Export-Import Bank of India Chapter I Introduction

Export-Import Bank of India is the premier export finance institution of the country,
established in 1982 under the Export-Import Bank of India Act 1981. Government of India launched the institution with a mandate, not just to enhance exports from India, but to integrate the countrys foreign trade and investment with the overall economic growth. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Commencing operations as a purveyor of export credit, like other Export Credit Agencies in the world, Exim Bank of India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and postshipment and overseas investment.[2] Bank is a very old institution that is contributing toward the development of any economy and is treated as an important service industry in the modern world. Economic history shows that development has started everywhere with the banking system and its contribution towards financial development of a country is the highest in the initial stage. Modern banks play an important part in promoting economic development of a country. Bank provides necessary funds for executing various programs in the process of economic development. They collect savings from large masses of people scattered throughout the country, which in the absence of banks would have remained ideal and unproductive. These scattered amounts are collected, pooled together and made available to commerce and industry for meeting the financial requirements. Bank plays a vital role in the economy by providing means of payment and in mobilizing resources. Bank is the most important financial institution in the economy. The economic development of a country depends on the development of banking sector. Todays modern banks are not only providing traditional banking but also expanding the many financial services. In todays world the life of the people directly or indirectly are within the arena of banking whether conventional or Islamic banking. Although Islamic banking is not a newer concept in Bangladesh as it has started its operation since 1983, very few people are aware about its operation. But things are changing. Islamic banking is also getting popularity in the country.

Internship program is essential for every student, especially for the students of Business Administration, which helps them to know the real life situation. For this reason a student takes the internship program at the last stage of the bachelors degree, to launch a career with some practical experience. Against this backdrop, I have completed my three months internship in the EXIM Bank Limited, Panthapath Branch, Dhaka which has helped me a lot to understand the real life situation of banking business.

1. Historical background of EXIM Bank Limited

EXIM Bank Limited was established under the rules & regulations of Bangladesh bank & the bank companys Act 1991, on the 3rd august 1999 with the leadership of late Mr. Shahjahan Kabir, founder chairman who had a long dream of floating a commercial bank which would contribute to the social-economic development of our country. He had a long experience as a good banker. A group of highly qualified and successful entrepreneurs joined their hands with the founder chairman to materialize his dream. In deed, all of them proved themselves in their respective business as most successful star with their endeavor, intelligences, hard working and talent entrepreneurship. Among them, Mr. Nazrul Islam Mazumder became the honorable chairman after the demise of the honorable founder chairman. Of its very beginning, EXIM Bank was known as BEXIM Bank, which stands for Bangladesh Export Import Bank Limited. But for some legal constraints the bank renamed as EXIM Bank Limited, which means Export Import Bank Of Bangladesh Limited. The bank starts its functioning from 3rd August 1999 with Mr. Alamgir Kabir, FCA as the advisor and Mr. Mohammad Lakiotullah as the Managing Director. Both of them have long experience in the financial sector of our country. By their pragmatic decision and management directives in the operational activities, this bank has earned a secured and distinctive position in the banking industry in terms of performance, growth, and excellent management. Banking sector in Bangladesh is already an established and prospective site. People of this country are very much with this sector. To confine a recognizable position in this sector for a new company will be more cutthroat than previously launched companies, because they have to enter with significant features and advanced facilities to magnetize the subscribers of the existing companies. The authorized capital and paid up capital of the bank are TK. 350.00 Crore and TK. 214.00 Crore respectively. The bank has migrated all of its conventional banking operation into Shariah based Islamic banking since 1st July, 2004.

Export-Import Bank of India was set up in 1982 by an Act of Parliament for the purpose of financing, facilitating and promoting Indias foreign trade. It is the principal financial institution in the country for coordinating the working of institutions engaged in financing exports and imports. Exim Bank is fully owned by the Government of India and the Banks authorized and paid up capital are ` 10,000 crore and ` 2,300 crore respectively. Exim Bank lays special emphasis on extension of Lines of Credit (LOCs) to overseas entities, national governments, regional financial institutions and commercial banks. Exim Bank also extends Buyers credit and Suppliers credit to finance and promote countrys exports. The Bank also provides financial assistance to export-oriented Indian companies by way of term loans in Indian rupees or foreign currencies for setting up new production facility, expansion/modernization or upgradation of existing facilities and for acquisition of production equipment or technology. Exim Bank helps Indian companies in their globalization efforts through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment. The Bank has introduced a new lending programme to finance research and development activities of export-oriented companies. R&D finance by Exim Bank is in the form of term loan to the extent of 80 per cent of the R&D cost. In order to assist in the creation and enhancement of export capabilities and international competitiveness of Indian companies, the Bank has put in place an Export Marketing Services (EMS) Programme. Through EMS, the Bank proactively assists companies in identification of prospective business partners to facilitating placement of final orders. Under EMS, the Bank also assists in identification of opportunities for setting up plants or projects or for acquisition of companies overseas. The service is provided on a success fee basis. Exim Bank supplements its financing programmes with a wide range of value-added information, advisory and support services, which enable exporters to evaluate international risks, exploit export opportunities and improve competitiveness, thereby helping them in their globalisation efforts improve competitiveness, thereby helping them in their globalisation efforts.

2. Organization
Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India, Export Credit Guarantee Corporation of India, a financial institution, public sector banks, and the business community. The Bank's functions are segmented into several operating groups including:

Corporate Banking Group which handles a variety of financing programmes for Export Oriented Units (EOUs), Importers, and overseas investment by Indian companies.

Project Finance / Trade Finance Group handles the entire range of export credit services such as supplier's credit, pre-shipment Agri Business Group, to spearhead the initiative to promote and support Agri-exports. The Group handles projects and export transactions in the agricultural sector for financing. Small and Medium Enterprise: The group handles credit proposals from SMEs under various lending programmes of the Bank. Export Services Group offers variety of advisory and value-added information services aimed at investment promotion. Export Marketing Services Bank offers assistance to Indian companies, to enable them establish their products in overseas markets. The idea behind this service is to promote Indian export. Export Marketing Services covers wide range of export oriented companies and organizations. EMS group also covers Project exports and Export of Services.

Besides these, the Support Services groups, which include: Research & Planning, Treasury and Accounts, Loan Administration, Internal Audit, Management Information Services, Information Technology, Legal, Human Resources Management and Corporate Communications.

3. Objectives of EXIM Bank Limited

i. General objective To get practical exposure to organization environment To understand the system and methodology adopted in conducting day to day banking by EXIM Bank. To observe the foreign exchange operation of EXIM Bank Ltd. And their services. ii. Specific Objective To get an overall idea of banking from bankers point of view. To review the techniques used by the bank to make it lucrative An analysis and discussion of foreign exchange services of the bank To evaluation of the present performance of the bank regarding foreign exchange. To search the problems of this branch of EXIM Bank Bangladesh Ltd.

Determining some guidelines to improve the effectiveness of foreign exchange services

The main objective of the study us to develop an understanding about the practical banking activity of EXIM Bank Limited, with special reference to its branch located at panthapath. However, the often related objectives are stated as followsTo gather practical knowledge on banking & to compare theory with ongoing practices. To understand the Islamic Banking system and its overview To know customer service in EXIM Bank To observe the foreign exchange operation of EXIM bank Ltd. And their services. To understand the different services provident by the bank To know the loans and advances of EXIM Bank Ltd. Methodology For preparing this report mainly Primary and Secondary data have been used. Data have been collected from two sources

a) Primary sources:

Face-to-face conversation with the respective officers and stuffs. Face-to-face conversation with clients visited the branch and practical work experience in the different desk of the department of the branch covered Relevant field study as provided by the officer concern. Secondary Sources: Annual report of EXIM Bank Limited Website of the EXIM Bank Limited Different procedure manual published by EXIM Bank Limited.

4.Scope

The literal scope of the report is to draw the scenario which will be free from imitate and it will try to come up with its maximum reach by giving the related pictures, rationale and nonetheless the factual information. It did apparently depend on the information that has been provided by the organization and also the data that has been collected in general. On the basis of all of this a recommendation has been given as well. Another important fact needs to be mentioned that the population of interest will be represented by collecting the data from available sample of the bank and itll be exclusively collected from the EXIM Bank Limited, Panthapath Branch, Dhaka.

Limitation of the Report

This report is not free from limitations. Moreover the topic is so much vast, so I faced some problems while preparing this report. A period of twelve week is not sufficient to collect and understand the insights of bank activities. The limitations acquainted with this report are as the following:

Time limitation: there was time limitation because the employees of the firm are busy persons. Limitation of data: the employees of the bank are not willing to provide all types of information because some data were denied to disclose as it was said that those were confidential. Another limitation of this report is Banks policy of not disclosing some data and information for confidential reason, which could be very much useful. Lack of co-operation from the data source Lack of coordination Technical problems.

5.VISION:

The gist of EXIM Bank Limited vision is together towards tomorrow. EXIM Bank Limited believes in togetherness with its customer, in its march on the road to growth and progress with services. To achieve the desired goal, there will be pursuit of excellence at all stages with a climate of continuous improvement, because, EXIM Bank Limited believes the line of excellence is never ending. Banks strategic plans and networking will strengthen its competitive edge over others in rapidly changing competitive environment. Its personalized quality service to the customers with the trend of constant improvement will be cornerstone to achieve our operational success.

6.MISSION:

The bank has chalked out the following corporate objectives in order to ensure smooth achievement of its goals: To be the most caring, customer friendly and service oriented bank. To create a technology based most efficient banking environment for its customers. To ensure ethics and transparency in all levels. To ensure sustainable growth and establish full value of the shareholders. Above all, to add effective contribution to the national economy. Eventually the Bank emphasizes on: Providing high quality financial services in export and import trade Providing efficient customer service Maintaining corporate and business ethics Making its products superior and rewarding to the customer Display team spirit and professionalism Fulfillment its social commitments by expanding its charitable and humanitarian activities.

7.DEFINITION OF INTERNATIONAL MARKETING:

Kotler defines marketing as 'human activity directed at satisfying needs and wants through exchange process.' International marketing can be defined as "marketing carriedon across national boundaries".International marketing has also been defined as ' the performance of businessactivities that direct the flow of goods and services to consumers or users in more than inone nation'. It is different from domestic marketing in as much as the exchange takesplace beyond the frontiers, thereby involving different markets and consumers who mighthave different needs, wants and behavioral attributes.

8. Scope of International Marketing:

Though international marketing is in essence export marketing, it has a broaderconnotation in marketing literature. It also means entry into international markets by:

Opening a branch/ subsidiary abroad for processing, packaging, assembly or evencomplete manufacturing through direct investment.

Negotiating licensing/ franching arrangements whereby foreign enterprises aregranted the right to use the exporting company's know-how's, viz., patents,processes or trademarks with or without financial investment.

Establishing joint ventures in foreign countries for manufacturing and ormarketing and

Offering consultancy services and undertaking turnkey projects broad.Depending upon the degree of firms involvement, there may be several variations of these arrangements.

9. Conventional Banks V/S Islamic Bank

1. The function and operating modes of conventional banks are based on manmade principles.Where as, The functions and operating modes of banks are based on manmade principles of Islamic Shariah. 2. The investor is assured of a predetermined rate of interest.Where as In contrast, it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur). 3. It aims at maximizing profit without any restriction.where as, It also aims at maximizing profit but subject to Shariah restriction.

4. It does not deal with Zakat. Where as In the modern Islamic banking system it has become one of the service-oriented functions of the Islamic banks to collect and distribute Zakat.

5. Leading money and getting it back with interest is the fundamental function of the conventional bank.Where as, Participation in partnership business is the fundamental function of the Islamic banks.

6. Its scope of activities is narrower when compared with an Islamic bank.Where as, Its scope of activities is wider when compared with a conventional bank. It is in effect, a multi-purpose institution.

7. It can charge additional money (compound rate of interest) in case of defaulters.Where as, The Islamic banks have no provision to charge any extra money from the defaulters.

8. In it very often, banks own interest becomes prominent. It makes no o ensure growth with equity.Where as It gives due importance to the public interest. Its ultimate aim is to ensure growth with equity.

Chapter II EXPORT LINES OF CREDIT

(A SAFE AND CONVENIENT EXPORT FINANCING OPTION WITH FOCUS ON SAME SECTOR) EXPORT-IMPORT BANK OF INDIA

Exim Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries, to import goods and services from India on deferred credit terms. The Indian exporters can obtain payment of eligible value from Exim Bank, without recourse to them, against negotiation of shipping documents. LOC is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool. Exim Bank extends LOCs, on its own, as well as, at the behest of Government of India.

