Exim bank export import foreign exchange

Managerial & Operational Procedure of Export Import Bank Limited & their Foreign Exchange and Foreign Trade

1.

INTRODUCTION:

The basic function of any economy is to allocate scarce and natural material resources in order to produce goods and services needed by the society upon which the standard of living of the people depends. With the resources available at hand, it is not possible to satisfy the unlimited demand of the people for goods and services until there is continues and harmonious development of all the sector of economy which largely depends on the proper financial system or discipline. Conventional financial system emphasized on capitalism and the basic formula of this was "survival of the fittest". Only strong person can survive. There was no place for weak person. So, Islamic financial system was required for all kinds of people and Insaf for all. To continue the financial system in proper way Islamic Banking has emerged as innovation in the banking sector.

Like other member nations of QIC (Organization of Islamic Conference), Bangladesh also took the initiative to promote a bank based on Islamic Shariah. EXIM Bank of Bangladesh Limited was in incorporated in 1999. EXIM Bank Bangladesh Limited is an unconditional and specialized financial institution that performs of the standard banking service, General Banking, investment and foreign exchange activities on the basis of profit-loss sharing system conforming to the principles of Islamic Shariah.

The most distinctive feature of Islamic banking is its abstinence from interest in observance of Islamic banking and prohibition of all interest based transactions. EXIM Bank organizes their operations on the basis of profit/loss sharing and other modes, which are permitted by Islam. Considering the importance of foreign exchange operation and performance of EXIM Bank, an attempt has been made in this paper to study the existing foreign exchange procedures under Islamic Framework with especial emphasis on EXIM Bank 'Rajuk Avenue Branch'. This paper attempts to analyze "Managerial & Operational Procedure Of Export Import Bank Limited & their Foreign Exchange and Foreign Trade" under Islamic banking system".

1.1

ORIGIN OF THE REPORT:

As a part of the Internship Program of Master of Business Administration course requirement, I was assigned for doing my internship in EXIM Bank for the period of 12 weeks starting from February 11 to May 31,2008.

In EXIM Bank I was assigned in the General Banking and Credit Division for seven week and remaining five weeks in Foreign Exchange Division of the office, Foreign Exchange Branch. My organizational supervisor was Mr. zasim Uddin bui, VP. My topic is "Managerial & Operational Procedure Of Export Import Bank Limited & their Foreign Exchange and Foreign Trade" which was assigned by organizational supervisor of the said bank.

1.2

PURPOSE:

It have been mentioned earlier that every student of AIUB's School of Business has to complete the internship program by submitting an empirical project report of any internship related topic. Therefore, this report has been prepared to describe about the practical knowledge and experience that is gathered during the 12 weeks program in EXIM Bank.

1.3 OBJECTIVE OF THE REPORT: BROAD OBJECTIVE The objective of this report is to gain practical experience in the job field with the help of my theoretical knowledge that I gathered from my academy (s). The 3 months program that I m doing from a Bank helps me to build up my working capability, inter personal skill, confidence, responsibility & ability to work in a group and to investigate about the reset EXIM BANK lance and differences between my theoretical and practical knowledge.

SPECIFIC OBJECTIVE: After selecting the topic, the specific objectives that have been decided to work with were as follows: • # Discovering the export mechanism of Bank • # Analyzing the export mechanism with EXIM Bank.

• # Analyzing the Industry of bank in export segment.

• # Considering the Marketing Mix approach taken by EXIM Bank and its Competitors.

• # Evaluating the strength & weakness of export operation compared with other banks.

• # Identifying the risk factors regarding export.

1.4

SCOPE OF THE REPORT:

EXIM Bank has 35 branches all over the country. I was placed to the Foreign Exchange Branch by the Human Resource Department of the Bank. The scope or span of this report is to highlight only the overall performance of Foreign Exchange Branches with related subject matter of the Bank.

1.3

METHODOLOGY:

In the following section, the detail methodology of the research has been described on the basis of research design, sampling design, data collection method and analysis.

1.5.1 1.5.2 RESEARCH DESIGN: From the viewpoint of function it is a descriptive research because it tries to find out how an export division of a bank is being processed. As a result, from the viewpoint of data, it is a qualitative research as well as quantitative research and from the viewpoint of research place it is a field research because the data that are used in this research are gathered from bank personnel during the internship program.

1.5.3

SAMPLING DESIGN:

The target population for the research was the bank individuals who are directly involved from accepting an export proposal to repatriate it. The sampling technique that was used was non-probability sampling. The respondents were chosen from export departments, exporters.

1.5.4

DATA COLLECTION METHOD:

The research work was dependent on primary and secondary data study as well as observation. For the primary data study, survey method was conducted through informal, relevant and important discussion with the export in-charge, principal officers, Sub-manager of EXIM Bank as well as officers of other banks. That is, on the basis of communication it was a survey through human interactive media or personal interview.

Then secondary data study was conducted through different websites, books, brochures of bank and other publications of EXIM Bank and other banks. Lastly, some data have been gathered by observation at the time of working in the bank.

1.6 LIMITATIONS: During the internship program the limitations of gathering data were as follows: # Three months time for internship is a pretty short time to acquire in depth knowledge about all the departments of EXIM Bank. # Every organization has their own secrecy that cannot be revealed to others. Confidentiality of data was another important barrier that was faced during the conduct of this study. # Some of the information is approximate, since the exact details were not available.

Rush hours and workload of the bank employees were another reason that acts as an obstacle while gathering data.

Before getting started with a specific branch, it is very much important to know about EXIM Bank- as a whole, since every branch of EXIM Bank has to maintain the rules and regulations that are generated by the EXIM Bank (Head Office). Each and every single branch is responsible for achieving the goal or target of EXIM Bank. So a short overview of EXIM Bank will help us understand every issue related to banking and the operations of the branches.

PART-2 AN OVERVIEW OF EXIM BANK 2.

ORGANIZATION OVERVIEW: COMPANY BACKGROUND: Export Import Bank of Bangladesh Limited (EXIM) was established in 1999 under the leadership of Late Mr. Shahjahan Kabir, founder chairman who had a long dream of floating a commercial bank which would contribute to the socio-economic development of our country. He had a long experience as a good banker. A group of highly qualified and successful entrepreneurs joined then- hands with the founder chairman to materialize his dream, hi deed, all of them proved themselves in their respective business as most successful star with their endeavor, intelligence, hard working and talent entrepreneurship. Among them, Mr. Mohammad Nazrul Islam Mazumder became the honorable chairman following the demise of the honorable founder chairman.

This bank starts functioning from 3rd August, 1999 with Mr. Alamgir Kabir, FCA as the advisor and Mr. Mohammad Lakiotullah as the Managing Director. Both of them have long experience hi the financial sector of our country. By their pragmatic decision and management directives in the operational activities, this bank has earned a secured and distinctive position in the banking industry in terms of performance, growth, and excellent management. The bank has migrated all of its conventional banking operation into Shariah based Islami banking since July/2004. EXIM Bank Ltd. as the name implies a newly formed commercial Bank but is the 1st of its kind in Bangladesh. It has been incorporated in Dhaka, Bangladesh as public limited company and its Head Office of the Bank is located at printers' buildings, SRajuk Avenue, Motijheel Commercial area Bangladesh-1000.

Hi the word of consumerism, the business organizations of the world strive for the consumers' satisfaction as a number one business strategy what ever may the product of the organization, either service or non-service. Service is the product of the Bank building. The guard at the door is the first person represents the Bank; receive a customer with wishes hi smiling face.

2.2 HISTORY OF EXIM BANK: The word EXIM implies the meaning of its operation. Though it is a new type of Bank in Bangladesh, it is familiar with so many countries in the world such as Export Import Bank of United States, Export Import Bank of Japan. Despite it is a local Bank, it has spread its operation in the whole world through foreign Banking. To achieve the desired goal, it has intention to pursuit of excellence at all stages with a climate of continuous improvement.

Because it believes, the line of excellence is never ending. It also believes that its strategic place and business networking will strengthen its competitive edge over in rapidly changing competitive environment. Its motto is to provide quality services to the customers all over the world. So the slogan of the Bank- "Local Bank Global Network" is completely adjustable. i 2.3 CAPITAL BASE: Authorized Capital : BDT 3,500,000,000 Paid up Capital : BDT 1,713,757,500 (as on 31.12.2006) 2.4 VISION AND MISSION OF EXIM BANK: % To be the finest bank in the banking arena of Bangladesh under the Shariah guidelines. # To maintain Corporate and business ethics. # To become a trusted repository of customers' money and their financial advisor. # To make our stock superior and rewarding to the customers/share holders. % To display team spirit and professionalism. # To have a Sound Capital Base.

4fc To provide high quality financial services in export and import trade. # To provide excellent quality Customer service 2.5

SLOGAN:

"Together Towards Tomorrow"

2.6 OBJECTIVES: Become one of the best private commercial banks of Bangladesh. Attain superiority in customer service next to none and finer than to all competitors. Cater to all differentiated portions of Retail and Wholesale Customers. Use state-of the art technology in all areas of banking activities.

2.7 VALUES: # Client is the center of attention # Quality # Honesty # Team Work 41 Respect for individual # Responsible citizenship 2.8 CORPORATE CULTURE: This bank is one of the most disciplined Banks with a distinctive corporate culture. Here we believe in shared meaning, shared understanding and shared 7sense making. Our people can see and understand events, activities, objects and situation in a distinctive way. They mould their manners and etiquette, character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to us. The people in the Bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture we belong has not been imposed; it has rather been achieved through our corporate conduct.

