Chapter #01 Introduction

Page 1 of 95

INTRODUCTION
This report has a certain purpose to focus on the operations of Foreign Exchange of Jamuna Bank Limited. Without any doubt Foreign exchange catches the flash as it has great importance in the balance of trade in economy. Banks plays a vital role in this discipline.

1.1 Origin of the Report1 Origin of the Rep

After completion of 4 years in the BBA program of the faculty of business studies, department of HRM studies, Northern University of Bangladesh, three months organizational attachment is must. So the preparation and submission of this report is partial requirement for the completion of the Bachelor of Business Administration (BBA). This internship report on Jamuna Bank Limited (Shantinagar Branch) is prepared to fulfill the partial requirement of the internship program as full credit subject of the BBA program of The University. 1.2 Background of the Study

1.2 Background of the Study

Banking Industry in Bangladesh is fully guided by the Central Bank, i.e. Bangladesh Bank. However, different bank has different management system, operational techniques and different guidelines. It makes the different views of different banks on the same topics & terms. The central Bank faces problem regarding regulating banks for their various practices. So Bangladesh Bank decided to frame a unique guideline for all of the banks, which would be classified as Industry best practices. A core area of concentration of this study was Foreign Exchange Division, so this study concerned with the specific area of managing Import & Export procedures to promote support in business. is

logistic

Page 2 of 95

1.3 Objectives of the Study

The main objective of the study is to get practical knowledge about how Foreign exchange division runs and what function it does. In line with the broad objective, the detailed objective of the study may be spelled out as follows: To know about the foreign exchange mechanism of the bank. To identify the risk involved in foreign exchange proceedings. To find out the problems relating to import and findings the discrepancy and the way to resolve the Risk of import procedures The risks involved in repatriation of export proceedings and remittance system. To know the regulation and deregulation regarding Foreign Exchange in Bangladesh. To know L/C process of Foreign Exchange.

1.4 Methodology of the Study

The study is performed based on the information extracted from different sources collected by using a specific methodology. The detailed is given below:

Data Collection:
Sources of data are as follow: Face to Face conversation with the respective officers and staffs sharing practical knowledge of officials. Annual Report of JBL Bank. Relevant file study provided by the officers concerned. Website Relevant books, Research papers, newspapers and Journals Internet and various study selected reports.

Analytical Tools Used:

To analyze the collected data chart & graph has been used for better presentation of foreign exchange financial data.
Page 3 of 95

1.5 Scope of the Study

Banking system occupies an important place in a Nations economy. A banking institution is indispensable in a modern society. It plays a pivotal role in the economic development of a country and forms the core of the money market in an advanced country. In recent times the banking sector over the world has been undergoing a lot of changes due to regulation, technological innovation, globalization etc.

1.6Limitation of the Study

While conducting this study, I have faced certain limitation. They are as follows: Sufficient records, publication were not available as per my requirement. Data finding of Jamuna Bank Limited was a troublesome work because of shortage of time. It is a private bank, so they maintain some sort of secrecy in giving information to the general public. The officers of Jamuna bank Ltd are always busy with their work. As a result they could not make time to talk to me. Through the officers tried to assist, sometimes their working pressure could not give me proper assistance. There is some information which needs special permission from top level is not always achievable.

Page 4 of 95

Chapter #02 Overview of Jamuna Bank Limited

Page 5 of 95

2.1 Overview of Jamuna Bank Limited

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June 2001. The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country. JBL's services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Jamuna Bank Ltd., the only Bengali named new generation private commercial bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the field of trade, commerce and industries. The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The Management of the bank constantly focuses on understanding and anticipating customers' needs. The scenario of banking business is changing day by day, so the bank's responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress within only eight years. The bank has already ranked as one of top quality service providers & is known for its reputation. At present the Bank has real-time centralized Online banking branches (Urban & Rural) throughout the Country having smart IT-Backbone. Besides these traditional delivery points, the bank has ATM of its own, sharing with other partner banks & Consortium throughout the Country. The operation hour of the Bank is 10:00 A.M. To 6:00 P.M. from Sunday to Thursday with transaction hour from 10:00 A.M. to 4:00 P.M. The Bank remains closed on Friday including government holidays.

Page 6 of 95

2.2 Board of Directors

Md. Belal Hossain Chairman

2 Directors:
Al-haj M. A. Khayer Engr. A. K. M. Mosharraf Hussain Engr. Md. Atiqur Rahman Golam Dastagir Gazi (Bir Protik) Fazlur Rahman Al-Haj Nur Mohammed Md. Tajul Islam Sakhawat, Abu Khair Mohammad Md. Mahmudul Hoque

Page 7 of 95

Md. Sirajul Islam Varosha Farhad Ahmed Akand Kanutosh Majumder Md. Ismail Hossain Siraji Shaheen Mahmud A. S. M. Abdul Halim Independent Director Gazi Golam Murtoza Al-haj Md. Rezaul Karim Ansari

Md. Motior Rahman Managing Director

Member
A. S. M. Abdul Halim Independent Director

Page 8 of 95

Company Secretary
Malik Muntasir Reza Company Secretary

2.3 Vision
To become a leading banking institution and to play a pivotal role in the development of the country.

2.4 Mission
The Bank is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work-force.

2.5 Strategies
To manage and operate the Bank in the most efficient manner to enhance financial performance and to control cost of fund. To strive for customer satisfaction through quality control and delivery of timely services. To identify customers' credit and other banking needs and monitor their perception towards our performance in meeting those requirements. To review and update policies, procedures and practices to enhance the ability to extend better service to customers. To train and develop all employees and provide them adequate resources so that customers' needs can be reasonably addressed. To promote organizational effectiveness by openly communicating company plans, policies, practices and procedures to employees in a timely fashion. To cultivate a working environment that fosters positive motivation for improved performance To diversify portfolio both in the retail and wholesale market.
Page 9 of 95

2.6 Corporate Slogan

Youre Partner for Growth.

2.7 Objectives
To earn and maintain CAMEL Rating 'Strong'. To establish relationship banking and improve service quality through development of Strategic Marketing Plans. To remain one of the best banks in Bangladesh in terms of profitability and assets quality. To introduce fully automated systems through integration of information technology. To ensure an adequate rate of return on investment. To keep risk position at an acceptable range (including any off balance sheet risk). To maintain adequate liquidity to meet maturing obligations and commitments. To maintain a healthy growth of business with desired image. To maintain adequate control systems and transparency in procedures. To develop and retain a quality work-force through an effective human Resources Management System. To ensure optimum utilization of all available resources. To pursue an effective system of management by ensuring compliance to ethical norms, transparency and accountability at all levels.

2.8 Sponsors
The sponsors of Jamuna Bank Limited are successful leading entrepreneurs of the country having stakes in different segments of the national economy. They are eminent industrialist and businessman having wide business reputation both at home and abroad.

Page 10 of 95

2.9JBL Corporate Culture

Employees of JBL share certain common values, which helps to create a JBL culture. The client comes first. Search for professional excellence. Openness to new ideas &new methods to encourage creativity. Quick decision-making. Flexibility and prompt response.

A sense of professional ethic

2.10 Management
Management JBL is managed by highly professional people. The present Managing Director of the Bank is a forward looking senior banker having decades of experience and multi discipline of knowledge to his credit both at home and abroad. He is supported by an educated and skilled professional team with diversified experience in finance and banking. The management of the bank constantly focuses on the understanding and anticipating customers needs and offer solution thereof. Jamuna Bank Limited has already achieved tremendous progress within a short period of its operation. The Bank is already ranked as one of the quality service providers and known for its reputation.

Page 11 of 95

ORGANOGRAM OF JBL
Chairman

Managing Director

Board of Directors

Chief Advisor

Additional MD

Deputy MD

Senior Executive Vice President

Executive Vice President

Executive Vice President

Executive Vice President

Senior Vice President

Senior Vice President Vice President

Senior Vice President

Senior Assistant Vice President Assistant Vice President

Page 12 of 95

First Assistant Vice President

Jr. Assistant Vice President Executive officer

First executive officer

Probationary Officer

Officer

2.11 Jamuna Bank Chronicles

April 02, 2001 June 03, 2001 June 03, 2001 October 25, 2003 December 11, 2003 March 28, 2004 December 12, 2005 April 12, 2006 Incorporation of the company Commencement of banking system First Branch opened at Mohakhali First Islamic banking branch opened at Nayabazar Obtained the License as a Primary Dealer First Dividend Declared For Income Tear 2003 @10% Capital Raised Through Initial Public Offering Listed with Dhaka Stock Exchange
Page 13 of 95

April 17, 2006 September 09 2007

Listed with Chittagong Stock Exchange Increased Authorized Share Capital to BDT 4000.00 Crore

October 16, 2008

Space purchased for establishing Corporate Head office at Gulshan

June 15, 2009 July 29, 2009 December 22, 2009 December 23, 2009

Launched SME Division Launched First SME/Agri Branch Obtained Off Shore Banking License Established Jamuna Bank Capital Management Limited (Merchant Bank)

June13, 2010 December 25, 2010

Increased Authorized Share Capital to BDT 1000.00 Crore Established Jamuna Bank Model Village (Singpara, Thakurgaon)

February 07, 2011

Established Jamuna Bank Securities Limited Brokerage House)

Page 14 of 95

Chapter #03 Internship Position and Duties

Page 15 of 95

3.1 Internship position and duties

I was started my internship Jamuna Bank Limited (JBL) at Shantinagar Branch. My internship duties were three months. I was started my internship work with Export section to know how to do it. I was working this section 40 days. Than I was worked in another side. I try to know how JBL at Shatinagar Branch is maintaining Foreign Exchange activities and how to hold customer.

3.2 Duties in general banking Department

I learn the procedure of issuing a cheque book requisition and how to register the inward and outword mail of the bank.

3.3 Import section

As Foreign activities import is one of the important functions of commercial bank. The major function of this section is to import goods from abroad. In this section I staying 40 days and observed as soon as possible the tit-bits of the total import process. Some major activities of this section are preparing proposal, opening L/C, scrutiny of import bills, providing post import finance etc.

3.4 Export section

Besides the import a large volume of profit is generated from export activities in Shantinagar Branch. The major function of this section is to assist our export their goods to abroad. In this section I stayed 40 days and observed different export related activities like opening BTB L/C, providing acceptance, Scrutiny of import papers etc.

Page 16 of 95

3.5 Issuance of Cheque Book (Existing Accounts)

All the procedure for issuing a new cheque book for existing account is same as the procedure of new account. Only different is that customer has to submit the requisition slip of the old cheque book with date, signature and parties address. Computer posting in then given to the requisitiom slip to know the posting of account and to know how many leaf/Leaves still not used. The number of new cheque book is entered on the back of the old requisition slip and is signed by the officer. If the cheque is handed over to any other person then the account holder an acknowledgement slip is issued by the bank addressing the account holder with details of the chequebook. This acknowledgement slip must be signed by the account holder and required to the bank. Otherwise the bank will no honor any cheque from this chequebook.

3.6 Major learnings from internship duties

I have learned many things while I was working in the bank as an interne. I already Mention worked in the General Banking Department section. I have learned there the works of bill and clearing, FDR. Here in brief of these activities: Daily functions: Keeping different books like cash, clearing and transfer. Recording the daily transactions in this book. Taking back up of all daily activities at the end of the day.

