MODE OF INVESTMENT UNDER

FOREIGN EXCHANGE OPERATIONS

Md. Shafiqur
Rahman
Executive Vice President
& Incharge
Islami Bank Bangladesh Ltd.
Local Office,
Foreign Exchange
Department.

International trade focuses on:

 Import

 Export

IMPORT:

1. Import in 3 categories:

 Machinery for projects

 Raw materials for the industries

 Commercial items

2. Import finance:

Major principles/modes

1. Musharaka & Ijarah:

For import of machinery/projects

2. Hire Purchase under Shirkatul Melk (HPSM):

Machinery is imported jointly by client and bank.

Bank leases out its portion to the client on rent and
bank gradually sells its portion on installments

3. Back to Back or Cash LC:

No funded facility is required.

4. Murabaha Post Import (MPI):

Funded investment

Bank imports the goods at request of the client

and sell the goods to the client on declared profit.

5. BAI-MURABAHA OR BAI-MUAJJAL:

It is applied in selling of goods to the client . In Bai Muajjal

profit may not be disclosed.
EXPORT :
Major principles/modes applied at Pre Shipment stage:

For procurement of raw material:

1. Back to Back LC
2. Import Cash LC: Cash or under MPI
3. Bai Murabaha/ Bai Muajjal for local procurement

For procurement of raw material at Processing stage:

1. Bai Salam:
Purchase in advance
When the raw materials arrive, Bank infuses fund by
purchase of a portion of the finished goods in advance
at a reduced rate.

After export, the liability is adjusted and the difference of

purchase and sale is taken as profit.

2. Istisnaa:
To put order for finished goods similar to Bai Salam .
Fund may be infused at production stage or at the time of
delivery.

Export finance at Post Shipment stage:

1. Bai-as-sarf:
Purchase of foreign currency denominated in the bill of
exchange or in the document (In case of sight bills).
Upon utilization bank earns exchange income.

2. Musharaka:
Participation in the business by infusing fund on
partnership basis to meet post shipment finance needs of
the client( In case of consignment).
The profit amount estimated for the consignment is shared
proportionately or as per agreement.