CH 7 32

SECTION - II
LETTERS OF CREDIT AND REMITTANCES AGAINST IMPORTS
20. The ADs may not issue, advise, notify or confirm any LC,
authority to purchase, guarantee or similar undertaking covering
imports into Bangladesh the implementation of which would involve
a payment in Taka to a non resident account or a payment in foreign
currency except in accordance with the instructions prescribed
hereunder.

LC covering The AD should establish LCs against specific authorisation only on

imports behalf of their own customers who maintain accounts with them and
are known to be participating in the trade. Payments in retirement of
the bills drawn under LCs must be received by the ADs by debit to
the account of the concerned customer or by means of a crossed
cheque drawn on the drawee's other bank. These restrictions shall
not apply to import of articles for the private use of the importer as
permitted in the Import Policy Order.
Terms on which
21. (i) All LCs and similar undertakings covering imports into
LCs may be
Bangladesh must be documentary LCs and should provide for
opened
payment to be made against full sets of onboard (shipped) bills of
lading, air way bill, railway receipts, truck receipts, post/courier
parcel receipts showing despatch of goods covered by the credit to a
destination in Bangladesh. All LCs must specify submission of
signed invoices and certificates of origin. If any particular LCAF
requires submission of any other document or the remittance of
exchange at certain periodical intervals or in any other manner, the
LC should incorporate those instructions of the LCAF. Besides,
following instructions are to be followed by ADs while importing
through land ports:
(a) only one port of entry ( land port) is to be mentioned specifically
in the letter of credit/purchase contract ( as the case may be);
(b) ADs shall have to send copies of letter of credit and subsequent
amendment(s) if any, including other relevant information to the
land port authority;
(c) specimen signatures of the officials working in the import-export
desks of the concerned Authorised Dealer bank, contact phone and
fax nos. of the ADs are to be sent to all the land ports;
(d) ADs, through their agents or representatives shall collect
certified invoice & bill of entry evidencing entry of goods into
Bangladesh from the concerned land ports;
(e) letters of credit/purchase contracts shall contain inter alia the
following payment terms instead of reimbursement authority/debit
authority:
"Upon receipt of documents complying with credit terms, we shall
effect payment as per instructions of Negotiating Bank/Collecting
Bank".
 CH 7 33
(f) LC covering value more than USD 5000 or equivalent should
be sent through SWIFT or other similar arrangements to the
advising bank;
(g) NOC(if any) shall contain name of the officials along with
P.A. nos. and official seal.
(ii) It is not permissible to open clean or revolving letter of credits
or LC with realisation clause (except EPZ companies). Applications
for opening such LCs should be referred to the Bangladesh Bank
with full particulars.
(iii) The ADs may open transferable LCs for imports into
Bangladesh under cash LCAF without reference to the Bangladesh
Bank. They may also allow without reference to the Bangladesh
Bank amendments that do not violate foreign exchange regulations
and IPO in force.
(iv) It is not permissible to open import LCs in favour of
beneficiaries in countries from which import into Bangladesh are
banned by the competent authority.

22. LC covering import of goods into Bangladesh against valid

LCAF should be opened within the period, if any, prescribed in the
current IPO.

23. (a) The AD should, before opening an LC, see documentary Period for
evidence that a firm order for the goods to be imported has been which LCs may
placed and accepted. The AD should ensure while opening an LC be opened
that full description of the goods to be imported are given in each
Credit alongwith the unit price of the merchandise.
(b) The ADs should also obtain confidential report on the LCs to be
exporters from their branches or correspondents abroad or in their opened only
discretion, satisfy themselves as to the standing of the exporter by against firm
consulting standard books of reference issued by international
credit agencies of international standing such as Seyds, Dunn and contracts
Bradstreet in all cases where the amount of the LC/Contract
exceeds BDT 5 lac against proforma invoices issued direct by
foreign suppliers and BDT 10 lac against indents issued by local
agents of the suppliers. Such reports should be obtained by the ADs Credit report of
themselves and the reports if submitted by the importers should not the foreign
be accepted. The ADs may also, at their discretion and in their own suppliers
interest, verify the standing of the beneficiaries even in cases where
the value of the credit is lower than the limits mentioned above.
Credit report my remain valid for a preiod of maximum twelve
months from the date of issuance if no adverse report comes to the
notice of the AD. Moreover, credit report of the same supplier
collected for one importer may be used for other importers within
the same validity.
24. LC may be established providing for payment to the country of
origin of goods or any other country except those countries imports Approved
from which are prohibited. The LC may provide for payment or methods of
reimbursement in any freely convertible foreign currency, in the payment
currency of the country of the beneficiary or of the country of
origin/shipment of goods, or by way of credit to the non resident
 CH 7 34

Taka account of the concerned bank abroad. Payments for imports

under barter agreements or under foreign Loans/Grants can be made
only in the manner specified for the concerned barter/loan/grant.

