Term paper on General Banking Performance of FSBL

Chapter one-Introduction
1.1 Introduction of the study In todays fast moving world, business is more complex and competitive. Banking is an essential industry. It is where we often wind up when were seeking a loan to purchase a new automobile, tuition for college or trade school, financial advice on how to invest our savings, credit to begin a new business, a safe deposit box to safeguard our valuable documents or even more commonly, a checking account or Credit card to keep track of when and where we spend our money. This industry, composed of thousands of firms worldwide, literally affects the welfare of every other industry and the economy as a whole. In fact, bank is the vitality of modern economy. Developed and organized banking system is a prerequisite of every kinds of economy- capitalistic, socialist, developed and underdeveloped countries whatever it may be. Todays banking is an industry in change. Rather than being something in particular, it is continually becoming new- offering new services, merging and consolidating into much larger and more complex business, adopting new technologies that seem to change faster than most of us can comprehend, and facing a new and changing set of rules as more and more nation cooperate to regulate and supervise the banks that serve their citizen. Bangladesh is not exception in this case. Marketing strategies for banking business is one of the most vital issues now in Bangladesh. Because, after liberation, the government of the Peoples Republic of Bangladesh formally took over the charge of administration of different banks. The banking
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institutions are the custodians of private savings and a powerful instrument to provide credit. They mobilize resources of the country by accepting deposits and canalize them for industrial and national development by granting advances. Hence, in order to implement the above-mentioned state policy, the Government of Bangladesh decided to nationalize all the banks of the country. At that time all the existing 12 banks were nationalize and were converted into six new banks. From 1983, privatization and denationalization process started in the banking sector. As a result 2 (out of 6) nationalized commercial banks were completely denationalized (in 1983) and one partly denationalized and other three were kept under government ownership. In addition, 8 new private commercial banks were permitted to function in the banking sector. Over the time there are 31 private commercial banks and 14 foreign banks now operating their business in Bangladesh. During the last six years, many new banks have emerged to cater the needs of the customers. They are continuously trying to attract people towards them by offering new types of products and services to face competition and fresh challenges thrown by their rival. Efforts are made to satisfy customers needs by providing superior value than their competitors. FSBL, Agrabad Branch is a bank of 21st century commenced their journey only 4 years ago. Within these 4 years, the bank has developed many attractive financial products and services at a pretty interest rate to help the people for saving their money and for meeting loan demand.

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Ive tried to know about the general banking services offered by FSBL the problems faced by them and the prospects they will enjoy. 1.2 Significance of the study The study carries much importance in view of the fact that the economic development of Bangladesh is closely linked with the strong and healthy financial organizations, which facilitate mobilization of domestic and foreign funds on a large scale. Banking organizations are doing their jobs more competitively now a day. Attracting the people to save their money by developing various products and schemes, investing the funds in different profitable sectors, helping in export and import business, providing services in case of inward and outward remittance etc. are the main focus of the banking institutions. As First Security Bank Limited is a new bank; no research work has been made to highlight the banking system, the problems and the prospects in this regard. This research gap induced me to undertake the study. It is hoped that the findings of the study will be useful for the readers and young learners to get knowledge about the topic.

1.3 Scope and Objectives At FSBL, Agrabad Branch, Chittagong, Ive tried to acquire knowledge about the overall banking system. The bank has classified its total operation into three sections. These are: General Banking Credit

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Foreign Exchange Ive worked with two of those three sections to acquire knowledge about the operations, procedures of the work followed by the bank. Analyzing the variable, like different deposits, loans and advances, customer services, profitability of the bank is one of the objectives of the study. In addition of the principal objective, the following are some of the common but significant objectives of the study: 1. To know about the general banking operation of FSBL Limited. 2. To know about the scopes of Deposit collection of the bank. 3. To know about the area of general Credit. 4. To know about the procedure of settle Loan. 5. To examine the loan collection process. 6. To know about the documents of the Credit. 7. To identify the problems of FSBL, Agrabad Branch, Chittagong is facing and the possible solutions of these problems.

1.4 Methodology of the study Sample design: In this Project work, FSBL, Agrabad Branch, Chittagong is selected to conduct the study. Selection of variables: Deposits, Loans and Advances, Customer services, Profits etc. are selected as variables. Data collection: For conducting the study I used the following methodsCollection of primary data: Some study related data are collected from designing questionnaires, personal interview, and from related instruments.

