What is Outward Remittance?
Foreign Outward Remittance:
Foreign currency being made out abroad may be termed as foreign outward remittance. Purpose of outward remittance are:
a) Import Bills Payment
b) Payment against Contract or Agreement
c) Travel
d) Education
e) Treatment
f) Membership fees
g) Fees for Application
h) Examination fees (TOEFL, GRE, GMAT etc.),
i) Registration Fees,
j) Admission Fees,
k) Tuition Fees,
l) Hajj,
m) Profit and dividend for Foreign Investment
n) Insurance claim etc.
Modes of Foreign Outward Remittance:
FTT, FDD, MT and TC are the common modes of Foreign Outward Remittance as like Foreign Inward Remittance.
FTT, FDD, MT and TC may be issued by Authorised Dealers (AD) in Bangladesh drawn on their foreign correspondents. Outward remittances may also be effected by selling foreign currency notes by AD to travellers.
Besides, Local currency credited to Non Resident Taka account of Foreign banks or convertible Taka account constitute outward foreign remittance. Outward foreign remittance also comprises remittance on account of import and private remittance on sundry items.
Checking Points for Outward Remittances:
- Application for foreign currency draft or remittance by means of Telegraphic Transfer to be obtained.
- T/M form duly filled in and signed by the applicant
- Permission from Bangladesh Bank for remitting foreign currency exceeding normal quota as per standing circular of Bangladesh Bank.
- Validity of Permission must be seen if approved by foreign exchange policy department of Bangladesh Bank.
Issuance of FTT:
– A Test number is to be provided earler and at present used SWIFT where as test number not required for authenticatin.
– Beneficiary’s name A/C No. to be mentioned clearly,
– FTT confirmation must be issued in the same day,
– Purpose to be executed.
When issued by SOCIAL ISLAMI Bank . (Outward Remittance) for (FTT):
Dr. Party’s A/C. Cash received (At B.C Selling rate) Tk.
Cr. ETCA –HO (Respective Nostro A/C at TT & OD) Tk.
Cr. Income A/C – Exchange Earnings Tk.
Cr.- Income A/C –Others if any Tk.
Issuance of FDD:
– FDD is to be crossed and Account Payee
– Date of Issuance must be mentioned
– Amount in words and figures to be clearly mentioned
– Name of the Drawee bank along with branch must appear on the face of the instrument
– Putting authorized signature of 02 (two) issuing bank officials on the draft
– Protector Graph to be used for protection of fraud and forgery.
– Insertion of test number as per agency arrangement is mandatory.
Issuance of FDD:
A) When issued against cash:
Dr. Party’s A/C (At B.C selling rate) Tk.
Cr. ETCA – HO (Respective Nostro A/C) (At TT & OD) Tk.
Cr. Income A/C – Exchange Earnings(Difference between B.C selling & TT & OD) Tk.
Usual Charges should also be recovered from the purchaser.
B) When issued against balance held in FC A/C:
Dr. Deposit in FC – FC A/C Tk.
Cr. ETCA – HO (Respective Nostro A/C) (At TT Clean Buying Rate) Tk.
Usual Charges should also be recovered from the purchaser.
Issue of Cash/Travelers Cheque to the Travelers:
- Foreign currency will be issued against passport of traveler (Person who is going abroad)
- Confirmed Air Ticket must be seen (Confirm means Air Ticket mentioning date and time of travel)
- Date of travel must not be later than 15 days
- Govt. order (GO) is to be obtained for govt. employee for traveling purpose.
- Without visa a person is not allowed for issuance of Cash/TC against passport.
- Before giving endorsement on the passport entitlement of passport holder is to be checked up.
- Person below 12 years is not entitled to get full quota of foreign exchange. They are entitled to draw half quota.
- Genuineness of the passport and Visa must be verified.
T. C. Sales To Clients:
i) When TC issued against cash payment
Dr. Party’s A/C / Cash Tk.
Cr. Bills payable – TC issued (At BC selling rate) Tk.
Cr. Income A/C – Commission on FC Tk.
