General Concept About Foreign Exchange Operation

General Concept About Foreign Exchange Operation

General Concept About Foreign Exchange Operation

This part describes some conceptual issues regarding foreign exchange market and transaction in our country on the theoretical basis covering the following points-

  1. Meaning of Foreign Exchange
  2. Foreign Exchange Market
  3. Trade Transaction
  4. Method of Foreign Trade payment
  5. Bank’s involvement in Foreign Trade Payment
  6. Letter of Credit Operation
  7. Foreign Correspondent
  8. INCO Terms 2010
  9. Exchange Rate & Their application

3.1:  CONCEPT OF FOREIGN EXCHANGE:

In simple word, foreign exchange means foreign currency. In other word, it means exchange or conversion of one currency with/ into another currency. Basically Foreign Exchange deals with foreign currency as well as currency instrument such as Draft, Traveler cheque, Bill of exchange, MT, TT and PO etc accepted, drawn, made or issued under clause 13, Article 16 of the Bangladesh Bank Order, 1972 and foreign trade- import and Export.

No country is self sufficient in this world. Everyone is more or less depending on another, for goods or services; Bangladesh is over populated country in the world. We always deficit in food grains and other essential commodities which have to import from abroad and pay foreign currency to supplier in foreign country. On the other hand, our country export jute, Tea, Shrimp, RMG etc to other country and a huge number of manpower is working abroad and earn foreign currency, which they remit to our country. From those earnings use to settle import claims. Bangladesh always deficit in trade balance which effect on Balance of payment. For this reason foreign currency is called the life blood of a country. At the time of foreign currency transaction we face various problems which involve high financial risk. To overcome the problems and smooth operation in foreign exchange, we should know about foreign exchange transaction why, when and how it happens and what are risk related areas to Foreign Exchange Transaction.

There are mainly two situations in the foreign exchange operation. One is Currency Dealing, which is related with buying, and selling of foreign currency and another is Trade Transaction which is required for settlement of import and export obligation.

 

3.2: Local Regulations for Foreign Exchange:

Our foreign exchange transactions are being controlled by the following local regulations.

3.2.1.   Foreign Exchange Regulation Act :

Foreign Exchange Regulation (FER) ACT 1947 enacted on 11th May 1947 in the British India, provides the legal bars for regulating the Foreign Exchange this ACT was accepted in Pakistan and lastly in Bangladesh. It extends to the whole Bangladesh and also applies to all citizen of Bangladesh whom are lives in or doing of anywhere outside of Bangladesh.

3.2.2.   Guidelines for Foreign Exchange Transactions:

This publication issued by Bangladesh Bank in the year 1996 in two volumes. This is compilation of the instructions to be followed by Authorised Dealers in Transaction regulating to Foreign Exchange.

3.2.3.   Foreign Exchange Circular :

Bangladesh Bank issues F.E. Circular from time to time to control the Export Import business and remittance to control the Foreign Exchange.

3.2.4.   Export Import Policy :

Ministry of Commerce issues Export Policy and Import policy providing formalities for Import and Export business. Now Import and Export Policy 2015-2018 in face.

3.2.5.   Public Notice:

Sometimes Chief Controller of Import and Export (CCI &E) issues public notice for any kind of change in Foreign Exchange transaction.

3.2.6.   Instruction from different Ministry:

Different Ministry of the Government sometimes instructed the Authorized dealer directly or through Bangladesh Bank to follow something required for the Government.

3.2.7.   Shariah Principles:

Along with all the above guidelines and regulation s Islamic Bank also bound to follow the principle of Islamic Shariah in Foreign Exchange transaction.

 

3.3       International Regulations for Foreign Exchange:

There are also some international Organizations influencing our Foreign Exchange Transaction, Few of them are discuss below:

3.3.1.   World Trade Organization (WTO):

World Trade Organization established on January 1995. GATT ( General Agreement on Tariff and Trade) was established on 01.01.1948. After completion of its 8th round, the GATT was abolished and replace by WTO. The organization has vital role in International Trade.

3.3.2.   International Chamber of Commerce (ICC):

International Chamber of Commerce is a worldwide non Government organization of thousands of companies. It was founded in 1919. ICC National Committees throughout the world present. ICC views to their Governments and alert Paris Head Quarters’ to National Business concerns. ICC issued some publications like UCPDC, URR,URC,ISBP etc, which are being followed by all the member countries. There also a international Court of Arbitration to solve the International Business disputes. Some publications discussed below:

3.3.3.   UCPDC 600:

To avoid problems and misunderstanding amongst International Traders in handling their Import /Export business through Letter of Credit (L/C). International Chambers of Commerce (ICC) to keep uniformity in the international Trade introduces UCPDC law in 1933, subsequently with the changed circumstances, ICC rules revised and published in the year 1951,1962,1974,1983, 1993 and 2007 respectively. UCPDC 2007 revision ICC publication No.600 is effective from 1st July 2007 more than 180 countries in the World are member of ICC. Since its inception, the UCP has remained a vital component of international Trade.

3.3.4.   Uniform Rules for Reimbursement ICC Publications No. 725:

Uniforms Rules for Bank to Bank Reimbursement under Documentary Credit,  ICC URR enforced as on July 01,1996. The matter relating to URR is issuing bank, Reimbursing Bank, Claiming Bank, Reimbursement Undertaking, Reimbursement Authorization etc. It consist of four Chapter comprising  16 Articles.

URR 725

URR 725 is the acronym of  Uniform Rules for Bank-to-Bank Reimbursements.

UNIFORM RULES FOR BANK-TO-BANK REIMBURSEMENTS APPROVED ON 15-16.04.2008. IN FORCE SINCE 01/10/2008

A. GENERAL PROVISIONS AND DEFINITIONS

Article 1.

Application of  URR The Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits (“rules”), ICC Publication No. 725,( URR 725) shall apply to any bank-to-bank reimbursement when the text of the reimbursement authorization expressly indicates that it is subject to these rules. They are binding on all parties

thereto, unless expressly modified or excluded by the reimbursement authorization. The issuing bank is responsible for indicating in the documentary credit (“credit”) that reimbursement is subject to these rules.

In a bank-to-bank reimbursement subject to these rules, the reimbursing bank acts on the instructions and under the authority of the issuing bank.

These rules are not intended to override or change the provisions of the Uniform Customs and Practice for Documentary Credits.

