Chapter 4

Import

4.1 Import
Import means purchase of goods and services from the foreign countries into Bangladesh. Normally consumers, firms, industries and Government of Bangladesh import foreign goods / materials to meet their various necessities. So, in brief, we can say that import is the flow of goods and services purchased by economic agent staying in the country from economic agent staying abroad.

4.2 Import procedure followed by MBL

As an Authori ed !ealer, "B#, "ain Branch is always committed to facilitate import of different goods into Bangladesh from the foreign countries. Import Section, which is under $oreign %&change !epartment of the branch, is assigned to perform this 'ob. And to serve its client(s demand to import goods, it always maintains re)uired formalities that are collectively termed as *he Import +rocedure. ,.At first, the importer must obtain Import -egistration .ertificate /I-.0 from the ..I1% submitting the following papers2 3p to date *rade #icense. Nationality and Asset .ertificate. *a& Indification Number 4A* -egistration Number In case of company, "emorandum 1 Articles of Association and .ertificate of Incorporation. Ban5 Solvency .ertificate etc. 6.*hen the importer has to contact with the seller outside the country to obtain the +ro forma Invoice. 3sually an indenter, local agent of the seller or foreign agent of the buyer ma5es this communication. 7ther sources are2 *rade fair. .hamber of .ommerce. $oreign "issions in Bangladesh. 8ournals etc.

9. :hen the importer accepts the +ro forma Invoice, he/she ma5es a purchase contract with the e&porter detailing the terms and conditions of the import. ;. After ma5ing the purchase contract, importer settles the means of payment with the seller. And import procedure differs with different means of payment. *he possible means are .ash in Advance, 7pen Account, .ollection "ethod and !ocumentary #etter of .redit. In most cases, the !ocumentary #etter of .redit in our country ma5es import payment. +urchase .ontract contains which payment procedure has to be applied. !ifferent "eans of +ayment2

a) .ash in advance2 Importer pays full, partial or progressive payment by a foreign !!, "* or **. After receiving payment, e&porter will send the goods and the transport receipt to the importer. Importer will ta5e delivery of the goods from the transport company. b) 7pen Account2 %&porter ships the goods and sends transport receipt to the importer. Importer will ta5e delivery of the goods and ma5es payment by foreign !!, "*, or ** at some specified date. c) .ollection "ethod2 .ollection methods are either clean collection or documentary collection. Again, !ocumentary .ollection may be !ocument against +ayment /!/+0 or !ocument against Acceptance /!/A0. *he collection procedure is that the e&porter ships the goods and draws a draft/ bill on the buyer. *he e&porter submits the draft/bill /only or with documents0 to the remitting ban5 for collection and the ban5 ac5nowledges this. *hen the remitting ban5 sends the draft/bill /with or without documents0 and a collection instruction letter to the collecting ban5. Acting as an agent of the remitting ban5, the collecting ban5 notifies the importer upon receipt of the draft. *he title of goods is released to the importer upon full payment or acceptance of the draft/bill. d) #etter of credit2 #etter of credit is the well accepted and most commonly used means of payment. It is an underta5ing for payment by the issuing ban5 to the beneficiary, upon submission of some stipulated documents and fulfilling the terms and conditions mentioned in the letter of credit. <. -e)uesting the concerned ban5 /importer(s ban5 /issuing ban50 to open a #/. /irrevocable0 on behalf of importer favoring the e&porter/seller.

