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AN OVERVIEW Of

INTERNATIONAL TRADE FINANCE

Md. Abdus SalamFaculty Member (SPO)JBSC, Dhaka

January 28, 2017

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Objectives of the Session

To enhance the customer services and

maintained it by negotiating with AD

Branches. To discuss the overall process or

structure of international trade.

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Session Outline

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Int’l Trade & Its Importance

Definition:exchange of goods and services across international borders or territories.

Importance:To meet up internal demands

To earn FC which leads to GDP

To contribute to the World Economics.

To generate the employment opportunities.

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Foreign Exchange Activities

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Process of a Typical Foreign Trade Transaction

Importer’s Bank

(Issuing Bank)

Exporter’s Bank

(Advising Bank)

Importer /Local Buyer

Exporter/Foreign Seller

Money Market Investor

Purchase order1

L/C

app

lica t

ion

2 Issue/trasmit LC3

L/C

not

ifica

tion

4 S

hip p

ing

doc u

me n

ts

a

a

nd ti

me

draf

t

6

Paym

ent

or

Dis

c oun

t ed

B/A

9

5 Shipment of goods

Rec

e ive

d fa

ce V

a lue

of

B/ A

at m

a tur

it y

13

re

cei v

ed f u

nd o

r Si

g ned

prom

isso

r y n

o te

for

FV o

f B/ A

10

Sh

ipp i

ng d

o cum

e nts

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Shipping Documents and

Payment or time draft acceptance7

Payment or Banker’s Acceptance8

B/A

12

Paymen

t Face

Value

B

/A15 B/A presented at maturity

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Wings of Int’l Trade Finance

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Import Finance

Import Finance

Pre-Import

Post Import

Opening of L/C

Payment against Document (PAD)

Loan against Imported Merchandise (LIM)

Loan against Trust Receipt

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Export Finance:

Export Finance

Pre-shipment

Post-shipment

Packing Credit (PC)

Back-to-Back Letter of Credit (BBLC)

Negotiation of Export Bill (FDBP)

ECC (H) (P)

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Foreign Remittance

Foreign Remittance

Inward

Outward

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Int’l Trade Products and ServicesTrade Products & Services Commercial LC- Import &

Export Standby LC Back to Back LC Documentary Collections

Trade Finance Working Capital Loans for

exports e.g ECC Import Financing Export Financing Overseas Financing

Sources of Import Finance Cash – Cash reserve of BB Wage earners FC balance (living in abroad) External Financial Aid (Loan or Grant) Commodity exchange (Barter & STA)

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International Payment Methods

Open Account

Cash in Advance

Documentary Collections

Letters of Credit

Consignment Sale (payment after sale)

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Int’l Methods of Payment

Low

High

High

Low

Exporter Risk Importer Risk

• Open Account

•Documentary Collection

• Letter of Credit

• Cash in Advance

Payment Methods & Risk Comparison

Trade Terms

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Guideline, Regulations and Practices

Import Policy (2015-2018)Export Policy (2015-2018)UCPDC- 600 : ICC Uniform Customs and Practice for

Documentary Credits (UCP-600) INCOTERMS-2010: International Commercial Terms ISBP : International Standard Banking Practices

(ISBP-745)Foreign Exchange Regulations Act-1947(up to date

amendments).Guidelines for Foreign Exchange Transactions (Vol. I

& II)- 2009.

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Guideline, Regulations and Practices

URR: Uniform Rules for Bank-to-Bank Reimbursements (URR- 725).

URC: Uniform Rules for Collection (URC- 522).URDG- Uniform Rules for Demand Guarantee

(URDG-758). ISP-98Other related ICC PublicationsForeign Exchange Circulars of Foreign Exchange

Policy Department of BB

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THANK TO THANK TO ALLALL