URR 725 Article 2. Definitions

For the purpose of these rules, the following terms shall have the meaning specified in this article and may be used in the singular or plural as appropriate:

  1. “Issuing bank” means the bank that has issued a credit and the reimbursement authorization under that credit.
  2. “Reimbursing bank” means the bank instructed or authorized to provide reimbursement pursuant to a reimbursement authorization issued by the issuing bank.
  3. “Reimbursement authorization” means an instruction or authorization, independent of the credit, issued by an issuing bank to a reimbursing bank to reimburse a claiming bank or, if so requested by the issuing bank, to accept and pay a time draft drawn on the reimbursing bank.
  4. “Reimbursement Amendment” means an advice from the issuing bank to a reimbursing bank stating changes to a reimbursement authorization.
  5. “Claiming Bank” means a bank that honours or negotiates a credit and presents a reimbursement claim to the reimbursing bank. “Claiming Bank” includes a bank authorized to present a reimbursement claim to the reimbursing bank on behalf of the bank that honours or negotiates.
  6. “Reimbursement Claim” means a request for reimbursement from the claiming bank to the reimbursing bank.
  7. “Reimbursement undertaking” means a separate irrevocable undertaking

of the reimbursing bank, issued upon the authorization or request of the issuing bank, to the claiming bank named in the reimbursement authorization, to honour that bank’s reimbursement claim, provided the terms and conditions of the reimbursement undertaking have been complied with.

  1. “Reimbursement undertaking amendment” means an advice from the reimbursing bank to the claiming bank named in the reimbursement authorization stating changes to a reimbursement undertaking.
  2. For the purpose of these rules, branches of a bank in different countries are considered to be separate banks.

URR 725 Article 3.

Reimbursement Authorizations Versus Credits

A reimbursement authorization is separate from the credit to which it refers, and a reimbursing bank is not concerned with or bound by the terms and conditions of the credit, even if any reference whatsoever to it is included in the reimbursement authorization.

B. LIABILITIES AND RESPONSIBILITIES

Article 4.

Honour of a Reimbursement Claim

Except as provided by the terms of its reimbursement undertaking, a reimbursing bank is not obligated to honour a reimbursement claim.

 

Article 5.

Responsibility of the Issuing bank

The issuing bank is responsible for providing the information required in these rules in both the reimbursement authorization and the credit, and is responsible for any consequences resulting from non-compliance with this provision.

C. FORM AND NOTIFICATION OF AUTHORISATIONS, AMENDMENTS AND CLAIMS

Article 6.

Issuance and Receipt of a Reimbursement Authorization or Reimbursement Amendment

  1. All reimbursement authorizations and reimbursement amendments must be issued in the form of an authenticated teletransmission or a signed letter. When a credit or amendment thereto which has an effect on the reimbursement authorization is issued by teletransmission, the issuing bank should advise its reimbursement authorization or reimbursement amendment to the reimbursing bank by authenticated teletransmission. The teletransmission will be deemed the operative reimbursement authorization or reimbursement amendment, and any subsequent mail confirmation shall be disregarded.

b. An issuing bank must not send to a reimbursing bank:

  1. a copy of the credit or any part thereof, or a copy of an amendment to the credit in place of, or in addition to, the reimbursement authorization or reimbursement amendment. If such copies are received by the reimbursing bank they shall be disregarded;
  2. multiple reimbursement authorizations under one teletransmission or letter, unless expressly agreed to by the reimbursing bank.
  3. An issuing bank shall not require a certificate of compliance with the terms and conditions of the credit in the reimbursement authorization.
  4. A reimbursement authorization must (in addition to the requirement of

Article 1 for incorporation of reference to these rules) state the following:

  1. credit number;
  2. currency and amount;

iii. additional amounts payable and tolerance, if any;

  1. claiming Bank or, in the case of a credit available with any bank, that claims can be made by any bank. In the absence of any such indication, the reimbursing bank is authorized to pay any claiming bank;
  2. parties responsible for charges (claiming bank’s and reimbursing bank’s charges) in accordance with Article 16 of these rules.

A reimbursement amendment must state only the relative changes to the above and the credit number.

  1. If the reimbursing bank is requested to accept and pay a time draft, the reimbursement authorization must indicate the following, in addition to the information specified in (d) above:
  2. tenor of draft to be drawn;
  3. drawer;

iii. party responsible for acceptance and discount charges, if any.

A reimbursement amendment must state the relative changes to the above.

An issuing bank should not require a sight draft to be drawn on the reimbursing bank.

  1. Any requirement for:
  2. pre-notification of a reimbursement claim to the issuing bank must be

included in the credit and not in the reimbursement authorization;

  1. pre-debit notification to the issuing bank must be indicated in the credit.
  2. If the reimbursing bank is not prepared to act for any reason whatsoever

under the reimbursement authorization or reimbursement amendment, it

must so inform the issuing bank without delay.

  1. In addition to the provisions of Articles 3 and 4, the reimbursing bank is not responsible for the consequences resulting from non-reimbursement or delay in reimbursement of reimbursement claims when any provision contained in this article is not followed by the issuing bank or claiming Bank.

Article 7.

Expiry of a Reimbursement Authorization

Except to the extent expressly agreed to by the reimbursing bank, the reimbursement authorization should not be subject to an expiry date or latest date for presentation of a claim, except as indicated in Article 9.

A reimbursing bank will assume no responsibility for the expiry date of a credit and, if such date is provided in the reimbursement authorization, it will be disregarded.

The issuing bank must cancel its reimbursement authorization for any unutilized portion of the credit to which it refers, informing the reimbursing bank without delay.

Article 8.

Amendment or Cancellation of Reimbursement Authorization

Except where the issuing bank has authorized or requested the reimbursing bank to issue a reimbursement undertaking as provided in Article 9 and the reimbursing bank has issued a reimbursement undertaking:

  1. the issuing bank may issue a reimbursement amendment or cancel a

reimbursement authorization at any time upon sending notice to that effect to the reimbursing bank.

  1. the Issuing bank must send notice of any amendment to a reimbursement authorization that has an effect on the reimbursement instructions contained in the credit to the nominated bank or, in the case of a a credit available with any bank, the advising bank. In case of cancellation of the reimbursement authorization prior to expiry of the credit, the issuing bank must provide the nominated bank or the advising bank with new reimbursement instructions.
  2. The issuing bank must reimburse the reimbursing bank for any reimbursement claims honoured or draft accepted by the reimbursing bank prior to the receipt by it of a notice of cancellation or reimbursement amendment.

