IForeign Exchange Operations of Basic Bank

The main purpose of this report is to analysis Foreign Exchange Operations of BASIC Bank Limited. Overall discussion are give a wide view of the different stages of foreign exchange operational procedure of BASIC Bank, starting from the Import, Export and Remittance with total Foreign Exchange Procedures. Finally identify the problems related to Foreign Exchange activities make some recommendations to solve the problems.

OBJECTIVES OF THE STUDY:

• To describe foreign exchange activities of Basic Bank Ltd,Mirpur Branch.

• To identify the problems related to Foreign Exchange activities of Basic Bank Ltd,Mirpur Branch .
• To make some recommendations to solve the problems.

Scope of the Report:

This report will cover Foreign Exchange Operations of BASIC Bank Limited. It will give a wide view of the different stages of foreign exchange operational procedure of BASIC Bank Limited, starting from the Import, Export and Remittance with total Foreign Exchange Procedures.

METHODOLOGY OF THE STUDY:

• Nature of the study: The report is descriptive in nature. The report mainly describe the process that is followed by the BASIC Bank.

• Data sources: There are two types of data used to prepare this report. They are primary sources of data and secondary sources of data. No structured questionnaire is used to prepare this report.

Secondary Sources of Data:

• Annual Report of BASIC Bank Ltd;
• Periodicals published by the Bangladesh Bank;
• Different publications regarding foreign exchange operation;
• From Newspapers and Internet.
• Different Official Records of BASIC Bank Limited.

Background of The BASIC Bank:

The BASIC Bank Limited (Bangladesh Small Industries & Commerce Limited) registered under the Companies Act 1913 on the 2^nd of August 1988, started its operations from the 21^st of January 1989. It is governed by the Banking Companies Act 1991. In 2001 the bank has changed its earlier name Bank of Small Industries and Commerce Bangladesh Limited and the changed name has been registered with the Register of Joint Stock Companies.

At the outset, the Bank started as a joint venture enterprise of the Bangladesh Credit Commerce (BCC) foundation with 70 percent shares and Government of Bangladesh (GOB) with the remaining 30 percent shares. The BCC Foundation being non functional following the closure of the BCCI, the Government of Bangladesh took over 100 percent ownership of the Bank on 4^th June 1992. Thus the bank is state-owned. However, the Bank is not nationalized; it operates like a private bank as before. The bank was established as the policy makers of the country felt the urgency for a bank in the private sector for financing Small scale Industries (SSI).

BASIC is unique in its objectives. It is a blend of development and Commercial Banks. The memorandum and Articles of Association of the Band stipulate that 50% of loan able funds shall be invested in Small and Cottage industries Sector.

CAPITAL POSITION:

Authorized capital               :  Tk. 2,000 million

Paid up capital                    :   Tk. 1964.65 million

Total Reserve and Surplus    :   Tk. 2509.78 million

The Bank is requested to transfer 20 percent of its net profit before tax to Capital Fund as per the Banking Companies Act 1991.

Mission, Vision, Objectives & Strategies of the Organization:

Organizational Goals and Objective:

BASIC Bank is unique in its objectives. It is blend of development and commercial banks. The Bank is entrusted with the responsibility of providing medium and long term loans and other financial assistance for promotion and development of small-scale industries.

• To employ funds for profitable   purposes in various fields with special emphasis on small scale industries (SSI).
• To undertake project promotion on identify profitable areas of investment.
• To search for newer avenues for investment and develop new products to suit such needs.
• To establish linkage with other institutions those are engaged in financing micro enterprises.
• To cooperate and collaborate with institutions entrusted with the responsibility of promoting and aiding SSI sector.

Motto of BASIC Bank Ltd:

Serving people for progress

Vision of BASIC Bank:

Provide the best banking services to all kinds of people and contribute for economic development of the country.

Mission of BASIC Bank:

To provide best development and commercial banking services to the common people of Bangladesh. And provide special support to the small scale business enterprises.

