One of the important businesses carried out by the commercial bank is

foreign trading. The trade among various countries falls for close link
between the parties dealing in trade. The situation calls for expertise in
the field of foreign operations. The bank, which provides such
operation, is referred to as rending international banking operation.
Mainly transactions with overseas countries in respect of import,
export and foreign remittance dealings under the preview of foreign
exchange department. International trade demands a flow of goods
from seller to buyer and of payment from buyer to seller. In this case
the bank plays a vital role to bridge between the buyer and seller.

Foreign exchange department of DHAKA Bank Limited is one of the

most important departments among all departments. This department
handles various types of activities. Among these main three are as
follows:

a) Import

b) Export and

c) Foreign remittance

3.7 Opening Letter of Credit (L/C)

In global business environment, buyers and sellers are often unknown
to each other. So seller always seek guarantee of payment for his
exported goods. In this situation bank plays an important role. Bank
gives export guarantee that it will pay for the goods on behalf of the
buyer. This guarantee is called Letter of Credit or LC. Thus the
contract between importer and exporter is given a legal shape by the
banker by its Letter of Credit.

3.7.1 Procedure of opening the Letter of Credit

(L/C)
The importer after receiving the proforma invoices from the exporter,
by applying for the issue of documentary credit, the importer requests
his/her bank to make a promise of payment to the supplier. Obviously,
the bank will only agree to this request if it can rely on reimbursement
by the applicant. As a rule accepted as the sole security for the credit
particularly if they are not the shorts of commodity that can be traded
on an organized market, such an agreement would involve the bank in
excessive risk outside its specialized field. The applicant must
therefore have adequate fund in the bank account or a credit line
sufficient to cover the required amount.
Banks deals with documents and not goods. Once the bank has issued
the credit its obligation to pay is conditional on the presentation of the
stipulated documents within the prescribed time limit. The applicant
cannot prevent a bank from honoring the documents on the grounds
that the beneficiary has not delivered goods.
The importer submit the following documents with the
application for opening the L/C

Tax Identification Number (TIN)

Valid trade license
Import registration certificate (IRC)
The bank will supply the following documents before
opening the L/C
LCA form
IMP form
Necessary charger documents for documentation
The above documents/papers must be completed duly signed and filled
by the parties according to the instruction of the concern banker.
After scrutinizing above-mentioned documents carefully, bank delivers
the following forms to be filled up by importer and banker then check it
carefully:
Whether the goods to be imported is permissible or not.
 Whether the goods to be imported is demanding or not.