Article 9.

Reimbursement Undertaking

  1. In addition to the requirements of sub Articles 6 (a), (b) and (c) of these

rules, a reimbursement authorization authorizing or requesting the issuance of a reimbursement undertaking must comply with the provisions of this article.

  1. An authorization or request by the issuing bank to the reimbursing bank to issue a reimbursement undertaking is irrevocable (“Irrevocable

reimbursement authorization”) and must (in addition to the requirement of

Article 1 for incorporation of reference to these rules) contain the following:

  1. credit number;
  2. currency and amount;

iii. additional amounts payable and tolerance, if any;

  1. full name and address of the claiming bank to which the reimbursement undertaking should be issued;
  2. latest date for presentation of a claim, including any usance period;
  3. parties responsible for charges (claiming bank’s and reimbursing bank’s charges and reimbursement undertaking fee) in accordance with Article 16 of these rules.
  4. If the Reimbursing bank is requested to accept and pay a time draft, the irrevocable reimbursement authorization must also indicate the following, in addition to the information contained in (b) above:
  5. tenor of draft to be drawn;
  6. drawer;

iii. party responsible for acceptance and discount charges, if any.

An issuing bank should not require a sight draft to be drawn on the

reimbursing bank.

  1. If the reimbursing bank is authorized or requested by the issuing bank to

issue its reimbursement undertaking to the claiming bank but is not prepared to do so, it must so inform the issuing bank without delay.

  1. A reimbursement undertaking must indicate the terms and conditions of

the undertaking and:

  1. the credit number and name if the issuing bank;
  2. the currency and amount of the reimbursement authorization,

iii. additional amounts payable and tolerance, if any;

  1. the currency and amount of the reimbursement undertaking;
  2. the latest date for presentation of a claim, including any usance period;
  3. the party to pay the reimbursement undertaking fee, if other than the issuing bank. The reimbursing bank must also include its charges, if any, that will be deducted from the amount claimed.
  4. If the latest date for presentation of a claim falls on a day on which the reimbursing bank is closed for reasons other than those referred to in Article 15, the latest date for presentation of a claim shall be extended to the first following banking day.
  5. A reimbursing bank is irrevocably bound to honour a reimbursement claim as of the time it issues the reimbursement undertaking.
  6. i. An irrevocable reimbursement authorization cannot be amended or cancelled without the agreement of the reimbursing bank.
  7. When an issuing bank has amended its irrevocable reimbursement authorization, a reimbursing bank that has issued its reimbursement undertaking may amend its undertaking to reflect such amendment. If a reimbursing bank chooses not to issue its reimbursement undertaking amendment, it must so inform the issuing bank without delay.

iii. An issuing bank that has issued its irrevocable reimbursement authorization amendment shall be irrevocably bound as of the time of its advice of the irrevocable reimbursement authorization amendment.

  1. The terms of the original irrevocable reimbursement authorization (or an authorization incorporating previously accepted irrevocable reimbursement authorization amendments) will remain in force for the reimbursing bank until it communicates its acceptance of the amendment to the issuing bank. v. A reimbursing bank must communicate its acceptance or rejection of an irrevocable reimbursement authorization amendment to the issuing bank. A reimbursing bank is not required to accept or reject an irrevocable reimbursement authorization amendment until it has received acceptance or rejection from the claiming bank to its reimbursement undertaking amendment.
  2. i. A reimbursement undertaking cannot be amended or cancelled without the agreement of the claiming bank.
  3. A reimbursing bank is irrevocably bound as of the time it issues the reimbursement undertaking amendment.

iii. The terms of the original reimbursement undertaking (or a reimbursement undertaking incorporating previously accepted  reimbursement amendments) will remain in force for the claiming bank until it communicates its acceptance of the reimbursement undertaking amendment to the reimbursing bank.

  1. A claiming bank must communicate its acceptance or rejection of a reimbursement undertaking amendment to the reimbursing bank.

Article 10.

Standards for a Reimbursement Claim

  1. The claiming bank’s claim for reimbursement:
  2. must be in the form of a teletransmission, unless specifically prohibited by the reimbursement authorization, or an original letter. A reimbursing bank has the right to request that a reimbursement claim be authenticated and, in such case, the reimbursing bank shall not be liable for any consequences resulting from any delay incurred. If a reimbursement claim is made by teletransmission, no mail confirmation is to be sent. In the event such a mail confirmation is sent, the claiming bank will be responsible for any consequences that may arise from a duplicate reimbursement;
  3. must clearly indicate the credit number and the issuing bank (and reimbursing bank’s reference number, if known);

iii. must separately stipulate the principal amount claimed, any additional amount due and charges;iv. must not be a copy of the claiming bank’s advice of payment, deferred payment, acceptance or negotiation to the issuing bank;

  1. must not include multiple reimbursement claims under one teletransmission or letter;
  2. must, in the case of a reimbursement undertaking, comply with the terms and conditions of the reimbursement undertaking.
  3. When a time draft is to be drawn on the reimbursing bank, the claiming bank must forward the draft with the reimbursement claim to the reimbursing bank for processing, and include the following in its claim:
  4. general description of the goods, services or performance;
  5. country of origin;

iii. place of destination or performance;

and if the transaction covers the shipment of merchandise,

  1. date of shipment;
  2. place of shipment.
  3. A reimbursing bank assumes no liability or responsibility for any consequences that may arise out of any non-acceptance or delay of processing should the claiming bank fail to follow the provisions of this article.

