What is URC?-What is URR?-What is ACU?-Transportation-Import Finance by Islami Bank? 

• Jul 11, 2020
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What is URC?-What is URR?-What is ACU?-Transportation-Import Finance by Islami Bank?

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What is URC?

URC means Uniform Rules for Collection. Firstly the International Chamber of Commerce (ICC) published URC in 1956 and latestly revised URC, ICC publication No. 522 came into force from 01.1.1996.  

31)Write the number of articles of URC.

(There are 26 (twenty six) articles of URC. The head of the articles are mentioned below: GENERAL PROVISIONS & DEFINITIONS: Article No.

1 : Application of URC – 522 ” ”

2 : Definition of Collection ” ”

3 : Parties to a Collection ” ”

4 : Collection Instruction ” ”

5 : Presentation ” ”

6 : Sight/Acceptance ” ”

7 : Release of Commercial documents ” ”

8 : Creation of documents LIABILITIES & RESPONSIBILITIES: ” ”

9 : Good faith and Reasonable Care ” ”

10 : Documents Vs. Goods/Services/Performances ” ”

11 : Disclaimer for Acts of an Instructed party ” ”

12 : Disclaimer on Documents received ” ”

13 : Disclaimer on Effectiveness of documents ” ”

14 : Disclaimer on delays, Loss in transit and translation ” ”

15 : Force Majeure PAYMENT: ” ”

16 : Payment without delay ” ”

17 : Payment in Local Currency ” ”

18 : Payment in Foreign Currency ” ”

19 : Partial payments INTEREST, CHARGES & EXPENSES: ” ”

20 : Interest ” ”

21 : Charges and Expenses OTHER PROVISIONS: ” ”

22 : Acceptance ” ”

23 : Promissory Notes and other instruments ” ”

24 : Protest ” ”

25 : Case of need ” ”

26 : Advices    

32)What is URR?

Uniform Rules for Reimbursements. In a broader sense URR means Uniform Rules for Bank to Bank Reimbursements under Documentary Credit. The International Chamber of Commerce (ICC) published Uniform Rules for Bank to Bank Reimbursement under Documentary Credit as ICC publication no. 725 in 2008 and came into force on 01.10.2008.  

33)Write the number of articles & names of URR.

There are 17 (seventeen) articles in URR, ICC publication-725. The name of the articles are: GENERAL PROVISIONS AND DEFINITIONS: Article

(i) Application of URR “

(ii) Definition “

(iii) Reimbursement Authorisations Versus Credits LIABILITIES AND RESPONSIBILITIES “

(iv) Honour of a Reimbursement Claim “

(v) Responsibilities of the Issuing Bank FORM AND NOTIFICATION OF AUTHORISATIONS, AMENDMENTS AND CLAIMS “

(vi) Issuance and Receipt of a Reimbursement Authorisation or Reimbursement Amendment “

(vii) Expiry of a Reimbursement Authorisation “

(viii) Amendment or Cancellation of Reimbursement Authorisations “

(ix) Reimbursement Undertakings “

(x) Standards for Reimbursement Claims “

(xi) Processing a Reimbursement Claims “

(xii) Duplications of a Reimbursement Authorisations MISCELLENEOUS PROVISIONS “

(xiii) Foreign Laws and Usages “

(xiv) Disclaimer on the Transmission of Messages “

(xv) Force Majeure “

(xvi) Charges “

(xvii) Interest Claims/Loss of Value.    

34)What is ACU?

ACU means Asian Clearing Union. It was established at the initiative of United Nations ‘Economic and Social Commission for Asia and the Pacific (ESCAP). The Draft agreement, establishing the ACU, was finalized at a meeting at Bangkok in 1973 with the senior Gov’t Officials and Officials of Central Banks and agreement for formulation of ACU was signed (formed) on 09.12.74. The ACU started its function/operation in November, 1975. ACU is the simplest form of payments arrangement whereby the members settle payments for inter regional transactions among the participating Central Banks on a multilateral basis.    

