Report on General Banking Operations in Habib Bank Limited (Part-3)

Report on General Banking Operations in Habib Bank Limited (Part-3)

Import Mechanism:

To import, a person should be competent to be an importer. According to import and Export control Act, 1950, the office of chief controller of Import and Export provides the registration certificate (IRC) to the importer. After obtaining this person has to secure a letter of credit authorization (LCA) from Bangladesh Bank and then a person becomes a qualified importer.

He is the person who requests or instructs the opening bank to open an L/C. He is also called opener or applicant or the credit.

Importer’s application for L/C limit / margin:

To have an import L/C limit, an importer submits an application to the department of (UCBL) furnishing the following importation:

       Full particulars of bank account.

       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.

 Opening of Letter of Credit (L/C) by Bank:

Opening of L/C means, at the request of the applicant (importer) issuance of a L/C in favor of the beneficiary (Exporter) by a bank. The bank, which open or issue L/C is called L/C opening bank or issuing bank.

On receipt of the importer’s L/C application supported by the firm contract (Indent / Proforma Invoice) and Insurance Cover Note the bank scrutinize the same thoroughly and fix up a margin on the basic of banker – customer relationship.

Before opening a L/C, the issuing bank must check the following:

  • L/C application properly stamped, signature verified and margin approved and properly retained.
  • Indent / Proforma Invoice signed by the importer and Indenter / supplier.
  •  Ensure that the relevant particulars of L/C application correspond with those stipulated in Indenter / Proforma Invoice.
  • Validity of LCA entitlement of goods, amount etc. conforms to the L/C application.
  • Conversion and rate of exchange correctly applied.
  • Charges like commission, FCC, Postage, Telex charge, SWIFT charge, if any recovered.
  • Insurance Cover Note – in the name of issuing bank – A/c importer covering required risks and voyage route.
  • Incorporation of instruction for Negotiating Bank as per banks existing arrangement.
  • Reimbursement instructions for reimbursing bank.
  • If foreign bank confirmation is required, necessary permission should be obtained and accordingly advising bank is advised as per banks existing arrangement.
  • If add confirmation is required on account of the applicant charges should be recovered from the applicant.
  • In case of usance L/C, mention rate of interest clearly in the letter of credit.

Liability of Issuing Bank:

As per Article 9(a) of UCPDC 500, An Irrevocable Credit constitute a definite undertaking of the issuing Bank, provided that the stipulated documents ——— comply with the terms and conditions of the credit.

Advising of Letter of Credit:

Advising means forwarding of a Documentary Letter of Credit received from the issuing bank to the beneficiary (Exporter).

Before advising a L/C the advising Bank must see the following:

  • Signature of Issuing Bank officials on the L/C verified with the specimen signatures book of the said bank when L/C received.
  • If the export L/C is intended to be an operative cable L/C Test Code on the L/C invariably be agreed and authenticated by two authorised officers.
  • L/C scrutinized thoroughly complying with the requisites of concerned UCPDC provisions.
  • Entry made in the L/C Advising Register.
  • L/C advised to the Beneficiary (Exporter) promptly and advising charges recovered.

Advising Bank’s Liability:

Advising bank’s liability is fixed up in uniform customs and practice for documentary credits, publication 500.

Article 7(a): A credit may be advised to a beneficiary through another bank (the “Advising Bank”) without engagement on the part of the advising bank, but that bank, if it elects to advise the credit shall take reasonable care to check the apparent authenticity of the credit which it advises. If the bank elects not to advise the credit, it must inform the issuing bank without delay.

Article 7(b): If the advising bank cannot establish such apparent authenticity it must inform, without delay, the bank from which the instructions appear to have been received that it has been unable to establish the authenticity of the credit and if it elects nonetheless to advise the credit it must inform the beneficiary that it has not been able to establish the authenticity of the credit.

Adding Confirmation:


Adding Confirmation is done by the confirming bank confirming bank is a bank which adds its confirmation to the credit and it is done at the request of the issuing bank the advising usually does not do it if there is not a prior arrangement with the issuing bank. By being involved as a confirming agent the advising bank undertakes to negotiate beneficiary’s bill without recourse to him.

  • Issue L/C and request to add confirmation.
  • Review the L/C terms.
  • Provide reimbursement.
  • Drafts to be drawn on L/C opening bank.
  • Availability of credit facilities.
  • Line allocation from the business and ownership units in the importer’s country.
  • Confirm and advise L/C.