3.7 Local remittance section

Remittance is one of the most important jobs of this bank. Remittance activities refer to send money from one place to another place through official channel. In this procedure bank receives money from client from one branch and make arrangement to make payment to another branch

Page 17 of 95

in the country. Since transferring fund by cash from one place to another is risky, so banks use different financial instruments in these purpose. Some are:

Pay Order (PO) Pay Slip (PS) Demand Draft (DD) Telegraphic Transfer (TT) Remittance Instruments

3.8 Foreign Remittance Section

In the foreign remittance section I stayed for half week, like the local remittance section the purpose of foreign remittance section is to ease the flow funds between our country and abroad. When an international is made the payment of the transaction is made through foreign currencies. Here the foreign remittance department works as a media between the transactions of two currencies. Foreign remittance can be categorized in the following two ways.

Inward Remittance Outward Remittance

3.9 Inward Remittance

The remittance of freely convertible foreign currencies which we are receiving from abroad against which the authorized making payment in local currency to the beneficiaries may be called as inward remittance.

Page 18 of 95

3.10 Outward remittance

The remittance in foreign currency which are being made for our country to abroad is known as foreign outward remittances. Outward remittance can be occurred due to following reason payment of import bills. Remittance of freight and passage. Agency commission for handling vessels. Operating expenses of Bangladesh Shipping Corporation and Bangladesh Biman. Charter of foreign ships and aircraft. Employment of overseas agents

Page 19 of 95

Chapter #04 Branch profile

Page 20 of 95

4.1 Branch at a Glance

Table of JBL Foreign exchange branch Name Established Address Foreign exchange Branch 1st January 2005 Green Peach Tower 41, Chamelibag 1st Floor. Shantinagar, Dhaka-1217. SWIFT address Branch Manager JAMUBDDHA041 Mr. Md. Belal Hossain Senior Vice President Phone Fax Web-Site 8355179 88-02-8355649 W.W.W. jamunabankbd.com

4.2 Workforce of the branch

The branch has total number of 28 employees including branch manager and operations manager. All other employees are worked under several divisions. These divisions are Foreign trade Credit department Accounts departments General banking CASH departments

Page 21 of 95

Name of the employee of Shantinagar Branch, Dhaka.

SI. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Name of the Employee Mr. Md. Belal Hossain Mr. A.K.M Shah Alam Mr. Biplob Kumar chakraborty Mr. Abul Kalam Azad Mr. Mohammad Nazmul Hasan Ms. Tahmina Begum Ms. Mohd. Abdus Shobhan Mr. Md. Paltu Ranjan Datta Naima Haque A.M. Morshed Ms. Nilufar Yasmin Ms. Najmonnahar Ms. Sultana Yasmin Mr. Md. Abul Kashem Mrinalini Saha Happy Mosharraf Mahamudul Hasan Mr. Md. Robiul Hasan Ms. Nazmul Haque Apu Ms. Fatima Aktar Mr. Md. Parbel Mollah Utpala Kundu Md. Anisuzzaman Md. Kafil Uddin Md. Zahidul Alam Md. Saukatun Nabi Touhida Islam Md. Bazlur Rashid

Designation S.V.P A.V.P F.A.V.P F.A.V.P S.E.O S.E.O S.E.O E.O E.O E.O E.O E.O F.E.O F.E.O F.E.O F.E.O F.E.O Off. (Gen) Off. (Gen) Off. (Gen) Off. (Gen) First Off. (Gen) First Off. (Gen) First Off. (Cash) First Off. (Cash) Asst. Off. (Cash) Asst. Off. (Cash) Asst. Off. (Cash)

Page 22 of 95

Foreign exchange department employees name and designation are:

Mr. Md. Belal Hossan (S.V.P)

MR. A.K.M Shah Alam (A.V.P)

Mr. Biplob Kumar chakraborty (F.A.V.P)

Mr. Abul Kalam Azad

Mr. Md. Paltu Ranjan Datta (E.O)

Mr. Mohammad Nazmul Hasan (S.E.O)

Naima Haque (E.O)

Mr. Mohammad Abdus Sobahan (S.E.O)

Mr. Md. Abul Kashem (F.E.O)

Mr.Md. Robiul Alam (Off , Gen)

Mahamudul Hasan (FEO)

Mr. Nzmul Haque Apu (Off, Gen)

Happy Mosharraf (FEO)

Mrinalini Saha (F.E.O)

Page 23 of 95

4.3 Products & Services

The products and services can be classifying in two ways & those arc.

The deposit products & services The lending products & services

Deposits products & services Corporate Banking Personal Banking Online Banking Monthly Savings Scheme Monthly Benefit Scheme Double/Triple Benefit Scheme Marriage Scheme Education Scheme Lakhpati Deposit Scheme Q-Cash ATM

Lending/Investment products & services Hi-her Purchase Lease Finance Personal loan for woman Project Finance Loan Syndication Consumer Credit Import and Export. Handling Financing

4.3.1 Corporate Banking3.1 Corporate Banking

The motto of JBL's Corporate banking services is to provide personalized solutions to their customers. The Bank distinguishes and identifies corporate customers' need and designs tailored solutions accordingly.

Jamuna Bank Ltd. Driers a complete range of advisory, financing and operational combining trade, treasury, investment and services to its corporate client groups coin transactional banking
Page 24 of 95

activities in one package. Whether it is project finance, term loan, import or export deal, a working capital requirement or a forward cover for a foreign currency transition, there Corporate Banking Managers will offer you the accurate solution, their corporate Banking specialists will render high class service for speedy approvals and efficient processing to satisfy customer needs. Corporate Banking business envelops a broad range of businesses and industries. Everyone can leverage on our know-how in the following sectors mainly:

Agro processing industry Industry (Import Substitute / Export oriented) Textile Spinning, Dyeing / Printing Export Oriented Garments, Sweater. Food & Allied Paper & Paper Products Engineering, Steel Mills Chemical and chemical products etc. Telecommunications. Information Technology Real Estate & Construction Wholesale trade Transport Hotels, Restaurants Non Bank Financial Institutions Loan Syndication Protect Finance
Page 25 of 95

 Investment Banking

Lease Finance Hire Purchase International Banking Export Finance. Import Finance

4.3.2 Personal Banking

Personal Banking of Jamuna Bank offers wide-ranging products and services matching the requirement of every customer. Transactional accounts, savings schemes or loan facilities from Jamuna Bank Ltd. make available to all a unique mixture of easy and consummate service quality.

4.3.3Online Banking
Jamuna Bank Limited has introduced real-time any branch banking on April 05, 2005. Now, customers can withdraw and deposit money from any of its 30 branches located at Dhaka, Chittagong, S ylhet, Gazipur, Bogra, Naogaon, Narayanganj and Munshigonj. Their valued customers can also enjoy 24 hours banking service through ATM card from any of Q-cash ATMs located at Dhaka, Chittagong, Khulna, Sylhet and Bogra. All the existing customers of Jamuna Bank Limited will enjoy this service by default.

Page 26 of 95

4.3.4 Monthly Savings Scheme (MSS) (MSS)

Savings is the best friend in bad days. Small savings can build up a prosperous future. Savings can meet up any emergences. JBL has introduced Monthly Savings Scheme (MSS) that allows saving on a monthly basis and getting a handsome return upon maturity. If anyone wants to build up a significant savings to carry out youre cherished Dream, JBL MSS is the right solution.

4.3.5 Monthly Benefit Scheme (MBS).5 Monthly Benefit Scheme (MBS)

Jamuna Bank Limited has introduced Monthly Benefit Scheme (MBS) for the prudent persons having ready cash and desiring to have fixed income on monthly basis out of it without taking risk of loss and without enchasing the principal amount. This scheme offers highest return with zero risk. Everyone can plan your monthly expenditure with the certain monthly income under the scheme.

4.3.6 Double/Triple Growth Deposit Scheme

For people who have cash flow at this moment and want to get it doubled/tripled quickly JBL has introduced Double/Triple Growth Deposit Scheme that offers to make double/triple money within 6(six) years and 9.5 (nine and a half) years respectively resulting a high rate of interest.

4.3.7 Marriage Deposit Scheme

Marriage of children, especially daughter is a matter of great concern to the parents. Marriage of children involves expense of considerable amount. Prudent parents make effort for gradual building of fund as per their capacity to meet the matrimonial expense of their children specially daughters. Parents get relief and can have peace of mind if they can arrange the necessary fund for marriage of their children, no matter whether they survive or not till the marriage occasion. It can be a great help to the parents if there is any scope of deposit of a modest mount as per

Page 27 of 95

their financial capacity, which groves very fast at high rate of interest yielding a sizeable amount on maturity. With this end in view JBL has introduced Marriage Deposit Scheme, which offers you an opportunity to build - up your cherished - fund by monthly deposit of serial, amount at your affordable capacity.

4.3.8 Education Savings Scheme

Education is a basic need of every citizen. Every parent wants to impart proper education to their children. Education is the pre-requisite for socio-economic development of the country. As yet, there is no arrangement of free education to the citizens from the government level. As such, there should
be

pre-arrangement of fund to ensure higher educations the children. Otherwise

higher education may be hindered due to change of economic condition, income of the parents at the future time when higher education shall be required. Today's higher education is becoming expired day by day. Parents can get relief and can have peace of mind if they can arrange the necessary fund for higher education of their children. As such, JBI, has introduced 'Education Savings Scheme' which offers you an opportunity to build up your cherished fund' by monthly deposit of small amount it at your affordable capacity or initial lump sum deposit to yield handsome amount on a future date to meet the educational expenses. Under this Scheme you have the different attractive options to avail the future benefit i.e. withdrawal of the total amount accumulated in lump sum or withdrawing monthly benefit to meet educational expense keeping die principal amount intact or to withdraw both principal and accumulated profit monthly for a certain period.

4.3.9 Lakhpati Deposit Scheme

To become a lakhpati is a dream to most of the people of Bangladesh especially to the lower and lower middle class income group. They experience their expectations and wants are enormous in nature in our small span of life. To meet our deposit and wants we need right plan. Keeping the

Page 28 of 95

above in mind JBL has introduced "Lakhopati Scheme" which has flexibility report of maturity and monthly installment as per affordable capacity.

4.3.10 Q-Cash Round The Clock Banking

Jamuna Bank Q-Cash ATIM Card enables the costumers to withdraw- cash variety of banking transactions 24 hours a day. Q-Cash ATMs are conveniently located covering major shopping centers, business and residential areas in Dhaka and Chittagong. ATMs in Sylhet, Khulria and other cities will soon start be introduced. The network will expand to cover the whole country within a short span of time. With customers Jamuna Bank Q-Cash ATM card they can:

Cash withdrawal Round The Clock from any Q-Cash logo marked ATM booths.