25. An AD may approve on behalf of Bangladesh Bank remittance

Applications against imports into Bangladesh provided the conditions set out in
for remittances section-I and elsewhere in this chapter are complied with and
against imports provided also that the documents covering the import, whether
under LC or otherwise, are received through the AD concerned. In
case of import by post/courier, the ADs may make remittance
without prior approval of the Bangladesh Bank only if the parcel is
addressed directly to the AD. Where the parcel is addressed to an
individual care of the AD/ to the individual direct, prior approval of
Bangladesh Bank should be applied for, in the manner laid down in
para 28 below.
26. ADs may allow remittance against discrepant documents
Remittance /documents received directly by the importers after the goods have
against been cleared from the customs, on the basis of the relative LCAF,
discrepant
documents/ the authenticated copy of the customs bill of entry for consumption
documents or customs certified invoice in the case of import by post/courier
received and the relative invoices.
directly by the
importers
27. (i) Advance remittance for permissible imports of goods and
services into Bangladesh may be effected by the Authorised Dealers
without prior approval of the Bangladesh Bank, against applications
Advance from the importers submitted with signed undertaking in the format
remittance of Appendix 5/10 provided that:
against imports
a) the purchase contract with supplier specifically requires advance
payment;
b) the supplier furnishes repayment guarantee acceptable to the
Authorised Dealer from a bank abroad, to be invoked for refund of
the amount paid in advance in the event of the supplier's default in
delivering the goods or services as per contract. Such guarantee
need not however be insisted upon in cases of advance payments up
to USD2500 for import of books, journals or life savings
medicines.
(ii) Requests for advance remittance where the suppliers are
unwilling or unable to furnish the repayment bank guarantee
referred to at para 27(i)(b) may be forwarded by the Authorised
Dealers, along with their recommendations, for specific decision of
Foreign Exchange Policy Department, Bangladesh Bank on merit of
each case.
 CH 7 35

(iii) Authorised Dealers shall report to the Bangladesh Bank the

cases where the goods/services against advance payments are not
received in Bangladesh within due time.

In addition to usual reporting to Bangladesh Bank, ADs within one

week of advance remittance, shall submit attested copies of (i)
undertaking (as per Appendix 5/10) (ii) repayment bank guarantee
provided by bank abroad (iii) credit report of the guarantee
providing bank abroad to the Foreign Exchange Policy Department,
Bangladesh Bank, Head Office mentioning the probable date of
import of goods/services. However, advance payment for import
from ERQ account may be done as per instruction mentioned in
chapter 13, section -IV of this guidelines.

28.(a) All applications for payments against imports into Forms on

Bangladesh (including imports from EPZs) should be made on IMP which
forms (See Appendix 5/11). The IMP forms must be submitted in applications for
duplicate by the importer or his duly authorised agent. In cases remittances
where empowered to approve the remittances on behalf of the should be made
Bangladesh Bank, the AD shall endorse its approval on the reverse
of the IMP form in the space provided for the purpose. In other
cases, the AD shall submit the IMP form together with required
supporting documents to the Bangladesh Bank for approval.
(b) The AD should mark with a bold letter "G" the IMP form for Indication on
remittance against an import in the name of a government IMP form for
department or office for which LCs are opened by the AD. In other Government
cases, where LCAFs are issued to private parties and are marked Imports
"On Government Account", the IMP forms should be similarly
marked with bold "G".

