How to Export

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How to Export

Export Section


4.10: Abridgment on Export Business

Export is one of the most important parts, which can develop economic and social structure through transaction of goods or services from our country to another country. This transaction is being made on the basis of contract executed between two economic agents (Domestic & Foreign). Thus domestic economic agent receives payment in form of valuable foreign currency.


The importers & Exporters Control Act 1950 regulate the importers and exporters trade of the country. no person/firm is allowed to export anything from Bangladesh unless he is registered with CCI and E under the registration order. To become an exporter an ERC must be obtained from the office of CCI&E.

Meaning of Export

Export means lawful carrying out of anything from one country to another country for sale.

Definition of Exporter

The importers and exports trade of the country is regulated by the Imports Exports Control Act 1950. No person /firm is allowed to export anything from Bangladesh unless he is registered with CCI and E under the registration order (Importer and Exporter) 1952. To become an exporter an ERC (export Registration Certificate) must be obtained from the office of CCI & E.

Procedure for Obtaining Export Registration Certificate (ERC):

For obtaining Export Registration Certificate (ERC), intending Bangladesh Exporters are required to apply to the CCI & E authority in the prescribed from along with the following documents:

  • Nationality Certificate.
  • Copy of valid Trade License.
  • Income Tax Certificate.
  • Bank Certificate.
  • Copy of rent receipt of the business firm.
  • Registered Partnership Deed in case of partnership concerns.
  • Memorandum of Articles & Association and Incorporation certificate in Case of Limited Company.

On satisfaction of the CCI & E the potential exporter is advised to deposit export registration fee of Tk. 1,000/- through Treasury Chelan to Bangladesh Bank/ Sonali Bank for enabling them to issue ERC. The ERC may be renewed every year on payment of renewal fee of Tk. 1,000/- through Treasury Chelan as started.

Different Types if Export

  1. Export under L/C

Exporters are allowed to export the commodity under irrevocable letter of credit. Under this type of export, exporter will ship the goods as pr terms of the credit and will get payment as per arrangement of the credit.

  1. Consignment basis export:

Exports are allowed against firm contract. As per contract, importer will ship the goods and the buyer will make payment after selling the consignment.

  1. Export against advancement payment:

Sometimes exporter receives payment in advance. In that case Authorized Dealer should obtain a declaration from the exporter on the “Advance receipt voucher” certifying the purpose of the remittance. Then the exporter will export the goods against the advance payment.

General Rules for Export

There are some rules, which are mandatory for export of any goods form Bangladesh. The rules are as under:

  • No Person can export any goods from Bangladesh, unless he is duly registered as an exporter with the CCI & E.
  • All export must be declared on the EXP form, which is consisting of 4 copies.
  • Export mush is against any of the following:
    • Export L/C.
    • Firm Contract.
    • Advance Payment.
  • Transport documents related to land route or sea and any other Author8ized Dealer. The Airway Bill and any other documents of title to car4go may be drawn to the order of a Bank in the country of import. However in case of advance payment, transport document may be drawn to the order of Foreign Importer Bank endorsement of transport documents is prohibited. Directions under Sl. No. shall not apply in the following cases:
    • Export of Trade sample.
    • Personal Effects.
    • Goods shipped under the order of Govt.
    • Export of fresh fish, vegetable and fruits.
    • Gift package for less than Tk. 50/-.
  • ‘EXP’ must be submitted to the Bank by the exported and Bank will submit the Duplicate Copy to the Bangladesh Bank within 14 days from the date of shipment.
  • Payment for goods exported should be received through an authorized dealer in freely convertible currency.
  • Export proceeds must be received by the exporters within 4 months.
  • Overdue export bills statement to Bangladesh Bank should be submitted by the 15th of the month, following quarter to which it relates.
  • In case of short shipment, exporter should give a notice of short shipment of\n the prescribed from in duplicate, the prescribed from in duplicate, the customs, who will forward a Certified copy of the notice, to the Bangladesh Bank.

Issuance of EXP Forms and Number

Bank will certify EXP Form only after confirming the following:

  1. a) Arrangements have been made for realization of Export proceeds.
  2. b) Bona-fides of the importer/ consignees abroad.
  3. c) Arrangements have been made for receipt by Authorized dealer of documents of title to goods.
  4. d) The EXP has been signed by the exporter

Stages & Mechanism of Export

1) Exporter will make the goods ready for shipment.