POS transaction (shopping malls, restaurants, Jewell Aries etc) Enjoy overdraft facilities on the card (if approved) Utility Bill Payment facilities Cash transaction facilities for selective branches n ATM service available in Dhaka and Chittagong Withdrawal allowed from ATM's of Jamuna Bank Ltd., AB Bank, The City Bank, Janata Bank, IFIC Bank, Mercantile Bank, Pubali Bank, Eastern Bank Ltd. respectively

And more to come Is Q-Cash

4.3.11 Lease Finance

Lease means a contractual relationship between the owner of the asset and its utter- fur a specified period against mutually agreed upon rent. The owner is called the lesser and the user is called the Lessee. Lease finance is one of the most convenient source of
Page 29 of 95

financing of assets viz machinery, equipment vehicle, etc. The user of the assets i.e. Lessee is benefited through tax advantages, conserving working capital and preserving debt capacity. Moreover, Lease is an off-balance sheet item 1.e lease amount is not shown in the balance sheet of the lessee and does not affect borrowing capacity. Leasing enables the lessee to avail the services of a plant or equipment without making the investment or incurring debt obligation. The Lessee car, use the asset by paying a series of periodic amounts called "lease payment" or "lease rentals" to the owner of the asset at the predetermined rates and generally in advance. The payments may be made monthly or quarterly. Jamuna Bark Ltd., the highly capitalized private Commercial 1 Bank in Bangladesh has introduced lease finance to facilitate funding requirement of valued customers & growth of their business houses.

4.3.12 Personal loan for women Goal

To make financially sound and solvent surd self dependent the women. Three categories of women are under this loan1. Self Employed Women 2. Working Women 3. House Wife

4.3.13 Project Finance Project loan is considered as long term investment of the bank. If the period is helpful to improve the economy and has a wide market then the bank thinks about giving project loan. To give this kind of loan the bank observes the willingness of the customer, his capacity and his ability to run the project. Having obtained this kind of information the bank makes a credit report about the customers loan proposal. Interest rate on loan varies from project Ratio of investment of customer and bank varies from customer to customer and the customers relationship with the bank.
Page 30 of 95

4.3.14Loan syndication
Bank cannot invest more than 15% of its paid up capital on one individual. When the loan amount exceeds 15% of its paid up capital then the bank share the loan with other bank for giving one individual and this is call loan syndicate.

4.3.15 Consumer Credit

Consumer credit scheme is relatively new field of micro-credit activities. People with limited income can avail of this credit facility to buy any household effects including car, computer and other consumer durable. It is a special credit scheme and the customers allow the loan on soft terms against personal guarantee and deposit of specified percentage of equity. The loan is repayable by monthly installment within a fixed period.

Page 31 of 95

Chapter #05 Foreign Exchange Department

Page 32 of 95

5.0 Foreign Exchange Department

Foreign Trade means exchange of foreign currency for the trade purpose between two countries. In other words, Foreign exchange deals foreign financial transactions related to trade or business.

Foreign Exchange Department is divided in to three sections.

Import

Export

Remittance

5.1 Concepts
Important concepts of foreign trade as per UCPDC 600 are discussed below: Importer / Buyer/ Opener/ Applicant: Applicant means the party on whose request the credit is issued.

Issuing/ opening bank: Issuing bank means the bank that issues a credit at the request of an applicant or on its own behalf.

Exporter/ seller/ beneficiary: Beneficiary means the party in whose favor a credit is issued.

Page 33 of 95

Advising / notifying bank: Advising bank means the bank that advises the credit at the request of the issuing bank.

Conforming bank: Confirming bank means the bank that adds its confirmation to a credit upon the issuing banks authorization or request.

Conformation: Confirmation means a definite undertaking of the confirming bank, in addition to that of issuing bank, to honor or negotiate a complying presentation.

Complying presentation: Complying presentation means a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice.

Negotiating bank: The bank that negotiates the bill (draft) of exporter drawn under the credit is known as negotiating bank. If the advising bank is also authorized to negotiate the bill (draft) drawn by the exporter he becomes the negotiating bank. Reimbursing bank: If the issuing bank does not maintain any account with a bank who will be negotiating documents under a L/C, then arrangement is made to reimburse the negotiating bank for the amount to be paid under credit from some other bank with which the issuing bank maintains his account. The latter bank is termed as reimbursing bank. An authority to debit his account is sent to the bank where he holds balance advising to honor claims placed by a negotiating bank. Paying bank: The bank that effects payment to the beneficiary (as named in the latter of credit) is known as paying bank/drawer bank.

Page 34 of 95

5.2 Import Section:

Import is the flow of goods and services purchased by economic agent staying in the country from economic agent staying abroad. We can simplify Import as a means purchase of goods and services from the foreign countries into Bangladesh. Normally consumers, firms and Government of Bangladesh import foreign goods to meet their various necessities. Import section of the Foreign Exchange Department helps business and other people to import goods. So seller always seeks guarantee for the payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by its Letter of Credit. When a buyer goes to import some goods from a foreign buyer, he request his bank makes payments to the exporter of goods. And the bank recovers the amount from the importer.

5.3 Legislative Bonding for Import

Imports are foreign goods and services purchased by consumers, firms & Governments in Bangladesh. To import, a person should be competent to be an importer. According to Import and Export Control Act, 1950, the Office of Chief Controller of Import and Export (CCI & E) provides the registration (IRC) to the importer. Import of good in Bangladesh is regulated by the Ministry of Commerce in terms of the Import and Export Control Act, 1950; Import Policy Order and the Public Notice issued by the Office of the Chief Controller of Imports and Exports (CCI&E). Import section of Foreign Exchange Department facilitates import related banking services concerns to import of goods in cash foreign exchange. The main facilities provided by the import section are: Opening of Letter of Credit Facilitating Payments to the Exporter on behalf of the Importer Providing Funded and Non-funded Credit Facility Issuing Bank Guarantee in foreign currency on behalf of Foreign Companies.
Page 35 of 95

5.4 Letter of Credit

Letter of Credit is a guarantee or undertaking or commitment to the beneficiary/exporter for making payment issued by the issuing bank on behalf of the importer upon fulfillment of some conditions. Central Banks, therefore assure these things to happen simultaneously by opening Letter of Credit guaranteeing payments to seller and goods to buyer. By opening a Letter of Credit on behalf of buyer in favor of seller, commercial banks undertake to make payments to a seller subject to submission of documents drawn on in strictly compliance with Letter of Credit terms giving title of goods to the buyer. It is a conditional guarantee. The Letter of Credit thus constitutes one of the most important methods of financing foreign trade. In the Import Policy Order 2003-2006 Letter of Credit denoted as Letter of Credit means a letter of credit opened for the purpose of import under this Order The expression Documentary Credit(s) and Standby Letter(s) means any arrangements, however named or described, whereby a bank (the issuing bank) acting at the request and on the instruction of a customer (the Applicant) or on its own behalf, whereby the buyers bank is committed (on behalf of the buyers) to place an agreed amount of money at the sellers disposal under some agreed conditions. Since the agreed conditions include amongst other things, the presentation of some specified documents, the letter of credit is called Documentary letter of credit. The uniform customs and practices for documentary Credit (UCPDC) published by international Chamber of Commerce (1993) revision, publication no 500 define Documentary Credit: Any arrangement however named or described whereby a bank (the issuing bank) acting at the request and on the instructions of a customs (the Applicant) or on its own behalf, Authorize another bank to effect such payment or to accept and pay such bills of exchange (Drafts) Authorize another bank to negotiate against stipulated documents provide that terms and conditions are complied with. Is to make a payment to or the order of a third party (the Beneficiary), or is to accept and pay bills of exchange (Drafts) drawn by the Beneficiary, or

Page 36 of 95

 authorizes another bank to effect such payment, or to accept and pay such bills of exchange (Draft(s)), or authorizes another bank to negotiate, Against stipulated document(s), provided that the terms and conditions of the Credit and complied with. On the other hand Letter of credit can be defined as a Credit Contract

5.5 Types of Letter of Credit

There are many types of Letter of Credits that are used in different countries of the world. But International Chamber of Commerce (ICC) vides their UCPDC- 500, which denotes only two types of LETTER OF Credits; mentioned: 1. Revocable Letter of Credit A revocable credit may be amended or cancelled by the issuing bank at any moment and without prior notice to the beneficiary. That is to say, this type of letter of credit can be revoked or cancelled at any time without consent of, or notice to the beneficiary. In case of seller (beneficiary), revocable credit involves risk, as the credit may be amended or cancelled while the goods are in transit and before the documents are presented, or although presented before payments has been made. The seller would then face the problem of obtaining payment on the other hand revocable credit gives the buyer maximum flexibility, as it can be amended or cancelled without prior notice to the seller up to the moment of payment buy the issuing bank at which the issuing bank has made the credit available. In the modern banking the use of revocable credit is not widespread. In this case the issuing banks must perform the following two roles: Reimburse another bank with which a revocable Credit has been made available for sight payment, acceptance or negotiation for any payment, acceptance or negotiation made by such bank prior to receipt by it of notice of amendment or cancellation, against documents which appear on their face to be in compliance with the terms and conditions of the Credit;

Page 37 of 95

 Reimburse another bank with which a revocable Credit has been made available for deferred payment, if such a bank has, prior to receipt by it of notice of amendment or cancellation, take up documents which appear on their face to be in compliance with the terms and conditions of the Credit.

2. Irrevocable Letter of Credit An irrevocable credit is a documentary credit, which cannot be revoked, varied or changed/amended or cancelled without the consent of all parties- buyer (Applicant), seller Beneficiary), Issuing Bank, and Confirming Bank (in case of confirmed Letter of Credit). Irrevocable Credit gives the seller greater assurance of payments, but he/she remains dependent on an undertaking of a foreign bank. In the issuance of Irrevocable Letter of Credit both the Issuing and Conforming Bank have some liability, mentioned bellow, as per UCPDC -500: The following types of Letter of Credits are used in the JBL, Shantinagar Branch: Cash Letter of Credit Payment made form cash foreign exchange not from export proceeds; there is not export L. C. which backs the import Letter of Credit Payment term is at sight. Deferred Letter of Credit The only difference between cash Letter of Credit and deferred Letter of Credit lied in the terms of payment. Payment under deferred Letter of Credit is made after certain days of Presentation of the export bill. Letter of Credit the differed payment basis may be opened for the following cases: Items Industrial Raw Materials (For own use) Back to Back Imports Agricultural Implements & Chemical Fertilizer Capital Machinery Period (Days) Maximum 180 days Maximum 180 days Maximum 180 days Maximum 360 days
Page 38 of 95

Coastal Vessel Life Saving Drugs

Maximum 360 days Maximum 90

Back to Back Letter of Credit It is related with export documents and not discussed in this report

5.6 General Conditions of Import of Goods

Import Trade Control Schedule Number For import purpose, use of ITC Number (H.S. Code) with at least six digits corresponding to the classification of goods as given in the Import Trade Control Schedule 1988, based on the Harmonized Commodity Description and Coding System shall be mandatory. The seven Digit H.S. Code published by Bangladesh Bureau of Statistics may also be mentioned in the Letter of Credit. Form, Letter of Credit and other relevant paper within a bracket in addition to normal H. S. Code as mentioned above. No bank shall issue Letter of Credit Authorization form or open Letter of Credit without properly mentioning I. T. C. number (H. S. Code) thereon. NOC (No Objection Certificate) On the basis of ROR (Right of Refusal) a. No Objection Certificate on the basis of Right of Refusal (ROR) form any authority shall not be required for import of any freely importable item by any Public Sector Agency. b. In case of import of banned/restricted items for approval projects financed under foreign aid the concerned Government Department/Agency will approach the Chief Controller of the Import and Export directly for necessary permission together with a list of items duly certified under proper seal and signature giving description, quantity/number, price and H.S. Code Number against each item required to be imported. The details about the aided project and specific provision of the relevant contract and other necessary information shall also have to be furnished along with the list of the items. The Chief Controller shall issue permission /permit on the basis of above documents.