35) Who are the members of ACU?

There are 09 (nine) member countries setting their respective import & export payments through ACU currencies:

(i) India,

(ii) Iran,

(iii) Mayanmar (Burma),

(iv) Sree Lanka,

(v) Nepal,

(vi) Pakistan,

(vii) Bangladesh,

(viii) Bhutan and

(ix) Maldives.  

36) Where the Head quarter of ACU?

The head quarter of Asian Clearing Union situated at Tehran, Iran.  

37) What are the objectives & functions of ACU?

A. To facilitate settlement, on a multilateral basis, of payments for current international transactions;

B. To promote the use of participants’ currencies in current transactions;

C. To promote monetary co-operation among the participants and closer relations among the banking systems so as to expand trade and economic activity among the countries of the ESCAP region;

D. To provide for currency swap arrangement among the participants.  

38) What is the name of the ACU currency?

The name of the ACU currency is Asian Monetary Unit (AMU). The Asian Monetary Unit (AMU) shall be denominated as ‘ACU Dollar’ and ‘ACU Euro’ which shall be equivalent in value to one US Dollar and one Euro respectively. Euro as AMU has introduced from 01.1.2009.  

39) What is Foreign Exchange & Foreign Trade?

As per Foreign Exchange Regulation Act, 1947 ‘Foreign Exchange’ means foreign currency and includes any instrument drawn, accepted, made or issued under clause (13) of article 16 of the Bangladesh Bank order, 1972. Simply, Foreign exchange means the exchange of one currency into another currency. Foreign Trade means imports of merchandises of a country from other countries and also exports of merchandises to other countries under contract.  

41) What are the Foreign Exchange Regulations?

 Foreign Exchange Regulation Act-1947

 Exchange Control Manual “Guide line for foreign exchange transactions” issued by Bangladesh Bank. Vol- 1 & 2.

 Foreign Exchange Circulars issued by Bangladesh Bank.

 Public notices issued by Bangladesh Bank and concerned Ministries.

 Export & Import policy issued by the Controller of Import & Export (CCIE)

 Circulars issued by the Ministry of Commerce.

 Uniform Customs & Practice for Documentary Credit (UCPDC) – 600

 Uniform Rules for Collection (URC) – ICC publication 522

 Uniform Rules for Reimbursement (URR) – ICC publication 725

 International Commercial Terms (INCOTERMS) – ICC publication 2000.  

41 What are the components for operating F.Ex. in Bangladesh?

1. Foreign Exchange Regulation Act, 1947.

2. Guidelines for Foreign Exchange transaction.

3. Import & export policy order.

4. Foreign Exchange circular

5. Public Notice.  

45) What is Balance of Trade and Balance of payment?

Balance of Trade refers to the net difference value of Export and Import of commodities from/into a country in a particular period. Balance of Payment is a statement that contain details of all the international economic transactions both visible and invisible items of a country within a given period of time, usually a year. Here visible items includes export import of commodities/goods and invisible items are shipping, banking, insurance, tourist, gift, interest on investment, technical know how, consultancy etc.    

46) What are the different modes of International Trade payments?

In International trade there are four methods of payment. These are:

a) Cash in Advance

b) Open account

c) Collection &

d) Documentary Credit.   The first three are the traditional trade payment methods, which views the Bank’s role as an agency for transmitting or receiving funds or documents. The ordering of the payment and delivery of goods depends upon the situation and convenience of the buyer and seller.  

a) Cash in Advance: Under this system the buyer puts funds at the disposal of the seller prior to shipment of goods or provision of services. In other words, exporter receive the value of goods/services before shipment through Cheque, Draft or TT or any other mode. This is an advantageous system for the exporter as he can use the fund immediately. But the risk lies to the importer as he cannot receive goods in quantity & quality in time as per contract/agreement. In this system the Credit report of the exporter should be obtained and carefully to be examined before making payment.  

