TFFE 96th Banking Professional Exam: Short Notes

Write short notes on any five of the following.

(a) Bill of Exchange

A Bill of Exchange is a written order made by the drawer. It instructs the drawee to pay a fixed amount of money to the payee. Payment may be made on demand or on a future date.

Parties:

Drawer – Makes and signs the bill.
Drawee – Makes the payment.
Payee – Receives the payment.

(b) Lodgment of Import Bill

Lodgment is the stage after document scrutiny. At this stage, the issuing bank accepts the import documents. The bank pays or commits to pay the exporter. It records the bill in the PAD Register and LC Register. The bank also obtains the importer’s signature on the IMP Form and passes the accounting entries. After lodgment, the importer retires the bill and collects the documents.

(c) Transport Documents in LC

A transport document proves that the goods have been shipped. It is also evidence of the contract of carriage. It normally contains the carrier’s name, shipment date, ports of loading and discharge, description of goods, shipper, consignee and freight details. Banks check these documents carefully to detect discrepancies such as late shipment, wrong port, or missing on-board notation.

(d) Financial Messaging System

A Financial Messaging System is a secure communication network used by banks. It helps banks exchange payment instructions and trade-related messages. SWIFT is the most widely used financial messaging system. It sends secure messages between banks but does not transfer money. The actual fund transfer takes place through correspondent accounts.

(e) Standby Letter of Credit (SBLC)

A Standby Letter of Credit is a bank’s guarantee of payment. It is used only when the applicant fails to fulfil the agreed obligation. Unlike a commercial LC, it works as a backup facility. It is commonly used in open account and documentary collection transactions. Most SBLCs are issued under ISP98 rules.

(f) Balance of Payments (BOP)

Balance of Payments (BOP) is a statement that records all economic transactions between a country and the rest of the world during a specific period. It has three main parts: Current Account, Capital Account, and Financial Account. Bangladesh Bank prepares the BOP. It helps assess the country’s foreign exchange position and reserves.

(g) UPAS L/C

UPAS stands for Usance Payable at Sight. Under this arrangement, the exporter receives payment immediately. The importer pays the bank after the usance period. It gives quick payment to the exporter and deferred payment to the importer. It is widely used as a trade finance facility in Bangladesh.