The document discusses various processes related to international trade transactions including: 1. Payment against documents (PAD) where documents are scrutinized and payment is made if documents comply with LC terms. 2. Lodgment and retirement of documents under sight and usance LCs involving roles of different bank departments. 3. Post-import financing facilities like FIM, FATR and related processes for clearing goods and adjusting payments.

1. 1
Committed to you
Welcome to
Basics of International Trade
Unit 2

2. 2
Committed to you
Payment Against Documents PAD:
 While opening LC , it is expected that related documents shall
be received from the bank nominated in the LC.
 On receipt, the documents are scrutinised to ascertain that
these conform to LC terms.
 If documents are found strictly in order, the opening bank is
obliged to reimburse the claiming bank immediately
(compliance presentation), in case of sight LC.
 Opening bank is allowed reasonable time (not exceeding 5
banking days after receipt of documents) to determine
whether to accept or reject the documents.
 Opening bank can reject the documents only on the basis of
documents

3. 3
Committed to you
Lodgment and Retirement of documents under
Sight L/C
 CPU Role:
Upon receipt of Import documents from the Negotiating Bank,
CPU shall scrutinize them immediately and advise discrepancies,
if any, to TCS (Trade Coordinating Staff ) of the respective
Branch and the same shall be advised to the Negotiating Bank
via SWIFT MT-734 (Advice of Refusal) positively within 5
working days after receipt of these documents, as per UCP-
Branch Role:
TCS, (Trade Coordinating Staff )upon receipt of discrepancies
will inform the customer in strive to seek their acceptance of
the same and send Applicant’s reply to CPU without delay via
fax and e-mail

4. 4
Committed to you
Lodgment and Retirement of documents under
Sight L/C
 CPU Role:
In case of Applicant's refusal to accept discrepancies, a SWIFT
message will be forwarded to the Negotiating Bank stating that
the applicant had refused the documents and the documents
are being held at their risk and responsibility. Refund is also
claimed with good value, if reimbursement was allowed and
already claimed by Negotiating Bank.
Branch Role:
In case of Clean Documents or upon Receipt of Acceptance of
Discrepancies, TCS will obtain exchange rates from the Treasury
and upon customer’s agreement, communicate the same to
CPU via fax or e-mail.

5. 5
Committed to you
Lodgment and Retirement of documents under
Sight L/C
• CPU will reverse the L/C liability and lodge the documents in
PAD and pass the transactions in the concerned branch’s books
through on-line system.
• If the customer requests to retire the documents on the same
day then PAD is lodged and retired on the same day and relevant
vouchers are prepared and posted. Otherwise, PAD lodgment
letter is issued to the customer and forwarded to the TCS of the
respective branch for onward delivery of the same to the
customer.
• In case PAD is not retired on the same of lodgment then specific
request from RM/BM will be required for lodgment of
documents in PAD only.

6. 6
Committed to you
Lodgment and Retirement of documents under
Usance L/C
• CPU Role:
• Upon receipt of Import documents from the Negotiating Bank,
CPU shall scrutinize them immediately and advise discrepancies,
if any, to TCS of the respective Branch and the same shall be
advised to the Negotiating Bank via SWIFT MT-734 (Advice of
Refusal) positively within 5 working days after receipt of these
documents, as per UCP-

7. 7
Committed to you
Lodgment and Retirement of documents under
Usance L/C
• In case of Applicant's refusal to accept discrepancies, a SWIFT
message will be forwarded to the Negotiating Bank stating that
the applicant had refused the documents and the documents
are being held at their risk and responsibility.
• If any direct reimbursement Authority (MT740) issued then
send MT for cancellation of MT-740. However, in case
reimbursement has already claimed by the Negotiating bank,
appropriate refund claim via SWIFT shall be lodged by CPU.

8. 8
Committed to you
Lodgment and Retirement of documents under
Usance L/C
• Bill of Exchange (B/E), Notes and Trust Receipt are sent to TCS
to receive acceptance from the customer.
• Branch Role:
• Upon receipt of B/E, Pro Notes and Trust Receipt, TCS will
obtain acceptance on the same from the applicant and verify
their signature and send the documents back to CPU.

9. 9
Committed to you
Lodgment and Retirement of documents under
Usance L/C
• CPU Role:
• Upon return of documents, CPU will ensure that the
Applicant has accepted the Bill of Exchange / signed Trust
Receipt & Pro -Notes.
• CPU will affix “Foreign Bill Stamps” after debiting customer's
account in accordance with the rate prescribed by Pakistan
Revenue Regulations, which changes from time to time.
• CPU will maintain Foreign Bill Stamps record and will do its
periodical balancing.

10. 10
Committed to you
Lodgment and Retirement of documents under
Usance L/C
• Usance (DA) LC :
• CPU will reverse the L/C liability and lodge the documents in
Acceptance. Original shipping documents duly endorsed in
favor of Applicant will be forwarded to the relevant branch
for onward delivery of the same to the customer.
• At the same time, maturity date is advised to the Negotiating
bank through SWIFT

11. 11
Committed to you
Lodgment and Retirement of documents under
Usance L/C
• Branch Role: (Usance DA )
Original shipping documents will be released to the importer
after the ascertainment of proper identification of the
importer’s representative i.e. copy of CNIC will be obtained
after having matched the CNIC’s particulars mention in the
importer’s authority letter. In case of a new delegate, a
phone call will be made to the concerned person at the
importer’s office that the person collection the documents is
their authorized representative.

