What are the Loan Products for Export financing ?

Answer:

A) BTB L/C: It may be foreign or local L/C

Conditions to be followed:

       i)      Total finance including PC will not exceed 90.00%. But in case of 100% value addition (if total raw materials procured from local origin), total finance may be upto 100% if required.

    ii)      Expiry of Local BTB L/C will be 30 days ahead of expiry of Export L/C to ensure timely shipment.

  iii)      Expiry of Foreign BTB L/C will be 30 days ahead of expiry of Export L/C to ensure timely shipment

B) EDF (Export Development Fund) L/C:

It is also a Back to Back L/C opened at sight basis against Export L/C. Payment at maturity is made primarily by the L/C issuing bank. And then, it is reimbursed by Bangladesh Bank upon submission of documents. It facilitates the exporter to procure goods from overseas sources at reduced price as payment is made at sight basis.

C) Accepted Bills for Payment (ABP):

Within the stipulated period, the beneficiary/supplier (if local, they are called “Deemed Exporter”) of the above  BTB L/C submit shipping documents as per terms of BTB L/c to the counter of BTB L/c issuing Bank. The issuing bank gives acceptance to the documents if it is found in order as per stipulated terms and created a contingent liability giving an specific payment maturity called Accepted Bills for Payment (ABP). 

C) Packing Credit (PC):

After making the exportable goods, for payment of factory overhead expenditures, salary, wages, procurement of Packing Materials to make shipment viable, the banks usually extends a credit to the exporters namely Packing Credit (PC) against and specific Export L/C and disburse @ 10-15% of ABP / BTB L/C figure @7.00% p.a. rate of interest. 

D) IDBP/IDBC (Inland Documentary Bills Purchase/for Collection)/:

Upon completion of shipment, Local supplier (beneficiary) of the above mentioned BTB L/C submit shipping documents to its negotiating bank and negotiating bank then sends it to L/C issuing Bank upon scrutiny to give acceptance. The issuing bank check the said documents  as per terms of L/C, and provide acceptance if all documents are in order. Then the negotiating Bank may purchase the same accepted export documents (deemed export) and allow disbursement of fund to the supplier/beneficiary keeping certain margin. It is called IDBP. Upon acceptance, if the bank send the bills for collection from the L/C issuing Bank only (no finance), it is IDBC. Upon realization of proceeds at maturity, relevant IDBP is adjusted.

E) FDBP/FDBC (Foreign Documentary Bill Purchase/for Collection):

Upon completion of shipment, the exporters (beneficiary) submit shipping documents to its negotiating banks and negotiating bank then sends it to L/C issuing Bank (Buyers bank) to give acceptance. After due acceptance by the Buyers Bank, the negotiating Bank may purchase the same accepted export documents (direct export) and allow disbursement of fund to the supplier/beneficiary keeping certain margin. It is called FDBP. The bank may send the bills for collection only without financing, then it will be FDBC. Upon realization of proceeds at maturity, relevant FDBP is adjusted.