2) Arrangements have to be taken for inspection of the goods by the competent authority as per credit terms.

3) Exporter will declare on EXP form against export L/C/Firm Contract/ Advance payment.

4) Exporter have to arrange approval for export from custom authority on EXP from by submitting Export L/C, Export permission from CCI & E, Quota clearance from EPB, U.D. in case of garments, invoice, packing list along with shipping bill prepared by C&F agent.

5) After completion of custom formalities, shipping company will receive the goods and will issue B.L.

6) Exporter will collect visa/ license and certificate of origin for final documentation.

7) Exporter will submit the full set of documents to the negotiating bank for negotiation.

8) Negotiation bank will dispatch the documents to the issuing bank for clearance of the goods from destination against payment as per credit terms.

Export Documents Checking

After submissions of export documents by the exporter, Bank must check, whether the entire required document submitted or not. Bank must examine all documents stipulated in the credit with reasonable care to ascertain whether or not they appear, on their face to be in compliance with the terms and conditions of the credit. The Banks will not examine documents not stipulated in the credit. To examine documents Bank must follow the L.C terms and international standard banking practice. Automated or computerized carbon copies to be treated as original documents if it is marked ‘original’ Copy documents need not be signed. Multiple documents means one original and remaining copies, Signature, Mark, Stamp or label is sufficient for authentication of document. Bank will accept a prohibited in the L/C.

Issuance PRC

Sometimes exporters are required to submit to the Govt. Agency evidence of goods and realization of their proceeds. In such cases proceeds realization certificate (PRC) may be issued.

Negotiation/ Purchase of Bill without L/C:

In our country exports are also made on the basis of contract between the buyer and the seller without the cover of L/C. In such case document are delivered to the buyer through the intermediary of foreign correspondent of the A.D against payment. Limit (post shipment finance) is usually sanctioned from Head Office to such exporters to boost up export of the Country.

Document sent on Collection Basis:

When the bank refuses to negotiate the document due to major discrepancies, the bill is sent by bank on collection basis under written instruction from the beneficiary. To handle such transaction as per ICC Publication No. 322 named “Uniform Rules for Collection”

Export Requirement

All export from Bangladesh must be declared by the shipper on EXP form to the Bank enabling them to submit the duplicate within 14 days from the date of shipment.

The shipper is required to repatriate the export proceeds within 4 months from the date of shipment otherwise penalty is imposed upon them. A careful watch is to be dept to ensure that the sale proceeds are received on due date. A due date diary must be maintained to pursue the individual case.

Shipping & Customs Formalities:

International transfer of goods are made through the Letter of Credit which issued by the foreign bank at he request of Importers in favor of exporter. Such Export L/Cs is enrooted through the Bangladeshi Banks by the foreign banks who have correspondent relationship.

The foreign issuing banks may advise a credit in the following manner:

  1. By short cable/ Telex followed by Airmail.
  2. By full telex (No airmail confirmation).
  3. Airmail L/C.
  4. Advising of L/C after adding confirmation.

Keep the goods ready for dispatch (shipment):

On receipt of the order from the importer, the exporter is to take immediate steps to manufacture the goods if they are not already in stock according to the specifications desired and keep them ready for dispatch.

Inspection of Goods:

The goods should be kept ready for inspection of the competent authorities and issue a certificate of quality control required under regulation: for example:

  1. Export promotion Bureau.
  2. Custom Authorities who will inspect the goods under Sea Customs Act.
  3. Chamber of Commerce and Industry.
  4. Other agencies authorized to inspect the goods before shipment.

Getting shipping space:

In order to export the goods, the shipping companies or their agent must be approached by the exporter for booking space, to know the freight etc. So that shipment may be made conveniently. In this regard, the services of clearing and forwarding agents may be taken conveniently for actual shipment of goods; commission etc. is also to be paid to the agents for this works.

Get in touch with port Authorities:

Who will have to allow the goods to move into the port and make arrangements for loading and unloading and keeping the goods in godown.

Shipment of Goods and other documents to C & F Agents:

To handle the goods for export in the port of shipment banks nominate clearing agents to handle the goods to pass on custom formalities. Clearing agents are appointed by the bank from amongst the C & F agents of custom authority. The clearing agent on behalf of the bank arrange shipping space in the overseas vessel as per shippers instructions and also pays all the relevant dudes payable to the custom authority shipping company as freight. Bank or the shipper is to reimburse these to the C & F agent to the debit of party account.