4.3 Documentary Requ rement! for "pen n# L$C

Importer shall submit following documents for opening #/.2 /a0 4alid Import -egistration .ertificate /I-.0 /commercial/industrial0 /b0 *a& Identification Number .ertificate /c0 4A* -egistration .ertificate /d0 "embership .ertificate of a recogni ed *rade Association as per I+7 /e0 A declaration, in triplicate, that the importer has paid income=ta& or submitted income la& return for the preceding year /f0 +ro forma Invoice or Indent duly accepted by the importer /g0 Insurance .over Note with "oney +aid -eceipt covering value of goods to be imported plus ,> /*en0 percent above h0 #/. application $orm /"$=f& l90 duly signed by the importer i0 #etter of .redit Authori ation $orm /#.A$0, commercial or industrial as the case may be, duly signed ?by the importer and incorporating New I*. number of at least @/si&0 digits under the Aarmoni ed System as given in the Import *rade .ontrol Schedule ,BCC. '0 I"+ $orm duly signed by the importer

4.4 %recaut onary &tep!

a0 *he Branch must ensure that they deal only with 5nown customers having a place of business in Bangladesh and can be traced easily, should any occasion arise for this purpose. b0 *he Branch shall all assess the financial standings 1 credibility of the customers with a view to ensure satisfactory arrangement for retirement of the documents. c0 *he Branch should also obtain confidential report on the e&porter in all cases where the amount of the #/. e&ceeds *5.6, >>,>>>.>> against +/invoice and *5.<, >>,>>>.>> against indents. d0 *he Branch shall verify prices so as to ascertain competitiveness of the commodities to be imported. e0 *he Branch shall also see the mar5etability of the commodities to be imported. f0 *he Branch shall verify signature of the Importer on L/C Application $orms, #.A$ 1 I"+ $orm. g0 *he Branch will not open #/.s for import of goods through the customs stations/routes li5e Sonamas'id, Aili, Burimary. Birol etc. unless the importers pay ,>>D margin or prior Aead 7ffice approval is obtained.

4.' &anct on n#( Documentat on ) Le#al *ormal t e!

Approval of Aead 7ffice and/or Branch "anger /where #/.s are to be opened under his delegation0 is to be obtained before opening #/./s0. Security documentation is to be completed as per sanction/approval terms prior to opening of #... .harge $orms such as !emand +romissory Note, #etter of 3nderta5ing, #etter of !ebit Authority 1 #etter of Guarantee /where applicable0 to be obtained with due stamps as per prevailing Stamp Act rate.

4.+ ,ccount n# -reatment

%art cular! #/. Applicant A/. or .ustomer(s A/. "argin A/. .ommission A/. +ostage A/. Stamp A/. $.$../foreign corresponding charge0 A/. *ele& charge A/. 7ther A/. Dr.$Cr. !r. .r. .r. .r. .r. .r. .r. .r.

Cu!tomer.! l ab l ty ,$C Ban5er(s liability A/.

Dr. .r.

- me L m t for "pen n# of L$C/ #/.s shall be opened within ,<> days from the date of issuance of #.A$.

4.0 -erm! of L$C &

All description of the goods along with )uantity and unit price is to be incorporated in the #/. and shall ta5e all precautions to )uote the correct A.S. .odes of the goods. +rices to be )uoted on .$- or $7B basis according to +/Invoice or indent. No import shall be made on .I$ basis without prior approval from the "inistry of .ommerce. #/.s should provide for payment to be made against full sets of 7n Board /shipped0 transport documents drawn or endorsed to the order of "ercantile Ban5 #imited showing despatch of goods covered the credit to a destination in Bangladesh. All #.s must specify submission of signed invoices, certificates of origin 1 pre=shipment Inspection certificate. #/.s shall also incorporate any other documents which are mandatorily specified for that .ommodity in the I+7/+ublic Notices/Bangladesh Ban5 .irculars. It is not permissible to open import #/.s in favor of beneficiaries or to use shipping carriers of the countries from which import into Bangladesh are banned by the competent authority. Also it is not permissible to open clean or revolving or pac5ing credits.

4.1 &h pment 2al d ty ) 34p ry

All #/.s must specify shipment validity as per terms of the +/Invoice or indent or #/. application. Aowever, shipment validity under any circumstances shall not e&ceed B/nine0 months from the date of issuance of #.A$ or registration of #.A$ with Bangladesh Ban5, e&cept capital machinery and spare parts, shipment of which shall be made within ,E /seventeen0 months. All #.s must stipulate an e&piry date and a place for presentation of documents for payment/acceptance.