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Collection of secondary data: To prepare the report, I used many data and literary information for which I had to depend on secondary sources. This are emphasis in the study. Annual reports of FSBL Limited. Different prospectors of FSBL,Agrabad Branch, FSBL Limited. Others related books. Along with these, observation is another method that was also given

1.5 Limitations of the study In every program or activities, one has to face numerous constraints. During my 2 months internship program, I have also faced some problems. These are: 1.Bank is a busy organization with comparison to others. There are rushes of people for about whole the day and the officers have to transact with them. So it is very much tough for them to allocate time for an internee. 2. The allocated time this project work is not sufficient for us to gather knowledge and to make the study a complete and fruitful one. 3.The study is restricted only to FSBL, Agrabad Branch, Chittagong. 4.The study also suffered from inadequacy of data provided by FSBL Limited.
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5.Most of the employees are not familiar with internship program. Chapter Two-Profile of FSBL Limited

2.1 Background of FSBL Limited FSBLis a bank of 21st century. It is a private commercial bank with head office at Dilkhusa, Dhaka, Bangladesh . The bank has 25 branches spread all over the country. The founders of FSBL Limited are committed to make it a little more different and a bit special qualitatively. This bank has a new vision to fulfill and a new goal to achieve. The bank has been manned with experienced executives equipped with modern technology so as to make it most efficient to meet the needs of 21st century. With assets of TK.722,74,49,242 and more than 120 employees, the bank has diversified activities in retail banking, corporate banking and international trade. The total amount of Deposits is Tk.523, 03,01,832 and the total Loans and Advances are Tk.410, 26,07,964 at the end of the year 2005 that shows a great performance of FSBL Limited. The Credit-Deposit ratio is 78.44%. Till 31st December 2005, the total amount of export is Tk.1988.40 million and the total amount of import is Tk.3750.60 million. The total profit at the end of the year 2005 is Tk.12.71 crore and the expected profit of year 2006 is Tk.25 crore. The bank has 10-division namely Human Resource Division, Credit Division, International Division, Audit and Inspection Division,
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Development and Marketing Division, Research and Planning Division, Information Technology Division, General Service Division, Treasury and Money Market Division. The bank selects its basic workforce from internal source mainly through directors recommendation. So, in general the employees are not highly qualified. But the executives were selected through interview and they had a long banking experience. So they are now the assets of the company.

2.2 Management of FSBL Limited The decision making process of FSBL is democratic and decentralized. The upper level management hardly bothers about the operational task of the bank. The sponsors Directors of the bank are well-established businessmen and professionals of the country having business in and out Bangladesh. A board of Directors is formed taking 26 members out of the entrepreneurs and Mrs.Nasim Sikder has elected as a chairperson unanimously. Highly qualified and efficient professionals manage the bank. The Managing Director of the bank is Mr.Syed Ashraf Ali who has rich experience of managing both the nationalized and private sector banks as Chief Executive. Most of the cases pending at Head Office level solved with higher priority for smooth functioning of bank operation and quick disposal of the proposals. All the decisions made at Head Office level through different committee. At branch level all the decision taken by the Branch manager complying rules and regulations set by the Head Office. Branch manager has the supreme authority to final disbursement of the facility to the customer. All credit facilities under branch delegation exercise through credit committee.

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Deputy manager coordinates all the functions of the branch as Manager Operation. 2.3 Organization structure of FSBL Limited a. FSBL of Bangladesh Ltd. (Head Office) Chairman Managing Director (M.D) Deputy Managing Director (D.M.D) Executive Vice President (E.V.P) Senior Vice President (S.V.P.) Vice President (V.P) Senior Assistant Vice President (S.A.V.P) Assistant Vice President (A.V.P) Senior Principal Officer (S.P.O.) Principal Officer (P.O.) Executive Officer (E.O.) Officer Junior Officer (J.O)

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b. FSBL of Bangladesh Ltd. (Agrabad Branch) Senior Assistant Vice President (S.A.V.P) Assistant Vice President (A.V.P.) Principal Officer (P.O.) Executive Officer (E.O.) Officer Junior Officer (J.O)

2.4 Sources of Fund FSBL uses various sources to raise its funds. Among the available sources, deposits occupy the lion share of the sources. FSBL has introduced various types of attractive saving schemes that motivate the saver to save their money at a pretty interest rate. The total amount of deposits, which was Tk.3080.20 million at the end of the year 2001 have increased to Tk.5230.30 million at the end of the year 2005. It shows a greater improvement in creating funds. Besides deposits, paid up capital, provision and reserves and other liabilities are the main sources of fund.

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2.5 Capital Adequacy Ratio In terms of section 13(A) of Banking Companies Act 1991 and BRPD circular no. 01,14 and 10, required capital of the Bank at the close of business on 31st December 2004 was required to be Tk.337,724,216as against available core capital of Tk.253,660,186 and supplementary capital of Tk.38,863,488, that is, a total of Tk.292,523,674. Amounts in Taka At 31st Dec.2004 Core Capital (Tier-1) Paid up capital 200,000,000 Statutory reserve 18,026,557 Other reserve 24,000,000 Retained profit 11,633,629 253,660,186 Supplementary capital (Tier-2) General provision on unclassified loans (1%) 37,444,410 Exchange equalization account 1,419,078 38,863,488 292,523,674 This shortfall of Tk.45, 200,542 (337,724,216-292,523,674) is yet required to be filled up.

