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Internship Report

On

Foreign Exchange Operations of Janata Bank Limited (JBL)

Internship Report On Foreign Exchange Operations of Janata Bank Limited (JBL) Janata Bank Limited

Janata Bank Limited

Internship Report

On

Foreign Exchange Operation of Janata Bank Ltd

(JBL)

Supervised by

Md. Amdadul Hoque

Chairman, Department of Finance

Bangladesh University of Business & Technology (BUBT)

Submitted By

Md. Alimur Razee

09102101039

21 st Intake

BBA Program

Major In Finance

09102101039 21 s t Intake BBA Program Major In Finance Bangladesh University of Business & Technology

Bangladesh University of Business & Technology (BUBT)

Date of Submission: December 19, 2013

DECLARATION

I declare that the report entitled “Foreign Exchange Operation of Janata Bank Limited” embodies the results of my own effort after completion of 3 (three) months work at Janata Bank Ltd., perused under the supervisor of Mr. Md. Amdadul Hoque, Assistant professor, Department of Finance, Bangladesh University of Business & Technology (BUBT).

I also confirm that, this report is only prepared for my academic requirement not for any other

purpose. It has not been previously submitted to any other university/college/organization for an academic qualification/certificate/diploma or degree.

I further affirm that the work reported in this internship is original and no part has been previously submitted to any books or in any other universities.

_

Md. Alimur Razee

ID: 09102101039

Intake: 21 st

Program: BBA

Major in Finance

Bangladesh University of Business & Technology (BUBT)

CERTIFICATE OF SUPERVISOR

This is to certify that Md. Alimur Razee is student of BBA program, ID No: 09102101039, has successfully completed his “Internship Program” entitled “Foreign Exchange Operation of Janata Bank Limited” under my supervision as a partial fulfillment of the award of BBA degree.

He has done his job according to my supervision and guidance. He has tried his best to do this successfully. I think this program will help him in the future to build up his finer career.

I wish his success and prosperity.

Signature

Mr. Md. Amdadul Hoque

Internship Supervisor

Assistant Professor and Chairman,

Department of Finance

Bangladesh University of Business and Technology (BUBT).

Letter of Transmittal

Md. Amdadul Hoque

Chairman

Department of Finance

Bangladesh University of Business & Technology (BUBT)

SUBJECT: Submission of Internship Report on Foreign Exchange Operation of Janata Bank Ltd

Dear Sir

With due respect that, I am delighted to submit my Internship report on Foreign Exchange Operation Of Janata Bank Ltd which is prepared by me. This report gives me a vast experience and valuable knowledge of how to analyze Foreign Exchange Operation. This report has been giving me the practical implement of a theoretical knowledge. I had tried my best to collect information on this report.

Finally, I would like to thank you for your valuable guidance and supportive in preparing this report. I would be grateful for any clarification when required. I will be highly obliged if you are kind enough to approve this report and provide your valuable judgment on it.

Sincerely your

Md. Alimur Razee

ID: 09102101039

21 st intake

Major in Finance

Acknowledgement

At beginning I will start my report by showing respect and give praise to our almighty Allah who takes care about me to finished report successfully

I give thanks to our honorable teacher Md. Amdadul Hoque, Chairman, Department of Finance of Bangladesh University of Business & Technology who gives me such a attractive prospect to make a report on “Foreign Exchange operationas well as helped me in every step to accomplish my report and try to provide me a faire practical knowledge as should as it possible.

I also will not miser to respect JBL that give me chance to obtain practical knowledge through their internship program. I thank the branch manager Md. Nurul Islam who helps me to do internship in his branch and provide me a fear idea about practical knowledge of banking activities. I will show appreciation to Mrs. Shamshad Ara madam and Nusrat madam whose are teaches as well as suggest me to do work.

Finally, I would like to thank authors of the books that I have take help from, which had made my understanding clear during the making of the report.

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Executive Summary

Main objective of this report is to analyze the performance of foreign exchange operation of Janata Bank Ltd. This is descriptive in nature that has been administrated by collecting secondary data. Source of data were collected from annual report of JBL and reading material published by JBL etc. for analyzing data M.S Office and SPSS STATISTICS software ware used.

This report has been shown that trend of export import and remittance increases year by year but in 2009 and 2012 the growth rate of export and import got lowest due to world recession and inflationary pressure respectively. Remittance flows are greatly affected in 2010. Operating profit has strong positive relation with export and import with significant level lower than .05remittance also has strong positive relation but significant level higher than .05. In total national market share of export, import and remittance, JBL contribute with the proportion at 14%, 8% and 7% for export, import and remittance respectively. Huge amount of remittance come from UAE where most of Bangladeshi expatriate lives and almost 4 overseas branches are situated.

Although export, import, remittance increase gradually and their relationship with profitability has strong positive relation JBL should concern that their export, import and remittance will not be fall down that’s why they can develop attractive financing packages such as Pre-Shipment and Post- Shipment Finance, Export Guarantee facility etc at a law rate for exporters and importers, JBL should increase strong network with the Overseas Exchange Companies and Banks in different parts of the world to ensure better remittance services for its customers and online Banking in every branch to promote Remittance, In case of L/C opening, Bank should provide low margin facility to clients.