Page 39 of 95

 Restriction regarding source of procurement of goods Goods from Israel or goods originating from that country shall not be importable. Goods also not are importable in the flag vessels of that country. All kinds of import form and export to Serbia and Montenegro, fragments of former Socialist Republic of Yugoslavia shall be banned. Pre-shipment inspection Unless otherwise specified, pre-shipment inspection of imported goods shall not be obligatory in case of import by private sector importers. Shipment of Bangladesh Flag Vessels Subject to waiver specified below shipment of goods shall not be made on Bangladesh flag vessels: Imports of goods up to maximum twenty metric tons in case of single individual consignee or up to maximum 100 (one hundred) metric tons in case of group import may be made in non Bangladeshi flag vessels. However the Director General of Shipping may notify general waivers in the following cases, such as (1) shipment of goods from foreign ports which are not visited by Bangladeshi Vessels, and (2) import of goods on the basis of specific agreement which provides C & F (Cost & Freight) contract. In all other cases a certificate of waiver shall be obtained from the Director General of Shipping of Importation of goods in non-Bangladeshi flag vessels. Director-General of Shipping shall not apply in cases of import under such foreign aids, loans or grants which contain specific provisions regarding shipment of goods. In case of import and export of goods by export oriented industries shipment may be made in non-Bangladeshi flag vessels.

Page 40 of 95

 Import at competitive rate Import shall be made at the most competitive rate and importers may be requited at any time, to submit documents regarding the price paid or to be paid by them. Incase of import under United Commodity Aid in the Private sector goods shall be imported at the most competitive rate by obtaining quotations from a minimum three suppliers/indenters representing at least two countries abroad. This condition shall however not apply for opening of Letter of Credit up TK. One lach. For import at most competitive rate by the Public Sectors the condition mentioned at Para 27(8) of this order shall apply. Import of C & F and FOB (free on Board) basis All imports by sea, air and land route shall be made either on C & F or FOB basis. However in case of import on FOB basis the concerned importer shall have to properly comply with the circular issued by Bangladesh Bank in this regard Provisions in the relevant loan agreement/projects agreement concluded with the foreign donors for import of CIF (Cost, Insurance & Freight) basis, no import shall be allowed on CIF basis without prior approval from the Ministry of Commerce. However, Bangladesh nations, living abroad, for sending goods against their earned foreign exchange and foreign investors, for sending capital machines and raw materials against their equity share portion shall be allowed on CIF basis. Import by Mentioning Country of Origin 1. In all cases of import, country if origin shall be mentioned clearly on goods, package/container. A certificate regarding country of origin issued by the concerned Government agency/approved authority/organization of the exporting country must be submitted, along with import documents to the Customer Authority at the time of release of goods.. Besides, 100% export oriented industries, which are recognized by Custom Authority, shall be waived from the restriction of country of origin subject to the conditions imposed by the Foreign Exchange Regulation Act, Bangladesh Bank and Commercial bank, 2. In case of import of Limestone, in different consignments/lot by the rope-way or by river, as raw-materials for Chattak Cement Factory, country of origin certificate

Page 41 of 95

from the exporting countrys Government/approved authority/organization shall be submitted once to the Customs authority at the time of release of goods, instead of each consignment/lot for the quantity mentioned in Letter of Credit in case of river way and as per supplied carrying list as case of rode-way.

5.7 Some Instructions Issued by Bangladesh Bank for Opening and Operation of Letter of Credit for Import of Goods
All Letters of Credits and similar undertakings covering imports into Bangladesh must be documentary Letter of Credits and should provide for payment to be made against full sets of onboard (shipped) transport documents (BL, AIB, TR etc.) showing dispatch of goods covered by Credit to a destination in Bangladesh; Ads are allowed to open divisible, transferable Letter of Credits for import into Bangladesh under cash LCAF (Letter of Authorization Form); It is not permissible to open Letter of Credits in favor of beneficiaries in countries from which import into are banned by the component authority; Letter of Credits to be opened only against firm contract between the Applicant and beneficiary. The AD should see documentary evidence, before opening Letter of Credit, that a firm order for the goods to be imported has been placed and accepted; The full description of goods to be imported along with unit price and quantity to be given in the Letter of Credit; Confidential report of the exporter to be obtained by the AD himself where the amount of Letter of Credit exceeds TK. 2,00,000 in case of import against Performa invoices issued direct by foreign supplier and TK. 5,00,000 against indent issued by local agents of the suppliers; Payments against discrepant documents may be made after the goods have been cleared from the customs on the basis of the locative LCAF.

Page 42 of 95

 Advanced remittance against import may be made after getting prior permission from Bangladesh Bank where the goods are of specialized or capital nature.

5.8 Parties of a Letter of Credit

APPLICANT FOR THE CREDIT: The importer or buyer on whose request and on whose behalf the letter of credit is opened is called the applicant. ISSUING BANK/ OPENING BANK: The bank that opens a Letter of Credit, at the request of the importer, is known as Issuing Bank. The Issuing Bank is the buyers bank and is also called opening bank. BENEFICIARY: The party, normally the supplier of the goods, in whose favor the Letter of Credit is opened is called beneficiary. The seller, after shipping the goods as per terms of the credit, presents the documents to negotiating bank/conforming bank for negotiation. ADVISING BANK: The bank is the exporters country, usually the foreign correspondent of the importers bank; through which Letter of Credit is advised to the supplier is called the advising bank. CONFORMING BANK: If the advising bank also adds its own undertaking to honor the credit while advising the same to the beneficiary, it becomes the conforming bank. The conforming bank, in addition, becomes liable to pay for documents in conformity with the Letter of Credit terms and conditions. NEGOTIATING BANK: The Bank, which negotiates the bill (draft) of the exporter drawn under the credit, is known as negotiating bank. If the advising bank is also authorized to negotiate the bill (draft) drawn by the exporter it itself becomes the negotiating bank. ACCEPTING BANK: A bank that (as specified in the Letter of Credit) accepts time or drafts on behalf of the importer is called the accepting bank. The Letter of Credit issuing bank can also take on the responsibility of an accepting bank. PAYING BANK: The bank that effects payment to the beneficiary (as named in the Letter of Credit) is known as paying bank/drawer bank.
Page 43 of 95

 REIMBURSING BANK: If the issuing bank does not maintain any account with THE NEGOTIATING bank an alternate arrangement is made to reimburse it for the amount payable under a credit form some other bank. The later bank is termed as reimbursing bank. An authority to debit his account is sent to the bank with whom the account is maintained to honor the claims placed by a negotiating bank.sal and submitting it to the Competent Authority for Obtaining
Permission of

5.9 Preparation of Proposal and submitting it to the Competent Authority for Obtaining Permission of Opening Letter Of Credit
Before opening Letter of Credit the applicant must take permission from the competent authority. Whether the authority has to be taken from the Branch or from the Head Office depends on the amount of Letter of Credit and the percentage of margin. A proposal for obtaining permission for opening Letter of Credit generally contains the following points: Name and address of the importer; Name and address of the Guarantor if any; Particular of Merchandise to be imported along with name of the item Harmonized System (H.S.) Code, country of origin, quantity, unit price and purpose of import. Particulars/ Terms of LC along with name and address of the beneficiary tenor of payment, port of loading and discharge, shipment validity and expiry date etc. Landed cost of the goods; Market price of the goods at Dhaka and Chittagong (if applicable); Name of the previous banker with outstanding liability (if any); Number of CD accounts and transaction performance through this account; Present liability position with the bank; Present liability position of allied/sister concerns with the bank

Page 44 of 95

 Letter of Credit performance of the party during the year/previous year;

5.10 Depositing of Letter of Credit Margin and Other Charges

Before issuing Letter of Credit bank asks the applicant to deposit Letter of Credit margin according to the terms of sanction and other necessary charges which includes commission, handling charges, foreign correspondence charge, telex/SWIFT charge etc. as per terms and conditions of sanction. Before issuing Letter of Credit Bank asks the applicant to deposit the following, as per the terms of the sanction: Letter of Credit Margin as per Government. Circular Commission As per internal policy (Letter of Credit value .005 for first quarter, Subsequent Quarter .003 Document Handling Charge 1500 SWIFT Charge 3500 Courier Charge (Except India) Courier (India) 1500 300 VAT 15% Fixed on Commission Margin charged against any particular Letter of Credit depends upon the Item or Goods of the import. Margin varies between nil to 100%. Generally the higher value of margin the higher it means that Bangladesh Bank discourages to import that goods or items.

5.11 Accounting Treatment in Case of Letter of Credit Opening

Now if the Officer thinks fit the application to open a Letter of Credit, the following entries are given to realize the Letter of Credit commission, charges, postage, Letter of Credit margin etc.

5.12 Issuing the Letter of Credit

In this stage, the issuing bank fills the bank-specified-form for issuing Letter of Credit. Generally a Letter of Credit contains the following information and terms and conditions:

Page 45 of 95

 Charges; Country of origin of goods; Currency and amount; Date and place of the expiry of the Documentary Credits; Description of goods and quantity; Documents required for negotiation; Instruction for negotiating bank; Last date of shipment; Letter of Credit Authorization (LCA) number, IRC (Import Registration Certificate) number and Harmonized System (HS) code; Mode of Carrying Air/Ship/Truck; Name and address of beneficiary; Name and address of the advising bank; Name and address of the applicant; Name of the issuing Bank and Branch; Negotiating bank preferably freely negotiable in any bank; Number of Letter of Credit and date of opening; Payment Term-Sight; Period of Negotiation; Period of presentation; Port of Loading and port of Discharge;

Page 46 of 95

 Reimbursing Bank and payment mode; Terms and conditions regarding Transshipment and Partial Shipment; Depending on the specific provision in the underlying sales-contract (mentioned below), it may be necessary to incorporate one or more of the following additional terms in the Letter of Credit Whether the pay of the bank charges is on account of the opener or seller Whether, in case of bulk import, charter-party Bill of Lading (B/L) is acceptable or not Whether shipment by chartered vessel is allowed, the following causes must be stipulated in the Letter of Credit. Shipping documents must include copies of Charter-party agreements and Mares Receipt duly attested by negotiating Bank

5.13Different Means of Payment5.13Different Means of Pay

Importer settles the means of payment with the seller after making the purchase contract. Import procedure differs with relation to different means of payment. In our country in most cases, the Documentary/Letter of Credit makes import payment. Purchase Contract contains which payment procedure has to be applied. a) Cash in Advance: Importer pays full, partial or progressive payment by a foreign DD, MT or TT. After receiving payment, exporter will send the goods and the transport receipt to the importer. Importer will take delivery of the goods from the transport company. b) Open Account: Exporter ships the goods and sends transport receipt to the importer. Importer will take delivery of the goods and makes payment by foreign DD, MT, or TT at some specified date.
Page 47 of 95

c) Collection Method: Collection methods are either clean collection or documentary collection Again, Documentary Collection may be Document against Payment (D/P) or Document against Acceptance (D/A). The collection procedure is that the exporter ships the goods and draws a draft/ bill on the buyer. The exporter submits the draft/bill (only or with documents) to the remitting bank for collection and the bank acknowledges this. Then the remitting bank sends the draft/bill (with or without documents) and a collection instruction letter to the collecting bank. Acting as an agent of the remitting bank, the collecting bank notifies the importer upon receipt of the draft. The title of goods is released to the importer upon full payment or acceptance of the draft/bill. d) Letter of Credit: Letter of credit is the well-accepted and most commonly used means of payment. It is an undertaking for payment by the issuing bank to the beneficiary, upon submission of some stipulated documents and fulfilling the terms and conditions mentioned in the letter of credit.

