14 December, 2010

Exchange rate and foreign remittance

Exchange rate is hte rate at which a specific currency can be exchanged with a standard foreign currency.
A foreign exchange transaction is either sells or purchase transaction. Therefore, the bank would quote two different rates of exchange.

Buying Rate & Selling rate:
The rate at which the central of any country buys foreign money is called buying rate. On the other hand , the rate bat which the central bank of any country sells foreign money is called selling rate.

Classification of Exchange Rate:
i) Fixed Rate
ii) Floating Rate:-
• Independent Floating
• Managed floating
• Pegging
 • Single currency
• Composite currency : a) SDEBIT & b) Other basket.



Exchange Rate Quotation:-
Exchange rate quoted by the following two ways:-
Direct : If the exchange rate is expressed in variable units of domestic currency for a fixed unit of foreign currency. It is also called pence rate.
Indirect: If the exchange rate is expressed in variable units of foreign currency for a fixed unit of domestic currency. It is also called currency rate.

Foreign Remittance:
Foreign remittance means sale and purchase of foreign currency. Foreign remittance are of two kinds: (i) Inward Remittance & (ii) Outward Remittance.

The term “ Inward remittance” includes not only remittances by TT, MT, Debitaft etc. but also purchase or bills, travelers cheque etc.
On the other hand, remittance from our country to foreign countries is called outward foreign remittance.

The Foreign Remittance department of Export-Import Bank Limited Foreign Exchange Branch is equipped with a number of foreign remittance facilities. Following are the types of foreign remittance facilities offered by Export-Import Bank Limited, Foreign Exchange Branch, Dhaka.

01) Issuance of Foreign Demand Debitaft (F.D.D)
02) Issance of Travellers Cheques (T.C)
03) Endorsement of US $ in Passport
04) Opening of Foreign Account
05) Opening of Student File

Foreign Demand Debitaft (FDD):-
Pubal Bank accepts the charges for TOEFL, SAT, GMAT etc. through Foreign Demand Debitaft. Export-Import Bank opens student files to issue foreign demand Debitaft following the permission of Central Bank. Before issueance of FDD, Export-Import Bank asks the students to fill up the TM Form, which contains the following particulars.

01) Name of the student
02) Full adDebitess of the student
03) Amount of FDD in Foreign Currency
04) Purpose of Remittance
05) AdDebitess of the Institution to which hte FDD will be favored
06) Country of receiving payment
07) Passport No. of the student with date of issue
08) Signature of the student

The TM Form is sent to Central Bank with photocopies of the Passport of the student and the FDD issued.

Issuance of Traveler’s Cheque (TC):-
Export-Import Bank Limited issues only American Express Traveler’s Cheque. For TC, customer has to fill up TM Form. He has to fill up the purchase form. Purchase form has four copies. One copy for American Express Bank, one copy for Export-Import Bank, and two copy for the customer. For TC Export-Import Bank limited charges 1% as commission.

Requirements for purchasing TC:
There are some requirements that are to be fulfilled by the Traveler’s Cheque purchaser.
The requirements are ---
i) Passport holder himself has to be present while issuing Traveler’s Cheque.
ii) The passport must be a valid one.
iii) Air ticket has to be confirmed.

Stemps involved in issue of Traveler’s Cheque:
(i) After verfying all these documents the customer is asked to fill up presCreditibed application form.
(ii) In the application the customer states the amount he is willing to endorsed and it is be verivied that his required amount is written the stipulated.
(iii) Then the customer pays cash or by debiting his account the Traveler’s Cheque is issed.
(iv) Endorsement is given on the passport and on the ticket. Customer fills up the TM Form.
(v) Purchase application form has to be filled up by the purchaser.
(vi) Entry has to be given in the foreign currency register and in the traveler’s cheque register

Endorsement of Cash:-
Cash foreign currency can also be remitted through the endorsement in the passport. In case of endorsing cash on passport, the requirements are requirements are similar to those of Traveser’s Cheque. But an individual person can not take more than $ 1000.00 in cash in a year. Thant’s why, the concerned officer check the last voyage of the purchaser. If he made any voyage and if he purchase dollar at that time, then the officer will the amount and will give the rest to the purchaser.

Export-Import Bank Limited can not endorse more than $ 600.00 as cash at a time. For more than $ 600.00 the customer has to purchase TC. For cash endorsement Export-Import Bank Limited maintains a separate register. For giving cash foreign currency, Export-Import Bank charges Tk150.00 as service charge.

Opening of Foreign Account:-
Export-Import Bank Limited opens foreign account. Foreign account is isued for receiving foreign currency from abroad or for sending the currency to abroad, It can be used in favor of a person or in favor of exporters.

Following papers are required to required to open a foreign account:-
i) Exporters’ foreign currency account opening form (application form, two signature cards duly filled in and signed with authenticated seal and introduction).
ii) Two copies of passport size photographs of each operator attested by Chairman of the company.
iii) Export registration certificate.