More Import and export item can be included JBL can provide Consulting facility by an expert

group of officials for foreign exchange, In case of payment of remittance, they should introduce debit card so that customer can withdraw money within a second at anywhere.

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Table of Contents

Part

Particulars

Page

no

Executive Summary ii

Executive Summary

ii

Part one

Introduction

1-4

 

1.0 Introduction

2

 

1.1 Origin of the Report

2

 

1.2 Significance of the Report

2

 

1.3 Objectives of the report

3

 

1.3.1 Broad objective

3

 

1.3.2 Specific Objectives

3

 

1.4 Methodology of The report

3

 

1.4.1 Research design

3

 

1.4.2 Sources of Data Collection

3

 

1.4.3 Data Collection Procedure

4

 

1.4.4 Data Analysis and Reporting

4

 

1.5 Limitations

4

Part Two

Organizational Profile

5-11

 

2.0 An Over View of Janata Bank LTD

6

 

2.1 Corporate Information

6

 

2.2Vission of Janata Bank

7

 

2.3

Mission of Janata Bank

7

 

2.4

Core Value of Janata Bank

7

 

2.5

Business Prospect of Janata Bank

7

 

2.6

Five Year Financial Performance

8

 

2.7

Hierarchy of Janata Bank

9

 

2.8

Product of Janata Bank

10

Part Three

Theoretical Aspect

12-19

Part Four

Foreign Exchange Operation

20-42

 

4.1

Import

22

 

4.2

Export

30

 

43 Remittance

36

iii

Part Five

Performance Analysis

42-59

 

5.1 Trend analysis

43

 

5.1.1 Import Finance:

43

 

5.1.2 Export Financing:

44

 

5.1.3 Foreign Remittance:

45

 

5.2

Income From Foreign Trade

46

 

5.2.1. Import Earning

46

 

5.2.2.

Export Earning

47

 

5.2.3

Remittance Earnings

48

 

5.2.4. Comparison of Import, Export and Remittance Earnings

49

 

5.3. Correlation analysis

50

 

5.3.1 correlation between Operating profit and Export

50

 

5.3.2 correlation between Operating profit and Import

51

 

5.3.3

correlation between Operating profit and

52

Remittance

 
 

5.4 Market Share of JBL’s in total National Foreign Exchange

53

 

5.4.1 Market Share Export of JBL

53

 

5.4.2 Market Share of Import of JBL

54

 

5.4.3 Market Share of Remittance of JBL

55

 

5.5

Division Wise Contribution

56

 

5.5.1. Division wise Contribution in Import

56

 

5.5.2. Division wise Contribution in Export

57

 

5.5.3. Division wise Contribution in Remittance

58

 

5.5.4. Country wise Inflow of Foreign Remittance:

59

Part Six

Findings, Conclusion & Recommendation

60-63

iv

 

List of Table

Table No.

Particulars

Page No.

Table: 1

Five year at a glance of JBL

8

Table: 2

Total Import financing of JBL

43

Table: 3

Total Export Financing of JBL

44

Table: 4

Total Foreign Remittance of JBL

45

Table: 5

Import Earning & Portion of Import Income on Total Foreign Trade

46

Table: 6

Export Earning & Portion of Export Income on Total Foreign Income

47

Table: 7

Remittance earnings & Portion of it on Foreign Trade

48

Table: 8

comparisons of Import, Export, Remittance earnings

49

Table: 9

Operating profit and Export of JBL

50

Table: 10

Correlations between Export & Profit

50

Table: 11

Operating profit and Import of JBL

51

Table: 12

Correlation between Import & Operating Profit

51

Table: 13

Operating profit and Remittance of JBL

52

Table: 14

Correlation between Remittance & Operating Profit

52

Table: 15

Market Share of Export of JBL

53

Table: 16

Market Share of Import of JBL

54

Table: 17

Market Share of Remittance of JBL

55

Table: 18

Division wise Contribution in Import Financing

56

Table: 19

Division wise Contribution in Export financing

57

Table: 20

Division wise contribution of remittance

58

Table: 21

Division wise contribution of remittance

59

v

List of Abbreviation

JBL

Janata Bank Limited

AD

Authorized Diller

TK.

Taka

L/C

Letter of Credit

SWIFT

Society for world-wide Intra-Bank Financial Telecommunication

ERC

Export Registration Form

CCI&E

Chief Controller of Import & Export

UCP

Uniform Customs & Practice

IRC

Import Registration Certificate

KSA

Kingdom Saudi Arabia

UAE

United Arab Emirates

USA

United States of America

T.M

Travel & Miscellaneous

IMP Form

Import Form

EXP Form

Export Form

Remt.