A: Papers are requirement in regard to export of goods subject to L/C stipulation:

  • Commercial Invoice.
  • Certificate of origin.
  • Negotiable bill of lading.
  • Pre-shipment inspection certificate.
  • Quantity & quality certificate.
  • Fumigation certificate depending o the nature of cargo.
  • Phytosanitary certificate depending on the nature of cargo.
  • Gross revenue proceeds (GFP), export price check (EPC)/ Incase of jute shipment etc.

Export Procedure under SIBL at a Glance

  1. Selection of Clients On the basis of
  • Export Registration Certificate. (ERC)
  • Membership of an authorized trade association.
  • Credit report.
  • Export L/C.
  • Checking and Advising.
  • EXP certification.
  • Pre shipment facility.
  • Processing for Export
  • Execution
  • Submission of Export documents.
  • Checking: Preparation of offering sheets for negotiation or Collection.
  1. Negotiation and Collection.
  • Purchasing documents.
  • Sending documents to L/C opening banks or correspondent for collection of proceeds .After collection adjustmentof negotiation value.
  1. Reporting
  • Duplicate EXP to Bangladesh Bank.
  • Triplicate EXP after relation of proceeds to Bangladesh Bank.
  • Monthly statement to Head office.
  1. Export Under Back to Back System.
  • Export L/C advising.
  • B .Proposal for BB L/C
  • Process to open BB L/C
  • Formalities time gap between Import and Export credit.
  • Report Buyer and Supplier.
  1. Thronging of BB L/C
  2. Advising bank or Foreign correspondent add confirmation.
  3. Lodgment of BB Bills
  • Shipping documents.
  • Evidencing dispatch.
  • Goods acceptance of import bills.
  • Conveying of due date to negotiating bank.
  • Clearance of Raw materials.
  • Storing in Bonded Warehouse.
  • Manufacturing of the product.
  • Pre shipment Extension
  1. Negotiation of Export Bill.
  • Execution of Export
  • Submission of Export Documents.
  • Disbursement of funds to different heads of A/C including F/C held account for payment of BB Bill.
  1. Relation of Proceeds and Reporting
  • Crediting NOSTRO A/C.
  • Adjustment of negotiation value.
  • Payments of BB Bills.
  • Export Incentives


EXP Form:


Authorization Dealer’s Code Number Register Serial Year


Exporter have to receive a L/C or contract from the Importer against which the whole transaction to be completed. Then the exporter will apply for blank EXP forms from the A.D. it is a declaration made by the exporter regarding all sorts of information of the particular Export according to the L/C or contract (to be kept under Lien in the bank). The exporter or their authorized person will sign this form.


The authorized dealer (AD) should ensure that the exporter is registered with the CCI &E and all the columns are filled (including code numbers) before certifying the full set of EXP form. The AD will record full particulars of the forms in the EXP Register and to be inserted in the space provided at the top of each form.


General Rule for Export


There are some rules, which are mandatory for export of any goods form Bangladesh. The rules are as under-


  • No person can export any goods from Bangladesh unless he is duly registered as an exporter with the CCI&E.
  • All export must be declared on the EXP Form which is consisting of 4 copies.
  • Export must be against any of followings:
    1. Export L/C
    2. Firm Contract
    3. Advance Payment
  • Transportation documents of title may be drawn to the order of a Bank in the country of import.
  • The exporter must submit EXP to the bank and bank will submit the Duplicate Copy to Bangladesh Bank within 14 days from the date of shipment.
  • Payment for goods exported should be received through an authorized dealer in freely convertible currency.
  • Export proceeds must be received by the exporters within 4 months
  • Overdue export bills statement to Bangladesh Bank should be submitted by the 15th of the month, following quarter to which it relates.


Export Financing


To meet up the cost of the goods to be exported, the exporter may require bank finance. Besides he may require finance for go down rent, freight, etc. even after shipment of the goods exporter may require finance to meet up his current expenditure up to repatriation of the export proceeds.