Article 11

Processing a Reimbursement Claim

  1. i. A reimbursing bank shall have a maximum of three banking days following the day of receipt of the reimbursement claim to process the claim. A reimbursement claim received outside banking hours will be deemed to be received on the next following banking day. If a pre-debit notification is required by the issuing bank, this pre-debit notification period shall be in addition to the processing period mentioned above.
  2. If the reimbursing bank determines not to reimburse, either because of a non-conforming claim under a reimbursement undertaking or for any reason whatsoever under a reimbursement authorization, it shall give notice to that effect by telecommunication or, if that is not possible, by other expeditious means, no later than the close of the third banking day following the day of receipt of the claim (plus any additional period mentioned in sub-Article (i) above). Such notice shall be sent to the claiming bank and the issuing bank and, in the case of a reimbursement undertaking, it must state the reasons for non-payment of the claim.
  3. A reimbursing banks will not process a request for back value (value dating prior to the date of a reimbursement claim) from the claiming bank.
  4. When a reimbursing bank has not issued a reimbursement undertaking and a reimbursement is due on a future date:
  5. the reimbursement claim must specify the predetermined reimbursement date;
  6. the reimbursement claim should not be presented to the reimbursing bank more than ten banking days prior to such predetermined date. If a reimbursement claim is presented more than ten banking days prior to the predetermined date, the reimbursing bank may disregard the reimbursement claim. If the reimbursing bank disregards the reimbursement claim, it must so inform the claiming bank by teletransmission or other expeditious means without delay.

iii. If the predetermined reimbursement date is more than three banking days following the day of receipt of the reimbursement claim, the reimbursing bank has no obligation to provide notice of non-reimbursement until such predetermined date, or no later than the close of the third banking  day following the receipt of the reimbursement claim plus any additional period mentioned in (a) (i) above, whichever is later.

  1. Unless otherwise expressly agreed to by the reimbursing bank and the claiming bank, a reimbursing bank will effect reimbursement under areimbursement claim only to the claiming bank.
  2. A reimbursing bank assumes no liability or responsibility if it honours a reimbursement claim indicating that a payment, acceptance or negotiation was made under reserve or against an indemnity, and shall disregard such indication.

Article 12

Duplications of a Reimbursement Authorization

An issuing bank must not, upon receipt of documents, give a new reimbursement authorization or additional instructions unless they constitute an amendment to, or a cancellation of, an existing reimbursement authorization. If the issuing bank does not comply with the above and a duplicate reimbursement is made, it is the responsibility of the issuing bank to obtain the return of the amount of the duplicate reimbursement. The reimbursing bank assumes no liability or responsibility for any consequences that may arise from any such duplication.

D. MISCELLANEOUS PROVISIONS

Article 13

Foreign Laws and Usages

The issuing bank shall be bound by and liable to indemnify the reimbursing bank against all obligations and responsibilities imposed by foreign laws and usages.

Article 14

Disclaimer on the Transmission of Messages

A reimbursing bank assumes no liability or responsibility for the consequences arising out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages, delivery of letters or documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the credit, reimbursement authorization or reimbursement claim, or when the bank may have taken  the initiative in the choice of the delivery service in the absence of such instructions in the credit, reimbursement authorization or reimbursement claim. A reimbursing bank assumes no liability or responsibility for errors in translation or interpretation of technical terms.

Article 15

Force Majeure

A reimbursing bank assumes no liability or responsibility for the

consequences arising out of the interruption of its business by Acts of God,

riots, civil commotions, insurrections, wars, acts of terrorism or by any strikes or lockouts or any other causes beyond its control.

Article 16

Charges

  1. A reimbursing bank’s charges are for the account of the issuing bank.
  2. When honouring a reimbursement claim, a reimbursing bank is obligated to follow the instructions regarding any charges contained in the reimbursement authorization.
  3. If a reimbursement authorization states that the reimbursing bank’s charges are for the account of the beneficiary, they shall be deducted from the amount due to a claiming bank when reimbursement is made. Where a reimbursing bank follows the instructions of the issuing bank regarding charges (including commissions, fees, costs or expenses) and these charges are not paid, or a reimbursement claim is never presented to the reimbursing bank under the reimbursement authorization, the issuing bank remains liable for such charges.
  4. All charges paid by the reimbursing bank will be in addition to the amount of the authorization, provided that the claiming bank indicates the amount of such charges.
  5. If the issuing bank fails to provide the reimbursing bank with instructions regarding charges, all charges shall be for the account of the Issuing bank.

Article 17

Interest Claims/Loss of Value

Any claim for loss of interest, loss of value due to any exchange rate fluctuations, revaluations or devaluations are between the claiming bank and the issuing bank, unless such losses result from the non-performance of the reimbursing bank under a reimbursement undertaking.

3.3.5.   Uniform Rules for Collection ICC Publications No. 522:

Collection means the handling of documents by the Bank in order to obtain payment acceptance/payment. URC the ICC Publication No.522 revised 1995 was first published in 1956, the rules which is now in force almost through out the world. There are 26 Articles in URC-522 classified in 5 chapters. We find several parties relating to collection as Principal, Reimbursing Bank, Collecting bank, Presenting Bank, Drawee etc. Collection may be clean or documentary which is related to L/C.

3.3.6: INCOTERMS – 2010

The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules, reducing the 13 used in Incoterms 2000 by introducing two new rules (“Delivered at Terminal”, DAT; “Delivered at Place”, DAP) that replace four rules of the prior version (“Delivered at Frontier”, DAF; “Delivered Ex Ship”, DES; “Delivered Ex Quay”, DEQ; “Delivered Duty Unpaid”, DDU). In the prior version, the rules were divided into four categories, but the 11 pre-defined terms of Incoterms 2010 are subdivided into two categories based only on method of delivery. The larger group of seven rules applies regardless of the method of transport, with the smaller group of four being applicable only to sales that solely involve transportation over water.

RULES FOR SEA AND INLAND WATERWAY TRANSPORT

  • FAS – Free Alongside Ship
  • FOB – Free On Board
  • CFR – Cost And Freight
  • CIF – Cost, Insurance and Freight

1. FAS – Free Alongside Ship (named port of shipment)

The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. Suitable only for maritime transport but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This term is typically used for heavy-lift or bulk cargo.

2. FOB – Free on Board (named port of shipment)

The seller must load the goods on board the vessel nominated by the buyer. Cost and risk are divided when the goods are actually on board of the vessel (this rule is new!). The seller must clear the goods for export. The term is applicable for maritime and inland waterway transport only but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. This term has been greatly misused over the last three decades ever since Incoterms 1980 explained that FCA should be used for container shipments.

3. CFR – Cost and Freight (named port of destination)

The seller clears the goods for export and delivers them when they are onboard the vessel at the port of shipment. Seller bears the cost of freight to the named port of destination. Buyer assumes all risks for goods from the time goods have been delivered on board the vessel at the port of shipment.Maritime transport only and Insurance for the goods is NOT included. This term is formerly known as CNF (C&F).