Remittance

vi

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1

1.0

Introduction of The Report

For any business school student only curriculum activity is not enough for handling the real Business situation, there for it is an opportunity for the students to know about the field of business through the internship program. This report is prepared on the purpose to better understand about foreign exchange operation in perspective of janata bank. Now a day’s international business has become very common activities in business and day by day it got an integrated part for doing business. In this globalization era a business organization faces worldwide competition so they have to compete for their existence and profitability that require them to engage in export and import activities and remittance for their financial transaction worldwide. Banks are the batter financial intermediaries to complete those activities.

1.1 Originating of the Report

Practical work is the best way to better understand about what is learned in theory, so after finishing my theoretical study I am sent for an internship program in janata bank and obtain practical knowledge and try to compare what I read and what I did in my internship program. For evaluating what I learned from internship program I prepare this report. I have always tried my best to reflect my experience of practical work in this report.

1.2 significant of the report

This internship report is an important partial requirement of four years BBA graduation program. This is because knowledge and learning become perfect when it is associated with theory and practice. That is, student can train and prepare themselves for the job market. A poor country like Bangladesh has a huge number of unemployed educated graduates. As they have no practical experience been able to gain normal professional knowledge to establish networking, this is important in getting a job. While preparing this report, I had a great opportunity to have an in depth knowledge of all the foreign exchange activities of JBL. Therefore, it is obvious that the significance of internship is clearly justified as the crucial requirement of four years BBA graduation.

2

1.3 Objective of the report

Objective is an important thing for different purpose. Objective helps to go in a good way that relates with the Report. Primary objective is to learn the real world experience because I have gathered theoretical knowledge of BBA program and try to match real world experience with the theoretical knowledge

1.3.1 Broad Objective

The broad objective of this report is to analyze the Performance Foreign exchange operations of Janata Bank Ltd. (JBL)

1.3.2 Specific Objectives

Furthermore, the specific objectives of this report are:-

To know the import, export financing procedure through JBL.

To analyze the trend of import and export financing through JBL.

To examine the division wise import and export financing and remittance.

To analyze the earnings from foreign exchange division of JBL.

To show the relationship export, import and foreign remittance with profitability of Janata Bank Ltd.

Assessment of the JBL’s import, Export, foreign Remittance with total national Import, Export, foreign Remittance

1.4 Methodology of the Report

1.4.1 Research design:

This report is descriptive in nature which briefly reveals analyze the foreign exchange operation of Janata Bank Limited. It has been administered by collecting secondary data.

1.4.2. Sources of Data Collection:

Mainly this report based on secondary sources of data. I also used some primary data to make the report more rich and informative

3

Primary Source:

Take expert opinion from higher officials of the bank.Primary Source: Observation with during the internship program. Secondary Sources: The secondary data sources are

Observation with during the internship program.Take expert opinion from higher officials of the bank. Secondary Sources: The secondary data sources are

Secondary Sources:

The secondary data sources are following-

Annual Report of JBL(2007-2012)Secondary Sources: The secondary data sources are following- Website of JBL Brochures of JBL Manuals and

Website of JBLdata sources are following- Annual Report of JBL(2007-2012) Brochures of JBL Manuals and Publications of JBL

Brochures of JBLfollowing- Annual Report of JBL(2007-2012) Website of JBL Manuals and Publications of JBL 1.4.3 Data collection

Manuals and Publications of JBLReport of JBL(2007-2012) Website of JBL Brochures of JBL 1.4.3 Data collection Procedure: I have collected

1.4.3 Data collection Procedure:

I have collected Primary data through informal discussion from concerned officer of JBL. Secondary data has been collected through different manuals, Annual report and other published papers.

1.4.4 Data Analysis and reporting:

For analysis and interpretation of data some statistical tools like MS-Word, MS- Excel and MS- Power point SPSS statistics software were used.

1.5 Limitation of The Study

Some limitations are faced to prepare this report. The limitations in preparing the report are described below.

The main barrier of the study was insufficiency of information. Bank employee can’t provide the information due to of the study was insufficiency of information. Bank employee can’t provide the information due to security and other corporate obligations.

Due to time limitation many of the aspects could not be discussed in the present report. Learning all the functions within just 60 days is really tough.information due to security and other corporate obligations. In many cases, up to date information was

In many cases, up to date information was not published.all the functions within just 60 days is really tough. Lack of experiences has acted as

Lack of experiences has acted as constraints in the way of meticulous exploration on the topicIn many cases, up to date information was not published. However, omitting the limitations, the report

However, omitting the limitations, the report will help to understand the Foreign Exchange Operation of the Bank.

4

5
5
5
5
5

5

2.0 An overview of Janata Bank Limited (JBL)

Janata Bank Limited is the leading sector bank in Bangladesh offering full range of Personal,

Corporate, International Trade, Foreign Exchange and Lease Finance. Janata Bank Limited is the

preferred choice in banking for friendly and personalized services, cutting edge technology, tailored

solutions for business needs, global reach in trade and commerce and high yield on investments,

assuring Excellence in Banking Services.