1.How does it work?

1. Exim Bank signs LOC Agreement with overseas Borrower Institution (Borrower) and announces the availability of LOC for utilization, when the Agreement becomes effective. 2. Exporter checks with Exim Bank, available amount under the LOC and quantum of service fee payable to Exim Bank, if any, and negotiates contract with Importer. 3. Importer approaches the Borrower for approval of the contract. 4. Borrower appraises the proposal. If satisfied, approves the contract and refers to Exim Bank for concurrence for inclusion of contract for being financed under the LOC. 5. Exim Bank accords approval to the contract, if in conformity with the terms of LOC. Exim Bank conveys contract approval to the exporter and the Borrower. 6. The Importer arranges remittance of advance payment to the Exporter and also opening of a Letter of Credit, which states that the contract is covered

under Exim Bank's LOC to the Borrower and reimbursement will be by Exim Bank for the Eligible Value of Credit, upon compliance with stipulated conditions therein. 7. Exporter executes the contract/ships the goods/provides services. 8. Exim Bank/commercial bank in India, designated as the Negotiating Bank negotiates shipping documents and pays the exporter. 9. Exim Bank reimburses the Negotiating Bank, on receipt of valid claim and service fee, as applicable, by debit to the LOC account of the Borrower. 10. Borrower repays Exim Bank on due dates. Eligible Goods Capital goods, plant and machinery, industrial manufactures, consumer durables and any other items eligible for being exported under the 'Exim Policy' of the Government of India. General Exporters are advised to check with Exim Bank before finalizing the contracts with the buyers, details of service fee and other charges, if any, payable by the exporters on the contracts to be covered under the relative LOC. For terms and particulars of specific LOCs, please refer to relevant brochures available with Exim Bank's offices in India. x Indian exporters requiring additional information or clarifications are welcome __________

2. What are the benefits of LOC to the Indian exporter?

Under Exim Bank's LOCs, the Indian exporters can obtain payment of eligible value from Exim Bank, without recourse to them, against

negotiation of shipping documents. The Indian exporter does not carry any credit risk either on the importer or the importer's country, whilst the overseas importer enjoys deferred credit facility. Thus, LOC is a safe mode of non-recourse financing option to the Indian exporter and serves as a market entry tool for India's exports. The Indian exporter can also increase his export volumes by offering deferred credit, where required.

3. What are the benefits of the LOC to the overseas importer of Indian
goods and services? Exim Bank has been using the LOC mechanism for promoting India's exports to the traditional as well as new markets in developing countries, which need deferred credit for buying Indian machinery, goods and services. As the LOC is extended by Exim Bank on internationally competitive terms, the overseas importer of Indian goods is allowed access to the credit facility at competitive interest rates. The overseas importer and the Indian exporter do not have to negotiate credit terms separately as the credit arrangement between Exim Bank and the overseas borrower financial institution is already in place.

4. What are the goods eligible for being financed under the LOCs?
Under the LOCs, export of capital goods, plant and machinery, industrial manufactures, consumer durables and any other items eligible for being exported under the 'Exim Policy' of the Government of India can be financed.

5. What is the interest rate the overseas importer of Indian goods

has to pay?

The overseas importer of Indian goods has to approach the overseas borrower financial institution/recipient of Exim Bank's LOC, for approval of his proposal for import of Indian goods on deferred credit terms. The interest rate that the importer will need to pay to the recipient of Exim Bank's LOC, will depend on various factors such as the cost of fund, the currency of credit, tenor of credit, security offered by the importer, the risk perception of the importer and the interest rate structure prevalent in the country. It may however be mentioned that Exim Bank's interest rates on LOCs being competitive, the importer would normally have to pay interest rate lower than what he would otherwise pay to his Bank on similar credits.

6. Does the Indian exporter need to take ECGC cover?

As the LOC is a non-recourse financing option to the Indian exporter, he does not have to obtain any ECGC cover.

7. What are the charges payable by the Indian exporter to Exim Bank?
In respect of certain LOCs, the Indian exporter has to pay a service fee to Exim Bank. The exporter should check in advance with Exim Bank the quantum/percentage of service fee payable. In respect of LOCs extended by Exim Bank, at the behest of Government of India, no service fee is normally payable by the exporter to Exim Bank.

8. Is there any minimum value of contract for being eligible for coverage under the LOC?
Most of the LOCs stipulate a minimum contract value as US$ 50000.

However, under certain LOCs, the minimum value of contract could be different. Exporters would be well advised to check the particulars of the individual LOC with Exim Bank.

9. What is the credit period allowed under the LOC?

Generally, export of capital goods and plant and machinery is allowed on credit terms of upto 5 years, whereas the export of industrial manufactures, consumer durables, raw materials and commodities is allowed on credit terms of upto 2 years. However, the credit period allowed under each LOC could be different. There are certain short-term LOCs which provide for credit period of 1 year, and there are certain LOCs which permit credit period beyond 5 years. Exporters are advised to check the details with Exim Bank, in advance. In respect of LOCs extended by Exim Bank, at the behest of Government of India, credit period ranges from 8 years to 20 years depending on the caegories of countries, based on their levels of incomes and external debts.

10. At what stage the Indian exporter should contact Exim Bank?
The Indian exporter should contact Exim Bank before finalizing the price negotiation with his prospective importer, if the transaction is intended to be covered under Exim Bank's LOC. The exporter should ascertain details such as the service fee payable to Exim Bank, the credit period permissible under the LOC, the payment procedure involved and the contact person/department in the overseas borrower institution/recipient of

LOC. In respect of certain LOCs especially those extended by Exim Bank, at the behest of Government of India, sectors/projects could be preidentified. 10. Does the overseas importer have to open Letters of Credit (L/Cs)? Does the importer pay normal charges payable on opening L/Cs? Under most of the LOCs of Exim Bank, the overseas importer of Indian goods needs to open, through his Bank, a Letter of Credit in favour of the Indian exporter, which states that the eligible value of contract would be reimbursed by Exim Bank, directly, or where specifically designated, through the negotiating bank in India, as per the terms of the contract approval and in accordance with the LOC Agreement between Exim Bank and the recipient of the LOC. Since the L/C opening bank, in such cases, does not undertake payment obligation, the L/C opening bank would only levy nominal handling charges to the importer at whose instance the L/C is opened. Exim Bank itself can undertake negotiation of documents under the L/Cs opened under the LOCs.

Chapter III EXPORT IMPORT POLICY OF INDIA

The foreign trade of India is guided by the Export Import policy of the govt. of India by the foreign trade development and regulatory Act announced by the central govt.

1. GENERAL OBJECTIVE OFEXIM POLICY

the productivity competitiveness of Indian Industry To Encourage the attainment of high and internationally accepted standards of quality

2. SPECIAL FOCUS INITIATIVES 3. MARKET DIVERSIFICATION

diversification of Indian exports to other markets. (a) 27 new countries have been included within the ambit of Focus Market Scheme. (b) The incentives provided under Focus Market Scheme have been increased from 2.5% to 3%. (c) There has been a significant increase in the outlay under Market Linked Focus Product Scheme by inclusion of more markets and products.

4. TECHNOLOGICAL UPGRADATION
Zero duty has been introduced for certain engineering products, electronic products, basic chemicals and pharmaceuticals, apparel and textile, plastics, handicrafts, chemicals and allied products and leather and leather products.The existing 3% EPCG Scheme has been considerably simplified. A number of products including automobiles and other engineering products have been included for incentives under Focus Product, and Market Linked Focus Product Schemes. Steps to encourage Project Exports shall be taken.

5. SUPPORT TO STATUS HOLDERS

The Government recognized Status Holders contribute approx. 60% of Indias goods exports. additional duty credit scrip can be used for import of capital goods by these status holders. The status holder incentive scrip scheme is being expanded to cover more export product groups.

6. AGRICULTURE AND VILLAGE INDUSTRY

Vishesh Krishi and Gram Udyog Yojana. Capital goods imported under EPCG will be permitted Import of inputs such as pesticides towns of export excellence with a threshold limit of Rs 150 crore shall be notified.

7. HANDLOOMS
2% bonus benefits. Specific funds for promoting handloom exports. Duty free import entitlement of specified trimmings and embellishments. Duty free import entitlement of hand knotted carpet samples. Duty free import of old pieces of hand knotted.

8. HANDICRAFTS
Duty free import. Specific funds are earmarked. CVD is exempted on duty free import of trimmings Machinery and equipment are exempt from customs duty. All handicraft exports would be treated as special Focus products. 2% bonus benefits under Focus Product Scheme for Handicraft exports.

9. GEMS & JEWELLERY

Import of gold of 8k and above is allowed Duty Free Import Entitlement of Consumables, Tools and additional items.

10. LEATHER AND FOOTWEAR

Additional 2% bonus benefits under Focus Product Scheme. Duty free import entitlement of specified items Machinery and equipment shall be exempted from basic customs duty.

11. MARINE SECTOR

Duty free import of specified specialised inputs / chemicals and flavouring oils. Marine products are incentivized at special higher rate Marine sector included for benefits under zero duty EPCG scheme.

12. SPORTS GOODS AND TOYS

Duty free import of specified specialised inputs allowed Sports goods and toys shall be treated as a Priority sector Fast track clearance Treated as special focus products 2% bonus benefits for Sports Goods & Toys.

13. GREEN PRODUCTS AND TECHNOLOGIES

India aims to become a hub for production and export of green products and technologies. special initiative will be taken to promote development and manufacture of such products and technologies for exports.

14. INCENTIVES FOR EXPORTS FROM THENORTH EASTERN REGION

In order to give a fillip to exports of products from the north-eastern States, notified products of this region would be incentivized under Reward Schemes

Chapter IV Exim policy 2

1. INDIAS FOREIGN TRADE POLICY 2009-14

1). Why do we need Export?

Export means trade across the political boundaries of different nation. No Nation is self sufficient and had all the goods that it needs. This happens because of climatic variation & unequal distribution of natural resources. As a result, countries all over the world have become interdependent, which necessitated foreign trade. A developing country like India with its fast

growing agricultural production to keep pace with the population to keep pace with the population growth and growing Industrial infrastructure

2). Needs high-import and this can be sustained only with fast export growth.
To meet the oil import bill, export is unavoidable. Thus, it is evident that export promotion continues to be a major thrust area for the government. Several measures have been under taken in the past for improving export performance of the country. In India, Govt. has come out from time to time with various policies on foreign trade to promote export thereby increasing the Foreign Exchange Reserve. These policies are termed as Exim Policy

3). Objective of Exim Policy

Accelerating the countrys transition to a globally oriented vibrant economy with a view to drive maximum benefits from expanding global market opportunities; Stimulating sustained economic growth Enhancing the technological strength and efficiency Encouraging the attainment of internationally accepted standards of quality Providing consumers with good quality products and services at reasonable prices.

4). Import Facilitation for Export Production Export Promotion Capital Goods (EPCG) Scheme Special Import Licenses Duty Free Licenses under Duty Exemption Scheme Duty free licenses are issued as : (1) Advance license (2) Advance Intermediate license. (3) Special Imprest licence. (4) Licence for jobbing, repairing etc. for re- export. (5) License under export production programme. (6) Advance Release Order. (7) Back to Back Inland Letter of Credit.

5). Export Incentives

Duty Exemption Duty Drawback Scheme DFRC (Duty free replenishment certificate) DEPB( Duty entitlement pass book) Deemed Exports

6). Export Production Units

 Export Oriented Unit (EOU) Special Economic Zones (SEZ) Software Technology Parks (STP) Electronic Hardware Technology Parks (EHTP)

2. INDIAS FOREIGN TRADE POLICY 2009-14 Targets:

Export Target : $ 200 Billion for 2010-11 Export Growth Target: 15 % for next two year and 25 % thereafter.

3. INDIAS FOREIGN TRADE POLICY 2009-14 EPCG Scheme:

Re-fixation of Annual Average1. Obligation under EPCG scheme Export Obligation: relaxed. Taking into account the decline in2. To aid technological up gradation exports, the facility of Refixation of export sector, EPCG Scheme at of Annual Average Export Zero Duty has been introduced. Obligation for a particular3. Export obligation on import of financial year in which there is spares, moulds etc. under EPCG decline in exports from the Scheme has been reduced by country, has been extended for 50%. the 5 year Policy period 2009-14. Support for Green products and products from North East extended.

4. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for FPS, FMS, MLFPS:
26 new markets added in this scheme. Incentives under FMS raised from 2.5 % to 3 % Incentive available under Focus Product Scheme (FPS) raised from 1.25% to 2%. Extra products included in the scope of benefits under FPS

5. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements

Market Linked Focus Product Scheme (MLFPS) expanded by inclusion of products like pharmaceuticals, textile fabrics, rubber products, glass products, auto components, motor cars, bicycle and its parts.etc. (However , benefits to these products will be provided, if exports are made to 13 identified markets (Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia and New Zealand). Focus Product Scheme benefit extended for export of green products and some products from the North East. A common simplified application form has been introduced to apply for the benefits under FPS, FMS, MLFPS and VKGUY (vishesh krishi Gram Upaj yojana).

6. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for MDA & MAI:
Higher allocation for Market Development Assistance (MDA) and Market Access Initiative (MAI) has been announced. Towns of Export Excellence (TEE) The following cities have been recognized as towns of export excellence (TEE) Handicrafts : Jaipur, Srinagar and Anantnag Leather Products : Kanpur, Dewas and Ambur Horticultural Products: Malihabad

7. INDIAS FOREIGN TRADE POLICY 2009-14 Scheme for Status Holders (Status Holders means star status holders)
1. Additional Duty Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports accelerate exports and encourage technological up gradation. 2. This facility shall be available for sectors of leather (excluding finished leather), textiles and jute, handicrafts, engineering (excluding Iron & steel & non-ferrous metals in primary and intermediate form, automobiles & two wheelers, nuclear reactors & parts, and ships, boats and floating structures), plastics and basic chemicals (excluding pharma products). 3. This facility shall be available up to 31 March, 2011. 4. Transferability for the Duty Credit scrips being issued to status holders under VKGUY Scheme permitted only for the procurement of cold chain equipments.

8. INDIAS FOREIGN TRADE POLICY 2009-14 Extension of Income Tax Exemption to EOU and STPI :
Income Tax exemption to 100% EOUs and to STPI units under Section 10B and 10A of Income Tax Act, has been already extended for the financial year 2010-11 in the Budget 200910. Extension of ECGC : The adjustment assistance scheme initiated in December, 2008 to provide enhanced ECGC cover at 95%, to the adversel y affected sectors, is continued till March, 2010.

9. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements For Marine sector :

Fisheries exempted from maintenance of average EO under EPCG Scheme (along with 7 sectors) however Fishing Trawlers, boats, ships and other similar items shall not be allowed for this exemption. Additional flexibility under Target Plus Scheme (TPS) / Duty Free Certificate of Entitlement (DFCE) Scheme for the marine sector.

10. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for Gems & Jewellery Sector:
Duty Drawback is allowed on Gold Jewellery exports to neutralize duty incidence. Plan to establish "Diamond Bourse (s) with an aim to make India and International Trading Hub announced. Introduction of a new facility to allow import on consignment basis of cut & polished diamonds for the purpose of grading/ certification.

11. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for Agro Exports:
Introduction of a single window system to facilitate export of perishable agricultural produce with an aim to reduce transaction and handling cost. This system will involve creation of multifunctional nodal agencies. These agencies will be accredited by APEDA (Agricultural and Processed Food Products Export Development Authority).

12. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for Leather Exports :
On the payment of 50 % applicable export duty, Leather sector shall be allowed re-export of unsold imported raw hides and skins and semi finished leather from public bonded ware houses.

13. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for Tea Exports:
The existing Minimum value addition under advance authorization scheme for export of tea is 100 %. It has been reduced from the existing 100% to 50%. DTA (Domestic Tariff Area) sale limit of instant tea by EOU units increased from 30% to 50%. Export of tea has been included under VKGUY Scheme benefits.

14. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for Pharma Exports :

 Export Obligation Period for advance authorizations issued increased from existing 6 months to 36 months. Pharma sector included under MLFPS for countries in Africa and Latin America & some countries in Oceania and Far East.

15. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for Handloom Exports
The claims under Focus Product Scheme, the requirement of " Handloom mark" was required earlier. This has been removed.

16. INDIAS FOREIGN TRADE POLICY 2009-14 Scheme for Export Oriented Units:
EOUs have been allowed to sell products manufactured by them in DTA (Domestic Tariff Area) upto a limit of 90% instead of existing 75%, without changing the criteria of similar goods, within the overall entitlement of 50% for DTA sale. (This means that instead of 75% these units can sell up to 90 % of their products in the domestic markets) EOU allowed to procure finished goods for consolidation along with their manufactured goods, subject to certain safeguards. Extension of block period by one year for calculation of Net Foreign Exchange earning of EOUs kept under consideration. EOU allowed CENVAT Credit Facility .

17. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for Value Added Manufacturing (VAM)
To encourage Value Added Manufactured export, a minimum 15% value addition on imported inputs under Advance Authorization Scheme. Announcements for Project Exports: Project Exports and a large number of manufactured goods covered under FPS and MLFPS. Fuel included in DEPB Scheme: Custom duty component on fuel where fuel is allowed as a consumable in Standard Input-Output Norm included in factoring.

18. INDIAS FOREIGN TRADE POLICY 2009-14 Easy Import of samples:

Number of sample pieces has been increased from the existing 15 to 50. This will facilitate the duty free import of samples by exporters. Convertibility of Shipping Bills Greater flexibility has been permitted to allow conversion of Shipping Bills from one Export Promotion scheme to other scheme. Customs shall now permit this conversion within three months, instead of the present limited period of only one month.

19. INDIAS FOREIGN TRADE POLICY 2009-14 Reduction in Transaction Costs:

Dispatch of imported goods directly from the Port to the site has been allowed under Advance Authorization scheme for deemed supplies. (Presently the duty free imported goods could be taken only to the manufacturing unit of the authorization holder or its supporting manufacturer. Maximum applicable fee for 18 Authorizations/ license applications (except those mentioned in Chapter 3 of FTP) has been reduced to Rs. 100,000 from the existing Rs 1,50,000 (for manual applications) and Rs. 50,000 from the existing Rs.75,000 (for EDI applications). No fee shall now be charged for grant of incentives under the Schemes in Chapter 3 of FTP.

20. INDIAS FOREIGN TRADE POLICY 2009-14 Disposal of Manufacturing Wastes:

Disposal of manufacturing wastes / scrap will now be allowed after payment of applicable excise duty also before fulfillment of export obligation under Advance Authorization and EPCG Scheme. Earlier it was allowed after fulfillment of export obligation. Announcements for Sports Weapon: Licenses for the import of sports weapon will be issued now by Regional Authorities provided a NOC (No Objection Certificate) is issued by Ministry of Sports & Youth Affairs. (Earlier DGFT Headquarters had to be approached for this)

21. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for Medical Devices
To solve the problem of medical device industry, the procedure for issue of Free Sale Certificate has been simplified and the validity of the Certificate has been increased from 1 year to 2 years. Announcements for Automobile Industry Those Automobile industries which have their R&D establishment will be allowed free import of reference fuels (petrol and diesel), upto a maximum of 5 KL per annum, which are not manufactured in India. Simplification in EPCG for automobile industry.

22. INDIAS FOREIGN TRADE POLICY 2009-14 Announcements for EDI Initiatives

 Export Promotion Councils & Commodity Boards have been advised to issue RCMC through a web based online system. It is expected that issuance of RCMC would become EDI enabled before the end of 2009. Set up of Directorate of Trade Remedy Measures Announced A Directorate of Trade Remedy Measures shall be set up, which will enable support to Indian industry and exporters, especially the Micro Small & medium Enterprises MSMEs in availing their rights through trade remedy instruments

23. INDIAS FOREIGN TRADE POLICY 2009-14 Duty Credit Scrips

Earlier the payment of customs duty for Export Obligation (EO) shortfall under Advance Authorization , DFIA or EPCG Authorization was allowed in cash only. Now this payment can be done in the way of debit of Duty Credit scrips. Import of Restricted Items Restricted Items can be imported now (as replenishment) against transferred DFIAs (Duty Free Import Authorizations) as the present DFRC (Duty Free Replenishment Card) scheme. Dollar Credits There is a provision for state-run banks to provide dollar credits

ChapterV International Marketing vs. Domestic Marketing:

There are a number of similarities and differences between international anddomestic marketing. 1.Both in domestic marketing and international marketing success depend uponsatisfying the basic requirements of consumers. This necessarily involves findingout what the buyers want and meeting their needs accordingly. 2.It is necessary to build goodwill both in the domestic market and internationalmarket. If a firm is able to develop goodwill of consumers or customers, its taskswill be simpler than the one, which has not been able to do so. 3.Research and development for product development and modification isnecessary both for international marketing and domestic marketing.However, there are some salient features of difference between internationalmarketing and domestic marketing. They are as follows:

1.Sovereign Political Entities:

Each country has is a sovereign political entity and goods andservices had to move across national boundaries. S a result, they may have to face anumber of restrictions. This my fall in any of the following categories;Tariffs and customs dutiesQuantitative restrictionsExchange controlsLocal Taxes.

2. Different Legal Systems:

Each country has its own legal system and it differs fromcountry to country. The existence of different legal systems makes the task of businessmen more difficult as they are not sure as to which particular system will applyto their transactions. In the case of domestic marketing the buyers are aware of the legalsystems in their country.

3. Cultural Differences
: In domestic marketing there is only one nation, same language andculture where as at international marketing many languages and different cultures.

4. Different Monetary Systems:

Each country has its own monetary system and the exchangevalue of each country's currency is different from that of the other. The exchange ratesbetween currencies fluctuate every day. In case of domestic marketing there is only onecurrency prevailing in the country.

5. Differences in the Marketing infrastructure:

The availability of the marketing facilitiesavailable in different countries may vary widely. For example, an advertisement mediumvery effective in one market may not be available or may be under developed in anothermarket.

6 . T r a d e Re s t r i c t i o n s :
Trade restrictions, particularly import controls are a very importantproblem which an international marketer faces

THE EXPORT- IMPORT BANK OF INDIA ACT, 1981 [ 11th September, 1981.]
An Act to establish a corporation to be known as the Export- Import Bank of India for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country' s international trade and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Thirty- second Year of the Republic of India as follows:-

CHAPTER VI PRELIMINARY
Short title, extent and commencement.-

(1) This Act may be called the Export- Import Bank of India Act, 1981 .
(2) It extends to the whole of India. (3) It shall come into force no such date 1[ as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act.

2. Definitions.- In this Act, unless the context otherwise requires,-(a) " Board" means the Board of Directors of the Exim Bank referred to in section 6; (b) " Development Bank" means the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964 ); 1. Ist January 1982, vide Notification No. S. O. 919 (E), dated 29- 12- 1981, (except section 26). 1. - 3- 1982: Vide Notification No. S. O. 91 (E), dt. 23- 2- 82 (in r o. S. 26). (c) " Exim Bank" means the Export- Import Bank of India established under section 3; (d) " export" and" import" mean, respectively, export from or import into India or any other country of goods or services, or both; (e) " goods" includes all materials, commodities and articles in a solid, liquid or gaseous state and all forms of energy; (f) " notification" means a notification published in the Official Gazette; (g) " prescribed" means prescribed by regulations made under this Act; (h) " Reserve Bank" means the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934 (2 of 1934 ); (i) " scheduled bank" means a bank, for the time being, included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934 ); (j) " services" includes,-(I) providing personnel (including skilled or unskilled workmen and persons for rendering technical or other services) for the purposes of any work or project (by whatever name called) or any activity; (II) transferring of technology, including transferring, or securing the transfer of rights, knowhow, expertises or other skill with respect to any patent, invention, model, design, secret formula or process or similar property; (III) furnishing any information, blueprints, plans, or advice with respect to any matter; and

(IV) making available any other resources

CHAPTER VII ESTABLISHMENT OF THE EXPORT- IMPORT BANK OF INDIA AND INCORPORATION THEREOF
. Establishment and incorporation of Export- Import Bank of India. (1) With effect from such date 1[ as the Central Government may, by notification, appoint, there shall be established for the purposes of this Act a corporation to be known as the Export- Import Bank of India. (2) The Exim Bank shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to contract, and may, by that name, sue or be sued. 999999. Ist January 1982, vide Notification No. S. O. 920 (E), dated 29- 12- 1981. Gazette 1 of India, Extraordinary, pt. II, sec. 3 (ii), page 1593. (3) The head office of the Exim Bank shall be at Bombay or at such other place as the Central Government may, by notification, specify. (4) The Exim Bank may establish offices, branches or agencies at such places in or outside India as it may consider necessary. 4. Authorised capital.(1) The authorised capital of the Exim Bank shall be two hundred crores of rupees: Provided that the Central Government may, by notification, increase the said capital up to five hundred crores of rupees. (2) The issued capital of the Exim Bank shall be wholly subscribed by the Central Government.