Steps involved in issue of Traveler’s Cheque:-
i) After verifying all these documents the customer is asked to fill up presCreditibed application form.
ii) In the application of the customer states the amount he is willing to endorse and it is be verified that his required amount is within the stipulated.
iii) Then the customer pays cash or by debiting his account the Traveler’s Cheque is issued.
iv) Endorsement is given on the passport and on the ticket. Customer fills up the TM Form.
v) Purchase application form has to be filled up by the purchaser.
vi) Entry has to be given in the foreign currency register and in the traveler’s cheque register.

Endorsement of Cash:-
Cash foreign currency can also be remitted through the endorsement in the passport. In case of endorsing cash on passport , the requirements are requirements are similar to those of Traveler’s cheque. But an individual person can not take more than $ 1000.00 in cash in a year. That’s why the concerned officer check the last voyage of the purchaser. If he made any voyage and if he purchase dollar at that time, then the officer will the amount and will give the rest to the purchaser.
Export-Import Bank can not endorse more than $ 600.00 as cash at a time. For more than $ 600.00, the customer has to purchase TC. For cash endorsement Export-Import Bank maintins a separate register. For giving cash foreign currency, Export-Import Bank charges Tk.150.00 as service charge.

Opening of Foreign Account:
Export-Import Bank opens foreign account. Foreign account is used for receiving foreign currency from abroad or for sending the currency to abroad. It can be used in favor of a person or in favor of exporters.
Following papers are required to open a foreign account:-
i) Exporters foreign currency account opening form (application form, two signature cards duly filled in and signed with authenticated seal and introduction).
ii) Two copies of passport size photographs of each operator attested by Chairman of the company.
iii) Export registration certificate.
iv) Attested photocopy of the membership certificate of the concerned association (BGMEA).
v) Export proceed realization certificate—declaration/undertaking regarding the utilization of foreign currency.
vi) Incase of Limited company:
a) Memorandum & Articles of Association of the company.
b) Power of Attorney.
c) Resolution of the Board of Directors.
d) Certificate of Incorporation.
e) Certificate of Commencement of Business.
f) List of Directors.
g) Trade License.

Student File Opening:-
Student can endorse $ 200.00 at a time in his own name. But if the amount exceeds $ 200.00 then the student has to open a student file. For opening a student file, the following documents are required:-
I. Preliminary application and information for admission.
II. Letter of approval of the student by the University.
III. A filled up application form for foreign currency in abroad.
IV. “TransCreditipt given by the Board for S.S.C / H.S.C or equivalent examination.
V. A photocopy of I-7 Visa form.
In case of tuition fees, applicant must send the currency in favor of the institute. He can not take the fees of the institute with him personally. Usually a student has to endorse at least one third of the fees of a year.

ICC Publications related to foreign exchange transactions:
UCPDC:
The elaboration of UCPDC is Uniform Customs and Practice for Documentary Creditedit. The UCPDC is first introduced in 1933. The latest version is UCP-500 published in 1993 by International Chamber of Commerce (ICC). This is not a law but is the collection of rules, which is applicable and accepted in the foreign exchange business as more than law.

The UCPDC has 49 articles. All these articles desCreditibes in detail the functions, responsibility of different banks related to a documentary Creditedit. The UCPDC is the master of laws applied in foreign exchange business and thus is called “ The Bible” in this sector.

URR-525:
ICC uniform rules for bank to bank reimbursement under documentary Creditedit (URR-525) is enforce with effect from July 01, 1996. To meet the need of International standards and uniform practice. ICC banking commission in 1993 establish a working party to Debitaft a suitable framework. The URR-525 is the result of the working party’s effort.

URC-522:
In the course of time, various formulations, expressions and terms have arisen among banks in connection with documentary collection business. In order to ensure uniform interpretations in international trade, the Uniform Rules for Collection – ICC publication no. 522 is enforces as on January 01, 1996.

Incoterms-2000:
Incoterm means commercial terms. These are also known as trade terms, contract terms or sales terms or purchase terms or delivery terms. The purpose of “Incoterms” is to provide a set of international rules for the interpretation of the most commonly used trade terms in international trade or foreign trade. ICC first introduced the incoterms in the year 1936. Now incoterms have been revised by the ICC in 2000 which are known as “ Incoterms-2000”. There are 13 terms including 127 rules divided into four categories 7 four groups.
These are as follows:-

Category
Group
No. of Incoterms
Departure
E
EXW -      Exworks
Main Carriage unpaid
F
FCA -        Free Carrier
FAS -        Free Alongside ship
FOB -        Free on Board
Main Carriage paid
C
CFR -        Cost & Freight
CIF  -        Cost, Insurance & Freight
CPT -        Carriage Paid To
CIP  -        Carriage Insurance Paid To
Arrival
D
DAF -        Delivered at Frontier
DES  -       Delivered Ex Ship
DEQ -        Delivered at quay
DDU -        Delivered duty unpaid
DDP -         Delivered Duty
   Some problems that we have faced on training institute :
01.    The most severe problem seemed to us that a whole variety of issues were covered only within 15 working days.
02.    The examination shoulod be set up after visiting the AD Branches for parctical works.
03.    The library facility of the training institute is not adequately equipped with necessary Books & journal.
04.    Sanitation facility is insufficient.
05.    Residential facility is effective for a better training.
06.    Some of the sessions seemed completely boringdue to some less experienced trainers.
07.    Setting arrangement is not comfortable.

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