4. CIF – Cost, Insurance and Freight (named port of destination)

The seller clears the goods for export and delivers them when they are onboard the vessel at the port of shipment. Seller bears the cost of freight and insurance to the named port of destination. Seller’s insurance requirement is only for minimum cover. Buyer is responsible for all costs associated with unloading the goods at the named port of destination and clearing goods for import. Risk passes from seller to buyer once the goods are onboard the vessel at the port of shipment.

RULES FOR ANY MODE OR MODES OF TRANSPORT

  • EXW – Ex Works
  • FCA – Free Carrier
  • CPT – Carriage Paid To
  • CIP – Carriage And Insurance Paid To
  • DAT – Delivered At Terminal
  • DAP – Delivered At Place
  • DDP – Delivered Duty Paid

Rules for Any Mode(s) of Transport

The seven rules defined by Incoterms 2010 for any mode(s) of transportation are:

1. EXW – Ex Works (named place of delivery)

The seller makes the goods available at its premises. This term places the maximum obligation on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included. EXW means that a seller has the goods ready for collection at his premises (works, factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination. The seller doesn’t load the goods on collecting vehicles and doesn’t clear them for export. If the seller does load the good, he does so at buyer’s risk and cost. If parties wish seller to be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of sale.

2. FCA – Free Carrier (named place of delivery)

The seller delivers the goods export cleared to the carrier stipulated by the buyer or another party authorized to pick up goods at the seller’s premises or another named place. Buyer assumes all risks and costs associated with delivery of goods to final destination including transportation after delivery to carrier and any customs fees to import the product into a foreign country.

3. CPT – Carriage Paid To (named place of destination)

The seller clears the goods for export and delivers them to the carrier or another person stipulated by the seller at a named place of shipment. Seller is responsible for the transportation costs associated with delivering goods to the named place of destination but is not responsible for procuring insurance.

4. CIP – Carriage and Insurance Paid to (named place of destination)

The containerized transport/multimodal equivalent of CIF. The seller clears the goods for export and delivers them to the carrier or another person stipulated by the seller at a named place of shipment. Seller is responsible for the transportation costs associated with delivering goods and procuring minimum insurance coverage to the named place of destination.

5. DAT – Delivered at Terminal (named terminal at port or place of destination)

The seller clears the goods for export and bears all risks and costs associated with delivering the goods and unloading them at the terminal at the named port or place of destination. Buyer is responsible for all costs and risks from this point forward including clearing the goods for import at the named country of destination.

6. DAP – Delivered at Place (named place of destination)

The seller clears the goods for export and bears all risks and costs associated with delivering the goods to the named place of destination not unloaded. Buyer is responsible for all costs and risks associated with unloading the goods and clearing customs to import the goods into the named country of destination.

7. DDP – Delivered Duty Paid (named place of destination)

Seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. This term places the maximum obligations on the seller and minimum obligations on the buyer.

3.3.7: International Standard Banking Practice (ISBP)

ISBP-International Standard Banking Practice.

The ISBP is a checklist of best practices worldwide for checking documents under the UCP, ICC’s universally used rules on letters of credit.

Because the UCP rules are general in nature, it was necessary to define in greater detail the term “international standard banking practice”, first found in UCP 500 sub-article 13 (a), the previous version of the UCP.

ISBP 681

The ISBP, which was revised in 2007 as ISBP 681, is credited with dramatically reducing the number of discrepancies between banks dealing with documentary credits. The ISBP addresses a range of subjects, for example, typing errors, mathematical calculations, drafts and how they are drawn, description of the goods in invoices and signing of bills of lading, among others.

In light of comments from users, the banking commission has decided to both update and expand the current ISBP to take in a range of new topics ‒ such as transfer, amendments, etc., that are not covered in ISBP 681. The new revision will relate to ICC’s latest revision of the UCP, UCP 600.

Anti-Money Laundering (AML)

This Working group composed of more than 60 high-level experts in the AML field provides a business viewpoint on anti-money laundering regulatory initiatives.

Money laundering

In October 2007, the Financial Action Task Force (FATF), formally invited ICC to provide feedback on a recently issued FATF guidance paper relating to roliferation financing and activity-based financial prohibitions pursuant to the United Nations Security Council Resolution (UNSC) 1737.

Consequently, a Task Force on Anti Money Laundering was created under the chairmanship of Neil Chantry, Global Head of Policy, Trade and Supply Chain, HSBC. The task force comprises 60 members, including representatives of ICC Commercial Crime Services in London.

A paper was produced and delivered to the FATF in response to their request for comments on the review of the 40+ 9 recommendations and ICC was invited to the subsequent public consultation forums, after which more responses to the FATF review processes were made, culminating in attendance at the Consultation forum in Milan, November 2011 and the Forum in Paris in April 2012 where the rationale behind the new 40 Recommendations was discussed.

The ICC delegation has raised some issues that still affect the trade finance business and is now entering into dialogue with the FATF secretariat to determine whether the related guidance notes can be modified to address these concerns.

Guidelines on sanctions clauses

The TF also produced guidelines on sanction clauses in trade related products, including letters of credit, documentary collections and guarantees, to draw the attention of the trade finance community to the use and negative impact of sanction clauses on certain trade instruments.

With these guidelines, ICC’s primary intention is to make practitioners aware of the need to be careful in their choice of counterparties or service suppliers and to emphasize that it is their responsibility to ensure that they do nothing that brings into question the irrevocable nature of the credit or guarantee, the certainty of payment, or the intent to honour obligations.

Discussion forum for trade and compliance professionals

The TF continues to act as a key review and discussion forum for trade and compliance professionals looking at the impact on trade and the mitigants that could be utilized to comply with regulation and still keep trade credit flowing and as a platform for educating practitioners about the relationship between sanctions and the ICC Rules.

Counter Terrorist Financing / Financial Crimes Group (“CTF/FC Group”)

Stemming from the AML Task Force, the BC also created the Counter Terrorist Financing and Financial Crimes Group to handle new mandates in the area of AML, financial crimes and proliferation financing.

This group’s responsibilities and work plan include:

Draft responses to the FATF Review of Standards/ calls for comment, a role taken on due to the response time frame requirements of the public consultation rounds. Guidance to ICC Members on KYC standards, especially relating to Correspondent banks.

Draft a paper on the problems relating to the falsification of information on Bills of Landing to beat sanctions, either relating to vessel names etc and final destinations Provide inputs to Anti-Corruption issues (in consequence of the UK Corruption Act 2010

Enhance collaboration with the Wolfsberg Group & FATF to ensure consistent industry positioning on these important matters.