Amendments to Letter of Credit:

After issuance and advising of a L/C, it may be felt necessary to delete, add or alter some of the clauses of the credit. All these modifications are communicated to the beneficiary through the same advising bank of the credit. Such modifications to a credit are termed as amendment to a letter of credit.

There may be some of the conditions in a credit are not acceptable by the beneficiary. In that cases beneficiary contact applicant and request for amendment of the clauses. On receipt of such request applicant approaches his bank that is issuing bank with a written request for amendment to the credit. The issuing bank scrutinizes the proposal for the amendment and if the same is not in contravention with the exchange control regulation and bank’s interest, the bank may then process for amendment there can be more than one amendment to a credit. All the amendment forms an integral part of the original credit.

L/C amendments are to be communicated by SWIFT or mail. If there is more than one amendment to a credit, all the amendment must bear the consecutive serial number so that the missing the any amendment can be identified by the advising bank or by the beneficiary.

What is to be done by the issuing bank before advising amendments?

The issuing bank has to –

  • Obtain written application from the applicant of the credit duly signed and verified by the bank.
  • In case of increase of value, applications for amendment are to be supported by revised Indent/Proforma Invoice evidencing consent of the beneficiary.
  • In case of extension of shipment period, it should be ensured that relative LCA is valid/revalidated/increased up to the period of proposed extension.
  • Amendments an increase of credit amount and extension of shipment period both the cases amendment of Insurance Cover Note also be submitted.
  • Proper recording and filing of amendment is to be maintained.
  • Amendment charges (if an account of applicant) will be recovered and necessary voucher is to be passed.

The following clauses of L/C are generally amended:

  • Increase/decrease value of L/C and increase/decrease of quality of goods.
  • Extension of shipment/negotiated period.
  • Terms of delivery i.e. FOB, CFR, CIF etc.
  • Mode of shipment.
  • Inspection clause.
  • Name and address of the supplier.
  • Name of the reimbursing bank.
  • Name of the shipping line etc.

Settlement of Letter of Credit :

Settlement means fulfillment of issuing bank in regard to affecting payment subject to satisfying the credit terms. Settlement to may be done under three separate arrangements as stipulated in the credit.

  • Settlement by Payment:

Here the seller presents the documents to the nominated bank and the bank scrutinizes the documents. If satisfied, the nominated bank makes payment to the beneficiary and in case this bank is other than the issuing bank, then sends the documents to the issuing bank and claim reimbursement as per arrangement.

  • Settlement by Acceptance :

Under this arrangement, the seller submits the documents evidencing the shipment to the accepting bank (nominated by the issuing bank for acceptance) accompanied by draft down on the bank at the specified tenor. After being satisfied with the documents, the bank accepts the documents and the draft and if it is a bank other than issuing bank, then sends the documents to the issuing bank stating that it has accepted the draft and at maturity the reimbursement will be obtained in the pre-agreed manner.

  • Settlement by Negotiation:

This settlement procedure starts with the submission of documents by the seller to the negotiating bank. in a freely negotiate documents and if negotiation restricted by the issuing bank, only nominated bank can negotiate the documents. After scrutinizing that the documents meet the credit requirement, the bank may negotiate the documents and give value to the beneficiary. The negotiating bank then sends the documents to the issuing bank as usual; reimbursement will be obtained in the pre-agreed manner.

Accounting Treatment:

Sundry Deposit L/C Margin A/C                                                    Dr.

PAD A/C                                                                         Cr.

(Margin amount transferred to PAD A/C)

Customer A/C                                                                  Dr.

PAD A/C                                                                          Cr.

(Customer A/c debited for the remaining Amount)

PAD A/C                                                                                     Dr.

          Head Office A/C + Exchange Trading A/C                      Cr.

          Income A/c interests on PAD                                                Cr.

(Amount given to Head Office ID and interest credit)

Reversal Entries:

Banker’s Liability                                                                          Dr.

Customer’s Liability                                                             Cr.

(When lodgment is given)

After realizing the telex charge, service charge, interest (if any), and the shipping documents is then stamped with PAD number & entered in the PAD Register. Intimation is given to the customer calling on the bank’s counter requesting retirement of the shipping documents. After passing the necessary vouchers, endorsements is made on the back of the bill of Exchange as “Receipt Payment” and the Bill of Lading is endorsed to the effect “Please deliver to the order of M/s……………………….  under two authorized signatures bank’s officer’s (P.A. holder). Then the documents are delivered to importer.

Payment procedure of the Import Documents:

This is the most sensitive task of the import department. The officials have to be very much careful while making payment.

