Trade Mixed-3

What is receivables finance?

A type of loan against inventory
Selling invoices to unlock cash (correct)
A type of distributor finance
A form of trade and supply chain financing

What is factoring?

A type of pre-shipment finance
A form of distributor finance
Selling bills to a third party at a discount (correct)
A type of loan against receivables

What is forfaiting?

Selling future payment obligations without recourse (correct)
A form of pre-shipment finance
A type of distributor finance
A type of loan against inventory

What is a loan or advance against receivables?

Financing against expected repayment from trade receivables (C) Signup and view all the answers

What is distributor finance?

Financing for a distributor to hold goods for resale (C) Signup and view all the answers

What is pre-shipment finance?

Credit extended to exporters prior to shipment of goods (A) Signup and view all the answers

What is the purpose of factoring?

To raise funds by selling bills at a discount (A) Signup and view all the answers

What is the security provided in a loan or advance against inventory?

Inventory held by the distributor (B) Signup and view all the answers

What is the primary function of a standby letter of credit?

To provide a guarantee for the applicant's performance (C) Signup and view all the answers

What is a characteristic of a red clause credit?

It allows pre-shipment advances to be made to the exporter (C) Signup and view all the answers

What is the purpose of a standby letter of credit?

To ensure the performance of the applicant's obligations (D) Signup and view all the answers

What is the risk associated with standby letters of credit?

The risk of unfair calling by the beneficiary (A) Signup and view all the answers

What is required to claim payment under a standby letter of credit?

A sight draft and a statement issued by the beneficiary (C) Signup and view all the answers

What is the role of the Confirming Bank in a red clause credit?

To make advances to the beneficiary before presentation of the documents (D) Signup and view all the answers

What is the purpose of a red clause credit?

To allow pre-shipment advances to be made to the exporter (C) Signup and view all the answers

What can provide protection against unfair calling risks under a standby letter of credit?

Insurance companies (A) Signup and view all the answers

What is required for a commercial invoice in Bangladesh when opening a Letter of Credit?

A signature (C) Signup and view all the answers

What must be received before payment can be made under a back-to-back LC?

Bill of Entry (D) Signup and view all the answers

What is the focus of banks in UCP, according to the text?

Documents (A) Signup and view all the answers

What is the relationship between the issuance date of a document and the issuance date of the credit in UCP 600?

The document date may be prior to the credit date, but not later (B) Signup and view all the answers

What is the requirement for shipment date in Bangladesh, except for a few cases?

Shipment date must be after the issuance date of the credit (A) Signup and view all the answers

What happens if an importer gives a waiver and it is acceptable to the issuing bank?

Payment is made according to the payment terms of LC (C) Signup and view all the answers

What is the focus of due diligence in determining bonafide business in acceptance payments?

Business legitimacy (C) Signup and view all the answers

What is the requirement for bankers after complying with presentation in UCPDC?

Make payment according to payment terms (D) Signup and view all the answers

What is Bangladesh Bank responsible for?

Framing guidelines governing foreign currency transactions (C) Signup and view all the answers

What documents do importers and exporters need to submit to the CCI&E of the Ministry of Commerce?

A diverse set of documents including Receipt of deposited fees, TIN, VAT, etc. (A) Signup and view all the answers

Who designed formats of standard purchase/sale agreement?

ICC and UNCITRAL (C) Signup and view all the answers

What is the purpose of authorized dealers maintaining adequate records?

To furnish the particulars in the prescribed formats (C) Signup and view all the answers

Under which Act can Bangladesh Bank call for information and inspect?

FERA 1947 (C) Signup and view all the answers

What is the purpose of Section 5, 8, and 12 of the FERA 1947?

Specifically important and relevant for trade services by banks (C) Signup and view all the answers

What do authorized dealers need to follow?

Both Foreign Exchange (FE) circulars and Export Policy and Import Policy Order (D) Signup and view all the answers

Who issues circulars/guidelines to regulate trade payment and international banking activities?

Bangladesh Bank (B) Signup and view all the answers

What does documentary collection provide?

A payment tool with documents against payment and documents against acceptance techniques (C) Signup and view all the answers

What is a Bank Payment Obligation (BPO)?

A payment tool offering a level of security similar to that of Letter of Credit (A) Signup and view all the answers

What is the objective of Supply Chain Financing (SCF)?

To facilitate payments and financing within supply chain of enterprises (C) Signup and view all the answers

What is international factoring used for?

Handling risk in open account trade (B) Signup and view all the answers

What is forfaiting used for?

Purchasing obligations falling due at some future date (D) Signup and view all the answers

What is factoring suitable for?

Financing smaller claims for consumer goods (C) Signup and view all the answers

What is a limitation in measuring the use of different trade payment and financing techniques?

Lack of uniform data (C) Signup and view all the answers

What does a Bank Payment Obligation (BPO) offer?

A level of security similar to that of Letter of Credit (C) Signup and view all the answers

What is the primary advantage of a documentary credit in international trade?

It assures the buyer and seller of payment and delivery, respectively, through the involvement of third-party banks (B) Signup and view all the answers

What is the role of the advising/confirming bank in a documentary credit transaction?

To inform the seller that the letter of credit has been issued and add its confirmation to the credit (C) Signup and view all the answers

What is the purpose of the Uniform Customs and Practice for Documentary Credits (UCP-600)?