4.5 ,dd t onal Conf rmat on to the L$C!

By the re)uest of the importer, the branch may re)uest a third correspondent ban5 /having prior arrangement of credit line0 to add their confirmation to the #/.s. *he branch shall send a re)uest letter to the International !ivision, Aead 7ffice for their record and necessary instructions to be advised to the concerned confirming ban5 for this purpose. .onfirmation charges are to be recovered from the importer as per schedule of charges of the ban5 unless it is waived or directed otherwise as per agreement between the supplier and the importer.

2ouch n# %rocedure/

!r2 .ustomer(s A/c. .r2 Income A/c2 .ommission on #/. /confirmed0 Man pulat on of ,uthor 6at on Re mbur!ement term! and !!uance of Re mbur!ement

*he branch shall stipulate reimbursement term in the #/.s mentioning name of the -eimbursing Ban5 and Nostro Account Number /preferably in the country of the currency denominated in the #/.s so as to avoid possible loss due to conversion of? differential currencies0. *he branch shall issue and send -eimbursement Authori ation to the -eimbursing Ban5 immediately after opening of the #/.s.

4.17 ,mendment!
*he Branch may allow amendments to the #/.s only upon re)uests of the #/. applicants that do not violate foreign e&change regulations and import control regulations. Necessary charges and/or margin /where #/. value is increased by subse)uent Amendments0 arc also to be reali ed /recovered from the customer before amending the #/.s. 2ouch n# %rocedure !r. +arty Account /for margin and/or commission F +ostage/*ele& F $....0 .r2 S/! A/c2 "argin on #/. /.ash0 /if the #/. value is increased0 .r. Income A/c2 .ommission on #/. $oreign .r. Income A/c: +ostal/*ele& -ecoveries .r. Sundry !eposit A/c2 $.... .ontra liability if the #/. value is increased2 !r. .ustomer(s liability on #/. cash /for increased amount0 .r. Bac5er?s liability on #/. cash

4.11 Cancellat on of L$C!

An Irrevocable #/. can not be cancelled without the agreement of the beneficiary and the confirming ban5, if any. *he branch, at the re)uest of the importer, may approach the #/. advising ban5 for cancellation of the #/. and such cancellation will only be effective upon consent of the beneficiary advised to the branch through the #/. advising ban5. Aowever, the branch may cancel the #/. without the consent of the beneficiary, advising ban5 and confirming ban5, if any, if the #/. e&pires and the brandG, receives no shipping documents within ,< daysG of e&piry of the #/.. *he branch should send a message to the concerned ban5 advisingH such cancellation and closure of #/. file due to e&piry of the same. *he branch will then cancel the -eimbursement Authorisation which has been provided to the -eimbursing Ban5 while opening the #/. . *he branch will reverse #/.

contra liabilities, refund margin and recover charges from the #/. applicant as per schedule of charges.

4.12 Import %erm t *orm 8IM%9

It includes #/. authori ation form number, !ate, 4alue in *a5a, -egistration of #.A$, Iuantity of goods, Invoice value, .ountry of origin, +ort of shipment, Name of the steamer, Indenture(s address.

*orward n# Documentary Cred t By ,d: ! n# or Conf rm n# Ban;/

*here are usually two ban5s involved in a documentary credit operation. *he issuing ban5 and the advising ban5 which is usually a ban5 in the seller(s country. *he issuing ban5 as5s another ban5 to advise or confirm the credit. If the 6nd ban5 is simply Jadvising the creditK, it will mention that when it forwards the credit to seller, such a ban5 is under no commitment or obligation to pay the seller. If the advising ban5 is also Jconfirming the creditK, this mention that the confirming ban5, regardless of any other consideration, must pay accept or negotiate without recourse to seller. *hen the ban5 is called confirming ban5 also. &ubm !! on "f <e!!a!ary Document! By 34porter -o -he <e#ot at n# Ban;/