2.1 Corporate Information:

Name:

Janata Bank Limited

Registered Address:

Janata Bhaban, 110, Motijhil commercial area Dhaka-1000, Bangladesh

Legal Status:

Public Limited Company

Date of Incorporation as PLC:

May 21, 2007

Authorized Capital:

Tk. 20,000 million (as on 31.12.12)

Paid up Capital:

Tk. 11000 million (as on 31.12.12)

No. of Branches:

Almost 884

2.2 Vision of Janata Bank Ltd:

To become the effective largest commercial bank in Bangladesh to support socio-economic

development of the country and to be a leading bank in South Asia.

2.3 Mission of Janata Bank Ltd:

Janata Bank Limited will be an effective commercial bank by maintaining a stable growth strategy delivering high quality financial products,leading bank in South Asia. 2.3 Mission of Janata Bank Ltd: providing excellent customer service through

providing excellent customer service through an experienced management team and ensuring good corporate governance in every step of banking network.will be an effective commercial bank by maintaining a stable growth strategy delivering high quality financial

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2.4

Core Values of Janata Bank Limited:

Professionalism Diversity Growth Core Value Of JBL Dignity Accountability Integrity
Professionalism
Diversity
Growth
Core Value
Of JBL
Dignity
Accountability
Integrity

Figure 1: Business Value of JBL

2.5 Business Prospect of the Bank

Maintaining required capital adequacy1: Business Value of JBL 2.5 Business Prospect of the Bank Business expansion in capital market

Business expansion in capital marketProspect of the Bank Maintaining required capital adequacy Gradual expansion of branch network Progressive automation

Gradual expansion of branch networkcapital adequacy Business expansion in capital market Progressive automation of the branches Real online banking

Progressive automation of the branchesin capital market Gradual expansion of branch network Real online banking software will be in function

Real online banking software will be in function soonmarket Gradual expansion of branch network Progressive automation of the branches Expansion of ATM and credit

Expansion of ATM and credit cardexpansion of branch network Progressive automation of the branches Real online banking software will be in

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2.6 Five Year Comparative Financial and Operational Performance:

(TK in Millions)

Particular

2008

2009

2010

2011

2012

Authorized Capital

8000

20000

20000

20000

20000

Paid up Capital

2595

5000

5000

8125

11000

Deposits

221336

246175

286567

361677

409767

Loans and Advances

144678

166359

225732

257801

305340

Investment

57824

72533

57514

90906

108342

Import

129413

118525

183744

197285

188283

Export

85418

88653

118515

153758

156525

Foreign Remittance

45924

56190

72285

52640

100089

Operating Profit

7003

8578

12037

15722

14534

Revenue

20922

24074

30614

40635

49515.63

Deposit Advance Ratio

65.37%

67.58%

78.77%

71.21%

74.52%

Return on Investment

8.29%

8.24%

4.89%

7.72%

8.04%

Current Ratio

1.00

1.00

1.10

1.06

1.03

Income per Share

83.88

78.02

98.16

60.45

(148.00)

Net Profit

3145

2982

4907

4445

(16280)

No. of Branches

894

851

861

873

884

Source Annual report (2007-2012)

Table1: Five year at a glance of JBL

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2.7 Hierarchy of Janata Bank Limited:

Board of Director

Chairman

Directors

Managing Director

Board of Director Chairman Directors Managing Director Deputy Managing Director General Managers Deputy General

Deputy Managing Director

Directors Managing Director Deputy Managing Director General Managers Deputy General Managers Assistant General

General Managers

Managing Director Deputy Managing Director General Managers Deputy General Managers Assistant General Managers Senior

Deputy General Managers

Managing Director General Managers Deputy General Managers Assistant General Managers Senior Principal Officers

Assistant General Managers

Managers Deputy General Managers Assistant General Managers Senior Principal Officers Principal Officers Senior Officers

Senior Principal Officers

Assistant General Managers Senior Principal Officers Principal Officers Senior Officers Officers / Officers

Principal Officers

Managers Senior Principal Officers Principal Officers Senior Officers Officers / Officers (Cash) Attorney

Senior Officers

Senior Principal Officers Principal Officers Senior Officers Officers / Officers (Cash) Attorney Assistants Clerical

Officers / Officers (Cash)

Officers Senior Officers Officers / Officers (Cash) Attorney Assistants Clerical Staff Members Non-clerical

Attorney Assistants

Officers Officers / Officers (Cash) Attorney Assistants Clerical Staff Members Non-clerical Staff Members Fig2:

Clerical Staff Members

/ Officers (Cash) Attorney Assistants Clerical Staff Members Non-clerical Staff Members Fig2: Hierarchy of Janata Bank

Non-clerical Staff Members

Fig2: Hierarchy of Janata Bank Limited

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2.8 Product of Janata Bank Ltd:

JBL has a very broad line products under the various business group, from short term to long term deposits, various types loans and advances, account service, it provides finance for export and import, finance for working capital, project financing, capital investment, remittance service, trade service, foreign exchange service, cash management service, Profit & loss sharing and also has other miscellaneous product and services around the nation.

