Ac Opening

ACCUMULATION OF BANKING KNOWLEDGE
1. What is Account Opening?
 Account opening is a contractual relationship between customer & banker which is

supported by Contract Act 1872.
2. Why Introduction is required during opening Account?
 To get legal protection under section 31 of NI Act 1881.
3. Some legal framework of Banking?
 Bangladesh Bank formed under Bangladesh bank order 1972

 Company Act 1994 (Based on Company Act 1913), It consists of 11 parts & 404
Section.
 Bank Company Act 1991
 Contract Act 1872
 Negotiable Instrument Act 1881
 Partnership Act 1932
 AML Act 2012
 CFT (Combating Financing in Terrorism) Act 2012
 Foreign Exchange Regulation Act 1947
 Custom Act 1969
4. What is the capital requirement of Banks ?
 As per section 13 of Bank Company Act 1991, Bank requires to maintain paid up capital worth Tk 400
crore or 10% of RWA ( risk weighted assets), which one is higher.
 Section 13 of Bank Company Act 1991 also stated capital regulation if the following manner.....
 Authorized Capital (Two times of Subscribe Capital)
 Subscribe Capital (Two times of Paid Up capital)
 Paid Up capital (10% of RWA or Tk 400 crore; which one if higher)
5. Some Features of Bank Company Act 1991
 Bank Company Act is based on Bank Company Act 1913

 There are total 181 section
 As per sec 103, account should have one nominee.
 Specific provision for classified & bad debt to be maintained as per section 28A of Bank company Act-
1991
6. What is MICR: Magnetic Ink Character Reader/Recognition.
7. CPV or Contact Point Verification is made as per Inst. Circular 1031.
8. Face to face interview to be made while opening account as per Inst. Circular 1071.
Courtesy: Rubaiyet Tanvir, UCB, Jubilee Road Branch.

5. What is CRR & SLR ?
 As per section 33 of Bank Company Act 1991 Cash Reserve Requirement (CRR) & Statutory Liquidity
Ratio (SLR) to be maintained.
 At present CRR has been maintained with the current account of BB @ 6.50% of total time & demand
liabilities & SLR @ 19.50 % (including CRR=6.50%) on the same liabilities has also been maintained
with BB in the form of Treasury Bills, Bonds, & Debentures including foreign Currency balance.
 “Money Market Desk” of UCB Treasury works to maintain CRR as a part of statutory reserve by taking
in call money market, repo, reverse repo & term placement.
 “Fixed Income & Security Desk” of UCB Treasury ensures Bank’s SLR by making investment in Govt.
securities like T-Bill, Bond, BB Bill & other instruments which are qualified for SLR.
6. What is Repo, Reverse Repo, ALS ?
 Repo means > Repurchase Agreement, by which BB lends money to commercial banks against the govt.
treasury bills & bonds held by the banks. At present rate of Repo is 6.75 %
 Reverse repo: By which BB buys money from the commercial bank. Present rate of reverse repo is 4.75%
 ALS: Besides, there is another repo which is called special repo or assured liquidity support (ALS).
7. What is M 1 & M 2 ?
 Total money in the market along with the money in Current deposit account of the banks is called M 1
 M 2 or Broad money refers to the sum of M 1 & savings , time deposits of banks.
 Worth mentioning that M 2 increases with the increase of credit growth.
 As per Monetary policy Jan-Jun-2016 , projected growth of M2 is 15 %
5. What is Dormant Account ?
 Saving Account remaining inoperative for more than 1 year & Current account remaining inoperative
for more than 2 years will be marked as dormant.
 Account remaining inoperative/dormant for more than 10 years & customer could not be traced after
reasonable efforts, the banker should transfer the balance to BB as ‘Unclaimed Deposit Account’ &
close the acccount.
6. What is the legal frame work of minor account ?
 As per section 11 of Contract Act 1872, a minor is incapable to contract but section 26 of NI Act 1881
allows a minor to draw, endorse, deliver & negotiate a negotiable instrument. So, a banker can open
minor account with his name, jointly with guardians or in the name of guardian.

7. How many parties are there in a negotiable instrument ?
 There are three parties –

 Drawer: Who makes the instrument.
 Drawee: On whom the instrument is drawn & who is liable to pay.
 Payee : Who receives the payment.
8. What is the basic characteristics of Negotiable Instrument ?
 Negotiability
 Title
 Recovery
 Presumption
9. What is holder & holder in due course ?
 Holder is the person who simply lawfully holds or in possession of the instrument. (Ref. section 8 of NI
Act 1881)
 Holder in due course is the person who has been the owner of the instrument by not only giving due
consideration but also ensuring genuineness of the instrument. (Ref. section 9 of NI Act 1881)
10. What is payment in due course ?
 As per section 10 of NI Act 1881, Payment in due course means payment made in accordance with the
apparent tenor of the instrument in good faith & without negligence to a person who is in possession
thereof & he is entitled to receive the amount of the instrument under the circumstances which do
not afford a reasonable ground for believing that he is not entitled to receive the payment of amount
therein mentioned.
11. In which section of NI Act 1881 attributes the liability of the banker for payment of Post dated/Stale cheque?
 As per section 31 of NI Act 1881 Banker will be liable for payment of Post Dated/ Stale cheque.
12. Put down some example of Negotiable & Non-negotiable instruments.
 A details list of Negotiable & Non-negotiable instruments are ----
NEGOTIABLE INSTRUMENT NON-NEGOTIABLE INSTRUMENT
Cheque Postal Order **
Bill of Exchange Pay Order (Quasi Negotiable)
Promissory Note Money Order **
Demand Draft IOU (I Owe to You)

Bank Note Share Certificate **
Treasury Bills Letter of Credit
Government Bill Bill of Lading (Quasi Negotiable) **
Prize Bond FDR
Dividend Warrants
 Though Money Order, Poster Order Share Certificates are transferrable by delivery & endorsement but
they are not able to give better title to the bona fide transferee for value than what the transferor has.
 Bill of lading is not a NI due to absence of face value.
 Letter of Credit is not a NI since it is a conditional order & cannot be transferred more than one.
14. What is Allonge ?
 If the space on the back of the instrument is insufficient for endorsement, then a piece of paper may
be attached for endorsement which is called “Allonge”
15. What is the difference between fiscal policy & monetary policy ?
 Fiscal policy is concerned with revenue & devised by the Govt_ Ministry of Finance on yearly basis.
Instruments of fiscal policy are Taxation, Public Expenditure & Public Borrowings.
 Monetary policy is concerned about supply of money & devised by Bangladesh Bank on half yearly
basis. Instruments of Monetary policy are Bank rate, SLR, CRR, Repo, Reverse Repo.
16. What is GEP ?
 Monetary policy, Fiscal policy & exchange rate policy – called as GEP of General Economic policy.
16. What are the core risk of Banking ?
 Six core risk are

1. Asset-Liability Management Risk
2. Credit Risk
3. Foreign Exchange Risk
4. Internal Control & Compliance Risk
5. Money Laundering Risk
6. IT Risk.
17. A few words regarding Money Laundering:
 If somebody earns illegal money through doing the predicate offenses & transfer, transform, convert &
intermingle that illegal money with a view to concealing the source of fund will be an act of Money
laundering.
 There are three stages of Money Laundering: Placement, Layering & Integration.

 AML Act 2002 > AML Ordinance 2008 > AML Act 2009 > As on Feb 20, 2012 MLPA 2012 Act> Money
laundering prevention (Amendment) Act-2015
 Major Change in Money laundering prevention (Amendment) Act-2015 :
Wording “Bangladesh Bank” will be replaced by “Bangladesh Financial Intelligence Unit”
 BFIU Circular No; 10 Dated: Dec 28,2014 acts as a master circular to comply the rules & regulations
instructed by the MLPA Act 2012 & CFT (Combating Financing in Terrorism) Act 2009 & CFT
(Amendment) Act 2013.
 CAMLCO (Chief Anti Money Laundering officer) of UCB: Mr M. M Rafiqur Rahman, AMD &
 Mr Abu Sadeq Miah, EVP working as a Deputy CAMLCO
 As per circular MD or next two top executive of MD will be qualified to be CAMLCO.
 CCU or Central Compliance Unit to be formed consisting of 5 members headed by CAMLCO.
 HOB or OM (In case of 7 busy branch in UCB) working as BAMLCO
 Meeting to be arranged in Branch on quarter basis regarding compliance of Money laundering.
 APG- Asia Pacific Group on Money laundering is an Autonomous & Collaborative International
organization founded in 1997 in Bangkok, Thailand consisting of 41 members.
 FATF_ Financial Action Task Force is an inter-governmental body which was established by the G-7
group of countries in 1989.
 Recently, Bangladesh got out from the “Grey List” of this global financial watchdog (FATF) & due to
this graduation Bangladesh will enjoy a great reduction in cost & time of financial transaction with the
rest of the world. FATF’s Grey list is an index of the countries identified to have strategic deficiencies
in their system for fighting Money Laundering & Terrorist Financing.
 40+9=49 recommendation given by the FATF & APG respectively which to be followed.
 SHELL Bank: The Bank having no Branch/Operation in the country where they are registered.
 Positive Pay Instruction to be required for
 Cheque 1 Lac & above against Corporate & Proprietor Account &
 Cheque 5 lac & above against personal account.
 TP to be updated after 6 month from the date of account opening by analyzing transactiions.
 KYC to be updated in every 2 years for low & medium risk customer &
 KYC to be updated in every 1 years for High risk customer
17. Circular of BB valid/ in force regarding AML/CFT :
 AML Circular no-10, Dt. Feb 16,2006 regarding CTR