  • Date of Payment: Usually payment is made within 7 days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay.
  • Preparing Sale Memo: A sale memo is made at BC rate to the customer. As the TT & DD rate is paid to the ID, the difference between these two rates is exchange trading. Finally, an Inter Branch Exchange Trading Credit Advice is sent to ID.
  • Requisition for the foreign Currency:  For arranging necessary fund for payment, a requisition is sent to the International Department.
  • Transmission of Telex: A telex is transmitted to the correspondent bank ensuring that payment is being made.


Practically by the term Export we mean out carrying of anything from one country to another. As banker we define export as sending of visible things outside the country for sale. Export Trade plays a vital note in the development process of an economy. With the caring we meet out import bills.

Although export trade is always encouraged, any body cannot export anything to any place. Like importer the exporters are also required to get them registered before entering into export trade. Export registration certificate (ERC) given by CCI & E is required for this purpose. The required documents to obtain ERC are also same as IRC.

When a bank (Authorized dealer) receives a L/C (cable or original) it ascertains the correctness of the test number and the authorized signature. Then the bank sends the original copy of the L/C to the beneficiary.

The exporter presents the relative documents to the negotiating bank after the shipment of the goods. The L/C issuing bank undertakes to honor is obligation only if the beneficiary fulfills the conditions stipulated in the L/C, may namely, the submission of stipulated documents with in the stipulated time.

Even a slide deviation of the documents from these specified in the L/C may give an excuse to the negating bank. So the negotiating bank must be careful, promote, systematic and bias-free while scrutinizing the tender documents after careful and through examination of the documents, the banker has to

 List out the discrepancies, which may be classified as major or minor, irremovable or removable. The removable discrepancies can be corrected by the tendered or future losses, which may arise due to non-repatriation of proceeds.

The following types of discrepancies may be noted while the negotiating bank examines the documents:

  1. L/C expired.
  2. Late shipment.
  3. Amount drawn in excess of the L/C.
  4. Bill of exchange not properly drawn.
  5. Descriptions of goods differ.
  6. Bill of Lading or Airway Bill state.
  7. Bill of Lading classed.
  8. Insurance Cover Note as per terms L/C.
  9. Insurance Cover obtained after the Bill of Lading or Airway Bill date.

10. Enough number of copies not submitted as required by L/C.

11. Negotiation under L/C restricted.

12. Packing List and certificate of analysis not as per the L/C.

13. Documents not properly endorsed in favor of the bank.

14. Full shipment not effective and part shipment prohibited.

15. Gross Weight and Net Weight shown in different documents differ.

16. Same of the documents required by L/C not submitted and

17. Documents inadequately stamped.

Documents with major discrepancies, which could not be negotiated, should be sent on collection basis with the permission of the exporter.

Export Procedure:

The Export and Importer trade in our country are regulated by imports and exports (control) Act, 1950. Under the Export Policy of Bangladesh the exporter has to get the valid Export Registration Certificate (ERC) from chief controller of Import & Export (CCI & E). The ERC is required to renew every year. The ERC number is to be incorporated on EXP Forms and other papers connected with exports.

Registration of Exporters:

For obtaining ERC indenting Bangladeshi exporters are required to apply to the Controller / Joint Controller / Deputy Controller / Assistant Controller of Imports and Exports, Dhaka / Chittagong / Khulna / Mymensing / Sylhet / Comilla in the prescribed Form along with the following documents:

  1. Nationality and assets certificate.
  2. Memorandum and Articles of Association and certificate of Incorporation in case of limited company.
  3. Bank certificate.
  4. Income tax certificate.
  5. Trade license etc.

Securing the Order:

After getting the ERC (Export Registration Certificate) the exporter may proceed to secure the export order. He/she can do this by containing the buyers directly or through agent. In this purpose exporter can get help from:

5.7.1     Liaison Office.

5.7.2     Buyer’s local agent.

5.7.3     Export Promotion organization.

5.7.4     Bangladesh mission abroad.

5.7.5     Chamber of Commerce (Local & Foreign)

5.7.6     Trade fair etc.

Signing the contract:

After communicating with buyer exporter has to get contracted (writing or oral) for exporting exportable item(s) from Bangladesh detailing commodity, quantity, price, shipment, insurance and marks, inspection, arbitration etc.

Receiving the Letter of Credit:

After getting contract for sale, exporter should ask the buyer for letter of credit clearly stating terms and conditions of export and payment.

