Report on Foreign Exchange of IBBL

Meaning of Foreign Exchange:

Foreign Exchange means currency & trade exchange say conversion of one to another. This is a part of economic & Science. This is a big deal divided into different currencies instrument such as Draft, Traveler Cheque, Bill of Exchange business including sell, purchasing of currency notes & TC etc.

Currency Exchange means the conversion of one Currency into another.

Foreign Exchange Market:

Foreign Exchange Market means the places where foreign currency is bought & sold. In this more that supply, currency value.

Alternately following are the features of  foreign exchange market:

1. Bank & client.
2. Different Banks in the same foreign exchange market.
3. Different Bank & Schedule Bank of the same country.
4. Different Control Bank.

Islami a Bank follows the following the two craters in respect & payment of foreign exchange:

1. Local currency market value &
2. Foreign currency market value.

Exchange Is being controlled: 

1.   To stabilize the rate of exchange.

2.   To protect domestic industries.

3.   For proper implementation of plans.

4.   To increase the bargaining strength.

5.   To check over invoicing & Under invoicing.

6.   To check the Blank marketing and smuggling.

7.   For regulating the international movements of goods.

Authorized Dealer Branch:

Bangladesh bank in exercise of the power under section 3 of Foreign Exchange regulation Act 1947 issues a license to schedule Bank where they have adequate trained Officer/Staff to deal in Foreign Exchange. The banks that are authorized to deal in foreign exchange are called authorized dealers.

Arbitrage of Foreign Exchange:   

Arbitrage can be defined as simultaneous buying and selling of foreign currencies for :he purposes of making profit Arbitrage is carried out mostly by banks, They koea constant watch over the latest development in the financial market of the world.

Foreign Exchange Regulation Items:

1.   Bangladesh Bank Manual.

2.   Foreign Exchange Circular.

3.   Public Notice

4.   Import & Export Policy Gazette 5. Ministry of Commerce Circular 6. BCD circular.

5.   Guide lines for foreign exchange regulation. 8. Other authorization (i.e. NBC Dept)

Methods of effecting payment of IBBL:

Islami Bank follows the following methods to make payments between countries.

Telegraphic Transfer (TT):

This is an instruction for transfer of money by Telegram, Cable or telex from a bank in one country to another Bank in different center. This is an instruction form the Importers Bank to the exporters Bank. The TT charge is realized by us from the partly as per Bank circular.

2.   Mail Transfer (M.T):

This transfer is the order to pay cash to a 3^rd party. This Transfer is sent by mail & the charge must be realized as per Bank circular.

3.   Drafts & Cheque:

A draft is pay order issued by one Bank to another Bank or its branch.

Some common terms used in Foreign Exchange:

Over Bought: This position known as long position.

Over Sold: This position known as short position.

LIBOR:London Inter Bank Offer Rate.

SWIFT: Society for World Wide Inter Bank Financial Telecommunication.

CHIPS: Clearing House Inter Bank Payment System.

NOSTRO A/C: Our A/C with you i.e. out A/C with American Express.

VOSTRO A/C: Their A/C with us, Al- Raji A/C with IBBL.

LORO AIC: This A/C i.e. third Bank Relationship.

ACU: Asian Clearing Union.

Uniform Customs and Practices for Documentary Credits (UCPDC) :

The ICC Uniform Customs and Practice for Documentary Credits (UCP), first published in 1933, are the universally recognized set of rules governing the use of the Documentary Credit in international commerce. Banking associations and individual Banks in more than 100 countries and territories adopted the previous revision of 1983.

This revision of the UCP, the first for ten years, takes into account a range of important consideration- including international judicial decisions, technical innovations in banking and other industries, case studies and day to day practice to offer a thoroughly revised and up to date series of rules.

Three years in preparation, the 49 Articles of the new UCP has come into effect on January 1,1994 that indispensable guides to Documentary Credit usage. They provide a comprehensive and practical working aid to bankers, lawyers, importers, exporters, transport executives and everyone involved in international trade.

 Activities of Foreign Exchange:

There are three kinds of foreign exchange transaction.

1. Import

2. Export &

3. Remittance.

In the following these are discussed in brief.

 Import:

Meaning of Import:

Import means lawfully carrying out of anything from one country to county for Buying. It will be occurred according to the Government law.

Important Policy Order:

Based on the needs of commodity and availability of finance, Government declares policy. For import of goods for a particular period having approval from the National Assembly is defined as Import policy order. Import policy is a guideline of a set of rules envisaged by Government Authority i.e. the Ministry of Trade and commerce for the registered importer for import of goods inside the country.

Duration:

Earlier import policy has been formulated for two years. But present import polio order has been formulated for 5 (five) years, Effect from the 14^th June 1999 to 30^t June 2003 and valid till announce of new import policy order. If require Government can revise the policy in each every years.

 General Rules In connection with import: Restriction of Import:

a) Negative list of Merchandises.

b) Restricted list.

c) Footnote under Restricted List

d) Freely importable items

ITC number is compulsory (H.S code 6 digit) to be mentioned in the UC and LCAF to identification the item to be imported. H.S code of seven digits as mentioned by Bangladesh statistical Bureau to be used.

1.   Requirement Right of Refusal (ROR) for public sector agency from Ministry of Industry or respective Ministry/department of both to Import item under Restricted List.

2.   Import cannot be Israel, Serbia Montenegro

3.   Pre-shipment inspection (PSI) for private sector normally PSI is not mandatory.

4.   Shipment to be made through Bangladeshi ship some exemption

a)     Single importer maximum 20 MT grow importer highest 100 MT

b)   General waiver from department of shipping otherwise certificate of waive is to be obtained to ship through Foreign Cargo c) Import of Raw materials export oriented Industries

Import to be made on competitive rate.

CFR & FOB Basis Import:

a)   Normally import under CFR basis

b)   FOB basis import can be made complying Bangladesh Bank relative instruction Country of origin: mandatory should be clearly indicated at the body of paking/ container / box / packet etc.

 Source of Finance:

1. Cash

a)Foreign Currency

b) Wage earners FC balance

2. Foreign loan grant or commodity assistance

3. Barter and STA

 Classification of Importer:

a)      Commercial Import

b)      Industrial import

c)      Import under wage earners scheme

d)     Actual user

1.No Important permit / license required

2.LCAF required

3.Import can be made duly through irrevocable L/C

 Working Procedure of  Banks in Case of LCAF:

1. LCAF received by the nominated bank
2. Importer has valid IRC & duly renewed Bank
3. For importation of capital mechanism

4.      IRC code number to be mentioned

5.      ICAF registration where need

6.      L/C copy to be sent to CCI & 15 days

7.      Income tax declaration two copies(one for Bank for rest to be sent to NBR)

Import Related fees:

1. Four categories of Import registration renewal fees are as under:

2.   Surcharges for different years are as under:

1 year late Tk.50/-

2 year late Tk.100/-

3 year late Tk. 200/-

Regulations of Import:

Imports of goods under this policy shall be regulated as under:

1.   Control list:

Unless otherwise specified items which have been indicated as banned in this list shall no be permissible for import. An items included in this list with specific conditions for import shall be importable only on fulfillment of the conditions specified.