 AML Circular no-22, Dt April 21,2009 regarding CFT Act 2009
 BFIU Circular no: 1 Dt Jan 12,5012 regarding establishment of BFIU
 BFIU circular no-2 Dt March 15,2012 regarding MLPA Act 2012 & CFT (Amendment) Act 2012
 BFIU Circular no: 7 Dt July 14,2013 regarding CFT (Amendment) Act 2013
 BFIU Circular No; 10 Dated: Dec 28,2014 acts as a master circular to comply the rules & regulations
instructed by the MLPA Act 2012 & CFT (Combating Financing in Terrorism) Act 2009 & CFT
(Amendment) Act 2013.
17. Some important features of MLPA Act 2012.
 Bangladesh Financial Intelligence Unit (BFIU) is established as per section 23(a) of MLPA Act 2012.
 Number of predicate offence is 28
 Offenses under this act shall be considered as the scheduled offence under ACC Act 2004 & shall be
investigated by Anti Corruption Commission (ACC).
 Punishment minimum 4 years & maximum 12 years. & for further offenses fine upto double the
concerned property or Tk 20 lac, which one is higher.
 Limit of CTR report is Tk 10 Lac & above for both cash deposit & withdrawal in a single day.
 Due to failure of supply of information BB can fine to commercial bank minimum Tk 10,000 &
maximum Tk 5 lac & if fined 3 times then BB may cancel license.
 Due to supply of false information BB can fine to commercial bank minimum Tk 20,000 & maximum
Tk 5 lac & if fined 3 times then BB may cancel license.
 Preserve record of transactions for at least 5 years in case of closure of account.
 BB can make fine to commercial Bank from Tk 50,000 to Tk 25 Lac for money laundering.
 BB can also cancel license of of Bank for money laundering
18. Features of Money market & Capital market
 Money Market:
 Short Term Market
 Players of Money Market: BFI, NBFI, Govt. & Corporation, Business Firm, Individuals.
 Instruments of MM: Treasury Bills, Bank Loan, Commercial paper, CD
 Capital market:
 Long Term Market
 Share, Stock,debenture etc. are the instruments of Capital market.
19. What is CAMELS ?
 CAMELS is a parameter sets by BB for Rating of Banks which stands for:

 C : Capital Adequacy
 A : Asset Quality
 M : Management Ability
 E : Earning Capacity
 L : Liquidity
 S : Sensitivity
20. What is the Single Borrower Exposure limit ?
 As on 31.12.2014 Total capital on UCB=2569.12 crore

 Total : 35% of Bank’s total Capital ( = 899 Crore)
 Funded : 15% of Bank’s total Capital. ( =385 Crore)
 Non funded: 20% of Bank’s total capital. ( = 513 Crore)
 In case of Export Finance: 50% ( =1284 crore)
 Funded: 15% (= 385 crore)
 Non funded: 35% (= 899 crore)
21. What is large loan amount?
 When sanctioned/disbursed amount (both funded and non funded) to a single borrower exceeds 10%
of bank’s total capital, then it is included in Large Loan Account. Monthly return of Large Loan to be
made to BB in Form-L
 Bank can extend large loan slap wise (Highest 56% of total loan & advance) depending on the % of
classified advance.
22. What is the delegation of Approval Authority?
 Board : Single Borrower Exposure Limit (899 crore)

 Executive Committee : 50 % of Board’s Limit (450 crore)
 Managing Director
 10 Crore (Maximum Funded=5+ Maximum Non Funded =10)
 Funded EOL may be allowed 10% of the Funded limit, Non Funded EOL may be allowed 10%
of total aggregate (F+N) limit & with 90 days validity in both case.(EOL should be backed by
collateral or adequate definite receivables)
 3 Months Time Extension for regularization/operational purpose
 6 Months time extension for full & final adjustment purpose
 DMD, CRMD : 6 Crore (Maximum Funded=3+ Maximum Non Funded =6)
23. What is the parameter of collateral security coverage against the credit facility ?
 Collateral situated within city corporation : Limit may allowed 1.25 times FSV
 Collateral situated in Municipality/Pouroshova area : Limit may allowed 1.50 times FSV
 Collateral situated other than city corporation, Municipality/Pouroshova: Limit may allowed 1.75
times FSV.
 Valuation of the property for facility exceeding Tk 25 Lac shall be done by Bank’s enlisted surveyor
 But valuation of the vacant land outside the city corporation should be made by the Bank’s enlisted
surveyor irrespective of any loan amount.
24. What is rate of provision required against the loan & advance ?
 General Provision for all Unclassified & SMA Loan other than SME category : 1% on O/S.
 General Provision for Off-balance Sheet exposure : 1% on total outstanding.
 For SME category of loan : 0.25 % (On Outstanding amount)
 For SME category of loan : 0.25 % (On Outstanding amount)
 Highest General Provision on Consumer Financing (Other than Housing Finance & Loan for
Professional) is 5%
 Base for Provision to be calculated to realize Specific provision against Classified Loan
 Formula for calculating Base for Provision:
Base for Provision= Total Outstanding – Eligible Security – Interest Suspense
Or
15% of outstanding amount; which one is higher.

 Specific Provision For SS : 20% (On base for provision)
 Specific Provision For DF: 50% (On base for provision)
 Specific Provision For B/L: 100% (On base for provision)
25. CIB & its relevant issues:
 CIB means Credit Information Bureau. CIB report of borrower means the credit report
that is collected from CIB of Bangladesh Bank.
 Classification of CIB
CIB I : Borrowers Information.
CIB 2 : Owner’s information if borrower is institution.
CIB 3 : Group Information.
CIB 4 : Credit Exposure Matrix
CIB 5 : Guarantors Information.
 Validity of CIB report : 2 Months
26. What is the benchmark of Classification ?
 As per BRPD (Banking Regulation & Policy Department) Circular :14, 2012
Overdue period 2 months to below 3 Months: SMA
Overdue period 3 months to below 6 Months: Substandard (SS)
Overdue period 6 months to below 9 Months: Doubtful (DF)
Overdue period 9 months & above : Bad & Loss.
 Exception of Classification for the Term Loan amounting upto 10 Lac as per BRPD Circular 19,2013
Overdue period 3 months to below 6 Months: SMA
Overdue period 6 months to below 9 Months: Substandard (SS)
Overdue period 9 months to below 12 Months: Doubtful (DF)
Overdue period 1 Year & above : Bad & Loss.
27. Definition of defaulted borrower ?
 As per section 5 (GA) of Bank Company Act-1991, installment/expiry of a loan overdue for more than 6
months will be treated as defaulted borrower.
 Sub-standard loan account is classified but not defaulted borrower.
28. What is the criteria & basis of Reschedule ?
 BRPD Circular 15,2013 is the master circular of rescheduling.

 Maximum 3 times rescheduling can be done
29. Some important ratio:
 Cost of Deposit = Interest paid on Deposit/Average Deposit

 Operating Profit = Operating Expense/Average Deposit
 Cost of Fund = Cost of Deposit + operating Cost (Cost of Fund of UCB=10.16)
 Yield on Advance = Interest Income on Loan & Advance/ Average Loan & Advance (13.87)
 Spread = Yield on Advance-Cost of Deposit
 Burden Coverage Ratio : Non Interest Income/Non Interest Expense (112.16)
 Credit-Deposit Ratio (CD/AD Ratio)= Total Credit/Total Deposit
 Capital Adequacy Ratio (CAR)= Capital Fund (Tier 1 +Tier 2 Capital)/Total RWA
30. Capital Requirement as per BASEL II
 There are 3 pillar

 Minimum Capital Requirement: 10% of Risk Weighted Asset (RWA)
Total RWA= RWA for credit risk+12.5 (Capital charge for market risk+Capital charge for
Operational risk)=2166.28+722.26+193.95=24325.50
 Credit Risk (Standardized approach for measurement)

 Market Risk (Standardized approach for measurement)
 Operational Risk (Basic Indicator approach for measurement)
 Tier 1 Capital of UCB as on 31.12.14: Highest quality of capital known as Core capital
 Paid Up Capital=836.61 crore
 Statutory reserve= 688.66 crore
 Non-repayable share premium account= 145.49 crore
 General Reserve= 2.65
 Retained Earnings = 253.11 crore
Total Tier 1 Capital=1926.54 crore=
 Tier 2 Capital:
 General Provision (UC+SMA+Off Balance Sheet)=280.67 crore
 Asset revaluation reserve upto 50%= 126.70 crore
 Revaluation reserve for securities upto 50%=34.59 crore
 Revaluation Reserve for equity upto 50%=0.59 crore
 Sub-ordinated bond= 200.00 crore
Total Tier 2= 642.57 crore
Total Eligible Capital= Tier 1+Tier 2
= 1926.54+642.57= 2569.11 crore
So, CAR= Capital Fund (Tier 1 +Tier 2 Capital)/Total RWA.
=2569.11/2432.50
=10.56 against required MCR of 10%