5.14 Transmission of Letter of Credit

The Letter of Credit duly signed by the authorized persons of the bank is then sent to the advising bank. There are three modes of sending the Letter of Credits which are as follows:

By mail/courier By telex: It was practiced earlier in the other branches, but from the very beginning of the Mohakhali Branch it did not transmit Letter of Credit though Telex. By SWIFT: SWIFT Stands for Society of World Wide Interbank Financial

Telecommunication. This is special format maintained round the world. Through this facility party can communicate within few minutes with other party staying any part of the world. Jamuna Bank Limited, Shantinagar Branch provides this facility to the clients.

Page 48 of 95

The advising bank verifies the authenticity of the Letter of Credit. Jamuna Bank has corresponding relationship or arrangement throughout the world by which the Letter of Credit is advised. Actually the advising bank does not take any liability if otherwise not requested.

5.15 Receipt and Scrutiny of Documents

After opening the Letter of Credit the next step would be to await shipment followed by negotiation of documents by a bank abroad. The beneficiary of the Letter of Credit (supplier), after effecting shipment of the goods as per Letter of Credit terms, prepare or collect necessary documents as required under the terms of Letter of Credit and presents the drafts to the negotiating bank along with the supporting documents for negotiation. The negotiating bank negotiates the draft if the documents are found in order as per terms of the Letter of Credit, pays the beneficiary. The negotiating bank will reimburse itself either by debiting Jamuna Banks Account, if any, maintained with them (the NOSTRO Account) or will seek reimbursing bank mentioned in Letter of Credit, if there is no account. Simultaneously, the bank will send the documents to Jamuna Bank. The nature of documents has to be sent by the negotiating bank will depend primarily on the terms of the Letter of Credit and secondly the sales contact between the buyer and seller. However, generally the following documents are asked to send: Bill of lading or Airway Bill or other evidence of shipment (e.g. Railway Receipt, Truck Receipt, Barge Receipt) Certificate of Origin; Commercial Invoice; Draft or bill of exchange; Inspection of Survey Certificate; Marine Insurance Policy;

Page 49 of 95

 Packing List; Quality Control Certificate. (Appendix C)

5.16 Scrutiny of Documents

On receipt of the documents the branch shall immediately set itself to the task of scrutinizing the documents. What they would ensure is that the documents received from the negotiating bank are drawn strictly in conformity with the terms of the Letter of Credit and respond to the requirement of the underlying Letter of Credit in every respect. Examination of the documents generally includes the following points: Completeness of the documents; Consistency of the documents with each other; Compliance with the Uniform Customs and Practices for Documentary Credits (UCPDC) issued by the International Chamber of Commerce, Paris. One of the basic principles of documentary credit is that all parties deal with document and not with goods (Articles 6 of UCPDC-500). That is why the documents should be scrutinized properly. If any discrepancy in the documents is found, that is to be informed to the party. A checklist may be followed for examining the documents. In the UCPDC the Standard for Examining of Documents is mentioned as follows: a) Banks must examine all documents stipulated in the Credit with reasonable care, to ascertain whether or not they appear, on their face, to be in compliance with the terms and conditions of the Credit b) The Issuing Bank, the Conforming Bank, if any or a Nominated bank acting on their behalf, shall each have a responsible time, not to exceed seven banking days following the day of receipt of the documents, to examine the documents and determine whether to take up documents and to inform the party from which it received the documents accordingly.

Page 50 of 95

C) If a credit contains conditions without stating the document(s) to be presented in compliance there with; bank will deem such conditions as not stated and will disregard them.

5.17 Discrepant Documents and Notice

A) When the Issuing Bank authorizes another bank to pay, incur a deferred payment undertaking, accept Draft(s), or negotiate against documents which appear on their face to be incompliance with the terms and conditions of the Credit, the Issuing Bank and the Conforming Bank, if any is bound: I. To reimburse the Nominated Bank which has paid, incurred a differed payment undertaking accepted Draft(s) or negotiated, II. To take up the documents. B) Upon receipt of the documents the Issuing Bank, and/or Conforming Bank, if any, or Nominated Bank, acting on their behalf, must determine on the basis of the documents alone whether or not they appear on their face to be in compliance with the terms and conditions of the Credit. If the documents appear on their face not be in compliance with the terms and conditions of the Credit, such banks may refuse to take up the documents. C) The Issuing Bank determines that the documents appear on their face not to be in compliance with the terms and conditions of the Credit, it may in its sole judgment approach the Applicant for a waiver for the discrepancy. D) i. If the issuing Bank and/or Conforming Bank, if any, or a Nominated bank acting on their behalf, decides to refuse the documents, it must give notice to that effect by telecommunication or, if that is not possible, by other expeditious means, without delay but not later that the close of the seventh banking day following the day of receipt of the documents. Such notice shall be given the bank form which it received the documents, or to the Beneficiary, if it received the documents directly from him.

Page 51 of 95

ii. The issuing Bank and/or Conforming Bank, if any shall then be entitled to claim from the emitting bank, with interest, of any reimbursement which has been made to that bank. E) If the issuing Bank and/or Conforming Bank, if any, fails to act in accordance with the provisions of this Article and/or hold the documents at the disposal of, or return them to the presenter, the issuing Bank and/or Conforming Bank, if any, shall be precluded from claiming that the documents are not in compliance with the terms and conditions of the Credit. F) If the reimbursing bank draws the attention of the issuing Bank and/or Conforming Bank, if any, to any discrepancy (is) in the document(s) or advises such banks that it has paid, incurred a deferred payment undertaking, accepted Draft(s) or negotiated under reserve or against an indemnity in respect of such discrepancy (is), the Issuing Bank, if any, shall not be thereby relieved from any of their obligations under any provisions of this Article.

5.18 Disclaim on Effectiveness of Documents

Banks assume no liability or responsibility for the form sufficiency, accuracy, genuineness, falsification or legal effect of any document(s), or for the general and/or particular conditions stipulated in the document(s) or superimposed thereon; nor do they assume any liability or responsibility, quantity, weight, quality, condition, packing, delivery, value of existence of the goods represented by any document(s), or for the goods faith or acts and/or omissions, solvency, performance or standing of the consignors, the carrier, the forwards , the consignees or the insurance of the goods or any other person whomsoever. Then the following things can happen. These are indicated in the following: 1. Discrepancy found but the importer accepts - then the bank will lodge the documents 2. Discrepancy found and importer not agreed to accept - Issuing bank would intimate negotiating bank for revised document or return the documents to the negotiating bank for necessary action. Here issuing bank is not bound to pay because the documents send by exporter is not in accordance with the terms of Letter of Credit.

Page 52 of 95

3. Documents are OK but importer is not willing to retire the documents - In this case bank is obligated to pay the price of exported goods. Since importer did not pay for bill of exchange, this payment by bank is one kind of credit to the importer and this credit in banking is known as Forced Payment against Documents (PAD). 4. Everything is O.K. but importer fails to clear goods from the port and request bank to clear In this case banks clear the goods and takes delivery of the same by paying customs duty and sales tax etc. So, this expenditure is debited to the importers account and in banking it is called LIM. The above mentioned description could be pointed out as under: a. The seller being satisfied with the terms and the conditions of the credit makes shipment of the goods as per Letter of Credit terms. b. After making the shipment of the goods in favor of the importer the exporter submits the documents to the negotiating bank. c. After receiving all the documents, the negotiating bank then checks the documents against the credit. If the documents are found in order, the bank will pay, accept or negotiate to Jamuna Bank d. Branch & Bank received seal to be affixed on the forwarding schedule e. The Bill of Exchange & transport documents must immediately be crossed to protect loss or fraudulent.

5.19 Lodgment
After the scrutiny the following steps are taken step-by-step to process for lodgment of import documents received from the negotiation bank. Usually payment is made within seven days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay the documents.

Page 53 of 95

Branch authority contacts with an importer, in which procedure they want to collect the documents. Lodgment Constitutes the Followings: Conversion of foreign currency amount of the bill and the foreign bank charges separately into Taka by applying Bills Collection (B.C.) selling rate ruling on the date of lodgment is done. If forward exchange was, the booked rate is applied.24 Payment against Documents (PAD) is created by Debiting PAD Account and Crediting Head Office Account. Full particulars of the documents are entered in the prescribed PAD. Register allotting a consecutive serial number in the register. If the forward exchange rate is booked then the booked rate is applied. Payment against Documents (PAD) is created by Debiting PAD Account and Crediting Head Office Account. Full particulars of the documents are entered in the prescribed PAD Register allotting a consecutive serial number in the register. Documents are endorsed by putting seal and signature. Inter-Brach credit advice (IBCA) is sent to the Head Office along with a prescribed statement to provide them credit for the payment from their overseas account through Jamuna Bank Limited General Account. Head Office (International Division) in receipt of the IBCA and the statement will respond the entry by debit to branch account (through Jamuna Bank Limited General Account) and contra credit to NOSTRO Account of the negotiating bank abroad. As soon as above formalities are completed the importers are served with PAD bill intimations for retirement of concerned import document.

5.20 Retirement of the Documents

On receipt of cost memo/lodgment voucher the importer pays the necessary amount. This stage of the documentary credit operation is known as Retirement of Import Bills. The branch will prepare the retirement voucher to reflect the amount of cost and other charges to be collected from the importer, adjustments of margin and PAD Account. Thereafter the documents may be

Page 54 of 95

handed over to the importer against proper acknowledgement after certification and endorsement. The certifications by authorized personnel of the bank are as follows: The invoice is certified by the authorized officer of the bank with the exchange rate as applied in lodgment; The bill of Exchange received from negotiating bank on issuing bank by the beneficiary; The Transport Documents evidencing the carrying of goods as per Letter of Credit term has to the endorsed by the AD branch. On receipt of intimation, the importer is given necessary instructions with regard to retirement of the bill, disposal of the shipping documents and clearance of the goods from the customs authorities. The importer may ask the bank to retire the bill by debiting his account or may request for the providing LIM or LTR facility, if arranged earlier. On intimation the importer approaches with a letter for retirement of the document against full payment with up to date interest and charges payable. Bank prepares cost memo in printed form on account of the concerned party giving details head of charges payable.