2.9 ACHIVEMENT: It is a great pleasure that by the grace of Almighty Allah, we have migrated at a time all the branches from its conventional banking operation into Shaeriah based Islami banking operation without any trouble. Lot of uncertainteties and adversities were there into this migration process. The officers and executives of our bank motivated the valued customers by counseling and persuasion in light with spirit of Islam especially for the non-Muslim customers. Our IT division has done the excellent job of converting and fitting the conventional business processes into the processes based on Shariah. It has been made possible by following a systematic procedure of migration under the leadership of honorable Managing Director.

2.10 SOCIAL COMMITMENT: The purpose of our banking business is, obviously, to earn profit but the promoters and the equity holders are aware of their commitment to the society to which they belong. A chunk of the profit is kept aside and / or spent for socio-economic development through trustee and in patronization of art, culture and sports of the country. We want to make a substantive contribution to the society where we operate, to the extent of our separable resources.

2.11 WORKFORCE (Year 2006).

2.12 BRANCHES: EXIM Bank Limited has 30 (Thirty) Branches. Among total of 30 Branches, 21 branches are located at the prime business centers of urban areas across the country and remaining 9 branches are at rural areas of the country. After the year 2006 they increase another 5 branches. The registered office (Head Office) of EXIM Bank Limited is at Printers Building (5th, 6th & 10th & 13th Floor), 5, Rajuk Avenue, Motijheel C/A, Dhaka -1000.

2.13

CORRESPONDENT RELATIONSHIP:

Correspondent banks are the trade partners of international trade. EXIM Bank has already achieved tremendous success in foreign exchange business. The Bank has established correspondent relationship, that is, agreement with 246 banks covering 117 countries across the world.

2.14

DEPARTMENTS OF EXIM BANK:

EXIM Bank Limited has does this work very well. Different departments of DBL are as follows: • # Human Resources Division • # Foreign Exchange Division • # Treasury Division • # Operations Division • # Information Technology Division • # Investment Division • # Accounts Division • # Audit & Risk Management Division 2.15

HUMAN RESOURCES AND TRAINING:

Amongst all the factors that combine to contribute towards the success of an organization, none counts as much as people. Export Import Bank of Bangladesh believes it in letter and sprit. Bank is maintaining a very transparent and neutral modus operandi as regards recruitment. EXIM bank treats every employee with dignity and respect in a supportive environment of trust and openness where people of different backgrounds can reach their full potential.

The bank's human resources policy emphasize on providing job satisfaction, growth opportunities, and due recognition of superior performance. A good working environment reflects and promotes a high level of loyalty and commitment from the employees. Realizing this EXIM Bank limited has placed the utmost importance on continuous development of its human resources, identify the strength and weakness of the employee to assess the individual training needs, they are sent for training for self-development. With this view EXIM Bank established its own training centre named EXIM Bank Training Institute on 2004.

2.16

PRODUCT AND SERVICES:

The product and services that are currently available are given below: 2.16.1 DEPOSITORY PRODUCT:

• • • • • • • • • • •

# Al-Wadia Current Deposit # Mudaraba Savings Deposit # Mudaraba Short Term Deposit # Mudaraba Term Deposit # One Month # Three Months # Six Months # Twelve Months # Twenty Four Months # Thirty Six Months # Foreign Currency Deposit

Mudaraba Savings Scheme * Monthly Savings Scheme(Money Grower) * Monthly Income Scheme(Steady Money) * More than Double the deposit in 6 years (Super Savings) *t More than triple the Deposit in 10 years (Multi plus Savings) ^ Mudaraba Hajj Deposit 2.16.2 • • • • • • • • • • • • 2.17

INVESTMENT/FINANCE PRODUCT: Corporate Finance Industrial Finance Project Finance Syndicate Investment Mode of Investment: Murabaha Bai Muazzal IzaraBilBaia Wazirat Bil Wakala Quard Local Documentary Bill Purchased Foreign Documentary Bill Purchased E-CASH/ ATM SERVICE:

The bank is currently providing Credit Card Service (MasterCard) to the privileged customers of the bank in collaboration of Prime Bank. Floating VISA card for both Debit and Credit card service is under process.

2.18

FINANCIAL PERFORMANCE OF EXIM BANK LIMITED:

2.18.1

DEPOSIT:

The deposit is the lifeblood for the commercial Banks. The core business of commercial Banks is accepting deposits and investing fund and it's the main steam of revenue of commercial Banking. The total deposit of the Bank stood at Tk.35032.02 million as on December 2006 as against Tk.28319.21 million of the previous year which is an increase of 23.70%. The growth rate may be termed as a remarkable achievement for the Bank. The

present strategy is to increase the deposit base through maintaining competitive rates of profit and having low cost of funds.

2.18.2 INVESTMENT: The size of the investment portfolio of the Bank as on 31 st December, 2006 stood at Tk.32641.27 million against Tk.26046.34 million in 2005 showing growth of Tk.6594.93 million i.e. 25.32%. Investment hi shares stood Tk.2233.25 million as on 31 st December 2006 that helped in reaping substantial amount of cash realized profit during the year.

2.18.2 2.18.3.1.

FOREIGN EXCHANGE SERVICES: IMPORT BUSINESS:

The total import business handled by the Bank during the year 2006 was Tk.49596.73 million as compared against Tk.41432.10 million in the previous year showing a growth rate of

19.71%. The main items of import were industrial raw materials, consumer goods, machinery, fabrics and accessories etc.

2.18.3.2.

EXPORT BUSINESS:

The total export handled by the Bank during the year 2006 was Tk. 46234.59 million compared to Tk. 31285.37 million in the previous year showing a growth rate of 47.78%. The main export items were Jute, Jute goods, readymade garments, leather and leather goods etc.

2.18.3.3.

FOREIGN REMITTANCE: Foreign Remittance of the bank stood at Tk. 343.78 million as of December 31, 2006 as against Tk. 222.97 million hi 2005. Besides, the Bank has taken initiatives to make Remittance Arrangements with some leading Exchange Houses at abroad.

2.18.3 CAPITAL AND RESERVE FUND: The authorized and paid up capital of the Bank was Tk. 1000.00 million and the paid-up capital of the Bank is Tk. 225.00 million while it started its Banking operation hi 1999. The capital and reserve of the Bank as on 31 st December 2006 stood at Tk.3111.68 million. The Bank also made provision on unclassified investments of the Bank, which is amounted to Tk.351.47 million.

2.18.5

YEAR WISE DIVIDEND POSITION OF THE BANK

PART-3 TOPIC AN ALISIS & DESCRIPION 3.

TOPIC ANALYSIS & DESCRIPTION

3.1 DEFINITION OF FOREIGN EXCHANGE: Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cheque, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies.

Foreign Exchange Act. 1947 defines foreign exchange as "foreign currency and includes deposits, credits, and balances payable in foreign currency as well as drafts, travelers cheque, letter of credit, bills of exchange drawn in local currency but, payable in foreign currency".

According to Dr. Paul Einzig, "Foreign exchange is the system or process of converting one national currency into another and transferring money from the country to another." Foreign exchange deals with foreign trade and foreign currency.

3.2

DEFINITION OF FOREIGN TRADE:

No country is self-sufficient in all the goods. Some countries have special advantage to produce some items. Bangladesh can manufacture readymade garments easily due to their cost of labor. So Bangladesh is exporting readymade garments to USA where as USA is exporting machinery to Bangladesh due to their favorable transaction to that item. These kinds of cross border transaction or exchange of goods are called foreign trade.

3.3 FOREIGN EXCHANGE AND FOREIGN TRADE: EXIM Bank undertakes spot purchase and sales foreign currencies by deploying its own fund.

EXIM Bank invests funds in foreign exchange baseness in the following manner.

Particulars Name of investment Bank act as Bank's income Direct Investment

Owner

Profit Margin

Islami Banks

Mudaraba Investment

Partner

Profit/Loss

Conventional

Banks Loan

Lender

Interest

Foreign exchange and foreign trades of a country are conducted according to the law of that country. EXIM Bank of Bangladesh Limited performs all its banking operations including foreign exchange activities according to that law but within the bindings of Islamic Shariah.

Islami banks conduct their foreign exchange business mainly into two ways: a) Bank provides service as an agent for the transaction and earns service charge, commission etc.

b) Bank invests its fund for the purchase of foreign currencies and sale of such currencies on the basis of present transaction and may earn profit thereof.

3.4 FOREIGN EXCHANGE TRANSACTIONS: Conversion of currencies or exchanges is known as foreign exchange transactions. The conversion may arise for a transaction between a bank and its customers or between a bank and another bank at home or abroad. The transaction involves at least two currencies. For a bank in Bangladesh, the process of conversion frequently involves conversion of Bangladeshi taka into foreign currencies or vice- versa.

3.5 WINGS OF FOREIGN EXCHANGE: A Bank's Foreign exchange department has three definite wings through which foreign exchange transactions are conducted.

Foreign Exchange Import Section

Export Section

Remittance Section

The achievement of EXIM Bank in the above three areas of foreign exchange business has been quite extraordinary. The Bank has been providing services to import and export trade and for repatriation of hard-earned foreign exchange of Bangladeshis living and working abroad and has, by now, consolidated its position in these areas.

3.6

IMPORT:

Import trade of Bangladesh is controlled under the import & Export control Act (EEC) 1950.

Buying of goods & services form foreign countries for sales is considered as import. The person or organization who import the goods & services form foreign countries is known Importer and from which goods & services are imported is known as Exporter. In case of Import, the importers are asked by their Exporters to open a Letter of Credit (L/C). So that there payment against goods & services is ensured.

3.6.1

GENERAL PROVISION FOR IMPORT:

Regulation of Import - Import of goods under this order shall be regulated as under: 3.6.1.1.

