of three suppliers indenters representing at least two countries abroad. This condition shall however not apply for opening Letter of Credit up TK. One lac.
For import at most competitive rate by the Public Sectors the condition mentioned at Para 27(8) of this order shall apply.
Import on C&F and FOB (free on Board) basisAll imports by sea, air and land route shall be made either on C&F or FOB basis. However in ease of import on FOB basis the concerned importer shall have to properly comply with the circular issued by Bangladesh Bank in this regard. Before opening L.C necessary insurance cover note shall have to be purchased from the Shadharan Bima Corporation or any other Bangladeshi insurance company. Unless there are specified provisions in the relevant loan agreement/projects agreement concluded with the foreign donors for import of CIF (Cost, Insurance & Freight) basis, no import shall be allowed on CIF basis without prior approval from the Ministry of Commerce. However, Bangladesh nations, living abroad, for sending goods against their earned foreign exchange and foreign investors, for sending capital machines and raw materials against their equity share portion shall be allowed on CIF basis.
Import by Mentioning "Country of Origin"A. In all cases of import, "country if origin shall be mentioned clearly on goods, package/container. A certificate regarding "country of origin" issued by the concerned Government agency/approved authority/organization of the exporting country must be submitted, along with import documents to the Customer Authority at the time of release of goods. However, the provisions of "country of origin" shall not be applicable to coal and export oriented garments industries. In case of this cotton import, it shall not be required to mention the country of origin on each bale. But
"country of origin" shall be mentioned in the phyto sanitary certificate. Besides, 100%
export oriented industries, which are recognized by Custom Authority, shall be waived from the restriction of"‖country of origin" subject to the conditions imposed by the Foreign Exchange Regulation Act, Bangladesh Bank and Commercial bank.
B. In case of import of Limestone, in different consignments/lot by the rope-way or by river, as raw-materials for Chatak Cement Factory, "country of origin" certificate from the exporting country's Government/approved authority/organization shall be submitted once to the customs authority at the time of release of goods, instead of each consignment/Jot for the quantity mentioned in Letter of Credit, in case of river-way and as per supplied carrying list as case of roadriver-way.
4.3 Instructions Issued by Bangladesh Bank for Opening and Operation of L/C for Import of Goods:
All Letter of Credits and similar undertakings covering imports into Bangladesh must be documentary Letter of Credits and should provide for payment to be made against full sets of onboard (shipped) transport documents (BL, AIB, TR etc.) showing dispatch of goods covered by Credit to a destination in Bangladesh;
They must ensure that they deal only with known customers having a place of business in Bangladesh and can be traced easily if any occasion arise for this purpose;
They should establish Letter of Credit against specific authorization on behalf of their own customers who maintain accounts with them with and know to be participated in the trade;
It is not permissible to open to clean or revolving credits;
They are allowed to open divisible, transferable Letter of Credits for import into Bangladesh under cash LCAF (Letter of Authorization Form);
It is not permissible to open Letter of Credits in favor of beneficiaries in countries from which import into arc banned by the component authority;
Letter of Credits to be opened only against firm contract between the Applicant and beneficiary. Bankers should sec documentary evidence, before opening Letter of Credit, that a firm order for the goods to be imported has been placed and accepted;
The full description of goods to be imported along with unit price and quantity to be given in the Letter of Credit;
Confidential report of the exporter to be obtained by the bank, where the amount of Letter of Credit exceeds TK. 2,00,000 in case of import against pro forma invoices
issued direct by foreign supplier and TK. 5,00,000 against indent issued by local agents of the suppliers;
Payments against discrepant documents may be made after the goods have been cleared from the customs on the basis of the locative LCAF;
Advanced remittance against import may be made after getting prior permission from Bangladesh Bank where the goods arc of specialized or capital nature.
4.4 Import Procedure:
Imports are purchase of goods and services from foreign country by the consumers, firms and Government in Bangladesh. The importer must obtain an Import registration Certificate (IRC) from the CCI&E. The importer functioning is to be made according to the terms of Import & Export Act-1950, and other regulatory circulars of Ministry of commerce and Industries.