The following are the main points to be looked into for receiving (collecting export proceeds by means of documentary credit:

  • The terms of the L/C are in conformity with those of the contract;
  • The L/C is an irrevocable one, preferable confirmed by the advising bank;
  • The L/C allows sufficient time for shipment and negotiation;

Terms and conditions should be stated in contract clearly in case of other modes of payment:

  • Cash in advance;
  • Open A/C
  • Collection basis (documentary / clean).

(Here the regulatory frame work is URC-525, ICC Publication).

Procuring the Materials :

After making the deal and on the L/C opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the contracted materials/merchandise.

Shipment of goods:

Then the exporter should take the preparation for export arrange for delivery of goods as per L/C and INCO-terms, prepare and submit shipping documents for Payment/ Acceptance/ Negotiation in due time. Documents for shipments –

  • EXP Form,
  • ERC (Valid),
  • L/C Copy,
  • Customer Duty Certificate,
  • Shipping Instruction,’
  • Transport Documents,
  • Insurance Documents,
  • Invoice,
  • Other documents,
  • Bill of Exchange (if required),
  • Certificate of Origin,
  • Inspection Certificate,
  • Quality Control Certificate,
  • G.S.P. Certificate,
  • Phyto-sanitary certificate,

Final Step:

After those, exporter submits all these documents along with a letter of Indemnity to NCCBL for negotiation. An officer scrutinizes all the documents. If the document is a clean one, NCCBL purchases the documents on the bank’s of banker – customer relationship. This is known as Foreign Documentary Bill purchases (FDBP).

Procedure for FDBP:

After purchasing the documents, NCCBL gives the following entries:

FDBP A/c                                                                          Dr.

Customer A/c                                                 Cr.

(Before realization of proceeds)

Head Office A/c                                                                 Dr.

FDBP A/c                                                                Cr.

(Adjustment after realization of proceeds).

A FDBP Registered is maintained for recording all the particulars.

Foreign documentary Bills for Collection:

United Commercial Bank Limited forwards the documents for collection due to the following reasons –

  • If the documents have discrepancies.
  • If the exporter is a new client.
  • The banker is in doubt.

Foreign documentary bills for collection signify that the exporter will receive payment only when the issuing bank gives payment. The exporter submits duplicate EXP Form & Commercial Invoice. Subsequently, the value of the bill is calculated and the following accounting entries are given:

Head Office A/C                                              Dr. @ TT Clean.

Client’s A/c                                           Cr.(@ OD sight)

Govt. Tax A/c                              Cr.(@ of Invoice Value)

Postage A/C                                Cr.

Income A/c profit on Exchange       Cr.

After passing the above vouchers, an Inter Branch Exchange Trading Debit Advice is sent for debiting the NOSTRO account. United Commercial Bank Limited has NOSTRO account with its reimbursing bank. an FDBP register is maintained, where first entry is given when the documents are forwarded to the issuing bank for collection and the second one is done after realization of the proceeds.

Export Bill Scrutiny Sheet :

Bank scrutinizes the export bill on they following points –

  • General:
  1. Late shipment.
  2. Late presentation.
  3. L/C expired.
  4. L/C overdrawn.
  5. Partial shipment or Trans shipment beyond L/C terms.
  • Bill of Exchange:
  1. Amount of bill differs with invoice.
  2. Not drawn on L/C issuing bank.
  3. Not signed.
  4. Tenor or B/E not identical with L/C.
  5. Full set not submitted.
  6. Invoice.
  7. Not issued by the beneficiary.
  8. Not signed by the beneficiary.
  9. Not made out 1 name of the applicant.

10. Description, price, quantity, sales terms of the goods not correspond to the credit.

11. Not marked one fold as original.

12. Shipping marks differs will B/A & Packing List.

Packing List :

  1. Gross weight, Net weight & Measurement, number of cartoons / packages differs with B/L.
  2. Not marked one fold as original.
  3. Not signed by the beneficiary.
  4. Shipping marks differs with B/L.
  • Bill of Lading / Airway Bill :
  1. Full set of bill not submitted.
  2. B/L is not drawn or endorsed.
  3. “B/L shipping on Board” “Freight Prepaid” or “Freight Collect” etc. notations are not marked on the B/L.
  4. B/L not indicate the name and capacity of the party i.e. carrier or master, on whose behalf the agent is signing the B/L.
  5. Shipped on Board notation not showing name of pre-carriage vessel/intended vessel.
  6. Shipping on Board notation not showing port of loading and vessel name (Incase B/L indicates a place of receipt or taking in charge different from the port of loading).
  7. Short form B/L.
  8. Charter party B/L.
  9. Description of goods in B/L not agree with that of Invoice/E & P/L.

