LCAF

Letter of Credit Authorisation Form(LCAF)

Letter of Credit Authorisation Form(LCAF)

LCAF

 Authentication/Registration Of LCAF:

When the importer submit LCAF (Letter of Credit Authorisation Form) with other papers to the bank to open L/C, Bank will Authenticate the LCAF, confirming the following:

  1. IRC is valid, renewal fee paid (if required)
  2. Item to be imported is eligible as per import policy/Pass Book.
  3. LCAF is duly filled in & signed by the importer.
  4. H.S. Code to be inserted into LCAF

 

Bank will endorse the value with particulars & equivalent Taka on the back of exchange control copy of LCAF.

Procedure for Registration:

  1. i)    a) The LCAF set of 6 copies duly filled in and signed by the importer is to be submitted to the Bank with a forwarding letter. The branch, on receipt, will carefully scrutinize the same in details, verify the signature of the importer, and furnish the required particulars and information certifying the entitlement as per current Import policy under their seal and dated signature. The LCAF is entered into the relevant register and submitted to the Area Registration Unit of Bangladesh Bank directly under cover of a forwarding schedule in duplicate for registration.
  2. b) The LCAFs are registered by the Bangladesh Bank Registration Unit subject to observance of usual bill. The officer-in-charge of the Bangladesh Bank Registration unit will give the Registration number on all the copies of LCAFs under his signature. Therefore, the same will be embossed with the security seal of the registration unit. No letter of credit will be opened unless an LCAF, which has been registered with the Bangladesh Bank, bears the impression of the security seal.
  3. c) After registration the original and duplicate copies of the LCAFs will be delivered to the authorized representatives of the banks from whom the same were received by the Registration Unit. Triplicate and quadruplicate copies of the form will be passed on to the concerned licensing office. Quintuplicate copy of the form will be retained in the record of the Registration Unit of the Bangladesh Bank.
  4. d) The customs copy is to be handed over by the branch to the importer, but Exchange Control copy is retained by the branch for further action at the time of opening L/C etc. the Exchange control copy of LCA form acts as the basis on which imports into Bangladesh is permitted, while the customs copy is required at the time of clearance of the goods from the customs on importation.
  5. ii)   a) In case of imports against barter/loan/aid etc. where registration of L.C. Authorisation forms will not be needed, the nominated bank of the importer will submit the form directly to the designated bank. The designated bank will countersign the form under their seal with date. The designated bank will retain the original and duplicate copies of the form and send triplicate and quadruplicate copies to the concerned licensing office and quintuplicate copy to the importer’s bank.
  6. b) The authorized Dealer branches will not issue blank L.C. Authorisation Forms to their clients.

The LCA forms are required to be properly filled in and duly signed by the importer in presence of concerned official of the branch. The branch is required to keep proper records of the stocks and issuance of each set of LCA form. For this purpose the following registers are to be properly maintained:

  1. i) LCA form Stock Register
  2. ii) LCA form Issuing Register

iii) LCA form Forwarding Register

 

LCAF..

Authentication/Registration Of LCAF:.

Procedure for Registration:.

Imports by Government Departments:.

Imports under Aid, Loan, Credit, barter etc.:.

Endorsement on LCA forms:.

Restriction of Using the Exchange Control copy of LCA form:.

Distribution of LCAF:.

Cancellation/Transfer of Endorsement on LCAF:.

Amount for which L/C can be opened or remittance effected:.

Remittance of Bank Charges:.

Import on F.O.B. Basis:.

Formalities for opening L/C & Amendment thereof :.

Checking of Text of (Telex/SWIFT) message of operative Telex/SWIFT L/C/T.T. etc:.

Amendment to L/C:.

Issuing Bank will pass the following voucher at the time of opening Cash L/C:.

 Imports by Government Departments:

Ministries and Government Departments may, however, import goods against specific allocation given to them by the Ministry of Finance subject to obtaining specific clearance from the Foreign Exchange Policy Department of Bangladesh Bank. No. L.C. Authorisation Form, import permit or clearance permit are required for their imports.

 

Imports under Aid, Loan, Credit, barter etc.:

For imports under External Economic Aid, Loan/Credit, Commodity Exchange no L.C. Authorisation Form is required to be got registered with Bangladesh Bank Registration Unit unless otherwise specifically mentioned by the Bangladesh Bank in the Foreign Exchange Circulars for any particular category/item of import, Imports under Secondary Exchange Market Scheme, necessitate prior registration of L.C. Authorisation forms with the Bangladesh Bank Registration Units if the fund is required to be bought from Bangladesh Bank.

