Sadar Nurul Amin :
(From previous issue)
vi) The branch Manager/senior level officers will supervise the process of export till the consignment is shipped in addition of the above stated control measures.
03 Pre-shipment cash credit/packing cash credit;
The AD allows pre-shipment cash credit to the exporter in the form of PSCC or PCe. It is a funded financing to the exporter for mitigating expenditure of procurement of export goods, packing & freight charges and wages to the worker for export of garments, jute and non traditional items.
i) Pre-shipment cash credit is allowed to the garments where BTB is allowed earlier for payment of packing ,freight and wages of worker .This credit is allowed to the garments industries after receiving of BTB goods in ware house of the garments duly verified by bank officials and the credit limit is up to 10% of the FOB value of the export L/C .This credit is adjusted at the time negotiation of export documents.
ii) Packing credit up to 90% of the invoice value may be allowed against railway /steamer receipt/Berge receipt of approved carrier duly supported b irrevocable export letter of credit for procurement of export goods and freight for the period of 120 days. This credit is adjusted at the time of negotiation or from the proceeds of advance T.T .
Hi) The pre-shipment finance should be extended only to the genuine exporter capable of executing the export order.
iv) The pre-shipment loan may be disbursed on phased basis as far a possible keeping in view of the procurement program of the exporter.
v) Packing cash credit ‘should normally be extended to those exporter who have been accommodated with regular cash credit facilities.
vi) Packing cash credit also allowed for export of both traditional items like jute, jute goods, leather, etc and non-traditional items like vegetable, fruits, battle leaf, battle nut dry foods like muri, chira, semai, chanachur, biscuit, handicrafts etc up to 80% of the irrevocable export LC value/advance TT. The credit will be adjusted at the time of negotiation.
04) Post shipment financing-export bill negotiation
After shipment of the export the exporter wants to get balance payment as soon as possible from their bank against export documents to generate immediate cash inflow. To receive payment an exporter or shipper must require present the documents required by the letter of credit, the documents are classified in to the following category:
a) Financial documents: bill of exchange, co-accepted draft
b) Commercial documents: invoice, packing list
c) Shipping documents: transport documents (bill of lading), insurance certificate, commercial, official or legal documents, inspection certificate, certificate of origin, GSP certificate.
Exporter after completion of the shipment of export goods submits the above documents with EXP certified by the custom authority to their bank to get the export payment as per LC terms.
After receiving the export documents Exporters Bank! Negotiating bank must examine all documents stipulated in the credit with reasonable care to ascertain whether or not they appear, on their face, to in compliance with the terms and conditions of the credit. Now what is complying presentation’?
A presentation is said to be complying presentation when it is :
i) in accordance with the terms and conditions of the credit,
ii) the applicable provisions of UCPDC and
iii) international standard banking practice.
If the documents are complying with the LC the negotiating bank will negotiate and purchase the documents and pay the rest of LC value keeping the value against liability created on pre-shipment credit with tax, duties, exchange, commission, and buying commission if any in the banks ledger. After completion of the negotiation and payment the negotiating bank must send the documents to the issuing bank for payment within 5 working days.
The negotiation is called post shipment credit as the negotiating bank provides rest of LC value to the exporter before collection of payment of the export LC value from the issuing bank.
If the document are not complying with the credit the negotiating bank will not negotiate the document rather the documents will be sent for collection.
Financing in an international trade is risk based financing. The main risk is risk of uncertainty of repatriation of export proceeds.
Banker should be very careful that the exporter comes to the bank with an export LC and wants to get payment of 90% at pre-shipment stage and rest of 10% at post shipment stage against his export LC value. Bank invests in the export process before collection of the proceeds keeping the risk of non-repatriation of the LC value from the buyer. Banker before going for any investment in the export process like other investment they should know their client and consider the following factors:
a ) Can the exporter perform the export order ..
b) Whether the exporter is well equipped with machine and worker
c) Genuinenses the export LC.
d) Whether terms and condition of the LC is hazardous and contradictory for payment
e) Skill and past performance of the exporter
d) Security against non-repatriation of the export proceeds or failure of the export.
f) The credit worthiness of the buyer as it is directly with the probability of payment to an exporter.
g) The political and economic stability of the buyer and seller country can affect the export.
h) Can the buyer pay as per LC or contract.
If banker does not consider and not be careful regarding the above factors before investment in the export the bank as well as its official will fall into financial and ethical risk and the they will have to face punitive action.
The banker should remember instruction contained in the chapter 22 of guide lines of foreign exchange transactions para (c) as ;;
” For delay in repatriation or non-realization of export proceeds the exporter as well (the AD and its official certifying the export forms render themselves liable to puniti1 action under FER act”. Therefore, in their own interest both the exporters and the ADs should be alert and active ensuring timely repatriation of export proceeds.
(Sarder Nurul Amim, General Manager, Sonali Bank Ltd, Dhaka.)