CHAPTER VIII MANAGEMENT OF THE EXIM BANK

1. Management.(1) The general superintendence, direction and management of the affairs and business of the Exim Bank shall vest in the Board, which may exercise all powers and do all acts and things which may be exercised or done by the Exim Bank. (2) Save as otherwise provided in the regulations made under this Act,-(a) the chairman, if he is a whole- time director or if he is holding offices both as the chairman and the managing director, or (b) the managing director, if the chairman is not a whole- time director, or, if the chairman being a wholetime director, is absent, shall also have powers of general superintendence, direction and

management of the affairs and business of the Exim Bank and may also exercise all powers and do all acts and things which may be exercised or done by the Exim Bank. (3) Subject to the provisions of this Act, the Board in discharging its functions shall act on business principles with due regard to public interest. (4) In the discharge of its functions under this Act, the Exim Bank shall be guided by such directions in matters of policy involving public interest as the Central Government may give to it in writing.

2. Constitution of Board.(1) The Board of Directors of the Exim Bank shall consist of the following, namely:-(a) a chairman and a managing director appointed by the Central Government: Provided that the same person may be appointed to function both as chairman and as managing director; (b) one director nominated by the Reserve Bank; (c) one director nominated by the Development Bank; (d) one director nominated by the Export Credit and Guarantee Corporation Limited, being a Government Company within the meaning of section 617 of the Companies Act, 1956 (1 of 1956 ); (e) not more than twelve directors nominated by the Central Government of whom-(i) five directors shall be officials of the Central Government; (ii) not more than three directors shall be from the scheduled banks; (iii) not more than four directors shall be persons who have special knowledge of, or professional experience in, export or import or financing thereof. (2) The chairman and the managing director shall hold office for such term, not exceeding 1[ [ five years], as the Central Government may specify in this behalf and any person so appointed shall be eligible for re- appointment. (3) Notwithstanding anything contained in sub- section (1), the Central Government shall have the right to terminate the term of office of the chairman or the managing director, as the case may be, at any time before the expiry of the term specified under sub- section (2), by giving him notice of not less than three months in writing or three months' salary and allowances in lieu thereof, and the chairman or the managing director, as the case may be, shall also have the right to relinquish his office at any time before the expiry of the term specified under sub- section (2) by giving to the Central Government notice of not less than three months in writing or three months' salary and allowances in lieu thereof. (4) The chairman and the managing director shall receive such salary and allowances as may be determined by the Central Government. (5) The Central Government may, at any time, remove the chairman or the managing director, as the case may be, from office: Provided that no person shall be removed from his office under this sub- section unless he has been given an opportunity of showing cause against his removal.

(6) Subject to the provisions contained in sub- section (7), any director nominated under clause (b) or clause (c) or clause (d) or clause (e) of sub- section (1) and not being an official of Government or not being a whol- time director or offical of the Reserve Bank or the Development Bank or the said Export Credit and Guarantee Corporation Limited or a scheduled bank, shall hold office for such term, not exceeding three years, as the Central Government or, as the case may be, the authority nominating him, may specify in this behalf and thereafterr until his successor enters upon his office, and shall be eligible for re- nomination: Provided that no such director shall hold office continuously for a period exceeding six years.] (7) Any 3[ director nominated under this section shall hold office during the pleasure of the authority nominating him. 1. Subs. by Act 81 of 1985, s. 16, for" the year" (w. e. f. 1- 5- 1986 ). 2. Subs. by Act 66 of 1988, s. 39, for sub- section (6) (w. e. f. 30- 12- 1988 ). 3. The word" other" omitted by s. 39, ibid. (w. e. f. 20- 12- 1986 ). (8) The Board shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed. (9) The chairman or, if for any reason he is unable to attend a meeting of the Board, the managing director or, in the event of both the chairman and the managing director being unable to attend a meeting, any other director nominated by the chairman in this behalf and in the absence of such nomination any director elected by the directors present from among themselves, shall preside at the meeting. (10) All questions which come up before any meeting of the Board shall be decided by a majority of votes of the directors present and voting, and in the event of an equality of votes, the chairman, or in his absence, the managing director, or in the absence of both the chairman and the managing director, the person presiding, shall have and exercise a second or casting vote. (11) Save as otherwise provided in sub- section (10), every director of the Board shall have one vote. 7. Committees.(1) The Board may constitute such Committees whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons for such purpose or purposes as it may think fit. (2) Any Committee constituted under sub- section (1) shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed. 8. Fees and allowances of directors and members of Committees. The directors and the members of a Committee shall be paid such fees and allowances as may be prescribed for attending the meetings of the Board or of any Committee constituted in pursuance of this Act and for attending to any other work of the Exim Bank: Provided that no fees shall be payable to the chairman, if he is appointed as a whole- time chairman, or to the managing director or to any other director or member who is an official of the Government, the Reserve Bank or the Development Bank. 9. Disqualifications.- No person shall be a director of the Board constituted under this Act, who(a) is, or at any time has been, adjudged insolvent, or

(b) is of unsound mind and has been so declared by a competent court, or (c) is, or has been, convicted of an offence which, in the opinion of the Central Government, involves moral turpitude, or (d) has, in the opinion of the Central Government, so abused his position as a director, as to render his continuance on the Board detrimental to the interests of the general public, or (e) has been, for any reason, removed from the Board.

CHAPTER XI BUSINESS OF THE EXIM BANK

. Business of Exim Bank. (1) The Exim Bank may grant in or outside India loans and advances by itself or in participation with any bank or financial institution whether in or outside India for the purposes of export or import and shall also function as the principal financial institution for co- ordinating the working of institutions engaged in financing of the export and import in such manner as it may deem appropriate. (2) The Exim Bank may also carry on and transact all or any of the following kinds of business, namely:-(a) granting loans and advances to a scheduled bank or any other bank or financial institution notified in the Official Gazette by the Central Government in this behalf by way of refinance of loans and advances granted by it for purposes of export or import; (b) underwriting the issue of stocks, shares, bonds or debentures of any company engaged in export or import; (c) issuing bid bonds or guarantees in or outside India by itself or in participation with any government, bank or financial institution in or outside India; (d) accepting, collecting, discounting, re- discounting, purchasing, selling or negotiating in or outside India, bills of exchange or promissory notes arising out of transactions relating to export or import and granting of loans and advances in or outside India against such bills or promissory notes; (e) granting, opening, issuing, confirming or endorsing letters of credit and negotiating or collecting bills and other documents drawn thereunder; (f) undertaking any transaction involving a combination of government to government and commercial credit for purposes of export or import; (g) granting lines of credit to the government of any foreign State or any financial institution or person outside India for purposes of export or import; (h) granting loans and advances outside India for any Indian joint venture; (i) granting loans and advances to any person in India in connection with his equity contribution in any joint venture in any country outside India; (j) financing export or import of machinery and equipment on lease basis;

(k) subscribing to, or investing in, or purchasing of, stocks, shares, bonds or debentures of any development bank or Export- Import Bank of any country outside India; (l) buying or selling of, or entering into such other dealings in, foreign exchange, as may be necessary for the discharge of its functions; (m) opening of any account in any bank in or outside India or the making of any agency arrangement with, or acting as an agent or correspondent of, any bank or other institution in or outside India; (n) transferring, for consideration, any instrument relating to loans and advances granted by it; (o) issuing participation certificates; (p) subscribing to, or investing in, or purchasing of stocks, shares, bonds or debentures to the extent necessary for the enforcement of a lien, pledge or other contractual right; (q) undertaking and financing of research, surveys, techno- economic or any other study in connection with the promotion and development of international trade; (r) providing technical, administrative and financial assistance of any kind for export or import; (s) planning, promoting, developing and financing export- oriented concerns; (t) forming or conducting subsidiaries for carrying out its functions; (u) acting as agent of the Central Government, any State Government, the Reserve Bank, the Development Bank or any other person as the Central Government may authorise; (v) collecting, compiling and disseminating market and credit information in respect of international trade; (w) doing any other kind of business which the Central Government may authorise; (x) generally doing such other acts and things as may be incidental to, or consequential upon, the exercise of its powers or the discharge of its duties under this Act or any other law for the time being in force, including sale or transfer of any of its assets. (3) The Exim Bank may receive in consideration of any of the services mentioned in subsections (1) and (2) such commission, brokerage, interest, remuneration or fees as may be agreed upon. (4) The Exim Bank shall not grant any loan or advance or other financial accommodation on the security of its own bonds or debentures.

CHAPTER X RESOURCES OF THE EXIM BANK

11. Loans by Central Government.- The Central Government may, after due appropriation made by Parliament by law in this behalf, advance to the Exim Bank--

(a) a loan of twenty crores of rupees at a rate of interest of five and a quarter per cent. per annum repayable in fifteen equal annual instalments, commencing on the expiry of a period of fifteen years from the date of receipt of the loan; and (b) such further sums of money by way of loan on such terms and conditions as may be agreed upon: Provided that the Central Government may, on a request being made to it by the Exim Bank, increase the number of instalments or alter the amount of any instalment or vary the date on which any instalment is payable under clause (a). 12. Borrowings and acceptance of deposits by Exim Bank.(1) The Exim Bank may, for the purposes of carrying out its functions under this Act,(a) issue and sell bonds and debentures with or without the guarantee of the Central Government; (b) borrow money from the Reserve Bank-(i) repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date on which the money is so borrowed against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; (ii) against bills of exchange or promissory notes arising out of bona fide commercial or trade transactions and bearing two or more good signatures and maturing within five years from the date of the borrowing; (iii) out of the National Industrial Credit (Long Term Operations) Fund established under section 46C of the Reserve Bank of India Act, 1934 (2 of 1934 ) for any of the purposes specified in that section; (c) borrow money from such other authority, organisation or institution in India as may generally or specially be approved by the Central Government; (d) accept deposits repayable after the expiry of a period which shall not be less than twelve months from the date of the making of the deposit on such terms as may generally or specially be approved by the Reserve Bank. (2) The Central Government may, on a request being made to it by the Exim Bank, guarantee the bonds and debentures issued by that Bank as to the repayment of principal and the payment of interest at such rate as may be fixed by that Government. 13. Loans in foreign currency.- Notwithstanding anything contained in the Foreign Exchange Regulation Act, 1973 (46 of 1973 ) or in any other law for the time being in force relating to foreign exchange, the Exim Bank may, for the purpose of granting loans and advances under this Act, borrow, with the previous consent of the Central Government, foreign currency from any foreign State or from any bank or financial institution in any foreign country or otherwise. 14. Grants, donations, etc., to Exim Bank.- The Exim Bank may receive gifts, grants, donations or benefactions from Government or any other source in or outside India.