Corporate Strategy:

The corporate strategy of any organization plays a vital role on the company’s performance and lead to the way of being in growth prospect of the company. The corporate strategy of BASIC Bank is as follow-

• Financing establishment of small units of industries and business and facilitate their growth.
• Small Balance Sheet size composed of quality assets.
• Steady and sustainable growth.
• Investment in a cautious way
• Adaptation of new banking technology

Foreign Exchange- its meaning and definition:

Foreign exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country. Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. 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, especially 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, “Anything 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.

Foreign Exchange

Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cheque, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies.

Bangladesh Bank issues Authorized Dealer (AD) license by observing the bank’s performance and also the customers associated with the bank for conducting foreign dealings.

Export Section:

Foreign Exchange Regulation Act, 1947 nobody can export by post and otherwise than by post any goods either directly or indirectly to any place outside Bangladesh, unless a declaration is furnished by the exporter to the collector of customs or to such other person as the Bangladesh Bank (BB) may specify in this behalf that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner and within a period specified by BB.

Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest sector that exports the lion share of the country’s export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export BASIC Bank are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers.

SCRUTINY AND NEGOTIATION OF EXPORT BILL

Bank deals with documents not with goods. The bankers are to ascertain that the documents are strictly as per terms of L/C. Before negotiation of the export Bill the bankers are to scrutinize and examine each and every document’s with care. Negligence on that part of the bankers may result in non repatriation or delay in realization of export proceeds are incorrect documents may put the importers abroad into unnecessary troubles.

The scrutiny of the bill of exchange (Draft) and other related documents should ensure that.

• The documents are presented for negotiation before the expiry of the relative credit.
• The amount does not exceed the amount available under the credit.
• All the documents stipulated in the L/C are submitted.
• The corrections and alteration are properly authenticated in all documents.

Export documents checking:

General verification:

• L/C restricted or not
• Exporter submitted documents before expiry date of the credit.
• Shortage of documents etc.

Particular verification:

• Each and every documents should be verified with the L/C.

Cross verification:

• Verified one documents to another.

Export Formalities:

There is certain formalities involved exporting such as maintaining the books register, L/C checking etc.

1. Procedure of Registration of Exporter.
2. Books and Register/ Ledger required for export
3. B.B. Bill checking/ Lodgments.
4. Export document checking and negotiation/ collection basis
5. Pre- shipment financing
6. Disposal of EXP forms
7. Export Incentives
8. Disputes and settlement of Export claim.

Procedure for obtaining Export Registration Certificate (ERC):

For obtaining export registration certificate form CCI & E, the following documents are required.

1. Application form
2. Nationality Certificate
3. Partnership deed (registered)
4. Memorandum & Article of Association and Incorporation Certificate
5. Bank Certificate
6. Valid Trade License
7. Copy of rent of the business firm.

While checking the export documents following things must be taken in consideration.

L/C terms:

Each and every clause in the L/C must be complied with meticulously and ensure the following:

• That the documents are not state.
• That the documents are negotiated within the L/C validity, it a credit expire on a recognized bank holiday its life is automatically become valid up to the next works day.
• That the documents value does not exceeds the L/C value.

Draft/Bill of Exchange

Draft is too examined as under.

• Draft must be dated
• It must be made out in the name of the beneficiary’s bank or to be endorsed to the bank.
• The negotiating bank must verity the signature of the drawer.
• Amount must be tallied with the invoice amount.
• It must be marked as drawn under L/C No……. dated……. issued by…….Bank.

Presentation of export documents for negotiation:

After shipment, exporter submits the following documents to BASIC Bank for negotiation.

• Bill of Exchange or Draft;
• Bill of Lading
• Commercial Invoice
• Insurance Policy/Certificate
• Certificate of origin
• Inspection Certificate
• Packing List
• Courier Receipt
• EXP from

Export performance of Basic Bank Mirpur Branch for the Month of December–2011:

Total Export = FDBC + LDBC = TK.33, 061.10 million

Import Section:

Imports are foreign goods and services purchased by consumers, firms & Governments in Bangladesh. To import, a person should be competent to be a ‘importer’. According to Import and Export Control Act, 1950, the Office Of Chief Controller Of Import and Export provides the registration (IRC) to the importer.

