Off-Shore Banking - Definition Off-Shore means out of the shore or located

or based outside of one’s national boundaries.

Off-shore Banking Unit is a separate part or unit of a Bank whether incorporated in Bangladesh or outside Bangladesh involving foreign currency denominated assets and liabilities that are out of proportion to the current account transactions of their domestic business and shall maintain its own separate books of accounts.

Off-Shore Banking - Characteristics The OBU shall maintain its own separate

accounts relating to off-shore banking business.

The operations of OBU shall be subject to the relevant laws of Bangladesh except those in respect of which exemptions are provided.

There will be no statutory capital and reserve or liquidity requirement for an OBU.

Off-Shore Banking - Characteristics The OBUs shall carry on transactions in freely

convertible foreign currencies.

There would not be any restriction on the physical location of the OBU. These may be located both in the EPZ or any other convenient location outside. Even existing branches of Bank may be allowed to operate such units through a completely separate counter.

Off-Shore Banking - Operation and Activities Deposit/borrow in Foreign Currency: The OBU will be free to accept deposit

from or to borrow from: persons / institutions not resident in

Bangladesh Bangladesh nationals working abroad. Type-A (wholly foreign owned) units in

the Export Processing Zones in Bangladesh

Off-Shore Banking - Operation and Activities

The OBU shall not accept deposits from persons/institutions resident in Bangladesh including Type-B (Joint Venture) and Type-C (wholly local owned) units in the Export Processing Zones in Bangladesh.

Off-Shore Banking - Operation and Activities

Lending in Foreign Currency: persons / institutions not resident in

Bangladesh.

Type-A (wholly foreign owned) units in the Export Processing Zones in Bangladesh.

Off-Shore Banking - Operation and Activities

Banking transactions

Banking transactions with residents of Bangladesh outside EPZ will not be permissible.

There would be no restriction on banking transactions with non residents.

Off-Shore Banking - Operation and Activities

Maintaining Other Bank account in foreign Currency

Local banks may also maintain foreign currency accounts with OBUs like they maintain Nostro accounts with their foreign correspondence.

Off-Shore Banking - Products

or services Products or services:

All type of Deposit/Borrowing/Lending with non-resident individual or company.

All type of foreign trade services.

Off-Shore Banking - Products or services

Off-shore financing through UPAS (Usance Payment at Sight). OBUs may discount/purchase import bills accepted by ADs in Bangladesh.

Lending or Placement to ADs for Export Bill Purchasing/Discounting in Foreign Currency.

Off-Shore Banking – Source of Fund Sources of Fund:

Internal Source:

Deposit collection from non-resident/ A-Type Company.

Borrowing from Head Office.

Off-Shore Banking – Source of Fund External Source:

Credit line with overseas bank /corresponding bank

Term borrowing from overseas bank or International Financial Institution or Inter Bank.

International factoring is as an arrangement between an exporter and a factor whereby

the factor purchases the trade debts from the exporter and provides the services

, such as finance maintainance of sales, , ledger collection of debts protection . against credit risks etc

International Factoring

1 st Stage: The exporter signs a factoring agreement .assigning all trade receivables to an export factor

2 nd Stage: ( The Export factor chooses an FCI factor ) Chain International correspondent to serve as an import factor in the country where goods are to be

. shipped The receivables are then reassigned to .the import factor

3 rd Stage: , At the same time the import factor investigates the credit standing of the buyer of the

’ exporter s goods and establishes lines of. credit This allows the buyer to place an order on

open account terms without opening letter of. credit

International Factoring

4 th Stage: the exporter factor will now advance 80% .upto of the invoice value to the exporter

5 th Stage: , Once the sale has taken place the import factor collects the full invoice value and is

responsible for the swift transmission of funds to the export factor who then pays the outstanding

.balance to the exporter

International Factoring

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