Bismillahir-Rahmanir-Rahim

Presentation
on
Import Bill:Scrutiny, Lodgement,
Endorsement, Payment & Retirement
procedure, EDF, UPAS, MFCI & OBU
 Scrutinize of Import Bills...continue
Steps for Scrutinizing Import Bill

Step-1: Examine Import Documents:

As per UCP 600, sub-article 14(b) documents must be
examined within a maximum period of 5(five) banking days
following the day of presentation.

Step-2: Documents Comply or do not Comply:

Documents Comply: As per UCP 600, sub-article 15(a), it is
obligated by the issuing bank to take up the documents and
effect settlement.

Documents do not Comply: It is not obligated by the issuing

bank to take up the documents and effect settlement.
 Scrutinize of Import Bills
Step-3: Decide to Refuse or Seek Waiver:
If the issuing bank determines that the documents do not comply,
it has two options:
First: It may refuse the documents and provide notice of refusal in
accordance with UCP 600, sub-article 16(c) in a single notice.
Second: UCP 600, sub-article 16(b) gives the issuing bank the
option, in its sole judgments, to approach the applicant for a
waiver of the discrepancies. The issuing bank is not bound by an
applicant’s decision to waive the discrepancies.
Step-4: Take up or refuse and give notice depending on receipt of
waiver:
If the issuing bank waives the discrepancies, then take up the
documents and if the issuing bank rejects the documents, then
refuse documents and give notice of refusal in accordance with
UCP 600, sub-article 16(c) & (d)
 Common Discrepancies on Import Bills

1. Late shipment
2. Late presentation
3. LC expired
4. Port of loading/dispatch differ
5. Description of goods not as per LC
6. Address of applicant/beneficiary in BL/AWB/TR not as per LC
7. Unit price not mentioned or differ in the invoice
8. Short shipment/partial shipment
9. Courier receipt not presented
10. Clean BL not submitted
11. Short form BL submitted
12. Documents in consistent with each other
13. Inspection certificate not submitted etc.
 Lodgement of Import Bills
If the import documents are found in order i.e. Complying
Presentation and accepted to the importer and then
make entry in the bill register with passing the necessary
voucher/entry. This process is known as lodgement.

The bank lodges the bill against payment or acceptance

of the importer immediately. The bank asks the importer
to retire the bill by sending a cost memo indicating the
amounts payable by him under different heads.
 Retirement & Endorsement of Import Bills
AD endorses documents by arranging fund to make payment after receiving request
letter from client stating that accepting documents despite discrepancy to release
goods and make payment from their own sources or bank investment. The following
documents are forwarded to C&F Agent or Branch for clearance of consignments:
1. Endorse on the back of Transport Documents
2. Invoice duly certified
3. Endorse on the back of LCAF
4. Endorse on the draft stating that payment received or payment under bank’s
investment
5. LC copy with amendment, if any
6. Insurance cover note & Insurance policy
7. Bank seal with signature of the authorized officer to other documents
8. NOC in case of capital machinery for 100% export oriented industry
9. Counter guaranty favoring the Shipping-lines against guaranty of the client in case of
endorsement of copy documents
10. Others documents, if any.
 Payment Procedures of Import Bills
i. Payment of Import Bills under Cash LC
ii. Payment of Import Bills under Back to Back LC
iii. Payment of Import Bills under LCAF
vi. Payment of Import Bills under Buyer’s/Supplier’s Credit
vii. Advance Remittance against Import
viii. Payment of Imports Bills against discrepant documents or
documents received directly by the importer
The aggregate amount of foreign exchange sold against an LCAF
under LC or otherwise, should not exceed the value mentioned in
the LCAF. Remittance in excess of the value of the LCAF is not
permissible without prior approval of the Bangladesh Bank except
for payment of normal bank charges of the foreign
correspondents which is reported with TM forms and supporting
documents. All applications for payments for imports into
Bangladesh should be made on IMP forms.
 Precautions to effect Payment
Before making remittance against the Back-to-Back import
bill, the AD should see that the authenticated copy of bill
of entry for bond in evidence of actual arrival of the
relative imports has been submitted.
(Chapter 7, Para-38 of GFET).
Payment of import bills against discrepant documents or
documents received directly by the importer after the
goods have been cleared from the customs, on the basis of
the relative LCAF, the exchange control copy of the
customs bill of entry or customs certified invoice in case
of import by post/land port, and the relative invoices.
(Chapter 7, Para-26 of GFET)
 Introduction of EDF
 EDF means Export Development Fund.
 EDF is an incentive to the Exporters.
 EDF was established Bangladesh in 1989.
 IBBL introduced EDF in 2010.
 Size of Fund is USD1200.00 million initially was
USD250.00 million.
 Fund to be utilized under Murabaha Agreement
(MFCI) with clients.
 EDF is import financing mode in the line of MPI.
 EDF should be obtained in FC
 Objectives of EDF
 Input procurement by the Manufacturer-
Exporter in the Cheap Rate