CHAPTER XI EXPORT DEVELOPMENT FUND

. Export Development Fund.- With effect from such date as the Central Government may, by notification, appoint, the Exim Bank shall establish a special fund to be called the Export Development Fund. . Credits to Export Development Fund.- To the Export Development Fund shall be credited-(a) all amounts received for the purposes of that Fund by way of loans, gifts, grants, donations or benefactions from Government or any other source in or outside India; (b) repayments or recoveries in respect of loans, advances or other facilities granted from the Fund; (c) income or profits from investments made from the Fund; and (d) income accruing or arising to the Fund by way of interest or otherwise, on account of the application of the Fund in accordance with the provisions of section 17. . Utilisation of Export Development Fund.(1) Where the Exim Bank considers it necessary or desirable so to do, it may, subject to the provisions of sub- sections (2) and (3), disburse or spend from the Export Development Fund any amount on account or in consequence of the grant of any loan or advance, or on account or in consequence of entering into any arrangement under sub- section (1) or clause (b) or clause (c) or clause (d) or clause (q) or Clause (r) or clause (s) or clause (w) or clause (x) of sub- section (2) of section 10: Provided that before granting any such loan or advance or entering into any such arrangement, the Exim Bank shall obtain the prior approval of the Central Government. (2) Before seeking the approval of the Central Government under sub- section (1), the Exim Bank shall satisfy itself that banking or other financial institutions or other agencies are not likely to grant such loan or advance, or to enter into any such arrangement in the ordinary course of business. (3) The Central Government shall, before giving its approval, satisfy itself that such loan, advance or arrangement is necessary as a matter of priority in the interests of the international trade of the country. (4) For the removal of doubts, it is hereby declared that nothing contained in this section shall be deemed to preclude the Exim Bank from granting any loan or advance or from entering into any arrangement under sub- section (1) or clause (b) or clause (c) or clause (d) or clause (q) or clause (r) or clause (s) or clause (w) or clause (x) of sub- section (2) of section 10 without the approval of the Central Government, if no amount in respect thereof is to be disbursed or spent from the Export Development Fund. 18. Debits to Export Development Fund.(1) To the Export Development Fund shall be debited-(a) such amounts as may from time to time be disbursed or spent under sub- section (1) of section 17; (b) such amounts as may be required for discharging the liabilities in respect of loans received for the purposes of that Fund;

(c) any loss arising on account of investment made out of that Fund; and (d) such expenditure arising out of, or in connection with, the administration and application of the Fund as may be determined by the Board. (2) No amount shall be debited to the Export Development Fund except as provided for in subsection (1). 19. Accounts and audit of Export Development Fund. (1) The balance- sheet and accounts of the Export Development Fund shall be prepared in such form and manner as may be prescribed. (2) The Board shall cause the books and accounts of the Export Development Fund to be closed and balanced as on the 31st day of December 1[ or such other date in each year as the Central Government may, by notification in the Official Gazette, specify]: 2[ Provided that with a view to facilitating the transition from one period of accounting to another period of accounting under this sub- section, the Central Government may, by order published in the Official Gazette, make such provisions as it considers necessary or expedient for the closing and balancing of, or for other matters relating to, the books or accounts in respect of the concerned years.] (3) The Export Development Fund shall be audited by one or more auditors appointed by the Central Government under section 24 who shall make a separate report thereon. (4) The provisions of sub- sections (2), (3), (4) and (6) of section 24 shall, so far as may be, apply in relation to the audit of the Export Development Fund. (5) The Exim Bank shall furnish to the Central Government, within four months from the date on which the accounts of the Export Development Fund are closed and balanced, a copy of the balance- sheet and accounts together with a copy 1. Subs. by Act 66 of 1988, s. 40, for each year" (w. e. f. 30- 12- 1988 ). 2. Ins. by s. 40, ibid. (w. e. f. 30- 12- 1988 ). of the auditors' report and a report on the operation of the Fund during the relevant year and the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament. 20. Liquidation of Export Development Fund.- The Export Development Fund shall not be closed or wound up save by order of the Central Government and in such manner as that Government may direct.

CHAPTER XII GENERAL FUND, ACCOUNTS AND AUDIT

1. General Fund.- All receipts of the Exim Bank other than those which are to be credited to the Export Development Fund under this Act shall be credited to a Fund to be called the General Fund and all payments by the Exim Bank, other than those which are to be debited to the Export Development Fund, shall be made out of the General Fund.

2. Preparation of accounts and balance- sheet.(1) The balance- sheet and accounts of the Exim Bank shall be prepared in such form and manner as may be prescribed. (2) The Board shall cause the books and accounts of the Exim Bank to be closed and balanced as on the 31st day of December 1[ or such other date in each year as the Central Government may, by notification in the Official Gazette, specify]. 2[ Provided that with a view to facilitating the transition from one period of accounting to another period of accounting under this sub- section, the Central Government may, by order published in the Official Gazette, make such provisions as it considers necessary or expedient for the closing and balancing of, or for other matters relating to, the books or accounts in respect of the concerned years.] 3. Disposal of profits accruing to General Fund.(1) The Exim Bank may establish a Reserve Fund to which may be transferred such sums as that Bank may deem fit out of the annual profits accruing to the General Fund. (2) After making provision for bad and doubtful debts, depreciation of assets and for all other matters for which provision is necessary or expedient or which is usually provided for by bankers and for the Reserve Fund referred to in subsection (1), the Exim Bank shall transfer the balance of the net profits to the Central Government. 3. Audit.(1) The accounts of the Exim Bank shall be audited by auditors duly qualified to act as auditors under sub- section (1) of section 226 of the Companies Act, 1956 (1 of 1956 ), who shall be appointed by the Central Government for such term and on such remuneration as the Central Government may fix. (2) The auditors shall be supplied with a copy of the annual balance- sheet of the Exim Bank and it shall be their duty to examine it together with the accounts and vouchers relating thereto and they shall have a list delivered to them of all books kept by the Exim Bank and shall at all reasonable times have access to the books, accounts, vouchers and other documents of the Exim Bank. (3) The auditors may, in relation to such accounts, examine any director or any officer or other employee of the Exim Bank and shall be entitled to require from the Board or officer or other employee of the Exim Bank such information and explanation as they may think necessary for the performance of their duties. 1. Subs. by Act 66 of 1988, s. 41, for" each years" (w. e. f. 30- 12- 1988 ). 2. Ins. by s. 40, ibid. (w. e. f. 30- 12- 1988 ). (4) The auditors shall make a report to the Exim Bank upon the annual balance- sheet and accounts examined by them and in every such report they shall state whether in their opinion the balance- sheet is a full and fair balance- sheet containing all necessary particulars and properly drawn up so as to exhibit a true and fair view of the state of affairs of the Exim Bank and in case they had called for any explanation or information from the Board or any officer or other employee of the Exim Bank whether it has been given and whether it is satisfactory. (5) The Exim Bank shall furnish to the Central Government within four months from the date on which its accounts are closed and balanced, a copy of its balance- sheet and accounts together

with a copy of the auditors' report and a report of the working of the Exim Bank during the relevant year, and the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament. (6) Without prejudice to anything contained in the preceding sub- sections, the Central Government may, at any time, appoint the Comptroller and Auditor- General of India to examine and report upon the accounts of the Exim Bank and any expenditure incurred by him in connection with such examination and report shall be payable by the Exim Bank to the Comptroller and Auditor- General of India. 25. Saving. Save as otherwise provided in sub- section (4) of section 19, nothing contained in this Chapter shall apply to the Export Development Fund.

CHAPTER XIII TRANSFER OF PART OF BUSINESS OF DEVELOPMENT BANK

. Transfer of part of business of Development Bank. (1) On such date as the Central Government may, by notification, appoint, all business, property, assets and liabilities, rights, interests, privileges and obligations of whatever nature of the Development Bank in so far as they relate to the export financing functions of that Bank shall stand transferred to, and vest in, the Exim Bank. (2) For the transfer to, and vesting in, the Exim Bank under sub- section (1), the Exim Bank shall pay to the Development Bank such amount in such manner and in such number of instalments as may be determined by the Central Government. (3) All contracts, deeds, bonds, agreements, powers- of- attorney, grants of legal representation and other instruments of whatever nature of the Development Bank which relate to the export financing functions of that Bank and which are subsisting or having effect immediately before the date referred to in sub- section (1) and to which the said Bank is a party or which are in favour of that Bank shall,-(a) if they relate exclusively to the export financing functions of that Bank, be of full force and effect against or in favour of the Exim Bank, as the case may be, and may be enforced and acted upon as fully and effectively as if instead of the Development Bank the Exim Bank had been a party thereto or as if they had been issued in favour of the Exim Bank; and (b) if they relate not only to the export financing functions of the Development Bank but also to any of the other functions of that Bank, be of full force and effect against or in favour of both the Development Bank and the Exim Bank and may be enforced or acted upon as fully and effectively as if in addition to the Development Bank the Exim Bank had also been a party thereto or as if they had been issued in favour of the Development Bank and also the Exim Bank.

(4) If, on the date referred to in sub- section (1), any suit, appeal or other legal proceeding of whatever nature relating to the export financing functions of the Development Bank is pending, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to the Exim Bank of the business of the Development Bank or of anything contained in this Act, but the suit, appeal or other proceeding may,-(a) where it relates exclusively to the export financing functions of the Development Bank, be continued, prosecuted and enforced by or against the Exim Bank; and (b) where it relates not only to the export financing functions of the Development Bank but also to any of the other functions of that Bank, be continued, prosecuted and enforced by or against the Development Bank and the Exim Bank or, if the Central Government by special order in writing so directs, by or against such one of the said two Banks, as may be specified in such order. (5) If any question arises as to whether any contract, deed, bond, agreement, powers- ofattorney, grant of legal representation or other instrument referred to in sub- section (3) or any suit, appeal or other legal proceeding referred to in sub- section (4) relates or relates exclusively to the export financing functions of the Development Bank, it shall be referred to the Central Government for decision and the decision of the Central Government thereon shall be final. (6) The provisions of this section shall have effect notwithstanding anything contained in the Industrial Development Bank of India Act, 1964 (18 of 1964 ) or any other law or any instrument having force by virtue of the said Act or other law.

CHAPTER XIV MISCELLANEOUS

. Staff of Exim Bank.(1) The Exim Bank may appoint such number of officers and other employees as it considers necessary or desirable for the efficient performance of its functions and determine the terms and conditions of their appointment and service. (2) Without prejudice to the provisions of sub- section (1), it shall be lawful for the Exim Bank to utilise, and for the Development Bank to make available the services of, such staff of the Development Bank having experience relating to export financing functions on such terms and conditions as may be agreed upon between the Exim Bank and the Development Bank. (3) The duties and conduct, terms and conditions of service and the establishment and maintenance of a Provident Fund or any other Fund for the benefit of the officers and other employees of the Exim Bank shall be such as may be prescribed. (4). Delegation of powers.- The Board may, by general or special order, delegate to any director or any officer or other employee of the Exim Bank, subject to such conditions and limitations, if any, as may be specified in the order, such of its powers and functions under this Act as it may deem necessary. (5). Returns.- The Exim Bank shall furnish, from time to time, to the Central Government such returns as the Central Government may require.

Obligation as to fidelity and secrecy.1)The Exim Bank shall not, except as otherwise required by this Act or any other law, divulge any information relating to, or to the affairs of, its constituents except in circumstances in which it is, in accordance with the law or practice and usage customary among bankers, necessary or appropriate for the Exim Bank to divulge such information.

2) The Exim Bank may, for the purpose of efficient discharge of its functions under this Act, collect from, or furnish to, the Central Government, the Development Bank or any scheduled bank or such other financial institution, as may be notified in the Official Gazette by the Central Government in this behalf, credit information or other information as it may consider useful for the purpose, in such manner and at such times, as it may think fit. Explanation.-- For the purpose of this sub- section, the expression" credit information" shall have the same meaning as in clause (c) of section 45A of the Reserve Bank of India Act, 1934 (2 of 1934 ), subject to the modification that" banking company" referred to therein shall mean the Development Bank, any scheduled bank or other financial institution as aforesaid

3) Every director, member of a committee, auditor or officer or other employee of the Exim Bank or of the Development Bank whose services are utilised by the Exim Bank under the provisions of this Act, shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the First Schedule.

Defects in appointments not to invalidate acts, etc.(1) No act or proceeding of the Board or of any committee of the Exim Bank shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Board or the committee, as the case may be. (2) No act done by any person acting in good faith as a director shall be deemed to be invalid merely on the ground that he was disqualified to be a director or that there was any other defect in his appointment.

Arrangement with Exim Bank on appointment of directors to prevail.(1) Where any arrangement entered into by the Exim Bank with a company provides for the appointment by the Exim Bank of one or more directors of such company, such provision and any appointment of directors made in pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956 ), or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the company, and any provision regarding share qualification, agelimit, number of directorships, removal from office of directors and such like conditions

contained in any such law or instrument aforesaid, shall not apply to any director appointed by the Exim Bank in pursuance of the arrangement as aforesaid.

(2) Any director appointed as aforesaid shall-(a) hold office during the pleasure of the Exim Bank and may be removed or substituted by any person by order in writing of the Exim Bank; (b) not incur any obligation or liability by reason only of his being a director or for anything done or omitted to be done in good faith in the discharge of his duties as a director or anything in relation thereto; (c) not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable to such retirement.

