Products in Foreign

Exchange Market
Presented by
Md. Sarwar Hossain
Director
Foreign Exchange Policy Department
Bangladesh Bank
Head Office
 Discussion Outline
• Trade Financing
• Trade Financing Products: Bangladesh Context
• Export Financing Products & Services : Funded
and Non Funded
• Import Financing Products & Services : Funded
and Non Funded
• Bank Guarantee
• EDF Financing
• Off-shore Banking
 What is Trade Finance?
Basic Concepts
This is the provision of any form of financing that enables a
trading activity to take place. Trade financing could be made
either directly to the supplier, to enable him procure items to
produce, or for immediate sale, and/or for storage for future
activities. It could also be provided to the buyer, to enable
him meet contract obligations. Whichever way it goes the
underlying principle is that the party more able to bear the
risk is made the reimbursement source for the facility.
 What is Trade Finance?
Buyers and sellers in international trade are confronted with
diverse geographic, social, economic and political conditions.

In general trade is built on trust, without trust trade would

not exist. Every one relies on the honest and integrity of
those in the trading cycle, however there are always adverse
elements (or unscrupulous parties) that could to upset this
cycle, this is where the bank can intervene and help to bridge
the trust gap. One major instrument that is used in
international trade to circumvent such problems is the
Documentary the Letter of Credit.
 Major Trade Finance Products & Services
Offered by Bangladeshi Banks
Export Services :
• Documentary Credit :
– Advising Export Documentary Credit (Local & Foreign)
Sight/DP.
– Transferring Export Documentary Credit.
– Issuance of Back- to-Back Documentary Credit (Local &
Foreign).
• Foreign Documentary Bills Collection Services :
– Documents Against Payment (D/P).
– Documents Against Acceptance (D/A).
• Pre-shipment Finance :
– Back-to-back LC
– Packing Credit (PC)
– Export Cash Credit (ECC)
 Major Trade Finance Products & Services
Offered by Bangladeshi Banks
Export Services : (cont..)
• Post-Shipment Finance :
– Foreign Documentary Bills Purchase (FDBP).
– Inland Documentary Bill Purchase (IDBP)
– Purchase/Discounting Export Bills (Foreign, FBP).
– Purchase/Discounting Export Bills (Local, IBP).
– Advance Against Acceptance (AAA).
– Advance Against Export Incentives
• Other Services :
– Export Development Fund (EDF) from Bangladesh Bank.
– Cash Incentive from Bangladesh Bank.
– Re-finance schemes of Bangladesh Bank.
• Special Schemes of Bangladesh Bank.
 Major Trade Finance Products & Services
Offered by Bangladeshi Banks
Import Services :
• Documentary Credit :
– Issuance of Documentary Credit (Local & Foreign)
Sight/DP/UPAS.
– Add Confirmation through Foreign Correspondent
Banks.
– Negotiation/ Discounting through Foreign
Correspondent Banks.
– Issuance of Shipping Guarantee.
• Documentary Collection Services :
– Documents Against Payment (D/P).
– Documents Against Acceptance (D/A).
 Major Trade Finance Products & Services
Offered by Bangladeshi Banks
Import Services :
• Post-Import Finance :
– Loan against Trust Receipt.(LTR)
– Loan against Imported Merchandise.(LIM)
– Time Loan.
– Term Loan (BDT & Foreign Currency)
 Major Trade Finance Products & Services
Offered by Bangladeshi Banks
Guarantee in Foreign Currency :
– Performance Guarantee.
– Advance Payment Guarantee.
Foreign Currency (FC) Account Services :
– Resident Foreign Currency Account (RFCD).
– Non-Resident Foreign Currency Account (NFCD).
– Non-Resident Taka Account (NRTA).
– Exporter's Retention Quota (ERQ) Account
– Private FC
– FC against Project
EXPORT FINANCE
DIFFERENT STAGES OF EXPORT FINANCE