There are two types of export finances:

  • Musharaka Pre-Shipment Finance
  • Musharaka Post-Shipment Finance


Musharaka Pre-Shipment Finance:


Pre-shipment finance is given to finance the activities of an exporter prior to the actual shipment of goods for export. The purpose of such credit is to meet working capital needs starting from the point of purchasing of raw materials to transportation of goods for export to foreign country. This type of finance takes the following forms-

  • Export Cash Credit against Hypothecation/Pledge
  • Packing Credit (Bai Salam)
  • Advance under Red Clause Letter of Credit
  • Back to Back Letter of Credit

Musharaka Post-Shipment Finance:


There is a time gap between export of goods and realization of the proceeds. So exporter may require finance in that period to continue his business. In that case, bank may finance against export documents in the following forms-

  • Negotiating of Documents
  • Purchase of Foreign Bill under document payment (D.P.) or document acceptance (D.A.) bills
  • Advance of Foreign bills under collection


4.11: Flow Chart for Export (Manufacturing)














































This section focused only on the activities that are usually performed by the authorized dealer branch of SIBL in the export L/C operation of RMG.

  • Export L/C Checking and Advising
  • Procedure for Opening Back-To-Back L/C
  • Mechanism of Acceptance
  • Pre-Shipment Financing
  • Export Document Checking and Negotiation
  • Mechanism for Proceeds Realization
  • Formalities of Back-To-Back Payment System
  • Payment of Local Buying House Commission
  • Back-To-Back Payment and other Liabilities
  • EXP Form Reporting to Bangladesh Bank
  • Local Export Bill Purchasing and Discounting





Export L/C issued by the foreign bank at the request of importer in favor of exporter. Generally, the opening bank sends such export L/C to the beneficiary through its own branch in the beneficiary’s country or its correspondent banker in that country through telex or SWIPT or courier/mail. After receiving L/C, advising bank/corresponding bank will authenticate this L/C and then send a message to the beneficiary or beneficiary’s bank (if mentioned in L/C) as to the received L/C.


Therefore, on received of a master L/C, following formalities to be followed by the bank:

First L/C must be recorded in the bank’s inward register.

Then L/C must be authenticated through letter or over telephone.

After authentication, L/C must be sent to the beneficiary/beneficiary’s bank.


Authentication System:

Bank authenticates a L/C on the basis by which it receives that L/C. If L/c received by courier/mail, then signature will be verified by checking Signature Book-lets or by sending L/C to the nearer branch of L/C issuing bank with a request to verify the signature.

If L/C received by Telex, then its test number must be authenticated. When a L/C received through SWIFT then its code number must be authenticated.


In case of Amendment

If any amendment message received against a particular master L/C then it must be authenticated as per authentication rule followed by bank. The bank is required to authenticate as many as amendment message received against master L/C & inform the beneficiary about such amendment.


Commission Charged for Advising and Amendment:

As per charges schedule, Tk. 500 is realized as Commission for advising any master L/C and TK. 200 for per amendment from Beneficiary’s A/C by SIBL.


Accounting Procedure for Charging Advising fee and Amendment fee:

Dr. Party’s A/C

Cr. Income Miscellaneous A/C




To obtain EXP form and forward shipment documents through the bank, at first exporter has to open an account in an authorized dealer bank from which he wants to get export facilities and then submit valid ERC (Export Registration Certificate) and master L/C. To provide export facility to any exporter, bank authority is required to monitor exporter’s current account position which opened in their own bank and collect information about exporter and also justify whether ERC is valid or not. After justification, if everything found O.K., then bank authority can issue EXP form to the exporter as well as forward shipment documents.


Moreover, to provide export credit facilities like packing credit, back-to-back L/c facility, or FDBP facility, dealing branch has to send a credit report to its head office for limit sanction against a particular facility. A limit is to be sanctioned based on the value of the mortgaged property, reputation of the exporter and so on.




To take BTB L/C facility or other export credit (i.e. packing credit) or negotiating shipping documents, master L/C must be lien with the credit-offering/negotiating bank. Incase of open L/C, exporter can lien master L/C at any bank but if L/C is restricted then exporter has to lien that L/C in that bank which has been mentioned in the L/C clause.

For lien, any master L/C bank should check the terms and conditions of that master L/C. The important points are-

  • Commodity that to be export is not banded by our export policy
  • Applicant name and address
  • Issuing Bank and address
  • L/C value
  • Shipment date and Expiry date
  • Documents and copy of each paper submitted to the issuing bank
  • All terms and conditions of L/C are subject to UCPDC.

After checking all terms and conditions of L/C, if bank authority want to lien such export L/C then dealing officer will endorse on each page of original master L/C “Lien with IBBL.


Maintenance of Register:

Full particulars of L/C have to be recorded in the Export L/C Register i.e. Serial number, master L/C number and date, issuing bank, applicant’s name & address, beneficiary’s name & address, advising bank, value of master L/C etc.