12. 12
Committed to you
Lodgment and Retirement of documents under
Usance L/C
On or before the maturity date, TCS will contact the
applicant for arrangement of funds in their account. On due
date, TCS will obtain exchange rate from Treasury and convey
these rates to the customer and upon their agreement of the
exchange rate, TCS will advise the same to CPU through
Fax/e-mail.

13. 13
Committed to you
Lodgment and Retirement of documents under
Usance L/C
• Branch Role: (Facility FATR, FIM or FE25 )
• Customer submits request for retirement of PAD and
confirms availability of funds in his accounts or facility FATR,
FIM or FE25 is approved the request is conveyed to the CPU
through fax followed by the original letter
• CPU Role:
• Upon receipt of customer’s request, transaction is posted in
the system through on-line system..

14. 14
Committed to you
Lodgment and Retirement of documents under
Usance L/C
• Cost Memo will be prepared, mentioning the details of the
charges and mark-up charged (if any) on PAD.
• Original documents will be endorsed in favor of the applicant
& sent to TCS along with cost memo and customer advice for
onward delivery of the same to the customer.
• In case of post import facility like FIM, or FE-25 (against
pledge f goods) the documents will be endorsed and
dispatched to the respective Muccaddum or as per
arrangements with the customer as advised by CAD.

15. 15
Committed to you
Finance Against Imported Merchandise,
(FIM)
 Facility allowed to importers for retirement of PAD.
 On request of importer goods are got cleared by bank,
through their approved clearing agents.
 Cleared goods are taken into effective pledge for storage at
either of following,
 Party’s godown at his premises.
 Custom ware house, which may be at party’s premises.
 Third party godown with H O K permission.

16. 16
Committed to you
Finance Against Imported Merchandise,
(FIM)
 Finance is created for landed cost of goods and PAD is
adjusted through such finance.
 Unit price of goods is calculated on the basis of total finance
amount.
 Pledged goods are released to importer through delivery
order against payment of equivalent amount.
 Payments received from importer are adjusted towards
outstanding FIM amount.

17. 17
Committed to you
Finance Against Imported Merchandise,
(FIM)
 Amount of finance plus mark up thereon has to be adjusted
within a period of 60 days or as prescribed in terms of
sanction, which usually is 90 days.
 Party may have a regular FIM limit for immediate retirement
of documents under sight LCs.
 Opening bank may sometimes be forced to create FIM to
have possession of goods, when importer is not coming up
to retire the documents.

18. 18
Committed to you
Finance Against Imported Merchandise,
(FIM)
 Pledged goods are released to importer through delivery
order against payment of equivalent amount.
 Payments received from importer are adjusted towards
outstanding FIM amount.
 Amount of finance plus mark up thereon has to be adjusted
within a period of 60 days or as prescribed in terms of
sanction, which usually is 90 days.
 Party may have a regular FIM limit for immediate retirement
of documents under sight LCs.
 Opening bank may sometimes be forced to create FIM to
have possession of goods, when importer is not coming up
to retire the documents.

19. 19
Committed to you
Finance Against Trust Receipt (FATR)
 To keep the goods insured against all risks in
favour of bank.
 That sale proceeds of goods shall remain under
bank’s lien and shall be adjusted towards
outstanding balance of TR finance
 Not to pledge the goods with any bank /
company or financial institution till full
adjustment of finance.
 Default in Trust Receipt is breach of trust and is a criminal
offence.

20. 20
Committed to you
Finance Against Trust Receipt (FATR)
 Short term facility allowed to importers for retirement of
PAD.
 Importer signs a Trust Receipt which binds him to repay the
finance within a period of 45 days.
 Trust Receipt also binds the importer ,
 To keep the goods separate and capable of
identification, and accessible to bank for inspection.
 Not to deviate from the purpose for which the goods
are handed over to him.
 Not to remove the goods from the specific premises
without written permission of bank.

21. 21
Committed to you
Issuance of Shipping Guarantees / Airway Bill
Endorsement
• Branch Role: Customer presents the non-negotiable copies of
Bill of Lading / Airway Bill along with a request for the
issuance of Shipping Guarantee / Endorsement of AWB.
• TCS will verify customer’s signature, obtain approval from
CAD and send all the documents to CPU.
• TCS will ensure availability of funds in the customer’s
account for cash margin

22. 22
Committed to you
Issuance of Shipping Guarantees / Airway Bill
Endorsement
CPU Role :
• Upon receipt of the documents, CPU will recover cash
margin from the customer’s account either 110% of the
invoice value or the percentage prescribed by CAD
• Shipping Guarantee will be generated and signed by two
attorney holders and non-negotiable documents will be
endorsed. Shipping guarantee along with non-negotiable
shipping documents will be forwarded to TCS for onward
delivery of the same to the customer.
• Upon receipt of original documents, Shipping Guarantee’s
liability will be reversed and it will be lodged and retired in
case of sight LC or lodge in acceptance in case of usance LC.

23. 23
Committed to you
Issuance of Shipping Guarantees / Airway Bill
Endorsement
Branch Role:
• Account Opening related to all Import transactions will be
handled by TCS of the domicile branch. If accounts related to
import transactions are to be opened, TCS shall open the
account only upon the branch management's approval. The
covering schedule from TCS must clearly mention the
account status as “Opened” with account number and Limit
has been disbursed/ fed or “Not Yet Opened” with clear
instructions of handling of documents. This information will
enable CPU to accordingly handle the case at their end.