“Export Procedures & Risk Involved in Repatriation”:The Trust Bank Ltd (Agrabad Branch, Chittagong).
The Trust Bank Limited
…………………………….. Servers with Trust
THE TRUST BANK LIMITED has introduced itself with strong-based bank backed by the best & strongest institution of Bangladesh i.e. The Bangladesh Army. It is an enterprise of Bangladesh Army Welfare Trust with 100% computerization with focus to on-line system. The bank has started its function with authorized capital of Tk.1, 000 million in the year 1999, now it is 2,000 million. The composition of the Board of the bank consists of Ex-officio from in service Senior Army Personnel with the Chief of Army Staff as its Chairman. The Army Welfare Trust is the only shareholder. Recently the bank is going to issue IPO for the first time. At present it has 18 branches across the country & plan to open more across Bangladesh particularly in the major cities of Dhaka, Chittagong, Khulna, Sylhet. The branch at BSB Bhaban, 106, Agrabad Commercial Area, Chittagong has started its operation since 27.07.2002.The Trust Bank Limited, Agrabad Branch is providing financial products and services like any other commercial public, private and foreign banks. Their wide range of service includes Foreign Exchange Products, Deposit Products, Loans / Advance Products. It has many agents & correspondents across the globe to facilitate its international trade & business.
Special Feature of TBL
The special features of THE TRUST BANK LIMITED are as follows:
q The bank has a very strong base backed by the best & strongest institution of Bangladesh i.e. The Bangladesh Army.
q It is an enterprise of Bangladesh Army Welfare Trust with 100% computerization with focus to on-line system.
q The Bank is assuring to its customers, best cooperation & service all the times with attractive & competitive rates.
q To act as official liquidator and receiver.
q To provide for safe deposit vaults and custody of valuables of all kinds.
q To act as agents for the sale and purchase of any stocks, shares or securities or for any other monetary or mercantile transaction.
q To promote or take part in the formation, management, supervision or control of the business or operation of any company or undertaking in Bangladesh or elsewhere and to render all assistance in this regard.
q To form, manage, join or subscribe to any syndicate, or any holding company or trust to carry on business of an investment trust company.
q To act as executors and trustees of wills, settlements and trust deeds of any kind made by customers and other matters related thereto.
Philosophy of TBL
At present, the bank has as many as 26 branches across the country and it is committed to become equal service providers compatible with the norms of commercial schedule bank. It renders all types of personal, commercial and corporate banking services to its customers within the purview of the Bank Companies Act, 1991 and in line with the directives and policy guidelines laid by down by Bangladesh bank.
Objective of the Bank
The Trust Bank Limited has been established with the objective of providing efficient and innovative banking services to the people of all sections of our Society .One of this bank is that it is backed by the disciplined and strongest Institution of Bangladesh i.e. Bangladesh Army and there is a synergy of welfare and profits in the dynamics of this institution.
Bank is service-oriented industry and we on our part are committed to ensure customized Qualitative and hassle free service in our banking operations along with the focus to broaden the clientele base. The bank has extensively in the country’s industrial and agricultural sectors in the coming days. The bank is committed to contribute as such as possible within its limitations for the economic growth and for ensuring value of its available resources.
Performance of Trust Bank Limited
TBL a blend of expertise and technological excellence is in place of meet varied needs of modern customers. The bank aims at mobilizing untapped money of the country and prudent deployment for production activities in the form of lading at a competitive interest rates/loan pricing.
