This document provides an overview of international trade finance. It begins with defining international trade and outlining its importance. It then discusses key aspects of international trade finance such as foreign exchange activities, the process of a typical trade transaction, import and export finance options, international payment methods, trade products/services, sources of import finance, and relevant guidelines, regulations and practices. The objectives are to enhance customer service and discuss the overall structure of international trade.

1. 1
AN OVERVIEW
Of
INTERNATIONAL
TRADE fINANCE
Md. Abdus Salam
Faculty Member (SPO)
JBSC, Dhaka
January 28, 2017

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
Session Outline

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
Foreign Exchange Activities

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
Wings of Int’l Trade Finance

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
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
Foreign Remittance
Foreign
Remittance
Inward
Outward

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
International Payment Methods
Open Account
Cash in Advance
Documentary Collections
Letters of Credit
Consignment Sale (payment after sale)

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
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
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
?

17. 17
THANK TOTHANK TO
ALLALL