10. Alternations in B/L not authenticated.

11. Loaded on deck

12. B/L bearing clauses or notations expressly declaring defective condition of the goods and/or the packages.

  • Others :
  1. Non-negotiable documents not forwarded to buyers or forwarded beyond L/C terms.
  2. Inadequate number of Invoice, Packing List & others submitted.
  3. Short shipment certificate not submitted.

Settlement of Local Bill :

The settlement of Local Bill is done in the following ways:

  • The customer submits the L/C to United Commercial Bank Limited along with the documents to negotiate.
  • United Commercial Bank Limited official scrutinize the documents to ensure the conformity with the terms and conditions.
  • The documents are then forwarded.
  • The L/c issuing bank gives the acceptance and forward an acceptance letter.
  • Payment is given the customer on either by collection basis or by purchasing the documents.

Accounting treatment of or purchase of Local Bill :

Local Bill purchase documentary                         Dr.

Party A/c                                             Cr.

Commission                                          Cr.

Interest A/c                                          Cr.

A LBPD (Local Bill purchase documentary) register is maintained to record the acceptance of the issuing bank until the acceptance is obtained, the record is kept in a collection register.

 Mode of payment of export bills under L/C :

The most common methods of payment under a L/C are as follows:

  1. Sight Payment Credit:  In a Sigh payment credit, the bank pays the stipulated sum immediately against the exporter’s presentation of the documents.
  2. Negotiation Credit :   In negotiation Credit, the exporter has to present a bill of exchange payable to him in addition to other documents that the bank negotiation.
  3. Deferred Payment Credit:  In deferred payment, the bank agrees to pay on a specified future date or event, after presentation of the export document. No bill of exchange is involved. In UCBL, payment is given to the party at the rate of D.A 60-90-120-180 as the case may be. But the Head Office is paid at T.T clean rate. The difference between the two rates is the exchange trading for the branch.
  4. Acceptance Credit:   In acceptance credit, the exporter presents a bill of exchange payable to himself and drawn at the agreed tenor (that is, on a specified future date event) on the bank that is to accept it. The bank signs its acceptance on the bill returns it to the exporter. The exporter can then represent it for payment on maturity. Alternatively he can discount it in order to obtain immediate payment.

Advising L/C :

When exporter L/C is transmitted to the bank for advising, the bank sends an advising letter to the beneficiary depicting that L/C has been issued.

Test Key Arrangement :

Test Key arrangement is a secret code maintained by the banks for the authentication for their telex message. It is a systematic procedure by which a test number is given and the person to when this number is given can easily authenticate the same test number by maintaining that same procedure. United Commercial Bank Limited has test key arrangements with so many banks for the authentication of L/C messages and for making payment.

Back to Back Letter of Credit :

A Back to Back letter of credit is a new credit. It is different from the original credit based on which the bank undertakes the risk under the back to back credit. In this case, the bank’s main security is original credit. The original credit (selling credit) are separate instruments independent of each other and in no way legally connected – although they both from part of the same business operation.

The supplier (beneficiary of the back to back credit) ships goods to the importer and presents documents to the bank as is specified in the credit. It is intended that the exporter would substitute his own documents for negotiation under the original credit, his liability under the back to back letter of credit would be adjusted out of these proceeds. The exporter L/C is marked lien and no margin is taken.

In UCBL, papers/documents required for submission for opening of back to back L/C:

A)   Master L/C

B)   Valid Import Registration Certificate (IRC) & Export Registration Certificate (ERC).

C)   L/C application & LCA Form duly filled in signed.

D)   Proforma Invoice or Indent.

E)    Insurance Cover Note with money receipt.

F)    IMP Form duly signed.

In addition to the above the following papers/documents are also required for export oriented garments industries while requesting for opening back to back letter of credit –

  • Textile permission.
  • Valid bonded warehouse license.
  • Quota allocation letter issued by Export Promotion Bureau (EPB) in favor of the applicant in case of quota items.
  • In case the factory premises is a rented one, letter of disclaimer duly executed by the owner of the house/premises to be submitted.