 Supervisory Review Process
 Market Discipline
29. What is the drawing power entitlement?
 Drawing Power = Stock (1 - % of Margin )

Or, Stock = Drawing Power/(1 - % of Margin )
30. New ratio as per BASEL III
 LCR: Liquidity Coverage Ratio

 NSFR : Net Stable Funding Ratio
 CRAR : Capital to Risk Weighted Asset Ratio
 DSCR : Debt Service Coverage Ratio
31. Time bar of Charge form is 3 years & Time bar of Mortgage is 12 years
32. Equitable mortgage to be done by signing CF-10 along with submitting original deed of land
33. SB-105 : Memorandum Ledger to be maintained for written off loan
34. EDF is given by IDA & maintained by BB
35. Exp –“Original” Submit =Custom
Exp –“Duplicate” Submit =BB within 14 days of shipment
Exp –“Triplicate” Submit =Bank Copy
Exp –“Quadruplicate” Submit =BB when proceed realize
Now Exp is issued in two copies as First Original & Second Original (details described in F Ex Part)
36. Bill of Exchange is must in case of Usance LC but Bill of Exchange is not required for Deferred LC to avoid
duty.
37. Resident > A Bangladeshi at a stretch 6 months stay in Country.
Non Resident > A Bangladeshi at a stretch 6 months stay in Abroad.
38. Foreign Currency can be kept on personally for highest 1 month.
39.AD branch operates as per Sec-2A of FERA.
40. There are 27 section in FERA
41. Possession right creates if a property in possession for 12 years without any claim. &
Right creates if a property in possession for 60 years without any claim
42. In case of Mortgage only interest not title is transferred.

43. Different types of survey
 C S - Cadestral Survey
 S A – State Acquisition
 R S- Revisional Survey
 P S- Pakistan Survey
 B S – Bangladesh Survey
44. Controlling Authority of International Trade & F Ex
 International trade controlled by Ministry of Commerce through CCI &E

 Foreign Exchange controlled by Ministry of Finance through Bangladesh Bank.
45. Documentary credit is guided by
 Uniform customs & practice of documentary credit (UCPDC)-600 (It is published by ICC having 39
articles & revised as on 2007)
 International standard for banking practice (ISBP) -745
 In Co Term (International Commercial Term)-2010 (It has 11 Term)
 Uniform Rules for Reimbursement-725 (URR-725)
 Uniform Rules for Collection (URC-522)
46. Customs Act-1969 is the basis of present customs Operation. There are 222 section & 20 Chapter & 3
Schedule. First Schedule is the details of Import & Export Duty.
47.HS Code >Harmonized Commodity Description & Coding System
48.Details of Duty:
 Duty applied as per Customs Act

 Customs Duty (CD)
 Regulatory Duty (RD)
 Duty applied as per VAT Act
 Supplementary Duty (SD)
 Value Added Tax (VAT)
 As per Income Tax Act
 Advance Income Tax (AIT)
49. Formula for calculating Duty:
 CD = Invoice value x % of CD
 RD = Invoice value x % of RD
 SD = Invoice Value+CD+RD
 VAT = Invoice Value+CD+RD+SD
 AIT = Invoice value x % of AIT
50. What is the difference between loan and advance?

 Generally loan has a specific payment schedule of equal installment size, wherein there is no specific
payment schedule.
 In case of Loan no subsequent debit is allowed except interest & incidental charges wherein
continuous debit & credit is allowed within the limit
 No cheque book is issued against loan & regular cheque book is issued.
51. What is primary security?
 An asset created from the loan amount is the primary security. In fact, it is the goods that is directly
related with the credit/advances.
 Example: Mr. Karim , a grocer is enjoying CC (H) limit of Tk.5.00 Lac from UCBL, Jubilee Road
Branch. Here hypothecation of the grocery items of his shops is primary security.
52. What is collateral security?
 This is not directly related with the business for which bank makes finance. It is taken for
securing the loan/credit. Example: For the above example, Mr. Karim provided 02(Two)
decimal land to the bank as security of his loan, it is collateral security.
53 What is Charge?
 Charge means creation of right of lender/creditor over the assets of borrower.
54 What are charge documents?
 : The documents, which are used for creating charge, are called charge documents. Example:
Demand Promissory (DP) note.
Letter of arrangement.
Letter of disbursement.
Letter of continuity
Letter of Hypothecation of goods.
Trust Receipts.
Letter of Guarantee.
etc

55 Forms of Charge Creation:
 There are 06(Six) types of charges:
Hypothecation.
Pledge
Mortgage
Lien
Set Off
Assignment
Hypothecation: In this form of charge, the possession of goods is retained with the borrowers;
lenders/creditors have certain right over the goods/assets to sell in case of default.
Pledge: In this form of charge, the possession of goods is transferred to lenders/creditors
Mortgage: Mortgage means transfer of interest on immovable property for the purpose of
securing the advance.
Lien: Lien is the right of the creditors to retain the goods and securities of the debtors to his
possession until the debt due is paid.
Set off : It means adjustment of claim of a creditor up on the debtors against the counter claim
of debtor up on the creditors.
Assignment: Assignment is the transfer of interest and future right, property and debt from
one person to another. Assignment is done on actionable claim such as book debts, insurance
claims, etc where as mortgage is done on immovable property.
56 What is Parri Passu Charge?
 The term is used in case of consortium /syndicate finance. Here the common security of the
same borrower is charged to all participating lenders on the basis of their shared advance
portion .
57 Describe the category of Loan?

 Continuous loan: The loan, which has specific validity and with in the validity frequent Debit
and Credit transaction can be made is called Continuous loan. Example: CC, SOD, etc.
Demand loan: The loan, which becomes due up on demand made by the bank is called
demand loan. Example: PAD, LTR, LIM, LBPD, FBPD. Etc.
Term loan: Term Loan has a specific payment schedule of equal installment size. Generally
amount is disbursed once but credit can be made frequently. No cheque book is issued in case
of term loan. Term loan is 02 types :
Term loan below 05 years
Term loan above 05 years.
Another form of loan Segmentation:
General Credit:
CC (H)
SOD(G)
Retail Loan.
SME Loan. Etc.
Import Finance:
LC
LIM
LTR
PAD .etc.
Export Finance :
PC.
LBPD
FBPD
58 What is CRG?
 CRG means Credit Risk Grading. It is a unique system of calculation and gradation of risks involved
with various types of credits. All banks should adopt/use Credit Risk Grading System before sanction,
renewal and enhancement of credit to its borrowers as per guidelines of Bangladesh Bank. A well
managed Credit Risk Grading System increases bank’s safety and soundness by managing and
minimizing the risk level.
Credit Risk Grading (CRG) consists of 08 (Eight) categories of Risk grading – Superior, Good,
Acceptable, Marginal/Watch list, Special Mention, Sub-standard, Doubtful and Bad-Loss. Risk Grading
is made on the basis of score from 1-100. Such as, good has score of over 85, acceptable has 75-84. In
CRG system, the risks are categorised/ classified as Financial Risk:Weight 50 point/%s, Business Risk:
weight 18 Points/%, Management Risk: weight 12 points, Security Risk weight 10 points and Relationship Risk
weight 10 points. Generally a Credit Proposal should have acceptable risk grading or above.
59 What is Leverage?
 Leverage means debt received from outer source. Debt equity ratio is one of the major
parameter to assess the leverage.
60 What is Current Asset?
 General the assets, which can be, liquidated (Transformed in to cash) with in a very time such
as 01 year is called current assets. Example:
Cash in Hand.
Cash at Bank
Bills Receivables/Account Receivable.
Sundry Debtors.
Stock.
61 What is Current Liability?

 General the liability which is payable with in a very short time such as 01 year is called
current liabilities. Example:
Short Term bank finance: Overdraft, CC, etc.
Bills Payables/Account Payables.
Sundry Creditors.
Arrear expenses.

62 What are the differences between Guarantee and Indemnity?
 01) In contract of Guarantee , there are 03 parties, debtor ( Applicant), Creditor (

Beneficiary) , Guarantor ( Bank). In Indemnity, there are 02 (Two) parties, namely Indemnifier
( Promisor) and Indemnified ( Promisee) .
02) In guarantee, there is an existing debt or obligation, the performance of which is guarantee
by the guarantor. In contract of indemnity, the liability only arises only on the happening of
the contingency.
63. Name various types of guarantees:
 Tender guarantee or Bid Bond.
Performance Guarantee.
Custom Guarantee
Shipping Guarantee.
Deferred Payment Guarantee
Advance Payment Guarantee.
64. What is Basel
 Basel is a guideline related with risk based capital adequacy framework. As per Basel, the more
the risk, the more the capital required.
As per Basel II, there are 03 kinds of risk that a bank and financial Institution are exposed to.
These are: Credit Risk, Market Risk and Operational Risk.
65 What is subject matter of 12 & 33 Article of Artha Rin Adalat Ain 2003
 Article: 12
As per right obtained through RIGPA (Registered Irrevocable General Power of Attorney),
bank can sell the mortgaged/hypothecated property/Goods in case of default of the borrower
without taking the matter to the court.
Article : 33
It is related with Auction procedure of the mortgage/hypothecated property/goods in case of
default of the borrower after Money suit and execution suit.