To standardize the procedures for documentary credits (C) Signup and view all the answers

What is the key difference between a revocable credit and an irrevocable credit?

The ability to amend or cancel the credit without prior notice (B) Signup and view all the answers

What is the primary reason why documentary credits are the most popular mode of payment in international trade?

They offer a high level of assurance to both the buyer and seller (C) Signup and view all the answers

What is the role of the issuing bank in a documentary credit transaction?

To issue the letter of credit on behalf of the buyer (C) Signup and view all the answers

What is the primary benefit of incorporating the UCP rules into a documentary credit?

It offers legal security to the involved parties (A) Signup and view all the answers

What is the primary characteristic of an irrevocable credit?

It constitutes a definite undertaking of the issuing bank (B) Signup and view all the answers

What is a condition for importing goods on CIF or CIP basis without prior approval from the Ministry of Commerce?

There is a specific provision in the relevant loan agreement or project agreement concluded with the foreign donors (D) Signup and view all the answers

Which of the following is NOT a change made by ICC to the Incoterms 2010 rules in the Incoterms 2020 rules?

Changes in the Three-Letter Initials for DAT to DAT (D) Signup and view all the answers

Who must comply with domestic regulations in Bangladesh?

Banks in the country (C) Signup and view all the answers

What can import on CIF or CIP basis?

Ministry of Food and Ministry of Relief and Rehabilitation Management (D) Signup and view all the answers

What is required for import on CIF or CIP basis?

Specific provision in the relevant loan agreement or project agreement concluded with the foreign donors (B) Signup and view all the answers

What is not an example of complying with domestic regulations?

Complying with international standard banking practice (B) Signup and view all the answers

Who can send capital machineries & raw materials on CIF or CIP basis?

Any expatriate Bangladeshi with income earned abroad (B) Signup and view all the answers

What is a characteristic of Incoterms 2020?

It has some changes in sellers’ and buyers’ obligations in delivery of the goods (A) Signup and view all the answers

What is the primary domestic regulation in regulating cross-border banking transactions in Bangladesh?

Foreign Exchange Regulations Act 1947 (FERA 1947) (A) Signup and view all the answers

Which international guideline is most relevant to documentary credits in Bangladesh?

Uniform Customs and Practice for Documentary Credit (UCP 600) (C) Signup and view all the answers

Which certificate is not required by government ministries for importation?

IRC (A) Signup and view all the answers

What is required for importers to import from any sources in Bangladesh?

IRC (Import Registration Certificate) (D) Signup and view all the answers

What is the purpose of Bangladesh Bank in framing guidelines for foreign exchange transactions?

All of the above (D) Signup and view all the answers

What is the role of the Chief Controller of Export and Import in the Ministry of Commerce?

To issue Export Policy and Import Policy Order (D) Signup and view all the answers

What is the purpose of the International Chamber of Commerce (ICC) publications in Bangladesh?

To provide guidelines for international trade services (A) Signup and view all the answers

What is the relevance of Section 5, 8, and 12 of the FERA 1947 to trade services by banks?

They are specifically important for trade payment and international banking activities (B) Signup and view all the answers

Which regulation is indirectly related to international trade services in Bangladesh?

Customs Act 1969 (C) Signup and view all the answers

What is the purpose of the Export Policy 2018-2021 in Bangladesh?

To regulate trade policies (A) Signup and view all the answers

What is the purpose of authorized dealers submitting regular monthly returns to the Bangladesh Bank?

To furnish particulars in the prescribed formats (D) Signup and view all the answers

Which international guideline is related to Bank-to-Bank Reimbursements for Documentary Credits in Bangladesh?

Uniform Rules for Bank-to-Bank Reimbursements for Documentary Credits (URR 725) (B) Signup and view all the answers

What is the authority empowered by the FERA 1947 to regulate trade payment and international banking activities?

Bangladesh Bank (A) Signup and view all the answers

What is the requirement for importers and exporters submitting documents to the CCI&E of the Ministry of Commerce?

They must submit a diverse set of documents (B) Signup and view all the answers

What is the purpose of the Ministry of Commerce in regulating international trade services in Bangladesh?

To issue trade policies (B) Signup and view all the answers

What is the purpose of the Bangladesh Bank's authority to call for information and inspect?

To regulate trade payment and international banking activities (C) Signup and view all the answers

What is the primary reason for examining transport documents in a documentary credit?

To identify common discrepancies in transport documents (B) Signup and view all the answers

Which of the following is NOT a common discrepancy in transport documents?

The goods are shipped in a container (A) Signup and view all the answers

What is the purpose of an on-board notation on the bill of lading?

To evidence the named vessel or actual port of loading (C) Signup and view all the answers

What is meant by a contract of indemnity in the context of insurance?

A contract that provides compensation for losses (D) Signup and view all the answers

What is the purpose of a policy in insurance?

To document the contract of indemnity (A) Signup and view all the answers

What happens if the documentary credit specifically prohibits transshipment and excludes sub-articles 20(c)(ii), 21(c)(ii), or 23(c)(ii)?

The transport document is rejected (B) Signup and view all the answers

What is the consequence of presenting a claused bill of lading showing defective condition of the packages or goods?

The bill of lading is rejected (D) Signup and view all the answers

What is the purpose of identifying the name of the carrier in transport documents?

To determine the liability of the carrier (C) Signup and view all the answers