal jewelry Miscellaneous Remittances: Remittance of membership fees Evaluation and Visa Processing Fee Visa fee: Family maintenance 3Other services: There are some other activities performed by foreign exchange department. These are mentioned in below: NRB( Non-resident of Bangladesh) Share Different types of security for NRB, Wage earner Passport services

NRB Share: Now Non-Resident of Bangladesh can invest in capital market. Every company provides some benefit to attract NRB investors. They give quota on a portion of their authorized capital for NRB. SJIBL also provide these services to their NRB clients. SJIBL apply for NRB share on behalf of their clients SJIBL issues DD Other services like refund warrant, buy sell of their share etc. It is also most profitable for the bank. The contribution of NRB share on total earnings of foreign exchange will discuss in next part of the report. Different Types of Securities for NRB: SJIBL also issues different types of government securities for wage earners, these are: Wage Earners Bond

Wage Dollar Bond etc. Financial Performance of Foreign Exchange operation of TBL:
Import Earnings:

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