Detective points or clauses appears in the Master L/C:

  • Issuing bank is not reputed.
  • Advising Credit by the advising bank without authentication.
  • Port of destination absent.
  • Inspection clause.
  • Nomination of specific Shipping/Airline or nomination of specified vessel by subsequent amendment.
  • B/L to blank endorse, to third bank, to be endorsed to buyer or third party.
  • No specific reimbursing clause.
  • UCP clause not mentioned.
  • Shipment / presentation period is not sufficient.
  • Original document to be sent to buyer or nominated agent.
  • FCR or HAWB consigned to applicant or buyer.
  • “shippers’ Load and Count is acceptable”.
  • L/C shall expire in the country of the issuing bank.
  • Negotiation is restricted.

Payment of back to back Letter of Credit:

In case of back to back as 60-90-120-180 days of maturity period, deferred payment is made. Payment is given after realizing export proceeds from the L/C issuing bank.

Accounting treatment for back to back L/C:

When the document is arrived, the following vouchers are passed:

Customer’s A/c                                     Dr.

Commission on Acceptance            Cr.

While payment, if the fund is at hand, the accounting entry is  –

Sundry deposit margin on acceptance        Dr.

Customer’s A/c                            Cr.

If the party is paid in foreign currency, B.C. rate is applied in this regard. International department takes the T.T. OD. Rate. If the payment is made to ID in local currency in national rate, T.t. clean rate is followed by ID. When the party is paid O.D sight rate is followed.

If the fund is not available to make the payment, the following vouchers are to passed –

OAP                                                              Dr.

Customer’s A/c                                     Cr.

Under the back to back concept, the seller, as beneficiary of the credit, offer it as security to the advising bank for the issuance of the second credit. As application for this second credit the seller is responsible for reimbursing the bank for payment made under it regardless of whether or not be himself is paid under the first credit. There is, however, no compulsion for the bank to issue the second credit, and in fact, many banks will not do so.

Foreign Exchange Remittance :

Remittance means sending of fund. The word remittance we understand sending/ transferring of fund through a bank from one place to another place which may be within the country or between two countries, one in abroad is called Foreign Remittance.

“Foreign Remittance” means purchase and sale of freely convertible foreign currencies as admissible “Foreign Exchange Regulations Act-1947” and “Guidelines for Foreign Exchange Transaction – VOL. 1&2 of the country. Purchase of foreign currencies constitutes inward foreign remittance and sale of foreign currencies constitutes out ward foreign remittance.

So we see that there are two types of Foreign Remittance:

  1. Foreign inward remittance.
  2. Foreign outward remittance.

Inward Remittance:

The remittances which are received from abroad are called inward remittance.

Purpose of inward remittance:

  • Family maintenance.
  • Indenting commission.
  • Donation.
  • Gift.
  • Foreign investment.
  • Export proceeds.
  • Others.

Mode of inward remittance:

  • Telegraphic Transfer (TT)
  • Mail transfer (MT)
  • Foreign Demand Draft (FDD)
  • Payment order (PO)
  • Travelers cheque (TC)
  • Foreign Currency Notes.

Outward Remittance:

Remittances which are made from our country to abroad is called outward remittance.

Mode of outward remittance:

  • Foreign Telegraphic Transfer (FTT)
  • Foreign Mail Transfer (FMT)
  • Foreign Demand Draft (FDD)
  • Travelers Cheque (TC)
  • Foreign Currency Notes.

          Present limit of outward remittance fixed by Bangladesh Bank :

  • Travel:

For Private Travel : Private travel quota entitlement of Bangladesh national total US$3000 per calendar year for visit to countries other than SAARC (India, Pakistan, Nepal, Bhutan, Srilanka, Maldives) and Myanmar.

Quota for SAARC countries and Myanmar is US$1000 for travel by Air and US$500 for travel by land. At a time bank can issue full amount of above quota if required. Case dollar may be issued maximum US$600 per passport per travel. The amount of travel quota mentioned above are prescribed for adults only. The minors are eligible for 50% of the annual ceilings of adults.

Business Travel :

(1)  Subject to an annual upper limit of US$5000 importers are entitled to business travel quotas 1% of their imports settled during the previous financial year.

(2) Subject to an annual upper limit of US$5000 non exporting producers are entitled to business travel quotas 1% of their turnover of the preceding financial year as declared in their tax return.

a)    For Exporters: New exporters are entitled to a quota for US$ 6000 annually and old exporters can use FCAD expanse retention quota A/c as per their requirement.

b)    For Foreign Nationals : The Authorized Dealers may issue foreign currency TCS to foreigners without any limit and foreign currency notes up to US$300 or equivalent per person against surrender of equivalent amounts in foreign currencies.