66. Value of Insurance
 01)In case of CC: 25% above the limit for stock.
02)In case of LC: 10 % above the limit.
67 Dates related with LCAF
 LC to be opened with in150 days from the date of LCAF.
Shipment to be made with 17 months and 09 months in case of capital machineries import and
other than machineries respectively.
Validity of LCAF is 18 months and 12 months in case of capital machineries import and other
than machineries respectively.
68. What is the meaning of RSD, MBD used in Insurance Policy
 RSD: Riot, Strike and Damage
MBD : Machine Break Down
69. What is IDMP
 IDMP means Interest During Moratorium Period.
IDCP : Interest During Construction Period
70 Classification of Small and Medium Enterprise
Small Medium
Trading A. Fixed Assets excluding a. Fixed Assets excluding land and

land and building: BDT building: BDT 1.00 Crore to BDT 15.00
5.00 Lac to BDT 1.00 Crore.
Crore.
B. Employee: 10 to 25 Person. b. Employee: 26 to 100 Person.
Manufac A. Fixed Assets excluding land and a. Fixed Assets excluding land and
turing building: BDT 50.00 Lac to BDT building: BDT 10.00 Crore to BDT
10.00 Crore. 30.00 Crore.

B. Employee: 25 to 99 Persons. b. Employee: 100 to 150 Persons.
71 Source of Cash Flow
a. Cash Flow from Operational Activities. Such as sale proceeds, changes in

Working capital. This indicates about ‘Income before interest and depreciation
but after tax.
b. Cash flow from Investment Activities. i.e. Sale and Purchase of Fixed Assets.
c. Cash flow from Financing Activities, i.e. Net changes in Creditors and owner’s
equity.
72 What do you mean by JL No used in Schedule of Land.
JL Means Jurisdiction Layout.
 BUYER’S CREDIT
 The transactions of FC loan, import bill discounting by bank’s OBU or foreign correspondents is also termed as
BUYER’s CREDIT.The above transactions fall into a classifications of L/C that is called U-PASS L/C or
USANCE-PASS L/C.
Why it is so called U-PASS?
Because U-PASS L/C is the hybrid of usance & sight L/C, in the sense of exporter it is sight L/C and in the sense of
importer it is usance.
Beneficiary of BUYER’S CREDIT: importer is the beneficiary of buyer’s credit. It is one kind of STFC loan under the
condition of interest libor+5 or above,
Now for example, let there is L/C under deferred payment of 6 months, L/C value is $1000 or equivalent BDT is tk80,000
where 1 USD= 80 tk. In this case bank pay the amount to exporter abroad as well as create a loan of BDT in the name of
importer with 15% interest, after 6 month the BDT payment of importer to bank is, 80,000+6000 (interest)= 86,000
Libor+5= 1.21+5=6.21
Considering above rate, after 6 months the total payment of importer in USD is 1000+31.8(interest) =1031.8
= 82544 tk.
Which is higher 86,000 (BDT LOAN) or 82544 (STFC).

If a bank are not agree with STFC loan to importer then the bank will lost the importer and another bank takeover the
customer that provides STFC for importer.
REPORTING OF BUYER’S CREDIT
EL-1,2,3 stands for reporting of import under loan, buyer’s credit, grants & supplier's credit
EL-1 stands for reporting of import under loan & grants, buyer’s credit where no remittance is involved.
SCHEDULE CODE 46
TYPE CODE 8
Other parameter is like as E-2/P-2.
 SUPPLIER’S CREDIT
An arrangement of credit over than 1 year between exporter & importer which requires prior BOI permissions and
repayment schedule is termed as supplier’s credit.
In supplier’s credit exporter and importer are well known themselves for long period.
Here every installment will report as follows,
The portion of principal in schedule EL-3
The portion of interest in E-3/P-3.
EL-3 stands for reporting of import under supplier’s credit.
Difference between buyer’s credit & supplier’s credit.
Buyer’s credit Supplier’s credit
1. In buyer’s credit arrangement importer is 1. In supplier’s credit arrangement importer is contracted

contracted with bank. with exporter abroad.
2. It is FC loan, maturity period is maximum 1 year. 2. It is FC loan, maturity period is more than 1 year.
3. buyer’s credit need not prior approval of BOI, 3. All supplier’s credit need prior approval of BOI.
except libor+5 above.
 BRPD Circular No. 15 Dated : 23.09.2012

 It is also known as “prolongation” or “evergreening”)
 If a borrower while applying for rescheduling, pays the required down payment in cash at a
time, the bank must address the application within 03 (three) months upon receipt. If the
borrower gives any cheque, pay order or any other instrument against down payment, the bank
must ensure encashment of such instrument before processing of the rescheduling case. Any
previous payment from time to time shall not be treated as a down payment.
 Time limit for rescheduling Continuous Loan:

Frequency SS DF BL
First Time Maximum 18 (eighteen) months from the 12 Month 12 Month

date of rescheduling
Second Time 12 09 09
Third Time 06 06 06
 Classification of Rescheduled Loan: During the rescheduled period all required principal and
interest payments must be made. Rescheduled amount should be repaid in monthly installments.
If the amount of defaulted installments is equal to the amount of 3(monthly) installments, the
loan will be classified as Bad/Loss.
 Time limit for rescheduling Demand Loan:
Frequency SS DF BL
First Time Maximum 12 (twelve) months from the date 09 Month 09 Month
of rescheduling
Third Time 06 06 06
interest payments must be made. Rescheduled amount should be repaid in monthly installments.
If the amount of defaulted installments is equal to the amount of 3(monthly) installments, the
loan will be classified as Bad/Loss.

 Down payment required for Continuous & Demand Loan:
Frequency Overdue Amount Rate of Down Outstanding

payment
First Time Upto 1.00 crore 15% Whichever is less
Above 1.00- 10% (but not less

Upto5.00 crore that Tk 15.00 Lac)
Above 5.00 crore 5% (but not less

that Tk 50.00 Lac)
Second Time 30% 20% Whichever is less
Third Time 50% 30% Whichever is less
 Time limit for rescheduling Fixed Term Loan:

Frequency SS DF BL
First Time Maximum 36 (twelve) months from the date 24 Month 24 Month
of rescheduling
Third Time 12 12 12
interest payments must be made. Rescheduled amount should be repaid in monthly/quarterly
installments. If the amount of defaulted installments is equal to the amount of 6 monthly or 2
quarterly installments, the loan will be classified as Bad/Loss.
 Down payment required for Term Loan:

Frequency Overdue Interest Outstanding
First Time 15% 10% Whichever is less

Second Time 30% 20% Whichever is less
Third Time 50% 30% Whichever is less
 CLASSIFICATION AND INTEREST SUSPENSE OF RESCHEDULED LOANS:

In case of rescheduled loans the unrealized interest, if any, will be credited to Interest Suspense
Account, instead of crediting the same to Income Account.
 NEW LOAN FACILITY AFTER RESCHEDULING:

 The borrower must pay at least 15% of the “Outstanding Balance” (outstanding amount
after excluding the down payment on rescheduling) to avail any further credit facility from
the rescheduling bank.
 In case of borrowing from other banks, the same rule will be applicable, i.e. the borrower
must pay at least 15% of the “Outstanding Balance” (outstanding amount after excluding
the down payment on rescheduling), then, will be allowed to take regular facility from
other banks subject to the submission of No Objection Certificate (NOC) from the
rescheduling bank or financial institution.
 Exporters may be granted further credit facility (after being identified as not-a-willful defaulter), if
required, subject to settling at least 7.5% of the “Outstanding Balance”(outstanding amount after
excluding the down payment on rescheduling). They will be allowed to take the regular facility
from other Banks subject to the submission of a NOC from the rescheduling bank or financial
institution.
 Prior approval of Bangladesh Bank shall have to be obtained if the loan is related to the director of
any bank.
 Information on such rescheduled loan accounts shall be reported to the Credit