Cr. Others if any.
ii) When TC issued against balance held in FC A/C:
a) Dr. Deposit in FC – FC A/C (General/Exporters Tk.
retention quota/RFCD At TT Clean Buying Rate)
Cr. Bills payable – TC issued (at TT Clean buying rate) Tk.
b) Dr. Party’s A/C (for Charges) Tk.
Cr. Income A/C – Commission on FC Tk.
Cr. Others if any Tk.
a) When settlement to be made with the drawee bank (Respective Nostro A/C):
Dr. Bills Payable – TC issued (Reversal of originating entry) Tk.
Cr. ETCA – HO (Respective Nostro A/C) Tk.
The branch should sent ETCA to Head Office with the total amount of settlement along-with a copy of settlement instruction.
Authorised Dealer’s Power:
Authorized Dealers can issue foreign currency remittance in respect of the following:
General Travel Quota (Per Year):
- SAARC Countries and Myanmar:
By road = USD 500/- & By Air USD 1000/-
- Other than SAARC countries: USD 3000/-
- Upper ceilings of cash currency USD 1500/-
- Minor will get half of the above mentioned amount.
Business Travel Quota (per year):
Exporter: For new exporter USD 6,000/- (against recommendation letter from export promotion bureau). Merchandise Exporters are entitled to a foreign exchange retention quota of 50% of repatriated FOB value of their export. However, for readymade garments, electronic goods etc. (low domestic value added) the retention quota is 10% of repatriated of FOB value (FE Circular No. 04 dated 19.01.2003).
- Importer: Importers are entitled 1% of their import settled during the previous financial year of USD 5,000/-, which ever is lower.
AD can issue USD 200/- for SAARC countries and USD 250/- for other countries per diem allowance to attend seminar, conference and workshop arranged by recognized bodies. NB:
a. For medical treatment abroad, USD 10,000/- can be issued as expenses.
b. Examination fees, Foreign education fee & evaluation fee for immigration at actual amount.
c. AD can remit membership fees, annual fees, and registration fees of International Bodies.
d. AD can remit foreign currency required for current expenses of Foreign offices of Bangladesh Biman, Bangladesh Shipping Corporation.
e. AD can remit consular fees of foreign Embassies, Pre-shipment Inspection fees & genuine export claims upto 10% of the proceeds realized.
f. AD can remit surplus earnings of foreign Airlines, Shipping lines & courier services.
g. AD can remit cost of ships bought in private sector.
Prior approval of Bangladesh Bank is required on the following:
- Family Remittance facility
- Other private remittance
- Commercial remittance:
- Payment of rent on hiring foreign ship/Aircraft by local branch/agent
- Appointment of agent by Bangladeshi firm.
- Advertisement in foreign News Paper by Bangladeshi Firm etc.
N.B.: Entitlement of F.C may be changed by Bangladesh Bank through circular or special permission.
Cancellation of MT/DD:
The above instruments may be cancelled & payment may be made to the applicant by cancellation after observing all existing formalities. Bangladesh Bank should also be reported about the cancellation of the outward remittance as inward remittance.
Reporting to Bangladesh Bank:
At the end of each month, transactions on outward remittances have to be reported to Bangladesh Bank similar to foreign inward remittance.
Finally, one has to remember that foreign Inward remittance has no restriction to pour in while foreign outward remittance should have to be made in accordance with the exchange control regulation of Bangladesh Bank. Last but not the least, we must keep in mind that all types of transactions involving foreign currency must be reported to Bangladesh Bank.
Importance:
It is encouraging to note that the flow of Foreign Remittance recorded a substantial growth gradually increasing. The main sources of our inward foreign remittance are export proceeds, wage earner remittance, foreign direct investment and Aid, Loan etc. In order to run the economy smoothly we have had no other alternative to give impassion to increase the flow of inward remittance.
REGULARISATION / UPDATING FC BALANCES OF DIFFERENT
HEADS OF A/C WITH RULING RATE OF EXCHANGE:
As per above procedure all the foreign Exchange transaction shall be settled on the day to day ruling rate of Exchange. But all the transactions are not fully settled at the entry point. Say, there shall be balance under Head Sundry Deposit A/C FC BPAR, FC A/C, NFCD A/C, RFCD etc. and these accounts may be settled at different rate if the rate is changed in between the date of entry and its settlement.
