CHAPTER- 4
SUMMARY OF FINDINGS
Part 01: Foreign Exchange
Division
Part: 01
Foreign Exchange Department
4.1 Introduction:
H.E. Evitt defined “Foreign Exchange” as the means and methods by which rights to wealth expressed in terms of the currency of one country are converted into rights to wealth in terms of the currency of another country.
Foreign Exchange Department is international department of the bank.
It deals globally and facilitates international trade through its various modes of services. It bridges between importers and exporters. Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers. If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign country. This department mainly deals with foreign currency. This is why this department is called foreign exchange department.
Some national and international laws regulate functions of this department. Among these, Foreign Exchange Act, 1947 is for dealing in foreign exchange business, and Import and Export Control Act, 1910 is for Documentary Credits. Governments’ Import &Export policy is another important factor for import and export operation of banks.
DBBL, Mohakhali Branch foreign exchange department has three sub-sections. One is foreign remittance section, another is import section and the third one is export section. An AVP is the in-charge of the Foreign Exchange Department of this branch.
4.2 Foreign Trade:
Foreign trade can be easily defined as a business activity, which crosses national boundaries. These may be between parties or government ones. Trade among nations is a common occurrence and normally benefits both the exporter and importer. In many countries, international trade accounts for more than 20% of their national incomes.
Foreign trade can usually be justified on the principle of comparative advantage. According to this economic principle, it is economically profitable for the country to specialize in the production of that commodity in which the producer country has the grater comparative advantage and to allow the other country to produce that commodity in which it has the lesser comparative advantage. It includes the spectrum of goods, services, investment, technology transfer etc. this trade among various countries calls for lose linkage between the parties dealing in trade. The banks, which provide such transactions, are referred to as rendering international banking operations. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller. And this flow of goods and payment are done through Letter of Credit.
4.3 Letter of Credit:
Letter of credit (L/C) can be defined as a “Credit Contract” whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some agreed conditions. Since the agreed conditions include, amongst other things, the presentation of some specified documents, the letter of credit is called Documentary Letter of Credit. The Uniform Customs & Practices for Documentary Credit (UCPDC) published by international Chamber of Commerce (1993) Revision; Publication No. 100 defines Documentary Credit:
Any arrangement however named or described whereby a bank (the “issuing bank”) acting at the request and on the instructions of a customer (the “Applicant”) or on its own behalf,
1. is to make a payment to or to the order of a third party(the beneficiary) or is to accept and pay bills of exchange(Drafts)drawn by the beneficiary, or
2. authorizes another bank to effect such payment or to accept and pay such bills of exchange (Drafts)
3. Authorizes another bank to negotiate against stipulated documents provide that terms and conditions are complied with.
Next...
কোন মন্তব্য নেই:
একটি মন্তব্য পোস্ট করুন