As soon as the seller/e&porter receives the credit and is satisfied that he can meet its terms and conditions, he is in position to load the goods and dispatch them. *he seller then sends the documents evidencing the shipment to the ban5. %&porter will submit those documents in accordance with the terms and conditions as mentioned in #/.. Generally the documents observed in the foreign e&change department are2 Bill of e&change, .ommercial invoice, Bill of lading, .ertificate of origin, +ac5ing list, .lean -eport of $inding /.-$0, :eight list, Insurance cover note, +re=shipment certificate

-he Document &ent -o -he I!!u n# Ban; -hrou#h -he <e#ot at n# Ban;

*he negotiating ban5 carefully chec5s the documents provided by the e&porter against the credit, and if the documents meet all the re)uirement of the credit, the ban5 will pay, accept, or negotiate in accordance with the terms and conditions of the credit. *hen the ban5 sends the documents to the #/. opening ban5. Ma; n# -he %ayment "f *ore #n B ll -hrou#h -he Re mbur! n# Ban;/

*he #/. issuing ban5 getting the documents chec5s immediately and if they are in order and meet the credit re)uirements, it will arrange to ma5e payment against #/. through reimbursement ban5 and will send the importer the document arrival notice.

4.13 &ecur ty of -he Document

$irst of all it must be ensured that full set of documents as mentioned in the #/. has been received. !ocuments have been negotiated within the negotiation period. *he Bill of #ading/Air= :ay Bill/ -ailway receipt is not dated later than the last date of shipment mentioned in the #/.. *he #/. has not been amended or sub'ected to any special instructions, which might alter the value of #/.. Import bills include following documents, which are to be scrutini ed2 Bill of %&change,.ommercial Invoice,Bill of #ading, .ertificate of 7rigin and 7thers. B ll of 34chan#e/ It has to be verified that the bill of e&change has been properly drawn and signed by the beneficiary according to the terms and conditions of #/.. *he amount in the bill is identical with that mentioned in the invoice. *he amount drawn does not e&ceed the amount mentioned in the #/.. *he amount in words and figures should be same. *he bill of e&change should be properly endorsed. Commerc al In:o ce/ It has to be verified that the commercial invoice has been properly drawn and signed by the beneficiary according to the terms and conditions of #/.. *he beneficiary should properly invoice the merchandise. *he merchandise is invoiced to the importer on whose account the #/. is opened. *he description of merchandise and the unit price correspond with that given in the #/.. *he import license or I-. number of the importer, indenter(s registration number and number of #etter of .redit Authori ation number are incorporated in the Invoice. B ll of Lad n#/ $irst of all it has to be cleared that the Bill of #ading is showing JShipped on BoardK and it has to be properly endorsed to the ban5. *he B/# should include the description of the merchandise according to invoice. *he port of shipment and destination, date of shipment and the name of the consignee are in agreement with those mentioned in the #/.. *he shipping company or their authori ed agents properly sign the B/#. *he date on the B/# is not Lstale( which means it is not dated in unreasonably long time prior to negotiation. Cert f cate of "r # n/ *he "erchandise described in the .ertificate is in accordance with the #/.

"ther!/ *here are some other documents, which are also attached, with the shipping documents li5e pac5ing list, pre=shipment inspection certificate etc. *hese documents are also verified carefully before lodgment.

4.14 Lod#ment ) Ret rement "f &h pp n# Document!

After scrutini ing the import negotiating document, if no discrepancy are found then it is treated to be accepted after the end of seven ban5ing days following the day of receipt of the document under JArticle ,/b0 of 3.+!. M<>>K. If any discrepancy is found then the ban5er inform it to the importer that whether he accept the bills with discrepancies or not. If the importer does not accept, the ban5er /+B#0 informs it to the negotiating ban5 within seven ban5ing days from the date of receipt of the documents, otherwise it is treated to be accepted and the opening ban5 /"B#0 must bound to pay against the bill and no complain against the bill will be accepted more than ; ban5ing days following the date of receipt of the documents under article number N, /d0 1 article number ,; /c0 of the 3.+!.=<>>. ,ccount n# -reatment/ *he office passes the following vouchers after negotiation.