BASIC Bank checks the documents. The usual documents are:-

• Invoice
• Bill of lading
• Certificate of origin
• Packing list
• Weight list
• Shipping advice
• Non-negotiable copy of bill of lading
• Bill of exchange
• Pre-shipment inspection report
• Shipment certificate

Import Procedures:

Registration with CCI&E

• For engaging in international trade, every trader must be first registered with the Chief Controller of Import and Export.
• By paying specified registration fees and submitting necessary papers to the CCI&E. the trader will get IRC (Import Registration Certificate).After obtaining IRC, the person is eligible to import.

Purchase Contract between importers and exporter:

• Now the importer has to contact with the seller outside the country to obtain the proforma invoice / indent which describes goods.
• Indent is got through indenters a local agent of the sellers.
• After the importer accept the preformed invoice, he makes a purchase contract with the exporter declaring the terms and conditions of the import.
• Import procedure differs with different means of payment. In most cases import payment is made by the documentary letter of credit (L/C) in our country.

Collection of LCA form:

Then the importer collects a Letter of Credit Authorization (LCA) form BASIC Bank, Shanti   Nagar Branch.

 Opening a Letter of Credit (L/C)

In international environment, buyers and sellers are often unknown to each other. So seller always seek guarantee for the payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by its ‘Letter of Credit’.

Parties to Letter of Credit:

• Importer ( Buyer)/ Applicant
• The issuing Bank (Opening Bank)
• The Advising Bank ( Notifying Bank)
• Exporter /Seller ( Beneficiary)
• Confirming Bank
• Negotiating Bank
• The paying/Reimbursing? Accepting/Remitting Bank

Letter of credit (L/C)

L/C is on instrument issued by a bank on behalf of one of its customers authorizing an individual or firm to draw drafts on the bank or one of its correspondents on its account under certain condition stipulated in the credit.

Parties of a Letter of Credit:                                                                           

1. Importer/ Buyer/ Applicant: This is the person who requests the opening bank to open L/C.
2. Opening Bank/ Issuing Bank: The bank that opens/issues letter of credit on behalf of the applicant/importer.
3. Advising Bank/ Notifying Bank: The bank through which the L/C is advised to the beneficiary (exporter).
4. Exporter/ Seller/ Beneficiary: Beneficiary of the L/C is the party in whose favor the letter of credit is issued. Usually they are the seller or exporter.
5. Confirming Bank: The bank, which under instruction in the letter of credit adds their irrevocable undertaking to that of the issuing bank. It is done at the request of the issuing bank having arrangement with them. The confirmation constitutes a definite undertaking on the part of confirming bank in addition to that of issuing bank.
6. Negotiating Bank: The bank that negotiates document and pays the amount to the beneficiary when presented complying credit terms. If the negotiation of the documents is not restricted to a particular bank in the L/C, normally negotiating bank is the banker of the beneficiary.
7. Reimbursing / Paying Bank: The bank nominated in the credit by the issuing bank to make payment against stipulated documents, complying with the credit terms. Normally issuing bank maintains account with the reimbursing bank.

Application For L/C limit:

Before opening L/C, importer applies for L/C limit. To have an import L/C limit, an importer submits an application to the Department of BASIC Bank Limited furnishing the following information:

• Full particulars of bank account maintained with BASIC Bank Mirpur branch.
• Nature of business
• Required amount of limit
• Payment terms and conditions
• Goods to be imported
• Offered security
• Repayment schedule

A credit Officer scrutinizes this application and accordingly prepares a proposal (CLP) and forwards it to the Head Office Credit Committee (HOCC). The Committee, if satisfied, sanctions the limit and returns back to the branch. Thus the importer is entitled for the limit.

The L/C Application:

After getting the importer applies to the bank to open a letter of credit on behalf of him with required papers.