Deposit Products:

Current Deposit Accountproduct and services around the nation. Deposit Products: Short Term Account Saving Bank Deposit Account Fixed

Short Term Accountaround the nation. Deposit Products: Current Deposit Account Saving Bank Deposit Account Fixed Deposit Monthly Saving

Saving Bank Deposit AccountDeposit Products: Current Deposit Account Short Term Account Fixed Deposit Monthly Saving Scheme Janata Bank Saving

Fixed DepositAccount Short Term Account Saving Bank Deposit Account Monthly Saving Scheme Janata Bank Saving Pension Scheme

Monthly Saving SchemeShort Term Account Saving Bank Deposit Account Fixed Deposit Janata Bank Saving Pension Scheme Janata Bank

Janata Bank Saving Pension SchemeBank Deposit Account Fixed Deposit Monthly Saving Scheme Janata Bank Deposit Scheme Education Deposit Scheme Medical

Janata Bank Deposit SchemeMonthly Saving Scheme Janata Bank Saving Pension Scheme Education Deposit Scheme Medical Deposit Scheme Janata Bank

Education Deposit SchemeJanata Bank Saving Pension Scheme Janata Bank Deposit Scheme Medical Deposit Scheme Janata Bank Monthly saving

Medical Deposit SchemeScheme Janata Bank Deposit Scheme Education Deposit Scheme Janata Bank Monthly saving Scheme Janata bank special

Janata Bank Monthly saving SchemeScheme Education Deposit Scheme Medical Deposit Scheme Janata bank special deposit scheme Janata bank shool banking

Janata bank special deposit schemeMedical Deposit Scheme Janata Bank Monthly saving Scheme Janata bank shool banking saving karjokorom Retirement

Janata bank shool banking saving karjokoromMonthly saving Scheme Janata bank special deposit scheme Retirement saving scheme Janata bank ltd retirement saving

Retirement saving schemedeposit scheme Janata bank shool banking saving karjokorom Janata bank ltd retirement saving scheme Janata bank

Janata bank ltd retirement saving schemeshool banking saving karjokorom Retirement saving scheme Janata bank masik amanat prakalpa Janata bank double benefit

Janata bank masik amanat prakalpasaving scheme Janata bank ltd retirement saving scheme Janata bank double benefit scheme Credit Product Term

Janata bank double benefit schemeretirement saving scheme Janata bank masik amanat prakalpa Credit Product Term loan Trade finance Import finance

Credit Product

Term loanprakalpa Janata bank double benefit scheme Credit Product Trade finance Import finance Export finance SME financing

Trade financeJanata bank double benefit scheme Credit Product Term loan Import finance Export finance SME financing Micro

Import financedouble benefit scheme Credit Product Term loan Trade finance Export finance SME financing Micro credit Home

Export financescheme Credit Product Term loan Trade finance Import finance SME financing Micro credit Home loan Loan

SME financingCredit Product Term loan Trade finance Import finance Export finance Micro credit Home loan Loan for

Micro creditCredit Product Term loan Trade finance Import finance Export finance SME financing Home loan Loan for

Home loanProduct Term loan Trade finance Import finance Export finance SME financing Micro credit Loan for merchant

Loan for merchant bankingscheme Credit Product Term loan Trade finance Import finance Export finance SME financing Micro credit Home

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E-service

Speedy remittance western Union Money ServiceE-service Automated Cleaning Internet Banking ATM banking ATM Operation Debt Card Operation Salary Card Credit Cart

Automated CleaningE-service Speedy remittance western Union Money Service Internet Banking ATM banking ATM Operation Debt Card Operation

Internet Bankingremittance western Union Money Service Automated Cleaning ATM banking ATM Operation Debt Card Operation Salary Card

ATM banking ATM Operation ATM Operation

Debt Card OperationUnion Money Service Automated Cleaning Internet Banking ATM banking ATM Operation Salary Card Credit Cart (Loan)

Salary CardMoney Service Automated Cleaning Internet Banking ATM banking ATM Operation Debt Card Operation Credit Cart (Loan)

Credit Cart (Loan)Union Money Service Automated Cleaning Internet Banking ATM banking ATM Operation Debt Card Operation Salary Card

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3. Foreign Trade:

Trade between two or more sovereign country is called foreign trade or international trade. This involves the exchange of goods and services between the citizens of two nations. When the citizens of one nation exchange goods and services with the citizens of another nation, it is called foreign trade; for example, India's trade with USA, Japan, France and Pakistan. Foreign trade is also known as external trade. Foreign trade transactions are classified under three categories:

Import Trade

Export Trade

Remittance

3.1 Import Trade:

Import trade refers to purchase of goods by one country from another country or inflow of goods and services from foreign country to home country.

3.2 Importer/Applicant:

An importer is one who wants to import goods from other country. In terms of the Importers (Registration) Order-1981 no person can import goods into Bangladesh unless he gets IRC with the Chief Controller of Import and Export (CCI&E). He is also called applicant. The bank opened L/C on the importer‟s application.