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2.6 Credit and Advance Policy FSBL invests both in public sector and private sector. Its credit portfolio is consisted of Financing in export and import. Financing in working capital. Financing in business transaction. Financing in purchasing consumer goods. Financing in projects etc. FSBL has been expediting financing in small and medium sized industries and business with the aim of creating enthusiasm among the entrepreneurs.

2.7 Financial Products/Services of FSBL Limited Products and Services of FSBL can be described in 3 dichotomies: Depository Products: 01.Current Account 04. FDR 02. Saving Account 05. Deposit Schemes 03. STD Account a) Monthly Saving Scheme b) Double Benefit Deposit Scheme c) Monthly Benefit Deposit Scheme Loan Products: 1. Loan General 2. Secured Overdraft 3. Cash Credit (Hypo) 4. Lease Finance 5. Hire Purchase 6. Consumer Credit Scheme 7. Packing Loan 8. Payment Against Document 9. Loan Against Trust Receipt 10.Loan Import Merchandise 11.Export Cash Credit
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Other Products and Services 01.Ready Cash 02.Remittance 03.Collection of Utility Bills 2.8 Special features of FSBL Limited 01.Encashment of Cheque within 45 seconds 02.Attractive interest rate 03.Competitive L/C commission and other charges 04.Emphasis on small loan disbursement 05.Promoting saving tendency of mass people by introducing attractive new saving scheme. 06.Expedite industrialization by providing long-term loan through lease finance. 07.Micro Credit facility for middle class people. 08.Step taken for elevation of poverty by opening branch in rural areas and providing loan facility in income generating project of rural middle class and others. 09.Reducing dependence on interest income by increasing fee based income. 10.Decentralized delegation of authority, 75% decision is taken at branch level. 11.Application of modern technology and producing quality service for the customer. 2.9 Performance of FSBL Limited Paid up Capital Total asset Deposit Loans and Advances Import Export Profit No of Branches Manpower As on Dec.31, 2004 Tk.21, 12,40,429 Tk.4459529149 Tk.3080.20 million Tk.2539.80 million Tk.2222.60 million Tk.1514.50 million Tk.7.59 crore 20 165 As on Dec.31, 2005 Tk. 25, 36,60,186 Tk.7227449242 Tk.5230.30 million Tk.4102.61 million Tk. 3750.60 million Tk.1988.40 million Tk. 12.71 crore 25 225
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Chapter Three Operations of FSBL,Agrabad Branch, Chittagong. The importance of the mobilization of savings for the economic development of our country can hardly be over emphasized. We consider savings and deposits as lifeblood of the bank. More the deposit, greater is the strength of the bank. The bank intends to launch various new savings scheme with prospect of higher return duly supported by a well-orchestrated system of customer services. The bank would cater to the credit needs of individuals as well as corporate clients. Initially it will emphasize on trade finance, which would be short term and self-liquidating in nature. Considering the importance of foreign trade in our country, financing and handling of Export & Import business and also handling of foreign remittance would be given top most priority.

3.1 Customer Service & Account Opening Department Functions: Account opening Cheque book issuing Signature scanning MSS opening MSS closing Account transfer Account closing Answering customers quarries Procedure of opens an Account in FSBL Limited: First of all, one has to fill up an Account opening form and a Cheque requisition form. An introducer who is an account holder of this bank, attest the customers photographs and the form. Then the banker will put an account number and give a Deposit slip to the customer. The customer must deposit minimum Tk.1000 to that account number of the bank. Then the

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Relationship between the Banker and the Customer will establish. After that the bank will issue a Cheque Book on the customers name. Procedure of close an Account in FSBL Limited: At first the client will apply to close his account. The banker will verify the signature of the application and take his Cheque book. Then the bank will provide him the deposited amount after deduction of the closing charge(s). In case of current account at first the liability will be adjusted with his deposit and then make payment. Requirements for Opening an Account: SB (Savings) An introducer Photograph of the A/C holder (2 copies) Nationality certificate/First 7 pages of passport (Photocopy) Photograph and signature of nominee. CD (Individual/Joint) An introducer Photograph of the A/C holder (2 copies) Nationality certificate/First 7 pages of passport (Photocopy) Photograph and signature of nominee. CD (Proprietorship firm) An introducer Photograph of the A/C holder (2 copies) Nationality certificate/First 7 pages of passport (Photocopy) Photograph and signature of nominee. Attested photocopy of trade license. CD (Partnership firm) An introducer Photograph of the A/C holder (2 copies) Nationality certificate/First 7 pages of passport (Photocopy) Photograph and signature of nominee. Attested photocopy of trade license
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Certified copy of Partnership Deed duly signed by all the partners. Partnership A/C agreement Resolution signed by all the partners to open A/C. CD (Limited Company) An introducer Photograph of the A/C holder (2 copies) Nationality certificate/First 7 pages of passport (Photocopy) Certified copy of the Memorandum & Articles of Association Certified copy of Certificate of Incorporation Certified copy of Certificate of Commencement (In case of Public Limited Co.) List of Directors Certified copy of Resolution of the Board of Directors for opening & operating of the A/C.