Towards attainment of its goals and objectives, the bank pursues diversified credit policies and strategic planning in credit management. To name a few, the bank has extended micro credit, consumers durable scheme loans, house building loans etc. to cater to the needs of the individuals, which in turn has helped thousands of families. The bank also extends loan in the form of trade finance, industrial finance, and project finance, export & import finance etc. The bank’s credit polices aimed at balanced growth and harmonious development of all the sectors of the country’s economy with top most priority to ensure quality of lending by averting growth of non-performing assets. The performance of the bank is shown below,
|Performance at a glance|
|Paid up capital||250.00||250.00||350.00||350.00||500.00||500.00|
|Share money deposit||150.00||200.00||250.00|
|Loans and Advances||525.74||1603.95||1897.63||4358.31||6804.45||9250.59|
|Profit Before Tax||0.62||54.26||(140.16)||68.14||216.38||364.62|
|Provision for Tax||0.25||28.30|
|Credit Deposit Ratio||0.46||0.63||0.63||0.97||0.75||0.53|
The above chart presents the Authorized Capital & Paid up Capital from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the Share money deposit, Statutory Reserve & Retained Earning from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the total Equity from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the condition of Loans & Advances of TBL from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the total Import from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the total Export from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the Foreign Remittance from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the Investment from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the Total Assets from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the Total Income from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the Total Expenses from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the Operating Income from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the Net Profit from 2001-2006. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
Total operating income of the bank in FY 2006 was Tk. 514.20 million against a total operating expenditure Tk. 222.91 million. Total profit before provision stood at Tk. 288.54 million during FY 2006. After keeping Tk. 16.70 million as provision against classified loans & advances, Tk.50.77 million as provision against unclassified loans (I%) And Tk. 2.5 million as SMA, the net profit stood at Tk. 216.40 million.
During the FY. Net profit after income tax in the year 2006 posted by the bank was Tk. 102.81 million. The earning per share was Tk. 44.16 in FY 2005 and 22.71 in FY 2006.
The TBL has taken up a program to expand its branches. The bank has already 26 branches in many different places in Bangladesh; most of them are inside the different cantonments. The management is filling that they need more branches all over the Bangladesh. So very recent they will open a branch in different areas over the country, specially developed and commercial areas. As per Bangladesh Bank circular that if any bank opens a branch in Dhaka then they have to open a branch in out side Dhaka.
Information Technology (IT) & Automation
All the branches of the TBL are fully computerized. New software is now in use to provide faster, accurate and efficient service to the clients. The bank is continuously striving for better services through extensive automation of its branches. We are soon going to launch “One Branch Banking” through on-line connectivity. The bank has set up a full-fledged IT division to keep abreast of the latest development of IT for better service in the days to come.
Foreign correspondent relationship facilities foreign trade operation of the bank, mainly in respect of export, import and foreign remittance. The number of foreign correspondents and agents of the bank in the year 2006 stood at 244, which covers important business and trade centers of the world. The bank maintains excellent relationship with the leading international banks, for handling all foreign correspondent and maintaining all foreign business them is an International Division, which is called ID.
Product of the Bank
- Current Deposit Account
- Savings Deposit Account (daily product basis)
- Fixed Deposit (3 months to 3 years term)
- Savings Certificate
- Trust Smart Savers Scheme(TSS)
- Trust Digoon Laav Scheme(TDLS)
- Trust Money Making Scheme(TMMS)
- Trust Education Scheme(TES)
- Corporate Financing
- Trust Consumer Durable Scheme (TCDS)
- Trust Marriage Loan Scheme (TMLS)
- Trust Car Loan Scheme (TCLS)
- Trust House Building Loan Scheme (THLS)
- Trust Micro Credit for Renovation & Reconstruction of Dwelling Houses
- International Banking
- Private Foreign Currency Accounts
- Non Resident Foreign Currency Deposit Account
- Resident Foreign Currency Deposit Account
- Travelers’ Endorsement (Cash and Travelers Cheque)
- Remittance of Foreign Currency
- Import and Export Transaction
- Foreign Exchange Dealing
- Purchase of Foreign Currency Drafts, Cheques, Travelers Cheques
- Wage Earner’s Development Bond
Organogram of Trust Bank Limited
|Limitation of Information System (PC Bank).
Modern facilities & Computer.
Interactive Corporate Culture
|Severe internal rivalry in Banking Industry.
SWOT Analysis is an important tool for evaluating the companies Strengths, Weaknesses, Opportunities and Threats. It helps the organization to identify how to evaluate its performance and can scan the macro environment which is turn would help the organization to navigate in the Turbulence Ocean of competition. Following is given the SWOT analysis of The Trust Bank:
1. Managerial Excellency:
The top management of the bank, the key strength for The Trust Bank has contributed heavily towards the growth and development of the bank. The top management officials are highly qualified professionals, so they have a good idea about the current situation.
2. Company Reputation:
The Trust Bank has created a good reputation in the banking industry of the country. Their main customers are army persons. The popularity of this bank is increase day by day also in the general public area.
The Trust Bank has founded by The Army Welfare Trust. The main sponsor for the bank is “Sena kalyan Sangstha” (SKS). The chairperson of this bank is Chief of army Staff and directors are appointed by the sangstha that is why the sponsor does not have any- problem for the fund.