However, branches shall pass the voucher at the applicable prevailing rate on the date of transactions and on the last day of each month after closer of business hour, the above Head of Accounts must be up dated by passing either of the following voucher (voucher shall only be passed if US dollar TT Clean buying rate is changed during the month).
- A. If US Dollar TT Clean rate as on the last day of the month is higher than that of the last day of the previous month (Rate Increased):
Dr. ETDA – HO Tk.
Cr. Sundry Deposit A/C – FC BPAR Control Ledger Tk.
Cr. Deposit in FC – FC A/C (WES) Control Ledger Tk.
Cr. Deposit in FC – FC A/C (Exporters) Control Ledger Tk.
Cr. Deposit in FC – NFCD A/C Control Ledger Tk.
Cr. Deposit in FC – RFCD A/C Control Ledger Tk.
Cr. Suspense A/C EDF Loan Receivable from Bangladesh Bank Tk.
Voucher shall be passed for difference amount of TAKA only and the same may be determined by:(FC Amount on the last day of the month multiplied by U.S Dollar TT Clean Rate) Minus Actual Taka Balance held as per control Ledger)
B. If US Dollar TT Clean rate as on the last day of the month is less than that of the last day of the previous month (Rate Decreased):
Dr. Sundry Deposit A/C – FC BPAR Control Ledger Tk.
Dr. Deposit in FC – FC A/C (WES) Control Ledger Tk.
Dr. Deposit in FC – FC A/C (Exporters) Control Ledger Tk.
Dr. Deposit in FC – NFCD A/C Control Ledger Tk.
Dr. Deposit in FC – RFCD A/C Control Ledger Tk.
Dr. Suspense A/C EDF Loan Receivable from Bangladesh Bank Tk.
Cr. ETDA – HO Tk.
T. C. Sales To Clients:
i) When TC issued against cash payment
Dr. Party’s A/C / Cash Tk.
Cr. Bills payable – TC issued (At BC selling rate) Tk.
Cr. Income A/C – Commission on FC Tk.
Cr. Others if any.
ii) When TC issued against balance held in FC A/C:
a) Dr. Deposit in FC – FC A/C (General/Exporters Tk.
retention quota/RFCD At TT Clean Buying Rate)
Cr. Bills payable – TC issued (at TT Clean buying rate) Tk.
b) Dr. Party’s A/C (for Charges) Tk.
Cr. Income A/C – Commission on FC Tk.
Cr. Others if any Tk.
a) When settlement to be made with the drawee bank (Respective Nostro A/C):
Dr. Bills Payable – TC issued (Reversal of originating entry) Tk.
Cr. ETCA – HO (Respective Nostro A/C) Tk.
The branch should sent ETCA to Head Office with the total amount of settlement along-with a copy of settlement instruction.
Authorised Dealer’s Power:
Authorized Dealers can issue foreign currency remittance in respect of the following:
General Travel Quota (Per Year):
- SAARC Countries and Myanmar:
By road = USD 500/- & By Air USD 1000/-
- Other than SAARC countries: USD 3000/-
- Upper ceilings of cash currency USD 1500/-
- Minor will get half of the above mentioned amount.
Business Travel Quota (per year):
Exporter: For new exporter USD 6,000/- (against recommendation letter from export promotion bureau). Merchandise Exporters are entitled to a foreign exchange retention quota of 50% of repatriated FOB value of their export. However, for readymade garments, electronic goods etc. (low domestic value added) the retention quota is 10% of repatriated of FOB value (FE Circular No. 04 dated 19.01.2003).
- Importer: Importers are entitled 1% of their import settled during the previous financial year of USD 5,000/-, which ever is lower.