Banned List: Banned goods are not allowed to import through the foreign exchange transaction. Such as Live Swine, Eggs of shrimps and prawns etc.

3.6.1.2.

Restricted List: Any item, which is restricted by the "Import Policy Order 1997-2002" in Annexure -l(b) shall be importable only on fulfillment of the conditions (b) specified therein against the item.

3.6.1.3.

Free Importable Items: The items which are not included either in the Banned list or Restricted list shall be freely importable.

3.6.1.4.

3.6.2

Others: hi addition to the conditions mentioned in the Restricted and Banned Lists the conditions restrictions and procedures for import of variety items mentioned in the test portion of this Order, shall as export apply in case of import of those items.

GENERAL CONDITIONS OF IMPORT GOODS:

Import Trade Control Schedule Numbers- for import purpose of new ITC Numbers with at least six digits corresponding to the classification of goods as given in the Import Trade Control Schedule 1998, based on the Harmonized Commodity Description and Coding System shall be mandatory.

3.6.2.1. NOC On The Basis Of ROR: No objection Certificate on the basis of ROR form any authority shall not be required for import of any freely importable item by any Public Sector Agency. However, in cases where a public sector agency is required to import banned or restricted items included in the control list prior permission of the Ministry of Commerce shall have to be obtained on the basis of ROR issued by the ministry of Industries or by the Sponsoring Ministry/Division or by both as the case may be.

3.6.2.2.

Restriction Regarding Source Of Procurement Of Goods: (a)

Goods from Israel or goods originating form that country shall not be importable. Goods shall also not be importable in the flag vessels of that country, (b) All kinds of import from and export to Serbia and Montenegro, fragments of former Socialist Republic of Yugoslavia shall be banned.

3.6.2.3. Pre- Shipment Inspection: Unless otherwise specified pre-shipment inspection of imported goods shall not be obligatory in case of import be the private sector importers.

3.6.2.4.

Shipment of Bangladesh Flag Vessels: Subject to waiver specified below shipment of goods shall normally be made on Bangladesh flag vessels.

3.6.3 TYPES OF IMPORTER: Goods are imported for personal, commercial or industrial purpose. So there are three kinds of importer such as: # Personal Importer.

Commercial Importer.

Industrial Importer.

3.6.4

AUTHORIZED DEALERS:

Authorized Dealer means a Bank, Authorized by Bangladesh Bank to deal in Foreign Exchange under the Foreign Exchange Regulation (FER) Act 1947. But there are some persons or firms, authorized by Bangladesh Bank to deal in Foreign Exchange with limited scope are called authorized Money Changers. To get a license for authorization a bank will apply the General Manager, Foreign Exchange Policy Department, Bangladesh Bank, Head Office, Dhaka complying the subsequent conditions:

I. The Bank should have adequate manpower trained in Foreign Exchange, ii. Prospect to attract reasonable volume of Foreign Exchange business in the desired location. iii. The bank maintain complies with the instruction of Bangladesh Bank. The bank will commit to deal in Foreign Exchange within the limit & will submit periodical returns as instructed by Bangladesh Bank.

3.6.5 FUNCTIONS OF AUTHORIZED DEALER: Authorized Dealer can handle all kinds of Foreign Exchange transaction as per Foreign Exchange Regulation (FER) Act 1947 under the instruction of Bangladesh Bank. Following are the main function of an Authorized Dealer * Exchange of Foreign Currencies. * To make arrangement with Foreign Correspondent. * Buying & Selling Foreign currencies. * Handling of Inward & Outward Remittance * Opening of L/C. * Investment in Foreign Trade. * Opening & Maintenance of Accounts with Foreign Banks under intimation to Bangladesh Bank. * Export Documents handling.

3.6.6 LETTER OF CREDIT (L/C): Letter of Credit (L/C) is a payment guarantee to the seller by the issuing bank on be half of the importer. In other words, it is a letter of the Issuing Bank to the beneficiary undertaking to effect payment under some agreed conditions. L/C is called documentary Letter of Credit, became the undertaking of the Issuing Bank is subject to presentation of some specified documents. Through the L/C Buyers & Sellers enter into a contract for buying and selling goods/ services and the buyer instructs his bank to issue L/C in favors of the seller. Here bank assumes fiduciary function between the buyer and seller.

3.6.8 CLASSIFICATION OF L/C: There are many kinds of L/C. Few of them are briefly discussed below:

3.6.8.1.

Irrevocable L/C: Irrevocable L/C cannot be amended or cancelled without the consent of the beneficiary or any other interested parties.

3.6.8.2.

Revocable L/C: It can be amended or cancelled by the Issuing Bank, without the consent of the Beneficiary or any other interested parties. If it is not indicated in the L/C whether it is Revocable or Irrevocable then the L/C to be treated as Irrevocable.

3.6.8.3.

Add-Confirmed L/C: When a third Bank provide guarantee to the beneficiary to make payment, if Issuing Bank fail to make payment, the L/C a third Bank adds their confirmation to the beneficiary, to make payment, in addition to that of Issuing Bank.

Confirmed L/C gives the beneficiary a double assurance of payment.

3.6.8.4.

Clean Clause L/C: It is a one kinds of Normal L/C without third Bank's confirmation.

3.6.8.5.

Revolving L\C: It is an L\C, where the original amount restores after it has been utilized. How many times and how long, the amount will restore should be specified in L\C. For example, an L\C opened for $10,000,000 and shipment effected for $5,000,000, now the L\C restored for full value i.e. there is scope to effect full value i.e. there is scope to effect further shipment of $10,000,000. Revolving L/C may be opened to avoid difficulties of opining new L/C. This L/C is not allowed in our present import policy.

3.6.8.6.

Transferable L/C: If the word "Transferable" incorporated in an L/C, then the L/C is transferable. Transferable L/C can be transferred by the 1 st beneficiary to the 2nd beneficiary. But 2nd beneficiary cannot transfer it further to another beneficiary. Transfer may be done to more than one beneficiary partially, if not prohibited in the L/C 3.6.8.7.

Clean Letter of Credit: This is a commercial letter of credit wherein the Issuing Bank does not ask any documents as evidence of execution of the deal under the L/C. Under the said L/C only Bill of Exchange may be negotiated or may be paid without any supporting documents. Clean letter of Credit is not permissible in our import policy.

3.6.8.8.

Documentary Letter of Credit: All the commercial letter of credits, where export related documents such as invoice, B/L etc are required to present with the bill of exchange, is called Documentary Credit. Under this L/C, bill of exchange will not be honored without other required documents.

3.6.9 OTHER CLASSIFICATION OF L/C: On the basis of fund L/C may be classified as follows: 3.6.9.1.

Back to Back L/C: Back to Back L/C is backed by another Export L/C. Where Import of the goods to be made to execute the export L/C & payment of Back to Back bills to be made normally from related export proceeds, the import L/C is called Back to Back L/C. 3.6.9.2.

Cash L/C: Where payment of import bill under L/C is being made form (i) Foreign Currency reserve in Bangladesh Bank or (ii) F.C account with Authorized Dealer the L/C is called Cash L/C. 3.6.9.3. Barter L/C: Where final settlement is being made through commodity Exchange between the nations, the L/C is called Barter L/C.

3.6.9.4. L\C Under Commodity Aid, Loan, Credit or Grant: Where final settlement of import payment are made through Commodity Aid, Loan, Credit or Grant.

3.6.9

DIFFERENT PARTIES TO A DOCUMENTARY CREDIT:

Normally the subsequent parties are related to a documentary credit. Such as 3.6.10.1.

The Issuing Bank: This is the bank who issues Documentary credit on account of it's client.

3.6.10.2.

The advising Bank: This is a Bank acting as Agent of the Issuing Bank, to advise the L/C to the beneficiary.

3.6.10.3.

The confirming Bank: This Bank gives the beneficiary a double assurance of payment. This is a third Bank undertake to make payment, to the beneficiary, if the Issuing Bank fail to make Payment.

3.6.10.4.

Negotiating Bank: This Bank provides value to the beneficiary against presentation of documents complying credit terms. Normally this is exporter's Bank who purchase the export documents.

3.6.10.5.

Reimbursing Bank: This is a Bank acting as Agent of the Issuing Bank Authorized to make payment or to honor reimbursing claim of the Negotiating Bank.

3.6.10.6.

The Transferring Bank: If the L/C is transferable then the 1 st beneficiary through a bank nominated by the Issuing Bank this bank is called the Transferring Bank.

3.6.10.7.

The Applicant: Importer or buyer is the applicant of a Letter of Credit.

Applicant should be the client of the Issuing Bank.

3.6.10.8.

Credit.

The beneficiary: Exporter or Seller of the goods is the Beneficiary of a Letter of

3.6.10.9.

Notify Party: The Party / Bank to whom the arrival of shipment has to be notified or to be informed is called notify party.

3.6.11 IMPORT MECHANISM: To import a person should be an importer. In accordance with Import & Export Control Act, 1950 the office of chief Controller of Import & Export provides the registration (TRC) to the importer. After getting this person has to secure a letter of credit authorization from Bangladesh Bank. Then he becomes a qualified importer; He is the person who requests or instructs the opening bank to open an L/C. He is also called opener or applicant of the Letter of Credit.

3.6.12 IMPORT REGISTRATION CERTIFICATE:

Import Registration Certificates are issued by the office of chief controller of imports and exports. Intending importers are to submit applications to CCI & for registration along with required documents are as follows: # Application # Trade License # Nationality Certificate # Tax identity number (TIN) # Bank Certificate # Membership certificate from Trade Association Certificate of incorporation, Article and Memorandum of Association. Partnership Deed for partnership firm.