Information Bureau (CIB) of Bangladesh Bank.
 While reporting to the CIB, the rescheduled loans/advances should be shown as RS-1
for first time rescheduling, RS-2 for second time rescheduling and RS-3 for third time
rescheduling. If rescheduling facility is availed through interest waiver, reporting
should be RSIW-1 for first time rescheduling, RSIW-2 for second time rescheduling and
RSIW-3 for third time rescheduling.
 RESTRICTION ON EXTENDING THE TERM TO MATURITY OF A TERM LOAN
 The loan must be performing ( Unclassified: Standard or SMA )
 The decision should be made at the level where the loan was originally sanctioned
 The maturity date may be extended by a period of time not exceeding 25% of the current
remaining time to maturity.
 Travel Quota:
Global private travel entitlement is US$ 12,000 per adult passenger during a calendar year,
with upto US$ 5,000 or equivalent for travel to SAARC member countries and Myanmar
and upto US$ 7,000 or equivalent for travel to other countries. For minors (below 12 years

in age) the applicable quota will be half the amount admissible for adults. However,
foreign exchange in the form of cash must not exceed US $5000 per person per trip
 Advance payment up to USD 5000 for import may be done without prior BB approval.
 For other cases, a repayment guarantee (from supplier) acceptable to the AD to be obtained.
 If guarantee is not available, prior permission from BB is required for making advance payment
 International Cards can be issued against the following:
Against ERQ
Against RFCD A/C
Against FC A/C
Against Hajj Quota ( for Hajj Agencies)
Against Hajj Quota ( Individual)
Against Official Tours of Govt. Official
Against per-diem Allowance for private sector Officials
 Convertibility is the ability of the owner of the asset (foreign exchange) to exchange it from one
currency into another currency.
 Current account convertibility means if current account transactions are convertible – such as-
transactions for trade (export-import), education, travel, treatment, short term loan etc.
 Capital account convertibility means If transactions of capital nature are convertible-
Example – Foreign Investment, transfer of property
Payments for current transactions means payments which are not for the purpose of transferring capital,
and includes-
 All payments due in connection with foreign trade, other current business, including services and
normal short term banking and credit facilities;
 Payments due as interest on loans and as net income from other investment
 Payments of moderate amount for amortization of loans or for depreciation of direct investments and
Moderate remittances for family living expenses
 Bangladesh has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of
Agreement, with effect from April 11, 1994.
 Bangladesh is the 87th country to accept the agreement.
 As a result, Bangladesh Taka was declared convertible in early 1994 for current account
transactions in terms of Article VIII of the IMF Articles of Agreement
 As per request of Bangladesh Government to promote non-traditional manufactured items export

business of Bangladesh, International Development Association (IDA) in 1989 arranged an Export
Development Fund (EDF) primarily with USD 31.2 million and the present balance of EDF is USD
1,500.00 million.

 Tenor of EDF loans: in all cases within 180 days from dates of disbursement, extendable by BB up to
270 days upon application to BB explaining the necessity of longer period for repatriation of export
proceeds.
 RMA refers to- Relationship Management Application

 SWIFT –Society for worldwide interbank financial telecommunications.
 UCPDC-600 :Uniform Customs & Practice for documentary Credit
 ISBP 745 : International Standard of Banking Practice.
 URR-725 : Uniform Rules for Reimbursement
 URC-522 : Uniform Rules for Collection.
 In Co Terms 2010 : Internationally Commercial Terms
 H S Code- Harmonized Commodity Description & Coding System
 S R O- Statutory Regulatory Order
 PRC- Proceed Realization Certificate
 DEDO : Duty Exemption and Drawback Office
 DWAT : Dead Weight All Told
 LCAF : Letter of Credit Authorization Forms
 LTFF : Long Term Financing Facility
 FSSP : Financial Sector Support Project
 Para wise snapshot of GEFT-2009

 Chap-5 Para-2
 In all cases of purchase of foreign currency, an application must be made to an AD. For
payments against imports into Bangladesh, the prescribed application form is form IMP
(Appendix 5/11) and for other types of remittances forms TM (Appendix 5/5). TM form must be
used for reporting by the Ads even when remittance is approved by Bangladesh Bank in any
other manner.
 Approval for selling foreign exchange for outward remittances given by the Bangladesh Bank
remain valid for a period not exceeding 30 days from the date of approval unless they are
expressly stated as valid for a specified longer period or unless t8hey have been revalidated for
a further period.
 ADs must report the cancellation of the outward remittance as an inward remittance in Form C.
The return in which the reversal of the transaction is reported should be supported by a letter
giving the details particular.
 Chap-5 Para-10
 Inward Remittances equivalent to US$ 10,000 and above should be reported on Form C.
However, declaration on Form C by the beneficiary is not required against remittances sent
by Bangladesh nationals working abroad. the ADs may submit a consolidated Form C in
respect of those remittances attaching therewith a separate list showing details of
remittances comprising the amount reported on Form C. Remittances received against
exports should be certified and reported on EXP Forms. In case of remittances, received in
advance for exports the ADs should obtain a signed declaration from the beneficiary on the
back of the "Advance Receipt Voucher" certifying the purpose of remittance.
Chap-6 Para-1 (d)
 An incoming person may retain foreign exchange upto US$ 5000 or equivalent brought in by
himself/herself without declaration and take out the same at the time of departure from
Bangladesh without endorsement in passport and air ticket. Such amounts may also be
deposited in RFCD account by a resident Bangladeshi and in NFCD account/private non-
resident FC account by a non-resident Bangladeshi any time after arrival in Bangladesh.
Amount in excess of USD 5000, brought in by the resident Bangladeshis, should however be
encashed or deposited in appropriate foreign currency account within 30 days of arrival. Such
amounts brought in by non-resident Bangladeshis can be encashed or deposited in foreign
currency account any time after return to Bangladesh. For a foreign national, the entire amount
brought in with declaration on Form FMJ or upto USD 5000 brought in without declaration may
be taken out freely at the time of departure. Such amounts brought in by foreign nationals can
be encashed or deposited in foreign currency account any time after their enter into Bangladesh.
Chap-7
 Import of goods into Bangladesh is regulated by the Ministry of Commerce in terms of the
Import and Export (Control) Act, 1950, through Import Policy Order (IPO) in force and Public
Notices issued from time to time by the Office of the Chief Controller of Imports and Exports
(CCI&E).
 In terms of the Importers, Exporters and Indentors (Registration) Order, 1981 no person can
import goods into Bangladesh unless he is registered with the CCI&E or exempted from the
provisions of the said Order.
 LCAF is not required for Import by  Ministry of Defense.
 LCAF having in sets of 5 copies each & one marked “ For Exchange Monitoring Purpose “used
for opening LC & effecting remittance.
 Ads can transfer LCAF to another AD.
 Validity of LCAF
Types of Validity Import Items Validity of LCAF
Validity for Opening LC Any Items Within 150 Days from the date of issuance
Other than Capital machinery 9 months from the date of issuance
Validity for Shipment Capital machinery & spare 17 months from the date of issuance
parts
Other than Capital machinery 1 (One) year subsequent to the month of

issuance
Validity for Remittance
Capital machinery & spare 18 months subsequent to the month of
parts issuance
 H S Code to be followed by – First Schedule of Customs Act-1969.

 If endorsement is mistakenly made in a wrong LCAF then – Endorsement in LCAF may be
transferred to one valid LCAF to another valid LCAF when both are identical in all respect.
 Remittance of bank cheque should be reported to BB through TM with supportive document.
 Full LCAF value is not remittable in case of Import under-FOB basis.
 An AD may remit bill even though the name of importer in Bill of Exchange differ with LCAF
in case of import under – Documentary Collection where original drawee dishonors the
document.
 “Import under LCAF” stamp to be given in the upper right corner of LCAF in case of import
under LCAF.
 Credit report of supplier/exporter is required in case of import through PI for USD 10000.00 &
in case of import through Indent for USD 20000.00
 In case of BBLC other than EPZ- no EXP/IMP form will be required.
 Post facto approval from BB required for payment of BBLC import bill in case of export failure
or non realization/short realization of proceed.
 Along with BB another two reporting authority in case of failure of export is -1. NBR & 2.
Commissioner of Customs.
 The AD can also retain foreign currency from export proceed for a maximum period of 30 days
for making payment of import bill (other than BBLC) due within 30 days even it exceeds
allowable retention quota. (para 39(ii) of Chap-7)
 Net FOB value =LC Value – freight charge – insurance – commission
 BBLC should not be opened against export LC under Barter/ STA (special trade arrangement)
without prior approval of BB.
Chap-7, Para 33 (a) :
Import Items Tenor
Import of Capital Machinery
Import of Coastal Vessel including oil tanker & ocean Up to 360 Days Usance basis
going vessel those procure for scrap
Import of Industrial raw material
Import of agricultural implements & chemical fertilizer Up to 180 Days Usance basis
BBLC can be opened
Import of Life Savings drugs Up to 90 Days Usance basis

