1. Write the name of five regulations of foreign exchange.

(Regulatory Measures)

Answer:
1. Foreign Exchange Regulation Act-1947
2. Exchange Control Manual “Guide line for foreign exchange transactions Vol-1 &2” issued by BB.
3. Export & Import policy issued by Ministry of Commerce.
4. Policy for Drawing Arrangements.
5. Convertibility of Taka.

2. Write the name of six regulations of foreign exchange. (De-regulatory measures).

Answer:
1. Uniform Customs & Practice for Documentary Credit (UCPDC) – 600
2. Uniform Rules for Collection (URC) – ICC publication 522
3. Uniform Rules for Bank to Bank Reimbursement (URR) –725
4. International Commercial Terms (INCOTERMS) –2010
5. Uniform Rules for Demand Guarantee (URDG)-758
6. ISP-98

3. What is Letter of Credit?

Answer:
As per UCP-600 sub-article 2
Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes
a definite undertaking of the issuing bank to honor a complying presentation.

4. What are the types of LC?

a. Revocable L/C
b. Irrevocable L/C
c. Confirmed L/C
d. Transferable L/C
e. Revolving L/C
f. Restricted L/C
g. Red Clause L/C
h. Green Clause L/C
i. Back to Back L/C
As per UCP-600 LC is available in the following way.
 Sight
 Deferred
 Acceptance
 Negotiation/Payment

5. What are the parties of L/C

Answer: As per UCP-600
Parties of LCs are
a. Issuing Bank
b. Confirming Bank (if any)
c. Beneficiary
The following parties of L/Cs are facilitates the transaction.
a. Applicant
b. Advising Bank
c. Nominated Bank/Negotiating Bank/Presenting Bank
d. Claiming Bank/Reimbursing Bank
6. What does mean the transferable LC?
Answer:
As per UCP-600 sub article 38 (b)
Transferable credit means a credit that specifically states it is "transferable". A transferable credit may be
made available in whole or in part to another beneficiary ("second beneficiary") at the request of the
beneficiary ("first beneficiary".

7. What does mean by complying presentation as per UCPDC?

Answer:
As per UCP-600 sub article-2
Complying presentation means a presentation that is in accordance with the terms and conditions of the
credit, the applicable provisions of these rules and international standard banking practice.

8. What do you meant by Negotiating Bank and Reimbursement Bank?

Answer:
Negotiating Bank means the bank negotiate or purchase the draft and /or documents under a complying
presentation at the request of the beneficiary. The bank with which the credit is available or any bank in
the case of a credit available with any bank.
Reimbursing bank means the bank instructed or authorized to provide reimbursement pursuant to a
reimbursement authorization issued by the issuing bank.

9. What do you meant by commercial Invoice?

Answer:
As per UCP-600 sub article -18
A commercial invoice
i. must appear to have been issued by the beneficiary
ii. must be made out in the name of the applicant
iii. must be made out in the same currency as the credit; and
iv. need not be signed.
v. The description of the goods, services or performance in a commercial invoice must correspond with
that appearing in the credit.

10. What do you meant by BTB LC?

Answer:
Back to Back L/C (BTB L/C) is a type of import L/C, either inland or in abroad, which opens against lien
on valid export L/C (Mother or Master L/C) received by export oriented industrial unit operating under
the Bonded ware house system, subject to observance of domestic value addition requirement prescribed
by Ministry of Commerce & from time to time.

11. What are the types of EPZ industries as per F.Ex guidelines?
Answer:
There are three types of Industries EPZs:
 Type A - 100% Foreign Ownership
o Type B - Joint Venture 
o Type C - 100% owned by Bangladeshi investors 

12. What is EDF LC?

Answer:
EDF LC is to finance import of raw materials for non-traditional export oriented industries on sight
payment basis, direct exporters would be able to barrow for their imported inputs based on confirmed.
Irrevocable L/C opened by an overseas buyer and indirect exporters would be able to borrow for
imported inputs based on confirmed irrevocable inland back to back L/Cs opened by direct exporters.
The term of the pre-shipment loan from the EDF will be the export production cycle or 180 days
whichever is shorter and will not exceed 180 days
13. What do you meant by deemed export LC?
Answer:
‘The arrangement whereby on behalf of the applicant a bank (issuing bank) undertakes the beneficiary to
make payment or accept the Bill of Exchange or authorizes another bank to effect payment or to negotiate
against stipulated documents in compliance of certain terms and conditions”. Such confirmed and certain
undertaking to seller or exporter is called Export L/C.