• Documentary Credit Application Form:

BASIC Bank provides a printed form for opening of L/C to the importer. This form is known as Credit Application form. A special adhesive stamp is affixed on the form.  While opening, the stamp is cancelled. Usually the importer expresses his desire to open the L/C quoting the amount of margin in percentage.

• Proforma Invoice: It states description of the goods including quantity, unit price etc.
• The insurance cover note: The name of issuing company and the insurance number are to be mentioned on it.
• The Letter of credit authorization (LCA) form: LCA form should be duly attested.
• The Form-IMP.
• Tax Information Certificate
• Forwarding for Pre-Shipment Inspection (PSI):
• Importer sends forwarding letter to exporter for Pre-Shipment Inspection. But all types of goods do not require PSI.

Securitization of L/C Application:

The BASIC Bank Official scrutinizes the application in the following manner:

• The terms and conditions of the L/C must be complied with UCPDC 500 and Exchange Control & Import Trade Regulation.
• Eligibility of the goods to be imported.
• The L/C must not be opened in favor of the importer.
• Radioactivity report in case of food item.
• Survey report or certificate in case of old machinery
• Carrying vessel is not of Israel or of Serbia- Montenegro
• Certificate declaring that the item is in operation not more than 5 years in case of car.

Examination of shipping documents:

One of the basic principles of documentary credit is that all parties deal with document and not with goods (Articles 6 of UCPDC-600). That is why the documents should be scrutinized properly. If any discrepancy in the documents is found, that is to be informed to the party. A checklist may be followed for examining the documents.

Major Discrepancies:

GENERAL:

• Late shipment
• Late presentation
• L/C expired
• L/C over-drawn
• Partial shipment or transshipment beyond L/C terms.

BILL OF EXCHANGE (B/E):

• Amount of B/E differ with invoice.
• Not drawn on L/C issuing Bank.
• Not signed
• Tenor of B/E not identical with L/C.
• Full set not submitted

COMMERCIAL INVOICE (C/I):

• Not issued by the Beneficiary.
• Not signed by the Beneficiary.
• Not made out in the name of the Applicant.
• Description, Price, quantity, seals terms of the goods not corresponds to the Credit.
• Not marked one fold as Original.
• Shipping Mark differs with B/L & Packing List.

PACKING LIST:

• Gross Wt., Net Wt. & Measurement, Number of Cartoons/ Packages differ with B/L.
• Not market one fold as Original.
• Not signed by the Beneficiary.
• Shipping marks differ with B/L.

BILL OF LADING/ AIRWAY BILL ETC (TRANSPORT DOCUMENTS):

• Full set of B/L not submitted.
• B/L is not drawn or endorsed to the Order of BASIC BANK LTD.
• “Shipped on Board”, “Freight Prepaid” or “Freight Collect” etc. notations are not marked on the B/L.
• B/L not indicate the name and the capacity of the party i.e. carrier or master, on whose behalf the agent is signing the B/L.
• Shipped on Board Notation not showing name of Pre-carriage vessel/intended vessel.
• Shipped on Board Notation not showing port of loading and vessel name (In case B/L indicates a place of receipt or taking in charge different from the port of loading.)
• Short Form B/L
• Charter party B/L
• Description of goods in B/L not agree with that of Invoice, B/E & P/L
• Alterations in B/L not authenticated.
• Loaded on Deck.
• B/L bearing clauses or notations expressly declaring defective condition of the goods and / or the packages.

OTHERS:

• N. Documents not forwarded to buyers or forwarded beyond L/C terms.
• Inadequate number of Invoice, Packing List, B/L & Others submitted.
• Short shipment Certificate not submitted.