3.3.8: Authorized Dealer:

As per section of foreign Exchange Regulation ACT.1947 means a person for the time being authorised under section 3 to deal in foreign exchange. In other words Authorized   Dealer means a Bank authorized by Bangladesh Bank to deal in Foreign Exchange under the FERAct.1947.

3.3.9: License of Authorized Dealer:

To get the authorized dealership, a Bank will apply to the General Manager, Foreign Exchange Policy Department, Bangladesh Bank, Head Office, Dhaka complying the following Conditions:

  1. The Bank must have adequate manpower trained in Foreign Exchange.
  2. Prospect to attract reasonable volume of Foreign Exchange business in the desired location.
  3. The Bank meticulously complies with the instruction Bangladesh Bank.
  4. The Bank will commit to deal with Foreign Exchange with in the limit and will submit periodical returns as instructed by Bangladesh Bank.

3.3.10: Function of Authorized Dealer:

Authorized dealer can handle all kinds of Foreign Exchange transaction as per FER Act.1947 under the instruction of Bangladesh Bank. Following are the main function of Authorized Dealer:

  1. Exchange of foreign currencies.
  2. to make arrangement with Foreign Correspondent.
  3. Handling of Inward and Outward Remittance
  4. Import and Export
  5. Investment in Foreign Trade
  6. Opening & maintenance with Foreign Bank under intimation to Bangladesh Bank.

At present Social Islami Bank Limited has 113 Branches. Among those 13 Branches are Authorized Dealer Branch. As a Authorized dealer, bank can operate all kind of Exchange Business. The main transaction can be divided under three categories:

  1. Import
  2. Export &
  3. Remittance.

3.3.11: Foreign Exchange Market:

The foreign exchange market is a market where conversions take place. In our country Inter Bank Foreign Currency/Exchange Market operated through electronic media using Dealing Room of Bank/Financial Institution for buying and selling of foreign currency among banks and other financial institutions at floating rate based on market demand and supply. Only authorized dealers deal directly with each other in foreign exchange markets that are licensed to operate in the foreign market by the Bangladesh Bank. Authorized dealers who are generally commercial bank on behalf of their customer handle all the foreign transactions.

3.3.12: Types of Foreign Exchange Market:

There are three types of foreign exchange market existed in our country-

Spot Market – Where exchange of one currency with another takes place on the spot.

Forward Market – Where actual delivery of the currency will happen at a future

Option Market – Wherein a contract is made specifying the right to buy or sell a standard amount of foreign currency within a specific date at a certain price.

 

3.3.13: Term Used in Foreign Exchange Market Operation:

Usually three terms used in our foreign exchange market operation. These are-

Arbitrage – Spot purchase of FC where the price is low and to sell where the price is high i.e. Buy low and Sell high. Currency Arbitrage due to price difference in two financial centers.

SWAP – Purchasing FC on the spot for selling  forward or selling spot for purchasing forward. Due to difference in interest rate of the concerned currencies.

Hedging – to avoid exchange risk, agreement is made today to buy or sell FC to be delivered at some future date at a rate agreed upon to day.

3.3.14: Trade Transaction

Mainly trade transaction is of two types. One is local trade transaction, which made with in a country and another is foreign or International trade transaction, which happened between two countries.

International Trade again can be classified into two categories. One is export and anther is import.

 

3.3.15: METHOD OF FOREIGN TRADE PAYMENT

In International trade, a number of modes of payment being used for receiving trade proceed. These are: cash in advance, open account, documentary collection and documentary credit. Among these, documentary credit has been observed to be mostly in our country. The procedures and pros and cons o f cash of the payment methods have been discussed in the sections that follow.

  1. Cash in Advance:

In this method of payment, the buyer places the funds at the disposal of seller or to shipment of goods in accordance with the sales/purchase contract. This may be acceptable to a first time buyer who trusts seller to deliver the goods. Since this method of payment is expensive and contains a lot of risks on the part of buyer; they may not be willing to accept such terms of payment. Thus it is rarely used in Bangladesh.

  1. Open Account System:

This is an arrangement between the buyer and seller whereby the goods are manufactured and delivered before payment is required. Under this arrangement seller can avoid a lot of banking charges and other costs. But he has no security that he will be receiving payment in due course. For this reason, the exporter may not be willing to accept this sort of mode of payment. This system is also uncommon in Bangladesh.

  1. Documentary Collection:

This is an arrangement where by the goods are shipped and the seller draws a draft or bill of exchange on the buyer and documents are sent through the seller’s bank with clear instructions for collection through one of its correspondent banks. In this method, the exporter will hand over the shipping documents to his bank and ask it to forward the documents to the buyer’s bank. This is called cash against documents. The exporter can also give the buyer trade credit by drawing a bill of exchange on him and requiring him to accept the bill when he collects the  documents. This is called documentary collection against acceptance.

Though documentary collection is inexpensive and simple to arrange, exporter is required to ship the goods without an unconditional guarantee or promise of  payment by the buyer. However as compare to cash in advance and open account, documentary collection is much more common means of payment.

  1. Documentary Credits

This is the mostly frequently use method of payment in International trade. Under this arrangement the buyer’s bank issues letter of credit (L/C), which will be discussed in the next section in details. Though this is the most costly but it is often considered the most secure buyer is assured that the seller will be paid only when the documents representing goods have been delivered. On the other hand, the seller is assured that the buyer will receive the documents for ultimate of goods only when payment has been made.

3.3.16: BANK’S INVOLVEMENT IN FOREIGN TRADE

Banks play a vital role by minimizing the risk of two parties, namely buyer and seller. In fact, without the help of banks we cannot think about a congenial international trade environment.

Now the question comes how banks help international trade. We know that in a local trade there is a chance to know about each other. But in international trade, the involved parties stay two distant places.

For a buyer the following risks are involved-

  • Risk of non-delivery of goods
  • Risk of receiving sub standard goods
  • Risk of fraud in goods

For the seller the following risk is involved-

  • Risk of non-payment

To reduce the aforesaid risks an independent system is introduced which is letter of credit (L/C) that provides a safeguard to the buyers as well as to the seller in an international trade. Actually, banks play a key role in L/C operation to getting into two parties and bind them.