To open BTB L/C against any master L/C, applicant must submit following papers-

  • Application for L/C opening
  • Proforma Invoice
  • Insurance Cover Note (if required)

On the receipt of the above papers an officer must examine –

  • Merchandise to be imported that are mandatory raw materials for processing export goods
  • Lead Time: In case of Local BTB L/C lead time must be one month and in case of foreign BTB L/C lead time must be three month
  • Value of BTB L/C that must not be exceed the total outstanding BTB limit up to which party can open L/C for a year approved by Head Office for that party.
  • Adequate balance in party a/c to realize commission and other charges


After examination, if every thing found O.K. then BTB limit should be calculated against the respective master L/C. Generally, BTB L/C can be opened against any respective master L/C up to 70-75% of that master L/C value as per export policy.


Calculation of BTB L/C limit against any respective master L/c:

Master L/C Value xxxxx

Less: Bill discount (25%) (xxxx)

Less: CFR (5%) (xxxx)

Less: Buying House Commission (5%) (xxxx)

Less: Packing Credit (10%) (xxxx)

Limit amount for opening BTB L/C xxxxxx


If BTB value is within limit then bank will supply two forms to the client for opening L/C.

  • L/C Application Form
  • LCA Form

L/C application form must be completed filled in and signed by the importer and two authorized officer of the bank. This form is to be stamped which act as an agreement between importer and bank.

Maintenance of Register

After making all formalities, banker will put a serial number on the L/C application form and records all particulars in the BTB L/C opening register.

Disposal of L/C

Local L/C typically typed in respective bank printed format in two folds. The original L/C is sent to the advising bank for beneficiary or beneficiary’s bank. Another copy is kept in respective BTB L/C file. Before sending L/C should be checked up and signed by two authorized signatories who have P.A number. Then telex, SWIFT, or courier to the advising bank transmits L/C. Normally, foreign L/C is transmitted through SWIFT and local L/C through courier.

L/C Amendment

Any clause of the L/C can be amended with the joint consent of parties (beneficiary & opener) involved in documentary credit operation. Every amendment must be noted in the register and copies of each amendment letter to be kept in respective L/C file.

Accounting Procedure for BTB L/C Opening:

To realize commission and other charges for opening BTB L/C, the following vouchers to be passed:

Dr. party’s A/C

Cr. Commission for BTB L/C

Cr. Sundry Creditor (for stamp charge)

Cr. Recovery Postage (for courier service)

Cr. Income Miscellaneous (for other charges)


For creating liability for opening BTB L/C, the following vouchers to be passed:

Dr. Customer Liability (BTB) L/C

Cr. Banker Liability (BTB) L/C



When bank receives full set documents, first it must check all documents /papers with the terms and conditions of L/C. In case of local documents banker must examine signature of applicant on the back of documents, which ensure that goods have already been received, by applicant.


If documents are in order, it will be obligated for issuing bank to issue acceptance letter within seven days to the negotiating bank. Before making acceptance bank also intimates the applicant through a letter to confirm the acceptance within three days. On the receipt of applicant’s acceptance, bank send an acceptance letter to the negotiating bank through courier/telex/SWIFT wherein opening bank confirm maturity date within which payment would be paid on the basis of tenor.


If documents are not in order, in that case bank has no obligation to make acceptance with in seven days. Bank can hold the documents as discrepancy. If applicant agrees to accept the discrepancy documents, bank then can confirm maturity date at the risk and responsibility of the applicant.

In case of foreign documents/EPZ BTB L/C, goods may reach the port before original documents received by the bank. In such case, to discharge goods from the port, bank issues NOC and attaches the non-negotiable documents. After receiving original documents bank confirm acceptance as per credit terms.


Maintenance of Register:

  • All particulars along with LBP No. to be put in Acceptance Register.
  • Mark in BTB L/C opening register as acceptance/To put Bill Number



Commission for acceptance and postage charge must be realized from party a/c as per bank’s charges schedule.


Accounting Procedure for Acceptance:

To realize commission and postage charge from party’s a/c, the following vouchers to be passed:

Dr. Party’s A/C

Cr. Commission for acceptance A/c

Cr. Recovery Postage A/C


To reverse liability for BTB, the following vouchers to be passed:

Dr. Banker liability (BTB) L/C

Cr. Customer liability (BTB) L/C


To create liability for acceptance, the following vouchers to be passed:

Dr. Customer Liability (Acceptance) for BTB Bills

Cr. Banker Liability (Acceptance) for BTB Bills




Pre-shipment finance is an advance granted by the bank to an exporter to meet the cost up to the packing of goods for export to overseas buyer. This is done in pre-shipment stage for wage payment, bill payment, processing, transporting, and shipment of goods.