5.21 Financing Related with Import

Advances against Import Bill are originated for the lodgment of shipping documents received from foreign correspondents against Letter of Credit estimated by the Bank on behalf of its customers. Three bills of lodged by debiting PAD account and crediting HO account. To Create PAD, the document received from the negotiating bank is to be scrutinized thoroughly whether they are in order as per L. C terms. If on scrutiny, the documents are found in order, lodgment of the same is done as PAD, after converting the foreign currency into Taka at the conversion rate. Loan against Imported Merchandise (LIM) Parties who are not in position to retire the documents, they may be allowed to retire the Pads through LIM Account on retaining sufficient margin n the landed cost of the goods or as prescribed by Bangladesh Bank. Even if they are reluctant to provide aforesaid margin, goods
Page 55 of 95

may be allowed to be cleared through LIM account under forced circumstances to save the consignment form incurring demurrage, pilferage, and auction and to protect the interest of the Bank. Under such circumstances, goods are cleared only through approved Clearing Agent of the Bank. The consignment after clearance is stored in Banks own go-down duly insured against all risks. The delivery of the consignment is made on the parties against payment only, without resorting to any borrowing from the Bank on that behalf. Loan against Trust Receipts (LTR) Advances against a Trust Receipt obtained from the Customer are allowed to only first class tested parties when documents covering an import shipment of other goods pledged to the Bank as scrutiny are given without payment. However, for such advances prior permission/sanction form Head Office must be obtained. The customer holds the goods or their sale proceeds in trust for the Bank, till such time, the loan allowed against the Trust Receipts is fully paid off. Period of Trust Receipt The Advance allowed against Trust Receipt must be adjusted within the stipulated period. It should be noted that the sale proceeds of goods held in trust must be deposited in the Bank by the borrower initially irrespective of the period of Trust Receipt. Fortnightly statement of sale of LTR goods to be obtained forms the customer and be reviewed to ensure that the sale proceeds have been properly deposited towards adjustment of the loan. Collateral Security Collateral security valuing double of the amount o LTR to be obtained. Any exception to this rule requires approval by Head Office.

Page 56 of 95

5.22 Credits Occurred in Letter of Credit Operation

During Letter of Credit operation some Credit facilities evolved to the importer and exporter. This credit facilitates are mentioned below Payment Against Document (PAD) a. This loan is related to cash Letter of Credit. b. After opening Letter of Credit, foreign exporter sends goods to the importer and a bill of exchange along with shipping documents to the Letter of Credit opening bank. Upon receiving bill of exchange and other documents, bank immediately make payment to the exporter if no discrepancies are found on the shipping documents. Bank hands over the shipping documents to the importer only after his recovery of the payment from the importer. Since bank pay to exporter on the basis of shipping documents, this is called Payment against Documents. Loan against Imported Merchandise A. LIM is occurred from PAD. B. After payment to the exporter on the basis of shipping documents, bank recovers the amount from the importer. (LIM) Sometimes for financial crisis, importer fails to pay the amount stipulated in bill of exchange to the Opening Bank. In this case, he request to the bank to treat PAD as credit and handover the shipping documents to him so that he can clear the imported goods from the port. Then banks convert the PAD to regular credit and hand over the documents to the importer, and take the imported goods as security for the loan. Since this loan is given on the imported goods, this is called Loan against Imported Merchandise. Duration of this loan is one month only. If the loan is no repaid after one month, it is treated as forced LIM. IP Loan a. When Letter of Credit opener has no sufficient fund to purchase Foreign Exchange to open Letter of Credit, then bank provides him credit to purchase necessary foreign exchange under the WES/SEM. This loan is called Import Loan under WES/SEM or IP loan.

Page 57 of 95

 Shipping Guarantee Shipping Guarantee is given to the Party or Client when goods arrive prior to arrival of documents. This happens mostly in cases of air shipment, shipment by truck from Land or shipment by post parcel. In such cases bank endorses non-negotiable shipping documents for clearance of the goods subject to scrutiny and the documents being in order and settlement of the bank dues against the relative bills. For giving guarantee bank charges Tk. 250 from the parties account. Endorsement by the Bank The bank endorses the documents in following manner: Document Endorsement Bill of exchange Receive/Payment for the jamuna Bank Limited Commercial Invoices Invoice value certifies & remitted for the Jamuna Bank Limited Bill of Lading, Airway Bill, Truck Challan Deliver / Pay to the order of M/S ---, for The Jamuna Bank Limited LCA For The Jamuna Bank Limited Then importer releases the importers goods from the port authority with the help of the Clearing and Forwarding (C&F) agent, who, clears the goods from the port and hands over the goods to the importers. After completion of all official requirements C&F agent submits the bill of entry of the Banks. The Bill of Entry is wanted from the party for maintaining the evidence as the goods has been arrived.

Cost At the time of retirement of the shipping documents against payment by debit to the account of the importer the branch prepares cost memo in printed from covering the bill amount and foreign currency charges etc. giving detailed heads of charges payable by the applicant which includes

Page 58 of 95

 Delivery of Shipping Documents If the bill is to be realized by debit to the importers account, the documents are handed over to the importer to his duly authorized clearing and forwarding agent for clearance of the goods form customs at his own account.

Payment to the Foreign Bank Import of Goods Negotiating Bank is authorized to Debit Head Office Account (JBL) directly, if the account is maintained with them. Negotiating Bank is authorized to obtain reimbursement claim form foreign correspondent with which account is maintained by Head Office (JBL) Where reimbursement is provided subsequent to the receipt of documents, an authority Letter is to send to correspondent abroad with whom account is maintained by Head Office to make payment to the Negotiating Bank to debit of JBL account maintained with them for the amount of the documents. Import is another primary form of foreign trade, where foreign commodities are brought into the country for consumption. Jamuna Banks has been providing this services to its client since it began operation in the mid 90s. Various sorts of commodities are imported in to Bangladesh from Fast Moving Consumer Goods to Capital Machinery. Now if we want to compare the volume of different genre of goods being imported we would see that most of the imports in Bangladesh are industrial raw materials and it represents almost 50% of the total imports. Then we have Consumer Goods contributing to 15% of the total import.

Page 59 of 95

Beneficiary

Contract

Applicant

SELLER

BUYER
2. Doc. Credit Application

4. Advise of Doc. Credit 3. Documentary Credit

ADVISING BANK

ISSUING BANK

Figure1: The Documentary Credit Cycle

The Plan of Payments By Means Of the Letter Of Credit The description of process 1. The contract is concluded between the importer and exporter.

2. The importer addresses in serving bank with the request to let out irrevocable the letter of credit (to open the letter of credit) according to condition to the contract and transfers the sum of a covering under the letter of credit.

3. The bank of the buyer opens the required letter of credit and the bank-correspondent asks to notify the supplier on opening the letter of credit.

4. Straight Bank (the bank-correspondent of the bank-emitter) informs the supplier on opening of the letter of credit.

Page 60 of 95

5. The exporter organizes transportation of the goods by means of the conclusion of the agreement with the transport or insurance company and receives the transport invoice or insurance policy.

The exporter gives, according to the contract, the following documents: Performa Invoice, Commercial Invoice, Bill of loading, Insurance policy, Packing sheet/list, Certificate of quality, Others.

And other documents straitening to bank for payment under the documents. It is supposed, that all documents correspond to conditions of the letter of credit. In this case we proceed from the assumption, that straitening and executing bank is the same.

6. The executing bank checks all the documents on conformity to the letter of credit and if not it is found out of any divergences are found out; executing bank can work with one of the following ways:

To send the documents for collection to Bank-Emitter, To pay the documents after reception from the exporter of the letter of guarantee, To pay the documents after reception of consent with divergences from the BankEmitter.

7. Executing Bank sends the documents to the bank-emitter according to the conditions, stipulated by the letter of credit.
Page 61 of 95

8. Executing bank sends the requirement about a covering (with the invoice of the addressee under the letter of credit) to confirming bank.

9. The Bank-Emitter notifies the buyer on arrival of the documents.

10. The importer receives from the bank-emitter the documents. 11. The importer gives the invoice of the transport company for reception of the 12. After reception if the goods from the transport goods.

The Plan of Payment

Confirming Bank 3
Issuer Bank, issuing the letter of credit

8 Binding Bank 1 7 4 5
The Exporter (Seller)

9
The Importer (Buyer)

10

1
Customs House The insurance company

5
Insurance Company

The Transport Company

The transport Company

Figure 2: Summary of the Plan of Payments

Page 62 of 95

Modes of Sales of Goods 1. Cash in advance: Risk is minimum. The Performa invoice is issued. 2. Open Account: Goods are sent first and payment is made afterwards. There are no intermediaries. Performa invoice is used here as well. 3. Documentary Collection: Same as an open account but the use of bank as an intermediary. Here the risk is zero. Here the bank acts like an agent. 4. Documentary Credit: L/C

Here modes 1, 2 and 3 are built on good faith and relationship, but mode 4 comes with a third party guarantor.

Export Section: 5.23 Things Done in Export

In broader aspect the major responsibility that re performed here are: L/C Advising Documents Collection Documents negotiation Export financing

5.24 Parties Involves In Export L/C

1. L/C issuing Bank 2. Importer 3. Exporter L/C advising Bank 4. Negotiation Bank 5. The Paying / Reimbursing Bank

Page 63 of 95

5.25 Export Procedures & Formalities.25 Export Procedures & Formalities

The export trade of the country is regulated by the Imports and Exports (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. These forma or procedures are enumerated as follows

5.26 Registration of the Exporter

The foremost requirement to engage in the business of import and export s registration with the Chief Controller of Imports and Exports (CCI&E). For this purpose an application in the prescribed, form is require to be submitted to that office along with the following documents : Trade license issued by the municipal Authority. Nationality Certificate from the Local Authority. Bank Certificate Income Tax Clearance Certificate. Payment of Registration fees and renewal fees in a Treasury Chalan. Copies of Contract or L/C (if any)

5.27 Export Registration Certificate (ERC)

The exports from Bangladesh are subject to export trade control exercised by the Ministry of Commerce through Chief Controller of Imports and Exports (CCI&E). No exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The ERC is to be renewed every year.

5.28 Export Permit Form (EXP)

After having the registration, the exporter applies to TBL with the trade license: ERC, and the

Page 64 of 95

Certificate from the concerned Government Organization to get EXP. the bank is satisfied, an EXP is issued to the exporter. An EXP contains the following particulars Name & address of the authorized dealer Particulars of the commodity to be exported with code Country of destination Port of destination Quantity L/C value in foreign currency Terms of sales Name & address of the importer Bill of lading No & date Port of shipment Land custom post Shipment date Name & address of the exporter 5.29 Securing the Order

5.29 Securing the Order29 Securing the Order

Upon registration, the exporter may proceed to secure the export order. Contracting the buyers directly through correspondence can do this.