  • Bank charges and sundries:

The Authorized Dealers may effect remittances toward settlement of dues to foreign banks of bank charges. Cost of cables and other incidental charges arising in their normal curse of the business without prior Bangladesh Bank approval. All such remittances should be reported to the Bangladesh on forms TM along with appropriate return.

  • Taking out / Bringing in of Bangladeshi Taka:

Incoming, outgoing passengers may bring in/take out up to taka 500 per person in   Bangladesh currency.

In all above cases for outward remittance TM form to be obtained and this will have to be reported to Bangladesh Bank Monthly basis.

Submission of Returns to Bangladesh Bank:

The Ads must maintain adequate and proper records of all foreign exchange transactions including transaction on non-resident Taka A/C in their book and furnish such particular in the prescribed statements/returns for submission to the Bangladesh Bank.

The purpose of submission of return & statements to Bangladesh Bank for keeping systematic and proper records of all dealings in foreign exchange including transactions on non-resident Taka A/Cs. Submission of the returns/statements to Bangladesh Bank is very much important. Total picture of foreign exchange transaction of the country such as reserve of FC, FCs earned through export, wage earners & other reference and FCs paid through import, treatment, education, traveling etc can be ascertained after compilation of these returns/statements submitted to Bangladesh Bank by the ADs.

Procedures for reporting transactions:

A) Export :

Export bills drawn under confirmed and/or irrevocable L/Cs:

Transactions in respect of export bills negotiated by the Ads should be reported as purchase only at the time entries are made in the currency account duly supported by EXP form and schedule:

a)    EXP Original reported by Custom Authority to Bangladesh Bank at the time of shipment/export.

b)    EXP . duplicate : To be reported by the Ads to Bangladesh Bank within 14 days of shipment.

c)    Exp. Triplicate : To be reported after repatriation of the export proceeds.

Export bills drawn on Collection basis :

Sometimes ADs also purchase export bills drawn on collection/CAD basis. Transactions relating to such export bills should be reported as outright purchases against “export” in the summary statement on receipt of advice of realization of the export proceeds.

Export bills pertaining to Head Office or branch maintaining independent currency account:

When export bills are re-discounted with the Bangladesh Bank the transactions should be reported as purchase in the Summary statement supported by Schedule A and Exp Form and the contra entries should be reported on schedule D as sales to Bangladesh Bank.

Export bills pertaining to branch not maintaining its own currency account :

As and when the exports are re-discounted with the Bangladesh Bank the branch concerned will report the transactions as purchase in the summary statement supported by Schedule A-1/0-1 and Exp. Form.

B) Other Receipts :

Purchase of DD, TT and MT etc. should be reported to Bangladesh Bank only when the transactions are put through the currency accounts.

C) Imports :

  • Foreign currency A/Cs of ADs are debited at the time of negotiation of import documents by their foreign corespondent drawn under the L/Cs established by the ADs. Sale of this F.C. should be reported on receipt of negotiated import documents and not on the basis of retirement of bills by the importer.
  • All sales on account of imports are required to be supported by the original copy of the   IMP form.
  • Import bills received on collection/CAD basis, the transactions will be reported on Schedule E-2 supported by original IMP Form.

D) Other payment :

Transactions relating to DD, TT, MT etc issued by the Ads should be reported only at the time of entries are made in the currency accounts.

Transactions in non-resident Taka accounts of foreign banks should also be reported by the ADs.

Coding of Transactions:

AD will give code numbers for all receipts and payments transactions on the relevant forms and schedules as per code list provided by Foreign Exchange Policy Dept. Bangladesh Bank (2000 edition) and. AD will use the HS Code number form the HS Code Guide titled “The Harmonized commodity Description and Coding System” exports and imports in the relevant schedules.

Reporting Procedure for cash transaction:

Ads shall report to the Bangladesh Bank particulars of all their foreign exchange transactions i.e. all outward and inward remittances effected. Whether through their accounts in foreign currencies or through the Taka accounts of non-resident banks. The original copies of statement / schedules to be sent directly to the Statistics Dept. Bangladesh Bank Head Office, Dhaka the duplicate copies along with the relevant forms should be endorsed to the concerned area office of Bangladesh Bank. these monthly statement / schedules to be sent to Bangladesh Bank by the 5th day of the following month.

Compilation of summary statement:

Each summary statement will be an abstract of the Ads ledger A/c and will consist of totals under specified heads. Opening and closing balances should be added making each summary a complete and balance statement.