2.  Freely Importable Items:

Unless otherwise specified an items the name of which does not appear in the control list shall be freely importable.

3.   Notwithstanding anything mentioned else where, all imports into Bangladesh shall be subject to such general or specific conditions as many have been prescribed in this order.

4.  In addition to the conditions mentioned in the control list the conditions. Restrictions and procedures for import of various items mentioned in the test portion of this order, shall as usual, apply in case of import of those items.

5.   If, while determining the import status of an items mentioned in the control list the description of goods does not conform to the H.S.C Code mentioned against item, or any discrepancy arises between the H.S Code and the description of goods, in that case the description of goods shall prevail, In other words, if the import of a particular item is shown as banned in the control list, or is shown as importable as subject to fulfillment of conditions in the list, the said ban or restriction as the case may be, shall equally apply to the import of that item , even if such ban or restriction is mentioned else where and not against the appropriate H.S Code, if any importer, taking , advantage of such discrepancy, import any banned items or restricted items or restricted item without fulfilling the respective conditions, such import shall be treated to have been made as in contravention of the provisions of this order.

Regulations of Import:

L/C: may be open under deferred payment basis.

Direct Payment in Abroad:

Only for Bangladeshi National who live in abroad for service. Those who are entitled to purchases the importable goods for direct payment to the beneficiary from his own service without opening any L/C, The goods must be sent to the Bangladesh. Nationals who lived in Bangladesh. In that case no approval is required from CCI & E.

Time Limit Opening of L/C:

Letter of Credit shall be opened by all importers within 120 days from the date of registration of LCAF with the Bangladesh Bank unless otherwise notified. Validity of LCA for Shipment:

Unless otherwise specified, shipment of goods shall take place within 17 month in the case of machinery and spare parts and 11 months in the case of all other items form the date of issuance of LCA from by Bank or registration of LCA form within Bangladesh Bank registration unit as the case may be.

Document required to be submitted along with LCA Form:

Importers in both public sector and private sector shall submit to their nominated banks the following documents along with the L/C authorization Form for opening letter of credit.

a)   UC application form duly signed by the importer.

b)   Indent for goods issued by indenture or pro-forma invoice obtained from the foreign supplier, as the case may be and

c)   Insurance cover note.

Import L/C (Letter of Credit):

A letter of credit is a conditional Bank undertaking of payment. In other words letters of credit is a letter form the importer Bankers to the exporter that the bills if drawn as per terms & conditions complied with will be honored on presentation.

Definition of L/C:

A letter of Credit is a conditional bank undertaking of payment. In other words letters of credit is a letter form the importer bankers to the exporter that the bills if drawn as per terms and conditions are compiled with will be honored on presentation

As per UCPDC 500 a credit may be either:

i)    Revocable.

ii)   Irrevocable.

The Credit, therefore, should clearly indicate whether it is revocable or irrevocable. In the absence or such indication the credit shall be deemed to be irrevocable.

Classification of L/C :

1    Revocable L/C

2.   Irrevocable UC

3.   Confirmed UC

4.   Transferable UC

5.   Divisible UC

6.   Revolving UC

7.   Restricted L/C

8.   Red Clause UC

9.   Green Clause UC 10. Back-to-Back UC

11. with Recourse 12. without Recourse

13. Stated by letter of credit.

Types of L/C:

Revocable Credit:

As per Article no. 8 (a) A revocable credit is a credit which can be amended or canceled by the issuing bank at any time without prior notification to the seller since to offers little security to the seller.

 Irrevocable Credit:

As per Article no 9 an irrevocable credit constitutes a definite undertaking of the issuing Bank. A credit cannot be amended or cancelled without the agreement of all parties. It gives the seller grater assurance of payment. An irrevocable credit can be either confirms or unconfirmed dependant on the desire of the seller.

Classification of Importer:

Importers are those who ate authorized by the import Trade authority i.e. & CCI & E for import of goods essential for consumption or for production purposes.

There are mainly three types of importers.

1.   Commercial Importer

2.   Industrial Importer

3.     Importers under Wage Earner Scheme

Commercial Importer:

It means an importer registered under the importers, exporters and indention registration order 1981 who import goods from sale, when issued to commercial importers, given the category held by him with ITC classification and public notice against which they are admitted into import trade.

 Industrial importers:

When issued to an industrial consumer, gives the items of import as raw materials and packing materials and spare parts, the value of entitlement and ITC classification.

Importers under WES:

It means registration importers who import only under the WES. In this scheme, the foreign exchange required for import of goods is met out of the remittance made. By Bangladesh national earning wage abroad. WES importers can be importing all permissible items a declared by the importer also can import under WES.

Registration of Importer:

As per import & Export control Act. 1950 no person can indent, import or export any goods into Bangladesh except kin case of exemption issued by the Government of the peoples Republic of Bangladesh. Violation of this order is punishable with fine under the provisions of Sea Customs Act 1878 as applied by sub section (3) of Section 3 of this Act

Procedure for obtaining, IRC (Import Registration Certificate):

Through public notice or import policy the chief controller of imports & Exports invites applications usually for registration of importers. The following papers/ documents are required for submission to CCI&E or area office of CCI & for import registration certificate:

1.   Application form .

2.   Nationality Certificate.

3.   Income Tax registration Certificate with GIR.

4.   Trade License from the municipal or local Authority. 5. Membership Certificate.

6.   Partnership deed (for partnership firm)

7.   Certificate of Registration with the register of joint Stock Co. & Articles and Memorandum of Association in case of Limited Co. 8. Bank Certificate.

9.   Documentary evidence for business existence.

10. Original copy of Treasury Chalan being payment of registration fees. 11. Original copy Chaplin for passbook.

12. Other documents if any required by the CCI & E.

13. Ownership’s documents or Rent receipts of the place of Business. 14. Survey clearance from the relevant Authority.

The nominated bank of the application will examine the papers/documents s& verity the signature of the applicant and forward the same to the concerned office of the CCI & E with forwarding schedule in duplicate through bank’s representative. The duplicate copy of the same bearing the acknowledgement of CCI & E office of the receipt of the documents is back by the bank and is preserved.