Interest Rate of Different Deposits: Deposits 1. Short term deposit 2. Savings deposit 3. Fixed deposit For one month For three months For six months For one year & above Rate 5.5% 7.5% 8% 9.5% 10.00% 10.50%

Monthly Savings Scheme: Small savings can formulate large deposit. Savings increases mental power of a man, form capital and increases the confidence of a depositor. FSBLintroduce a saving scheme with high profit for the purpose of increases saving mentality. In this savings scheme one can deposit money in every month and will get a handsome amount of money at the end of certain

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period. The amount of savings/deposits as period is shown in below: Period Monthly Monthly installment installment Tk.250 Tk.500 5 years Tk.19615 Tk.39230 8 years Tk.37367 Tk.74735 10 years Tk.52702 Tk.105405

per monthly installment and Monthly installment Tk.1000 Tk.78460 Tk.149470 Tk.210810 Monthly installment Tk.5000 Tk.392300 Tk.747350 Tk.1054050

3.2 Bills and Remittance Department Bank has branches throughout the country and therefore, they serve as best medium for remittance of funds from one place to another. This service is available to both customers and non-customers of the bank. Functions: Issuing TT, DD, PO, SDR Collection of outward Cheque Collection of inward Cheque Providing Accounts statement Settlement of MBSS, DBDS, FDR Solvency certificate issuing Payment Order / Pay Order (P.O) This is an instrument issued by the branch of a bank for enabling the Customer/Purchaser to pay certain amount of money to the order of a certain person/firm/organization/office within the same clearinghouse area of the pay order-issuing branch. Characteristics of P.O The issuing branch and paying branch are same. Application for payment within the clearinghouse area of the issuing branch. This may be open or can be crossed.
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Demand Draft (D.D) This is an instrument through which customers money is remitted to another person/firm/organization in outside the clearinghouse area from a branch of one bank to an outstation branch of the same bank or to a branch of another bank (with prior arrangement between that bank with the issuing branch). This is an order instrument in which the issuing branch gives instruction to the payee/drawer branch to pay certain amount of money to the order of certain person/firm/organization. Telegraphic/ Telephonic Transfer (T.T) This is a mode of transfer of customers money from a branch of one bank to another branch of the same bank through telegraphic/telephonic message. The issuing branch used to send the message of such remittance through telegraph/telephone adding certain code number or test number on the basis of test key apparatus developed by the concerned bank for its different branches. Characteristics of T.T Issued by one branch to other branch and message is talecommunicated. Remittance/ transfer of money is done through tested tale-messages. Remittance is affected on the basis of tested message. Test key apparatus is required. Clearing house Clearing House is a place in the Central Bank where different banks come to settle their interrelated liabilities. Clearing House System The mechanism of working at a Clearing House in general is as follows: Every Bank of the locality, which is a member of the clearinghouse, prepares a Bank-wish list of cheques after receive from customers and drawn on different Banks of the locality.

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An officer, in charge of clearinghouse, goes to the clearinghouse in the morning with the cheques and their list. He delivers the cheques to the officials of the respective banks. Similarly, he also receives the cheques drawn on his Bank from the officials of the other banks. The official of each bank computerizes the final balance, payable or receivable by his Bank after taking into account the various amount of receipt and payment. The official return of their respective Bank to meet again in the afternoon to return any dishonored instruments to the officials of the respective Banks. The final settlement is effective by the supervisor of the clearinghouse by debiting or crediting, as the case may be, the accounts of the respective Banks as maintained with the clearinghouse.

3.3 FOREIGN EXCHANGE DEPARTMENT Foreign Exchange refers to the process or mechanism by which the currency of one country is converted into another country. Foreign exchange is the means and methods by which rights to wealth in a countrys currency are converted into rights to wealth in another countrys currency. The foreign exchange department of FSBL,Agrabad branch is playing an important role in enhancing exports earning. Which aids economic growth and will be helpful for economic boost. On the other hand, it also helps to meet those goods and services, which are more demanding and note adequate in our country.