The overall import procedure is illustrated briefly as follows:
Step 1: The importer obtain IRC from the CCI&E;
Step 2: The importer contacts with the seller outside the country to obtain the pro-form Invoice from him or his agent with in the country (Indenter)
Step 3: If the importer accepts the indent/pro-forma invoice, he makes an agreement with the seller detailing the term and conditions of the import;
Step 4: Importer opens L/C his bank in favor of the seller and offers to take necessary steps regarding the L/C.
Step 5: The Issuing bank asks another bank to advice it to the seller;
Step 6: The advising bank advises the L/C to the seller;
Step 7: After Issuing Bank receives the documents and reimburses the payment by his reimbursing bank provided that the delivered documents are according to the L/C and there is no discrepancy;
Step 8: The Issuing Bank receives the documents and reimburses the payment by his reimbursing bank provided that the delivered documents are according to the L/C and there is no discrepancy;
Step 9: The importer collects the documents from the bank and release the goods.
The above described import procedure is usually maintained but the payment procedure of the advising may be different if there is any clause regarding the movement of the L/C.
4.5 Flow Chart of Opening L/C for Import:
Following document duly signed L/C application form LCA form IMP form authority to debit account.
Banker examines the liability position of the importer from different departments and whether the item is importable or not.
Credit report of the exporter asked from the negotiation bank.
Original IRC submitted to the bank
TIN certificate
Trade License (up to date) copy
Membership certificate of chamber of Commerce
Positive or Negative L/C is opened and sent to advising bank through swift.
Documents submitted by the importer by the importer indent/ PI/ Insurance cover note etc.
4.6 Documents Required for Opening of L/C:
L/C application and agreement Form (Bank's prescribed application form) with adhesive stamp.
Letter of Credit authorized Form (LCAF)
CIB.(Credit Information Bureau)
Pro-forma Invoice (Approved by BRTC in case of Mobile Set)
Import Registration Certificate. Tax Identification Number, VAT (IRC renew)
Membership Certificate.
Last year income tax assessment.
Harmonized System Code (HS Code)
Charged Documents.
Under Charged Documents the following letters are required:
Demand Promissory Note.
Letter of Guarantee. (Signature without Seal) Some Exemption:
No IRC required for importation of capital machinery for setting up new industry.
Only BOI approval required.
Country of origin‖ issued by government/competent body. Trade body CO is not required in case of importation of raw materials for Coal & RMG industry.
4.7 Application for L/C Limit:
Before opening L/C, importer applies for L/C limit. To have an import L/C limit, an importer submits an application to the bank furnishing the following information-
Full Particular of Bank A/C maintained with the bank
Nature of Business
Required Amount of Limit
Payment Terms and Conditions
Goods to be Imported
Offered Security
Repayment Schedule
A credit officer scrutinizes this application and according prepares a proposal (CLP) and forwards it to Head Office Credit Committee (HOCC). The committee, if satisfied, sanctions the limit and \returns back to the branch. Thus the importer is entitled for the limit.
4.8 An Opening of Letter of Credit
Importer applies to the bank to open L/C in favor of foreign supplier. The bank has its printed application form and the importer should carefully fill in this form. On receiving this application, the bank scrutinizes it to ensure that. Whether the customer fulfils all the required conditions/criteria to be eligible as an importer as per provisions of the Import Policy Order and Guidelines for Foreign exchange Transactions in force and the supporting documents/papers required are submitted.
Whether the items for import of which the documentary credit need to be opened is permissible i.e. not included in the negative/restrictive list as per Import Policy order in force.
Whether we are holding satisfactory credit report on the beneficiary to satisfy the relevant provisions of the guidelines for Foreign Exchange transactions.
On receipt of the L/C application over the counter or through dispatch/mail section, the receiving date and time to be recorded on the L/C application.
Signature of the customer on the L/C application to be verified by authorized/
designated officer.
L/C application with all supporting papers to be checked to ensure that the required papers areas per requirement of Guidelines for Foreign Exchange Transactions and are consistent to each other.
L/C application must show the following clearly
Full name & address of the beneficiary
The amount of the credit
The Credit whether to be irrevocable or confirmed irrevocable.