1. Pre Shipment Finance

2. Post Shipment Finance

 Pre- shipment finance

BASIS FOR GRANTING

•A confirmed export order /contract or
•Letter of credit or
•Original fax /telex message exchanged between the
buyer and the seller
In case of sub suppliers
•A letter from the main exporter
• a undertaking from the main exporter that he has not
availed packing credit from any other bank
PURPOSE
a. purchasing raw materials
b. manufacturing
c. processing
d. transporting
e. warehousing
f. packing, and
g. shipment
Pre- shipment Finance
QUANTUM OF FINANCE
•Concept of need based finance
•Margin requirement
•Credit rating of the exporter

PERIOD OF ADVANCE
a. Product cycle
b. 120 days plus extension of 90 days
TYPES OF PRE SHIPMENT FINANCE

1) Back-to-back LC (Non Funded)

2) Packing Credit (PC)

3) Export Cash Credit (ECC)

 Back to Back L/C
L/C against another Master L/C
To procure Law Materials
Usually against Bond
Mostly used in RMG
In case of Sight BB , EDF facility

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 Back to Back L/C
Features/Norms:
▪ Back-to Back L/C is opened against Export L/C or Sales contract.
▪ Back-to-Back L/C value is determined on FOB value of Export L/C
or sales contract complying the prescribed percentage of Import
Policy Order.
▪ Pre-shipment finance (such as PC) is allowed only on receipt of
raw materials at the factory premises of the customer. Pre-
shipment finance and Back-to-Back L/C liability altogether will not
exceed 90% FOB value of the export L/C. PC liability shall be
adjusted upon negotiation/ repatriation of the corresponding
export bill.
▪ No accepted bill drawn under Back-to-Back L/C shall be kept
overdue beyond its due date of payment as per acceptance
communicated by the Bank.

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 Back to Back L/C
Features/Norms:
▪ Pricing mode: Commission usually on quarterly basis.
▪ Primary security: Lien on Export L/C.
▪ While allowing Back to Back L/Cs and pre-shipment finance on
account of export oriented industries operating under Bonded
Warehouse system, the following norms to be followed:
▪ Branches will ensure the compliance issues of the 100% export
oriented RMG customers.
▪ Export L/C must be examined carefully to ascertain its
genuineness and important points i.e. shipment validity, credit
validity, payment/availability clause, reimbursement clause etc. to
be noted-down to ensure that nothing is adverse to execute the
export order and to receive the payment

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PACKING CREDIT
PC stands for (Export) Packing Credit. It is a short term
facility allowed to customers against export L/C and/or
firm contract for processing/packing/shipping of goods
to be exported. It must be adjusted from proceeds of the
relevant exports.

Features/Norms:
▪ This is a mode in export finance.
▪ All specific PCs and each PC created under a revolving
limit are demand loan by nature.
EXPORT CASH CREDIT (ECC)
ECC stands for Export Cash Credit. ECC is essentially a
short term credit and allowed to supplement requirement
of finance of an exporter to meet genuine costs and
expenses related to the exportable commodity. It must be
adjusted from proceeds of the relevant exports.
EXPORT CASH CREDIT

Features/Norms:
▪ This is a mode of export finance.
▪ All specific ECC and each ECC created under a revolving
limit are demand loan by nature.
▪ ECC amount should be determined on the basis of
export L/C value. Total finance against an export L/C
should not exceed 90% of the FOB value.
▪ The advances must be liquidated out of export
proceeds within 180 days.
▪ Pricing mode: Interest.
▪ Primary security: Export L/C/firm Contract.
Post- shipment Finance
WHO IS ELIGIBLE
✓ Merchant/Manufacturer exporters
✓ Export /Trading Houses
✓ Manufacturer supplying goods to EPZ or Dim
Exporter

BASIS

PURPOSE
TYPES OF POST SHIPMENT FINANCE

1) Foreign Documentary Bills Purchase (FDBP).

2) Inland Documentary Bill Purchase (IDBP)

3) Purchase/Discounting Export Bills (Foreign, FBP).

4) Purchase/Discounting Export Bills (Local, IBP).

5) Advance Against Acceptance (AAA).