+A! /+ayment Against !ocument0 Account A.7. International !ivision Account

!r. .r.

-everse entry is given. Ban5er(s liability Account .ustomer(s liability Account !r. .r.

*he shipping documents then stamped with +A! number and entered in the +A! register. As soon as the above formalities are completed, the importer is served with +A! bill intimations for retirement of concerned import documents.

7n intimation the importer calls on the ban5(s counter re)uesting retirement of the shipping documents against payment to the debit of their account by the bill amount and other charges payable. Ban5 prepares cost memo in printed form on account of the concerned party giving detailed read of charges payable. 4ouchers passed in retiring documents2 #/. margin Account +arty Account +A! Account Income Account interest on +A! .ommission on +A! "iscellaneous earning !r. !r. .r. .r. .r. .r.

After the vouchers are passed, endorsement is made on the bac5 of the bill of e&change as L-eceived +ayment( 1 bill of leading is endorsed to the effect that L+lease deliver to the order of "/S( under two authori ed signatures of the ban5 officials of "B#. *hen the documents are delivered to the #/. applicant /importer0. But if there is any discrepancy in the documents, the #/. issuing ban5 send message to the negotiating ban5 to rectify it under its ris5s and responsibilities.

4.1' %o!t=Import * nanc n#

If there is no available cash in importer(s hand, he can re)uest the ban5 to grant loan against the documents for the purpose of post import finance. *here is one form of post import finance available in "B# "ain Branch.

4.1+ L-R 8Loan ,#a n!t -ru!t Rece pt9

7n the arrival of goods and lodgment of import documents, importer may re)uest the ban5 for clearance of goods from the port /custom0. +roper sanction from the competent authority is to be obtained before clearance of consignment. $or giving these types of loan, officer ma5es loan proposal and sends it to A/7 for approval. After getting approval from A/7, ban5 grants loan in the form of #*-. It(s needless to say that ban5 only deals with the documents, not with goods 1 services in case of foreign e&change business.

4.10 -he Idea of Bac;=-o=Bac; L$C

*he following instructions should be complied with while opening Bac5=to=Bac5 Import #/.s2

*he master e&port #/. should have validity period ade)uate to cover the time needed for importation of inputs, manufacture of merchandise, and shipment to consignee. *he bac5= to=bac5 #/. value shall not e&ceed the admissible percentage of net value of the relative mater e&port #/. $or computation of net value of a master e&port #/., the freight charge, insurance cost and commission if payable by the e&porter shall be deducted from the #/. value. *he bac5 to bac5 import #/. shall be opened on up to ,C> days basis e&cept in case of those opened against %&port !evelopment $und administered by Bangladesh Ban5 in which case the bac5 to bac5 #/. will be opened on sight basis. All amendments of the master e&port #/. should be noted down carefully to rule out chances of e&cess obligation under the bac5=to=bac5 import #/.. Bac5=to=Bac5 #/. can either be local or foreign.

4.11 %rocedure of ,cceptance ) Lod#ment of B-B Import B ll

7n receipt of import documents against the #/. these should be sub'ected to usual scrutiny. If found in order the customer should be as5ed to accept the bill of e&change. :hen the bill of e&change is returned by the drawee after duly accepted by him the maturity date of the bill is to be wor5ed out and noted in the +A! register and also in due date diary. *he date of maturity of the bill of e&change is communicated to the negotiating or collecting ban5 by tele&/ fa& Simultaneously the documents are lodged under AB+ /Accepted Bills for +ayment0.