b) Open account: An open account method is an arrangement between buyer (importer) and seller (exporter) whereby the goods delivered before payment is made. Open account thus obviously more advantageous for the importer as he will pay the price of the goods after satisfying the delivery date, quantity & quality. In this system the risk is very much high for the exporter. Thus he will collect credit worthiness of the buyer before agreeing open account business term.  

c) Collection: Collection is a method under which goods are shipped and the Bill of Exchange (Draft) is drawn by the seller on the buyer. The documents are sent to the bank with clear instruction for collection through one of its’ correspondent bank located in the buyers country. The documents are to be delivered only after the payment has been made or Draft is accepted.  

 Documents against Payment (D/P bill) is one of the most widely used method of trade payment. After shipped the goods the seller draw a Sight Bill of Exchange (Draft) on the buyer and the same is presented to the drawee (buyer/importer) alongwith the shipping documents for payment through a Bank in the country of importer. Banks in buyers’ country gives delivery of documents to buyer only against payment. This system is also called ‘Cash against Document’ (CAD) or Sight bill.  

 Documents against Acceptance (D/A bill) is a method where Usance Bill of Exchange is drawn on the buyer by the seller which is presented to the drawee for acceptance by a bank on his own country (Collecting Bank). Drawee accept the Draft and Fix-up a date of payment (date of maturity). The collecting bank holds the accepted draft and release documents to the drawee. The drawee may make payment before the maturity of the draft. On due date the accepted draft is presented to drawee for payment. This bill is also called Usance Bill or Deffered Payment against Acceptance.    

d) Documentary Credit: Documentary Credit is the classic form of international trade payment. This method substantially reduce payment related risk for both exporter and importer. Documentary Credit is a conditional bank undertaking of payment on behalf of the buyer/applicant/importer to the seller/beneficiary/exporter against complying presentation of documents.  

47)What is Transport document?

Goods are carried from the Exporter (seller) to Importer (buyer) through various modes of transport, viz: Truck, Rail, Air, Ship etc. All the documents required for these modes are separately at a glance is called Transport document. Transport documents issued by the freight forwarders. Articles 19-27 of UCPDC-600 clearly mentioned about transport documents of various types and modes.  

48) What are the types of Transport document?

There are different types of transport documents named on the basis of the different modes of shipment. Such as:

(i) Marine/Ocean bill of lading or simply Bill of Lading (BL) in case of goods delivered to a ship for carriage by sea.

(ii) Air transport document/Airway bill (AWB) in case of air shipment of goods.

(iii) Road, Rail or Inland Waterway Transport Document/Truck receipt (TR) in case of goods carried by Truck, Railway Receipt (RR) in case of goods carried by Rail and so on.

(iv) Courier receipt and Postal receipt in case of shipment of goods by courier and by post respectively.  

49) What is multimodal transport document?

As per article-19 of UCPDC-600, when a transport document covering atleast two different modes of transport with transshipment, even if the credit prohibits transshipment, is acceptable from the place of shipment to the place of final destination provided that the entire carriage is covered by one and the same transport document is called multimodal or combined transport document.  

50)What are the contents of Transport document?

The transport document should contain the following information:

1) It must be issued by a named carrier or his agent.

2) Description of goods consistent with that in the credit.

3) Identifying shipping marks.

4) The name of the carrying vessel ( in case of marine B/L) or the intended carrying vessel ( in case of multimodal transport document including sea transport)

5) An indication of dispatch or taking in charge or loading on board as the case may be.

6) An indication of place of such dispatch or taking in charge or loading on board and the place of final destination.

7) The name of shipper, consignee (if not made out ‘to order’) and the name & address of the notify party.

8) Whether freight has been paid or still to be paid. 9) Date of issuing the document 10) The number of originals if issued in more than one original.  

