FOREIGN DEMAND DRAFT (FDD)
Bank or exchange company issues the Foreign Demand Draft for the charges for TOEFL, SAT, GMAT, registration fee, membership fee and also for the application or processing fee for the student who are interested to study abroad. Bank opens Student Files to issue Foreign Demand Draft following the permission of Bangladesh Bank (central bank). Before issuance of FDD, bank asks the students to fill up the TM Form; which contains the following particulars -
o Name of the student
o Full address of the student
o Amount of FDD in Foreign Currency
o Purpose of Remittance
o Address of the Institution to which the FDD will be favored
o Country receiving payment
o Passport no. of the student with date of issue
o Signature of the student
The TM Form is sent to Central Bank with photocopies of the Passport of the student and the FDD issued.
Commission for issuance of FDD @ Tk.500.
Commission for Cancellation of FDD @ Tk.500.
The foreign bank/exchange company on local bank usually issues foreign Demand Draft. It is an order to pay a certain sum to a certain person or as his instruction, issued by the bank on its overseas branch or on its correspondent bank. The demand draft is handed over to the purchaser who sends it to the beneficiary. The beneficiary obtains payment on presentation to the bank on which the draft is drawn.
Encashment of FDD may take place in two ways-
Purchase
Sending for collection.
Purchase:
The following criteria must be fulfilled:
Firstly, the party applies for a Foreign Bill Purchase (FBP) to limit the facility, which is approved by the Head Office authority for a certain period.
The local banks will entertain valued clients with this facility.
The party will give an undertaking regarding adjustment of FBP liabilities which is offered to him in case of non-realization of proceeds (FDD).
It is necessary that all relevant charge documents (D.P. Note, Personal Guarantee etc.) be collected from the party.
The following vouchers are passed after it is posted in the FBP register;
Dr. - FBP (at the spot buying rate)
Cr.-Income A/C Commission others
Cr. - Income A/C Postage
The FDD is sent to the American Express Bank, Dhaka for collection along with a R.L. It is drawn on a foreign bank in abroad otherwise it is sent to the respective bank on which the FDD is drawn. After giving endorsement on the backside of the FDD.
After realizing proceed,the following vouchers are passed-
Dr. – MTBL G/A
Cr. – FBP (liability adjusted)
Cr. – Income A/C (Exchange Gain)
Sending for collection:
It is posted in the Foreign Bills for Collection. The following functional activities are undertaken for a FBC:
i. It is posted in the FBC register. FBC No. Is assigned to the FDD.
ii. Then it is sent for collection to the branch of the bank on which it is drawn. If it is drawn on a foreign bank in abroad, it is sent to the AMEX. Dhaka along with a R.L. and liability voucher.
a. Dr- FBR
b. Cr- FBC