1. Limitation of Information System (PC Bank):
PC bank is not comprehensive banking software. It is desirable that a more comprehensive banking system should replace PC bank system.
2. Turnover Problem:
The turnover problem treated as a weakness for The Trust Bank because the employees do not stay far a long. So there will be a chance of brain drain from this bank to other bank and as a result the bank may suffer from managerial in competency.
3. Advertisement Problem:
There is another weakness for The Trust Bank is advertisement. Their media coverage is so poor that people do not know the bank thoroughly.
1. Diversification :
The Trust Bank can pursue diversification strategy in expanding its current line of business. They do not serve not only the army but also the general people.
2.Business Banking :
The investment potential of Bangladesh is foreign investors. So TBL has opportunity to expand in business banking.
3. Modern Facilities and Computer:
From the very beginning, The Trust Bank tries to furnish their work surroundings with modern equipment and facilities. For speedyservice to the customer, The Trust Bank had installed money-counting machine in the teller counter. The bank has computerized banking operation under software called PC banking. More over computer printed statements are available to internal use and occasionally for the customers. The Trust Bank is equipped with telex and fax facilities.
4. Stirring Branches:
From the formative stage of The Trust Bank tried to furnish their branches by the impressive style. Their well-decorated branches gets attention of the potential customer, this is one kind of positioning strategy. The Sena Kalyan Bhaban Branch and Gulshan branch are also impressive and is comparable of foreign banks.
5. Interactive Corporate Culture:
The corporate culture of The Trust Bank is very much interactive compare to other local organization. This interactive environment encourages the employee to work attentively. Since the banking jobs is very much routine work oriented and lovely environment boots up the work capability of the employees.
1. Severe Internal rivalry in Banking Industry:
The contemporary banks of The Trust Bank like, Dhaka Bank, Dutch Bangla Bank, National Bank, Mutual Trust Bank, Mercantile Bank are its major rivals. They are carrying out aggressive campaign to attract lucrative clients as well as major depositors. The Trust Bank should remain vigilant about the steps taken by these banks, as these will in turn affect The Trust Bank strategies.
2. Multinational Bank:
The Rapid expansion of multinational bank poses a potential threat to new PCB’s. Due to the booming energy sector, more foreign banks are expected to operate in Bangladesh. Moreover, the existing foreign banks such as HSBC, Citi N.A, and Standard Chattered are now pursing an aggressive branch expansion strategy. Since the foreign banks have tremendous financial strength, it will pose a threat to local bank to a certain extant in terms of grabbing the lucrative clients.
3. Default Culture:
Default culture is very much familiar, in our country. For a bank, it is very harmful. As The Trust Bank is new, it has not faced it seriously yet. However, as the bank grows older.
TBL, Agrabad Branch at a glance :
Date of operation:
27th July’2002 on Saturday.
No of clients:
|No of total Deposit A/C|
|Trust Double Benefit||00||00||10||37|
|02. No of Loans A/C||28||171||303||168|
|03. No of Banks A/C||Nil||04(FDR)||Nil||Nil|
No of Employee:
|Senior Vice President||01|
|Assistant Vice President||03|
|Senior Executive Officer||02|
|Total number of Employees||35|
Activities of Agrabad Branch
Organgram of Agrabad Branch
Practically by the term “Export” we mean carrying anything from one country to another. Banker defines “Export” as sending of visible things outside the country for sale. Export Trade plays a vital role in the development process of an economy.
With the earning the economy meet out import bills, through export trade is always encouraged, anybody cannot export anything to may place. Like importer the exporters are also required to get them registered before entering in to export trade. Export Registration Certificate (ERC) given by Chief Controller of Import & Export (CCI&E) is required for this purpose.
The required documents to obtain ERC are also same as documents to obtain IRC. Documents required to obtain IRC have been enumerated earlier in import section.
When a bank (Authorized Dealer) sent by an foreign importer, it ascertains the correctness of the test number and the authorized signature and then sends the original copy of the L/C to the beneficiary, the exporter.
The exporter, on being satisfied on terms of L/C takes necessary steps to marked shipment and presents the relative documents to the negotiating bank after the shipment of goods. The L/C issuing bank undertakes to honor the obligation only if the beneficiary, the exporter, fulfils the conditions stipulated in the L/C.