If the documents are found in order and the CCI & E is satisfied the IRC is issued to the applicant and sent direct to the nominated bank. The passbook is also issued by the CCI & E simultaneously to the importer and sent direct to the nominated bank.

Parties to a letter of credits:

As per terms and conditions of the UC, the seller is required to be routed through some intermediary bank in other order to get his claim. So, we see hat there are a number of parties involved in a UC involved parties to a UC ar4e under

1.   Importer/Buyer.

2.   Exporter/Seller/Beneficiary

3.   Opening/ssuing Bank

4.   Advising/ notifying Bank

5.   Confirming bank (for add confirming UC)

6.   Exporter’s bank i.e. negotiating bank

7.   Reimbursing bank or paying bank.

Preparation of credit report:

Bank prepared credit report in prescribed forms character, capacity and capital witch are known as the three C’s of credit. Instead of three C’s some mention the three R’s i.e. reliably, responsibility and resources.  To these three C’s we may add two more C’s i.e. collateral and conditions.

How a banker should obtain the necessary information regarding these fundamental of credit, No. doubt, bankers have o make inquires from those of their customers and other peoples and inquired he report by the bankers. Sometimes information are gathered by deputing marketing officer or credit officer.

Position of A/C:

Import section will see whether there is sufficient fund available in account to cover the margin to be sanctioned, commission, postage, cable or telex charge etc. if it is found O.K, L/C will be sanctioned.

In all cases the sanction must be informed to the importer for acceptance. On receiving confirmation from the client then the terms anmd conditions of the sanctioned are acceptable, the subsequent documentation/ charge document are taken up.

Papers/ documents submitted by the importer before opening of the L/C:

1. Trade license
2. Import registration certificate
3. Passbook import.
4. Income tyax declaration.
5. Membership certificate.
6. Memorandum of articles
7. Registrar deed.
8. Resolution.
9. One copy photo.

Bank will supply the following papers before opening L/C:

1.   L/C application form.
2.    LCAF form
3.  IMP form
4.    Murabaha agreement
5.    Charge documents paper.

The above paper must be completed duly filled and signed by the party and verified the signature.

Maintenance of register:

The sanction must be recorded in the following registers:

Document execution register. All the charge documents must be recorded in this register

Limit register.

Liability ledger.

 Application & Procedure for opening L/C:

For opening L/C the client is to submit to the bank an application in the printed format of the designated bank. This is called L/C application form, which is also an agreement between the importer and the bank. The form is to be stamped under stamp act. In force in Bangladesh. The importer must submit the LCA & IMP and indent or contract. Purchase order/pro-forma invoice (duly accepted by the importer) along with application.

The L/C application must be completed in and signed by the authorize person of the importer giving the following particulars.

1. Full name and address of the supplier of beneficiary and importer.
2. Brief description of the goods.
3. L/C value for US $, etc.(CFR value) which must not exceed the LCA value.
4. The unit price, quantity quality of the goods.
5. Origin of the goods, port of loading and port of destination must be mentioned.
6. Model of shipment (sea, Air, Truck or Rail etc)
7. List date of shipment and negotiation
8. Insurance cover note number and name or the company.
9. Tenor of draft
10. Mode of advising
11. Opening of L/C
12. Opening of L/C under UCPDC publication no. 500/- ICC revision 1993.
13. Whether shipment is allowed.
14. Instruction to add confirmation if required.
15. LCA number.
16. Any other relevant information if must be mentioned in the L/C application form.

Examination of L/C application:

On receipt of l/c application it must be cheeked by an officer of l/c section very care fully in the following manner;

1. That the terms and conditions as stipulated in the l/c application area consistent with the exchange control and import trade regulation and UCPDC.
2. That all the information mentioned in above column has been furnished.
3. That the terms to be imported are eligible according to importers entitlement.
4. The goods are not being imported or originated from South Africa of Israel.
5. If the goods are imported from any number counters of ACU.
6. 6. That all the cutting/permit etc are endorsed.

7.   That the validity of the L/C must not exceed the validity of LCA.

8.   L/C is opened within the validity period permitted in the License.

Confidential Report of beneficiary of L/C:

According to exchange control regulations bankers are required to obtair confidential report of the beneficiary of UC Before opening the same, if the amount of UC exceeds Tk. 5.00 Lac Bank can open UC below Tk. 500 Lac without obtaining C. R.

Bankers can write to their foreign correspondents to supply the Credit Report. But from practical experience foreign correspondents of different country are not supply timely.

On receipt of FR from any source the bender can accumulate the same in one master file.

LCAF Registration & Procedure:

UC authorization forms consisting of six copies. 1″ copy for exchange control

purposes, 2″^d copy for the licensing authority 3`^d & ^4th copies for the CCI & E 5^th copy for the registration unit and 6^th copies is the office copy of the bank. The procedure for registration of LCA form with the Bangladesh Bank is as under:

a. All LCA forms should be registered with Bangladesh Bank, Registration Unit, Exchange control department, Bangladesh Bank, Dhaka.

b.   After filling up the relevant portions of the LOAF and duly signed by the importer there are forwarded to the area registration unit of the Bangladesh Bank by the authorized dealers duly authenticated. The LOAF are registered by the Bangladesh Bank registration unit subject to observation of usual drill. The officer kin-charge of the Bangladesh Bank Registration unit will give the restoration number on all the copies of LCA forms under his signature. Thereafter, the same will be opened unless a LCA forms which has been registered with the Bangladesh Bank.

c.   After registrati8on the original and duplicate copies of the LC authorization forms will be delivered to the authorize representation of the banks from whom the same received by the registration unit of the Bangladesh Bank.

d.   The authorized dealers will not issue blank L/C authorization forms to their clients; the importer should sign the UC authorization for in presence of Banks officer. The A.D should sign the LCA form and verify the importer signature. Authorized dealer shall keep it carefully.

e.   All Authorized dealers will remain to have with them specimen signature and photo and authenticating officers of the Bangladesh Bank registration Unit

f.    The registration will remain valid for 11 months or 17 months As the Case may be depending on the commercial and Industrial machineries.

g.   When letters of credit have been opened against the Exchange control copy of the copy under the stamp and signature of the authorized dealer.

 L/C Advising:

UC must be typed in the printed the format of a bank. After typing, UC should again be checked up advised by short cable, short cable be sent \n corporation principal term of the UC as under:-

a.   Advice irrevocable L/C No date favoring (beneficiary’s name and address)

b.   Amount (foreign currency)

c.   Merchandise to be imported.

d.   Negotiation days

e.   Name of the importer with address.

f.    Test number.

g.   Air mailing details.