6) Advance Against Export Incentives

Foreign Documentary Bills Purchase (FDBP)

FDBP stands for 'Foreign Documentary Bills Purchase'.

This facility is provided to negotiate (purchase) Foreign
Documentary bills/documents submitted by the exporter
on export made against export L/C denominated in
Foreign Currency.

Features/Norms:
▪ This is a demand loan.
▪ This is a mode of export finance.
▪ All specific FDBP and each FDBP created under a
revolving limit are demand loan by nature.
 Foreign Documentary Bills Purchase (FDBP)

Features/Norms:
▪ The documents/bills have to be in order as per export L/C terms.
▪ Cash drawing allowed under FDBP after adjustment of BTB L/C, PC,
and other liabilities associated to the particular export.

▪ Usually has no fixed tenure but maximum tenure may be allowed is

21 days for sight L/C and as per stipulated usance period for
usance (DP) L/C.
▪ Pricing mode: In case of Sight L/C, interest not applicable for 21
days and in case of usance (DP) L/C, interest not applicable for the
usance/deferral period. Usually bank earns from exchange rate
difference. But in case of overdue, interest will be charged in
commercial rate.
▪ Primary security: In order L/C documents/bills.
 Inland Documentary Bills Purchase (IDBP)

IDBP stands for 'Inland Documentary Bill Purchase'. This facility is

provided to purchase/negotiate documents/ bills (duly accepted by
issuing Bank) submitted by the exporter/supplier on (deemed)
export/supply made to local export oriented industries against inland
L/C (supported by export L/C or export sales contract) usually
denominated in Foreign Currency.

Features/Norms:
▪ This is a demand loan.
▪ This is usually a mode of (deemed) export finance.
▪ The acceptance must be communicated by the accepting Bank
through SWIFT massage under valid code upon request of the
purchasing Bank.
 Inland Documentary Bills Purchase (IDBP)

Features/Norms:
▪ A customer may be allowed IDBP maximum up to 90% of accepted
value of confirmed acceptance.
▪ The tenure of loan is as per the maturity date of the confirmed
acceptance.
▪ Liability is adjusted from the proceeds of the Bill. However, usually
a General Letter of indemnity is obtained from the beneficiary
(exporter/supplier) to the effect that if the proceeds against any
bill is not received in due time, the bill/bills will be adjusted from
the beneficiary's own source.
▪ Pricing mode: Interest.
▪ Primary security: Confirmed acceptance and confirmed inland
documentary bills.
 Purchase/Discounting Export Bills (Foreign, FBP)

FBP stands for ‘Foreign Bills Purchase'. Payment made to a

customer through purchase of Foreign Currency Drafts,
subject to obtaining clearance from the corresponding bank

Features/Norms:
▪ It is demand loan by nature.
▪ The Cheques/Drafts have to be in order.
▪ FBP is allowed to meet short term obligations of Bank's
existing tested and trusted customers.
▪ Usual amount of FBP is up to 90% of the Drafts value.
▪ Tenure depends on the collection period of the Drafts.
 Purchase/Discounting Export Bills (Foreign, FBP)

Features/Norms:
▪ Liability is adjusted from the proceeds of the
Cheques/Drafts.
▪ Pricing mode: Interest.
▪ Primary security: Foreign Currency Cheques/Drafts.
However, a General Letter of indemnity on Tk. 300 non-
judicial stamp is obtained from the drawee to the effect
that if the proceeds against any Cheques/Drafts is not
received in due time, the liability will be adjusted from
the drawee's own source and the customer will
compensate the bank if any claim raised in future
against the bank.
 Purchase/Discounting Export Bills (Local, IBP)

IBP stands for ‘Inland Bills Purchase’. Payment made to a

customer through purchase of Govt. Cheques/ Payment
Orders/ Draft issued by scheduled banks(s) and bills.