5.30 Signing of the Contract

Description of the goods Quantity of the commodity Price of the commodity Shipment Insurance and marks Inspection Arbitration

Page 65 of 95

5.31Receiving Letter of credit

After getting contract for sale, exporter should ask the buyer for Letter of Credit (L/C) clearly stating terms and conditions of export and payment. The following are the main points to be looked into for receiving / Collecting export proceeds by means of Documentary Credit: The terms of the L/C are in conformity with those of the contract The L/C is an irrevocable one, preferably confirmed by the advising bank. The L/C allows sufficient time for shipment and a reasonable time for registration If the exporter wants the L/C to be transferable, divisible and advisable, he should ensure those stipulations are specially mentioned in the L/C. Advising L/C: When export L/C is transmitted to the bank for advising, the bank sends an Advising Letter to the beneficiary depicting that, L/C has been issued. Shipment of Goods The exporter make and shipment of goods as per the agreement. Documents Collection: Exporter prepares the required documents mentioned in L/C, are as such: Bill of Exchange Bill of Lading Insurance Policy/ Certificate Certificate of Origin Inspection Certificate Commercial Invoice Packing List Full set of shipping documents Documents Negotiation: These documents should be submitted to the bank for negotiation: 1. Export L/C 2. EXP form
Page 66 of 95

3. Commercial invoice 4. Bill of Exchange 5. Certificate of origin# Bill of Lading 6. Packing list# Inspection certificate 7. Insurance document 8. Any other document as per L/C

Respective officer must scrutinize all the documents with reasonable c the terms and conditions are right or wrong.

5.32 Realization of Export Proceeds

The period prescribes by the Bangladesh Bank within which exporter must receive full foreign exchange proceeds of exporter in four months if the receipt of the full proceeds of any shipment is delayed beyond the period without a special authority from the Bangladesh Bank. The exporter will be liable to action under FER Act, 1947.

5.33 Export Financing

An exporter is one who exports the goods to another customer whether n domestic country or in abroad. In exporting the stipulated goods he nay requires financing. So export financing may be required at two stages. I. Pre-shipment credit II. Post shipment credit,

I. Pre-shipment Credit: Pre shipment credit, as the name suggests, is given to finance the act of an exporter prior to the actual shipment of the goods for export. The purpose of such credit is to meet working capital needs starting from the point of purchasing of raw materials to final shipment of goods for export to foreign country. Before allowing such credit to exporters the bank takes into consideration about the credit worthiness, export performance of the exporters, together with all other

Page 67 of 95

necessary information require for sanctioning the credit in accordance with the existing rules and regulations. An exporter can obtain credit facilities against lien on the irrevocable, confirmed and unrestricted export letter of credit in farm of the followings: i. Packing credit (PC). ii. Back-to-Back letter of credit.

Packing Credit (PC) Packing Credit is essentially a short-term advance granted by a Bank to an exporter for assisting him to buy, process, manufacture, pack and ship the goods. This type of credit is sanctioned for the transitional period starting from dispatch of goods till the negotiation of the export documents. Exporter can get PC up to 10% of the Export L/C value and has to be liquidated by negotiation / purchase of Bills of Exchange. The drawings of P.C are required to be adjusted fully once within a period of 180 days.

Back-To-Back Letter Of Credit: A back-to-back letter of credit, a new L/C (an Import L/C) is opened on the basis of an original L/C (an Export L/C). Under the Back -to -Back concept, the seller as the Beneficiary of the First L/C offers it as a security to the advising Bank for the issuance of the second L/C. The Beneficiary of the Back-to-Back L/C may be located inside or outside the original Beneficiarys country. As per instruction of the central bank commercial banks are rendering back-to-back L/C at nil margins.

II. Post-shipment Credit: This type of credit refers to the credit facilities, extended to the exporters by the banks after shipment of the goods against export documents. Necessity for such credit arises, as the exporter cannot afford to wait for a long time for without paying manufacturers / suppliers. Before extending such credit, it is necessary on the Part of banks to look into carefully the financial
Page 68 of 95

soundness of exporters and buyers as well as other relevant documents connected with the export in accordance with the rules and regulations in force, Banks in our country extend post shipment credit to the exporters throughi. Foreign Documentary Bills Purchased (FDBP). ii. Local Documentary Bills Purchased (LDBP).

5.34 Foreign Remittance Department

JBL, Shantinagar Branch is an authorized dealer of foreign exchange. Their dealing in foreign exchange involves buying and selling of foreign exchange covering inward remittances received from abroad and outward remittances sent abroad. There are two types of remittance: 1. Inward remittance 2. Outward remittance

1. Inward Foreign Remittance: Inward remittance covers purchase of foreign currency in the form of foreign T.T., DL, and bills etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form C. The bank also gives service to the customer through Cash Express Instant Cash Remit Master AFX Fast Remit X-press money.

Through these exchange houses money come from abroad to Bangladesh the customer can collect the money by submitting specific document.

Page 69 of 95

2. Outward Foreign Remittance: Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts etc. as well as sell of foreign exchange under t and against import hills retired. Sale of foreign exchange is reported to Excel control Department of Bangladesh flank on form T/M. Foreign exchange means foreign currency and includes all deposits, credits and balances payable in foreign currency as well as foreign currency instruments such as Drafts, T.Cs, bill of exchange, and Letters of Credit Payable in any Foreign Currency. All foreign Exchange transactions in Bangladesh are subject to exchange control regulation of Bangladesh Bank.

5.35 Foreign Account of Bank In order of effect foreign exchange transactions, bank maintains accounts in their own name in various foreign currencies, with banks overseas. These accounts are credited with the claims receivable overseas in the respective currency of the country concerned, and debited with the payments denominated in the respective currency of the country in which the accounts are maintained.

NOSTRO ACCOUNT Nostro is a Latin meaning OURS. So Nostro account means Ours account. Nostro accounts are just reflection or minor accounts showing the position as it obtains in the foreign currency account with each correspondent bank. In the Nostro account, the bank will show the foreign currency accounts of each transaction and alongside the respective items the domestic currency equivalents are indicated. When the bank the domestic currency equivalents are indicated. When the bank makes a purchase of foreign currency, the foreign bank will credit the Nostro account. When it makes a sale it will result in a debit in the Nostro account. In the mirror account the purchase will be debited and sale credited. The Nostro accounts reflect what the foreign correspondent owes to the bank and what the home bank owes to the foreign bank.

Page 70 of 95

VOSTRO ACCOUNT The Nostro account is termed as Vostro account by the correspondent bank. The word Vostro means YORS. A Vostro account or Your Account is also called a local currency with local banks and such accounts are called Vostro accounts. Generally Vostro accounts are maintained by foreign correspondent banks on a reciprocal basis to effect payment as well as receive payments on behalf of their clients. Functions performed in this department: 1. Issuance of TC, Cash Dollar/Pound. 2. Issuance of FDD, FTT & purchasing, payment of the same 3. Passport endorsement. 4. Encashment Certificate. 5. F/C Account opening & filing. 6. Maintenance of ledger of Cash Dollar, FC Deposit A/C & TC. 7. Preparation of all related statement, Voucher & posting 8. Preparation of Weekly, Monthly, Yearly Statement for Bangladesh Bank return timely. 9. Attending all related correspondence to other Bank or Institution.

5.36 SWIFT
SWIFT means High-value payment market infrastructures focus primarily on security and resilience to support time-critical payments, efficiency to have the right trade-off between risks and cost. Liquidity cost reduction by early finality, easy collateral coverage and better liquidity management through real-time interactive services Balancing cost, efficiency and risk are your key requirements, and SWIFT meets them with a reliable, secure and reusable messaging infrastructure, supporting international and proprietary standards. More than 62 high-value payments clearing and settlement systems covering more than 90 countries and carrying more than 240 million payments a year, rely on SWIFT for secure messaging services and common message standards essential to their smooth operation. Because customers are multilateral, customers need a trusted third party like SWIFT to provide secure, reliable and proven messaging solutions. Swifts offering is more compelling in terms of cost and risk than
Page 71 of 95

alternatives, thanks to reusability of participants existing SWIFT infrastructures, value-added services such as FIN Copy, and standard support services. SWIFT solutions for high-value payment clearing systems support the messaging layer for payment transaction processing, cash management, business administration functions, reporting and generic communication.

5.37 CASH REPORTING: SUPPORTING CUSTOMERSNEED FOR ACCOUNT INFORMATION

The need for standardized solutions in cash reporting is driven by the centralization of liquidity management and treasury functions, growing volumes of cross-border payments, increasing volumes of 'time-payments' (payment versus payment, delivery versus payment, real-time gross settlement systems), the emergence of cross-border real-time payment settlement systems, in addition to existing domestic systems, and regulatory pressure to manage liquidity and credit risk.

5.38 The Function of SWIFT

For payments Cash Reporting Supporting your real-time account information needs Payments and cash management Economic changes in the payments landscape have forced the banking community to find new ways to reduce their operational costs, mitigate their liquidity risk and increase the revenue and efficiency of their core payment products. Under the pressure of regulators, the cash management service offering becomes more transparent to meet new customer expectations. While conforming to regulation is a must, service quality becomes a key differentiator. SWIFT has developed offerings in payments and cash management to help the banking community meet these urgent challenges:
Page 72 of 95

 Enhance customer service: automate exceptions and investigations in order to reduce enquiry turn-around time and to provide transparency on enquiry status to your customers, provide a compelling value proposition for corporate or person to- person retail payments for immigrants (workers remittances) including mobile payments. Improve liquidity and risk management: receive end-of-day as well as intraday cash reports information vital to get visibility on cash positions across your organization and to improve liquidity management. In addition, SWIFT is considering extending its value proposition to include liquidity risk management tools. Increase operational efficiency and save costs: Swifts single window allows you to rationalize your connectivity channels with: 1. Correspondent banks for clearing and settlement of domestic or foreign currency payments using Swifts payments clearing messaging services 2. High value payments clearing and/or settlement systems operating on a real time gross settlement basis using Swifts secure and reliable FIN domestic services for high value payment market infrastructures 3. Retail payments clearing systems using Swifts cost efficient services for retail payments market infrastructures: the services help to clear batches of payments prior to settlement at discrete intervals, with or without netting.

Page 73 of 95

Chapter #O6 Findings and Analysis

Page 74 of 95

6.1 Data Analysis 6.1.1 Import financing in the year 2011 in Santinagar Branch
Shows Import Financing
Name of the month 2011(Lac)

January February March April May June July August September October November December Total Shows Import financing diagram:
2500 2000 1871.11 1574.84 1500 1199.42 1000 500 0 973.38 902.5 873.38

1871.11 1199.42 1574.84 973.38 902.5 873.38 987.45 1215.01 1930.31 1060.02 1425.53 1893.38
15906.33

Source: Bank Statement

January 1930.31 1893.38 1425.53 1215.01 987.45 1060.02 February March April May June July August September October November December

Comments: From above diagram we can see that, In June 2011 the total Import by the bank is
the lowest position and the amount is tk. 873.38(Lac). After that the import is increased in regular basis. At September 2011 the total import by the bank is the highest position and the
Page 75 of 95

amount is TK. 1930.31(Lac). At the months January, March and December 2011 the import is increased.

6.1.2 Export financing in the year 2011 in Santinagar Branch

Shows Export Financing:
Name of the month 2011(Lac)

January February March April May June July August September October November December Total Shows Export financing diagram:
3000 2500 2000 1546.28 1500 1000 500 0 1216.28 1974.3

1546.28 1216.28 1974.3 1496.27 1595.12 843.27 2091.17 1386.9 1010.42 2460.15 614.27 1539.92 17774.35 Source: Bank Statement

January 2460.15 2091.17 1595.12 1496.27 1539.92 1010.42 843.27 614.27 February March April 1386.9 May June July August September October November December

Comments: From above diagram we can see that, In November 2011 the total Export by the
bank is the lowest position and the amount is tk. 614.27 (Lac). After that the import is increased
Page 76 of 95

in regular basis. At October 2011 the total Export by the bank is the highest position and the amount is TK. 2460.15 (Lac). At the months March, July and December 2011 the Export is increased.