The airmail UC must state as under “This is a confirmation of our cable dated”         This is necessary to eliminate the possibility or issuing two advised of dispatching the same UC to the beneficiary by the foreign correspondent.

Add confirmation:

Sometimes the beneficiary of the UC may ask for add confirmation to all UC by an internationally, reputed bank in the beneficiary’s country. The import is requesting his bank i.e. opening to do so in writing.

The opening bank advised the UC through their correspondent with whose have prior arrangement of credit line. Instructions are issued in the following language. “Please adding your confirmation of the credit at beneficiary’s cost” Adding confirmation UC is negotiation restrict to the bank who has added their confirmation the credit.

Such undertaking can neither be amender nor cancelled without the agreement of the issuing bank, the confirming bank and the beneficiary.

Disposal of UC copies and fillings:

L/Cs is normal typed in respective banks printed format in manifolds (9 copies). The original L/C is sent the advising bank for beneficisry and 2^nd copy sent to the adove bank at the same time for their own purposes 3^rd copy for importer, 4^th copy for  reimbursing bank 5^th copy office copy of the bank,7^th copy for I.D 8^th copy CCI & E  and 9^th copy for Bangladesh Bank One copy for importer be sent to them alone with memo of changes incurred by the opening bank for the L/C stating their account has been so debited for the amount of memo including that amount of margin.

Partial utilization of LCA:

When several L/Cs are opened against a single LCA endorsement must be given according to the L/C opened and aggregate of all the L/Cs must not exceed the value of LCA. Particular of all L/Cs should be noted on the back of LCA under “opened L/C no……..dtd………..for F currency………@……..equiv.Tk……balances is Tk………….

Accounting procedure for opening L/C:

The following accounting system is followed in documentary credits. The register shall be posted immediately on receipt  of approval from the manager to open L/C. THIS REGISTER SHALL CONTROL THE NUMBERS of L/c.following entries are to be passed:

Currency Voucher:

Dr. Assets as per contra(L/C WES) at notional rate

Cr. Liability as per contra (L/C WES)        “

Dr. F.C Deposit (WES fund held A/c)     “

Cr. F.C Deposit (WES  L/c cover)     “

Taka voucher:

Dr. Party’s A/c (current A/c)

Cr Sunday Deposit (security dep. L/c WES A/c)

Cr. Telex recovery A/c (at the L/c is transmit by telex or cable)

Cr. Commission (As per Bangladesh Bank Circular).

Cr. P &T A/c.

Cr. Murabaha import L/c @ B.C selling rate.

Cr. WES found purchase A/c.

Dr. Profit receivable A/c WES.

Dr. Profit receiable A/c ( monthly creditable by daily product basis)

Cr. Investment income A/c.

L/c Amendment:  Amendment of irrevocable letter of credit is not permissible without the joint consent of all the parties involved in documentary credit operation.

Time Extension : A written application from opener is verified a relevant license/LCA/permit of the Loan/Barter must remain valid up to that period the extent is sought. Increase of L/C amount may be done provided the LCA covers the increase in amount. L/C amount can be decreased provided the relevant indent is amending accordingly & with the consent of beneficiary. Each of clauses of the L/C can be amended provided the parties involve the L/C consent to it. Procedure or preparation & dispatch: Amendment is to be type in the Banks printed format. The copies of the amendment must be dispatched to all concerned as done in dispatching the L/C. Amendment be kept in the L/C file chronologically date wise.

Bank Charge : Amendment commission is to be realized from the party as per instruction of Bangladesh Bank F.E. Circulars.

Accounting procedure:

Dr.  Party’s A/C

Cr.  Commission A/C

Cr.  Postage & Telegraph A/C

Liability :

If the amount of L/C increased the liability voucher is to be passed as under :

Dr.  Liability as per contra (WES L/C)

Cr.  Asset as per contra (WES L/C)

Dr.  Asset as per contra (WES L/C)

Cr.  Liability as per contra (WES L/C)

A fresh Liability is to be passed including amount of increase on the date of amendment.

Back to Back L/C :

Meaning of Back to Back L/C :

Back to Back L/C IS a type of import L/C either in inland or in abroad, which open against lien on valid export L/C.

In our country in export garment this method of finance is widely used & very well known to the manufactures of garments. Bangladesh exporter received an irrevocable L/C for supply readymade shirts from an American Bank. For manufacture of the ordered shirts the exporter. Does not has required raw materials & clothes. To execute the order he is to import materials & cloths from Korea.

Then the Bangladeshi exporter does not have the required raw materials and clothes . To excite the order he is to import materials and clothes from Korea.

Then Bangladeshi exporter will have to open an import L/C favoring Korean supplier for import of clothes and accessories. The L/C is opened by the Bangladeshi bank keeping the American bank L/C in the ‘back’ (i.e. to fulfill the requirement) of the export L/C is called back to back L/C.

While opening such import L/C the Bangladeshi exporter is to pledge to manufacture the shirt by the Korean in imported clothes under boded ware house system.

Problems of Back to back L/C :

1. Shipment time gap: Sometime is shorted for exporting against import L/C, kit may be caused.
2. Terms & rules violations: IBBL cannot violate the rules & terms of Shariah council.
3. Selling violation: Out of agreement IBBL cannot receive excess wanted.
4. Payment of Back to back L/C bill: No stock bills are supported against Shariah.
5. Gaps of International rules & regulations.

Prospects of back-to-back L/C:

1. It is Garment oriented readily.
2. Backward lender (must have).
3. To continuous quality improvement.
4. To exchange customer facilities.
5. To be continuous of our authorized.

L/C Opening Functions:

1. Opening the L/C
2. L/C Lodgment
3. L/C Retirement

Lodgment of L/C:

When the documents are received from the foreign correspondent & checked with L/C file by two persons to ascertain the correctness it is found in order at that time make entry in the bill register & pass the necessary voucher (reverse the entry). The process is known as lodgment. Document must be lodged within 3 (three) days. In three ways the documents may be transferred to the parties.

a)      Cash Payment

b)      MPI (Murabaha Post Imported)

c)      Murabaha WES bill

Retirement of L/C:

When the parties retire the documents by cash payment or by MPI/LIM arrangement is known as retirement.

Kinds of Bill :

a)      At sight

b)      Collection (30 cash/Loan? Barter)

c)      Issuance/Deferred

Check up the document:

Before lodgment, documents must be checked with L/C file. Check up as under :

1. Invoice
2. Bill of Lading
3. Draft
4. Bank Forwarding Date.

1.   Invoice:

a)      The invoiced amount tallied with draft amount.

b)      The invoice is shown by the beneficiary and signed by him.

c)      Description of goods in the invoice & bill of lading are identical.