Features/Norms:
▪ It is a demand loan by nature.
▪ The Cheques/PO/Drafts shall have to be in order in all
respects.
▪ IBP is allowed to meet short term obligations of Bank's
existing tested and trusted non-export customers.
▪ Usual amount of IBP is upto 80% of the Cheques/PO
/Drafts value.
 Purchase/Discounting Export Bills (Local, IBP)

Features/Norms:
▪ Pricing mode: Interest.
▪ Primary security: Local Currency Cheques/PO/Drafts.
However, a General Letter of indemnity on Tk. 300 non-
judicial stamp is obtained from the drawee to the effect
that if the proceeds against any Cheques/PO/Drafts is
not received in due time, the liability will be adjusted
from the drawee’s own source.
Advance against bills for collection

Banks generally accept export bills for collection of

proceeds when they are not drawn under a L/C or when the
documents, even through drawn against an L/C contain
some discrepancies. Bills drawn under L/C, without any
discrepancy in the documents, are generally negotiated by
the bank and the exporter gets the money from the bank
immediately. However, if the bill is not eligible for
negotiation, he may obtain advance from the banks against
the security of export bills. Banks may give advance ranging
from 50 to 80 percent of the document’s value. In addition
to the export bills, banks may ask for collateral security like
a guarantee by a third party and equitable/registered
mortgage of property
Advance Against Export Incentives

Cash advances are extended against export incentives and

are approved after the goods are shipped. Funds are availed
before shipment if the value of materials that need to be
produced exceeds the free onboarding limit. Such advances
are usually repaid by negotiating export bills and receipts of
export invoices.
IMPORT SERVICE &
FINANCE
TYPES OF IMPORT SERVICES

Documentary Credit :
1. Issuance of Documentary Credit (Local &
Foreign) Sight/DP/UPAS.
2. Add Confirmation through Foreign
Correspondent Banks.
3. Negotiation/ Discounting through Foreign
Correspondent Banks.
4. Issuance of Shipping Guarantee.
Documentary Collection Services :
1. Documents Against Payment (D/P).
Documentary Credit (L/C) SERVICES

This is an obligation to the exporter’s bank the importer for import

of any permissible item from both local & foreign sources. Inland
L/C shall be allowed for manufacturing unit at sight basis only.
The AD branches are allowed to operate the L/C business.

Features/Norms:
▪ L/C governed by UCPDC-600.
▪ An L/C transaction is guided by Foreign Exchange Guidelines
of Central Bank, Foreign Exchange Regulation (FER) and
Import Policy.
▪ Bank is obliged to pay the beneficiary on complied presentation
of documents or upon production of stipulated documents.
Documentary Credit (L/C) SERVICES

Features/Norms:
▪ L/Cs are of different types as under:
a) Sight L/C:
When payment against the L/C is made on sight of the shipping
documents/bill.
Pricing mode: Commission usually on quarterly basis.
Primary Security: L/C Margin, L/C related shipping documents
b) Usance or Deferred Payment (DP) L/C:
When Bank gives acceptance for payment at a pre-agreed later time
upon sight of the shipping documents/bill.
Pricing mode: Commission usually on quarterly basis.
Primary Security: L/C Margin, L/C related shipping documents and
acceptance.
.
Documentary Credit (L/C) SERVICES

Features/Norms:
▪ L/Cs are of different types as under:
c) UPAS L/C (Usance Payable at Sight):
It is actually the combination between Sight L/C and Usance L/C.
Simply saying, UPAS is an Usance L/C that is payable sight basis to
the seller (beneficiary), while the payment by the applicant (buyer) to
the issuing bank will made at the end of usance term.