The conditions may include the submission of stipulated documents within the stipulated time. Even a slide deviation of the documents from those specified in the L/C may given an excuse to negotiating bank.
So the negotiating bank must be careful, systematic and bias free while scrutinizing the tender documents. After careful and through examination of the documents, the banker has to lost out the discrepancies, while may be classified as major or minor, irremovable or removable.
The removable discrepancies can be corrected by proper mechanism stated in the L/C.Documents, with major discrepancies, which could not be negotiated, should be sent on collection basis with the permission of the exporter.
Incentive for the Exporter
- Cash Incentives.
- Duty Drawback.
- Export Credit Guarantee Scheme (ECGS).
- Export Development Fund (EDF).
- Exporter Retention Quota Account Facilities (ERQAF).
- Commercially important person.
- Tax Exemption.
- Bonded Warehouse Facilities.
- Low Rate Credit Facilities. (Packing Credit)
- Trade Fair arranged by Chamber of Commerce.
We are going to diversify our export market such as Medical, Vegetables, Health Care, Informational Technology & other non-traditional items to boost-up our export performance and reduce Balance of Payment.
Political & Social Commitment
Encouraging Tax & Tariff policy
Stability of unrest political situation.
Salient Features of Export Policy 2003-2006
Export Policy 2003-2006 has been liberalized by the Government of People’s Republic of Bangladesh in order to keep pace with the present globalization system under WTO rules.
The Objectives of the Export Policy
- Capacity building of export related institutions like EPB (through its reorganization to enhance institutional efficiency), Customs department, Land and Seaports, Fisheries department, BSTI, Tea board and Trade bodies.
- Product diversification
- Develop product quality and design and production
- Adopt new strategies for expanding export products; ensure good use of IT or computer technology, E-commerce and other technologies.
- Develop necessary infrastructures and in required cases backward and forward linkage industries to ensure production of maximum volume of exportable items.
- Create new exporters and provide all assistance to existing exporters and develop a business friendly environment.
- Develop expert manpower on trade and
- Equip trade bodes, businessmen and concerned people with necessary knowledge on systems of world trading.
- The export targets for 2004-2005 & 2005-2006 have been fixed a US$ 8565.78 million and 9599.20 million respectively
- The number of precuts included in the list of export prohibited items has been reduced in the present export policy 2003-2006 compared to the preceding Export Policy 1997-2002.
- List of items exportable under condition has also been reduced in the Export Policy 2003-2006 compared to the preceding Export Policy 1997-2002.
- Government has declared the following package of incentives/facilities:-
Income tax exemption for export earning, under the income tax law other than the owners of factories not registered in Bangladesh, all exporters will get 50% exemptions in their insurance premium.
a) Exemption in insurance premium.
b) Bond facilities for export oriented industries.
c) Facilities for duty free import of capital machinery for export-oriented industries.
d) The export-oriented industries will get the advantage of importing10 percent spare parts of their capital machinery without duty in every two years.
e) Providing alternative facilities to export-oriented local textiles and RMG other than duty-bond or duty-draw-bank.
f) Tax holiday
g) Duty-draw-back scheme.
The rate of cash incentive as provided by the Government for export of different commodities is as follows:
|Sl.No.||Name of commodities||FE Circular No. & date of Bangladesh Bank||% of Cash Incentive|
|01||Frozen Shrimp & other fish||FE No. 23, 12th December,2002||10%|
|02||Product Made of Hogla, Straw, Coir of Sugar Cane
a) If local raw material is used more than 80%
b) If local raw material is used more than 50%
|03||Bicycle||FE No.27, 12th December,2002||15%|
|04||Crushed Bone||FE No.25, 12th December 2002.||15%|
|05||Agro and Agro Products (Vegetables/Fruits/Agro Processing)||Fe No.05,25th July,2004||30%|
|06||Local Fabrics (l/C Handloom Fabrics)
|FE No. 10, 5th June,2002||10%
|07||Jute Products||FE No.19, 12th August,2002||7.5%|
|08||Leather Products||FE No.12th December,2002||15%|
|09||Tobacco||FE No.01,28th December,2002||10%|
|10||Potato||FE No.01,28th December,2002||15%|
- Provide assistance through developing necessary numbers of product development councils for increased product of export items.