Packing credit normally granted against any respective master L/C up to 10%-15% of that master L/C value. This credit is to be adjusted from the export proceeds.


Accounting Procedure for pre-shipment financing:


Dr Mushara Pre-shipment A/C

Cr. Pay Order A/c

Cr. Commission for Pay order A/C

Cr. Sundry vat A/c

Cr. Recovery postage A/c



On the receipt of documents, it must be checked properly and if documents are in order, then it to be dispatched by courier service with a forwarding letter.


Negotiation stand for payment of value to the exporter against the documents stipulated in the L/C. If documents are in order,bank purchases the same on the basis of bank-customer arrangement. This is known as Foreign Documentary Bill purchase or FDBP.

If documents are not in order or there is no arrangement between bank and customer as to the purchasing bill,in that case bank sends documents on collection basis. This is known as Foreign Documentary Bill for Collection or FDBC.


Documents Checking

While checking documents the following points must be taken into consideration;

  • Applicant name
  • Issuing Bank
  • Beneficiary name
  • Negotiating Bank
  • Notify Party Name
  • Master L/C Number and Date
  • Shipment Date that goods shipped on board within last shipment date
  • Negotiation Period that documents is negotiated with in L/C validity.
  • Expiry Date
  • Part Shipment that are allowed or not
  • Value of draft that must be complied with L/C terms
  • Shipping Company that issued Bill of lading must be as per L/C instruction
  • All required papers and number of copies are enclosed properly as per L/C terms
  • The dealing officers may use a checklist for their convenience.



Recording in the Register:

After checking documents, if documents are in order and all terms and conditions are fulfilled strictly then following particulars are to be noted in the Export Register-


  • Export Bill Number
  • Dispatch Date
  • Name of Shipper
  • Name of Drawee
  • Master L/C Number and Date
  • Amount in FC
  • Amount in TK
  • Shipping Company
  • Bill of Lading Number and date
  • Port of Loading and Discharging
  • Reimbursing Bank
  • EXP No. and date of report,


Disposal of Document:

Before dispatch, bill of exchange and original Bill of Lading must be endorsed by negotiating bank to the order of the issuing bank and each paper to be marked with round seal and signed by authorized officers. After endorsement, a forwarding letter will be prepared in two copies in the printed format and signed by authorized officer where negotiating bank instructed the issuing bank to remit proceeds to its Nostro A/C maintained with a specified bank.

After making all necessary formalities, documents are to be dispatched along with a forwarding letter by courier service.





Any loan or advance granted or any other credit by negotiating bank to an exporter after shipment of the goods from the date of extending credit to the date of realization of the export proceeds is called post-shipment financing. Foreign Documentary Bill Purchase (FDBP) is one type of post shipment financing. Under FDBP, at the time of negotiation, bank can grant advance through purchasing shipping foreign documents.


Formalities for Foreign Documentary Bill Purchase (FDBP)

If documents are seen to be in order then bank can purchase documents at the request of the beneficiary. Before purchasing, liabilities against this particular documents should be considered and then amount up to which documents to be purchased must be determined. Finally, a proposal for purchasing documents to be sent to head office and with the approval of head office a loan a/c for FDBP opened in the name of beneficiary and purchasing amount transferred through that FDBP a/c to beneficiary’s current a/c.

FDBP (amount in TK) = 90% of Net Bill Value @ OD sight export

Determination of FDBP (in amount TK):


Bill Value xxxxx

Deduct Liabilities:

BTB L/C opened agt. this bill xxxx

Packing Credit agt this bill xxxx

Freight (CFR) xxxx

Foreign Buying Commission xxxx

Local Buying Commission xxxx

Total Liabilities xxxxx

Net Bill Value xxxxx


FDBP (amount in TK) = 90% of Net Bill Value @ OD sight export




When issuing bank remits proceeds to negotiating bank’s Nostro A/C as per payment instruction, the bank with which nostro a/c maintained sends a SWIFT message to negotiating bank mentioning that the proceeds have been deposited in the specified nostro a/c. After receiving message international division of head office of negotiating bank credited dollars in Head Office/ General A/C. After receiving credit message from head office, dealing officer is required to determine all related liabilities against the export proceeds for realization purpose.