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Foreign Exchange Department in FSBL Agrabad Branch:

L/C Operation

Foreign Remittance

Import operation.

Export operation. Outward remittance

Foreign Currency A/C

Inward remittance

Foreign exchange department of FSBLAgrabad Branch has been divided into two sections---1. Foreign Remittance. 2. L/C Operation. L/C operation can be aging classified into two sections: Import Section. Export Section.

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Some important terms of foreign exchange: Letter of Credit: Letter of credit can be defined as a Credit Contract whereby the buyers bank is committee (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 (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 instruction of customs (the Application) or on its own behalf, Is to make a payment to or to the order of a third party (the beneficiary) or is to accept and pay bills of exchange (Drafts) drawn by the beneficiary or 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. FORMS OF DOCUMENTARY CREDIT: 1. Revocable Credit: A revocable credit is one where the issuing bank at liberty to revoke i.e. cancels the credit at any time. According to UCPDC a revocable credit may amend or cancelled by the issuing bank at any moment and without prior notice to the beneficiary before shipment of consignment against the L/C. 2. Irrevocable Credit: An irrevocable L/C is one, which cannot be revoked, amended or modified by the bank with the concurrence of the interested parties. Parties involved in the process of Letter of Credit Importer (Buyer)/ Application. The Issuing Bank (Opening Bank) The Advising Bank/ Notifying Bank
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Exporter/ Seller (Beneficiary) Confirming Bank Negotiating Bank The Paying/ Reimbursing/ Accepting/ Remitting Bank. a) Applicant: The person/ body (customer of the bank) that request the bank (opening bank) to issue letter of credit. As per instruction and on behalf of the applicant, bank open L/C in line with terms and condition of the sales contract between the buyer and seller. b) Opening bank/ issuing bank: The bank which open/ issue on behalf pf the applicant/import. Issuing banks obligation is to make payment against presentation of documents drawn strictly as per terms of the L/C. c) Advising/ notifying bank: The bank through which the L/C is advised/ forwarded to the beneficiary (exporter). The responsibility of advising bank is to communicate the L/C to the beneficiary after checking the authenticity of the credit. The advising bank acts only as agent of the issuing bank without having any engagement on their part. d) Beneficiary: Beneficiary of the L/C is the party in whose favor the letter of credit is issued. Usually they are the seller or exporter. e) Confirming bank: The bank, which under instruction in the under letter of credit, add conformation of making payment in addition to the issuing Bank. It is done at the request of the issuing Bank having arrangement with them. This conformation constitutes a definite undertaking on the part of the confirming Bank in addition to that of issuing Bank. f) Negotiating Bank: The Bank, which negotiate documents and pays the amount to the beneficiary when presented complying credit terms. If the negotiation of documents is not restricted to a particular Bank is the Banker of the beneficiary. g) Reimbursing / Paying Bank: The Bank nominated in the credit by the issuing Bank to make payment stipulated in the document, complying with the reimbursement Bank.

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Mechanism of L/C operation

Buyer (Importer)

Seller (Exporter)

Issuing Bank

Advising bank

Reimbursement Bank

Legends: 1. L/C opening 2. Present document. 3. Payment against document. 4. Confirming L/C. 5. Submit document. 6. Makes document. 7. Issue L/C. 8. Forward Document. 9. Makes document. IMPORT SECTION
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Import section deals with L/C opening and post import financing i.e. LIM & LTR. Now the procedure from opening L/C to disbursement against L/C is given below: Application for opening L/C: At first, an importer will request banker to open L/C along with the following documents. An application. Indent or Proforma Invoice. Import Registration Certificate (IRC). Taxpayers Identification Certificate (TIN) Insurance cover note with money receipt. A bank account in First Security Bank, Agrabad Branch. Membership of chamber of commerce. Indent or Proforma invoice: Indent or proforma Invoice is the sale contract between seller and buyer in import- export business. There is slight difference between indent and proforma invoice. The sales contract, which is direct correspondence between importer and exporter, is called Proforma invoice. There is no intermediary between them. On the other hand, there may be an agent of exporter in importers country. In this regard, if the sale contract is occurred between the agent of exporter and importer then it is called indent.