- Provide market intelligence to producers and exporters on product demands and prices in markets abroad.
- Offer increased institutional facilities through trading and export houses to encourage export.
- Offer assistance in establishing seal of quality organizations to ensure to ensure quality of export items in required cases.
- Offer assistance in establishing “Bangladesh International Arbitration Centre” or similar organizations for prompt settlement and disposal of Trade disputes.
- Offer assistance to producers for development of product designs and use of modern technology.
- Offer assistance to enable exporters getting acquainted with the strategies and methods of countries which attained remarkable success in export trading and highlight the exporters and
- Organize single country export fair for Bangladeshi products abroad and offer assistance to exporters in participating trade fair in different countries.
Use of foreign currency:
The exporters can deposit a certain amount of their export earning in foreign currency under a retention quota in their foreign currency account in the form of US dollar, Pound Sterling, Japanese yen or Euro. The amount of the retention (in terms of percentage) will be fixed by the government/Bangladesh Bank. This foreign currency can be used to fulfill real business needs like business trips abroad, participation in export fair or seminars in foreign countries, import of raw materials and spare parts and setting up office abroad. Presently 10% has been fixed for lower value added products (like RMG, petroleum by products, Naphtha, furnace oil etc) and 50% for high value added products (like Computer software and data entry/processing service etc.)
Export Promotion Fund (EPF):
Offer venture capital with less interest rate and easy term for production Assist in getting foreign technical assistance, service and technology in product development and diversification.
Export credit is given from Export Promotion Fund (EPF) at 4.50% interest and 2% service charge that is 6.50% to the handling sector as working capital against L/C contract purchase order for increasing export of handicraft products. Maximum limit of loan in handicraft sector is TK.5.00 lakh only at a time in favour of one firm.
Export credit is also given to the exporters of computer software sector at 7% interest.
Facilities in other activities for product and market development.
Providing fund for export:
- Interest free loans will be provided under duty-draw-back credit scheme for 180 days and 100 percent of the loan amount will be provided in advance.
- Import process of raw materials and related products will be made easier under the export promotion fund (EPF).
- Facilities will be provided to open back to back LC for all exportable and
- The proposals for importing capital machineries with soft term loan with lesser interest rate can be considered for export promotion.
The enterprises that export 80 percent of their products will get the facilities given to export-oriented industries.
Reduced plane fare for priority products including vegetables and fruits, Biman will consider measures for reduced plane fare exporting fruits, vegetables and ornamental plants by air. Withdrawal of royalty for expansion of cargo services of foreign airlines for export promotion.
Fixing of limit for sending sample of export products annually. Arrangement and participation in international and single country trade fairs and other market development programmes abroad.
Incentives will be given for organizing and participating in international trade fairs, single exhibition and other market development programmes and arranging single country trade fairs jointly by government and non-government organization.
Every year product-wise Commercially Important persons (CIPs) will be selected on the basis of the exporters extra ordinary contributions to export promotion.
National Export Trophy (NET) will be give in recognition of extra ordinary contribution to export.
The Export Credit Guarantee Scheme (ECGS) will be restructured, activated and made efficiency.
Export Target & Performance from 2002-2003 to 2005-2006
Foreign Exchange Division
Foreign Exchange is one of the key areas for development of the working business. Any branch of a bank can deal with Foreign Exchange business having an authorized dealership license in our country. Foreign Exchange Business is conducting on the strength of Foreign Exchange regulation act 1947 has amended up to date in Bangladesh. And all the procedures and transaction relating to the Foreign Exchange Business is conducted as per Uniform Customs and Practices for Documentary Credit (UCPDC), ICC publication on –500 1993 and uniform rules for collections UCR-522. Every bank in Bangladesh is conducting their Foreign Exchange Business as guidelines of Foreign Exchange transactions vol-1982-1986.
The foreign exchange manual has been segregated in to two parts.
First part deals with the policy framework & guidelines and the second part contains of USPDC (ICC Brochure) no-500 uniform rules and for collections accounting procedures and reporting of transactions.
In addition to the foreign exchange department of a bank maintains various types of foreign currency and convertible TK A/C such as:
q Private Foreign Currency A/C.
q FC account of overseas Bangladesh Nations.
q FC A/C of joint venture contracting firms.
q FC A/C of Bangladesh working in foreign organization.
q Non-resident FC deposit A/C (NFCD)
q Resident foreign currency deposit A/C (RFCD).
q Converting taka A/C.
