Modern banking offers diverse credit facilities—from overdrafts and term loans to LCs, guarantees, and refinance schemes—designed to support trade, business, and individual financial needs.

 Letter of Credit (LC)

• Bank’s commitment to pay exporter on behalf of importer upon compliant documents.
• Example: A Bangladeshi importer opens LC at Trust Bank to buy fabrics from China.

 

 Trust Receipt (TR)

• Post-import finance where importer takes goods on trust, sells them, then repays bank.
• Example: Importer takes machinery under TR facility and repays after sales.

 

 Time Loan

• Short/medium-term loan for fixed time, repayable lump sum or installments.
• Example: A company takes a 12-month time loan for seasonal raw material purchase.

 

 Term Loan

• Medium/long-term credit for asset purchase or project finance.
• Example: Factory takes 5-year term loan to buy new production machinery.

 

 Syndicated Loan

• Loan jointly financed by several banks for large projects.
• Example: Multiple banks finance a 500 MW power plant project.

 

 Payment Against Document (PAD)

• Bank pays exporter on importer’s behalf and releases shipping docs.
• Example: Bank settles PAD for rice importer against shipping bill.

 

 Inland Bill Purchase (IBP)

• Bank purchases local bills/drafts from seller for immediate cash.
• Example: Textile mill sells bill to bank for goods delivered to a local retailer.

 

 Overdraft (OD)

• Facility to withdraw more than account balance within limit.
• Example: Trader uses OD of BDT 20 lakh for daily expenses.

 

 Secured Overdraft (SOD)

• Overdraft backed by collateral like FDR, stock, or lien.
• Example: Customer gets SOD of BDT 10 lakh against his FDR.

 

 Packing Credit

• Pre-shipment loan to exporters for raw materials and packing.
• Example: Garment exporter takes packing credit to buy fabric.

 

 Cash Credit (CC)

• Continuous credit against hypothecation/pledge of stock or receivables.
• Example: Wholesaler operates CC limit of BDT 50 lakh for inventory.

 

 Bank Guarantee (BG)

• Bank’s assurance to pay beneficiary if customer defaults.
• Example: Contractor provides BG to government for project performance.

 

 Back-to-Back LC

• Exporter opens import LC using export LC as security.
• Example: Garment exporter opens back-to-back LC to import fabric for export order.

 

 UPAS LC (Usance Payable at Sight)

• Exporter paid at sight, importer pays bank at maturity.
• Example: Exporter in Korea gets paid immediately; Bangladeshi importer pays after 180 days.

 

 Export Development Fund (EDF)

• Refinance by Bangladesh Bank for raw material imports in export industries.
• Example: Garment factory imports yarn under EDF facility.

 

 Finance under FSSP (Financial Sector Support Project)

• Long-term refinance facility by Bangladesh Bank for priority sectors, supported by World Bank.
• Example: SME takes FSSP loan for modernizing agro-processing unit.

 

 IPFF (Investment Promotion & Financing Facility)

• Bangladesh Bank & World Bank funded facility for infrastructure projects.
• Example: IPFF loan supports construction of a private power plant.

 

 Director’s Loan

• Loan to bank directors, strictly regulated under Bank Company Act.
• Example: Director of a bank seeks loan but requires special approval under law.

 

 Bid Bond

• A bank guarantee issued on behalf of a bidder to ensure they will honor contract terms if selected.
• Example: A construction company submits a bid bond of BDT 50 lakh for a highway tender.

 

 Performance Guarantee

• Bank assures the project owner that contractor will perform as per contract; claimable if contractor defaults.
• Example: Contractor provides performance guarantee to govt. for road project completion.

 

 Advance Payment Guarantee

• Bank guarantee ensuring that advance payment given to contractor will be repaid or adjusted against performance.
• Example: Exporter receives advance from foreign buyer; bank issues advance guarantee to secure buyer’s money.

 

Type	Meaning	Purpose	Example
Bid Bond	A bank guarantee given with a tender/bid.	Ensures bidder will sign the contract if selected.	Contractor submits a bid bond while bidding for a government project.
Performance Guarantee	A bank guarantee after contract is awarded.	Ensures contractor will complete work as per agreement.	Contractor gets performance guarantee while constructing a bridge.
Advance Performance Guarantee	A bank guarantee against advance money received.	Ensures advance payment will be used properly and adjusted in project.	Supplier takes advance from buyer, gives advance performance guarantee to secure it.

 In short: Bid bond = before contract, Performance guarantee = during contract execution, Advance performance guarantee = securing advance money.

 

 Non-Legal Measures to Recover Non-Performing Loans (20 Points)

1. Early contact with borrower – regular follow-up calls and visits.
2. Restructuring loan – change repayment schedule.
3. Rescheduling loan – extend tenor with revised installments.
4. Resettlement – new terms agreed with borrower.
5. Persuasion and counseling – convince borrower to continue repayment.
6. Personal meeting – bank officer visits borrower’s residence/business.
7. Written reminders – send reminder letters/SMS alerts.
8. Offering rebate – waiver of penal interest for prompt repayment.
9. Encouraging partial payment – accept part payments to reduce burden.
10. Negotiation – adjust interest rate, EMI size.
11. Loan top-up/working capital support – fresh finance for viable projects.
12. Monitoring cash flow – ensure loan proceeds used properly.
13. Regular account review – detect early warning signals.
14. Building relationship – maintain trust and communication.
15. Advisory support – guide borrower on improving business.
16. Using guarantors’ influence – remind personal guarantors of liability.
17. Community pressure – involve local business associations.
18. Media warning – publish name in bank notice (non-legal pressure).
19. Rescheduling under Bangladesh Bank policy – allow breathing space.
20. Voluntary sale of mortgaged property – assist borrower to sell assets and adjust loan.