Foreign Exchange

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FOREIGN EXCHANGE DEPARTMENT

2 Introduction

One of the largest businesses carried out by the commercial bank is foreign trading. The trade among various countries falls for close link between the parties dealing in trade. The situation calls for expertise in the field of foreign operations. The bank, which provides such operation, is referred to as rending international banking operation. Mainly transactions with overseas countries in respect of import, export and foreign remittance come under the preview of foreign exchange department. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller. In this case the bank plays a vital role to bridge between the buyer and seller.

Foreign exchange department of Standard Bank is one of the most important departments of all departments. This department handles various types of activities by three separate sections: a) Import section

b) Export section.
c) Foreign remittance section.

Import
Imports are foreign goods and services purchased by consumers, firms and Governments in Bangladesh. To import, a person should be competent to be an importer. According to Import and Export Control Act, 1950, the Office of Chief Controller of Import and Export provides the registration (IRC) to the importer.

2.01 Import Procedures

2.02 Registration with CCI&E

a) For engaging in international trade, every trader must be first registered with the Chief Controller of Import and Export.
b) By paying specified registration fees and submitting necessary papers to c) The CCI&E. the trader will get IRC (Import Registration Certificate). After obtaining IRC, the person is eligible to import.

2.03 Purchase Contract between importer and exporter

a) Now the importer has to contact with the seller outside the country to obtain the proforma invoice / indent which describes goods. b) Indent is got through indenters' local agent of the sellers. c) After the importer accept the 'proforma invoice, he makes a purchase contract with the exporter declaring the terms and conditions of the import.

d) Import procedure differs with different means of payment. In most cases import payment is made by the documentary letter of credit (L/C) in oar country.

2.04 Collection of LCA form
The importer collects a Letter of Credit Authorization (LCA) form SBL Principal Branch.

2.05 Opening a Letter of Credit (L/C)

In international environment, buyers and sellers are often unknown to each other. So seller always seek guarantee for the payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by its Letter of Credit'.

2.06 Parties of L/C

a) Importer - Seller who applies for opening an L/C.
b) Issuing Bank - It-is the bank which opens/issues a L/C on behalf of the importer.
c) Confirming Bank - It is the bank, which adds its confirmation to the credit and it, is done at the request of issuing bank. Confirming bank may or may not be advising bank.
d) Advising / Notifying Bank - is the bank through which the L/C is advised to the exporters. This bank is actually situated in exporters country. It may also assume the role of confirming and / or negotiating bank depending upon the condition of the credit.

e) Negotiating Bank - is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank.

f) Paying / Accepting Bank - is the bank on which the bill will be drawn (As per condition of the credit). Usually it is the issuing bank. g) Reimbursing bank - is...
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