Export Procedure

Meaning and Scope of Export

Export refers to the outflow of goods and/or services produced in one country and purchased by individuals, firms or governments of another country. Exports play a vital role in economic growth by earning foreign exchange, increasing employment and improving industrial capacity.

Exports may be conducted with or without Letters of Credit (LCs), depending on the agreement between buyer and seller, but in all cases they must follow the legal and procedural framework set by regulatory authorities.

Legal Framework Governing Export Trade

Import and Export Control Act, 1950

The import and export trade is regulated under the Import and Export Control Act, 1950, which governs exporter eligibility, licensing and compliance requirements. All exports must comply with national trade, customs and foreign exchange regulations.

Registration of Exporters

Export Registration Certificate (ERC)

Before engaging in export activities, an intending exporter must:

• Register with the Chief Controller of Imports and Exports (CCI&E)
• Obtain an Export Registration Certificate (ERC)

The ERC number must be quoted on all export‑related documents and correspondence, including shipping documents and bank submissions. Without ERC registration, an exporter cannot legally operate.

Securing Export Orders

Market Identification and Buyer Contact

Exporters may secure orders using several channels, such as:

• Local Chambers of Commerce
• Export Promotion Bureau (EPB)
• Bangladesh missions abroad
• Direct communication with foreign buyers via letters, emails or other correspondence

Once price, quality, delivery terms and payment conditions are agreed, the buyer issues a formal sales contract or Letter of Credit.

Receipt of Letter of Credit or Export Contract

Letter of Credit or Sales Contract

After finalizing commercial terms, exporters receive a Letter of Credit (LC) or contract from the foreign buyer. The LC specifies:

• Name of issuing bank
• Beneficiary
• Goods description
• Shipment deadline
• Required documents
• Payment terms

Careful review of LC terms is essential before proceeding with production or shipment.

Procurement, Production and Shipment of Goods

Manufacturing and Sourcing

After receiving the LC or contract, the exporter:

• Procures raw materials
• Manufactures or sources the contracted goods
• Prepares the goods according to buyer specifications

Shipment of Goods

Goods are shipped within the specified period. Any delay or deviation from LC terms may result in refusal of payment.

Preparation and Procurement of Export Documents

Documents Prepared by the Exporter

Exporters must prepare key commercial documents, including:

• Bill of Exchange
• Commercial Invoice
• Beneficiary’s Certificate

Documents Procured from Third Parties

Additional documents are collected from authorized entities, such as:

• Transport documents (Bill of Lading or Air Waybill)
• Certificate of Origin
• Insurance Policy or Certificate
• Inspection Certificate (if required by LC)

Compliance with LC terms is mandatory for all documents.

Submission of Documents to Bank for Negotiation

Once documentation is complete, the exporter submits all documents to the bank for negotiation or payment. The bank examines the documents strictly against LC terms and international banking rules.

Negotiation of Export Documents

Definition of Negotiation under UCP 600

Under UCP 600, negotiation means the purchase by a nominated bank of drafts and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary.

Post‑Shipment Export Financing

Negotiation of export documents is considered post‑shipment finance, enabling exporters to meet cash flow requirements between shipment and receipt of payment from the issuing bank.

Complying Presentation and Document Scrutiny

Meaning of Complying Presentation

A complying presentation means that documents:

• Fully comply with LC terms
• Follow UCP 600 provisions
• Conform to International Standard Banking Practice (ISBP)

Common Discrepancies in Export Documents

Bill of Exchange Discrepancies

Common discrepancies include:

• Bill drawn on incorrect party
• Missing LC reference
• Incorrect tenor
• Mismatch in amount (words vs figures)
• Absence of exporter’s signature

Commercial Invoice Discrepancies

Typical issues include:

• Incorrect goods description
• Value mismatches
• Unauthorized issuer

Transport and Insurance Document Discrepancies

Discrepancies may arise due to:

• Incorrect vessel or shipment details
• Missing endorsements
• Improper coverage or dates

Handling of Discrepant Documents

Causes of Discrepancies

Discrepancies often occur because exporters do not fully understand LC terms or fail to consult banks before shipment.

Options for Handling Discrepant Documents

Correction of Documents

If time permits, exporters may correct documents or submit fresh ones. Corrections must be properly authenticated by the issuing authority.

Obtaining Issuing Bank’s Approval

The negotiating bank may:

• Inform the issuing bank about discrepancies
• Seek permission to pay despite discrepancies

If approval is received through authenticated communication, payment may proceed.

Sending Documents on Collection Basis

Documents may be sent with instructions to release against payment upon acceptance by the importer.

Payment under Indemnity

Where permitted by LC terms, banks may make payment under reserve against exporter indemnity, considering past performance and risk exposure.

Realization of Export Proceeds

Credit of Export Proceeds

After negotiation or dispatch of documents, the negotiating bank requests the issuing bank to credit the export proceeds to its Nostro account.

Local Settlement

Once funds are received, the negotiating bank credits the exporter by debiting the head office account.

Non‑Realization of Export Proceeds

Four‑Month Timeframe

Export proceeds must be realized within four months from the date of shipment. Failure to do so must be reported to the central bank as per foreign exchange guidelines.

Dispute Settlement in International Trade

Methods of Dispute Resolution

Disputes arising from export transactions may be settled through:

• Amicable negotiations
• International Chamber of Commerce (ICC) arbitration
• Legal proceedings

Choice of dispute resolution depends on contract terms and jurisdiction clauses.

Export Without Letter of Credit

Although Letters of Credit are the safest method, exports may occur without LC under:

• Advance payment
• Open account
• Documentary collection

Such transactions carry higher risk and require careful evaluation by exporters and banks.

Importance of Proper Export Procedures

Effective export procedures:

• Ensure timely payments
• Minimize disputes and discrepancies
• Enhance exporter credibility
• Strengthen banking and trade relationships

A thorough understanding of export processes is essential for sustainable participation in global trade.