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An overview of int'l trade finance

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An overview Discussion on International Trade Finance

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An overview of int'l trade finance

  1. 1. 1 AN OVERVIEW Of INTERNATIONAL TRADE fINANCE Md. Abdus Salam Faculty Member (SPO) JBSC, Dhaka January 28, 2017
  2. 2. 2 Objectives of the Session  To enhance the customer services and maintained it by negotiating with AD Branches.  To discuss the overall process or structure of international trade.
  3. 3. 3 Session Outline
  4. 4. 4 Int’l Trade & Its Importance Definition: exchange of goods and services across international borders or territories. Importance: To meet up internal demands To earn FC which leads to GDP To contribute to the World Economics. To generate the employment opportunities.
  5. 5. 5 Foreign Exchange Activities
  6. 6. 6 Process of a Typical Foreign Trade Transaction Importer’s Bank (Issuing Bank) Exporter’s Bank (Advising Bank) Importer / Local Buyer Exporter/ Foreign Seller Money Market Investor Purchase order 1 L/Capplication 2 Issue/trasmit LC3 L/Cnotification 4 Shippingdocuments aandtimedraft 6 Paymentor DiscountedB/A 9 5 Shipment of goods ReceivedfaceValue ofB/Aatmaturity 13 receivedfundorSigned promissorynoteforFVofB/A 10 Shippingdocuments 11 Shipping Documents and Payment or time draft acceptance 7 Payment or Banker’s Acceptance8 B/A 12 Paym ent Face Value B/A 15 B/A presented at maturity 14
  7. 7. 7 Wings of Int’l Trade Finance
  8. 8. 8 Import Finance Import Finance Import Finance Pre-ImportPre-Import Post ImportPost Import Opening of L/COpening of L/C Payment against Document (PAD)Payment against Document (PAD) Loan against Imported Merchandise (LIM) Loan against Imported Merchandise (LIM) Loan against Trust ReceiptLoan against Trust Receipt
  9. 9. 9 Export Finance: Export Finance Pre-shipment Post-shipment Packing Credit (PC) Back-to-Back Letter of Credit (BBLC) Negotiation of Export Bill (FDBP) ECC (H) (P)
  10. 10. 10 Foreign Remittance Foreign Remittance Inward Outward
  11. 11. 11 Int’l Trade Products and Services Trade Products & Services  Commercial LC- Import & Export  Standby LC  Back to Back LC  Documentary Collections Trade Finance  Working Capital Loans for exports e.g ECC  Import Financing  Export Financing  Overseas Financing Sources of Import Finance  Cash –  Cash reserve of BB  Wage earners FC balance (living in abroad)  External Financial Aid (Loan or Grant)  Commodity exchange (Barter & STA)
  12. 12. 12 International Payment Methods Open Account Cash in Advance Documentary Collections Letters of Credit Consignment Sale (payment after sale)
  13. 13. 13 Int’l Methods of Payment Low High High Low Exporter Risk Importer Risk • Open Account •Documentary Collection • Letter of Credit • Cash in Advance Payment Methods & Risk Comparison Trade Terms
  14. 14. 14 Guideline, Regulations and Practices Import Policy (2015-2018) Export Policy (2015-2018) UCPDC- 600 : ICC Uniform Customs and Practice for Documentary Credits (UCP-600) INCOTERMS-2010: International Commercial Terms ISBP : International Standard Banking Practices (ISBP-745) Foreign Exchange Regulations Act-1947(up to date amendments). Guidelines for Foreign Exchange Transactions (Vol. I & II)- 2009.
  15. 15. 15 Guideline, Regulations and Practices URR: Uniform Rules for Bank-to-Bank Reimbursements (URR- 725). URC: Uniform Rules for Collection (URC- 522). URDG- Uniform Rules for Demand Guarantee (URDG-758). ISP-98 Other related ICC Publications Foreign Exchange Circulars of Foreign Exchange Policy Department of BB
  16. 16. 16 ?
  17. 17. 17 THANK TOTHANK TO ALLALL

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