Indemnity of directors.(1) Every director shall be indemnified by the Exim Bank against all losses and expenses incurred by him, in, or in relation to, the discharge of his duties, except such as are caused by his own wilful act or default. (2) A director shall not be responsible for any other director or for any officer or other employee of the Exim Bank or for any loss or expenses resulting to the Exim Bank from the insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of the Exim Bank or the insolvency or wrongful act of any debtor or any person under obligation to the Exim Bank or anything done in good faith in the execution of the duties of his office or in relation thereto. . Protection of action taken in good faith.- No suit or other legal proceeding shall lie against the Exim Bank or any director or any officer or other employee of the Exim Bank or any other person authorised by the Exim Bank to discharge any functions under this Act for any loss or damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act or any other law or provision having the force of law. 35. Act 18 of 1891 to apply in relation to Exim Bank.- The Bankers' Books Evidence Act, 1891 shall apply in relation to the Exim Bank as if it were a Bank as defined in section 2 of that Act. 36. Section 34A and section 36AD only of Act 10 of 1949 to apply to Exim Bank.- Nothing contained in the Banking Regulation Act, 1949 , except section 34A and section 36AD thereof, shall apply to the Exim Bank. 37. Act 43 of 1961 and Act 7 of 1964 not to apply to Exim Bank.- Notwithstanding anything contained in the Income- tax Act, 1961 , or the Companies (Profits) Surtax Act, 1964 or any other enactment for the time being in force relating to tax on income, profits or gains, the Exim Bank shall not be liable to pay income- tax, surtax or any other tax in respect of(a) any income, profits or gains accruing to the Export Development Fund or any amount received to the credit of that Fund; and (b) any income, profits or gains derived, or any amount received, by the Exim Bank.

38. Liquidation of Exim Bank.- No provision of any law relating to the winding up of companies or corporations shall apply to the Exim Bank and the Exim Bank shall not be placed in liquidation save by an order of the Central Government and in such manner as it may direct. 39. Power to make regulations. (1) The Board may, with the previous approval of the Central Government, 1[ by notification in the Official Gazette,] make regulations not inconsistent with this Act to provide for all matters for which provisions is necessary or expedient for the purpose of giving effect to the provisions of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for1. Ins. by Act 66 of 1988, s. 42 (w. e. f. 30- 12- 1988 ). (a) the times and places of the meetings of the Board or of any committee constituted under this Act and the procedure to be followed at such meetings including the quorum necessary for the transaction of business; (b) the fees and allowances that may be paid to the directors and the members of a committee; (c) the form and manner in which the balance- sheets and the account of the Export Development Fund and the Exim Bank shall be prepared; (d) the duties and conduct, and the terms and conditions of service of the officers and other employees of the Exim Bank; (e) the establishment and maintenance of provident fund or any other fund for the benefit of the officers and other employees of the Exim Bank; and (f) any other matter which is to be, or may be, prescribed. (3) Every regulation made by the Board under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation. 40. [ Amendment of certain enactments.] Rep. by the Repealing and Amending Act, 1988 (19 of 1988 ), s. 2 and the First Schedule. 41. Power to remove difficulty. If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, do anything, not inconsistent with such provisions, for the purpose of removing the difficulty: Provided that no such order shall be made after the expiration of three years from the date on which this Act receives the assent of the President.

Chapter XV FOREIGN EXCHANGE: Foreign Exchange & Foreign Trade

Foreign exchange department is international department of the bank. It deals with globally and facilitates international trade through its various modes of services. It bridges between importers and exporters. Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as authorized Dealers (AD). If the branch is AD in foreign exchange market, it can remit foreign exchange from local country to foreign country. This department mainly deals with foreign currency. This is why this department is called foreign exchange department.

1.Meaning of Foreign exchange

H.E. Evitt defined Foreign Exchange as the means and methods by which rights to wealth expressed in terms of the currency of one country are converted into rights to wealth in terms of the currency of another country. The term Foreign Exchange has three principal meanings. Firstly, it is a term used referring to the currencies of the other countries in terms of any single one currency. To a Bangladeshi, dollar, pound sterling etc. are foreign currencies and as such foreign exchange. Secondly, the term also commonly refers to some interments used in international trade, such as bill of exchange, drafts, travelers cheque and other means of international remittance. Thirdly, the terms Foreign Exchange is also often referred to the balance in foreign currencies held by a country. Local Regulations for Foreign Exchange Foreign exchange transactions are being controlled by the following rules & regulations: Foreign Exchange Regulation Act 1947 for dealing foreign exchange business. Import and Export Control Act, 1910 is for Documentary Credits. Export and Import Policy issued by ministries of commerce Time to time circular issued by Bangladesh Banks to control foreign exchange

Public notice issued by CCI&E for any kind of change in foreign exchange transaction. Bangladesh Bank published two volumes in 1996. this is compilation of the instructions to be followed by the authorized dealers in transitions related to foreign exchange.

2.Foreign Exchange Risk Management by EXIM Bank

Foreign exchange involves purchase and sale o foreign currencies against local currency. Thus foreign exchange risk is the risk or change of loss due to unexpected movement of market price of the currencies of different countries or of the assets denominated by foreign currencies. The foreign exchange risk the bank is minimal as all the transactions are carried out on the customers against underlying foreign exchange transactions. For effective and efficient management of foreign exchange risk, the bank has a well-developed and well- structured Foreign Exchange risk manual and an international standard dealing Room Manual. Treasury department, with its three distinct portions- front office, mid office and Back office, carries out the whole procedure of foreign exchange. The Front Office independently conducts the transactions and the Back Office of is responsible for verification of the deals and passing of their entries in the books of account. The Mid Office plays a vital role in the process by checking the foreign exchange procedure performed by front and back office and by reporting it directly to the Managing Director of the bank. The bank maintains shadow ledgers or all its foreign currencies accounts. All foreign exchange transactions are revalued at market-to-market rate as determined by Bangladesh Bank at the month- end. All NOSTRO accounts are reconciled on monthly basic and the management for their settlement reviews outstanding entries beyond 30 days.

3.Function of Import Section

The function of this section is mainly to deal with various components such as Letter of Credit (L/C ) Payment Against Document (PAD ) Payment Against Trust receipt ( PTR ) Loan Against Imported Merchandise ( LIM )

4. Letter of Credit
A letter of credit is a letter issued by a bank (know as the opening or the issuing bank) at the instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain

conditions mentioned in the letter gave been complied with. Since the agreed conditions include, amongst other things, the presentation of some specified documents, the letter of credit is called Documentary Letter of Credit.

Types of L/C :
There are twelve types of letter of credit but mainly used only 3 types: i. ii. iii. Revocable Irrevocable Add confirmed Credit.

i. Revocable Credit :
A revocable credit is a credit that can be amended or cancelled by the issuing bank at any time without prior notice to the seller. In case of seller (beneficiary), revocable credit involves risk, as the credit may be amended or cancelled while the \goods are in the transit and before the document are presented or although presented before payment has been made. The seller would then face the problem of obtaining payment on the other hand revocable credit gives the buyer maximum flexibility, as it can be amended or cancelled without prior notice to the seller up to the moment of payment buy the issuing bank at which the issuing bank has made the credit available. In the modern banking the use of revocable credit is not widespread.

ii. Irrevocable Credit :

An irrevocable credit constitutes a definite undertaking of the issuing bank (since it can not be amended or cancelled without the agreement of all parties thereto), provided that the stipulated documents are presented and the seller satisfies the terms and conditions. This sort of credit is always performed to revocable credit. Sometimes letter of credits is marked as either with recourse to drawer or without resource to drawer. EXIM Bank mostly used Irrevocable Letter of credit without Resource.

iii. Add confirmed Credit :

When a third bank provides guarantee to the beneficiary to make payment, if issuing bank fail to make payment, the L/C is called confirmed L/C. In caser of a confirmed L/C a third bank adds their confirmation to the beneficiary, to make payment, in addition to that of issuing bank. Confirmed L/C gives the beneficiary a double assurance of payment

6. Parties to a Letter of Credit :

The parties of letter of credit areas follow: Importer- Seller who applies for opening the L/C. Issuing Bank- It is the bank which opens/issues a L/C on behalf of the importer. Confirming Bank- It is the bank, which adds its confirmation to the credit and it is done at the request o issuing bank. Confirming bank may or not be advising bank. Advising / Notifying Bank- is the bank through which the L/C is advised to the exporters. This is actually situated in exporters country. If may also assume the role of confirming and/ or negotiating bank depending upon the condition of the credit. Negotiating bank- is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may not be the same. Sometimes it can also be confirming bank. Paying/ Accepting Bank- is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank. Reimbursing bank- is the bank which would reimburse the negotiating bank after getting payment- instruction from issuing bank

Chapter XVI .Import Procedure and Policy

Import Policy
Imports of goods into Bangladesh is regulated by the Ministry of commerce and industry interims o the Import and Export and (control) Act, 1910, with Import policy orders issued by annually, and Public Notices issued from time to time by the office of the chief controller of Import and Export ( CCI & E ). Through the process of import some vital but which are inadequate in our country products are imported to meet the local needs of the people. To import, a person should be competent to be and importer. According to Import and export control Act, 1910, in the office of the chief controller of Import and Export provides the registration (IRC) to the importer.

Step 1- Registration with CCI&E:

For engaging in international trade, even trader must be first registered with the Chief Controller of Import and Export (CCI&E). By paying specified registration fees to the CCI&E- the trader will get IRC/ERC (Import/Export Registration Certificate), to open L/C with bank, this IRC is must.

Step 2- Determination terms of credit:

The terms of the letter of credit are depending upon the contract between the importer and exporter. The terms of the credit specify the amount of credit, name and address of he beneficiary and opener, tenor of the bill of exchange-period and mode of shipment and of destination, nature of credit, expiry date name and number of sets of shipping documents etc.

Step 3- Proposal for Opening of L/C:

To have an import L/C limit an importer submits an application to department to EXIM Bank. The proposal contains the following particulars: Full particulars of the bank account Nature of business Required amount of limit Payment terms and conditions Goods to be imported Offered security Repayment schedule

Step 4- Submission of documents by importer to the banker:

For opening L/C, the importer is required to fill up a prescribe application from provided by the banker along with the following documents: 1. L/C Application from 2. Filled up LCA from 3.Pay Order for insurance 4. Pro-forma invoice 7. Beneficiaries credit report 8. Filled up amendment request form 9. IMP form 10. Insurance cover note and money receipt

5. Tax identification number

11. No Objection Certificate (NOC)

6. Import registration certificate 12. VAT certificate

Step 5- Opening of L/C by the bank for the opener:

Taking filled up application form from the importer. Collects credit report of exporter from exporters country through his foreign correspondence there. Opening bank then issues credit by air mail/TELEX/SWIFT followed by L/C advice as asked by the opener through his foreign correspondent or branch as the case may be, at the place of beneficiary. The advising bank advises the L/C to the beneficiary on his own where it is addresses to him or merely hand over the original L/C to the beneficiary if it is so addressed.

Step 6- Shipment of goods and lodgment of documents by exporter:

Then exporter Ships the goods to the destination of the importer country. Sends the documents to the L/C opening bank through his negotiating bank. Generally the following documents are sent to the opening banker with L/C: 1. Bill of Exchange 2. Bill of Lading 3. Commercial Invoice 4. Certificate of Origin 6. Packing List 7. Advice Details of Shipment 8. Pre-shipment Inspection Certificate 9. Vessel particular

5. A certificate stating that each packet contains the description of goods over the packet. 10. Shipment Certificates

Step 7- Lodgment of documents by the opening bank from the negotiation bank:
After receiving the documents, the opening banker scrutinizes the documents. If any discrepancy found, it informs the importer. If importer accepts the fault, then opening bankers call importer

retaining the document. At this time many thing can happen. These are indicated in the following: Discrepancy found but the importer accepts- no problem occurs in lodgment. Discrepancy found and importer not agreed to accept- In this case, importer protest and send back all the documents to the exporter and request his to make in the specified manner. Here banker is not bound to pay because the documents send by exporter is not in accordance with the term of L/C Documents are OK but importer is willing to retire the documents- In this case bank is obligated to pay the price of exported goods. Since importer did not pay for bill of exchange, this payment by bank is one kind of credit to the importer and this credit in banking is known as PAD Everything is OK but importer fails to clear goods from the port and request bank to clear- In this case banks clear the goods and takes delivery of the same by paying customs duty and sales tax etc. So, this expenditure is debited to the importers account and in banking it is called LIM.