1.    Bill of Lading:

a)      Full set of on board & freight prepaid incase of CFR value duly signed by the shipping company.

b)      Correct description of goods is given as per invoice & bill of lading.

c)      Shipment date is given as per L/C.

d)     Bill of Lading not closed or closed or dirty, if so, the acceptance of is required.

Endorsement of L/C License:

L/C form must be endorsed showing the utilization of shipment as under:

“Utilized       (F.C……….) equivalent TK…………….@……………….Under Bill No……………Against L/C No. Balance TK……………………

Signature of the official noting on the L/C file :

As soon as documents are lodged the utilized amount is to be noted on the Back of the L/C copy or on the printed format of the L/C file.

Security Documents:

Documents must be kept under & Key of the Bank under the custody of a responsible officer.

Intimation to the Importer:

Importer is to be advised on the date of lodgment of documents with full particulars of shipment to retire the documents against payment or to dispose the importer documents

As per pre-arrangement, if any. Documents must not be handed over to the importer without making any arrangement for disposal.

Lodgment of Deferred/Issuance Bill :

After security of documents, if it is found in order, the documents are presented to the importer for acceptance. The draft is presented under a covering schedule as follows :

“We have received a original documents for US$……………………Drawn on you which presented for your acceptance on the1st of exchange duly signed by you under robber stamp. Please return us the draft within one day of your receipt”.

Dishonor of Documents :

If a documents if found discrepant by the Bank on checking a telex/cable message is to be sent to the Negotiating Bank/Collecting Bank on the date of receipt of documents in the following language.

“Your Ref. No………..Under out L/C No……………for US$…………………..Bears discrepancy (i.e.) 1……………….2…………………3……………….etc. Return to draw shall revert on hearing. Meantime documents held at your risk & responsibility”.

Regards :

In the meantime the discrepancies are also to be referred to the draw for their acceptance.

The reply of importer is to reach to the Bank within 72 hours in case of non-acceptance. The dishonor is to be communicated to the Negotiating Bank within responsible time. Unusual delay in communication of dishonor is not acceptable to the Negotiating Bank & the Issuing Bank forfeits its right to claim refund.

Retirement Procedure for Deferred Payment of Issuance Bills/BB Bills :

When the draft is returned by the draw (importer) after duly accepted by him the following procedure to be maintained.

1. The maturity date is to be worked out & noted in the bill register & also in the due date diary. The due date diary. May be maintained by the dealing officer & the Manager in-charge of foreign exchange department.
2. The Foreign Correspondent should be advised the due date maturity & be authorized to debit the NOSTRO account or to claim reimbursement on due date as per L/C terms.
3. All the documents delivered to the importer except accepted bill of exchange.

For liability of Issuance bill reversed the following vouchers are to the assed be the Bank.

Dr. Liability as per contra, When retired the documents, the as Cr. Assets as per contra. Voucher under :

                               Dr.  Party’s A/C

Cr.  H.I., I.D A/C

Cr.  R & T A/C

Cr.   F.C.C. A/C

Cr.   Commission A/C

Checking & Advising of Export L/C Processing of Opening of BB L/C :

Books, Register& Forms Required :

1.   Export L/C advising register.

2.   Test key.

3.   Signature Book-lets of foreign correspondence.

4.   L/C advising & amendment advising letter forms.

5.   Inward received register.

International transfer of goods are made through the letter of which issued by the Foreign Bank at the request of Importers in favor of Exporter. Such export L/Cs. Is enrolled through the Bangladesh Bank by the Foreign Banks who have correspondent relationship.

The foreign issuing banks may advice a credit in the following manner :

1. By short cable/telex followed by airmail.
2. By full telex (no airmail confirmation).
3. Airmail letter of credit.
4. Advising of L/C after adding confirmation.

a)      When a telex L/C is received by the bank it should be recorded first in the Bank inward cable/telex received register. Then it would be passed onto test section for decoding & to verify the test number. When the rest verified then the full telex L/C message will be passed on the beneficiary in the printed format of the advising bank.

b)      When a L/C is received by short cable authenticate the test number & advised it to the beneficiary. The item is to be diaries to follow up the airmail. Inward register & then the signature on the L/C is to be verified by authorized officer of a bank & finally is to be forwarded to the beneficiary under forwarding schedule, it found in order in all respects

All the necessary particulars of the L/C both cable or airmail original export L/C are to be enter in the L/C advising register.

Adding confirmation to Export L/C :

Add confirmation in an undertaking to the Exporter by the advising bank on behalf of the L/C opening bank regarding payment of documents value to be submitted against the L/C.

Add confirmation is to be given at the request of L/C opening bank. Therefore, their must have an agency arrangement between both the bank i.e. L/C opening bank & advising bank. First it is to be checked whether the issuing bank is a corresponding bank, if so whether there is any credit limit has been fixed. In case of foreign banks of good understanding adding confirmation to the export L/C is done without any limit.

The sanction of appropriate authority (H.O ) is required before confirming a L/C. No confirmation should be added in respect of V issued by known banks. Revocable L/C of L/C of banned countries must not be confirmed.

While adding confirmation commission must be realized as per instruction of the correspondent. While on L/C is confirmed its negotiation is done by the confirming bank usually.

Accounting Procedure for Confirmation of L/C :

Dr. Customer Liability (Confirming L/C )

Cr. Bankers Liability (Confirming L/C )

Amendments :

1.  On received of amendment, must be authenticate the test or verify the signature.         If the test number is incorrect or signature differs, cable confirmation must be obtained from the L/C opening bank, Meanwhile, amendment may be advised as unauthenticated.

2. Dispatch under register mail or by special messenger. Realize the advising commission TK. 200/- per L/C & TK. 200/- per amendment from the beneficiary as per rules of the bank.

Before advising any L/C the following steps must be ensured (Checking of Export L/C ).

Before advising the Export L/C to the beneficiary advising bank should check the terms & conditions of export to the following points :

1. That the export commodity is not banded by our export policy.

1. That all L/Cs are subject to uniform custom & practice for documentary credit ICC Publication No. 500, 1993 revision.

 Export:

 Meaning of Export :     

Export means lawful carrying out of anything from one country to another country for sale.

Definition of Exporter :

The importers & exports trade of country is regulated by the Imports Exports Control Act. 1950. No person/firm is allowed to export anything from Bangladesh unless he is registered with CCI & E under the registration order (Importer & Exporter) 1952. To become an exporter an ERC (Export Registration Certificate) must be obtained from the office of CCI & E .