Whether the credit is available by payment, acceptance or negotiation
On which party the drafts are to be drawn and the tenure of such drafts
A brief description of the goods, including details of quantity and unit price
Whether freight is to be prepaid or not
The port of shipment and the destination
Whether the transfer of the goods from one vessel to another, or from one mode of transport to another, route, is prohibited.
The last date for shipment
The date and place of expiry of the credit.
Negotiation period.
Details of the documents required and how those are to be dispatched to the issuing bank i.e. by ordinary mail/courier.
Whether the credit is to be a transferable one.
How the credit is to be advised i.e. by mail/telex.
Letter of Credit authorization from duly filled in and signed.
Indent or Performa Invoice issued by Seller or his agent (Indenter) duly counter signed by the customer.
Insurance certificate or policy (Marine/Air/Mail/Truck) covering the goods at 10%
above L/C value for the whole journey/shipment together with unconditional premium paid receipt.
Prior permission/registered LCA form, No objection/any other certificates from the concerned authority as required as per provision of the Import Policy Order.
I.M.P. form duly filled in and signed.
In case the L/C application is not complete or in consistence or the required papers are not submitted, the customer should be promptly contacted for rectification of the defects.
4.9 Margin and Other Charges:
Before issuing Letter of Credit, bank asks the applicant to deposit Letter of Credit margin according to the terms of sanction and other necessary charges which includes commission, handling charges, foreign correspondence charge, telex/SWIFT charge etc, as per terms and conditions of sanction. Margin charged against any particular Letter of Credit depends upon the Item or Goods of the import. Margin varies between nil to 100%. Generally the higher value of margin, the higher it means that Bangladesh Bank discourages to import that goods or items.
4.10 Issuing the Letter of Credit:
In this stage, the issuing bank fills the bank-specified-form for issuing Letter of Credit.
Generally a Letter of Credit contains the following information and terms and conditions:
Charges;
Country of origin of goods;
Currency and amount;
Date and place of the expiry of the Documentary Credits ;
Description of goods and quantity ;
Documents required for negotiation;
Instruction for negotiating bank;
Last date of shipment;
Letter of Credit Authorization Form (LCAF) number, IRC (Import Registration Certificate) number and Harmonized System (HS) code;
Mode of Carrying -Air/Ship/Truck;
Name and address of beneficiary ;
Name and address of the advising bank;
Name and address of the applicant;
Name of the issuing Bank and Branch;
Negotiating bank preferably freely negotiable in any bank;
Number of Letter of Credit and date of opening ;
Payment Term-Sight
Period of Negotiation ;
Period of presentation ;
Port of Loading and port of Discharge;
Reimbursing Bank and payment mode;
Terms and conditions regarding Transshipment and Partial Shipment;
Depending on the specific provision in the underlying sales-contract (mentioned below), it may be necessary to incorporate one or more of the following additional terms in the Letter of Credit:
Whether the pay of the bank charges is on account of the opener or seller.
Whether short form of Bill of Lading (B/L) is acceptable.
Whether, in case of bulk import, charter-party Bill of Lading (B/L) is acceptable or not.
Whether shipment by chartered vessel is allowed, the following causes must be stipulated in the Letter of Credit.
Shipping documents must include copies of Charter-party agreements.
Bill of Lading must be signed by named carrier or his authorized agent.
4.11 Different Means of Payment:
Importer settles the means of payment with the seller after making the purchase contract.
Import procedure differs with relation to different means of payment. In our country in most cases, the Documentary/Letter of Credit makes import payment. Purchase Contract contains which payment procedure has to be applied.
a) Cash in Advance: Importer pays full, partial or progressive payment by a foreign DD, MT or TT. After receiving payment, exporter will send the goods and the transport receipt to the importer. Importer will take delivery of the goods from the transport company.
b) Open Account: Exporter ships the goods and sends transport receipt to the importer.