 AD can also invest from their own FEX Fund

up to 50% of MFCD Balance.

 AD exist in the market competition

 Build up market image

 Profit Rate
 Profit to be provided to Bangladesh Bank:
@ 6 month LIBOR+ 0.50%
 Profit to be imposed by AD on the Client:

@ 6 month LIBOR+1.5% or rate fixed from

time to time by Bangladesh Bank & Head
Office.
 Profit Sharing
 Bangladesh Bank:
@ 6 month LIBOR+0.5%
 Head Office : @ 0.33%

 AD Branch : @ 0.67%

Or rate fixed from time to time by

Bangladesh Bank & Head Office.
 Tenor of EDF facility
 Normal : Up to 180 days from the date of
disbursement by Bangladesh Bank

 Extendable : Maximum 270 days by

Bangladesh Bank considering its reasons
 Eligibility of EDF
 Manufacturer-Exporter for input
procurement
 Compliance with the value addition
criterion of IPO
 Proceeds repatriation within 120 days or
within the permitted time
 Within Single Borrower Exposure Limit

 Limit-holder Client of the Bank

 For Cash LC & Back to Back LC in FC

 Having no classified liability i.e. defaulter

 EDF Limit
1. Manufacturer-Exporters other than BTMA Mills
producing Yarn: USD12 million or less value addition
amount of Master LC/Contract whichever is lower, all items
for procurements of exported goods.
2. BTMA Mills making bulk import of Raw Cotton &
other fibers against Deemed Export: USD12 million
or 12(twelve) months' export proceeds received in FC
through Inland Back to Back LC over the past, or
whichever is lower.
3. Estimated requirements for up to 1(one) year based on
their export performance over the preceding year
manufacturer-exporters of Leather goods & Footwear
Manufacturers & Exporters Association of Bangladesh
(LFMEAB) and Bangladesh Ceramic Wares Manufacturers’
Association (BCWMA) for bulk imports.
 EDF Limit
4. USD1.00 million or 12 month’s export
proceeds received in FC through BB LC which over
is lower (for deemed export-Bangladesh Garments
Accessories & Packaging Manufacturers & Exporters
Association (BGAPMEA) making bulk import of raw
materials for local deliveries of garment accessories.
5. USD 0.50 million or 12 month’s export
proceeds received in FC through BB LC which over
is lower (for deemed export under Bangladesh
Plastic Goods Manufacturers and Exporters
Association (BPGMEA) for bulk import of input
procurements.
 Procedures of EDF
 Client apply to AD for opening LC under EDF
 AD seeking permission from BB through HO
 AD open LC under EDF after getting HO
approval
 After receiving docs, AD request IBW, HO for
arrangement of funds.
 IBW, HO request BB for fund
 BB credit fund in FC Clearing A/C with BB
 IBW provide approval to AD for payment
 AD recover funds in maturity from the client
and refund the same to BB through IBW,HO
 Regulations on EDF facility
 Guidelines for Foreign Exchange Transactions
 BB MASTER CIRCULAR 25 DATED 22.12.2009
 FE CIRCULAR 19 DATED 29.09.2010
 FE CIRCULAR 20 DATED 27.10.2010
 FE CIRCULAR 13 DATED 10.10.2013
 FE CIRCULAR 15 DATED 15.12.2013
 FE CIRCULAR 16 DATED 18.12.2013
 INSTRUCTION CIRCULAR NO.IBW/22/10 DATED
06.05.2010 FOR EDF.
 INSTRUCTION CIRCULAR NO.IBW/15/10 DATED
08.04.2010 FOR MFCI.
 MODE OF INVESTMENT
 Murabaha Foreign Currency Investment
(MFCI)
 Restricted Mudaraba of BB

 Murabaha with Client

 UPAS
 UPAS means Usance Payment At Sight.