Liabilities Adjustment:

The liabilities may be created against any export bill that are-

  • BTB L/C: BTB L/C value should be assessed which opened against the master L/C and determine proportionate value of BTB L/C against export bill proceeds which must be kept in FC Held for BTB L/C Payment.
  • Local Buying Commission: Buying house commission to be determined as per transferable L/C clause, which must be kept in Sundry Creditor A/C.
  • FDBP: Amount of FDBP along with predetermined profit to be determined which sanctioned against this proceed bill
  • PC: Amount of Musharaka Pre-shipment Finance/Packing credit with predetermined profit to be assessed, which has been sanctioned against Master L/C
  • Outstanding balance: outstanding balance that could not be adjusted from previous proceeds realization.
  • Other Charges: Handling Charges for proceeds realization, & other related charges are to be realized from export proceeds.


After determining all related liabilities, total proceeds are to be divided in to two portions. One portion is for BTB L/C payment and another residual portion is for other liability adjustment. The portion, which reserved for BTB payment must be converted into equivalent TK at the notional rate and kept in FC held A/C. Another portion, which kept for liability adjustment (except BTB L/c), must be sold to head office at TT Clean rate and converted into OD Sight Export rate. Here it may be noted that rate prevailing on the date of realization to be used. The difference between TT Clean rate and OD Sight Export rate is to be considered as Exchange Gain for the designed branch.


After adjusting all possible liabilities, the residual amount (if any remains) will be credited to the party’s a/c.

















Diagram: Flow chart for Proceeds Realization



Accounting Procedures for Proceeds Realization:

In SIBL, the following vouchers to be passed for proceeds realization

Dr. SIBL/ General A/C

Cr. FC held for BTB Payment

Cr. Exchange gain on FC

Cr. Sundry Creditors A/c (for buying house commission)

Cr. Party A/c


To adjust liabilities against export bill precedes, the following vouchers to be passed:

Dr. Party A/C


Cr. Mushara Pre-shipment A/C

Cr. Income Miscellaneous A/C (for handling charge)




On the maturity date or before maturity period, payment for BTB L/C has to be made. It is ruled that after proceeds realization the outstanding BTB L/C for whose payment dollars kept in FC held a/c must be paid within three (03) days .


BTB Payment at local currency:

If BTB payment is made at the local currency that means P.O or DD is issued for BTB payment then following formalities to be followed-

  • Assess document’s value which to be actually paid off
  • Read payment instruction carefully, and justify the negotiating bank to which PO/DD to be issued.

Dollars amount for BTB L/C payment to be transferred from FC held a/c to SIBL General a/c @ notional rate and then same dollars to be sold to the head office @ TT Clean rate and converted into OD sight rate. Branch earns some exchange gains from difference between TT clean and OD sight export rate.

After adjusting PO commission and vat and postage charge from payable amount, a PO/DD is issued for the remaining balance in favor of negotiating bank at the account of Beneficiary with a forwarding letter printed in bank’s prescribed form.

Accounting Procedure for BTB payment at local currency

Dr. FC held for BTB Payment

Cr. SIBL/General A/C

Dr. SIBL/General A/C

Cr. Exchange gain on FC A/C

Cr. Commission for P.O

Cr. Sundry Vat

Cr. Recovery postage

Cr. Pay Order

BTB Payment at foreign Currency:

If BTB payment is to be made at foreign currency (i.e. dollars) then following formalities should be followed:

  • Assess documents value which to be actually paid off
  • Read payment instructions carefully and justify the account number of designed bank to which payment to be paid
  • A payment instruction to be sent to the reimbursing bank through Bangladeshi branch of reimbursing bank.


Accounting Procedures for BTB Payment at Foreign Currency:

Dr. FC held for BTB Payment

Cr. H.O/ID A/C


Maintenance of Register:

Mark “paid as on” in Acceptance Register

Mark “Payment as on” in respective BTB L/C file


A copy of forwarding letter/payment instruction to be kept in respective BTB L/C file and also in BTB payment file.






Issuing bank is liable to make deferred payment under BTB L/C arrangement on or before maturity period. Generally, bank makes payment of BTB L/C from the proceeds of respective export bill. If exporter fails to ship goods on just time for any reason then proceeds will not be incurred. In such situation, exporter will have to make arrangement for BTB payment opened against corresponding export shipment. If exporter fails to make payment, bank has to make payment of accepted bill by creating force loan in the name of that exporter to keep its commitment.