DELIVERED FORMS BY BANKER TO IMPORTER: After scrutinizing above-mentioned documents carefully, officer delivers the following forms to be filled up by importer and banker should check: Whether the goods to be imported is permissible or not. Whether the goods to be imported is demanding or not. The forms are: L/C Application Form: L/C Application Form is a sort of an agreement between customer and bank on the basis of which letter of credit is opened. First Security Bank, Agrabad Branch provides a printed form for opening of L/C to the importer. A special adhesive stamp of value Tk. 150 is affixed on the form in accordance with

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Stamp Act in force. While opening, the stamp is cancelled. Usually the importer gives the following information. Full name and address of the importer. Full name and address of the beneficiary. Draft amount. A availability of the credit by the sight payment/acceptance/negotiation/deferred payment. Time bar within which the documents should be presented. Sales type (CIF/FOB/C&F). Brief specification of commodities, price, quantity, indent no. Country of origin. Bangladesh Bank registration no. Import License/LACF no. IRC no. Account on. Documents no. Insurance Cover Note/Policy no. date, amount. Name and address of Insurance Company. Whether the partial shipment is allowed or not. Whether the transshipment is allowed or not. last date of shipment. Last date of negotiation. Other terms and conditions (if any). Whether the confirmation of the credit is requested by the beneficiary or not. The L/C application must be completed/filled in properly a signed by the authorized person of the importer before it is submitted to the issuing bank. L/C Authorization Form (L/CAF): The Letter of Credit Authorization Form (LCAF) is the form prescribed for the authorization of opening letter of credit/payment against import and used in lieu of import license. The authorized dealers are empowered to issue LCA forms to the importers as per basis of licensing of the Import Policy order in force to allow import in Bangladesh. If foreigner exchange is intended to be bought from the Bangladesh Bank against an LCAF, it has to be registered with Bangladesh Banks Registration unit located in the concerned area office of the CCI&E. The LCA Forma available with
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authorized dealers is issued in set of five (05) copies each. First Copy is exchange control area of CCI&E office by authorized dealer/Registration Unit of Bangladesh Bank. Quadruplicate Copy is kept as office copy by authorized dealer/ Registration Unit. The Letter of Credit Authorization Form (LCAF) contains the following Name and address of the importer. IRC no. and year of renewal. Amount of L/C applied for (both in figure and word). Description of item(s) to be imported. ITC Number/ HS code no. Signature of the importer with seal. List of goods to be imported. Imports permit form (IMP): L/C authorization form no. Date Value of taka Registration of LCAF. Quantity of goods. Invoice value. Country of origin. Port of shipment. Name of the vessel. Indenters address. Preparation of L/C by Banker: Banks officer prepares L/C when above-mentioned forms are to be submitted by customer of importer. Before preparing L/C DBL officer scrutinizes the application in the following manner. 1. The terms and conditions of the L/C must be complied with UCPDC 500 and Exchange Control & Import Trade Regulation 2. Eligibility of the goods to be imported. 3. The L/C must not be opened in favor of the importer. 4. Radioactivity report in case of food item. Survey reports or certificate in case of old machinery is required. Bank of the importer is called L/C Issuing Bank. Then issuing bank inform its corresponding bank, called Advising Bank or Confirming Bank located in exporters country to advise and the
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credit forward to the exporter and simultaneously officer makes L/C opening vouchers. Deskwork: One debit voucher to be passed. Corresponding credit vouchers to be passed (margin, commission, postage, stamp, F.F.C/ and others Liability voucher to be passed.

Some inevitable notion in foreign exchange: Bill of exchange: According to the Section 05, Negotiable instrument (NI) Act- 1881 A Bill of exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay (on demand or at fixed or a determinable future rate) a certain some of money only to or to the order of a certain person or to the bearer of the instrument. It may be either at sight or day sight. At sight means making payment whenever the document will reach in the issuing Bank. Commercial Invoice: Commercial invoice issued by Exporter in the accounting document by which the seller charges the goods to buyer.

CHAPTER FOUR Performance of FSBL Agrabad Branch

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4.1 Deposits of FSBL Agrabad Branch Since this is a branch of FSBLso its main source of deposit is public deposit. The various deposited amount of 30th September 2006 and 31st December 2006 is shown in the following table: Deposits C.D S.D S.T.D F.D MSS MBSS DBDS Total 30th Sep. 2006 Tk.1, 65, 45,765.10 Tk.2, 99,38,149.55 Tk.3, 56,72,183.12 Tk.51, 79,27,390.00 Tk.4, 45,32,575.85 Tk.9, 58,47,500.00 Tk.4, 55,11,578.32 Tk.78, 59,75,141.90 31st Dec. 2006 Tk.1, 88, 41, 884.15 Tk.3, 07, 33, 972.13 Tk.3, 41,67,222.80 Tk.51, 93,47,860.00 Tk.4, 98,82,507.70 Tk.9, 79,22,500.00 Tk.4,59,93,594.16 Tk.79, 68,89,540.90