14. Offshore Banking Unit.

Answer:
An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax
jurisdiction or tax haven that provides financial and legal advantages.
These advantages typically include:
(i) greater privacy;
(ii) low or no taxation;
(iii) protection against local political or financial instability.

15. Papers/Documents required to open BTB LC & Cash LC

Answer:
(i) L/C application and Agreement form To be supplied by Bank.
(ii) LCA form
(iii) IMP form
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(iv) Valid Trade License & Membership certificate of the Trade body.
(v) Valid ERC and IRC
(vi) Indent/Proforma invoice
(vii) Insurance Cover note
(viii) Valid Bonded Ware House License
(ix) Quota allocation letter (if applicable)
(x) Indemnity Bond duly stamped
(xi) Credit report
(xii) Letter of Undertaking to the effect that he will export the ready made garments as per terms
& conditions of L/C.
(xiii) Master/Mother L/C duly lien marked
(xiv) Charge documents duly stamped.

16. What is bill of Entry?

Answer:
A written statement prepared by the C&F agent on behalf of the merchant or Importer on a prescribed
form describing nature, quantity and value of goods imported along with supporting papers. They
submit the same to the custom authority. Custom authority scrutinize the papers and asses the customs
duty, VAT & other charges. Thereafter they ask the C&F agent or importer to deposit the assessed money
into Sonali Bank, Custom House branch. After making payment they submit the main copy of payment to
the custom authority. Finally, Custom authority issue a computerized certificate is known as ‘Bill of
Entry’. It proves that the goods imported as per rule/law of the country, entered in the country, paid all
Gov’t dues and similar to Bill of Lading. As per rule of Bangladesh Bank, the importer must submit the
Bill of Entry to the L/C issuing bank within 120 days from the date of payment (creation of PAD/MIB)

17. What are the responsibilities of an Advising Bank?

Answer:
As per UCP-600 sub article-9, after received a LC from issuing Bank,
Advising bank signifies that it has satisfied itself as to the apparent authenticity of the credit or
amendment and that the advice accurately reflects the terms and conditions of the credit or amendment
received.
Sometimes advising bank checks the following manner.
(i) The credit goods are not banned item by the Export policy of the Government.
 (ii) The terms & conditions stipulated in the L/C are not contrary to the exchange control
regulation of the country.
(iii) The payment terms stipulated in the L/C is clear and acceptable
(iv) The documents required in the L/C are easily available.
(v) The reimbursement is not allowed through a banned country.

18. What do you meant by multimodal transport document?

Answer:
A multimodal transport document is a transport document, which is covering at least two different
modes of transport. The documents must appear to indicate that the goods have been dispatched, taken
in charge or shipped on board at the place stated in the credit. It’s called ‘Through Bills of Lading’.

19. What do you meant by contract?

Answer:
In general terms, the buyer and seller conclude a legally enforceable export contract by agreeing on the
goods to be sold and the price to be paid for them. Usually, their agreement will, in addition, cover elated
items such as the time period for delivery, the method of payment and how the goods are to be delivered
(the ‘trade terms’). It may also specify what law is applicable to the contract and which court or
arbitration system has jurisdiction to hear any claims in the event of a dispute.

20. What are the types of transport document?

Answer:
As per UCP-600
There are seven types of transport documents named on the basis of the different modes of shipment.
Such as:
(i) Multimodal Transport Documents UCP article-19
(ii) Bill of Lading UCP article-20
(iii) Non-negotiable sea way bill UCP article-21
(iv) Charter Party Bill of Lading UCP article-22
(v) Air Transport Documents UCP article-23
(vi) Road, Rail or Inland Waterway Transport Documents UCP article-24
(vii) Courier Receipt, Post Receipt or Certificate of Posting UCP article-24

21. What are the scrutinize points of Master LC before opening of BTB LC?
Answer:
(i) Whether Master L/C has been opened by an internationally reputed bank.
(ii) Whether the L/C is irrevocable.
(iii) Whether the L/C issued covers ICC publication UCP-600.
(iv) L/C should not contain unacceptable conditions/clause.
(v) Terms of payment not ambiguous.
(vi) Date of shipment/credit validity/place of expiry should be clearly mentioned.
(vii) Inspection clause, reimbursement clause, disposal of document clause should be clearly
mentioned.
(viii) Regarding terms of delivery CIF is preferable as we can make payment the freight and
insurance in local currency.
(ix) If the L/C is transferable, authentication of transfer/letter of transferring bank to the issuing
bank is required.
(x) If exportable goods are under quota, allocation of quota is required.