Step 8 Retirement:
The importer receives the intimation and gives necessary instruction to the bank for retirement of the import bills or for the disposal of the shipping document to clear the imported goods from the customs authority. The importer may instruct the bank to retire the documents by debiting his account with the bank or may ask for LTR (Loan against Trust Receipt).

There are three types of import financed by the EXIM bank

A. Loan against Trust Receipts (LTR): Advance against a Trust Receipt obtained from the customers are allowed to only first class tested parties when the documents covering an import shipment or other goods pledged to the bank as security are given without payment. However, for such advances prior permission/sanction from head office must be obtained. The customer holds the goods or their sale-proceeds in trust for the bank, till such time, the loan allowed against the Trust Receipts is fully paid off. The trust receipt is a document that creates the bankers lien on the goods and practically amounts to hypothecation of the sale in discharge of the lien. B. Loan against Imported Merchandise (LIM): Advance (Loan) against the security of merchandise imported through the bank may be allowed either on pledge or hypothecation of goods, retaining margin prescribed on their landed cost, depending on their categories and credit restriction imposed by the Bangladesh Bank. Bank shall

also obtain a letter of undertaking and indemnity from the parties, before getting the goods cleared through LIM Account. C. Payment against Document (PAD): Payment made by the bank against lodgment of shipping documents of goods imported through L/C falls under this head. It is an interim advanced connected with import and is generally liquidated against payment usually made by the party for retirement of the documents for release of imported goods from the customers authority. It falls under the category of Commercial Loan.

Source of Finance
Import may be allowed under the following sources of finance: a) Cashi. of Bangladesh Bank) ii. b) c) Foreign currency accounts maintained by Bangladeshi nationals working/living abroad. External Economic Aid. Commodity Exchange. Cash foreign exchange (balance of the foreign exchange reserve

Chapter XVII Export policy and Procedures

Export policy
The goods and services sold by Bangladesh to foreign households, businessman and Government are called export. The export trade of the country is regulated by the Imports and Export (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry Of Commerce through Chief Controller of Imports and Exports (CC & E). No exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CCI&E and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed every year. The ERC number is to be incorporated on EXP forms and other documents connected with export.

Export Procedures Step 1- Registration of Exporters:

For obtaining ERC, intending Bangladeshi exporters are required to apply to the controller/ Joint Controller/ Deputy Controller/ Assistant Controller of Imports and Exports, Dhaka/ Chittagong/ Rajshahi/ Mymensingh/ Sylhet/ Comilla/ Barishal/ Bogra/ Rangpur/ Dinajpur in the prescribe form along with the following documents: Nationality and assets certificate, Memorandum and Article of association and Certificate of Incorporation in case of Limited Company, Bank Certificate, Income Tax Certificate, Trade License etc.

Step 2- Securing the Order:

After getting ERC Certificate the exporter may proceed to secure the export order. He can do this by contacting the buyers directly or through agent. In this purpose the exporter may get help from Liaison Office Buyers local agent Export Promotion Organization Bangladesh mission abroad Chamber of Commerce (Local & Foreign) Trade fair etc.

Step 3- Signing the Contract:

After communicating buyer, exporter has to get contracted (writing or oral) for exporting exportable items from Bangladesh detailing commodity, quantity, price, shipment, insurance and marks, inspection and arbitration etc. Step 4- Receiving letter of credit: After getting contract for sale, exporter should ask the buyer for Letter of Credit (L/C) clearly stating terms and condition of export and payment. The following are the main points to be looked into for receiving/ collecting export proceeds by means of Documentary Credit:

The terms of the L/C are in conformity with those of the contract; The L/C is an irrevocable one, preferably confirmed by the advising bank; The L/C allows sufficient time for shipment and negotiation. * Terms and conditions should be stated in the contract clearly in case of other mode of payment: Cash in advance , Open account, Collection basis (Documentary/ Clean)

Step 5- Procuring the materials:

Then the exporter should take the preparation for export arrangement for delivery of goods as per L/C and prepare and submit shipping documents for payment/ acceptance/ negotiation in due time.

Step 6- Document for shipment:

EXP form, ERC (valid) L/C copy, Customer Duty Certificate, Shipping Instruction, Transport Documents, Insurance Documents, Invoice, Other Documents, Bills of Exchange (if required) Certificate of Origin Inspection Certificate, Quality Control Certificate, G.S.P Certificate,

Photo-sanitary Certificate

Step 7- Final Step:

Submission of the documents to the Bank for negotiation Checking of export documents: After getting the documents banker used to check the documents as per LC terms. Negotiation of export documents: If the bank accepts the documents and pays the value draft to the exporter and forward the document to issuing bank that is called a negotiating bank. If the bank does buy the LC then the bank normally acts as collecting bank. Realization of proceeds: This is the period when the issuing bank has realized the payment. Reporting to the Bangladesh bank: As per instruction by Bangladesh bank the bank has to report to respective department of Bangladesh bank by mentioning latest payment. Issue to proceeds realization certificate (PRC): Bank has to issue proceed realization certificate of export LC to the supplier/ exporter for getting cash assistance. After scrutinizes all the documents, if the documents are clean, EXIM Bank purchase the documents on the banker- customer relationship. This is known as Foreign Documentary Bill Purchases (FDBP).

Chapter XVIII Export financing activities of the bank

Financing export constitutes an important part of a banks activities. Exporters require financial services at four different stages of their export operation. During each of these phases exporters need different types of financial assistance depending on the nature of the export contract. Pre-shipment credit Post-shipment credit

Pre-shipment credit, as the name suggests, is given to finance the activities of an exporter
prior to the actual shipment of the goods for export. The purpose of such credit is to meet working capital needs starting from the point of purchasing of raw materials to final shipment of goods for export to foreign country. Before allowing such credit to the exporter the bank takes into consideration about the credit worthiness, export performance of the exporters, together with all other necessary information required for sanctioning the credit in accordance with the existing rules and regulation.

Post-shipment Credit:
This type of credit refers to the credit facilities extended to the exporters by the banks after shipment of the goods against export documents. Necessity for such credit arises, as the exporter cannot afford to wait for a long time for without paying manufacturers/ suppliers. Before extending such credit, it is necessary on the part of banks to look into carefully the financial soundness of exporters and buyers as well as other relevant documents connected with the export in accordance with the rules and regulations in force.

Chapter XIX Foreign Remittance

Foreign Remittance means purchase and sale of freely convertible foreign currencies as admissible Foreign Exchange Regulations Act-1947 and Guidelines for foreign Exchange Transaction VOL. 172 of the country. Purchase of foreign currencies constitutes inward foreign remittance and sale of foreign currencies out ward foreign remittance. In broad sense, foreign remittance includes all sale and purchase of foreign currencies on account of import, export, travel and other purposes. However, specifically foreign remittance means sale & purchase of foreign currencies for the purpose other than export and import. As such, this chapter will not cover purchase & sale of foreign currencies on account of import & export of goods. Remittance procedure of foreign currency Foreign remittance takes place in two ways1. Inward remittance 2. Outward remittance

Inward Remittance
Remittance comes from foreign countries to our country is called inward remittance. To the bankers or Ads inward remittance means purchase of foreign currency by authorized dealers. Generally, inward remittances are received by draft, mail transfer, TT, purchase of foreign bills & travelers Cheque, export bills. Basically, these are the formal channels of receiving inward remittance. A local bank also receives indenting commission of local firm also comes under purview of inward remittance.

Outward Remittance
Remittance from our country to foreign countries is called outward foreign remittance. On the other word, sales of foreign currency by the authorized dealer or formal channels may be addressed as outward remittance. The authorized dealers must utmost caution to ensure that

foreign currencies remitted or released by them are used only for the purpose for which they are released. Outward remittance may be made by appropriate method to the country to which remittance is authorized. Most outward remittance is approved by the authorized dealer on behalf of Bangladesh Bank. Outward remittance may be made for following purpose I. II. III. IV. V. VI. VII. VIII. IX. Travel Medical treatment Education purpose Attending seminar etc. Balance amount of F.C account Profit of foreign companies. Technical assistance New exporters up to USD 6,000/- for business promotion F.C. remittance can be made for fare, exhibition from export retention quota.

Foreign Remittance Process

Fund transfer from one country to another country goes through a process which is known as remitting process. Suppose a local bank has 200 domestic branches. The bank hag corresponding relationship with a foreign bank say X, and maintaining Nostro Account in US $ wit the bank. Bangladeshi expatriates are sending foreign remittances to their local beneficiary, through that account. Now, when the Bangladeshi expatriates through other banks of different countries remit the fund to their Nostro Account with X, then the local banks Head Office international division will receive telex message and the remittance section will record the advice and generate the advice letter to the respective branch of the bank. The branch will first decode the test, verify signature and check the account number and name of the beneficiary. After full satisfaction, the branch transfers the amount to the account of the beneficiary and intimates the beneficiary accordingly. But some times the complexity arises, if the respective local bank has no branch where the beneficiary maintains his account. Then the local bank has to take help of a third bank who has branch there.

Formal Channel

Fund transfer from one country to another country through official channels, i.e. banking channel, post office, and other private service channels, such as- Western money order, Neno money order etc. The legitimate purposes for moving money abroad through formal channel are To invest To lend To meet trading/ Personal obligation To safeguard assets against theft or seizure by repressive regimes.

Informal Channel
Fund transfer from one country to another country through hand or over telephone in an unofficial channel like as Hundy. Haque (1992) comments, that remittance collected by informal Hundy rings operating in Middle East counties and UK are also used to finance illegal trade and transactions. Islam (2000) observes that as informal channel is needed for illegal trade of goods, as well as gold and drug into Bangladesh, and therefore, helping the ever-present problem of capital flight out of Bangladesh. Criminals use informal channel for moving money abroad because ofDealing in arms & ammunition Drug trafficking Financial terrorist activities Evasion of exchange regulations/ control Evasion of taxation Disguise or remove proceeds of threat/ fraud/ bribe Making blackmail payments Paying ransom for kidnappers.

Chapter XX: Loans and Advances

Department

Loans and advances department Introduction Banking is essentially a business dealing organization with money and credit like all other business activates. Banks are profit-oriented organization. A bank invites its fund many ways to earn more and more profit and most of its income is derived from loans and advances. Bank makes loans and advances to traders, Businesspersons, industrialists and many other persons against security of some cautions policy and sound lending principle in the matter of lending. EXIM Bank is a lending bank in loans and advances and it grant loans in various sectors especially in industry, trade and commerce. Types of loans and advances There may be different types of loans and advances given from the commercial banks such as EXIM Bank Ltd. of our country. Loans and advances may be in the following types: Term loan. Cash credit. Overdraft. HouseBuilding loan (general and staff) Transportation (car) loan (only for senior staff) Consumer credit scheme. Loan against Imported Merchandise (LIM). Loan Bills Purchases Documentary (LBPD). Loan against Other Securities (LAOS). Brief idea about loans and advances

Cash Credit (CC):

A cash credit is an arrangement by which the customer is allowed to borrow many up to a certain limit. This permanent arrangement and the customers need not to draw the sanctioned amount of money at a time. The borrower can draw the money when required. The borrower can put back any surplus amount, which he/she may be affected frequently. Intersect is charged only to the amount withdrawn and not the whole amount sanctioned cash credit arrangement is usually divide into two ways such as: Cash credit pledge.