6.1.3 Remittances in year 2011

Shows the remittances:
Name of the month 2011

January February March April May June July August September October November December Total

0 0 32000 24000 16000 60000 94000 150000 18000 10000 8000 30000 442000 Source: Bank Statement

Shows the remittances diagram:

160000 140000 120000 100000 80000 60000 40000 20000 0 0 0 32000 24000 16000 18000 10000 8000 60000 94000 150000 January February March April May June July 30000 August September October November December

Page 77 of 95

Comments: From above diagram we can see that, In January and February 2011 the total
remittance by the bank is the lowest position and the amount is tk. Zero. After that the remittance is increased in regular basis. At August 2011 the total remittance by the bank is the highest position and the amount is TK. 150000.

6.1.4 Import financing in the year 2012 January to march basis in Santinagar Branch
Shows Import Financing:
Name of the month January February march Total 2012(Lac) 1035.96 721.46 921.51 2678.93

Source: Bank Statement

Shows Import financing diagram:

1200 1000 800 600 400 200 0

1035.96 921.51 721.46 January February march

January

February

march

Comments: From above diagram we can see that, In

February 2012 the total Import by the

bank is the lowest position and the amount is tk. 721.46 (Lac). After that the import is increased
Page 78 of 95

in regular basis. In January 2012 the total import by the bank is the highest position and the amount is TK. 1035.96 (Lac).

6.1.4 Export financing in the year 2012 January to march basis in Santinagar Branch
Shows Export Financing: Name of the month January February march Total Shows Export financing diagram: 2012(Lac) 2736.65 981.59 969.73 4687.97 Source: Bank Statement

3000

2736.65

2500

2000 January 1500 981.59 1000 969.73 february march

500

0 January february march

Comments: From above diagram we can see that, In March 2012 the total Export by the bank
is the lowest position and the amount is tk. 969.73 (Lac). After that the Export is increased in regular basis. In January 2012 the total import by the bank is the highest position and the amount is TK. 2736.65 (Lac).

Page 79 of 95

6.2 FINDINGS
In recent years, the foreign exchange business of Jamuna Bank ltd is increasing at a faster rate. As a state owned scheduled bank, Jamuna Bank Ltd is playing an important role toward the growth and economic development of Bangladesh. Jamuna Bank is rendering a stable support to the national foreign exchanges business. Although the foreign exchange business loading day by day there are also some obstacles around it they are as per observations: JBL provide 4.5% interest on saving account, 12% on FDR for six months. JBL in Shantinagar Branch has SWIFT facilities. Very few bank in our country officer this. In JBL Shantinagar Branch total outward remittance was highest in March month. But in April month it is decreasing. Exchange rate is movement. Government rules and regulation often make problem for import and export market in Bangladesh. More innovative product must be offered, in JBL but lack customer confidence. Existing bad legal system and alarming factor recovering lone from defaulter. In reality it is very difficult, lengthy, and expensive to have a verdict in favor of bank. Weak software function often disrupts the foreign exchange operation of the JBL, Shantinagar Branch. It is difficult to serve so many persons simultaneously in foreign exchange division of the beach because of limited space.

Page 80 of 95

Chapter #7 SWOT Analysis

Page 81 of 95

7.0 SWOT Analysis

SWOT analysis is the detailed study of an organizations exposure and potential in perspective of its strength, weakness, opportunity and threat. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in comparison to their competitors. As though this tool, an organization can also study its current position, it can also be considered as an important tool for making changes in the strategic management of the organization.

So, we can say that it is a technique used by the credit officers to evaluate credit proposal submitted by company especially by the production concern.

7.1Strengths:
Jamuna Bank Ltd has already established a favorable reputation in the Banking industry of the country. It is one of the leading private sector commercial Banks in Bangladesh. The Bank has already shown a tremendous growth in the profits and deposits sector. Jamuna Bank Ltd has provided its Banking service with a top leadership and management position. The top management officials have all worked in reputed Banks and their years of Banking experience, skill, and expertise will continue to contribute towards further expansion of the Bank. Jamuna Bank ltd has already achieved a high growth rate accompanied by an impressive profit growth rate in 2008. The number of deposits and the loans and advances are also increasing rapidly. Jamuna Bank Ltd has an interactive corporate culture. The working environment is very friendly, interactive and informal. And, there are no hidden barriers or boundaries while communicate between the superior and the employees. This corporate culture provides as a great motivation factor among the employees. Jamuna Bank ltd has the reputation of being the provider of good quality service to its, potential customers.
Page 82 of 95

7.2Weaknesses: The main important thing is that the Bank has no clear mission statement and strategic
plan. The Banks not have any long-term strategies of whether it wants to focus on retail Banking or become a corporate Bank. The path of the future should be determined now with a strong feasible strategic plan.

The Bank failed to provide a strong quality-recruitment policy in the lower and some
mid-level position. As a result the services of the Bank seem to be Deus in the present days. The poor service quality has become a major problem for the Bank. The quality of the service at Jamuna Bank Ltd is higher than the Dhaka Bank, Prime Bank or Dutch Bangla Bank etc. But the Bank has to compete with the Multinational Bank. Some of the job in Jamuna Bank Ltd has no growth or advancement path. So lack of motivation exists in persons filling those positions. This is a weakness of Jamuna Bank Ltd that it is having a group of unsatisfied employees. In terms of promotional sector, Jamuna Bank ltd has to more emphasize on that. They have to follow aggressive marketing campaign.

7.3Opportunities:
In order to reduce the business risk, Jamuna Bank ltd has to expand their business portfolio. The management can consider options of starting merchant Banking or diversify into leasing and insurance sector. The activity in the secondary financial market has direct impact on the primary financial market. Banks operate in the primary financial market. Investment in the secondary market governs the national economic activity. Activity in the national economy controls the business of the Bank. Opportunity in retail banking lies in the fact that the countrys increased population is gradually learning to adopt consumer finance. The bulk of our population is middle class. Different types of retail lending products have great appeal to this class. So a wide variety of retail lending products has a very large and easily pregnable market.
Page 83 of 95

 A large number of private Banks coming into the market in the recent time. In this competitive environment Jamuna Bank ltd must expand its product line to enhance its sustainable competitive advantage. In that product line, they can introduce the ATM to compete with the local and the foreign Bank. They can introduce credit card and debit card system for their potential customer. In addition of those things, Jamuna Bank ltd can introduce special corporate scheme for the corporate customer or officer who have an income level higher from the service holder. At the same time, they can introduce scheme or loan for various service holders. And the scheme should be separate according to the professions, such as engineers, lawyers, doctors etc.

7.4Threats:
All sustaining multinational Banks and upcoming foreign and private Banks pose significant threats to Jamuna Bank ltd. If that happens the intensity of competition will rise further and Banks will have to develop strategies to compete against these local and foreign Banks. The default risks of all term loans have to be minimized in order to sustain in the financial market. Because of default risk the organization may become Bankrupt. Jamuna Bank ltd has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem if not eliminate. The low compensation package of the employees from mid level to lower level position is not able to keep the employee motivation. As a result, good quality employees leave the organization and its effects the organization as a whole.

Finally it can be said that, top management officials have experience skill and proficiency on Banking. JBL has got impressive decoration, for that it creates the attention of the potential customers. Lovely environment boost up capability of the employees. Besides these JBL has adequate capital, high interest rate for DPS and Savings account and its goodwill. For poor employment system, JBL is losing its reputation. For this reason right people are also not in right
Page 84 of 95

place for reference appointment. Another weakness is low interest rate of FDR, for which JBL is losing their customers. This analyzes the opportunity, which will be available to a company in near future, such as withdraw of tax, incentives, export, exemption and more credit facilities etc. JBL can also adopt diversification strategy in expanding the business line into leasing and insurance company. It analyzes the threats, which may face the company such as international law, withdraw of most favorable nation (MFN) and GSP facilities etc. Some contemporary, multinational and upcoming Banks are competitors of JBL. These Bank poses threat for JBL. So JBL should take necessary steps to compete with them.

Page 85 of 95

Chapter #08 Recommendation & Conclusion

Page 86 of 95

Recommendations
As an internee of JBL Shantinagar Branch, I have some recommendation, JBL import and export amount is very low compared to the other bank. JBL should develop more and more advertisement programs to attract importer and exporter. They should develop a more effective database needed for analyzing Foreign Exchange business and sector wise export financing facilities. Adequate training is essential for the efficient foreign trade management. Almost all recognized commercial bank has its own training center, where contentious training given to the managers and their improvement. Commission income occupies the major part of the total earnings of the bank and banks profitability mainly depends on commission earning capacity. So bank should establish a research and development center for the purpose of introducing and efficient Foreign Exchange department. Clients of JBL complained that sometime bank requires extra time for import and export. The bank should be conscious to solve the problem. Some officers of the bank are not self motivated. They should be self motivated by training. The needed more branches throughout the country. Jamuna Bank should take initiatives to Encourage Remittance Flow and Utilize for Economic Development through Savings Facilities for Non-Resident Bangladeshis, NonResident Foreign Currency Deposit (NFCD), BD Taka Premium Bond, Wage Earners Development Bond.

Page 87 of 95

CONCLUSION:
It is a great pleasure for me to have practical exposure to Jamuna Bank Limited JBL, Foreign Exchange Branch. Without practical knowledge, it is not possible for me to compare the academic knowledge & practical knowledge. Since the time is very limited to learn the all the sectors of a Bank. If the duration of internship can be increased, then it is possible to learn all the Banking activities more properly. To compete in the environment of advancing technology and faster communication the JBL should depend more heavily on the quality service and information technology. JBL should be connected through wide area network. So that all the informational and service can be accessed from any branch of the world. No doubt about it that JBL achieve superior position in our Banking industry but to cope with customer JBL should think how to make its service operation in Bangladesh, JBL analysis. As a leading new generation Bank JBL is contributing significantly to the economy of Bangladesh with a promising future. I can hope that JBL will be able to spread their business with increasing various schemes & other utility services. should proactive. To compete with other Banks

introduce easier way for faster processing of credit

Page 88 of 95

References

Books:
L.Franch.Wendell and H.Bell.Cecil 2001.Organization Development 6th Edition. Transactions in foreign exchange: Principles and Practices (M.A Yousuf & M.R Sinha).

Annual Report
Annual report 2009 Jamuna Bank Limited. Annual report 2010 Jamuna Bank Limited.

Hand note
Mr. Md. Belal Hossain (manage) and Mr.Biplom Kumar Chakraborty (FAVP) (Foreign Exchange division, Shantinagar Branch)

Website
JBL Branches. Available from http://www.jamunabankbd.com/info branch list Jmuna Bank Limited 2012, History of JBL, available from http://www.jamunabankbd.com http://www.Swift.com

Page 89 of 95

Appendix

Page 90 of 95

This chapter focuses Letter of Credit form, Remittance received form and Import form. 1. First part is L/C form 2. Second part is Remittance Receive form 3. Third part is Import form

Page 91 of 95

Page 92 of 95

Page 93 of 95

Page 94 of 95

Page 95 of 95