So from the above table it is clear that the maximum deposit is Fixed Deposit. And the total amount is increasing. So as per deposit the performance is satisfactory. 4.2 Loans & Advances Portfolio Now we show the credit portfolio of FSBLAgrabad Branch,in 31st December 2006 Types of Loan Loan General Loans against imported merchandise LTR Packing Credit House Building Loan P.A.D Cash Credit (Hypo) SOD CFS Hire purchase Car loan FDBP SOD: Export 31st Dec.2006 Tk.1, 91,24,632.77 Tk.1, 89,71,801.52 Tk.82, 62,362.52 Tk.15, 04,118.37 Tk.25, 29,194.43 Tk.33, 69,943.13 Tk.3, 62,74,847.48 Tk.22, 17,39,491.87 Tk.42, 85,489.89 Tk.36, 91,032.17 Tk.5, 44,993.00 Tk.36, 63,74,361.64 Tk.2, 66,24,455.85
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Total

Tk.71, 32,96,724.64

From the above table we see the position of different types of loans sanctioned by FSBL Agrabad Branch, 4.3 Deposits and Loans & Advances The total amount of Deposits and Loans & Advances made by FSBL, Agrabad Branch from the year 2002 to 2003 are shown in the following table: 2005 2006 Deposits Tk.58, 91,32,572.18 Tk.79, 68,89,540.90 Loans & Advances Tk.51, 16,97,445.56 Tk.71, 32,96,724.64 From the above table it is clear that Loans & Advances made by the branch are less than its Deposits. Both Deposits and Loans & Advances are increasing from year 2002 to tear 2003 that is good for the bank. The CreditDeposit ratio is 89.51% for the year 2003 that is good for the bank. 4.4 Income, Expenditure & Profit The total amount of Income, Expenditure & Profit made by FSBLAgrabad Branch, from the year 2002 to 2003 are shown in the following table: Income Expenditure Profit Year 2002 Tk.7, 85,92,954.57 Tk. 5,46,11,917.91 Tk.2, 39,81,036.66 Year 2003 Tk.11, 51,37,642.28 Tk. 7,40,31,287.84 Tk. 4,11,06,354.44

From the above table, it is clear that the profit of FSBLAgrabad Branch is increases significantly in year 2003 from year 2002. So it is a satisfactory performance of FSBLAgrabad Branch.

4.5 Customers Satisfaction Level

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By assessing the customers satisfaction, we find that around 85% customer are satisfied with the services provided by FSBL Agrabad Branch. So, it is clear that FSBL Agrabad Branch provides a reasonably satisfactory service to the customer. But they have to improve their services to compete with other Private Banks of our country. Reasons of Satisfaction Well-furnish and air condition room. Officers are cordial and well mannered. Reasonably quick service. Various types of saving deposit schemes and interest rate on these schemes is competitively high. Various types of Loans & Advance opportunities and Bank take very little time to sanction Loan. Transactions continue at launch period in the Bank. Customer friendly terms & conditions. Competitive interest rate. Reasons of dissatisfaction Junior officers & Assistant officers are not well qualified. Some customer hopes more entertainment from the Bank. Some customer think long-term credit facility is not available. Absence of on-line Banking facility. Very much profit oriented.

Limitations: 1. The promotional measures for marketing of existing services are not taken aggressively to reach every initiatives and special facilities at the door of the customers.
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2. Schemes for poor are not available. 3. The branch network is limited to some area. In Chittagong city there are only two branches. 4. Maximum officers are working in a specific desk for a long period of time. As a result, they may feel monotony, their skills do not increase, they do not know about the overall banking. 5. Absence of long-term credit. 6. Number of employees is more than required. 7. Officers in the junior level are not highly qualified. 8. Lack of modern business methods. 9. Training facility is not available, especially for lower level officers. 10.Necessary Documents like Prospectus, Annual Report, Bulletin, Brochure etc. are not available in the Bank.

4.6 SOWT Analysis By analyzing the performance of the bank, we get the following Strengths, Weaknesses, Opportunities and Threats (SWOT). Strengths: 1. It has well reputation in the market. 2. Not engaged in unfair business practice. 3. Executives are highly educated and experienced. 4. Bank has many attractive deposit schemes. 5. Well-furnished and Air-conditioned Bank. 6. Efficient management practice in the Bank. 7. Located in important commercial area. Weaknesses: 1. Officers in the junior level are not highly qualified. 2. Short time experience of the Bank. 3. Absence of long-term credit. 4. Small market shares in banking business.

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5. Lack of training facility. 6. Lack of promotional activities. Opportunities: 1. Can increase the credit scheme. 2. Private Banks becomes more reliable to local public. 3. Have opportunity to increase market share. 4. Private Banks can contribute more in the economic development of our country. 5. By doing social welfare activities it can create a good impact on public mind. Threats: 1. There are many competitors in the market. 2. Govt. pressures to reduce interest rate. 3. Banking technologies are changed. 4. Govt. imposes tax & VAT on profit. 5. Govt. restricted Banking activities.