 Endorsement on LCA forms:

  1. i)    At the time of opening of L/C against a LCA form, full particulars should be endorsed on the back of the Exchange Control copy of the relative LCA form under stamp and signature of the authorized official of the branch. The amount of Taka equivalent of the L/C amount should be shown after converting the F.C amount into taka at the ruling rate of exchange for ready delivery.
  2. ii)   Details of remittances made whether under L/C or otherwise, should also be endorsed on the Exchange Control copy of LCA forms together with the number of relative IMP form.


Restriction of Using the Exchange Control copy of LCA form:

  1. i)    The AD branch should in no case hand over the Exchange Control copy of LCA form to the Importer or their authorized agent. If such LCA is required by any other bank in connection with opening of L/C or making remittances against imports or by the CCI & E for extension, revalidation etc. the same should be forwarded to the Bank concerned or to the CCI & E directly by the branch.
  2. ii)   Before forwarding the LCA forms to other Authorised Dealers of Licensing Authorities,   Authorised Dealer branches should ensure that full particulars of all letters of Credit opened, and remittances made there-against are clearly endorsed on the back of the LCA forms and that the LCA forms will be resubmitted to them.

 

Distribution of LCAF:

Original                        Exchange Control copy

Duplicate                     Custom purpose copy

Triplicate                     CCI & E’s office

Quadruplicate             Statistical copy

Quintuplicate               Registration Unit of Bangladesh Bank

Last copy                    Office copy of the Bank

On obtaining full set of LCAF from issuing Bank, Bangladesh Bank will

 

  1. a)   Insert Registration Number
  2. b)   Emboss with Security seal &
  3. c)   Put authorized signature on the LCAF

 

LCAFs remain valid for remittance for 09 (Nine) months in case of commercial items and 17 (Seventeen) months in case of capital machineries & spares.

 

Cancellation/Transfer of Endorsement on LCAF:

  1. i)    Where a Letter of Credit opened against a valid LCA form is cancelled or expires partly or wholly unutilized or if the sale of foreign exchange against a valid LCA form is subsequently cancelled, the relative endorsement mode on the back of the Exchange control copy of the LCA form may be cancelled provided, appropriate remarks to that effect are made on the back of the LCA form under the stamp and signature of the Authorised officer.
  2. ii)   In case where an endorsement has been made on a wrong LCA form by mistake, the Authorised Dealer may cancel the endorsement provided the endorsement is transferred simultaneously to the appropriate valid LCA form. It is not permissible, however, to transfer endorsements from valid LCA form to LCA forms, which have expired, although, such LCA form may show an unutilized balance sufficient to cover the endorsement. It is also not permissible to transfer endorsements from one valid LCA form to another valid LCA form unless both are identical in all respects.

 

Amount for which L/C can be opened or remittance effected:

The total amount of L/Cs opened or remittances made should in no case exceed the unutilized amount available in the relative LCA form. Remittances in excess of the value of LCA form are not permissible without prior approval of Bangladesh Bank.

Remittance of Bank Charges:

  1. i)    The ADs are however allowed to remit actual foreign bank charges against imports in excess of the value of LCA forms without prior approval of Bangladesh Bank subject to report on T/M form with necessary supporting documents. No adjustment on account of remittance of Bank charges should be made from the amount of LCA form.
  2. ii)   The bank charges on account of imports will include only the following items that should    be specifically mentioned on the T/M forms:
  3. a)    Advising Commission;
  4. b)    Amendment Commission;
  5. c)    Confirmation Commission;
  6. d)    Negotiation Commission;
  7. e)    Un-utilised L/C Commission;
  8. f)     Payment Commission;
  9. g)    Re-imbursement Commission;
  10. h)    Collection Commission;
  11. i)      Acceptance Commission;
  12. j)      Postage & Cable charges;
  13. k)    L/C cancellation charges.

iii)   Remittances for items other than those mentioned above will be subject to prior approval of the Bangladesh Bank. Foreign bank charges against imports in the Public Sector will, however, be on the suppliers’ account. Unless otherwise specified bank charges as enumerated above shall apply to imports under Cash, Loans, Credit, Grants and commodity Exchange Agreement. Remittance of bank charges for imports under Barter will be governed by the terms of the relevant Barter protocol/Banking arrangements.

Import on F.O.B. Basis:

LCA forms are normally issued on C & F basis and it is not permissible to remit upto the full amount of the value of the LCAF on FOB basis. Freight charges payable on imports into the country on FOB basis are to be adjusted against the relative C & F LCA forms. At the time of endorsing the FOB value of the consignment on the Exchange Control copy of the LCA forms, Authorised Dealers should also endorse the amount of the freight to be paid in Bangladesh Taka as indicated in the bill of lading etc. Miscellaneous charges paid in Taka against imports by Air should also be adjusted from LCA form and endorsed on it.

In cases where the F.O.B. value and the amount of freight payable in Taka exceeds the value of the LCA form, the application should be referred to the Bangladesh Bank for consideration with full particulars and supporting documentary evidence.