(Concluded)
(From previous issue)
vi) The branch Manager/senior level officers will supervise the process of export till the consignment is shipped in addition of the above stated control measures.
03 Pre-shipment cash credit/packing cash credit;
The AD allows pre-shipment cash credit to the exporter in the form of PSCC or PCe. It is a funded financing to the exporter for mitigating expenditure of procurement of export goods, packing & freight charges and wages to the worker for export of garments, jute and non traditional items.
i) Pre-shipment cash credit is allowed to the garments where BTB is allowed earlier for payment of packing ,freight and wages of worker .This credit is allowed to the garments industries after receiving of BTB goods in ware house of the garments duly verified by bank officials and the credit limit is up to 10% of the FOB value of the export L/C .This credit is adjusted at the time negotiation of export documents.
ii) Packing credit up to 90% of the invoice value may be allowed against railway /steamer receipt/Berge receipt of approved carrier duly supported b irrevocable export letter of credit for procurement of export goods and freight for the period of 120 days. This credit is adjusted at the time of negotiation or from the proceeds of advance T.T .
Hi) The pre-shipment finance should be extended only to the genuine exporter capable of executing the export order.
iv) The pre-shipment loan may be disbursed on phased basis as far a possible keeping in view of the procurement program of the exporter.
v) Packing cash credit ‘should normally be extended to those exporter who have been accommodated with regular cash credit facilities.
vi) Packing cash credit also allowed for export of both traditional items like jute, jute goods, leather, etc and non-traditional items like vegetable, fruits, battle leaf, battle nut dry foods like muri, chira, semai, chanachur, biscuit, handicrafts etc up to 80% of the irrevocable export LC value/advance TT. The credit will be adjusted at the time of negotiation.
04) Post shipment financing-export bill negotiation
After shipment of the export the exporter wants to get balance payment as soon as possible from their bank against export documents to generate immediate cash inflow. To receive payment an exporter or shipper must require present the documents required by the letter of credit, the documents are classified in to the following category:
a) Financial documents: bill of exchange, co-accepted draft
b) Commercial documents: invoice, packing list
c) Shipping documents: transport documents (bill of lading), insurance certificate, commercial, official or legal documents, inspection certificate, certificate of origin, GSP certificate.
Exporter after completion of the shipment of export goods submits the above documents with EXP certified by the custom authority to their bank to get the export payment as per LC terms.
After receiving the export documents Exporters Bank! Negotiating bank must examine all documents stipulated in the credit with reasonable care to ascertain whether or not they appear, on their face, to in compliance with the terms and conditions of the credit. Now what is complying presentation’?
A presentation is said to be complying presentation when it is :
i) in accordance with the terms and conditions of the credit,
ii) the applicable provisions of UCPDC and
iii) international standard banking practice.
If the documents are complying with the LC the negotiating bank will negotiate and purchase the documents and pay the rest of LC value keeping the value against liability created on pre-shipment credit with tax, duties, exchange, commission, and buying commission if any in the banks ledger. After completion of the negotiation and payment the negotiating bank must send the documents to the issuing bank for payment within 5 working days.
The negotiation is called post shipment credit as the negotiating bank provides rest of LC value to the exporter before collection of payment of the export LC value from the issuing bank.
If the document are not complying with the credit the negotiating bank will not negotiate the document rather the documents will be sent for collection.
Financing in an international trade is risk based financing. The main risk is risk of uncertainty of repatriation of export proceeds.
Banker should be very careful that the exporter comes to the bank with an export LC and wants to get payment of 90% at pre-shipment stage and rest of 10% at post shipment stage against his export LC value. Bank invests in the export process before collection of the proceeds keeping the risk of non-repatriation of the LC value from the buyer. Banker before going for any investment in the export process like other investment they should know their client and consider the following factors:
a ) Can the exporter perform the export order ..
b) Whether the exporter is well equipped with machine and worker
c) Genuinenses the export LC.
d) Whether terms and condition of the LC is hazardous and contradictory for payment
e) Skill and past performance of the exporter
d) Security against non-repatriation of the export proceeds or failure of the export.
f) The credit worthiness of the buyer as it is directly with the probability of payment to an exporter.
g) The political and economic stability of the buyer and seller country can affect the export.
h) Can the buyer pay as per LC or contract.
If banker does not consider and not be careful regarding the above factors before investment in the export the bank as well as its official will fall into financial and ethical risk and the they will have to face punitive action.
The banker should remember instruction contained in the chapter 22 of guide lines of foreign exchange transactions para (c) as ;;
” For delay in repatriation or non-realization of export proceeds the exporter as well (the AD and its official certifying the export forms render themselves liable to puniti1 action under FER act”. Therefore, in their own interest both the exporters and the ADs should be alert and active ensuring timely repatriation of export proceeds.
(Sarder Nurul Amim, General Manager, Sonali Bank Ltd, Dhaka.)
(Concluded)