INVOICE:

It is to be scrutinized to ensure the following:

• The Invoice is addressed to the Importer.
• The full description of merchandise must be given in the invoice strictly as per L/C.
• The price, quality, quantity, etc. must be as per L/C.
• The Invoice must be language in the language of L/C.
• No other charges are permissible in the Invoice beyond the stipulation on the L/C.
• The amount of draft and Invoice must be same and within the L/C value.
• If L/C calls for consular invoice, then the beneficiary’s invoice is not sufficient.
• Number of Invoice will be submitted as per L/C.
• The shipping mark and number of packing list shown in the B/L must be identical with those given in the Invoice and other documents.
• The Invoice value must not be less than the value declared in EXP Forms.
• Invoice amount must be correct on the basis of price, quantity as per L/C.
• Invoice amount, indicate sale terms/ Income terms VIZ FOB, CFR, CIF etc.
• Consular Invoice must be stamped by the local consulate/embassy of the country to which the goods are imported.

COLLECTION DOCUMENTS:

Normally negotiating Bank will send the documents on collection basis mainly for the following discrepancies:

• L/C expired;
• Late shipment;
• Late presentation;
• L/C overdrawn;
• Unit price differ between L/C and Commercial Invoice;
• Consignee Name and address differ between L/C and other documents;
• Discrepancies in B/L;
• Any other Major discrepancies.

Import performance of Basic Bank for Mirpur Branch for the Month of December–2011:

Total Import = Cash L/C (sight) + Cash L/C (Usance) + Inland B/B L/C (sight) + Inland B/B L/C (Usance) + Foreign Inland B/B L/C (sight) + Foreign Inland B/B L/C (Usance) + L/C under AID/Loan + L/C under STA + Import from EPZ (Cash L/C) (sight) +  Import from EPZ

Total Import = TK. 47,087.80 million.

Foreign Remittance Section:

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, in 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.

Inward Foreign Remittance:

Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, T.C. and bills etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C.

Outward Foreign Remittance:

Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired. Sale of foreign exchange is reported to Exchange control Department of Bangladesh Bank on form T/M.

Foreign exchange means foreign currency and includes all deposits, credits and balances payable in foreign currency as well as foreign currency instruments such as Drafts, T.C.s, bill of exchange, and Letters of Credit Payable in any Foreign Currency. All foreign exchange transactions in Bangladesh are subject to exchange control regulation of Bangladesh Bank.

Identification of Documents Used in Foreign Exchange Banking:

The following Documents are used in Export:

• Bill of Exchange or Draft
• Bill of Lading
• Commercial Invoice
• Insurance Policy/Certificate
• Certificate of origin
• Inspection Certificate
• Packing List
• Courier Receipt
• EXP from

The following Documents are used in Import:

• Invoice
• Bill of lading
• Certificate of origin
• Packing list
• Weight list
• Shipping advice
• Non-negotiable copy of bill of lading
• Bill of lading
• Certificate of origin

The following documents are used in Foreign Remittance:

• Certificate of origin
• Remittance application
• ID card

Instruments of Inward & Outward Remittance:

• International money order (I.M.O)
• Cash
• Telegraphic Transfer (T.T)
• Mail transfer (M.T)
• Foreign Demand Draft (F.D.D)
• Payment order (P.O)
• Travelers cheque (T.C)
• Foreign Currency Notes.

Foreign Remittance Section performs the following function:

Selling

• Selling of foreign exchange to non-resident stock investor.
• Selling of Travel’s cheque to Bangladeshi travelers
• Selling of foreign currency to Bangladeshi for medical expense

Buying

• Buying of foreign currency from FC account of Bangladeshi individual as well as from exporters.
• Buying of international currency from foreigner and Bangladeshi
• Buying of cash foreign currency from foreigner and Bangladeshi
• Buying of foreign currency from non-resident investing in shares and stocks of Bangladesh.

Different Foreign Currency Account:

There are some accounts where customers can deposit and withdraw foreign currency-

1. NFCD (Non- Resident Foreign Currency Deposit): Travelers or visitors who are traveling other countries may open it.
2. FC (Foreign Currency) account: Exporters or importers for the purpose of their business may open it.
3. RFCD (Resident Foreign Currency Deposit): Any person in a country who is working and staying in abroad can open it.