Procedure for Obtaining Export Registration Certificate(ERC) :

For obtaining Export Registration Certificate(ERC), indicating Bangladesh Exporters are required to apply to the CCI & E authority in the prescribed from along with the following documents :

a)      Nationality Certificate.

b)      Copy of valid Trade License.

c)      Income Tax Certificate.

d)     Bank Certificate.

e)      Copy of rent receipt of the business firm.

f)       Registered Partnership Deed in case of partnership concerns.

g)      Memorandum of Articles & Association & Incorporation certificate in case of Limited Company.

On satisfaction of the CCI & E the potential exporter is advised to deposit export registration fee of TK. 1,000/- through Treasury Chelan to Bangladesh Bank/Sonali Bank for enabling them to issue ERC. The ERC may be renewed every year on payment of renewal fee of TK. 1,000/- through Treasury Chelan as started.

Get the name of the Importer/buyer :

The following authorities/organizations will be able to furnish the names of foreign buyers

a)      The Export Promotion Bureau.

b)      Trading Corporation of Bangladesh.

c)      The Commercial Representatives locater in our Embassies/High Commissions abroad.

d)     Commercial Representatives of Foreign Governments located in our country.

e)      Commercial Banks, Chamber of Commerce & Trade Association.

f)        International Chamber of Commerce, Paris & other organizations through their Directors, Periodicals & Publications.

g)      Direct Trade Deals of the Government.

h)      World Directory of Industry & Trade Association.

i)        Export Service Organization i.e. shipping lines, airlines, marine insurance firms etc.

j)        Trade Fairs.

k)      Trade Directories of the world.

Different Types of Export :

1. Export under L/C :

Exporters are allowed to export the commodity under irrevocable letter of credit. Under this type of export, exporter will ship the goods as per terms of the credit & will get payment as per arrangement of the credit.

1.   Consignment basis export :

Exports are allowed against firm contract. As per contract, importer will ship the goods & the buyer will make payment after selling the consignment.

1. Export against advanced payment :

Sometimes exporters receives payment in advanced. In that case Authorized Dealer should obtain a declaration from the exporter on the “Advanced Received Voucher” certifying the purpose of the remittance. Then the exporter will export the goods against the advanced payment.

General Rules for Export :

There are some rules, which are mandatory for export of any goods from Bangladesh. The rules are as under :

1. No person can export any goods from Bangladesh, unless he is duly registered as an exporter with the CCI & E.
2. All export must be declared on the EXP form, which is consisting of 4 copies.
3. Export mush is against any of the following :

a)      Export L/C

b)      Firm Contract

c)      Advance Payment

1. Transport documents related to land route or sea & any other Authorized Dealer. The Airway Bill & any other documents of title to cargo may be drawn to the order of a Bank in the country of import. However in case of advance payment, transport documents may be drawn to the order of Foreign Importer Bank endorsement of transport documents is prohibited. Directions under SI. No. shall not apply in the following cases :

a)      Export of Trade sample

b)      Personal Effects

c)      Goods shipped under the order of Govt.

d)     Export of fresh fish, vegetable & fruits.

e)      Incentives

1. ‘EXP’ must be submitted to the Bank by the exported & Bank will submit the Duplicate Copy to the Bangladesh Bank within 14 days from the date of shipment.
2. Payment for goods exported should be received through  an authorized dealer in freely convertible currency.
3. Export proceeds must be received by the exporters within 4 months.
4. Overdue export bills statement to Bangladesh Bank should be submitted by the 15^th of the month, following quarter to which it relates.
5. In case of short shipment, exporter should give a notice of short shipment of the prescribe form in duplicate, the customs, who will forward a Certified Copy of the notice, to the Bangladesh Bank.

Issuance of EXP Forms & Numbering :

Bank will certify EXP Form only after confirming the following :

a)      Arrangements have been made for realization of Export proceeds .

b)      Bona-fides of the importer/consignees abroad.

c)      Arrangements have been made for receipt by Authorized Dealer of documents of title to goods.

EXP Number should be as under :

Disposal of EXP Form :

1. The EXP Forms are quadruplicate. Exporter will complete & sign the EXP Forms.

1. After completing his EXP Forms, exporter should submit all copies to the AD for collection. After Bank’s certification it to be submitted along with the shipping bill to the custom authorities. Custom authorities affixing their seal & signature will return the duplicate, triplicate & quadruplicate copies to the exporter. The original copy to be forwarded to Bangladesh Bank by custom authority.

1. Exporter will submit the remain copies exp forms along with invoice to the AD through whom payment to be received.

1. AD should submit the remain copies duplicate copy of EXP forms to the Bangladesh Bank within 14 days from the date of shipment.

1. Upon the receipt of payment ,the AD should also submit the triplicate copy of EXP forms to the Bangladesh Bank at the end of the month certifying on the reverse of the form, with monthly summary statement.

Stages & Mechanism of Export :

1.  Exporter will make the goods ready for shipment.

2. Arrangement has to be taken for inspection of the goods by the competent authority as per credit terms.

3. Exporter will declare on EXP form against export L/C/Firm Contract/ Advance payment.

4.   Exporter have to arrange approval for export from custom authority on EXP from by submitting Export L/C, Export permission from CCI & E, Quota clearance from EPB, U.D in case of garment, invoice, packing, list along with shipping bill prepared by C&F agent.

5.   After completion of custom formalities, shipping company will receive the goods and will issue B.L.

6.   Exporter will collect visa/ license and certificate of origin for final documentation.

7. Exporter will submit the full set of documents to the negotiating bank for negotiating.

8.   Negotiation bank will dispatch the documents

After submissions of export documents by the exporter, Bank must check, whether the entire required document 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. The Bank  will not examine documents not stipulated in the credit. To examine documents Bank must follow the L.C terms and international standard banking practice. Automated or computerized carbon copies to be treated as original documents if it is marked ‘original’ Copy documents need not be signed. Multiple documents means one original and remaining copies, Signature, Mark, Stamp or label is sufficient for authentication of document. Bank will accept a prohibited in the L/C.

Some common discrepancies in Export Documents:

1)      Late shipment.

2)      Late presentation.

3)      Part shipment effected.

4)      Consignee/notify party differs.

5)      F.CR presented instead of B/L.

6)      House Airways Bill presented instead of AWB.

7)      B/L shows “freight collect” instead of “freight prepared”

8)      Shopped on board not marked on the B/L

9)      B/L is caused

10)  Description of the goods differs

11)  Unit price differs

12)  Amount overdrawn

13)  Pre-shipment inspection certificate absent

14)  Certificate does not cover credit terms

15)  Certificate not signed by authorized person

16)  Not showing inspection of the good at named place

17)  Telex acknowledging receipt and giving acceptance on sample, not presented etc.