3.3 Export Trade:

Export trade refers to the sale of goods by one country to another country or outflow of goods from home country to foreign country

3.4 Exporter:

The seller or exporter is the beneficiary of the credit. The letter of credit is opened in his favor and addressed to him. The beneficiary has the obligation to make export as per the contract and produce the documents as required by the credit.

3.5 SWIFT:

The Bank has become the member of SWIFT Alliance Access, a multi-branch secure financial messaging system provided by the Society for Worldwide Inter-bank Financial Telecommunication [SWIFT], Belgium. With the activation of the SWIFT system the Bank enjoys instant, low-cost, speedy and reliable connectivity for L/C transaction, fund transfer, message communication and other worldwide financial activities.

13

3.6 Remittance:

Transfer of funds, usually from a buyer to a distant seller, instrument of transfer such as a check or draft or funds so transferred.

3.6.1 Types of remittance

Remittances are basically two types:

1)

Local Remittance.

2)

Foreign Remittance.

1)

Local Remittance

Remittance is significant part of the general banking. The bank receives and transfers various types of bills through the remittance within the country. Obviously the bank charges commission on the basis

of bills amount. The types of local remittance are:

Pay Order (PO)

Demand Draft (DD)

Telegraphic Transfer (TT)

Mail Transfer (MT)

A) Pay Order (PO)

Pay Order is an instrument that contains an order for payment to the payee only in case of local payment whether on behalf of the bank or its constitution. Unlike check there is possibility of dishonoring Pay Order.

B) Demand Draft

A method used by individuals to make transfer payments from one bank account to another. Demand

drafts are marketed as a relatively secure method for cashing checks. The major difference between demand drafts and normal checks is that demand drafts do not require a signature in order to be

cashed.

C) Telephone Transfer

T/T is a method of payment in which funds are transferred via telegraph or cable. Telegraphic transfers are most common in business conducted in countries.

14

D) Mail Transfer

A mail transfer or MT is like an order by a bank to its correspondent‟s bank but the instructions are sent by the mail. Therefore it takes longer time to reach its destination and sometime elapses between the purchaser paying for it and the payee receiving this payment.

2)

Foreign Remittance:

Foreign remittance is a transfer of money by a foreign worker to his or her home country. „Foreign remittance‟ means purchase and sale of freely convertible foreign currencies as admissible under Exchange Control Regulations of the country.

There are two types of foreign remittances:

A. Foreign Outward Remittance: The sending country, where the wage earner is located. The

sender uses a bank or foreign exchange company to send money to foreign country

B. Foreign Inward Remittance: The receiving country, where the beneficiary resides. The bank

receives the money that has been sent from the sending person in the country in which the money has been earned.

3.7 Letter of Credit (L/C):

Letter of Credit L/C also known as Documentary Credit is a widely used term to make payment secure in domestic and international trade. Letter of credit (L/C) is a written commitment to pay, by a buyer's or importer's bank (called the issuing bank) to the seller's or exporter's bank (called the accepting bank, negotiating bank, or paying bank).A letter of credit guarantees payment of a specified sum in a specified currency, provided the seller meets precisely-defined conditions and submits the prescribed documents within a fixed timeframe.

3.7.1 Types of Letter of Credit

1. Irrevocable Letter of Credit:

It carries a definite undertaking; of the issuing bank to honour the documents drawn strictly in conformity with the terms and conditions of the credit. It cannot be amended nor cancelled without the consent of all parties concerned. Any Credit issued will be an irrevocable credit.

15

2.

Revocable Letter of Credit:

This credit can be amended / modified / cancelled any time by the opening bank without the consent of the beneficiary. Hence, this credit is not a safe credit from the point of view of the beneficiary. However, in practice, this type of credit is seldom issued. Even though the credit can be cancelled any time, but the opening bank would be liable to the beneficiary for the shipments made by him prior to receipt of notice by him about the cancellation of credit by the issuing bank

3. Confirmed Letter of Credit:

Confirmed Letter of Credit is a special type of L/C in which another bank apart from the issuing bank has added its guarantee.

4. Back to Back Latter of Credit

The beneficiary of the export credit, who is not the manufacturer of the goods, may approach a bank

to

open a letter of credit in favors of the manufacturer who is ready to supply the goods. Such a letter

of

credit is opened on the strength of the export letter of credit and hence called back-to-back letter of

credit. Such a documentary credit should be opened on behalf of the good exporters and suppliers.

5. Sight L/C

A letter of credit that is payable once it is presented along with the necessary documents. An

organization offering a sight letter of credit commits itself to paying the agreed amount of funds provided the provisions of the letter of credit are met

3.8 Parties to Letters of Credit

Applicant

Applicant is the buyer of the goods or services supplied by the seller. Letter of credit is opened by the issuing bank as per applicant's request. However, applicant does not belong one of the parties to a letter of credit transaction. This is because of the fact that letters of credit are separate transactions from the sale or other contract on which they may be based.

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Beneficiary

Beneficiary is the seller of the goods or the provider of the services in a standard commercial letter of credit transaction. Letter of credit is opened by the issuing bank in favor of the beneficiary.