Chap-8 Section-1
 Export of goods from Bangladesh (excepting export from Type A industrial units located in the
EPZs) to foreign countries by land route or by sea, the Railway Receipts, Bills of Lading and
any other documents of title to cargo should be drawn only to the order of an AD designated
for this purpose by the respective exporters and delivered to the authorised representatives of
the ADs concerned and to none else.
 In case of export of goods, full payment for which value has been received by the exporter in
advance through the AD, the Bill of Lading and other documents may be endorsed by the AD
in favour of foreign importers and the same may be sent directly to the importers abroad by the
AD.
 In respect of export of goods from Bangladesh (excepting exports from Type A industrial units
located in the EPZs) to foreign countries by air, the Airway Bills and any other documents of
title to cargo should be drawn to the order of a bank in the country of import nominated by the
AD designated for this purpose by the respective exporters and delivered to the authorised
representative of the AD.
 The above directions shall not apply to exports exempted from repatriation of export proceeds
like- trade sample, gift etc. Exports of fresh fish, vegetables, fruits, poultry and other goods of
perishable nature are also exempted from this direction
 The documents of title to cargo like Bill of Lading, Airway Bill in respect of goods shipped from
the fully foreign-owned enterprises (Type A industries) in the EPZs may also be drawn in
favour of the consignee /LC opening bank.
 What is the type of endorsement in transport document will be made by AD in case of export
from other than Type A industry of EPZ ?
Ans: Endorsement to be made in favour of the AD’s foreign correspondents not to the
consignee.
 What is the type of endorsement in transport document will be made by AD in case of export
from Type A industry of EPZ ?
Ans: Blank Endorsement or Endorsement to be made in favour of the consignees as per Export
LC .
 What is the permitted rate of Commission, brokerage or other trade charges due to be paid to
foreign importers or agents by exporters in Bangladesh.
Ans: Upto a maximum of 5% of the value of the goods relating to the particular shipment may
be deducted from the relative bill amount or the amount of the sale proceeds or remitted from
Bangladesh after the full proceeds have been realized.
 What is the permitted discounting rate in case of export of Books, Journals published in
Bangladesh to be offered by exporters in Bangladesh.
Ans: Upto a maximum of 33.5% of the invoice value witout prior approval of BB.

 What is the prescribed period by the Bangladesh Bank within which full foreign exchange
proceeds of exports must be received by exporters ?
Ans: Four months (Vide Bangladesh Bank Notification No. FE 1/77-BB dated 16th April, 1977
 In cases, where exporters arrange insurance cover and freight in Bangladesh but prepare
invoices on FOB basis, the ADs should verify from the bills of lading that freight has not been
prepaid in Bangladesh. All cases where freight or insurance has been paid in Bangladesh but
export documents are on FOB basis should be reported to the Bangladesh Bank.
 Export of any goods directly or indirectly (except trade samples, ship stores & transshipment
cargo, goods shipped under GOB, military, navy, air force, gift certified by BB etc) from
Bangladesh is prohibited without declaration through EXP –as per section 12 of FERA 1947.
 Exp no consists of 11 digit.
 In the following cases export exempted (declaration of EXP not required) from repatriation of
sale proceed :
 bonafide trade samples sent by registered exporter upto the value prescribed in the Export
Policy in force;
 personal effects, whether accompanied or unaccompanied, of travellers; (iii) ships stores and
transhipment cargo;
 goods shipped under the order of the GOB, Military, Naval or Air Force .
 gift packets less than the value as prescribed in the Export Policy in force where the packet is
covered by a certificate issued by the Bangladesh Bank to the effect that the export of the parcel
does not involve any transaction in foreign exchange.
 Chap-8 Section-2
1. What are the types of industry in EPZ ?
 Export Processing Zones (EPZs) have been established by the Act namely, Bangladesh
Export Processing Zone Authority Act, 1980. The following types of industrial units
operate in the EPZs:
 Type A: 100 percent foreign owned including those owned by Bangladeshi nationals
ordinarily resident abroad;
 Type B: Joint venture projects between foreign and Bangladesh entrepreneurs resident
in Bangladesh;
 Type C: 100 percent Bangladeshi entrepreneurs resident in Bangladesh
2. EXP forms for Exports from EPZs should be rubber stamped or over printed with
words " "EXPORT FROM EPZ" in bold letters.
3. No permission of the Bangladesh Bank is needed to make foreign investment in Bangladesh in
collaboration with local investors or may even be wholly owned by the foreign investors if

the entrepreneurs use their own funds. However, to avail of the facilities and institutional
support provided by the Government, entrepreneurs/sponsors may secure registration with
the Board of Investment (BOI).
4. Transfer of shares of private/public limited companies not listed in the stock exchanges, from
resident to non-resident, non-resident to resident and nonresident to non-resident, Foreign
Exchange Investment Department, Bangladesh Bank, Head Office should be informed,
through the concerned AD within 14 days, of such transfer along with other documents.
5. The ADs may remit export claims not exceeding 10% of the repatriated export proceeds on
the following counts: (a) Short weight claim; (b) Quality claim; & (c) Part shipment.
 Chap-10 Para-34
6. The ADs may effect remittances towards settlement of dues to foreign banks of bank
charges, cost of cables & other incidental charges arising in their normal course of the
business without prior Bangladesh Bank approval. All such remittances should be reported
to the Bangladesh Bank on TM Forms along with appropriate return
 Chap-12 Para-1
7. Release of foreign exchange in excess of USD 200 or equivalent will require valid visa.
However, while issuing foreign exchange to the Diplomats/Privileged persons/UN
personnel, Govt. officials travelling on official duties, such endorsement in their passports
need not be made. The AD should verify to satisfy itself that the ticket covers a journey to be
undertaken not later than two weeks after the date on which exchange is issued.
 Chap-12 Para-7 (ii)
8. Importers are entitled to a business travel quota @ 1% of their imports settled during the
previous financial year while non-exporting producers for the local market are entitled to
such business travel quota @ 1% of their turnover of the preceding financial year as
declared in their tax return; subject in both cases to annual upper ceiling of US$ 5000. The
same business organization engaged in imports as well as production shall be allowed such
business travel quota entitlement only on one count
 As per FEPD Circular Letter No. 25, Date: November 01, 2015: remittances from abroad against service
exports such as business services, professional/research and advisory services, etc. may be credited to
local currency accounts and ERQ accounts in the names of the concerned exporters subject to
observance of the instructions including declaration on Form C as outlined in FE Circular No. 06 of May
30, 2011. However, declaration on Form C is only required against inward remittances (other than
remittances sent by Bangladesh nationals working abroad) exceeding USD 10,000 or equivalent other
currencies as per FE Circular No. 13, dated September 21, 2015.
 As per FE Circular No. 05 Date: May 27, 2015 regarding Enhancement of Exporter’s Retention Quota
(ERQ)
Section IV, chapter 13 of the Guidelines for Foreign Exchange Transactions-2009 (GFET) permits
exporters to retain specified parts of their export earnings in foreign exchange, for utilization without
prior Bangladesh Bank approval for bonafide business expenses abroad including maintenance of
offices abroad, import of raw materials, machineries and spares, etc. It has been decided to further
widen this facility by enhancing the ERQs as under:

(a) ERQ for exports of high domestic value added merchandise shall stand enhanced to 60 percent
from existing 50 percent.
(b) ERQ for merchandise exports of high import contents (like apparels using woven fabric) shall stand
enhanced to 15 percent from existing 10 percent.
(c) ERQ for export of services shall stand enhanced to 60 percent from existing 50 percent of
repatriated export receipts.
 As per FE Circular No. 23 Date: 24 December, 2015, it has been decided to dispense with the
submission of TM Form as stated at the Appendix (5/5) of the GFET, 2009, Volume -1 and documents
related to TM with the monthly/periodic returns to Bangladesh Bank effective from January, 2016.
Online TM monitoring System of Bangladesh Bank should be updated at the time of conducting such
transactions.
 As per FE Circular No. 02 Date: 06 February, 2012
In ref to Chap-7 Paragraph 33(a) of GFET-2009 in term of usance interest, now to be decided total usance
interest on deferred basis private sector import will not exceeds 6% pa.
 As per FE Circular No. 53/15 Date: 13.09.2015

Foreign Exchange Regulation (Amendment) Act, 2015

In ref to paragraph 5 of FE Circular No. 25, dated December 22, 2009
EDF loan to an Authorized Dealer (AD) bank against their foreign currency financing of input
procurement for manufacturer-exporter and BTMA member mill does not exceed permissible
entitlement or USD 10 million, whichever is lower. It has now been decided to enhance the above limit
from USD 10 million to USD 12 million.
EDF loan availability to BGAPMEA member mills for bulk import of input procurements. It has now
been decided that EDF loans will be available also to member mills of the Bangladesh Plastic Goods
Manufacturers and Exporters Association (BPGMEA) making bulk import of raw materials for local
deliveries of garment accessories to manufacturer-exporters against inland back to back LCs in foreign
exchange. An EDF loan to an AD against their foreign currency financing of input imports for a BPGMEA
member mill shall not exceed (i) the value realized in foreign exchange against inland back to back LCs
over the past twelve months, or (ii) USD 500,000 (five hundred thousand), whichever is lower.
Please refer to paragraph 11, chapter 16 of Guidelines for Foreign Exchange Transactions, Vol-1, 2009
in terms of which Authorized Dealers (ADs) are allowed to issue, on behalf of residents, bid
bonds/performance bonds/guarantees in foreign currency in favor of local project authorities against
goods/services procurement tenders financed by international/foreign donor agencies, on the
condition that in case the guarantee is invoked the claim there against would be paid only in Taka
equivalent and not in any other currency.
It has now been decided that ADs may, on behalf of residents, issue bid bonds/performance
bonds/guarantees in foreign currency favoring local project authorities against goods/services
procurement tenders financed by Government subject to observance of the instructions stipulated in
the paragraph mentioned above.
 As per FE Circular No. 06/15 Date: 09.07.2015:

Issuance and disposal procedure of EXP Form:
First Original → Certified by AD → Customs →Bangladesh Bank

Second Original → Certified by AD →Customs →Exporter→AD→BB Online report
(within 14 days of shipment) →AD hold second original till realization of proceeds→ After
realization of export proceeds, ADs shall certify on the reverse of the Second Original EXP
Form and shall report the same to online reporting module → AD without attachment of
EXP Form, report the realization of export proceeds in relevant schedule of monthly returns to
Bangladesh Bank → ADs shall retain Second Original EXP Form with them for record and
eventual inspection for a period of 5(five) years
Issuance and disposal procedure of IMP Form:
As a part of phasing out submission of EXP/IMP Forms, ADs are no longer required to obtain
IMP Form in duplicate from the importer. IMP Form (amended form with separation of FOB
value; freight, insurance and other charges and reporting instructions in relevant schedules,
submitted by the importer should, therefore, be in original.