To make arrangement for payment of non payment bill under forced loan, branch will have to send a proposal including detailed all necessary information & inspection report of corresponding stock position for approval. On receipt of approval with specific terms and conditions, the authorized officers of the branch must complete all necessary security & documentation formalities in this respect and the client must duly sign a confirmation certificate. After making all formalities related loan sanction, BTB L/C payment will be made as per instruction.

The branch will need monitoring & follow-up for recovery of the bank’s dues with in due date of the agreement positively. In case of the party’s failure to repay the bank dues, the branch will arrange for disposal of the mortgaged property & stock as per agreement.


Documents to be executed:

  • Charge Documents
  • An undertaking to be taken for settlement of loan liabilities
  • Agreement of Bai-Muajjal (WES Bill)

After creating Bai- Muajjal (WES Bill) account then payment will be made as per rule against that account. Here it may be noted that only BC Selling rate will be applied rather than notional rate & no exchange gain will be incurred.



There may be a clause for buying house commission on the back of transferable L/C. At the time of proceeds realization, the required commission for local buying house should be kept in Sundry Creditor A/C as per L/C instruction. While making payment of buying house commission the following items to be deducted from total payable amount –

  • 5% of total payable amount to be reserved as vat for Bangladesh Bank
  • Commission for pay order/DD
  • Vat on commission of pay order/DD
  • Postage charge


After deducting the above items, a pay order to be issued for the residual amount in favor of the bank of buying house, which has been mentioned in the L/C clause. A forwarding letter is to be sent with the pay order to the designed bank. A copy of this forwarding letter and pay order to be kept in Buying House Commission file for recording.


Accounting Procedures for Buying House Commission Payment

Dr. Sundry Deposit (S/D Creditor)

Cr. P.O. for Buying house commission

Cr. P.O. for Bangladesh Bank

Cr. Commission on pay order

Cr. Sundry vat

Cr. Recovery postage





EXP. form will be in four (4) copies that must be completed and signed by the exporter. After completing the EXP form, the exporter should submit to the custom along with the shipping bill at the time of shipment. After affixing their seal and signature thereon, custom authority will return the duplicate, triplicate and quadruplicate copies to the exporter and submit the original copy to the Bangladesh Bank. The exporter must submit all the remaining copies of EXP. form to the negotiating bank at the time of negotiation. The EXP form is reported to the Bangladesh Bank as under:

  • The original copy is to be forwarded by the custom authority to the Bangladesh Bank
  • Duplicate EXP duly certified by the negotiating bank must be submitted to Bangladesh Bank with in 14 days from the date of shipment along with one copy of invoice.
  • The triplicate copy will be reported to the Bangladesh Bank along with monthly return after realization of proceeds
  • Quadruplicate copy is to be retained by the bank for record.



Usually local exporter supply local fabrics and other accessories to export oriented Garments and Textile Industry against a Local BB L/C known as ILC (Inland letter of Credit). These Inland Back to Back L/Cs are usually drawn on usance basis of 30/60/90/120 days. After shipment, in other words delivery of the goods as per terms of the credit the customer submits the shipping documents with delivery challan to his bank for discounting. Purchasing these local documents is known as IDBP. IDBP stands for Inland Documentary Bill Purchase. Generally, Bank purchases local bills, which are drawn against irrevocable letter of credit and accepted and confirmed by the L/C opening bank.


Formalities of purchasing of local document:

When a party come to SIBL with a request to negotiate local documents, SIBL first check documents with its respective L/C, and forwards these document to the L/C opening bank with a forwarding letter where in SIBL instructs the opening bank to remit the proceeds by pay order or DD quoting the specified their reference number.

Since most of the local L/Cs issued on acceptance basis, so the documents must be accepted by L/c opening bank as per L/C terms. After receiving acceptance letter from opening bank, SIBL will verify the signature of acceptance and send a letter to the opening bank to confirm genuineness of acceptance.

If acceptance is found O.K. SIBL sends a proposal for purchasing local documents to the higher authority. After approval, bank purchases 80% of total bill value and credit purchase value after deducting some additional charges and the residual 20% of bill value kept in sundry account as a margin.


Accounting Procedures for purchasing local document:


Cr. Party’s A/C

Cr. Sundry Deposit A/C

Cr. Commission on IBP A/C

Cr. Income Miscellaneous A/C

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