Pricing mode: Commission usually on quarterly basis. Interest shall be

realized for the deferred period as per regulation of Bangladesh bank

Primary Security: L/C Margin, L/C related shipping documents and

acceptance.
Documentary Credit (L/C) SERVICES

Features/Norms:
▪ L/Cs are of different types as under:
d. Stand By letter of Credit:

A standby letter of credit (SLOC) is a guarantee of payment issued by a

bank on behalf of a client that is used as "payment of last resort" should the
client fail to fulfill a contractual commitment with a third party. Standby
letters of credit are created as a sign of good faith in business transactions
and are proof of a buyer's credit quality and repayment abilities. The bank
issuing the SLOC performs brief underwriting duties to ensure the credit
quality of the party seeking the letter of credit, then sends notification to the
bank of the party requesting the letter of credit (typically a seller or creditor)
e. Back to Back (BTB) L/C:

The BTB L/C is opened under the umbrella of a Master L/C or sales
contract in favor of beneficiary. Usually, BTB L/Cs are opened to mobilize
export inputs. FDF L/C may also be allowed to the eligible customer to
import/ procure raw materials of export materials of export.
TYPES OF POST IMPORT FINANCING

Post-Import Finance :
1) Loan against Trust Receipt.(LTR)

2) Loan against Imported Merchandise.(LIM)

3) Time Loan.

4) Over Draft (Export)

5) Term Loan (BDT & Foreign Currency)

 Loan against Trust Receipt.(LTR)

LTR stands for ‘Loan against Trust Receipt'. This facility

allowed for retirement of shipping documents (so that the
importer can release the goods imported through L/C) by
adjustment of PAD liability, is known as LTR. LTR is allowed
against import of trading items/ industrial raw materials. In
no cases, LTR will be allowed against import of capital
machinery & other fixed assets for non-trading purpose.
The facility is allowed on trust with the arrangement that
sale proceeds (of the goods) will be deposited to liquidate
the loan account within the stipulated time
 Loan against Trust Receipt.(LTR)

Features/Norms:
▪ This is a demand loan.
▪ This is a post-import finance.
▪ Usually allowed to retire shipping documents of L/C.
▪ Usually LTR amount is less than or equals the PAD liability.
▪ Importer controls/possesses the imported goods.
▪ Usually has the tenure of 30, 60, 90, 120, or 180 days based on
the nature/ marketability/ perishability of the goods or as per
Bangladesh Bank guidelines/directives.
▪ Drawing is allowed once only, no further drawing is allowed.
Borrower has option to adjust the loan within the period of LTR
shortly.
▪ Pricing mode: Interest.
▪ Primary security: Hypothecation of imported goods.
 Loan against Imported Merchandise.(LIM)

LIM is the short term loan provided by the bank to the

importer against the pledge of imported goods. It is used as
security, if the importer fails to retire the bill within the
stipulated time. Commonly, LIM is provided to that
importer who has fund constraint to retire the bill as well as
clear the goods from the port authority. The fund is
provided to clear the imported merchandise from the port,
i.e. The fund is provided to release the goods from the
Customs Authority.
How does LIM work?
When the imported merchandise are released from the
customs authority, the possession of the goods remains
with the Bank i.e. Under bank’s lock & key.
Time Loan

This is specific purpose oriented loan of specific tenor. This

facility is allowed favoring a customer usually for the
following reasons:
▪ To meet emergency/seasonal fund requirement in the business.
▪ In some forced circumstances such as encashment of bank
guarantee, against letter of credit and other commitment of the
bank where customer fails to build up fund to honor the same.
▪ As a post import facility against sight L/C (local)/ deferred
L/C(foreign).
▪ Against cash incentive claim of export oriented company as per
prevailing norms of Bangladesh Bank.
▪ For payment of duty, tax, vat against import business.
Features/Norms
▪ All specific Time Loan and each Time Loan under a revolving limit
are demand loan by nature.
Time Loan (Features/Norms)

▪ Time Loan is a single time disbursement loan with specific purpose

and validity.
▪ Generally, the loan is allowed for short period. But maximum
validity can be 360 days depending on the purpose of the loan.
▪ It is adjusted though crediting sales proceeds of the respective
goods/ cash incentive received from Bangladesh bank/ from own
source of the customer.
▪ If a customer is allowed Time Loan facility under forced situation,
other approved credit limit will be suspended and case to case
approval from Head Office to be obtained for allowing any other
facility till full adjustment of the forced loan liability. After
adjustment of the forced loan liability, the approved limit will be
revived after informing Head Office.
▪ Pricing mode: Interest.
▪ Primary security: Hypothecation of stock in trade, work in process,
finished goods
OD(Export)

OD (Export) stands for ‘Over Draft (Export)’. This facility is

allowed for making import payments under BTB L/C in foreign
currency against export L/C, where the export proceeds do not
materialize before the due date of import payments. This facility may
be also allowed for making payment of overdue accepted bills liability
due to stock lot.