Importer will take delivery of the goods and makes payment by foreign DD, MT, or IT at some specified date.
c) Collection Method: Collection methods are either clean collection or documentary collection. Again, Documentary Collection may be Document against Payment (D/P) or Document against Acceptance (D/A). The collection procedure is that the exporter ships the goods and draws a draft/ bill on the buyer. The exporter submits the draft/bill (only or with documents) to the remitting bank for collection and the bank acknowledges this. Then the remitting bank sends the draft/bill (with or without documents) and a collection instruction letter to the collecting bank. Acting as an agent of the remitting bank, the collecting bank notifies the importer upon receipt of the draft. The title of goods is released to the importer upon full payment or acceptance of the draft/bill.
d) Letter of Credit: Letter of credit is the well-accepted and most commonly used means of payment. It is an undertaking for payment by the issuing bank to the beneficiary, upon submission of some stipulated documents and fulfilling the terms and conditions mentioned in the letter of credit.
4.12 Transmission of Letter of Credit Payment:
The Letter of Credit duly signed by the authorized persons of the bank is then sent to the advising bank. There are three modes of sending the Letter of Credits which are as follows
:
By Mail/Courier: Letter of credit can be sent to the advising bank by mail /courier.
By Telex & Fax It was practiced earlier in the other branches, but now NCC Bank does not transmit letter of credit through telex & fax.
By SWIFT: SWIFT Stands for Society of World Wide Interbank Financial Telecommunication. This is special format maintained round the world. Through this facility party can communicate within few minutes with other party staying any part of the world. NCC Bank Limited, Khatungonj Branch Provides this facility to the clients. The advising bank verifies the authenticity of the Letter of Credit. NCC Bank has corresponding relationship or arrangement throughout the world by which the Letter of Credit is advised. Actually the advising bank does not take any liability if otherwise not requested.
4.13 Receipt of Documents:
After opening the Letter of Credit the next step would be to await shipment followed by negotiation of documents by a bank abroad. The beneficiary of the Letter of Credit (supplier), after effecting shipment of the goods as per Letter of Credit terms, prepare or collect necessary documents as required under the terms of Letter of Credit and presents the drafts to the negotiating bank along with the supporting documents for negotiation. The negotiating bank negotiates the draft if the documents are found in order as per terms of the Letter of Credit, pays the beneficiary. The negotiating bank will reimburse itself either by debiting NCC Bank's Account, if any, maintained with them (the NOSTRO Account) or will seek reimbursing bank mentioned in Letter of Credit, if there is no account. Simultaneously, the bank will send the documents to NCC Bank. The nature of documents has to be sent by the negotiating bank will depend primarily on the terms of the Letter of Credit and secondly the sales contact between the buyer and seller. However, generally the following documents are asked to send: Bill of Lading or Airway Bill or other evidence of shipment (e.g. Railway Receipt, Truck Receipt etc.)
4.14 Scrutiny of Documents:
On receipt of the documents, the branch shall immediately set itself to the task of scrutinizing the documents, what they would ensure is that the documents received from the negotiating bank are drawn strictly in conformity with the terms of the Letter of Credit and respond to the requirement of the underlying Letter of Credit in every respect, examination of the documents generally includes the following points:
Completeness of the documents;
Consistency of the documents with each other;
Compliance with the Uniform Customs and Practices for Documentary Credits (UCPDC) issued by the International Chamber of Commerce, Paris. One of the basic principles of documentary credit is that all parties deal with document and not with
goods (Articles 6 of UCPDC-600). That is why the documents should be scrutinized properly. If any discrepancy in the documents is found, that is to be informed to the party. A checklist may be followed for examining the documents.
In the UCPDC the Standard for Examining of Documents is mentioned as follows:
a) Banks must examine all documents stipulated in the Credit with reasonable care, to ascertain whether or not they appear, on their face, to be in compliance with the terms and conditions of the Credit. Compliance of the stipulated documents on their face with the same terms and conditions on the Credit shall be determined by international standard banking practice as reflected in these Articles. Documents which appear in their face to be inconsistent with one another will be considered as not appearing on
a) Banks must examine all documents stipulated in the Credit with reasonable care, to ascertain whether or not they appear, on their face, to be in compliance with the terms and conditions of the Credit. Compliance of the stipulated documents on their face with the same terms and conditions on the Credit shall be determined by international standard banking practice as reflected in these Articles. Documents which appear in their face to be inconsistent with one another will be considered as not appearing on