Export Financing:

To meet up the cost of the goods to be exported, the exporter may require Bank finance. Besides, he may require finance for go down rent, freight etc. Event after shipment of the goods, exporter may require Bank finance to meet-up his current expenditure up to repatriation of the export proceeds.

There are two types of export finance:

i)        Pre-shipment finance.

ii)      Post shipment finance.

Pre-shipment finance:

Pre-shipment investment is finance, allowed by a bank to an exporter, to meet the cost up to the shipment of the goods to overseas buyer. The purpose of the investment is to purchase raw materials or finished goods or manufacturing processing, packing and transporting the goods.

Post shipment finance:

There is a time gap between export of the goods and realization of the proceeds. So exporter may require finance in that period to continue his business. So Bank may finance against export documents ensuring the following:

1)      export documents comply the credit terms.

2)      Buyer is bona-fide.

3)      Party’s part performance is satisfactory.

4)      Any other security in case of export under contract.

Types of Pre-shipment Finance:

1)      Cash finance for purchase of raw materials/finish goods.

2)      Cash finance for factory rent, wages & salaries and all other factory expenses.

3)      Finance for payment of freight.

4)      Purchase of Quota to export the goods to Quota countries.

Limit of Pre-shipment Finance :

1. As per existing rule Banks can extend pre-shipment facility up to 90% of Export L/C value (FOB value).
3. Bank will finance with in the Head Office sanction limit for the concerned client.

1. Other liabilities of the client with the Bank also be considered for extending pre-shipment facility.

Issuance PRC :

Sometimes exporters are required to submit to the various Govt. Agency evidence of goods & realization of their proceeds. In such cases Proceeds Realization Certificate (PRC) may be issued.

Negotiation/Purchase of Bill without L/C :

In our country exports are also made on the basis of contract between the buyer & the seller without the cover of L/C. In such case documents are delivered to the buyer through the intermediary of foreign correspondent of the A.D. against payment. Limit (post shipment finance) is usually sanctioned from Head Office to such exporters to boost up export of the country.

Document sent  on Collection Basis:

When the bank refuses to negotiate the document due to major discrepancies, the bill is sent by bank on collection basis under written instruction from the beneficiary. To handle such transaction as per ICC Publication NO. 322 named “Uniform Rules for Collection”.

EXP Requirement:

All export from Bangladesh must be declared by the shipper  on EXP from to the Bank enabling them to submit the duplicate within 14 days of shipment.

The shipper is required to repatriate the export proceeds within 4 months from the date of shipment otherwise penalty is imposed upon them. A careful watch is to be dept to ensure that the sale proceeds are received on due date. A due diary must be maintained to pursue the individual case.

Shipping &Customs Formalities:

International transfer of goods are made through the Letter of Credit which issued by the foreing bank at the request of importers in favor of exporter. Such Export L/Cs is enropted through the Bangladeshi Banks by the foreign banks who have correspondent relationship.

The foreign issuing banks may advise a credit in the fdollowing manner:

1. By short cable/Telex fillowing by airmail.
2. Byfull telex (No airmail confirmation).
3. Airmail L/C.
4. Advising of L/C afterv adding confirmation.

Keep the goods reads for dispatch (shipment):

On receipt of the order from the importer, the expoter is to takeimmediate steps to manufacture the goods if they are not already in stock according to the specifications desired and keep them ready for dispatch.

Inspection of goods:

The goods should be kept ready for  Inspection of the competent authorities and issue a certificate of quality required under regulation for example :

1.   Export promotion Bureau.

2.   Custom Authorities who will inspect the goods under Sea Customs Act.

3.   Chamber of Cokmmerce and Industry.

4.   Other agencies authokrized to inspect the goods before shipment.

Get in touch with the customs and other competent Authorities:

Getting shipping space:

In order to export the goods , the shipping companies or their agent must be approached by the exporter for booking space to know the freight etc. So that shipment may be made conveniently . in this regard , the services of clearing and forwarding agents may be taken  conveniently for actual shipment of goods , commission etc . is also to be paid to the agents for this works.

Get in touch with port authorities:

Who will have to allow the goods to move into the port and make arrangements for loading and unloading and keeping the goods in godsons.

Shipment of goods and other documents to C&F agents :

To handle the goods for export in the port of   Shipment banks nominate clearing agents to handle the goods to pass on custom formalities . Clearing agents are appointer by the bank from agent amongst the C&F agents of custom authority . the clearing agent on behalf of the bank arrange shipping space in the over seas vessel as per shippers instructions and also pays all the relevant dues payable to the custom authority shkipping company as freight . The bank or the shipper is to reimburse these to the C&F agent to the debit of party account .

Which documents / papers are requirement in regard to export of goods subject to L/C stipulation :

1. Commercial Invoice
2. Certificate of origin
3. Negotiable bill of lading
4. Pre-shipment inspection Certificate
5. Quantity and quality Certificate
6. Fumigation Certificate depending on the nature of cargo
7. Phytosanitary Certificate depending on the nature of cargo
8. Gross revenue proceeds (GRP) , export price check (EPC) Incase of jute shipment etc.
9. All the above documents prepared by the exporters are an essential pre requisite shipment of export to various countries . In completion documentary formalities cargo is firmly booked by the shippers . The shipping documentary formalities cargo is firmly booked by the shippers . The  shipping agents issued shipping order.

The shippers /C&F agent then forward the shipping order along with shipping bill to customs authorities . Customs authorities check of the shipping bills /invoices /packing list /shipment order. GRP /EPC pre shipment inspection certificate etc. when they are satisfied with export document and find jetty and charges have been paid by the shippers, they pass the shipping bill and order for shipment. The export cargo is then weighed by the LMD and shipment is effected in the presence of preventive officer. Immediately when the cargo has been lifted on board on the basis of LMD. Mate receipts are issued by the master/chief officer of ship, & finally bills of lading are prepared on the basis of each mate receipt which is & acknowledgment of receipt by ship owners against shipment of cargo on board.

On completion of shipment’s when shipping documents are presented to bank for necessary settlement of bill of exchange, the bankers should carefully scrutinize/check that the documents have been prepared as per the terms of L/C.

Some bad terms in export L/C :

Generally the following bad terms are found in the export L/C :

1.   Negotiation restricted : It should be freely negotiable

2.  Expiry outside Bangladesh : It should be in Bangladesh .

3.  Document to be present for negotiation outside Bangladesh : It should be in Bangladesh .

4.   Bills of lading to the order of opening bank or buyer : It should be to the order of negotiating bank & endorsed favoring opening bank or named bank as per L/C  terms.