Issuing Bank

Issuing Bank is the bank that issues a letter of credit at the request of an applicant or its own behalf. Issuing bank undertakes to honor a complying presentation of the beneficiary without recourse.

Nominated Bank

Nominated bank is the bank with which the credit is available or any bank in the case of a credit available with any bank.

Advising Bank

Advising bank is the bank that advises the credit at the request of the issuing bank. An advising bank that is not a confirming bank advises the credit and any amendmend without any obligation to honor.

Confirming Bank:

Confirming bank is the bank that adds its confirmation to a credit upon the issuing bank's authorization or request. Confirming bank may or may not add its confirmation to a letter of credit. This decision is up to confirming bank only.

Reimbursing Bank:

Reimbursing Bank shall mean the bank instructed and/or authorized to provide reimbursement pursuant to a reimbursement authorization issued by the issuing bank.

3.9 Different Account in L/C Operation

Nostro Account:

Nostro account means “our account with you”. A Nostro account is a foreign currency account of a bank maintained its foreign correspondents abroad. For example, US Dollar Account of JBL maintained with Citibank, N.A, New York, USA is a Nostro account of JBL.

Vostro account:

Vostro account means “your account with us”. The account maintained with foreign correspondent in a bank of a particular country is known as Vostro account. What is the nostro account for a bank in a

17

particular country is a Vostro account for the bank abroad maintaining the account thus the account of JBL with City Bank N.A, New York is regarded as it‟s Nostro account held with City Bank, while City Bank N.A, New York regards it as a it‟s Vostro account held for JBL.

Loro Account:

Loro account means “their account with you”. Account maintained by third party is known as Loro account; suppose JBL is maintaining an account with City Bank N.A, New York and at the same time IBBL is also maintaining a Nostro account with City Bank N.A, New York. From the point of view of JBL IBBL‟s account maintained with City Bank N.A New York is the Loro account.

3.9 Some Important Document used in Foreign Trade:

1. Indent

Indent is an order placed by the importers to the exports. It contains the essential information regarding the goods to be imported i.e. quality, quantity, packing, packaging, mode of payment, insurance, price of good, etc

2. Pro-forma invoice:

An abridged invoice sent by a seller to a buyer before of a shipment or delivery of goods for the final confirmation about goods/service. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges.

3. Invoice

A commercial document that is itemized a transaction between a buyer and a seller which is prepared by seller or exporter. An invoice will usually include the quantity of purchase, quality and price of goods and/or services, date, parties involved, unique invoice number, and tax information. If goods or services were purchased on credit, the invoice will usually specify the terms of the deal, and provide information on the available methods of payment.

4. Bill of Entry:

A declaration by an importer or exporter of the exact nature, precise quantity and value of goods that have landed or are being shipped out. Prepared by a qualified customs clerk or broker, it is examined by customs authorities for its accuracy and conformity with the tariff and regulations.

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5. Bill of Lading:

A document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. It is also

a receipt for cargo accepted for transportation, and must be presented for taking delivery at the

destination.

Among other items of information, a bill of lading contains:

(1) Consignor's and consignee's name

(2) Names of the ports of departure and destination

(3) Name of the vessel

(4) Dates of departure and arrival

(5) Itemized list of goods being transported with number of packages and kind of packaging

(6) Marks and numbers on the packages

(7) Weight and/or volume of the cargo

(8) Freight rate and amount.

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20
20
20
20
20
20

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4.0 Foreign Exchange:

As per foreign exchange regulation act 1947 (Article 2 nd ) Foreign Exchange means Foreign Currency i.e. currencies other than Local Currency. It includes any instrument drawn, accepted, made or issued all deposits, credits and balances payable in any foreign currency and any draft, traveler’s cheque, letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in any foreign currency.

Many transactions with overseas countries are respects of import; export and foreign remittance come under the preview of foreign exchange transactions. International trade demands a flow of goods from seller to buyer and payment from buyer to seller. In this case the bank plays a vital role to bridge between the buyer and seller.

The Importer (Buyer of Goods)
The Importer
(Buyer of Goods)
The Bank (Third
The Bank
(Third
The Exporter (Seller of Goods)
The Exporter
(Seller of Goods)

In JBL AD Branch (s) there are a lot of talented officials are working continuously with great effort, skill and teamwork are performed in this department. The Bangladesh Bank and the respected in charge (s) of this section control them.

In exercise of the power conferred by section 3 of the Foreign Exchange Regulation Act, 1947 Bangladesh Bank issues license to schedule Bank to deal with exchange. These banks are known as Authorized Dealers. Licenses are also issued by Bangladesh Bank to person or firms to exchange foreign currency instruments such as T.C. Currency notes and coins. They are known as Authorized Money changers.

