FEPD Circular No. 01: Providing Cash Incentive Against Advanced TT for Textile Goods

Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka. Poush 25, 1420 FEP Circular No.-01 Date: ------------------- January 08, 2014 To: All Approved Dealers in Foreign Exchange Transactions.

Dear Sir,

Regarding: Providing Cash Incentive to the Export-Oriented Domestic Textile Sector Against Advanced Remittance of Export Earnings via TT.

Reference is invited to FEP Circular No. 09 dated 05/03/2001 issued on the subject matter and subsequent FEP Circulars/Letters issued on this matter.

2. In accordance with the decision taken by the Government, cash incentive will be provided against advanced remittance of export earnings via TT for oven, knitting, and terry towel in the export-oriented domestic textile sector, in addition to the existing Documentary Collection, subject to the following conditions:

(a) Under the existing foreign exchange transaction system, an internal back-to-back letter of credit is established for delayed payment against the export credit document obtained for export, and the liability for domestic supply is paid from the returned export value. In the case of advanced export value receipt via TT, it will not be necessary to establish an internal back-to-back letter of credit under the delayed payment system. Therefore, local procurement of materials can be done through site-based internal back-to-back letters of credit, and the said liability can be settled by the direct exporter using the advanced value received. The name of the recipient of the cash incentive must be mentioned in the site-based internal back-to-back letter of credit established for the procurement of materials.

(b) In the case of export against the letter of credit/contract stipulating advanced payment of export value via TT, the approved dealer bank branch must be satisfied regarding the credibility/reliability of the foreign buyer, the accuracy of the price, and the remittance of advanced value for genuine export from Bangladesh, based on the TT message and other documents.

(c) The relevant letter of credit/contract stipulating advanced payment via TT must explicitly mention this. The correct price and quantity of the exported goods and the credibility/reliability of the foreign buyer must be verified by the association concerned of the direct exporter, who is the recipient of the advanced value.

(d) Advanced payment via TT must be made directly through banking channels (excluding exchange houses) by the exporter issuing the export order or the importer, and the source of import-related information must be mentioned in the TT message.

3. The facility discussed above for the payment of cash incentive in the textile sector will apply against the export of goods shipped on the date of issuance of the circular or thereafter.

All existing instructions issued regarding the payment of cash incentive in the textile sector will remain unchanged.

Yours faithfully,

(Md. Zahirul Haque) Deputy General Manager Phone: 9512604