Chapter Five- Recommendations & Conclusion

5.1 Areas Of Improvements

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From the driven findings, the following recommendations can be formulated for FSBL: Reduce the rate interest of loans & advances so that the borrowers have the ability to conduct business as usual. FSBL is running the risk of lending more than what they are provisioned for. Albeit the negative relationship between banks credit risk and return on equity is not significant in context of Bangladesh, FSBL can manage to reduce their credit risk by increasing their amount of deposits. FSBL can use its total assets so that it can increase the profit. Increasing the individual banks deposit can also enhance the market size of FSBL as a sequel they can improve their return on equity. This can be concluded from the significant relationship existing between market size and return on equity in context of Bangladesh. FSBL can improve their distribution channel so that they can give customers a sense of availability of their desired products. To reduce cost of information. FSBL considering the concentration factor can think of creating more brand awareness as the reputed ones are enjoying the advantage. FSBL can introduce new products so that customer can determine the right product offering for their portfolio. FSBL can bring in flexible loan offers to make them more attractive in the core level. FSBL will have to adopt standards in capital adequacy, income recognition and provisioning norms. Risk management setup in FSBL will need to be strengthened.
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Benchmark standards could be evolved. Payment and settlement system will have to be strengthened to ensure transfer of funds on real time basis eliminating risks associated with transactions and settlement process. Regulatory set-up will have to be strengthened, in line with the requirements of a market-led integrated financial system. Banks may have to evaluate on an ongoing basis, internally, the need to effect structural changes in the organization. This will include capital restructuring through mergers / acquisitions and other measures in the best business interests. There should be constant and continual up gradation of technology in the Banks, benefiting both the customer and the bank. Banks may enter into partnership among themselves for reaping maximum benefits, through consultations and coordination with reputed IT companies. The skills of bank staff should be upgraded continuously through training. In this regard, the banks may have to re-look at the existing training modules and effect necessary changes, wherever required. Seminars and conferences on all relevant and emerging issues should be encouraged. Banks will have to set up Research and Market Intelligence units within the organization, so as to remain innovative, to ensure customer satisfaction and to keep abreast of market developments. Banks will have to interact constantly with the industry bodies, trade associations, farming community, academic / research institutions and initiate studies, pilot projects, etc. for evolving better financial models.

5.2 Conclusion
FSBL have introduced a new dimension in the field of innovative and benevolent banking in our country. The bank has successfully made a positive contribution to the economy of Bangladesh with in very short period of time. Its profit is gradually increasing.
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It plays a great role in collecting scattered Deposit, Loan settlement and International Trade etc. The Bank ensures quality services to the customers. For better growth and healthy economic position, it should introduce new and lucrative long-term credit schemes especially for new investors and schemes for poverty alleviation like micro credit. We hope FSBL do more work for socio-economic development besides there banking business. To keep pace with ever-changing uncertain domestic business environment and face the challenges of revised global economic scenario, the bank should be more pro-active and responsive to introduce new marketing strategy to hold the strong position in home and abroad. I wish continuous success and healthy business portfolio of FSBL Agrabad Branch, Chittagong.

BIBLIOGRAPHY Books: 1. Principles Of Managerial Finance By

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Lawrence J. Gitman 2. Financial Management By Brigham & Ehrhardt 3. Strategic Management By Pearce & Robinson Manual: 4. First Security Bank Limited Manual. 5. Annual Report Of First Security Bank Limited.
6. The website of First Security Bank Limited (www. first security

bank.com) 7.Various leaflets of the Bank. 8.Daily affairs of FSBL Agrabad Branch. 9.Previous years internship report. 10. Iqbal Kabir Mohon- Modern Banking.

KEY WORD and SPECIAL TERMS

EXIM CD SB STD PO Export Import Bank of Bangladesh Limited Current Deposit Savings Bank Short Term Deposit Pay-Order
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TT Telegraphic Transfer MT Mail Transfer DD Demand Draft IBC Inward Bills for Collection OBC Outward Bills for Collection SOD Secured Overdraft CC(H) Cash Credit (Hypo) CC(P) Cash Credit (Pledge) ECC Export Cash Credit DA Documents Against Acceptance DP Demand Promissory Note PAD Payment Against Document LIM Loan Against Imported Merchandise LTR Loan Against Trust Receipts LBP(D) Local Bill Purchase by Documents LBP(C) Local Bill Purchase by Clean LBP(F) Local Bill Purchase by Foreign PC Packing Credit MC Micro Credit LG Letter of Guarantee IRC Import Registration Certificate ERC Export Registration Certificate STA Special Trading Arrangement

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