Necessity of Foreign Exchange
No country is self-sufficient in this world. Everyone is more or less, dependent on another, for goods or services. Say Bangladesh has cheap manpower whereas Saudia Arabia has cheap petroleum. So Bangladesh is dependent on Saudia Arabia for petroleum and Saudia Arabia is dependent on Bangladesh for cheap manpower. People of one country are going to abroad for Education, Medical Service etc. Thus there is exchange of foreign currency.
Activities of Foreign Exchange Division
Regulation for Foreign Exchange Division
Foreign Exchange transactions are being controlled by the following rules & regulation.
o Foreign Exchange Act 1947.
o Bangladesh Bank issues Foreign Exchange circular from time to time to control the export, import and remittance business.
o Ministries of Commerce issues export & import policy giving basic formalities for import & export business.
o Sometimes CCI & E issues public notice for any kind of change in foreign exchange transaction.
o Bangladesh Bank published two volumes in 1996. This is compilation of the instructions to be followed by the authorized dealers in transactions related to foreign exchange.
International Regulation for Foreign Exchange:
q There are some international organization influencing our foreign exchange transactions. There are-
q International chamber of commerce (ICC) is a world wide non-governmental organization of thousands of companies. It was founded in 1919. ICC has issued some publication like UCPDC, URC and URR etc, which are being followed by all the member countries. There is also an international court of arbitration to solve the international business disputes.
q World trade organization (WTO) is another international trade organization established in 1995. General Agreement on Tariff & Trade (GATT) was established in 1948, after completion of its 8th round the origination has been abolished and replaced by WTO. This organization has role in international trade, through its 124 member countries.
Flow Chart: Export Procedures
The export trade of the country is regulated by the Import & Export (Control) Act, 1950. There are a number of formalities that an exporter has to fulfill before and after shipment of goods. These procedures are given below:
Obtaining Export Registration Certificate (ERC)
Under the export policy of Bangladesh, the Exporter has to get valid export registration certificate (ERC) from the Chief Controller of Import and Export (CCI&E). The Export Registration Certificate (ERC) is required to renew every year. The ERC number is to be incorporated and EXP forms and other documents connected with exports.
For obtaining ERC, intending Bangladeshi Exporter are required to apply to the controller/Joint controller/Deputy Controller/Assistant Controller of Imports & Exports, Dhaka/Chittagong/Rajshahi/Khulna/Mymenshing/Shylet/Comilla/Barisal/Pabna/Bogra/Rangpur/Dinajpur, as the case may be, in the prescribed form along with the following documents.
- Nationality & Assets certificate of the Proprietor/Directors.
- Registered Partnership Deed in the case of Partnership concerns.
- Memorandum & Articles of Association & Incorporation Certificate in case of limited company.
- Bank Certificate.
- Income Tax Certificate.
- Copy of Valid Trade License.
- Copy of Rent Receipt of the Business Premises.
- Membership Certificate of a Trade Association.
- Affidavit from 1st class magistrate.
- Any other certificate as required in the Policy etc.
Registration / Renewal of ERC
On receipt of necessary advice from the office of the control/Joint controller/Deputy Controller/Assistant Controller of Imports &Exports, applicants for Export Registration Certificate are required to deposit requisite registration fee to the Government Head of Account” 42 Trade and Commerce- Fees realized under the imports & Exports control Act 1950” through Bangladesh Bank/Government Treasury/Sonali Bank. Copies of Treasury Chalans showing payment of fees should be sent to the concerned offices of the chief controller of Imports & Exporters for enabling them to issue ERC. Once registered, exporters are to make annual payments for having their export Registration Certificate renewed.
Securing the Export Order
Upon registration, the exporter may proceed to secure the export order. He can do this by contracting the buyer directly through correspondence. Some buyers of goods like jute & jute goods maintain liaison office, representatives or local agents who can be contracted to secure a deal. Sometimes, TCB BJBC and BJEC secure bulk contracts and pass or allocate the contracts the local chamber of commerce of potential buyers. The Export Promotion Bureau and the Bangladeshi missions abroad are also good sources for securing information on the prospective foreign buyers.