1. Bank endorsement in B/L : In no circumstance blank endorsement is acceptable in exchange control Bangladesh.
2. Airway bill to the order of applicant : It should be to the order of a bank.
3. Payment will be made after of proceed from a name bank or buyer : Payment terms should be clear & specific.
4. GSP form requires : GSP form ‘A’ is to be issued by the authority. Only in case of the merchandise to be exported is made by using Bangladesh raw materials.

Remittance:

Meaning of Remittance :

The word “Remittance” originates from the word ‘remit’ which means to transmit money/fund in banking terminology, the word “remittance” means transfer of fund one place to another. When money transferred from one country to another is called “Foreign Remittance”.

Types of Remittance:

Inward Foreign Remittance

Outward Foreign Remittance

Inward Foreign Remittance

Inward Foreign Remittance means remittance received from foreign countries from abroad. In other words remittance coming into our country from other countries by the remitter by way of permissible banking channel through freely convertible Foreign Currencies is called ‘Inward Foreign Remittance’ i.e. payless point of view it is Inward Foreign Remittance. on the other hand remitter’s point of view it is called

Outward Foreign Remittance. During the year 1995-1996 Bangladesh received an amount of US$ 1217.062 Mln as Foreign Remittance.

Outward Remittance:

Outward Remittance of funds be made by means of TT. DD.etc. the remitter has to deposit money along with the application contains name and address of the payee name of the currency etc. All Outward  Remittance must cover the transactions approved by Bangladesh Bank which are usually for importers travel and educational expenses.

Direct/Indirect Remitter:

Wage Earners:

Bangladeshi nationals working abroad both in private and in Govt. Sector

Indenture:

Indenting commission and Agency commission received from suppliers from abroad. Bangladeshi nationals working in Bangladesh Embassy abroad. Foreign Govt./Govt. organization (UNO & others ) who have their own activities in Bangladesh say business, Embassy etc. can also remit to Bangladesh for meting their expenses, salary etc.

Donors:

Foreign Donors can only remit to Bangladesh through the Govt. Register Organisation and Institution etc.

Exporters:

Export proceeds also remitted to Bangladesh against exporting of goods.

Activities ( Task ) of Remittance:

Only three activities are executed; these are

1. OFBC – Draft, Cheque etc. are drawn outward / abroad.
2. IFBC-
3. FCC-FC clearing is a place where met agent place, from many banks, branches that is drawn on the Bangladeh Bank.

Mechanism of Remittances:

FCAD-Foreign Currency A/C Dollar

FCAP- Foreign Currency A/C Dollar

MFCD-Mudaraba foreign currency deposits

PFC-Private foreign currency

FCAD-Exp.-Foreign currency A/C dollar export.

NRO-Non residence dollar

NRT-No residence taka

PDAP-Properly development A/C dollar.

PDAP-Properly development A/C poumd.

Instruments of Foreign Remittances:

Cash for    :     Dollar, Pound, France Fr. Riyal or any     other currency.

T.C            :     Travelers Cheque.

F.D.D        :     Foreign Demand Draft.

T.T             :     Telegraphic transfer, Cable transfer ot Swift transfer.

M.T           :     Mail Transfer.

I.M.O        :     International Money Order.

Cheque      :     By any person & institution

P.O            :     Payment Order.

Different types of F.C A/c:

Foreign currency A/C . Under wage Earmers Scheme FCAD,FCAP& other.

P.F.C

N.F.C.D

Exporters Retention Quota A/c

Education Foreign Currency

C,T A/c Convertible taka A/c &Non- Convertible taka A/c

Procedure of Opening F.C. A/cs:

Any Bangladeshi National or pertson of Bangladeshi Origin who are serving and working aboard (out side Bangladesh) and whose incomes are not derived from Bangladesh sources are wage earners. Folliwing formalities to be obtained before opening a F,C A/c

Opening form fill up;

Account opening form prescribed for currency account should be properly filled in.

Signature verify:

Thesignature of the nominee, if the account holder desires to authorize to operate the absence of him, nominee’s signature must be varied byb the account holder.

Photostat copy of Passport:

First three page where responsible person.

Required Documents for Different Types of Remittance : 

1.   Declaration form signed by the remitted for getting the WES benefit.

2.   ‘C’ Form to be filled in regarding purpose of remittance is required by the remittance from the remitter (for remitting exceeding USS$20,000/-)

3.   For export –EXP Form duly signed by exporter & other ERC, Invoice , AWB/BL& other documents.

4.   Indenting commission-Photo copy of valid RC turn over/ VAT, Tax registration certificate form mist be submitted. Copy of previous month (paid VAT/Tax) treasure challan also.

5.   Donation –NGO Bureau’s permission & NGO registration certificate to be obtained.

6.   If the remittance in the form of cash /TC is more than US$ 5,000 then the same to be declared in the form FMJ supplied authority which is required to produce the bank at the time of encasement.

Accounting Procedure on Foreign Exchange Transaction: (Inward Remittance) :

1. For T.T1st verify the test number any entry in the T.T payment register.

Dr. IBG A/c. D.D.ID

Cr. F.C Deposit (W.F.H) a/c (at national rate)

Dr. WES Fund purchase a/c Tk. @T.T Clean

Cr. Party’s a/c

Cr. Commission a/c

Cr. Govt. tax a/c (if the remittance relates with indenting commission 5% & 15% vat to be deducted).

2.   If the party deposit draft to the bank for collection of the proceeds. In that case the following voucher should be passed:

Dr. Outward foreign bills lodged a/c

Cr. Outward Foreign Bills for collecting.

After clearance the proceeds of the draft the voucher as under:

Dr. Outward foreign bills for collection

Cr. Outward foreign bills lodged a/c

Dr. IBG a/c. H.O.ID (at nation rate)

Cr. Commission a/c

Dr. W.F. purchase @ TT clean rate.

Cr. P&T a/c

Cr. Pay’s a/c

Cr. Govt. tax a/c (for indenting commission)

3. When a taka draft presented for payment those who are maintain NRD & a/c with us.

Dr. IB general a/c. L.O (mentioning related NRT a/c)

Cr. Party’s a/c

Accounting Procedures for Outward Remittance for issuance FDD/TT (Tested MSG to be given):

 Dr. FC deposit (W.F held a/c.)@40

Cr. IB general a/c H.O.I.D @ 40

Dr. Party’s a/c cash @ BC selling.

Cr. WF purchase a/c

Cr. Commission a/c

Cr. P&T a/c

b)      When issued T.C

Dr. FC Deposit (W.F.H) a/c

Cr. IB General A/c H.O.ID.

Dr. Party’s a/c

Cr, Commition.