Features/Norms:
▪ It is a demand loan by nature.
▪ This is a forced liability.
▪ OD (Export) is allowed to meet import payments under BTB L/C
obligations. Thus the amount equals the import obligations.
▪ Tenure depends on possible date of export proceeds realization or
proceeds received from sales of export lot in local market/ foreign
market.
 OD(Export)

Features/Norms:
▪ Liability is adjusted from the export proceeds. However, in case of
failure, the exporter pays from their own sources.
▪ If a customer is allowed OD (export) facility, approved regular limit
will be suspended and case to case approval from Head Office to be
obtain for any facility till full adjustment of the forced loan liability.
▪ Pricing mode: Interest.
▪ Primary security: Export L/C documents/bills.
Term Loan

This is a mode of term financing for acquisition of capital machinery

and equipment's or other assets such as consumer durables and
vehicles or for specified define purpose. The customer is entitled to
use the asset at his own risk & responsibility throughout the loan
tenure

Features/Norms:
▪ It is a term loan.
▪ A down payment or margin from the customer is required.
▪ Liability is adjusted through deposit of Installments periodically.
▪ Pricing mode: Interest.
▪ Primary security: Hypothecation of the asset.
LETTER OF GUARANTEES
Bank Guarantee (BG)

A bank guarantee is an unconditional undertaking of the bank on

account of its customer in favour of the beneficiary to pay a specified
amount of money if the customer (on account of which guarantee is
issued) fails to fulfill the contractual obligations.

Features/Norms:
▪ The guarantee is unconditional and irrevocable.
▪ Bank is obliged to pay the beneficiary upon lodgment of claim by
the beneficiary.
 Bank Guarantee (BG)
Guarantee are of different types:

✓ Bid Bond (BB):This guarantee is issued on behalf of a bidder/contractor

(customer) to participate in a tender favouring tender inviting authority. If
the customer becomes the successful bidder, the work/supply awarding
authority asks for submission of Performance Guarantee and return the
original Bid Bond. If the customer becomes the unsuccessful bidder, the
work/supply awarding authority returns the bid bond immediately after
tender.

✓ Performance Guarantee (PG):This guarantee is issued on account of the

contractor (after being successful bidder) favouring the work/supply order
awarding authority for getting formal work/supply order. Usually its validity
covers the work order validity plus warranty period.
 Bank Guarantee (BG)
Guarantee are of different types:
✓ Advance Payment Guarantee (APG):This guarantee is issued on behalf of
contractor (Customer) favouring the work/supply order awarding authority
against advance made by them. Bank’s liability under APG is liquidated
gradually as per adjustment of the advance with the Work Awarding
Authority.
✓ Retention Money Guarantee/Retention Bond/ Warrantee Guarantee: This
guarantee is issued on behalf of contractor (Customer) favouring the
work/supply order awarding authority after completion of work/supply
order for withdrawing the money retained by them from the bills. Usually
its validity ends with the warranty/defect liability period.
✓ Payment Guarantee/ Suppliers Credit Guarantee: This guarantee is
provided in favor of the suppliers/service providers and on behalf of the
Customers to avail certain amount of supplies/services on credit.
✓ Guarantee against Counter Guarantee of other Bank: This Guarantee is
given by Banks normally on behalf of their customers to another bank. It
happens when, by law, a foreign bank even of good or best standing, is not
authorized to issue guarantee in favor of resident in a specific
Export Development Fund
(EDF)
EXPORT DEVELOPMENT FUND (EDF)

Bangladesh Government with the help of International Development

Association (IDA), World Bank, created the EDF fund in
1989. During creation, the amount was USD 300 million in size as of
now, it is USD 5 billion . The EDF is held and managed by the
Foreign Exchange Reserve and Treasury Management Department
(FRTMD) at the head office of BB.