51)Write the modes of Import financing by Islami Bank.

a) Import of goods by Letter of Credit

b) Murabaha Import Bill (MIB

c) Mudaraba Post Import (MPI)

d) Murabaha Trust Receipt (MTR):  

Import of goods by Letter of Credit: A Letter of Credit (L/C) is a conditional undertaking to the exporter (Seller) by a bank on behalf of his customer (Importer/buyer) to pay the bill amount, if all the terms & conditions of the L/C are fulfilled. By issuing a L/C, a bank undertakes the full responsibility of payment, if otherwise in order. Since bank takes the liability of payment against some percentage of margin from the importer, which may be in cash or collateral or both cash & collateral depending upon banker customer relationship – so it is an Import financing.  

Murabaha Import Bill (MIB): Payment made by the bank against lodgement of transport documents of goods imported through L/C is called MIB. It is an interim investment for a maximum period of 30 days connected with import and is generally liquidated against payment usually made by the party for retirement of the documents for release of imported goods from the customs authority. In conventional banking this type of investment is called Payment Against Document (PAD).  

Mudaraba Post Import (MPI): Normally importer pays the duty & sales tax of the imported goods after arrival at the port. Due to shortage of fund or some other reasons, sometimes importer approachs the L/C opener bank to assist him for retirement of the imported goods. In some cases importer do not come forward to retire the goods. In these cases the L/C opener bank themselves arrange to retire the goods by pledge in Godown under bank’s lock & key. This type of payment (forced loan) is called MPI. This is a temporary arrangement for a maximum period of 90 days. Within this time limit, the importer borrower will release the goods at a time or gradually after making payment to the bank. In traditional banking this type of investment is called LIM (Loan against Imported Merchandise) or LAM (Loan against Merchandise)  

Murabaha Trust Receipt (MTR): It is a type of investment allowed by a bank on trust to his experienced, reliable & reputed importer for retirement of shipping documents towards release the imported goods. Under this arrangement the importer borrower will deposit the sale proceeds of imported goods which are under his control at a time or gradually within a maximum period of one year. In traditional banking this type of facility is called Trust Receipt (TR).  

55)What is Indent?

Some Firms or Companies are registered with the Regulatory bodies (CCI & E and Bangladesh Bank) to act as an agent of foreign buyers or sellers. These agents are called Indentor. After negotiation between the agent and the importer, offer on behalf of the exporter (seller) to importer (buyer) issued by Indentor is called Indent. It indicates the specifications, price, quantity, delivery period and other terms of sale of a product.  

56)What is Proforma Invoice?

After negotiation over phone/fax/letter/e-mail or any other mode between exporter and importer, offer directly issued by the exporter to importer is called Proforma Invoice. It includes the specifications of the product, price, quantity, delivery period and other terms of sale of a particular product.  

57)What is Commercial Invoice?

There is no prescribed form of Commercial invoice. Each exporter designs his own Commercial invoice forms. Commercial invoice is a set of five papers or as desired by the importer which should bear the date, full address of exporter (beneficiary) and importer, currency, quantity and amount as per credit, description of the goods, name of the vessel/carrier, port of shipment, port of destination, shipping marks, L/C and Indent or Proforma invoice references, freight, Insurance, origin of goods etc. Normally exporter signed the copies of Commercial invoice. As per Article 18 a(iv) of UCP-600, Commercial invoice need not be signed by the exporter.  

58)What is LIBOR?

LIBOR means London Inter Bank Offered Rate. LIBOR is the base rate of interest by which the Bank fixed its own rate of interest to charge on their lending to other banks for a given period of time.  

59)What is Consular Invoice?

A consular invoice may contain a declaration about the place of origin of the goods. The consul of the importing country then certifies the invoice. The principal function of the consular invoice is to enable the authorities of the importing countries to have an accurate record of the types of merchandise shipped to that country, their quantity, grade and value, both for the purpose of fixing and for assessing import duties and for general statistical purposes. It helps in clearing of the goods through the customs of the importing country without undue delay. Any false declaration in the consular invoice involves heavy penalty.