Formalities for opening L/C & Amendment thereof :

  1. After sanctioning AD Branch will provide a L/C Number as per Bangladesh Bank’s rules, which is serial number of the L/C started from 1st January of the concern year.
  2. All Particulars of the L/C to be recorded in the L/C opening register.
  3. Pre-shipment inspection clause to be incorporated in Back to Back L/C & Govt. Import though it is not mandatory in private import but to save the bank’s interest it must be incorporated. Pre-shipment inspection may become mandatory for particular items as per special order from time to time by the ministry of commerce.
  4. L/C must be documentary & should provide for payment to be made against full sets of “on board” bills of lading, air consignment notes, railway receipts, post parcel receipts showing dispatch of goods covered by the credit to a destination in Bangladesh. All L/Cs must specify submission of Signed invoice and certificate of origin. HS Code number is also to be incorporated in the L/C.
  5. L/C to be opened within 150 days from the date of LCAF issued/registered.
  6. Special conditions for particular items such as Food item, Powder Milk, Old cloths, Recondition Car etc. to be incorporated in the L/C.
  7. Reference of “UCPDC 1993 Revision ICC publication No. 500” must be incorporated in the L/C.
  8. If L/C is dispatched by mail, two Signatures of Authorised officers to be put on the L/C. Signature number to be put on bank’s copy only. A tested/authenticated message is to be sent for authentication of issuance of the LC.

Checking of Text of (Telex/SWIFT) message of operative Telex/SWIFT L/C/T.T. etc:

The text of message of operative L/Cs and amendments thereto transmitted by Telex/SWIFT and other Telex/SWIFT messages involving financial transactions such as T.Ts. sent by the branches to Foreign Correspondents/other branches of the Bank should be properly checked on the same day or invariably on the following morning by an authorized officer who will authenticate the office copy of the transmitted message by putting his signature thereon. If any error/omission is detected, correction must be sent to the correspondent/Branch concerned immediately through Tested Telex/SWIFT.

Amendment to L/C:

After opening of L/C sometimes alteration/amendments to the original terms and conditions become necessary. These amendments involve changes in (i) unit price, (ii) extension of validity of the L/C, (iii) Documentary requirements etc. Such amendments can be effected only if all the parties concerned are agreeable i.e. the beneficiary, the importer, the issuing bank and the advising bank. For any amendment, the importer must request the opening bank in writing duly supported by revised indent / proforma invoice etc. where necessary. The opening bank will then advise the required amendment to the advising bank by cable/telex/SWIFT/post, as instructed by the importer. All amendments should be noted in the L/C file and L/C opening register. L/C amendment commission including cable/telex/SWIFT/post should be charged to the client’s account.

In case of increase in L/C value, it should be ensured that the balance available in the LCA form is sufficient to cover the increased L/C amount. If not value of LCA form should be enhanced to cover the increased amount of L/C. Insurance documents should also be obtained for enhanced amount.

 

Issuing Bank will pass the following voucher at the time of opening Cash L/C:

  1. a) Passing of Contra Liability Voucher:

Dr. Customers liability for L/C (Cash) (Foreign/Local)                                         Tk

Cr.  Bankers Liability for L/C   (Cash) (Foreign/Local)                                          Tk.

 

  1. b) Realisation of Margin & Charges

Dr. Party’s A/C                                                                                                              Tk.

Cr. Sundry Deposit A/C –Margin on L/C (Cash)                                               Tk.

Cr. Income A/C – Commission on L/C (Cash)                                                    Tk.

Cr. Income A/C –SWIFT/Telex/Courier Service etc.                                     Tk.

Cr. Others, Stamp if any                                                                                              Tk.

 

Note:     1) Taka Amount for contra voucher shall be determined by multiplying the L/C value  at B.C Selling rate on the date.of L/c opening.

2) Separate liability voucher should be passed for Foreign and Local L/C.

3) Actual liability voucher may be passed by rounding up the amount in thousand for  balancing purpose.

4) Margin amount shall be retained by the branch in taka amount only.

Advising Bank will advise the L/C to the beneficiary. Then beneficiary will export the goods and submit the Export documents to the negotiating Bank. Negotiating Bank then will send the Export document to the issuing Bank.

Upon receipt of Import documents issuing Bank will scrutinize the documents as per L/C terms & inform to the importer to release the documents if it is OK. If documents are discrepant, Bank will intimate the same to the negotiating bank within 5 working days. Bank will hold the documents at negotiating bank’s risk asking their disposal instruction mentioning UCPDC article reference.

Letter of Credit Authorisation Form(LCAF) 

Letter of Credit Authorisation Form(LCAF) 

Letter of Credit Authorisation Form(LCAF) 

Letter of Credit Authorisation Form(LCAF) 

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