4.15 %rocedure %ayment of Bac;=to=Bac; L$C

+ayment of B*B #/.s shall be made at maturity, out of e&port proceeds. *he re)uired foreign e&change out of repatriated e&port proceeds will be set in a separate foreign currency account called $.. held for B*B #/. in single pool system separately for each and every industrial unit. Accepted bills will be paid according to their maturity from this single pool even where some reason e&port has not ta5en place, or where e&port proceeds have not been reali ed or where the reali ed e&port proceeds is not ade)uate to cover B*B import payment. In such cases post facto approval of Bangladesh Ban5 will have to be applied for, e&plaining fully the conditions of the e&port failure or non=reali ation/ short reali ation of e&port proceeds, with relevant supporting documents. *he branch will pay B*B bills according to their maturity within 9 wor5ing days from date of reali ation of e&port proceeds.

+art <

34port

'.1 34port %rocedure

%&port is a .ountries .lassification of International *rading 1 "anufacturing of goods shipped from the manufacturing .ountry, Goods are not classified as e&ported until all e&port documentation is completed and the ship/plane is outside of the countries boundaries at sea, or airspace. Simply put, merchandise sold to other countries. %rocedure for 34port L$C/ *he main focal point of the Ban5 in e&port financing was garments industry, the lone driving force of the economy of Bangladesh in single biggest source of foreign e&change and employment provider of the country. *here are a number of formalities, which an e&porter has to fulfill before and after shipment of goods. *hese formalities or procedures are enumerated as follows = 1. "bta n n# 34port Re# !trat on Cert f cate/ No e&porter is allowed to e&port any commodity permissible for e&port from Bangladesh unless he is registered with .hief .ontroller of Imports and %&ports /..I 1 %0 and holds valid %&port -egistration .ertificate /%-.0. After applying to the ..I1% in the prescribed from along with the necessary papers, concerned offices of the .hief .ontroller of Imports and %&ports issues %-.. 7nce registered, e&porters are to ma5e renewal of %-. every year. 2. &ecur n# the order/ After getting %-., the e&porter may proceed to secure the e&port order. Ae can do this by contracting the buyers directly through correspondence. 3. "bta n n# 3>%/ After having the registration, the e&porter applies to "ercantile Ban5 with the trade license, %-. and the .ertificate from the concerned Government 7rgani ation to get %O+. If the ban5 is satisfied, an %O+ is issued to the e&porter. 4. & #n n# of the contract/ After communicating with buyer the e&porter has to get contracted for e&porting e&portable items from Bangladesh detailing commodity, )uantity, price, shipment, insurance and mar5, inspection, arbitration etc.

'. Rece : n# the Letter of Cred t/ After getting contract for sale, e&porter should as5 the buyer for #etter of .redit clearly stating terms and conditions of e&port and payment. After receiving #/., the following points are to be loo5ed for2 *he terms of the #/. are in conformity with those of the contract. *he #/. is an irrevocable one, preferably confirmed by the advising ban5. *he #/. allows sufficient time for shipment and a reasonable time for registration. If the e&porter wants the #/. to be transferable, divisible and advisable, he should ensure those stipulations are specially mentioned in the #/.. +. %rocur n# the mater al!/ After ma5ing the deal and on having the #/. opened in his favor, the ne&t step for the e&porter is to set about the tas5 of procuring or manufacturing the contracted merchandise. 0. 3ndor!ement on 3>%/ Before the e&port forms are lodged by the e&porters with the customs/postal authorities, they should get all the copies endorsed by "ercantile Ban5. Before shipment, e&porter submits e&p. form with commercial invoice. *hen "ercantile Ban5 officer chec5s it properly, if satisfied, certifies the e&p. :ithout it e&porter he cannot ma5e shipment. *he customer must declare all e&ports goods on the %O+ issued by the authori ed dealers. D !po!al of 34port *orm!/ a. b. c. d. 7riginal2 customs authority reports first copy of %O+ to Bangladesh Ban5 after shipment of the goods. !uplicate2 Negotiating ban5 reports the !uplicate to Bangladesh Ban5 in or after negotiation date but not later than ,; days from the date of shipment. *riplicate2 7n reali ation of e&port proceeds *riplicate is reported by the same ban5 to the same authority. Iuadruplicate2 $inally, the negotiating ban5 as their office copy retains Iuadruplicate

1. &h pment of #ood!/ %&porter ma5es shipment according to the terms and condition of #/.. 5. %re!entat on of e4port document! for ne#ot at on/ After shipment, e&porter submits the following documents to "ercantile Ban5 for negotiation. Bill of %&change or !raftH Bill of #adingH InvoiceH Insurance +olicy/.ertificateH .ertificate of originH Inspection .ertificateH .onsular InvoiceH +ac5ing #istH Iuality .ontrol .ertificateH +hoto M Sanitary .ertificate.

