CHAPTER - FIVE
LOAN AGAINST IMPORTED MERCHANDISE - LIM
(POST  IMPORT FINANCE)

5.1 DEFINITION OF LIM

Import Finance plays vital role in a country's foreign trade business. Import of goods and service are needed no only for export production but also to supply domestic industry with the necessary inputs which are not locally available or available at uneconomic cost and are needed for expansion and development.

Loan Against Imported Merchandise (LIM) is a facility provided by the bank to the importers who are in shortage of fund to retire the import bills and thus to clear the goods from the post authority. In other works it may be referred as an advance against merchandise.

5.2 CASES OF LIM ACCOUTN

LIM Accounts may be created in the following two cases :-

a) LIM Account on importer's request.
b) Forced LIM Account.

a) LIM Account in importer's request

After lodgment of documents, the importers concerned to be intimated for early retirement of the documents by paying outstanding bill amount including other charge. If the importer is not in a position to retire the bill out of his own sources at that moment may request the bank to clear the goods by creating LIM Account. On receipt of the importer request the official of the import bills section will prepare an office note by calculating the total landed cost of the consignment. To ascertain the landed cost the following points to be considered.

Efforts should be taken so that at least 20% to 30% margin of the landed cost may realise from the importer. Realization of margin will depend on the banker customer relationship and also on the marketability of the goods.

The following charge documents have to executed by the importer :-

i) DP Note (Demand Promissory note).
ii) Letter of Arrangement.
iii) Letter of Disbursement.
iv) Letter of pledge.
v) Any other document of necessary.

The branch Manager are not empowered to sanction the LIM A/Cs in favour of the importers for clearance the goods without obtaining the approval from Head Office.

On getting approval from Head Office on the Office Note the branch will send the documents to the port city branch by indorsing the bill of lading infavour of them with certification of invoice for clearance the goods through importer's nominated as well as Bank's approval C & F agent. In the forwarding letter clear instructions to be given for dispatching the goods either by train or by truck duly insured Branch Managers will have to take prior approval from International Division, Head Office to create LIM Account in favour of importers. Before sending the documents to the port city branch and under taking on prescribed from with special adhesive stamp of Tk. 80/- (Flexible) regarding the stipulated period sanctioned to the importer to be obtained.

The following accounting entries and vouchers are generally to be passed in the set of Retirement Vouchers on the same day at the branch :-

Dr. Customer A/C
Dr. LIM
Cr. IBTA / Pay order
Cr. PAD

The particulars of LIM A/C must be entered and voucher to be posted in the LIM Register.

After clearance, the goods should be stared either in Bank's go down or in importer's go down under bank's lock and key and the particulars of goods to be entered in the space provided in the LIM Register. At the same time issuance of goods covering fire and other risk to be made. Go down staff salary, go down rent (if the goods stored at the Bank's go down) and other miscellaneous charges in connection with the LIM A/C will be paid by debit to party's LIM A/C under advice to the importer.