Cautionary Notice (Regarding Online Forex Trading / Dealing) Disclosures on Risk Based Capital (Basel-II)
Admission circular of EXIM Bank Agricultural University Bangladesh

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Basel –II Market Disclosure
Import Finance
Import financing basically refer to post import financing. LC is only pre import services. There are several modes of import financing and they are:
Murabaha Import Bills (MIB)
Murabaha Trust Receipt (MTR)
Murabaha Post Import (MPI)
Izara Bill Baia (IBB) etc.
Letter of Credit:
An importer is required to open a Letter of credit (L/C) by way of applying to bank in the prescribed format widely known as L/C Application Form and this form is also an agreement between the bank the importer for establishment of an L/C with a view to import desired goods. Before opening of L/C an importer is required to fulfill certain terms and condition set by the bank as per law of the land. After fulfillment of all the requisites, bank establishes a L/C for importing goods as per requirement of importer described in Pro-forma Invoice or Indent.

In the year 2010 bank handled BDT 129.57 billion (equivalent USD 1.85 billion) against import business through 39,855 Letter of Credits which is 54.41% higher than the previous year.
Murabaha Import Bills (MIB):
When a L/C is established bank enters into a commitment of making payment upon submission of credit conform shipping documents towards the counter of L/C issuing Bank.

When such documents received by the issuing bank, it is the duty of the issuing bank to carefully scrutinize/examine the shipping documents whether all terms and conditions of L/C are complied with according to the law of the land as well as international law. If the documents are in order the bank will lodge and retire the documents and the process is done in by creating Murabaha Import Bill under intimation to the importer. Subsequently bill amounts to be reimburse to the beneficiary through negotiating bank as per LC term.
Murabaha Trust Receipt (MTR):
This is one of the modes of post import finance where an importer can’t take delivery of shipping documents by cash payment to release goods from port. Letter of Trust Receipt is a document dully stamped and signed in bank’s prescribed format by the importer before getting delivery of shipping documents. In Trust Receipt the importer specifies the goods and agrees that he is holding the goods not as owner but as an agent for the bank until the goods are sold or used for the express purpose for which they were released to them. Thus, the bank continues to have the rights of pledge. In getting such facility, the importer has to offer sufficient tangible securities (most often cheque is taken) accepted by the bank covering the entire amount of investment.

i. Verify the sanction limit
ii. Office note
iii. Document Endorse favoring the Importer
Murabaha Post Import: (MPI)
When the imported goods are cleared by the bank due to fund crisis or bank may also clear the goods from the port due to non-retirement of import documents by the importer to avoid further financial loss on the part of the bank, the facility is provided to importer by the bank as per arrangement or on force situation. In this cases bank may charges further margin from the importer in addition to the L/C margin to cover custom duty, VAT, sales Tax etc. or these duties are also be paid by the bank.

In both cases, whether the importer request the bank for clearance of goods fails for retirement of import document, the liabilities under MIB are converted to MPI except for the profit amount. In case of profit element, the unrealized profit in MIB A/C to be carried forward to MPI A/C as charge with a view to avoid compounding as per Shariah.

i. Verify the sanction limit
ii. Office note
iii. Document Endorse favoring the Importer
Izara Bill Baia:
This sort of facility is being provided to the importer for the importation of the capital machinery having the sanction limit set by the Head Office on long term basis due to shortage of fund.

i. Verify the sanction limit
ii. Office note
iii. Document Endorse favoring the Importer

Payment Instruction/Reimbursement Authority issued to Reimbursing Bank.