About Back To Back L/C

The company may open back to back import L/C against export L/C received by export oriented industrial units operating under the bonded warehouse system, subject to observance of domestic value addition requirement prescribed by die Ministry of Commerce from time to time. Further to the relevant general instructions in the foregoing sections of this chapter, the following instructions should be complied with while opening back to back import LCs:Only recognized export oriented industrial units operating under bonded warehouse system will be allowed the back to back LC facility. The unit requesting for this facility should possess valid registration with the CCI&E and valid bonded warehouse license. The master export L/C (against which opening of back to back L/C is requested) should have validity period adequate to cover the time needed for importation of inputs, manufacture of merchandise, and shipment to consignee. The back to back L/C value shall not exceed the admissible percentage of net f.o.b value of the relative master export LC (as per prescribed value addition requirement) and the price of goods to be imported must be competitive. For computation of net f.o.b value of a master export LC, the freight charge, insurance cost and commission if payable by the exporter shall be deducted from the LC value. If the freight element is not shown separately, a certificate from the shipping company or the shipping agent should be asked for. )The back to back import LCs shall be opened on upto 180 days usance (DA) basis except in case of those opened against Export Development Fund (EDF) administered by the Department of Banking Operation and Development of Bangladesh Bank in which case the back to back LC will be opened on sight (DP) basis. Interest for the usance period shall not exceed LIBOR, or the equivalent interest rate in the currency of settlement.  All amendments of the master export LC should be noted down carefully to rule out chances of excess obligation under the back to back import LC.  Back to back import LC should not be opened against LCs received for export under Barter/STA, without prior approval of Bangladesh Bank.  The back to back import LC shall contain condition of pre-shipment inspection by an internationally reputed inspection firm regarding quality and quantity of the merchandise. Inland back to back LCs denominated in foreign exchange may be opened in favour of local manufacturer-cum- suppliers of inputs, against master export LCs received by export oriented manufacturing units operating under the bonded warehouse system; upto value limits applicable as per prescribed value addition requirement/ utilisation permit.