Remittance performance of Basic Bank for Mirpur Branch for the Month of December– 2011:

Total Remittance =  Tk 22,897.88 milion

Findings:

In recent years, the foreign exchange business of BASIC Bank ltd is increasing at a faster rate. As a state owned scheduled bank, BASIC Bank Ltd is playing an important role toward the growth and economic development of Bangladesh. BASIC bank is rendering a stable support to the national foreign exchanges business. Although the foreign exchange business is increasing day by day there are also some obstacles around it which are as follows:

• One problem relates to technology, the bank must try to adopt new technologies. Otherwise the profitability of the bank may hamper.

• To meet the challenges in the banking industry and to help employees to adapt to the changes and new working condition, training is essential but no such training center has yet been established in BASIC Bank. Moreover, training given to employees is not adequate.

• Besides, SWIFT is being used in some branches and the head office of the bank for trade finance related operations like documentary credit, documentary collections, fund transfer, guarantee, etc. with optimum security, but not in all branches.

• The officers are very helpful to the business men. Some of our business men do not know exactly the procedures of opening L/C. the officers of BASIC bank help them properly to execute their business.

• To make the process easy, bank should give emphasis to use the modern communication media like e-mail, fax, internet etc.

• Modern technical equipment like computer, ups, modem etc. is not sufficient in foreign exchange department, which results in the delay of exchange process.

• The data base system of foreign exchange department is not very systematic. Also documentation and filing process of foreign exchange operation is not user friendly, which sometimes wastes valuable time.

• Letter of credit (L/C) opening system for the importer is easy. it consumes time and money as well.

RECOMMENDATIONS:

I had the practical exposure in BASIC Bank Ltd. for just twelve weeks, with my little experience in the bank in comparison with vast and complex banking system, it is very difficult for me to recommend. We have observed some shortcomings regarding operational and other aspects of their banking. On the basis of my observation we would like to recommend the followings :

• The branch need to set up well designed IT section by using more updated technology and information.
• Adequate on the job training is required for the newly employed personnel.

• SWIFT service should be introduced in each and every branch of the bank, which will help to smoothen the foreign exchange operations of the bank.

• Some officers of the bank are not self motivated. They should be self- motivated by training.

• The bank should do more advertisement for attracting new customers.

• Bank needs sufficient computer, ups, modem etc for foreign exchange department

• The bank should develop an effective database system to analyze the data of foreign exchange business.

• Bank should provide emphasis to make the documentation and filing process of foreign exchange operation user friendly.

• Letter of credit L/C opening system for the exporter should be easier.

I think the Management should employ at least few more employee in foreign trade department as I have seen from my practical experience that many customers wait for a long time for any service as they see that only one concerned official is doing their best to meet the requirements of the customers.

CONCLUSION:

BASIC Bank Ltd. is committed to Boost up export, reduce import, raising of Gross Domestic Product (GDP) and increase employment.

All the branches of BASIC Bank Limited are authorized dealer of Foreign Exchange Business. The authorized dealer motivates the importer to import Raw materials, Fabrics, Frozen fish, jute items, and electronics goods, Accessories, Chemicals, and Vegetable Fat etc.

The import or exports are motivated by the BASIC Bank Limited to the foreign exchange business, particularly to open the letter of credit. A letter of credit offer advantages both to the importer and exporter. The advantages accruing to either of the parties differ depending upon the nature of credit opened. There are certain Common benefits accruing from the use of credit as under.

BASIC Bank Limited is playing a vital role in financing import and exports of the country. Without Bank’s co-operation, it is not possible to run any business or production activity in this age. Exports and import need finance in various stages of their activities. Export and import financing are letter of credit (L/C), payment against documents (PAD), loan against imported merchandise (LIM) etc. All these facilities are being provided by BASIC Bank Limited. For this purpose Bank considers the borrower’s business standing, integrity, liability with the bank and term and conditions of the L/C. There is lot of risks involved in foreign exchange business. So, the Basic Bank Limited has to clearly serve the customers from a neutral point and gather the current information about the market.