Immediately after import payment, ADs make online report to BB→AD report in monthly returns to
BB without attachment of IMP Form→ADs hold IMP Form until the Customs certified Bill of Entry is
received→non-receipt of Customs Certified Bill of Entry, Ads shall, on demand, submit the IMP Form
and full set of import documents to Bangladesh Bank →On receipt of Customs certified Bill of Entry
evidencing import into Bangladesh, ADs shall report the same to online reporting portal after
necessary verification →Afterwards, ADs shall retain the IMP Form and relevant Bill of Entry with full
set of import documents including LCA Form with them for record and eventual inspection for a
period of 5(five) years.
 As per FE Circular No. 20/15 Date: 08.09.2015:

In ref to para 33, Chap-10, ADs may without prior Bangladesh Bank approval effect remittance towards
cost of advertisement of Bangladeshi products in foreign electronic & online media in dynamic, image,
video, interactive and/or other formats, after satisfying themselves with the genuineness & bonafides of
the requests through agreement and invoices and after deducting all applicable taxes. Remittance on the
above purpose may only be made through an AD designated by the remitter for the purpose under
intimation to foreign exchange operation dept, BB, Dhaka/Area Office of BB.
1 ) What is the criteria for Bullet repayment terms inadmissible in import financing?
Ans: Import financing exceeding USD 10,00,000 or equivalent in value or for terms exceeding six months. the
financing arrangements must stipulate quarterly repayments. However, in these cases the repayment
installment due after the first quarter may on prospective cash flow considerations be set lower than the
subsequent ones, subject to being not less than one tenth the total amount payable.
2) What is the entitlement for export of sample by 100% export oriented RMG
Ans: USD 10,000/= annually.
3) Authority of Export Policy
– Export Policy: issued by Ministry of Commerce, GOB for three years and published by CCI&E.
4) Which one is post shipment finance?
i) ULC back to back (Local/Foreign)
ii) Packing credit OD
iii) Advance against foreign bill under collection
iv) Time Loan
5) Which one is pre-shipment finance?
i. Negotiation of documents under L/C’s (FDBP)
ii. Purchase of foreign bill under D.P and D.A
iii. Advance against foreign bill under collection
iv. Packing credit OD
6) What is the highest tenor of Back to Back LC ?
a. 90 Days b. 180 Days c. 270 Days d. 60 Days
7) What kind of LC does not required Margin?
a. Deferred LC b. Back to Back LC c. Sight LC d. Stand by LC
8) How many articles are there in UCP-600 ?
Ans: 39 articles
9) The seller does not supply insurance documents having incoterms-
a. CFR b. FOB c. FCA d. CPT
10. Which of the following incoterms is recommended when the credit requires an air way bill marked freight
prepaid to the airport of destinations ?
a. CFR b. CPT c. FCA
11. How many parties are required to give consent to amend a confirm LC ?
Ans: As per article 10(a), there are three parties - a. The issuing bank
b. The confirming bank c. The beneficiary.
12. How many terms in Inco Terms 2010 ?

Ans: 11 Terms
13. Which are Terms only used for Sea & Inland water way transport ?
Ans : FAS, FOB, CFR, CIF
14. Which terms are used for any mode of transport ?
Ans: EXW, FCA, CPT, CIP, DAT, DAP, DDP.
15. What is the prescribed period within which export proceeds should be repatriated ?
Ans : Within 4 months from the date of shipment.
16. What is the prescribed period within which second original of EXP to be reported to BB online?
Ans : Within 14 days from the date of shipment.
17.What is IRU

Ans: Irrevocable Reimbursement Undertaking.
18.In case of export on FOB basis freight will be paid in-
Ans: Foreign Currency.
19. What is UD & UP ?
Ans : UD: Declaration for use of raw material issued by BGMEA & BKMEA against Master LC &
applicable in case of direct exporter.
UP: Permission for use of raw material issued by Bond Commissioner of Customs against UD &
BBLC. It is applicable in case of deem exporter.
20. Why LC is a definite undertaking ?
Ans : As LC is irrevocable.
21.What is frustrated cargo ?
Ans: Any shipment of supplies and/or equipment which, while en route to destination, is stopped prior to
receipt and for which further disposition instructions must be obtained.
22. What is ACU ?
Ans : ACU stands for Asian Clearing Union, established in 1974.
Headquarter of ACU: Tehran, Iran
No of Member : 9
Members are : Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan & Srilanka.
23. Which exchange rate is used for making payment to exporter against export bill after collection?
Ans : a. TT Clean b. TT & OD c. TT Doc d. OD Sight Export.
24. Exchange rate used for FC Selling to customer:
A. TT & OD: Selling rate for issuance of MT, TC etc.
B. BC Selling : Selling rate against payment of Import Bill.
25. Exchange rate used for FC Selling to customer:
A.
 Rules & regulation in export policy will not be entitled in case of following items:
 Store), equipment)
 Entitlement of Sample Export as per Export Policy-2012-2015:

(free on board)
7,000/
Letter of Credit)
60,000
10%
10,000
10,000/-
Bonafide
 What is the annual entitlement of expenses for the exporter related to corresponding & booking of
export order?


 What is called Entre-port export?
Ans:
Ab~¨b 5% Gi AwaK g~‡j¨
 Which of the following is not a prohibited item to export?

i. Lubricant Oil
ii. Wheat
iii. Urea fertilizer of KAFCO
iv. Jute Seeds
 Which of the following can be exported with permission of competent authority

i. Radioactive material
ii. Pulse (except processed)
iii. Urea fertilizer produced in the factory other than KAFCO
iv. Soya bean Oil
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PUD,Cooked 71/90 Count
kZ© mv‡c‡¶ ißvwb cY¨ ZvwjKv
BDwiqv dvwU©jvBRvi -
2 we‡bv`bg~jK Abyôvb, Mvb, bvUK, QvqvQwe, cÖvgvY¨ wPÎ BZ¨vw` AwWI K¨v‡mU, wfwWI K¨v‡mU, wmwW, wWwfwW
BZ¨vw` d‡g© Z_¨ gš¿Yvj‡qi AbvcwË mv‡c‡¶ ißvwb Kiv hv‡e|
of CO satisfied by presentation of signed, dated doc that certifies to the origin of goods. CO must appear to
relate to the invoiced goods. Consignee information if given m
Select (√) the most appropriate option:
Ques. How many sections are there in the Foreign Exchange Regulation Act?
1.
199 19
a. b.
21 27
c. d.
Ques. In which case of the following, Ads sell foreign exchange to their customer?
2.
a. Inward remittance b. Outward remittance

All of the above None of these
c. d.
Ques. Who can make FX regulation under FER Act in the form of gazette notification?
3.
Bangladesh Bank Government

a. b.
Both BB and government Commercial banks
c. d.
For purchase of foreign currency for import payment, application must be made to AD in which of the
Ques.
4. following for?
TM EXP
a. b.
c. IMP d. S-2
Ques. Who issues LC Authorization Form?

5.
AD BB
a. b.
c. CCI & E d. None of these
Ques. Before certifying EXP, AD should ensure that the exporter is registered with CCI&E.
6.
a. True b. False
It is not mandatory for foreign individual / organization to have permission from BB to open branch /
Ques.
7. place of business in Bangladesh
a. True b. False
Ques. In Import related transactions, Authorized Dealers buy foreign currency

8.
a. True b. False

Ques. Money changers can maintain FC account with Bangladesh Bank
9.
a. True b. False
Ques. Authorized Dealer can sell $ 55000 to Bangladesh Bank at any time………..
10.
a. True b. False
Ques. Documents required in a documentary credit operation according to UCPDC includes-

11.
transport documents commercial invoice

a. b.
insurance documents all of the above
c. d.
Ques. Issuing Bank’s liability is-

12.
primary liability secondary liability

a. b.
no liability none of the above
c. d.
Ques. Which of the following is not among the main/core parties of LC-
13.
issuing bank advising bank

a. b.
beneficiary confirming bank
c. c d.
Ques. As per CFR term, who covers the cost of main carriage-
14.
exporter Importer
a. b.
Bank none of the above
c. c d.
Ques. For examining documents each bank have maximum-

15.