 LC is in Usance but there shall be a clause

that payment will be made at sight.

 General criteria as in Usance

 Product of OBU of IBBL

 Objectives of UPAS
 To meet the client's need

 To remain competitive in the market

 To use FC Fund of the bank

 To uphold Bank's image

 Profit Rate & Profit Sharing

 Profit Rate: up to @ 6% or as determined by

Head Office time to time

 Profit Sharing between AD & OBU: 10:90

 Tenor
 As per tenor of LC which is set by GFET
volume-I, Chapter-7 of usance period
criteria

 Short Term facility for working capital

 Long Term facility for project/HPSM

 Eligibility of UPAS

 Importer for input raw material & capital

machinery procurement.
 Within Single Party Exposure Limit.

 For Cash LC & BB LC in FC

 Limit-holder client

 Having no classified investment

 Repatriate export proceeds within stipulated

time,if clients become exporter
 Amount of UPAS Investment
 Depend on the availability of FC fund
 FC position of Treasury, IBW, HO

 Balance of MFCD A/C

 As per LC value
 Procedures of UPAS
 Client apply to AD for opening LC under UPAS facility
 AD seeking permission from FTOD, IBW, HO
 AD open LC after getting HO permission and inform
FTOD, IBW, HO and OBU
 After receiving docs, accepting the same and request
OBU with necessary docs for payment. AD (Mudarib)
make Restricted Mudaraba Agreement with OBU
(Shahib-Al-Maal)
 OBU make payment & intimate the due date and total
amount (principal, profit and handling charge) payable
by AD
 AD recover fund from the client and adjust UPAS Bills
liability held with OBU
 Regulations
 GFET

 INSTRUCTION CIRCULAR IBW/12 DATED

01/01/2012
 Mode of Investment
 Restricted Mudaraba with OBU

 Restricted Murabaha with Client

 Definition of Off-shore Banking:
An Offshore Bank is a bank outside the
country of residence of the depositor,
typically in a low tax jurisdiction that
provides financial and legal advantages.
But practically, any banking unit (in
Bangladesh with prior approval from
Bangladesh Bank) may be treated as off
shore banking unit irrespective of
geographical location or presence, which
operates all transactions in convertible FC
and is free to accept deposit/borrow fund
from abroad & make advance/investment
 Advantages of OBU:
 Less restrictive legal regulation
 Low or no taxation
 Greater privacy
 Easy access to deposits
 Receipt & utilization of fund at lower rate.
 No exchange difference to be paid by the client
 Protection against local political or financial
instability
 Main Features of OBU:
1. All transactions are done in FC
2. Local capital requirement is either non-existent
or extremely low.
3.Taxes including withholding taxes on internal
income and other forms of levies are nonexistent.
4. Entry of foreign banks to conduct off shore
business.
5. License fee for registration and operation is
either nil or very low.
6. Separate Reporting/Accounting
 OBU: Bangladesh Perspective

In Bangladesh Off-shore banking was

started in 1985 and Bangladesh Bank
declared its policy in this respect vide
BRPD circular No. BCD (P) 744(27) on
17th December, 1985. The primary
objective of off-shore banking was to
activate financing business and industrial
activities in the newly created Export
Processing Zones (EPZ).
Area of Operations for OBU:

 Deposit Collection
 Investment/Credit Deployment
 Fund Collection/Borrowing abroad
 UPAS
 All FC related transactions
 Client of OBU:
 Non-resident (Individual and or Industry)
 Bangladeshi National working abroad.
 Type-A Unit (100% foreign owned)
operating in EPZ & outside EPZ
 Type-B, Type-C and industrial units outside
the EPZ (only for term loan)
 AD Branch under UPAS facilities
 Major Policy Issues of OBU....continue.
 OBUs are free to accept deposits from or to borrow from
persons/institutions not resident in Bangladesh including
Bangladesh nationals working abroad.
 OBUs are also free to accept deposits from or to borrow
from Type-A units of EPZ in Bangladesh.
 OBUs are not allowed to accept deposits from
persons/institutions resident in Bangladesh including Type-B
and Type-C units in the EPZs in Bangladesh.
 OBUs can carry on transactions in freely convertible
currencies.
 OBUs are not free to make loans/advances to
persons/institutions resident in Bangladesh including Type-B
and Type-C units in the EPZs in Bangladesh.
 Major Policy Issues of OBU:
 Industrial units outside the EPZs and Type-B and Type-C units in the
EPZs in Bangladesh may avail term loans in FC subject to compliance
with the guidelines issued by BOI for borrowing abroad by industrial
units in Bangladesh.
 OBUs can provide buyers credit with maximum markup of 6% for
the period of upto 1(one) year for the items which are allowed to
import on usance basis (subject to maximum usance period as
mentioned in GFET).
 OBUs can extend credit facilities to local banks for discounting export
bill.
 OBUs can discount/purchase accepted usance/deferred bills against
import from abroad on banker customer relationship applying due
diligence- UPAS.
 Banks functioning in Bangladesh may maintain correspondent
relation with OBUs in the manner they maintain such accounts their
foreign correspondents.
 OBU of IBBL:
 Permission obtained : 28 March, 2010
 Location of OBUs: HOCC, Agrabad, and
Uttara
 Clients of OBU: 13 AD Branches
 Sub-Clients: 43 Corporate Clients.
 Deposit Products : MFCD and FCAD
 Investment Products: Mudaraba Import Bills
(UPAS), Export Bills (MDB in FC), and project
Finance
 MFCI (Murabaha Foreign Currency Investment)

Objectives of MFCI:
 To meet up the unique needs of the clients.

 To invest FC funds of MFCD Accounts to our

investment clients.

 To invest EDF fund complying with the

Shariah principle.
 Sources of fund of MFCI:
a. MFCI utilizing of EDF

b. MFCI utilizing of MFCD (utilization of 50%

its MFCD)
 Salient Features of MFCI...continue
1. MFCI is allowed for the settlement of usance/sight import BB
Bills/Cash import Bills, Import Bills under EDF and Import Bills
under OBU operations.
2. All transactions is made in selected FC and the amount in all
related documents/vouchers related to be mentioned in FC.
3. MFCI A/C and Profit Receivable A/C (MFCI) is revalued at the
end of the day as per existing FC Revaluation procedure.
4. MFCI is allowed for settlement of import bills only. Other
expenses if any, payable in Taka to be borne by the client.
5. MFCI is allowed under the Single deal concept.
6. Profit is realized at the time of adjustment of the deal and HO
portion of the profit as fixed from deal to deal basis is
transferred to TD through IBCA.
 Salient Features of MFCI
7. Rebate may be allowed in case of early adjustment of investment and
compensation may be imposed for overdue period as per bank’s rule.
8. MFCI utilizing EDF of Bangladesh Bank the instruction contained in the
F.E Circular No. 25 dated 22.12.2009 shall be followed.
9. MFCI is made within the existing limit of the client.
10. MFCI is made for 180 days, extendable upto for 270 days by HO
11. Rate of Return is fixed by BB/Head Office from time to time.
12. MFCI is adjusted from the export proceeds/own sources of the client.
13. Eligibility for Investment /Target Group:
a. Exporters and Importers of the bank who have specific limit and
ability to repay FC investment from their export proceeds or own
sources having no overdue/ irregular/uncovered liabilities and no
distressed Cargo/Export failure.
b. The clients who are eligible for such facility as per BB guidelines.
c. The clients of OBU may avail the said facility observing the related
formalities/rules.