To obtain import registration certificate (IRC) the applicant will submit the following paper to the CCI & E through this nominated Bank. # Questionnaire duly filled in & signed by the applicant # Trade License # Membership certificate from chamber of commerce or any other trade Association # Nationality Certificate # Income tax registration certificate. # Partnership deed/certificate of registration with the register of join stock companies where applicable.

On being satisfied, the CCI&E issues IRC obtain original copy of treasury challan for payment of registration fee.

3.6.13 PRELIMINARY STEPS FOR OPENING L/C: Before opening the L/C Bank will takes the subsequent steps: 3.6.13.1. Applicant to be Bank's A/C Holder: Bank will open the L/C on behalf of a person who has an account with the Bank. Unknown person will not be allowed to open L/C. 3.6.13.2. Registered importer: Before opening the L/C bank should confirm that the L/C applicant is a registered importer or personal importer, and the IRC of the importer has been renewed for the current year.

3.6.13.3. Permissible item: The item to be imported should be permissible and not banned item. If the item is from conditional list, the condition should fulfill to import the same.

3.6.13.4. Market Report: Bank will verify the marketability of the item & market price of the goods. Some times the importer may misappropriate the Bank's money through over invoicing.

3.6.13.5. Sufficient Security or margin: Price of some items fluctuates frequently. In case of those item Bank will be more careful to take sufficient cash margin or other security.

3.6.13.6.

Business Establishment: Bank should not open an L/C on be half of a floating businessman. The importer should have business establishment, particularly he should have business network for marketing the item to be imported.

3.6.13.7.

Restricted Country: Goods not to be imported from Israil.

3.6.13.8. Credit report of the beneficiary: It the amount of L/C in one item exceeds TK. 5.00 lac, suppliers credit report is mandatory. Bank will collect credit report of the beneficiary through its correspondent in abroad.

3.6.13.9. Application of the client to open the L/C: The client will approach to open the L/C in Bank's prescribed form, duly stamped & signed, along with the following paper & documents: Such as # N Indent / Performa invoice. # Insurance cover note with money receipt. # LCAF duly filled in & signed. # Membership certificate form chamber of commerce / Trade Association. # N Tax payment certificate / declaration. # IMP & TM form signed by the importer # Charge documents # IRC, Pass book, Trade license Membership certificate & VAT rSegistration certificate in case of new client. # Export L/C in case of back-to-back L/C. 3.6.13.10.

Permission From Ministry of Commerce: If the goods to be imported under GIF (cost insurance & freight), then permission form ministry of commerce to be obtained.

3.6.13.11.

Creditability of the Client: In consideration of all the above points, if Bank become satisfied regarding the client then L/C may be ope Sned on behalf of the client.

Before opening the L/C bank will issue & authenticate a set of LCAF in the name of the importer.

3.6.14 IMPORTANT POINTS TO PREPARE AN L/C: To prepare an L/C the Authorized Dealer (AD) should take care on the subsequent points: 3.6.14.1. Serial Number: ADs will put a number for each L/C which is the serial number of the L/C for a particular year, In example I can say if first L/C of EXM Bank, Rajuk Avenue Branch in 2008 may be numbered as 1953/01/08/0001 (Branch code/ month/ year/ L/C number) 3.6.14.2.

Place & Date of issue: L/C should indicate the place and date of issue.

3.6.14.3. Date & Place of expiry: L/C should have an expiry date. This is the last date of presentation of document under the L/C. Place of expiry of the L/C also to be mentioned in the L/C. Normally it should be the counter of the negotiating Bank.

3.6.14.4. Shipment date: There should be a last shipment date after which shipment is not allowed. Bank may also fix-up a first shipment date before which shipment will not be allowed.

3.6.14.5.

Presentation period: Issuing bank will allow a period within which exporter should present the export documents to the negotiating bank or to any other nominated bank.

This may be 15 days from the date of shipment. Maximum may be allowed one month. But within the expiry date of the credit.

3.6.14.6.

L/C.

Applicant: Name of the applicant with business address to be put in the

3.6.14.7.

L/C.

Beneficiary: Name of the beneficiary with address also to the indicated in j the

3.6.14.8.

L/C.

Advising Bank: Name of the advising Bank with address to be mentioned in the

3.6.14.9.

Amount: Every L/C should show the amount of the L/C.

3.6.14.10. Part- shipment & Transshipment: Issuing Bank also clearly indicate in the L/C whether part-shipment & Transshipment are allowed or not.

3.6.14.11. Availability: L/C should indicate whether the credit is available be payment, by negotiation or by acceptance.

3.6.14.12. Port of shipment & port of destination: L/C will also indicate from where shipment to be made & where goods to be delivered.

3.6.14.13. Tenure of the Draft: Whether the draft to be drawn at sight or deferred also to be cleared in the L/C. 3.6.14.14. Documents required: Bank will give the list of required documents & data content there in. Each 7 every term should be supported by documents. Became any term without asking document is valueless.

3.6.14.15. Payment: When & where, by whom payment to be made, also to be indicated in the L/C. 3.6.14.16. UCPDC: Bank will incorporate the reference of UCPDC(Uniform customers and practice for documentary credits)-500 in the L/C for its application in all the operation of the L/C. 3.6.14.17. Bill of lading: B/L should be issued or endorsed to the order of the Issuing Bank.

It should be clean and freight prepaid if L/C is on CFR basis. Short form & charter party B/L to be avoided. All these terms to be incorporated in the B/L clause of the L/C. 3.6.14.18. Bill of Exchange: bill of exchange to be drawn on the issuing bank.

3.6.14.19. Pre-shipment Inspection: Pre-shipment inspection certificate is compulsory for both government and private importer except in few cases.

3.6.14.20. Data content: Invoice & other documents if required should indicate the H.S code number, LCAF no with description of the item & country of origin.

3.6.14.21. Special conditions: Special conditions such as in case of food, machineries, Vehicles and any other items should be incorporated in the L/C where required.

3.6.14.22. Authenticity of the credit: L/C to be authenticated by putting a test number or signing by two Authorized officers.

3.6.15 SCRUTINIZE OF L/C APPLICATION: The Official scrutinize the L/C application in the following mode. # The terms and conditions of the L/C should be compiled with UCPDC-500 and # # Exchange Control & import trade Regulation. # Eligibility of the foods to import # The L/C should not be opened in favor of the importer or his agent # L/C should be signed by the importer agreeing all terms and conditions mentioned in the application. # IMP form duly filled in and signed. # Validity of IRC # HS (Harmonize coding system) code of the goods # Insurance cover note with date of shipment # Radioactivity report in case of food items # Survey reports or certificate in case of old machinery # Carrying vessel is not from Israel # Certificate declaring that the item is in operation not more than 5 years in case of car.

3.6.16 TRANSMISSION OF L/C: Authorized Dealer will scrutinize the L/C application with all the related paper. If it becomes satisfied it will put a number for the L/C and will entry the L/C in opening register with particulars of the L/C. 3.6.17 AMENDMENT OF L/C: Irrevocable letter of credit may be amended against applicant's written application with the joint consent of all the parties involved in the documentary credit operation. L/C to be amended before its expiry date only. Dispatch or transmission of the amendment is not sufficient to become the amendment effective. Beneficiary's acceptance of the amendment becomes effective, upon his express communication, accepting such amendment or upon his tender of complying documents under the amended credit to the nominated bank. Shipment date & expiry date of the L/C's may be amended if relevant LCA, permit; remain valid up to that period. L/C amount may be decreased with consent of the beneficiary. Numbering of amendments may be done but it is not mandatory.

3.6.18 ACCOUNTING PROCEDURES FOR OPENING L/C: (a) Contingent Liability Voucher Dr. Asset as per contra (L/C cash/ Back to Back L/C) Cr. Liability as per Contra (L/C cash / Back to Back L/C) (b) Charges & Securities Realization Vouchers Dr. Party's Current Account Cr. Income Account (Commission on cash/ Back to Back L/C) Cr. Telex charge recovery (P&T A/C) Cr. Stationery A/C

Cr. Sundry Deposit A/c, where applicable 3.6.19. ADVISING THE IMPORT L/C: Advising depicts the proof of authenticity of the credit to the seller/beneficiary. The advising process consists of forwarding the original credit to the beneficiary. Before forwarding the advising bank has to verify the signature of the L/C opening bank. In addition it ensures that the terms and conditions of the L/C are not inconsistent with the existing regulations. In such a case advising bank does not undertake any liability.

3.6.20. ADVISING CONFIRMATION: The confirming bank does adding confirmation. Confirming bank is a bank, which adds its confirmation to the credit. The confirming bank may or may not be the advising bank. The advising bank expertly does not it if there is not a prior arrangement with the issuing bank.

By being involves as a confirming agent the advising bank undertakes to negotiate beneficiary's bill without recourse to him.

3.6.21. PRESENTATION OF THE DOCUMENTS: The seller being satisfied with the terms and the conditions of the credit proceeds to dispatch the required goods to the buyer. Them he has to present the documents evidencing dispatching of goods to the negotiating bank on or before the stipulated expiry date of the credit. After receiving all the documents, the negotiating bank them checks the document against the credit. If the documents are found in order the bank will pay accept or negotiate to Bank. Then bank checks the documents. The export documents are: # Invoice # Bill of lading # Certificate of origin # Packing List # Shipping Advice # Nor negotiable copy of bill of lading & Bill of exchange # Pre-shipment inspection report # Shipment Certificate

3.6.22.