17. 34am nat on of Document/ Ban5s deal with documents only, not with commodity. As the negotiating ban5 is giving the value before repatriation of the e&port proceeds it is advisable to scrutini e and e&amine each and every document with great care whether any discrepancy is observed in the documents. *he ban5ers are to ascertain that the documents are strictly as per the terms of #/. Before negotiation of the e&port bill. Ban5 officers assigned for e&amining the e&port documents may use a chec5list for their convenience. 11. <e#ot at on of e4port document!/ Negotiation stands for payment of value to the e&porter against the documents stipulated in the #P.. If documents are in order, "ercantile Ban5 purchases /negotiates0 the same on the basis of ban5er= customer relationship. *his is 5nown as $oreign !ocumentary Bill +urchase /$!B+0.

'.2 &ettlement of Local B ll!

*he settlement of local bills is done in the following ways, = *he customer submits the #/. to +remier Ban5 along with the documents to negotiate "ercantile Ban5 official scrutini es the documents to ensure the conformity with the terms and conditions. *he documents are then forwarded to the #/. opening ban5. *he #/. issuing ban5 gives the acceptance and forwards an acceptance letter. +ayment is given to the customer on either by collection basis or by purchasing the document

'.3 Mode of payment of 34port b ll under L$C

As per 3.+ <>>, ,BB9 revision there are four types of credit. *hese are as follows2 1. & #ht %ayment Cred t/ In a Sight +ayment .redit, the ban5 pays the stipulated sum immediately against the e&porter(s presentation of the documents. 2. Deferred payment Cred t/ In deferred payment, the ban5 agrees to pay on a specified future date or event, after presentation of the e&port documents. No bill of e&change is involved. In "ercantile Ban5, payment is given to the party at the rate of !.A @>=B>=,6>=,C> as the case may be. But the Aead office is paid at *.* clean rate. *he difference between the two rates us the e&change trading for the branch.

3. ,cceptance cred t/ In acceptance credit, the e&porter presents a bill of e&change payable to himself and drawn at the agreed tenor /that is, on a specified future date or event0 on the ban5 that is to accept it. *he ban5 signs its acceptance on the bill and returns it to the e&porter. *he e&porter can then represent it for payment on maturity. Alternatively he can discount it in order to obtain immediate payment. 4. <e#ot at on Cred t/ In Negotiation credit, the e&porter has to present a bill of e&change payable to him in addition to other documents that the ban5 negotiates. ,d: ! n# L$C/ :hen e&port #/. is transmitted to the ban5 for advising, the ban5 sends an Advising #etter to the beneficiary depicting that #/. has been issued.

'.4 %roce!! n# and "pen n# of Bac;=to=Bac; Letter of Cred t

An e&porter desired to have an Import #/. limit under Bac5=to=Bac5 arrangement. In that case the following papers 1 documents are re)uired2 $ull +articulars of Ban5 AccountH Balance SheetH Statement of Assets 1 #iabilityH *rade #icenseH 4alid Bonded :arehouse #icenseH "embership .ertificateH Income *a& !eclaration.