Objectives: EDF is intended to facilitate access to financing in foreign

exchange for input procurement by manufacturer- exporters.
Authorized Dealer (AD) banks can borrow US Dollar funds from the
EDF of Bangladesh bank to provide to exporters.
The ADs can also lend to some extent from their own foreign
exchange funds for input procurement (up to fifty percent of NFCD
balances, cf., para 20, chapter 13, GFET 2009).
EXPORT DEVELOPMENT FUND (EDF)

Purposes of EDF:
(i) To make the payment of import bill against Back to Back sight
L/Cs. For export of goods Bangladesh Bank arrange pre shipment
credit by EDF.

(ii) To increase the working capacity of Export administration and

financial institutions.

(iii) To encourage the motive of the foreign supplier. Foreign

guarantee conferring institutions and foreign commercial banks who
provide short time loan to the Bangladeshi exporters.
 EXPORT DEVELOPMENT FUND (EDF)

Amounts of EDF loans:

Exporters from six sectors can get loans from the EDF and the central
bank can set a separate credit ceiling for them. For instance, a single
member of the Bangladesh Garment Manufacturers and Exporters
Association is allowed to get $25 million from the fund and a member
of the Bangladesh Knitwear Manufacturers and Exporters Association
$ 25 million.

Procedure of application for EDF loans from BB:

Head offices/principal offices of AD banks shall submit to FRTMD, BB duly filled in
application listing the input procurements financed by them in foreign exchange,
against which they are seeking the EDF loans. The application, signed by two
appropriately empowered officials will also authorize BB to realize the principal and
accrued interest on the EDF loans to the ADs immediately upon expiry of the
permissible periods of the loans by debit to the FC clearing accounts of the
concerned ADs with BB; unless repaid by them earlier. Repayment advices of the
ADs should be accompanied by calculation worksheets.
Loan Against EDF

To boost up the export sector, Bangladesh Bank has formed a fund

which is known as Export Development Fund (EDF). The eligible
customer may allow to get the fund through Commercial Bank as per
prevailing norms of Bangladesh Bank. In case of meeting Sight L/C or
Sight BTB L/C (for importing/ procuring export input) payment at the
premature stage of export, EDF provides the fund in foreign currency.

Features/Norms:
▪ EDF liability has to be repaid within 06 months. In case of overdue,
rate of interest will be charged @ commercial rate of interest.
▪ This facility is allowed to meet Sight L/C or Sight BTB L/C
payment for importing export inputs when export payment will be
due later.
Loan Against EDF

Features/Norms:
▪ Liability is adjusted from the export proceeds within 06 months.
However, in case of failure, the loan has to be adjusted by creating
SOD (Export) facility.

▪ Pricing mode: Interest

▪ Primary security: Deemed export L/C, Export L/C documents/bills.

▪ All specific loans against EDF and each loan against EDF created
under a revolving limit are demand loan by nature.
Off-Shore Banking
Off-shore Banking : Definition as per BB

"Offshore Banking" shall refer to the particular conduct of banking

operations in foreign currencies conditionally approved by Bangladesh
Bank;

“Offshore Banking Division” shall refer to the business management

unit of a bank that controls and supervises the offshore banking
operations; and

"Offshore Banking Unit (OBU)" shall refer to a specific business unit

in the form of distinct branch, booth or desk of a branch of a bank that
is duly approved by Bangladesh Bank to carry out the offshore
banking
Offshore banking Limitation on activities

Products and services are offered by OBUs :

a) Foreign Currency Deposit Account for Non-residents.

b) Full Export-Import services to Type-A industrial units in Export

Processing Zones (EPZ).

c) Usance Payable At Sight (UPAS) Documentary Credit.

d) Short Term Foreign Currency Loan to ADs for purchase of Export

Bills in Foreign Currency.

e) Foreign Currency Term Loan to eligible industrial units.

Thank
You ?