SCRUTINY OF DOCUMENTS: First of all it should be ensured that full set of documents as mentioned in the L/C has been received. Following documents are included, namely: # Letter of Credit # Commercial Invoice # Bill of Exchange # Bill of lading # Insurance Cover note # Certificate of origin # Others 3.6.23. LODGMENT OF DOCUMENTS: During scrutiny, if the documents are in order, the bank lodges the documents in PAD. The following steps are involved in lodgment: # First all the particulars of the documents are entered in the PAD register and PAD No. Seal is given on all the copies of the received documents. # Convert the foreign currency into Bangladeshi currency. # Reverse the contingent liability and entry made in the liability register. # Prepare lodgment voucher Such as: Liability reversal vouchers Banker's Liability on L/C Dr. Customer's Liability on L/C Cr. # Prepare other vouchers, Such as: PAD (Payment against document) A/C Dr. HO A/C Cr Profit on PAD A/C Cr. Exchange Trading earning CR. # Send an IBCA to the head office. # Make intimation to the importer After getting the charge the shipping documents are stamped with PAD number & entered in the PAD register. Intimation is give to the customer calling on the bank's counter requesting retirement of the shipping documents.

3.6.24. RETIREMENT OF THE IMPORT DOCUMENT: When an importer get red off the import documents form the bank by acceptance / cash payment or under post import bank finance it is known as retirement of the import documents. The importer receives the intimation and gives necessary instruction to the bank for retirement of the bills or for the disposal of the shipping documents to release the imported goods from the custom authority. The importer may instruct the bank to retire the documents by debiting his account with the bank or may ask for investment, which is investment against trust Receipt. Following steps are related to the retirement of the documents: # Calculation of the profit # Calculation of the other charges # Passing vouchers # Entry in the register # Endorsement made on the bank of the bill of exchange. # Finally documents are delivered to the importer.

3.6.25. ACCOUNTING METHOD: The customer's account and margin On L/C is debited and PAD and head office and other income A/C are credited. In case of PAD the TR A/C is debited instead of the PAD. 3.6.26.

PAYMENT PROCEDURES OF IMPORT DOCUMENTS:

Payment is the most sensitive task of the Import department of any branch of bank. The officials have to be very much care of while making payment. This task constitutes the following; 3.6.26.1.

Date of Payment: Export payment is made within sever days after the documents have been received. If the payment is become deferred, the negotiating bank may claim profit for making delay.

3.6.26.2.

Preparing sale memo: A sale memo is made at B.C rate to the customer. As the T.T & O.D rate is paid to the ID the difference between these two rates is exchange trading.

Finally an inter branch exchange trading Credit advice is sent to ID. 3.6.26.3.

Requisition for the foreign currency: For arranging necessary fund for payment, a requisition is sent to the international department.

3.6.26.4.

Transmission of message: Message is transmitted to the correspondent bank ensuring that payment is being made.

3.6.27.

PAYMENTS OF THE IMPORT BILLS:

Incase of Back to back import bills payment to be made on or before maturity date of the bill out of the realization export proceeds. In case of cash sight import bills, bank will make payment from its FC deposit account & will resized, the value of foreign currency from the client account.

3.6.28. ACCOUNTING FOR RETIREMENT: At the time endorsement of the documents for custom clearance bank will pass the vouchers under as follows: Dr. Party's A/C Cr. Income A/C (commission on clearance of imported consignment) For cash L/C retirement: * Dr. FC Deposit (WFH) A/C Cr. Deposit (Cash L/C cover) A/C * Dr. FC Deposit (cash L/C cover) A/C Cr. Bills of Exchange A/C * Dr. Party's A/C or MPI A/C Cr. WFH fund purchase A/C Cr. FCC A/C Cr. Stationery.

IMPORT SITUATION OF BANGLADESH OVER THE YEAR: Year Total Import Growth

1996-1997

1931

0.00%

1997-1998

3348

73.38%

1998-1999

4765

42.32%

1999-2000

7566

58.78%

2000-2001

8430

11.42%

2001-2002

7697

-8.70%

2002-2003

8707

13.12%

2003-2004

10903

25.22%

2004-2005

13147

20.58%

2005-2006

16578

26.10%

3.7.

EXPORT: The export policy 1997-2008 has been formulated by the government to operate within imperative and opportunities of the market economy with a view to maximizing export growth and narrowing down the gap between import payment and export earning. As per existing Export Policy an Exporter can export any goods or services except the items listed as band and restricted in the said policy.

Foreign Exchange Regulation Act, 1947 Clearly states that nobody can export by post and otherwise than by post any goods either directly or indirectly to any place outside Bangladesh, unless a declaration is furnished by the exporter to the collector of customs or to such other person as the Bangladesh Bank (BB) may specify in this behalf that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner and within a period specified by BB. So a clear lawful procedure should be follow in case of export of goods & services.

3.7.1

MEANING OF EXPORT:

# Selling goods to foreign countries against of foreign currency. # Export means lawfully carrying get of anything from one country to another country for sale. The import and export trade of the country is regulated by the IEC Act. 1950.

3.7.2. EXPORT POLICY: As per export policy order, 1997-2008 now in force an exporter can export any goods or services except the items listed as band and restricted in the said policy.

3.7.3.

OBJECTIVES OF EXPORT / EXPORT POLICY:

Growth of national health, increase of production in export sectors, generation of employment & flow of capital and to achieve the growth of target GDP. EXPORTER REGISTRATION: An exporter should obtain Export Registration Certificate from the office of the Chief Controller of Import & Export (CCI & E).The procedure for obtaining Export Registration Certificate (ERC). Procedures for obtaining export registration certificate (ERC) from the CCI & E, the following documents are required: # Application as per format prescribed by CCI & E. # Bank Solvency Certificate. # Membership Certificate from a Chamber of Commerce. # Nationality certificate. # Partnership deed (Registered / Un-Registered) for partnership business concern. # Memorandum & Articles of Association & its incorporation certificate for public limited company. # Income Tax payment certificate (TIN) # Recent pass port size photographs of the applicant. # Treasury challan showing payment of fees for ERC. 3.7.5.

CLASSIFICATION OF EXPORT : i.

Export Under L/C: Exporters are allowed to export the commodity under irrevocable L/C, Under this type of export, exporter will ship the goods as per terms of the credit and will got payment as per arrangement of the credit. ii.

A firm Contract/Consignment Basis Export: Exports are allowed against firm contract. As per contract, exporter will ship the goods and the buyer will make payment after selling the consignment. iii. Export Against Advance Payment: Sometimes exporter receives payment in advance.

In that case AD should obtain a declaration from the exporter on the Advance Receipt Voucher certifying the purpose of the remittance. Then the exporter will export the goods against the advance payment.

Export section EXIM Bank of Rajuk Avenue Branch deals with two types of L/C that are as follows-

3.7.6. BACK-TO-BACK LETTER OF CREDIT: Back-to-back L/C is a secondary L/C (New Import L/C) opened by the seller's bank based on the original L/C (Master L/C) to purchase the raw materials and accessories for manufacturing of the export product (s) required by the seller.

Under the 'Back to Back' concept, the seller as the Beneficiary of the master L/C offer it as a 'security' to the advising Bank for the issuance of the second L/C. The beneficiary of

the Back-to-Back L/C may be located inside or outside the original beneficiary's country. In case of a Bark-to-Back L/C, the bank takes no cash security (margin).

3.7.7.

DOCUMENTS REQUIRED FOR OPENING BACK-TO-BACK L/C:

In EXIM Bank Rajuk Avenue Branch, following papers/ documents are required for opening a back-to-beck L/C # Master L/C # Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC) # L/C Application and LCAF duly filled in and signed Performa Invoice or Indent Insurance Cover Note with money receipt IMP Form duly signed.

In addition to the above documents, the followings are also required to export oriented garment Industries while requesting for opening a back-to-back L/C # Textile Permission # Valid Bonded Warehouse License # Quota Allocation Letter issued by the Export Promotion Bureau (EPB) in favor of the applicant for quota items

In case the factory premises is a rented one, Letter of Disclaimer duly executed by the owner of the house/premises to be submitted.

A checklist to open back-to-back L/C is as follows: # Applicant is registered with CCI&E and has bonded warehouse license; # The master L/C has adequate validity period and has no defective clause; # L/C value shall not exceed the admissible percentage of net FOB value of relative Master L/C; # Maximum Period will be up to 180 days.

3.7.8.

CHECK POINTS NOTED IN MASTER L/C:

Following defective points are expertly found in the Master L/C. So, these points are so much carefully checked by the bank officials. These are # Issuing bank is not reputed; # Advising credit by the advising bank without authentication; # Port of destination absent; 4$t Inspection clause; # Nomination of specific shipping/Air line or nomination of specified vessel by subsequent amendment; # Bill of lading endorses blank, endorses to 3rd bank, endorses to buyer or 3rd party; # # No specific reimbursing clause; # UCP clause not mentioned; # Shipment/ presentation period is not sufficient; # Original documents to be sent to buyer or nominated agent; H FCR consigned to applicant or buyer; # "Shipper's load and count is not acceptable" clause; # L/C shall expire in the country of the issuing bank; # Negotiation is restricted, 3.7.9. PAYMENT OF BACK-TO-BACK L/C: On 3/ 60/120/180 days of maturity period, deferred payment is made. Payment is given after realizing export proceeds from the L/C Issuing Bank. For Garments Sector, the duration can be maximum 180 days. In case of export failure or non realization/ short realization of export proceeds, forced Investment i.e. OAP has to be created in order to settle the Back to Back L/C payment.