Cash credit hypothecation Cash credit pledge: In case of cash credit pledge possession of the goods dealings to bank and ownership of the goods belongs to borrower and bank the possessions of the goods as primary security. The goods stored in go down under lock and key by direct supervision of the bank. If the borrower wants to sell any portion of the pledged goods he/she permission of bank with returning the value of the loan amount. It is therefore regarded as the most secured type of advance Cash credit hypothecation: In case of cash credit hypothecation possession of the goods not transferred to the bank and therefore such and advance is no better then a clean loan, such an advance can thus only be granted to a person in whose integrity the banked has full confidence cash credit in the form of Hypothecation is normally accompanied with mortgage of immovable properties. The pray/borrower possesses the lock and key of the down. The Formalities of opening cash credit: The intending cash credit holder should submit the following documents and being fill-up properly: Stock report, rend receipt. Trade license. Up to date income tax clearing certificate. Charge documents. Letter of continuity. Letter of arrangement. DP (Demand Promissory) note. Letter of guarantee. Letter lien. Limit sanctions advice. Non-Encumbrance certificate. Observing the documents the bank authority prepares a CC proposal form that contains the following information:

Nature of business. Banking with EXIM. Transition with CD account by the client. Allied deposit with SB/STD account. Number of adjustment(s) [How many times the CC holder made his/her account nil that means debit balance equal to credit balance] Recycling it is the ration of total credit summation to the limit. If the ratio is higher it is better from bankers point of view. Turn over in the account. By the encasement authority the bank holds the power to encase the FDR the encasement authority at any time in case of borrowers failure to repay the loan amount with interest in due time. Based on the above-mentioned information the dealing officer of the loans and advances department prepares recommendation about the prospect of granting the CC loan to the client. Overdraft: Overdraft is an arrangement between the banker and the customer by which the letter is allowed to withdraw over his/her credit balance in the current account up to an agreed limit. The borrower is permitted for draw and repays any number of times, provided the total amount overdrawn dose not exceeds the agreed limit. Here the interest is charged only for the amount withdrawn over the limit, not for the whole amount. Overdraft is divided into two categories: Secured overdraft (SOD) Temporary overdraft (TOD) Secured overdraft: It is allowed against the full security (i.e. FDR, ICB unit certificates). Temporary Overdraft: It is allowed to the customer for a very short period of time. But EXIM bank deals only secured overdraft. Car loans: This is a special type of loan, which is only provided for the staff of EXIM Bank. Usually AVP and above level officers get this kind facility. This loan is reimbursed on instrument basis and repayable after each month. House Building loan (general and Staff):

Generally house building loan is providing into two sectors: Generally Staff Naturally house-building loan is paid for the construction of commercial buildings, land owners etc. procedures for sanctioning house-building loan as follows:Application for sectioning loan. Application properly filled-up for credit facilities supplied by the bank. Personal net worth statement each director. Inquiry form. Required papers for sanctioning HB loan: Copy of general power of attorney. Copy of material certificate. Copy of engineers estimate. Copy of projected cash flow. Loan (General): In case of loan the banks sanction some of money for a certain period of time. The enter amount is one time disbursement and paid in cash or credit loan A/C. the interest is charged on full sanctioned amount @ 16%. The bank generally sanctions loan to establish industry. These types of loans are granted for capital expenditure such as purchase of land, constriction of factory building, purchase of now machinery and modernization of plant. The borrower cannot withdraw this type of loan once repaid in full or in part again. Formalities for extending project loan Loan application form: After receiving the loan application from the borrower the branch scrutinizes the application whether it is viable or not. Loan application form contains the following particulars amongst other detail below. Particular description of the project. Nature of the project.

Detail information about the borrower. Statements of assets and liabilities of the borrower with declaration. Detail information about proposed products, machineries and manpower etc. Project cost and source of fund. Market for the proposed project Feasibility report: This report is provided by the borrower, which includes the following aspects of the project: Marketing aspect Technical aspect financial aspect. Managerial aspect Socio-economic aspect CIB report: Before making credit repot to the head office the lending branch takes the credit information to the borrower from the CIB (Credit Information Bureau) of Bangladesh Bank and other financial institutions. For obtaining this report the branch sends Inquiry form to CIB duly filled in particulars of the borrower. The report is divided into 5 segments. Project appraisal: It is the reinvestment analysis done by Banker before a project is approved. Project appraisal in the Banking sector is needed for following reasons: To ensure repayment of the Bank finance. To achieve the organizational goals. To establish industrialists in a country. The main tasks of the project appraisal are to justify the soundness of an investment by the Banker by means of a capital and systematic of the different elements of the project. For this purpose Banks use two types of analysis: Lending Risk Analysis (LRA). Spread Sheet Analysis (SSA)

Lending risk analysis: Bangladesh bank issued a letter number BCD (p) 611/13/1290 dated 17-07-1994, which now makes it mandatory for the commercial Banks to implement the LRA approach to credit analysis prior to extending credit facilities to a Borrower. The modern concept of lending is purpose and production oriented and not security oriented. The emphasis should be given not no securi9ty rather on he likelihood of repayment, the credit worthiness of the customer soundness and viability of the business etc. Documentation Documentation is a retained statement of facts of proof or evidence arising out of particular transaction, which on placement may bind the parties there to answerable and liable to the court of law for sanction of the charge in question. In this connection Bank for the purpose of security take some charge document from the borrower. Common compulsory documents: A letter of acceptance about the terms and conditions laid down in sanction advice. DP note (Depending one the type of borrowers). Letter of arrangement. Documents depending on the type of advance: In case of loan: Letter of disbursement. Letter of authority. Letter of hypothecation. Insurance policy Any other document as stated in sanction advice. In case of cash credit: Letter of disbursement in case of renewed go down. Letter of authority. Letter hypothecation/ Pledge. Insurance Policy.

Letter of continuity. Personal guarantee. Any other document as stated in sanction advice. In case of mortgage: Mortgage deed (Certified copy). Registration receipt in original CS/ SA/ RS porcha. Up to date rent receipt. Non-encumbrance certificate. Power of authority. Legal opinion from the legal advisor. Valuation certificate from the concerned certificate. Location map or site plan. Note: In case of simple mortgage registration of the deed is essential, but in case of equitable registration is not required. Disbursement Loan disbursement has to be made after completion of documentation and observation of the sanctioning terms against rising of equity by sponsors as lay down. Each of loan disbursement to be supervised by Bank official that the project and the phase of implementation of the project to be affectivity supervised and borrowers persuaded for completion of project in time. There are main there important factors in the loan disbursement such as: Completion of documentation. Verification of stocks. All-important documentation. Follow up After the disbursement of the loan bank follows the borrower in the following manner: Constant supervision.

Working capital assessment. Stock report. Break even analysis. Rescheduling of repayment. Recovery Loans and advance in whether from granted by the bank to its clients are repayable either on demand or at the expiry of the fixed period or as per repayment schedule agreed upon while granting the facilities. If any loan is not repaid then notices served to the customer. Sometimes legal actions also taken for recover the loan. The overdraft and cash credit is legally in installment and deferral cases in the payment of any installment entire loan usually become immediately recoverable of at the position of the Bank. Banks generally realize their advance under following cases: If death occur dither of the borrower or the guarantor. In the borrower is reported to have committed as Act of insolvency. Dissolution of partnership. Liquidation of the borrowing company. Failure to renew documents sufficiently before the expire of the limitation. Deterioration in the financial position of the party. If the borrower fails to maintain the stipulated Merlin. Change in the Banks policy of lending. The policy of selective credit control by Bangladesh Bank. Detection of any other undesirable feature of accounts Types of classification of loans In banking practice there are three types of classified loans. This classification is prepared based on the non-repayment with in particular time fame of the loan; this classification type has been developed by the Bangladesh Banks rules and regulations. 4.8.1 Sub-standard loan: In the borrower does not make any transaction with in 6 or 12 months (neither crediting nor withdrawing money) in his/her loan accent then it would be known as sub-standard loan.

Doubtful loan: If the borrower does not make any transaction before 18 months and above (neither crediting nor withdrawing money) in his/ her loan account then it would be known as doubtful loan. Bad or loss (BL) loan: If the borrower does not make any transaction before 18 months and above (neither crediting nor withdrawing money) in his/ her loan account then it would be known as doubtful loan. Basis of classification of loans The Classification is done as per central Banks instruction in BCD circular no. 34/1989, BCD circular no. 20/1994. According to these rules and regulation EXIM Banks classifies loan on the basis of the following criteria: Overdue: If the borrower does not repay the loan instruction within stipulated time frame then the loan would be known as overdue loan. Limit overdrawn: If the borrower crosses the granted limit of loan then it would be known as limit overdrawn. Required payment: If the required payment is not made within the particular time then it would be classified required payment. Legal action: If the Bank takes any legal action at any time against borrower for defaulting the loan repayments then in it would be known a the loan classified based on legal action. Qualitative Judgments: This is the basis of loan classification upon the borrower performance. If the Bank authority observes that the borrower has the chance not to repay the loan amount within the required time frame than they consider it as qualitative judgment classified loan.

Chapter XXI Provision

If any borrower fails to pay his /her borrower amount the account is classified as substandard, doubtful and bad depending on the period of nonpayment. When the amount of classified loan is big the Bank can not operate Banking functions very smoothly. At that time Bank required provision and then a proportion of net profit transfer to the provision. The main function of provision is to overcome bad and loss on one side, a big amount of provision is good, because the Bank can operate Banking functions and disburse to the new probable sector in the

economy to develop the country and on the other hand a big amount of provision is bad, because the amount of reserve is small. Bank guarantee According to the section 126 of contract Act 1872 guarantee can be defined as a contract to perform the premise of discharge of liability of a third person in case of his default. The person who gives the guarantee is called the Surety the person in respect of whose default the guarantee is given the called the principal debtor and the person to whom the guarantee is given is called the creditor. It is an irrecoverable under taking to pay in case of a certain eventually. Banks generally provide three types of guarantee. Bid Bond. Performance Guarantee. Advance Payment Guarantee. Bid Band (BB): Bid band is one type of guarantee given by the Bank. It is no fully secured guarantee. Bank takes full margin this type of guarantee. Performance Guarantee (PG): Performance guarantee is fully secured guarantee. Bank gives guarantee to the beneficiary that if the party fails to perform his/ her work then Bank will take the liability. Advance Payment Guarantee (APG): If the party takes from the beneficially advance payment to perform them Bank provides guarantee to the beneficially on behalf of the party. It is fully secured guarantee Findings In recent years, the foreign exchange business of Export Import Bank of Bangladesh Ltd, is increasing at a faster rate. Exim Bank rendering a stable support to the national foreign exchange business. Although the foreign exchange business loading day by day there are also some obstacles around I they are as per observation: The EXIM Bank Ltd, patho poth branch is not AD (Authorized Dealer) branch, so while opening a L/C its required to contact with the Nawabpur branch, which is an AD branch of EXIM Bank. EXIM bank does not provide assistance in relation with foreign exchange to the small entrepreneur. Small entrepreneur has to keep higher margin sometimes 100% regarding opening a L/C. It mainly gives facilities foreign exchange services to the big shots. As a result their

services are not diversified in to the small-scale portfolio. This may cause high financial loss in future. Lack o enthusiastic scheme or export & import. EXIM Bank performance in volume o export and volume of import are improving year by year but compare to other private banks like South-East Bank Ld, Dutch-Bangla Bank Ltd, and NCC Bank Ltd, it secure second position Banks performance in letter o guarantee is improving year by year from 2002 to 2006 but it secure lowest position compare to other private bank taken on account. The marketing strategy adopted by the bank is effective but not efficient. The appearance of the bank in the printing media and electronic media has become a matter o fortune Foreign currency deposit was increasing year by year from 2002 to 2005 but had 13.3 negative growths in the year 2006. It secures lowest position in comparison with other banks. Volume of exchange gain of this bank in improving but South-East Bank Ltd doing better than EXIM Bank. Bank performance in foreign remittance business was unstable in the year 2002 to 2005 but it is highest in the year 2006. Compare to other bank it is very much poor. I think most profitable and difficult sector of bank is its foreign exchange department. But in this branch there are not sufficient employees to handle its huge activities. There is no research and development cell to research and case study. Recommendation Recommendations to overcome the drawbacks foreign exchange division of EXIM Bank Ltd are shown below For opening a L/C its required to contact with the Pantho poth Branch, which is an AD Branch of Exim Bank. To minimize the time lag proper attempts should immediately taken to convert this branch as an AD Branch. Diversified scheme for export and import with fewer margins for L/C should introduced by the bank or small entrepreneur to target a different segment to increase volume of export and import. Efficient and attractive marketing appearance of the bank in the printing media and electronic media would also increase knowledge of people about foreign trade. This is very much useful for increase transactions in foreign exchange department of this bank.

Tight rules and requirements for opening currency account should be relaxed and make it easy and simple. EXIM Bank should change its policy regarding foreign currency transaction. It should increase its foreign currency transaction from 10% to at least 30% of its total foreign exchange transaction to complete with other banks. To earn more exchange gain, the bank should change its risk adverse policy. By charging lower commission this bank can increas3e the volume of transaction related to DD, TT, and TC and thus can improve its volume of foreign remittance. Appointment of sufficient and well-trained employee in foreign exchange department would help the branch to perform better. Commissions income occupies the major part of the total of a bank and banks profitability mainly depends on commission earning capacity, so bank should establish a research and development cell for the purpose of introducing an efficie