29. In all cases of remittances for imports into Bangladesh, the

importer must submit within 4 months from the dates of Submission
remittances the relevant authenticated copy of the customs bill of of the
entry. In case of import by post/courier, the importer must submit authenticated
the invoice certified by the customs authorities in lieu of the copies of 'Bill
authenticated copy of the bill of entry. Where the value of an import of Entry' and
'Certified
by post/courier is less than £ 5 or its equivalent in other foreign
Invoices'
currency, the customs authorities will issue a certificate instead of
certifying the invoices. In such cases, the certificate may be
submitted in place of the certified invoices.
30. The Bangladesh Bank is prepared to consider applications for Extension of
extension of the time limit beyond 4 months in cases of genuine time limit for
difficulties, such as delay in the arrival of the ship or difficulties in submission of
bill of entry etc.
clearing the goods already landed at a port in Bangladesh etc.
 CH 7 36

Disposal of 31. (a) The ADs will obtain invoice, in duplicate, both of which will
IMP Forms be certified by them as usual. After recording in the IMP form the
particulars of the remittance effected, the original IMP form
alongwith a copy of the customs certified invoice shall be
forwarded to the Bangladesh Bank with the usual monthly returns.
(b) The duplicate copy of IMP form will be retained by the AD.
Subsequently when the authenticated copy of the bill of
entry/customs certified invoice is submitted by the importer, the
particulars therein should be matched and checked with those in the
IMP form and invoice filed earlier, to see if the merchandise for
which remittance was made has been duly received in Bangladesh.
If no material discrepancy is detected, the case should be
considered closed, with the duplicate IMP form, invoice and custom
bill of entry/custom certified invoice filed together for eventual
inspection and disposal instruction from inspection team of
Bangladesh Bank.
(c) Cases with material discrepancy between the particulars of
merchandise for which remittance was made and the merchandise
actually received as evidenced by the authenticated copy of bill of
entry/customs certified invoice, and cases of non submission of bill
of entry/customs certified invoice within four month of remittance
should be reported quarterly to the area office of Bangladesh Bank,
in proforma as given at Appendices 5/12 and 5/13, by 15th day of
the month following the quarters ending March, June, September
and December. The ADs should also follow up with the importers
the cases of material discrepancies and of non submission of bills of
entry/ customs certified invoices within due time. Importer who has
failed to submit bill of entry/certified invoice against any earlier
remittance for import within the stipulated time ( or within the
extended period allowed by Bangladesh Bank ) will be barred from
opening new letter of credit without prior permission of
Bangladesh Bank. Bangladesh Bank may instruct AD to abstain
from opening new LC in favor of those in whose cases major
discrepancy between the description, quantity etc. of goods stated in
Bill of Entry/customs certified invoice and the same declared on the
eve of remittances of value thereof is detected by the Bangladesh
Bank from the quarterly statement of the AD concerned.
(d) In respect of all imports in the public sector the forms should be
kept in separate importer-wise folders till final disposal.

32. In the event goods are completely lost, duplicate copy of the
IMP form should be forwarded to the Bangladesh Bank giving full
Loss of goods particulars of the loss and the manner in which the insurance claim
has been collected. In the event of partial loss, the authenticated
copy of the customs bill of entry for the goods actually cleared
should be submitted giving full particulars of the loss and the
manner in which the insurance claim has been collected.
 CH 7 37

33. (a) Subject to compliance with other conditions laid down in LCs on
this chapter and in the current IPO, import LCs may be opened on deferred
deferred payment/usance basis in the following cases: payment
basis
i) Import of capital machinery on upto 360 days usance basis;
ii) Industrial raw material imports for own use of industrial
importers (including back to back imports discussed in detail in
the next section) on upto 180 days usance basis;
iii) Import of coastal vessels including oil tankers and ocean going
vessels including those procured for scrapping on upto 360
days usance basis;
iv) Import of agricultural implements and chemical fertilizers on
upto 180 days basis;
v) Import of life saving drugs (certified/declared as such by Drugs
Administration Authority) on upto 90 days usance basis.

For such deferred payment imports, the prices must be

internationally competitive and usance interest, if any, should not
be at rate higher than the LIBOR for the relative period or the
equivalent rate prevailing in the currency of the country of the
supplier.

(b) Instructions regarding opening of import LCs on longer usance

terms against supplier's credits obtainable by industrial enterprises
in the private sector as per general or specific BOI approval are
contained in chapter 15 of this Guidelines.

34. ADs shall make payment of import liabilities as per LC/ Payment of
contracts (both local and foreign) on maturity. Failure in settlement import
of import liability as per credit/contract terms may result in liability
punitive actions including revocation of AD licence by Bangladesh
Bank.