3.7.10. ACCOUNTING TREATMENT OF BACK TO BACK L/C: At the time of arrival document, the following vouchers are passed Customer's A/C Dr. Commission on Acceptance Cr. At the time of payment, when fund is at hand, the following accounting entries are given : Sundry Deposit Margin on Acceptance Dr. Customer's A/C Cr. If the party is paid in foreign currency, B.C. rate is applied in this regard

International Department takes the T.T. & O.D. rate. If the payment is made to ID in local currency in notional rate, ID follows T.T Clean Rate. When the party is be paid, OD Sight rate is followed.

When fund is not available, the following vouchers are to be passed – OAP (Own Acceptance Purchase) 3.7.11.

Dr, Customer's A/C Cr.

REPORTING TO BANGLADESH BANK:

At the end of every month, the reporting to Bangladesh Bank regarding the following information is mandatory a. Filling of E-2/P-2 Schedule of S-l category that covers the entire month's amount of import, category of goods, currency, county etc. b. Filling of E-3/P-3 Schedule of for all charges, commission with T/M Form, c. Disposal of TMP Form that includes: d. #• Original IMP is forwarded to Bangladesh Bank with invoice and indent; # Duplicate IMP is kept with the branch along with the Bill of Entry/ Certified Invoice; # Triplicate IMP is kept with the branch for office record; # Quadruplicate is kept for submission to Bangladesh Bank in case of imports where documents are retired.

3.7.12.

EXPORT LETTER OF CREDIT:

The other type of L/C facility offered by Rajuk Avenue Branch is Export L/C. Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and wove), jute, jute-made products, frozen shrimps, tea are the main goods that Bangladeshi exporters exports to foreign countries. Garments Sector is the largest sector that exports the lion share of the country's export. Bangladesh exports most of its readymade garments products to USA and European Community (EC) countries.

3.7.13.

FORMALITIES REQUIRED FOR EXPORT L/C:

The export trade of the country is regulated by the Imports & Exports (Control) Act, 1950.

There are a number of formalities that an exporter has to fulfill before and after shipment of goods. These formalities or procedures are enumerated as follows 3.7.13.1.

Export Registration Certificate (ERC):

The exports from Bangladesh are subject to export trade control exercised by the Ministry of Commerce through Chief Controller of Imports & Exports (CCI&E). No exporter is allowed to expert any commodity permissible for export from Bangladesh unless he is registered with CCI&E and holds valid ERC. The ERC is required to be renew every year. The ERC number is to be incorporated on EXP (Export) Forms and others documents connected with exports.

3.7.13.2.

The EXP Form :

Foreign Exchange Regulation (PER) Act- 1947 prohibit export of any goods directly or indirectly to any place outside Bangladesh unless the exporter furnish a declaration to the effect that the export value of goods has been or will be repatriated into the country within a period time specified by the Bangladesh Bank. So, repatriation of export precedes is mandatory for all exported goods or services. Accordingly, before shipment of goods an exporter should declare on Export Form (Exp) prescribed by Bangladesh Bank and issued by the Authorized Dealer (Exporters Bank). The EXP Forms are numbered serially and issued in quadruplicate. For delay in repatriation of export proceeds or non-realization of export proceeds, the exporters render themselves for action under Foreign Exchange Regulation Act 1947. Authorized Dealers (AD) and their officials who certify the export forms also render themselves of such action by the Central bank. An EXP Form expertly contains the following particulars # Name and address of the Authorized Dealer; # Particulars of the commodity to be exported with particulars and code no; # Country of destination; # Port of destination; # H Quantity; # L/C value in foreign currency; # Terms of sale; # Name and address of Importer/Consignee; # Bill of Lading/Railway Receipt/Airway Bill/Post Parcel Receipt no. and date; # Port of Shipment/Post Office of Dispatch; # Shipment Date; # Name of the Exporter with address; # registration number and date; # Sector (public or private) under which the exporter fails.

3.7.13.3. Securing The Order : Upon registration, the exporter may proceed to secure the export order. This can be done by contracting the buyers directly through correspondence.

3.7.13.4.

Signing OF The Contract:

3.7.13.3.

Securing The Order :

Upon registration, the exporter may proceed to secure the export order. This can be done by contracting the buyers directly through correspondence.

3.7.13.4.

Signing OF The Contract:

While making a contract, the following points are to be mentioned: # Description of the goods; # Quantity of the commodity; # Price of the commodity; # Shipment; # Insurance and marks; # Inspection, and â‚Ź* Arbitration.

3.7.13.5.

Procuring the Materials:

After making the deal and on having the L/C opened in his favor, the next step for the exporter is set about the task of procuring or manufacturing the contracted merchandise.

3.7.13.6.

Registration OF Sale:

This is needed when the proposed items to be exported are raw jute and jute-made goods.

3.7.13.7.

Shipment of Goods:

The following documents are normally involved at the stage of shipment: # EXPFrom, # Photocopy of registration certificate, # Photocopy of contract, # Photocopy of the L/C, Customs copy of ERF Form for shipment of jute-made goods and EPC Form for raw jute, # Freight certificate from the bank in case of payment of the freight if the port of lading is involved, # Railway receipt, berg receipt or truck receipt, # Shipping instructions, and

# Insurance policy.

The following points should be looked carefully for # The terms of the L/C are in conformity with those of the contract. # The L/C is an irrevocable one, preferably confirmed by the Advising Bank. # The L/C allows sufficient time for shipment and a reasonable time for registration. # If the exporter wants the L/C to be transferable, advisable, he should ensure those stipulations are specially mentioned in the L/C. At last, time exporter submits all these documents along with a Letter of Indemnity to the branch for negotiation. An officer scrutinizes all the documents. If the documents are clean one, the branch purchases the documents on the basis of banker-customer relationship. This is known as Foreign Documentary Bill Purchase (FDBP).

3.7.14. EXPORT DOCUMENTS: After due passing of EXP, the exporter then execute shipment. As evidence of export and as per terms of the export L/C, Contract, exporter should prepare document in order to get his payment and to facilitate release of goods by the buyer abroad. Document are of (2 (two) types.

3.7.14.1.

Financial Document:

The Financial document, prepared by exporter is known as Bill of Exchange or Draft. It is prepare by the exporter directing the L/C issuing Bank to pay sum of money at a certain date or determinable future time to negotiating Bank or order.

3.7.14.2.

Commercial Document:

The documents evidencing description and other details of goods shipped and supporting other terms and condition of L/C Contract are commercial documents.

Some Vital commercial documents are: Invoice/ Commercial Invoice Bill of Lading/Airway bill/Truck Receipt Packing/ shipment/ Measurement List Certificate of origin Pre-shipment Certificate GSP Certificate issued by EPB. 3.7.15. PREPERATION OF EXPORT DOCUMENTS: The exporter needs to be extra careful in the preparation o! export documents, firstly to comply with the terms of the L/C and secondly to fulfill the requirement of the bank and exchange control authority. Any commission or negligence in this regard may lead to

complication of negotiation of documents and collections of export proceeds. The following are the documents normally required for negotiation: 0 Draft of bill of exchange # Commercial invoice. # Bill of lading # Air consignment note # Packing list # Certificate of origin.

3.7.16.

NEGOTIATION OF DOCUMENTS:

If the documents are found strictly as per the terms of LC i.e. if the documents are free from discrepancy or if the discrepancies arc covered by indemnity of the party, hank may negotiate the export bill .As per article 10-b (ii) of UCPDC-500. Negotiate the giving of value for drafts and or documents by bank Authorized to negotiate. Mere examination of document of without giving of value does not constitute a negotiation. For negotiation of export bills, the OD sight export bill-buying rate prevailing of the date of negotiation is applicable.

After negotiation of export bills, the documents are sent abroad expertly to the LC opening bank. As per instructions of LC Negotiating bank claim reimbursement of the proceeds from the bank as mentioned in the letter of credit. Bank also advice the reimbursing bank to credit head office maintained with the correspondents in abroad. Accordingly, bill proceeds are credited to Head office's account with foreign correspondent. After credit of the proceeds branch adjustment the amount which was paid at the time of negotiation by debiting their lead office. If documents are found discrepant these are sent on collection basis with the instruction to credit the proceeds as above. After such collection of the process the exporter's account is credited by debiting Head office account by the branch.

3.7.17.

REIMBURSEMENT:

The simple meaning of the word Reimbursement is repayment or to payback. In international trade it is made in L/C operation for settlement of payment. It means arrangement of repayment by the opening bank of an L/C against which negotiating bank already made payment to the beneficiary. Opening bank make such repayment through another bank in the beneficiary's country or any third country with which opening bank maintained A/C, this bank is called Reimbursing Bank.

Article -19 of UCPDC, ICC publication 500 of 1993 describes details of Reimbursement arrangement. Obligations of the issuing bank for timely reimbursement claiming of arrangement. Obligation of the issuing bank for timely reimbursement claiming of reimbursement # It is the responsibility of the Issuing bank to provide reimbursement authorization to Reimbursing bank in good time.

# Claiming bank shall not be required to submit any certificate of compliance of Credit terms at the time of reimbursement claim, # Issuing bank will not be released if reimbursement is not made by the reimbursing bank # Issuing bank shall be responsible for any loss of interest if reimbursement is not provided on first presentation # Reimbursing bank's charge is for the account of Issuing bank if otherwise not specified in the Credit.

Reimbursement is also guided by "ICC Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits (URR-525).

3.7.18. FOREIGN DOCUMENTARY BILLS FOR COLLECTION (FDBC): EXIAM Bank of Bangladesh Rajuk Avenue Branch forwards the documents for collection due to the following reasons # If the documents have discrepancies. # If the exporter is a new client # The banker is in doubt.