 

3.3.17: LETTER OF CREDIT OPERATION

In simple word, a letter of credit is a conditional undertaking given by a bank. In board sense, A letter of credit is a written assurance of Bank, issued on the instruction of the applicant to the beneficiary, to pay specific amount on agreed currency, provided beneficiary submits the documents in conformity with the terms and conditions of the credit within the prescribe deadlines.

However, Uniform Customs and Practice for Documentary Credit (UCPDC) Revision, Publication No. 600 defines in its Article No.2 that documentary credit mean any arrangement whereby a bank (issuing bank) acting at the request and on the instructions of a customer (the applicant) or on its own behalf

  • Is to make payment to or the order of a third party (the beneficiary) or is to accept and pay bills of exchange (drafts) drawn by the beneficiary or
  • Authorizes another bank to effect such payment, or to accept and pay such bills of exchange (Drafts)
  • Authorizes another bank to negotiate, against stipulated documents provided that the terms and conditions are complied with.

3.3.18:  Type of LETTER OF CREDIT

As per rules of UCPDC-600 (Article-6) a documentary credit may be either

  • Revocable L/C
  • Irrevocable L/C
  • Revocable L/C which can be amended or cancelled by the issuing bank at any time without prior notification to the seller.
  • Irrevocable L/C, which cannot be amended or cancelled without the agreement of both parties.

Besides these there are several special types of  L/Cs as under-

  • Confirmed L/C – which confirmed by another bank in addition to that of issuing bank.
  • Transferable L/C – which can be transferable by the original beneficiary to one or more subsequent beneficiaries.
  • Back-to-Back L/C – which is opened against lien on valid exports L/C to import only raw materials.
  • Restricted L/C- which cannot be negotiated in any bank rather than a specified bank mentioned in the L/C
  • Red Clause L/C- which authorizes the negotiating bank to provide pre-shipment advance to the beneficiary, typed in red ink.
  • Green Clause L/C- which authorizes negotiating bank to grant advance to the beneficiary for storage facility at the part is addition to pre-shipment advance.
  • Revolving L/C, which provides for restoring the credit to the original amount after it has been utilized.

 

3.3.19:  Parties involved in Letter of Credit

There are number of parties involved in a L/C. The involved parties to a L/C are as under:

  • Importer/Applicant-Buyer who applies for opening an L/C
  • Exporter/Beneficiary-Seller in whose favor L/C is issued
  • Issuing Bank-It is the bank which opens/issues a L/C on behalf of the importer.
  • Confirming Bank- It is the bank which adds its confirmation to the credit at the request of issuing bank.
  • Advising Bank/Notifying Bank-It is the bank through which L/c is advised to the beneficiary.
  • Negotiating Bank-It is the bank, which negotiates bill and purchase bill from exporter.
  • Paying/Accepting Bank-It is the bank on which bill is drawn as per condition of L/C and who confirm the maturity period.
  • Reimbursing Bank- It is the bank which reimburses the negotiating bank after getting payment instructions from issuing bank

 

Flow Chart of L/C Operational Mechanism

Diagram- 1.1: Flow Chart of L/C Mechanism

 

3.3.20:  Documents involved in Letter of Credit

Commonly known L/C is actually “Documentary Letter of Credit”. From the very name of the credit, it is implied that the credit is extended against documents. The issuing bank stipulated a list of documents, which are to be submitted to the negotiating bank for negotiation (or to the issuing/accepting bank for acceptance)

As per UCPDC 600, there are four types of documents involved in documentary letter of credit, which are as follows:

  • Transport Documents
  • Insurance Documents
  • Commercial Invoice
  • Other documents

All the above-mentioned documents are collectively known as Shipping Documents

 

Transport Documents

Transport documents are the documents of title of goods that means it acts as the evidence of contract for the carriage or transportation of the goods between the shipper and the carrier such as Marine/Ocean Bill of Lading, Air way Bill, Truck receipt and so on.

 

BILL OF LADING / TRANSPORT DOCUMENTS

Typess of  Bill of Landing :

  1. Clean B/L- Goods have been loaded on board/ shipped on a named vessel Transhipment is no allowed in this case.
  2. Combined -Transport B/L Carriage of goods more than one mode of transport. Transhipment is normally allowed in this case.
  3. Stale B/L – It has been held too long before it is passed on a bank or to consignee
  4. Short Form B/L-In which the detailed conditions of transportation are not listed in full.
  5. Through B/L – Covering goods being transhipped inter route. This covers several mode of transport.
  6. Straight B/L – It is issued to the name of certain party that cannot be transferred through endorsement.
  7. Charter party B/L – It is not liner vessel & covers the whole voyages in his own direction & own risk.
  8. Port / Custody B/L – It is issued by port officer / warehouse supervisor stating that goods have been received for shipment.
  9. Clause B /L – Which expressly declares a defective condition
  10. On-Deck B/L – It states that goods are/will be loaded & carried on deck.

 

Insurance Documents:

International trade is very much risk hidden. So it is necessary to insure the goods against the risk of loss or damage. The documents in which insurance is embodied is called insurance cover note.

  1. Commercial Invoice:

Another important document of documentary credit operation is the invoice or commercial invoice. It is also called the seller’s bill for merchandise. Usually a commercial invoice is signed by the exporter/seller and submitted in a number of sets as desired by the importer/buyer.

INVOICE ( SELLER`S BILL )

The invoice is the list of articles containing their particulars and prices. It is also bookkeeping instruments for the importer.

  1. The description of the good / Merchandise in invoice should correspond with to that given in the L/C.
  2. The invoice should be signed by the beneficiary or by the assignee and it should be prepared strictly as per credit terms and condition of L/C be incorporated in the LC.
  • The amount of invoice should be expressed in the currency of the L/C.
  1. The invoice should specify quantity clearly and the word like approximately, about, nearly be avoided.
  2. The invoice should contain brief reference to transport documents and disclose basis of pricing (FOB, CFR, CIF etc.).
  3. The invoice docs not include extra ordinary expense such as cable, storage, commission etc. unless specified in the credit.
  • The relevant LCAF number, Bangladesh Bank registration number, etc. are correctly incorporated in the invoice.

Type of  Invoice :

  1. Commercial Invoice : There is no standard form of invoice. Each exporter designs commercial invoice form in his own way. A commercial invoice is required to be duly signed by the exporter.
  2. Consular Invoice: It is made out on a prescribed format certified by consular office of the importing country stationed in the exporting country. It is also called legalized invoice.
  3. Custom Invoice : These are specific form supplied by the customs office of the respective importer duly filled & signed by the shipper & serve the purpose of making easy entry of the merchandise into the importing country.
  4. Certified Invoice: It is an invoice bearing a signed statement by someone in the importers country who have inspected the goods & found them in accordance with those specified in the contract.
  5. Pro forma Invoice: It is a form of quotation to a potential buyer.