5 banking days 3 banking days
a. b.
c. c 7 banking days d. 10 banking days
Ques. In Bangladesh , which is the most popular payment method used in imports-
16.
open account documentary collection

a. b.
documentary credit cash in advance
c. c d.
Ques. What is the elaboration of URR-

17.
Uniform Rules for Reimbursement under

Uniform Rules for Reimbursement
a. b. Documentary Credits
c. c Uniform Rules for Reimbursement under d. none of the above

Documentary Collections
Ques. Documentary letter of credit is a-

18.
trade payment method trade financing tool

a. b.
both (a) & (b) none of the above
c. d.
Ques. Packing Credit is a popular means of-

19.
pre-shipment export financing post-shipment export financing

a. b.
import financing none of the above
c. d.

Ques. Not prohibited item as per export policy- 2009-2012
20.
a. All petroleum and petroleum products b. Jute and shan seeds
c. vegetable d. Wheat
Ques. Who are the parties involved in performing custom formalities?

21.
a. NBR b. Exporter
c C & F agent d None of these
Ques. Validity of IRC is

22.
a. 6 months b. 2 year
c. c 1 year d. 3 year
Ques. What is the message type for using LC in Swift Operation

23.
a. 700 of 701 b. 800 of 801
c. 900 of 901 d. 600 of 601
Ques. How many methods are using in import trade?

24.
a. 3 b. 4
c. 5 d. None of the above.

Ques. Up-to what percentage an exporter can retain Foreign Currency in ERQ Account?
25.
12.5% 7%
a. b.
15% 8%
c. d.
Ques. From which country Bangladesh received most of its Wage Earner’s Remittance?
26.
USA U.A.E
a. b.
Saudi Arabia None of the above.
c. d.
Ques. With how may Exchange Companies UCBL have established remittance arrangement?
27.
a. 21 b. 15
c. 18 d. 25
Ques. 28. Foreign Currency Account may be opened in how many currencies?
a. 3 b. 4
c. 5 d. 6
Ques. AD Branch may allow Interest on the balances held in FC Accounts.

29.
a. True b. False
Ques. Which documents are required to custom authority in case of import?

30.

a. EXP b. IMP
c. LCAF(custom purpose copy) d. EPB permission
Ques. Which documents are needed for custom authority in case of export?
31.
a. EXP b. Bill of lading

Indent/proforma invoice Insurance policy
c. d.
Ques. Who are the parties involved in performing custom formalities?

32.
a. NBR b. Importer
c. Exporter d. Shipping agent
Ques. What type of endorsement to be needed in case of transport document (import)?

33.
a. Receipt payment b. Invoice value certified

Please deliver to the order of “importer” or “C &
c. Pay to the order of “C& F agent” d.
A agent.”
Ques. Which parties are responsible to submit all shipping documents & requisite paper to perform custom
34.
formalities?
a. Bank b. C&F agent
c. Port authority d. CCI&E.

Ques. Which acts are involved to perform custom formalities?
35.
a. NI Act 1881 b. Foreign Exchange Regulation Act 1947
c. Letter of Revival d. None of the above
Ques. Upon which value, the duties are ascertained?

36.
a. LC value b. CRF value
c. Insurance value d. Exp value
Ques. What & when the list of goods is to be submitted by shipping agent to custom authority on arrival of
37.
vessel at port site?
a. Export manifesto within 24 hours b. Import manifesto within 24 hours
c. Delivery orders within 12 hours d. Shipping documents within 24 hours
Ques. What components does custom appraiser to assess?

38.
a. Tariff b. Port demerge
c. Duty d. SID, AIT, DSC, PSI
Ques. Bangladesh Custom Tariff (Schedule -1) contains the following:

39.
a. HS code & description of goods b. Invoice value
c. Rate of AIT d. IDSC

Ques. Export proceeds must be repatriated within ………….. months from date of Shipment.
40.
a. Four b. Three
c. Two d. Five
Ques. The AD will issue LCAFs in sets of …………… copies each.

41.
a. 5 b. 2
c. 6 d. 7
Ques.
42. Documents should be checked within 7 working of days from the date of receiving the document.
a. True b. False
Ques.
43. In case of industrial LCA shipment validity is 17 months.
a. True b. False
Ques.
44. Bank does not deal with goods, deals with documents only.
a. True b. False
Ques.
45. An importer can renew his IRC within 30th September without any sur-charge.
a. True b. False
Ques. Bill of loading is a quasi negotiable instrument issued by shipping company which is a document of title to
46.
the goods described in it.

a. True b. False
Ques. What is the name of the medium for international transaction?

47.
Swift LC
a. b.
Shipment Invoice
c. d.
Ques. What is the name of current version of DC rules?
48.
a. UCP 600 b. UCP 900
c. UCP 800 d. UCP 700
Ques. With how may Exchange Companies UCBL have established remittance arrangement?
49.
a. 18 b. 21
c. 15 d. 20
Ques. FOB stands for-

50.
Free in border Free on Board

a. b.
c Free on Biman d none of the above

Snapshot of Monetary Policy-January-June 2016
Particulars Projected in Monetary Policy Actual as on

January-June 2016 December 2015
Projected Broad Money (M2) growth 15.00 % 14.2 %
Projected Domestic Credit growth 15.5% 10.9 %
Projected Private Sector Credit growth 14.8 % 13.8 %
Projected Public Sector Credit growth 18.7 % - 1.7 %
Projected Inflation 6.07 % 6.2 %
Rate of Repo 6.75 % 7.25%
Rate of Reverse Repo 4.75 % 5.25 %

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ACCUMULATION OF BANKING KNOWLEDGE

1. What is Account Opening?

 Account opening is a contractual relationship between customer & banker which is

2. Why Introduction is required during opening Account?

 To get legal protection under section 31 of NI Act 1881.

3. Some legal framework of Banking?

 Bangladesh Bank formed under Bangladesh bank order 1972

4. What is the capital requirement of Banks ?

5. Some Features of Bank Company Act 1991

 Bank Company Act is based on Bank Company Act 1913

7. CPV or Contact Point Verification is made as per Inst. Circular 1031.

Courtesy: Rubaiyet Tanvir, UCB, Jubilee Road Branch.

6. What is Repo, Reverse Repo, ALS ?

5. What is Dormant Account ?

6. What is the legal frame work of minor account ?

Courtesy: Rubaiyet Tanvir, UCB, Jubilee Road Branch.

 There are three parties –

8. What is the basic characteristics of Negotiable Instrument ?

9. What is holder & holder in due course ?

10. What is payment in due course ?

12. Put down some example of Negotiable & Non-negotiable instruments.

 A details list of Negotiable & Non-negotiable instruments are ----

NEGOTIABLE INSTRUMENT NON-NEGOTIABLE INSTRUMENT

Cheque Postal Order **

Bill of Exchange Pay Order (Quasi Negotiable)

Promissory Note Money Order **

Demand Draft IOU (I Owe to You)

Courtesy: Rubaiyet Tanvir, UCB, Jubilee Road Branch.

Treasury Bills Letter of Credit

Government Bill Bill of Lading (Quasi Negotiable) **

Prize Bond FDR

14. What is Allonge ?

16. What is GEP ?

16. What are the core risk of Banking ?

 Six core risk are

17. A few words regarding Money Laundering:

Courtesy: Rubaiyet Tanvir, UCB, Jubilee Road Branch.

17. Circular of BB valid/ in force regarding AML/CFT :

 AML Circular no-10, Dt. Feb 16,2006 regarding CTR

17. Some important features of MLPA Act 2012.

18. Features of Money market & Capital market

 CAMELS is a parameter sets by BB for Rating of Banks which stands for:

20. What is the Single Borrower Exposure limit ?

 As on 31.12.2014 Total capital on UCB=2569.12 crore

21. What is large loan amount?

22. What is the delegation of Approval Authority?

 Board : Single Borrower Exposure Limit (899 crore)

15% of outstanding amount; which one is higher.

Courtesy: Rubaiyet Tanvir, UCB, Jubilee Road Branch.

25. CIB & its relevant issues:

CIB 2 : Owner’s information if borrower is institution.

CIB 3 : Group Information.

CIB 4 : Credit Exposure Matrix

CIB 5 : Guarantors Information.

 Validity of CIB report : 2 Months

26. What is the benchmark of Classification ?

Overdue period 3 months to below 6 Months: Substandard (SS)

Overdue period 6 months to below 9 Months: Doubtful (DF)

Overdue period 9 months & above : Bad & Loss.

Overdue period 6 months to below 9 Months: Substandard (SS)

Overdue period 9 months to below 12 Months: Doubtful (DF)

Overdue period 1 Year & above : Bad & Loss.

27. Definition of defaulted borrower ?

28. What is the criteria & basis of Reschedule ?