FDBC signifies that the exporter will receive payment only when the issuing bank gives payment The exporter submits duplicate EXP Form and Commercial Invoice. Subsequently, the value of the bill is calculated and the following Head Office A/C Client's A/C Postage A/C Income A/C profit on Exchange 3.7.19.

Dr. @ T.T. Clean Cr. @O.D. sight Cr. Cr.

PROCEDURE FOR FDBP:

After purchasing the documents, EXIM Bank of Bangladesh Limited-New Market Branch gives' the following entries BEFORE REALIZATION OF PROCEEDS FDBPA/C Customer A/C

Dr. Cr.

Adjustment After Realization Of Proceeds Head Office A/C FDBP A/C

Dr. Cr.

A FDBP Register is maintained for recording all the particulars. The most important contents of a FDBP register are as follows* FDBPRef.no. * Date * Beneficiary * Applicant * Foreign Currency * Rate * Local Currency * Margin (% of amount) * Modes of Transport * Merchandise # Documents # L/C no. and name of opening bank # Name of collecting Bank # Initial, due date, date realized, bank charges recovered with remarks.

3.7.20.

INLAND LETTER OF CREDIT (ILC):

ILC means L/C within the same country. This type of L/Cs is opened when seller does not believe the buyer though they are in the same country and also in the cases where the sales contract is of a big amount. EXIM Bank of Bangladesh Limited Rajuk Avenue Branch has couple of ILC. 3.7.21. SETTLEMENT OF LOCAL BILL: The settlement of local bills is done in the following ways # The customer submits the L/C to the branch along with the documents to Negotiate # The branch officials scrutinizes the documents to ensure the conformity with the terms and conditions; # The documents are then forwarded to the L/C Opening Bank; # The L/C Issuing Bank gives the acceptance and forwards an acceptance letter;

# Payment is given to the customer on either by collection basis or by purchasing document.

the

Accounting entries made for purchasing of local bill: Local Bill Purchase Party A/C Cr. Commission Profit A/C

Dr. Cr. Cr,

This Register is maintained to record the acceptance of the issuing bank. Until the acceptance is obtained, the record is kept in a collection register.

3.7.22. MODES OF PAYMENT FOR EXPORT BILLS UNDER L/C: Broadly payment methods under a L/C are as follows-

3.7.22.1. SIGHT PAYMENT CREDIT: In a Sight Payment Credit, the bank pays the stipulated sum immediately against the exporter's presentation of the documents.

3.7.22.2.

DEFERRED PAYMENT CREDIT:

In deferred payment, the bank agrees to pay on a specified future date or event, after presentation of the export documents. No bill of exchange is involved. In IBBL, payment is given to the party at the rate of D.A 60-90-120-180 as the case may be. But the Head office is paid at T.T clean rate. The difference between the two rates my the exchange trading for the branch. Another two types come under the same heads. These are as follows3.7.22.2.1. NEGOTIATION CREDIT: In Negotiation credit, the exporter has to present a bill of exchange, payable to himself in addition to other documents, that the bank negotiates.

3.7.23.

ACCEPTANCE CREDIT:

In acceptance credit, the exporter presents a bill of exchange payable to him and drawn at the agreed tenor (that is, on a specified future date or event) on the bank that is to accept it. The bank signs its acceptance on the bill and returns it to the exporter. The exporter can then represent it for payment on maturity. Alternatively he can discount it in order to obtain immediate payment.

3.7.24.

ADVISING L/C:

When export L/C is transmitted to the bank for advising, the bank sends an Advising Letter to the beneficiary depicting that L/C has been issued.

3.7.25.

TEST KEY ARRANGEMENT:

Test key arrangement is a secret code maid by the banks for the authentication for their telex massage. It is a systematic procedure by which a test number is given and the person to whom this number is given can easily authenticate the same test number by maintaining that same procedure. IBBL has test key arrangements with so many banks for the authentication of L/C messages and for transfer of funds, 3.7.26.

EXPORT FINANCING:

To meet up the cost of the goods to be exported, the exporter may require Bank finance.

Besides, he may require finance for storehouse rent, electricity bill, freight etc. Even after shipment of the goods, exporter may require Bank finance to meet-up his current expenditure up to repatriation of the export proceeds. There are two types of export finance: 3.7.26.1.

Pre-Shipment Finance:

Pre-shipment investment is finance, allowed by a Bank to a exporter, to meet the cost up to the shipment of the goods to overseas buyer. The purpose to the investment is to purchase Raw materials or finished goods or manufacturing processing. Packing and transporting the goods.

3.7.26.2.

Post -Shipment Finance:

There is a fine gap between export of the goods and realization of the proceeds. So exporter may require finance in that period to continue his business. So bank may finance against export documents ensuring the following: # Export documents comply with the credit terms. & Party's past performance is satisfactory.

Any other security in case of export under contract.

3.7.27 SETTLEMENT FOR EXPORT CLAIMS: In terms of export policy order 1997-2008 of exchange control Manual Bangladesh Bank, produces of export bills should be repatriated within a maximum period of four months. This is period may be extended by Bangladesh Bank on reasonable grounds, it has already been pointed out that side by emphasis has also been given on settlement of the foreign buyer's claims arising out exports, as quick settlement of export claims is an indirect incentive to the overseas buyer for our products.

EXPORT PERFORMANCE OF BANGLADESH OVER THE YEAR: Year Total Export Growth 1996-1997

18813.04

0.00%

1997-1998

23416.38

24.47%

1998-1999

25491.10

8.86%

1999-2000

28818.52

13.05%

2000-2001

34858.74

20.%%

2001-2002

34366.14

-1.41%

2002-2003

37915.45

10.33%

2003-2004

44827.22

18.23%

2004-2005

53233.97

18.75%

2005-2006

70746.35

32.90%

3.8.

REMITTANCE: Fund transfer from one country to another country goes through a process which is known as remitting process. Suppose a local bank has 200 domestic branches and has the corresponding relationship with a foreign bank say-"X", maintaining "Nostro Account" in US$ with the

bank. Bangladeshi expatriates are sending foreign remittance to their local beneficiary, through that account. Now, when the Bangladeshi expatriates through other banks of different countries remit the fund to their "Nostro Account" with "X", then the local bank's Head office international division will receive telex message and the remittance section will record the advice and generate the advice letter to the respective branch of the bank. The branch will first decode the test, verify signature and check the account number and name of the beneficiary. After full satisfaction, the branch transfers the amount to the account of the beneficiary and intimates the beneficiary accordingly. But sometimes complexity arises, if the respective local bank has no branch where the beneficiary maintains his account. Then the local bank has to take help of a third bank who has branch there.

Chart - Flow Chart of Remitting

Export Import Bank of Bangladesh Limited (EXIM) Bank is the Authorized Dealer (AD) to deal in foreign exchange business, as an authorized dealer, bank must provide some services to the clients regarding foreign exchange and this department provides the service of remitting foreign currencies from one country to another country. In the process of providing this remittance service it sells and buys foreign currency, the conversation of one currency into another takes place at an agreed rate of exchange , which than Banker quote one for buying and another for selling.

Instrument of remittance: # Cash # TC (Travelers Cheque) # FDD (Foreign Demand Draft) # TT (Telegraphic transfer) ^ MI (Mail Transfer) # PO (Payment Order) â‚Ź* IMO (International money order) # Cheque etc.

3.8.1. FOREIGN CURRENCY REMITTING PROCEDURES:

There are two types of remittance: * Inward Remittance # Outward Remittance 3.8.2.

INWARD REMITTANCE:

Inward remittance covers purchase of foreign currency in the form of foreign Telegraphic Transfer (T.T), Demand Draft (DD) and Bills & Travelers Cheque, Export Bill etc. sent from abroad favoring a beneficiary in Bangladesh, purchase of foreign exchange is to be reported to Exchange Control Department of Bangladesh Bank on form - Letter of Credit (L/C).

Basically, these are the formal channels of receiving inward remittance. A local bank also receives indenting commission of local firm also comes under purview of inward remittance.

3.8.2.1.

Purposes Of Inward Remittance:

# Indenting commission # Donation # Family maintenance Draft # Export proceeds # Foreign investment # Others.

3.8.3.

OUTWARD REMITTANCE:

When foreign Currency transferred from home country to other it is called foreign outward remittance. Generally it includes all the remittance of invisible items; in broad sense it also includes the remittances against visible items.

On March 24,1994 Bangladesh Taka was declared convertible for current account international transaction. Outward remittance include sale of Foreign Currency by T.T, M.T, Draft, T.C or in cash for private, official and commercial purpose.

3.8.3.1.

Purpose Of Remit:

Any Bangladeshi Nationals who want to travel can remit/bear foreign currency up to a minimum limit fixed by Bangladesh Bank from time to time.

Exporters for business travel as per quota fixed by Bangladesh Bank.

Student who are residing abroad for study purpose having permission from Bangladesh Govt. /Bangladesh Bank.

Medical treatment and other purposes having Bangladesh Bank permission.

Bangladeshi Nationals warring abroad can also remit out of balance held in their foreign currency A/Cs against direct remittances.

Foreign Nationals, Diplomatic missions, Embassy, juridical persons etc. Working/ residing in our country may also remit out of the fund already remitted to our country.

Foreign nationals come to our country for visit purpose and on cash foreign currency into local currency may also remit in freeing currency up to maximum limit of his convened amount.

In Foreign National those who are working in our country also remit out of their salary subject to approval of Bangladesh Bank / Bangladesh Govt.

Importers may also allow remitting foreign currency for their import as per import policy of Bangladesh Government.

Any persons who want to take sample from abroad may also remit foreign currency as per Bangladesh Bank Rule.