 

Other Documents:

Other documents indicate the documents required in documentary credit operation other than the transport documents, insurance documents and invoice. These are may be of different types and natures depending on the objectives conditions of the credit. As per UCPDC, the other documents, which are to be accompanied with the credit, must be stipulated in the credit and they must be consistent with each other. Some common other documents are mentioned below-

  • Packing list
  • Weight list
  • Certificate of origin
  • Inspection certification
  • Beneficiary’s certificate
  • Certificate of analysis
  • Shipping agent’s certificate

L/C- Shariah Issues:

  • SIBL opens L/C / back to Back L/C against the letter of authority obtained from the importer/exporter to utilize his/their license/authority for the import ad undertake to purchase the goods so imported/purchased by the bank for ultimate manufacturing export of the products by the buyer (exporter) immediately.
  • After the bank shall sell opening the L/C the consignment to the client under Bai-Murabaha/Bai-Muazzal mode of investment for a period on execution of necessary charge, documents including Bai-Murabaha/Bai-Muazzal import agreement and Trust Receipt (T/R), mortgage documents and others.
  • It may further be mentioned that since above the client shall be the owner of the consignment by way of execution of Bai-Murabaha agreement/Bai-Muazzal (import) agreement may sell the goods/products procured/manufactured with the imported goods as owned by him/them to the bank.
  • The seller sells certain specific goods permissible under Islamic Shariah and the law of the land.
  • The price once fixed as per agreement and deferred can’t be further increased
  • Therefore it will not be buy back and shall not impede Shariah Principles in any way.

Table of Contents

General Concept About Foreign Exchange Operation.

3.1:  CONCEPT OF FOREIGN EXCHANGE:

3.2: Local Regulations for Foreign Exchange:

3.2.1.        Foreign Exchange Regulation Act :

3.2.2.        Guidelines for Foreign Exchange Transactions:

3.2.3.        Foreign Exchange Circular :

3.2.4.        Export Import Policy :

3.2.5.        Public Notice:

3.2.6.        Instruction from different Ministry:

3.2.7.        Shariah Principles:

3.3        International Regulations for Foreign Exchange:

3.3.1.        World Trade Organization (WTO):

3.3.2.        International Chamber of Commerce (ICC):

3.3.3.        UCPDC 600:

3.3.4.        Uniform Rules for Reimbursement ICC Publications No. 725:

URR 725.

URR 725 is the acronym of  Uniform Rules for Bank-to-Bank Reimbursements.

  1. GENERAL PROVISIONS AND DEFINITIONS.

Article 1.

URR 725 Article 2. Definitions.

URR 725 Article 3.

Reimbursement Authorizations Versus Credits.

  1. LIABILITIES AND RESPONSIBILITIES.

Article 4.

Honour of a Reimbursement Claim..

Article 5.

Responsibility of the Issuing bank.

  1. FORM AND NOTIFICATION OF AUTHORISATIONS, AMENDMENTS AND CLAIMS.

Article 6.

  1. An issuing bank must not send to a reimbursing bank:

Article 1 for incorporation of reference to these rules) state the following:

Article 7.

Expiry of a Reimbursement Authorization.

Article 8.

Amendment or Cancellation of Reimbursement Authorization.

Article 9.

Reimbursement Undertaking.

Article 10.

Standards for a Reimbursement Claim..

Article 11.

Processing a Reimbursement Claim..

Article 12.

Duplications of a Reimbursement Authorization.

  1. MISCELLANEOUS PROVISIONS.

Article 13.

Foreign Laws and Usages.

Article 14.

Disclaimer on the Transmission of Messages.

Article 15.

Force Majeure.

Article 16.

Charges.

Article 17.

Interest Claims/Loss of Value.

3.3.5.        Uniform Rules for Collection ICC Publications No. 522:

3.3.6: INCOTERMS – 2010.

RULES FOR SEA AND INLAND WATERWAY TRANSPORT..

  1. FAS – Free Alongside Ship (named port of shipment).
  2. FOB – Free on Board (named port of shipment).
  3. CFR – Cost and Freight (named port of destination).
  4. CIF – Cost, Insurance and Freight (named port of destination).

RULES FOR ANY MODE OR MODES OF TRANSPORT..

  1. EXW – Ex Works (named place of delivery).
  2. FCA – Free Carrier (named place of delivery).
  3. CPT – Carriage Paid To (named place of destination).
  4. CIP – Carriage and Insurance Paid to (named place of destination).
  5. DAT – Delivered at Terminal (named terminal at port or place of destination).
  6. DAP – Delivered at Place (named place of destination).
  7. DDP – Delivered Duty Paid (named place of destination).

3.3.7: International Standard Banking Practice (ISBP).

ISBP-International Standard Banking Practice.

ISBP 681.

Anti-Money Laundering (AML).

Money laundering.

Guidelines on sanctions clauses.

3.3.8: Authorized Dealer:

3.3.9: License of Authorized Dealer:

3.3.10: Function of Authorized Dealer:

3.3.11: Foreign Exchange Market:

3.3.12: Types of Foreign Exchange Market:

3.3.13: Term Used in Foreign Exchange Market Operation:

3.3.14: Trade Transaction.

3.3.15: METHOD OF FOREIGN TRADE PAYMENT..

3.3.16: BANK’S INVOLVEMENT IN FOREIGN TRADE..

For a buyer the following risks are involved-.

3.3.17: LETTER OF CREDIT OPERATION..

3.3.18:  Type of LETTER OF CREDIT..

Besides these there are several special types of  L/Cs as under-.

3.3.19:  Parties involved in Letter of Credit

Flow Chart of L/C Operational Mechanism..

3.3.20:  Documents involved in Letter of Credit

Transport Documents.

BILL OF LADING / TRANSPORT DOCUMENTS.

Insurance Documents:

INVOICE ( SELLER`S BILL ).

Type of  Invoice :

Other Documents:

L/C- Shariah Issues:

General Concept About Foreign Exchange Operation

General Concept About Foreign Exchange Operation

General Concept About Foreign Exchange Operation

Leave a Comment