Receiving the Letter of Credit
After getting the contact for sale the exporter should ask the buyer for L/C clearly stating terms and conditions of export and payment.
The followings are the main points to be looked into :
- The terms of the L/C are in conformity with those of the contract.
- The L/C is an irrevocable one, preferably confirmed by the advising bank.
- The L/C allows sufficient time for shipment and a reasonable time for negotiation.
- If the exporter wants the letter of credit to be transferable, divisible & advisable, he should ensure that these stipulations are specifically mentioned in the l/c.
Letter of Credit (L/C)
Letter of Credit (L/C) is a credit contract whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some agreed conditions.
Since the agreed conditions include amongst other things, the presentations of some specified documents, the letter of credit is called Documentary Letter of credit. The Uniforms & practices for Documentary Credit published by International Chamber of Commerce (1993) Revision, publication No 500 defines Documentary credit: Any arrangement, however named or described, whereby a bank (the issuing bank) acting at the request and on the instructions of a customer (the applicant) or its own behalf,
1) Is to make a payment to or to the order of a third party (the beneficiary) or is to accept and pay bills of Exchange drawn by the beneficiary.
2) Authorizes another bank to effect such payment.
3) Authorizes another bank to negotiate against stipulated documents provided that the terms and conditions are compiled with.
Types of L/C
q Revocable L/C is a credit which can be amended/ cancelled by issuing bank, without prior notice to the seller.
q Irrevocable L/C is a credit, which cannot be amended or cancelled without the agreement of all parties.
a. Confirmed L/C
b. Transferable L/C
c. Divisible L/C
d. Revolving L/C
e. Restricted L/C
f. Red Clause L/C
g. Green Clause L/C
h. Back-to-Back L/C
Letter of Credit-Operational Mechanism
In simple terms, a documentary credit is a conditional bank undertaking of payment.
Expressed more fully, it is a conditional undertaking given by a bank (Issuing Bank) at the request of a customer (Applicant) or on its own behalf to pay a seller (Beneficiary) against stipulated documents provided all the terms & conditions of the credit is complied with.
These stipulated documents are likely to include those required for commercial line, regulatory, insurance or transport purposes, such as commercial invoice certificate of origin, insurance policy or certificate and a transport document of a type appropriate to the mode(s) of transport used.
Documentary credits offer both parties to a transaction a degree of security, combined with possibility, for creditworthy party of securing financial assistance more easily.
Opening Letter of Credit
Opening of Letter of Credit (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 Applicant supported by the form contract (Indent/Proforma Invoice) & Insurance Cover Note, the bank scrutinize the same thoroughly and fix up a margin on the basis of banker-customer relationship.
Before opening a L/C, the issuing bank must check the following.
1. L/C application properly stamped, signature verified & margin approved & properly retained.
- Indent/Proforma Invoice signed by the Importer & Indenter/Supplier.
- Ensure that the relevant particulars of L/C application correspond with those stipulated in Indent/Proforma Invoice.
- Validity of LCA entitlement of goods, amount etc. confirm with the L/C application.
- Conversion & rate of exchange correctly applied.
- Charges like commission, F.C.C, postage, telex charge, if any received.
- Insurance Cover Note In the name of Issuing Bank A/C Importer covering required risk & voyage route.
8. Incorporation of instructions for Negotiating Bank as per bank’s existing arrangement.
- Reimbursement instructions for Reimbursing Bank.
- If foreign bank’s confirmation is required, necessary permission should be obtained and accordingly advising bank is advised as per bank’s existing arrangement.
- If add confirmation is required on account of the applicant charges should be recovered from the applicant.
- Incase of usance L/C, mention rate of interest clearly in the L/C.
Parties to Documentary Letter of Credit
Letter of Credit – Settlement
Settlement means fulfilling the commitment of issuing bank in regard to effecting payment subject to satisfying the credit terms.
Settlement may be done under 3 (three) separate arrangements as stipulated in the credit.
Settlement by Payment:
Here the seller presents the documents to nominated bank & bank scrutinizes the documents. If satisfied, the nominated bank makes payments to beneficiary and incase this bank is other than the issuing bank, then sends the documents to issuing bank and claim reimbursement as per arrangement.
Settlement by Acceptance:
Under this arrangement the seller submits the documents evidencing the shipment to accepting bank (nominated by the issuing bank for acceptance) accompanied by a draft drawn and 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.