+art @
7bservations

:ith its strong corporate image and identity, "ercantile Ban5 #imited has better positioned itself in the minds of the customers. *his image has helped "B# grabs the personal ban5ing sector of whole Bangladesh very rapidly. "B# employees are one of the ma'or assets of the company. *he employees of "B# have a strong sense of commitment towards organi ation and also feel proud and a sense of belonging towards "B#. *he strong organi ational culture of "B# is the main reason behind its strength. It has been seen from customers( opinion that "B# provides hassle=free customer services to its client comparing to other financial institutions of Bangladesh. +ersonali ed approach to the needs of customers is its motto. *he selection 1 recruitment of "B# emphasi es on having the s5illed graduates, merits 1 postgraduates who have little or no previous wor5 e&perience. *he logic behind is that "B# wants to avoid the problem of ?garbage in 1 garbage out?. And this type of young 1 fresh wor5force stimulates the whole wor5ing environment of "B#. *he human resource of "B# is e&tremely well thought 1 perfectly managed. As from the very first, the top management believed in empowering employees, where they refused to put their finger in every part of the pie. *his empowered environment ma5es "B# a better place for the employees. *he employees are not suffocated with authority but are able to grow as the organi ation matures. It has been seen that the net profit has been gradually rising over the years. Not only "B# "ain Branch but also all of Branches yearly over profit target fill up. $urthermore, "B# is not 'ust sitting on its previous year(s success, but also ta5ing initiatives to improve. "B# provides the western 3nion money transfer service for these customers are easily getting the foreign money in everywhere. Another "B# Iuic5 +ay, Sumba and other money transfer service. "B# 7nline transfer, **, +ay order and other commission is also high. "ost of the "B# Branch has no online service. "B# should commission charge less or free. +resently "B# charges same rates for all types of import #/.. But for import #/. of e&ports= oriented industry, "B# should reduce the charge of #/.. As a result, e&porter will be benefited and the country will earn more foreign e&change. "B# provides clean Import #oan to most of its solvent clients. But they usually do not want to finance small entrepreneurs whose financial standing is not clean to them. In order to be more competitive in the mar5et, "B# should come up with more new attractive and innovative products. *his is one of the wea5nesses that "B# is currently passing through but plans to get rid of by 6>,6. *he salary at "B# is very decent, but it lac5s other sorts of motivation. Incentives such as bonuses are given for ac)uiring a particular figure, but all in all these are the only motivational factors. Another "B# should manage e&tra !eposit account and lower interest rate in loan for only employee and staff. Not only "B# "ain Branch but also all of "B# branches has shortage of +. and shortage of A to Q software training. Need more efficient employee who is specialist of computer software and hardware. Some of the +.s in this branch have very outdated hardware which is very slow and affects the customers and hence the performance of the ban5 as a whole.

7ne of the 5ey opportunities for "B# is its efficient managers. "B# has employed e&perienced managers to facilitate its operation. *hese managers can ma5e more wor5able environment for employees and customers. I believe that e&perience "anager can help to ma5e effective economy. "B# "ain Branch manager is study for new development ban5ing sectors. Bangladesh is a developing country to satisfy the needs of the huge population, a large amount of investment is re)uired. 7n the other hand, building %+Q areas and some Govt. policies easing foreign investment in our country made it attractive to the foreigners to invest in our country. So, "B# has a large opportunity here. Another, Government of Bangladesh has rendered its full support to the ban5ing sector for a sound financial status of the country, as it is becoming one of the vital sources of employment in the country now. Such government concern will facilitate and support the long term vision for "B#. %mergence of e=ban5ing will open more scope for "B# to reach the clients not only in Bangladesh but also in global area. *he upcoming private, local .ommercial Ban5s posse(s serious threats to the e&isting ban5ing networ5 of "B#2 it is e&pected that in the ne&t few years more commercial ban5s will emerge. If that happens the intensity of competition will rise further and ban5s will have to develop strategies to compete against and win the battle of ban5s. Now=a=days different foreign and private ban5s are also offering similar type of products with an almost similar profit margin. So, if all competitors fight with the same weapon, the natural result is declining profit. *he problem of non=performing loans or default loans is very minimum or insignificant. Aowever, this problem may rise in the future thusH "B# has to remain vigilant about this problem so that proactive strategies are ta5en to minimi e this problem.