3.8.3.2.

Instrument Of Outwore Remittance:

*Cash * TC (Travelers Cheque) * T.T (Telegraphic transfer or cable transfer). * M.T (Mail Transfer). * P.O (Payment Order). * I.M.O (International Money Order). * Cheque etc.

Performance of Foreign Exchange Business of EXIM Bank, Rajuk Avenue Branch as on 31 st December 2007 Taka in lac Month Import Export Remittance Inward

Outward

Jan

1996.40

1092

6.58

Nil

Feb

5058.80

2024.40

16.13

Nil

March

9428.17

3586.02

16.13

Nil

April

11767.83

4955.86

17.06

Nil

May

15082.32

6639.05

19.59

Nil

June

17495.36

7617.18

20.96

Nil

July

21350.51

10119.43

23.69

Nil

August

26188.89

11754.52

30.32

Nil

September

35517.42

14153.33

31.52

Nil

October

40256.39

16279.19

58.33

Nil

November

46256.39

17734.52

61.11

Nil

December

49029.16

18811.37

61.80

Nil

PART-4 FINDINGS 4. FINDING: 4.1.

SWOT ANALYSIS:

SWOT Analysis is the detailed study of an organization's exposure and potential in perspective of its strength, weakness, opportunity and threat. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in comparison to their competitors. As though this tool, an organization can also study its current position, it can also be considered as an important tool for making changes in the strategic management of the Foreign Exchange activities.

STRENGTHS: EXIM Bank Limited has already established a favorable reputation in the banking industry of the country. It is one of the leading private sector commercial banks in Bangladesh. This bank has already displayed its strengths in foreign exchange business.

Compare to other competitor banks and financial organization it enjoys strong position in foreign exchange business.

Foreign Exchange service charges like - commission, postage fees etc. are reasonable compare to other leading private commercial banks.

As our economy largely depends on import, EXIM bank mainly performs import business services to its client but they take special consideration over export finance as well as foreign remittance service. And these activates play an effective role to well socio-economic turnover of our country.

Monitoring and supervision activities in case of Foreign Exchange operation are stunning and matured.

Keep strong documentation in foreign exchange business, for this EXEM bank and its client feel more secured.

"Clients are the partners" the bank believes that. Any suggestions from clients are heartily acceptable. Strengths in managerial skills, cohesion and avoiding bureaucracy help the bank in creating valuable services to their customers.

WEAKNESSES: # Foreign Exchange business service charges are little bit higher than some other commercial private bank which indicates that there is a possibility of loosing clients. # EXEVI Bank mainly focuses on import financing compare to export financing and foreign remittance. As a result, it may loose confidence of certain portion of its customers' who are dealing with foreign trade # EXIM Bank is too rigid in case of document preparation, lodgment and retirement compare to other banks which sometimes dissatisfied clients.

Corresponding network which is very essential in foreign trade is not so enlarge.

OPPORTUNITIES: In order to achieve higher growth, EXIM Bank Limited has to concentrate not only one section of foreign trade business but also give simultaneous concentration over all the sections.

Foreign Exchange business (export, import & remittance) has bright future in our country.

Export, Import & Remittance flow of Bangladesh growth is increasing which suggests that there is an opportunity to flourish the foreign exchange business market in near future. EXIM bank has to take that chance by preparing up to date strategic plan.

Foreign Exchange Business hugely depends on political stability of a country. After 1/11, in Bangladesh there is a good situation exist for foreign trade and as banks are important player in foreign trade, it has good opportunity to increase their foreign exchange business.

For getting higher market share in foreign exchange business, EXIM Bank has to be more efficient and swift in service.

THREATS: All sustain multinational and private commercial banks force enormous threats to EXIM Bank Limited. If that happens the intensity of competition will rise further and bank has to develop strategies to compete against foreign banks competition.

The rapid expansion of one of the biggest Islami Shariah based bank named Islami Bank Bangladesh Limited (IBBL) is referred to as major threats for EXIM Bank. IBBL can provide faster and smooth services to its clients because of their network either in home or abroad.

Foreign Bank like- Standard Chartered & HSBC has extensive network worldwide which is an integral part in foreign trade. Both banks enjoy this competitive advantage. * Government has recently decided to convert some government bank to public limited company which will increase the efficiency level of the management and its employees.

These banks have strong branch network and foreign correspondents which help them to emerge as a major threat for private commercial bank like EXIM Bank.

4.2. Others problem: 1) Lack of legal Islamic framework for conducting foreign exchange business. Business in conventional banking system Foreign currency is considered as goods not as currency and its value fluctuates continuously which is not in accordance with Islami Framework.

2) According to UCPDC, banks deal with documents not with goods. But according to Islam, Bank should deal with goods. So, today's banking system is contradictory to Islami Shariah.

3) The tax structure of the country is not more conductive to the sprit of Islam. In our country, tax structure is maintained in such a way, people are always trying to avoid tax on the other hand, the person who's tax amount only 200, he has to paid minimum requirement 1200 taka.

So rich people are always trying to show profit less than actual and poor people are bound to pay minimum requirement.

Backward linkage is a problem for foreign exchange which is re related to back to back L/C, Backward linkage refers to those small industries that support the large industry. For example, For the production of a shirt, cloth, button and other accessories are required. Any problem of this small industry have effect on the large industry.

In case of export, the exporter has to purchase some raw material from abroad. Became, same importers give some restriction on export. Suppose the exporter purchase the material from Japan. In this case, our foreign currency is going to Japan and we are unable to use our local cloth. So, our local cloth industry is corrupted. Again, if for any reason, the exporter fail to receive that cloth in time, then he will be unable to produce that shirt and export in time will not be possible.

As a result, relationship between the importer and exporter will decrease and the exporter will not be willing to import from that exporter again, and our country will loose foreign currency.

To avoid this situation, the exporter is needed to have stock lot for which he will have to engage much money. Moreover if will incur inventory cost.

4) Lack of Islamic call market: In a call market, trading takes place at specified time intervals one structure for a call market pries announced verbally in a verbal market price are announced and the participants indicate the amount they are willing to seller purchase at that price. In a call market Islamic Shariah are is not followed. For example, Dhaka Stock Exchange, Chittagong Stock Exchange follows interest based system.

PART-5 RECOMMENDATION # Normally Islamic Bank make its transactions with other Islamic bank in abroad. The director of Islamic Bank should offer to abroad's directors to follow the Islamic Shariah. In their banking sector. As a result, income received from NOSTRO A/C can be shown as income. # Tax structure should be reformed in such a way, Rich people can not make any chance to avoid the tax and poor people give their tax as such amount with have to pay by them.

Minimum requirement should be removed. As a result peoples tendency of giving Zakat would be increased. # Latest technology such as swift, ATM computer should be increased. As a result customer dealing will be increased. And transaction will be made at a few minutes. * Employee should be skilled in operating technology. If all the persons will be skilled, no person depends on others specific person for operating this to perform the transactions. * Islamic call market should be introduced. As a result Dhaka Stock Exchange, Chittagong stock exchange will be maintained its transactions in Islamic way. Then bond share, will be transact continuously.

PART-6 CONCLUSION Interest free banking system is not new concept. It is now a Reality, a dynamic system, embodying a set of superior banking mechanism. More than 300 Islamic bank and financial institutions are operating in different Countries throughout the world with a marked success from this inception in our country in 1983. EXIM Bank of Bangladesh Limited has been operating with real and confidence in corporation with other conventional banks. Bringing a new concept in such business sector, which is growing to rapidly in the world, is rally bold step. As a large Islamic commercial bank, EXIM Bank took variety steps to create employment and socio-economic development for the poor through Islamic shariah. The Import, Export and Remittance business of Rajuk Avenue Branch as a percentage of Total Import, Export and Remittances of EXIM Bank is increasing over the years.

EXIM Bank of Bangladesh Limited is trying to create an overall climate for the introduction of large scale Islamic banking environment in Bangladesh. Despite tremendously support, spectacular success in term of mobilization of deposit, profit from the foreign exchange business of both EXIM Bank & the Rajuk Avenue Branch have not yet been achieved the desired level due to absence of appropriate legal framework and foreign exchange infrastructure for earning out Islamic banking operations in the country, They an appropriate framework has to be chalked out and also the choice of modes of foreign exchange financing should be modernized, To conclude I can say that, Islamic banking has immense potential in Bangladesh. It can play vital role in bringing revolutionary changes in our life with both material and moral world and in individual and collective level BIBLOGRAPHY Reference Books: 1. International Trade and Foreign Exchange [Published by BIBM] - S.M. Ahsan Habib & Md. Sajjdur Raliman 2. Foreign Exchange and Financing of Foreign Trade - Syed Ashraf Ali 3. Essential Statistical Methods for Business - Edward N. Dubois Annual Reports, Manuals & others * Annual Reports of EXIM Bank Limited - 2002-2006 & Annual Reports of Social Investment Bank Limited - 2002-2006 * Bangladesh Economic Review 2006, Economic Advisor's wing, Finance Division Ministry of Finance. * Quarterly Economic Update Bangladesh by Asian Development Bank * Economic Trends, Bangladesh Bank * State of Bangladesh Economy - Early Signals of FY 2006, CPD * Import Policy Order 2003-2006. Ministry of Commerce, Government of the people's republic of Bangladesh. * Export Policy 2003-2006, Ministry of Commerce, Government of the people's republic of Bangladesh * Newsletters, Journal, Prospectus of EXIM Bank Websites # Www.eximbankbd.com # Www.siblbd.com # Www.epb.gov.bd # Www.mincom.gov.bd # Www.bangladesh-bank.org # Www.cpd-bangladesh.org