Supporting schedules and forms of the summary statement:

Every summary statement must be accompanied by schedules and the relative forms as indicated in the summary statements.

Preparation of schedules:

Schedule A-1 :

When EXP form is certified against purchase of FCS the transaction must be listed in schedule A-1 in triplicate showing the number of EXP form and the amount.

Schedule A-2:

a)    Advance receipt for goods to be exported this is to be reported through “Advance Receipt Voucher” (A[ppendix-19 Vol-2)

b)    Where the duplicate EXP form has already been lodged with the Bangladesh Bank and the triplicate is not available at the time when proceeds are received. This is to be reported through “EXP form not attached voucher” (Appendix 20-Vol-2).

Schedule A-3:

Schedule A-3/0-3 is used to report purchase of F.C. against export to Myanmar under Bangladesh – Myanmar Border Trade Arrangement.

Schedule –C :

Currencies purchased from other Ads or branches in Bangladesh to be reported in schedule – C to be attached with relative S-1, S-2 and S-6 statement.

Schedule – G:

Currencies sold to other Ads or branches in Bangladesh to be reported in schedule-G to be attached with S-1, S-2, and S-6.

Schedule – D:

FCs purchased from and sold to Bangladesh Bank to be reported as Schedule-D.

Schedule – E-2/P-2, E-3/P-3 and EL 1/2/3:

All import transactions to be reported schedule E=2/P-2 and the charges (interest reimburse etc.) there against and other sales other than import Traveling, Treatment, Service/Technical charges etc in schedule E-3/P-3. Transactions relating to Loans/Grants will be reported through EL-1/2/3.

Reporting of Inland L/C settlements:

Payment against inland L/Cs in foreign exchange will be reported in summary statement S-1 or sales side as “Payment against Inland L/C” and the recipient AD will report the receipt on the purchase side of S-1 as “Receipt in settlement of Inland L/C”.

Date of submission of statements to Bangladesh Bank:

1. Operations on private non-resident Taka accounts of non-bank clients.Quarterly with 12th day of following month.
2. Monthly statement of outstanding payment commitments abroadBy 15th of following month
3. Commodity wise statement of imports L/Cs outstanding as on each month end.10th of the following month
4. Monthly statement of outstanding exports bills as of each month end.15th of the following month.

Schedule Time

Currency wise daily position statements should be kept ready for immediate submission to Bangladesh Bank as and when called for.

Recommendations for uplifting of Habib Bank Limited

With a view to ensure exciting services and opening up the new window of progression as well as uplift, we should like to present the Habib Bank Ltd. Ltd with several recommendations like:

General Banking:

  • Introducing the “customer Day” or “Care U” week and new advertisement on different TV channels.
  • Launching one stop service cell.
  • More skilled persons are needed for reducing busyness.
  • Two branches should be under on line banking.

Foreign trade

  • More persons are needed for instant service.
  • High executive should deal this department directly.

Human Resources:

  • Some qualified officers should be promoted properly. Without it they become demoralized.
  • Sending the assistant officers and officers to BIBM for better view over pragmatic knowledge they know what they doing but don’t know how and why they are adopting different banking practice.
  • Motivating employee with special bonus and tour to foreign country
  • Should be developing more interpersonal relation.

Sales promotion and Ad Campaign:

  • Arranging the Habib Bank Ltd. Inter College Debate Contest and quiz test for children.
  • Offering scholarship for the Varsity Students and School goers.
  • Offering pre shipment and post shipment finance.

These initiatives will ensure healthy sales volume as well as well progression for the Habib Bank Ltd. And a new door of possibility will open up.


The education or study / training are then effective when it is related with practical. Students are very much practical oriented in the department of science because they are laboratory room oriented. In the business world the study also must be related with practical field. The principles, operations whose we read and memorize from various books, we should know whether it implemental in practical field. There has no alternative to make the business study effective. Though the books are available in the syllabus of business administration was written according to the operation of generally recognized industries but in implementation of those theoretical principals, procedures are not same in every industry. Especially in the environment of Bangladesh there has a lot of deviation is seen. Why this deviation how to overcome from that deviation, try to find out the reason and try to give solution and recommendation.

In the organizational environment I feel very cozy to work in that type of convenient ambience. The premises expedite me for enhancing my knowledge as well as give me a proper safeguard about upcoming future circumstances.

Some More Parts-

Report on General Banking Operations in Habib Bank Limited (Part-1)

 Report on General Banking Operations in Habib Bank Limited (Part-2)

Report on General Banking Operations in Habib Bank Limited (Part-3)