AD can issue USD 200/- for SAARC countries and USD 250/- for other countries per diem allowance to attend seminar, conference and workshop arranged by recognized bodies. NB:
a. For medical treatment abroad, USD 10,000/- can be issued as expenses.
b. Examination fees, Foreign education fee & evaluation fee for immigration at actual amount.
c. AD can remit membership fees, annual fees, and registration fees of International Bodies.
d. AD can remit foreign currency required for current expenses of Foreign offices of Bangladesh Biman, Bangladesh Shipping Corporation.
e. AD can remit consular fees of foreign Embassies, Pre-shipment Inspection fees & genuine export claims upto 10% of the proceeds realized.
f. AD can remit surplus earnings of foreign Airlines, Shipping lines & courier services.
g. AD can remit cost of ships bought in private sector.
Prior approval of Bangladesh Bank is required on the following:
- Family Remittance facility
- Other private remittance
- Commercial remittance:
- Payment of rent on hiring foreign ship/Aircraft by local branch/agent
- Appointment of agent by Bangladeshi firm.
- Advertisement in foreign News Paper by Bangladeshi Firm etc.
N.B.: Entitlement of F.C may be changed by Bangladesh Bank through circular or special permission.
Cancellation of MT/DD:
The above instruments may be cancelled & payment may be made to the applicant by cancellation after observing all existing formalities. Bangladesh Bank should also be reported about the cancellation of the outward remittance as inward remittance.
Reporting to Bangladesh Bank:
At the end of each month, transactions on outward remittances have to be reported to Bangladesh Bank similar to foreign inward remittance.
Finally, one has to remember that foreign Inward remittance has no restriction to pour in while foreign outward remittance should have to be made in accordance with the exchange control regulation of Bangladesh Bank. Last but not the least, we must keep in mind that all types of transactions involving foreign currency must be reported to Bangladesh Bank.
Importance:
It is encouraging to note that the flow of Foreign Remittance recorded a substantial growth gradually increasing. The main sources of our inward foreign remittance are export proceeds, wage earner remittance, foreign direct investment and Aid, Loan etc. In order to run the economy smoothly we have had no other alternative to give impassion to increase the flow of inward remittance.
REGULARISATION / UPDATING FC BALANCES OF DIFFERENT
HEADS OF A/C WITH RULING RATE OF EXCHANGE:
As per above procedure all the foreign Exchange transaction shall be settled on the day to day ruling rate of Exchange. But all the transactions are not fully settled at the entry point. Say, there shall be balance under Head Sundry Deposit A/C FC BPAR, FC A/C, NFCD A/C, RFCD etc. and these accounts may be settled at different rate if the rate is changed in between the date of entry and its settlement.
However, branches shall pass the voucher at the applicable prevailing rate on the date of transactions and on the last day of each month after closer of business hour, the above Head of Accounts must be up dated by passing either of the following voucher (voucher shall only be passed if US dollar TT Clean buying rate is changed during the month).
- A. If US Dollar TT Clean rate as on the last day of the month is higher than that of the last day of the previous month (Rate Increased):
Dr. ETDA – HO Tk.
Cr. Sundry Deposit A/C – FC BPAR Control Ledger Tk.
Cr. Deposit in FC – FC A/C (WES) Control Ledger Tk.
Cr. Deposit in FC – FC A/C (Exporters) Control Ledger Tk.
Cr. Deposit in FC – NFCD A/C Control Ledger Tk.
Cr. Deposit in FC – RFCD A/C Control Ledger Tk.
Cr. Suspense A/C EDF Loan Receivable from Bangladesh Bank Tk.
Voucher shall be passed for difference amount of TAKA only and the same may be determined by:(FC Amount on the last day of the month multiplied by U.S Dollar TT Clean Rate) Minus Actual Taka Balance held as per control Ledger)
B. If US Dollar TT Clean rate as on the last day of the month is less than that of the last day of the previous month (Rate Decreased):
Dr. Sundry Deposit A/C – FC BPAR Control Ledger Tk.
Dr. Deposit in FC – FC A/C (WES) Control Ledger Tk.
Dr. Deposit in FC – FC A/C (Exporters) Control Ledger Tk.
Dr. Deposit in FC – NFCD A/C Control Ledger Tk.
Dr. Deposit in FC – RFCD A/C Control Ledger Tk.
Dr. Suspense A/C EDF Loan Receivable from Bangladesh Bank Tk.
Cr. ETDA – HO Tk.