4.0.2 Foreign Exchange Department:

There are three kinds of foreign exchange transaction

1. Import

2. Export &

3. Remittance.

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4.1 Import

Import trade in Bangladesh is controlled under the Import and Export control Act 1950. Authorized Dealer Banks will import the goods into Bangladesh following the import policy, public notice, F.E. circular and other instructions from competent authorities from time to time. The whole import functions of the branch as far I have understood are discussed below:

4.1.1 Registration of importer

In terms of the Importers, Exporters and Indenters (Registration) Order 1981, no person can import goods into Bangladesh unless he is registered with the Chief Controller of Import and Export or exempted from the provisions of the said order. So the following documents are required to be submitted to the licensing authority for registration as importers:

Questionnaire form duly filled in and signed

Income tax registration certificate

Trade License from the Municipal or Local Authority

Bank certificate

Nationality certificate

Partnership Deed where applicable

Certificate of Registration with the Registrar of Joint Stock Companies,

Certificate from the Chamber of Commerce/Registered Trade Association

Ownership documents or rent receipts of the place of business

Any other documents required under the relevant import policy.

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4.1.2

Import procedure:

To import through Janata Bank Ltd a customer requires:

Performa Invoice is received by the L/C applicant L/C applicant submit it to the Bank
Performa Invoice is
received by the L/C
applicant
L/C applicant
submit it to the
Bank
Bank Issue L/C to
the applicant
favoring
beneficiary
L/C advised by
advising Bank
Goods shipped by
Beneficiary &
submit the
documents to
negotiate bank
Negotiate bank
forward the
documents to the
L/C issuing bank.
Documents
checked by L/C
If documents are
ok, then L/C value
issuing bank &
inform it to L/C
applicant
is paid by L/C
issuing bank to
negotiate bank
Goods release from
the customs
Submission of Bill
of Entry to L/C
issuing Bank by the
applicant
Report to
Bangladesh Bank

Figure: 3 The Import process

4.1.3 Import Policy Order:

Under the import policy and export control act, 1950, the government of Bangladesh formulates the import policy through Ministry of Commerce. As per the import policy goods and commodities are divided into four groups

List of items banned for import

List of items import of which is subject to certain condition

Foot Note: This list contains further conditions with regard to import of items on banned list and conditional list

Freely importable item: All items excepting those mentioned in the banned list and conditional list are freely importable.

4.1.4 Steps in an Import Letter of Credit Transaction

STEP 1: The Sales Contract

The sales contract is the formal agreement between the buyer and seller specifying the terms of sale that both parties have agreed upon. The contract should include: a description of the goods; the amount; the unit price; the terms of delivery; the time allowed for shipment and presentation of documents; the currency; and the method of payment.

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2 Application & Agreement:

11 IImmppoorrtt LL//CC ((LLeetttteerr ooff CCrreeddiitt))::

A letter of credit is a conditional Bank undertaking of payment. In other words letters of credit is a

letter from the importer Bankers to the exporter that the bills if drawn as per terms & conditions complied with will be honored on presentation. As per UCPDC 500 a credit may be either:

i) Revocable.

ii) Irrevocable.

The Credit, therefore, should clearly indicate whether it is revocable or irrevocable. In the absence or such indication the credit shall be deemed to be irrevocable.

22 PPaarrttiieess ooff DDooccuummeennttaarryy CCrreeddiitt ((LLCC))::

11

AApppplliiccaanntt// BBuuyyeerr//IImmppoorrtteerr

22

IIssssuuiinngg//OOppeenniinngg BBaannkk

33

AAddvviissiinngg BBaannkk

44 BBeenneeffiicciiaarryy//sseelllleerr//EExxppoorrtteerr

55

NNeeggoottiiaattiinngg BBaannkk

66

CCoonnffiirrmmiinngg BBaannkk

77

RReeiimmbbuurrssiinngg//PPaayyiinngg BBaannkk

FFiigguurree:: PPaarrttiieess ooff DDooccuummeennttaarryy CCrreeddiitt

3 Types of L/C:

Commercial Letters of Credit

Commercial letters of credit are mainly used as a primary payment tool in international trade such as exporting and importing transactions. Majority of commercial letters of credit are issued subject to the

latest version of UCP (Uniform Customs and Practice for Documentary Credits). The ICC publishes UCP, which are the set of rules that governs the commercial letters of credit procedures.

Standby Letters of Credit

Commercial letters of credit are a means of payment to be utilized when the principal perform its duties. As an example, let us consider an exporter who ships the goods according to the sales contract and apply to the nominated bank for the payment. If the nominated bank decides that the presentation

is conforming to the terms and conditions of the credit and the UCP rules then exporter will be paid.

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This situation is just contrary in standby letters of credit. A payment is made to the beneficiary of a standby letter of credit when there is a breach of the principal's obligation.

Revocable Letters of Credit

Revocable letters of credit give issuer the amendment or cancellation right of the credit any time without prior notice to the beneficiary. Since revocable letters of credit do not provide any protection to the beneficiary, they are not used frequently. In addition, UCP 600 has no reference to revocable letters of credit. All credits issued subject to UCP 600 are irrevocable unless otherwise agreed between the parties.

Irrevocable Letters of Credit

Irrevocable Letters of Credit cannot be amended or cancelled without the agreement of the credit parties. Unconfirmed irrevocable letters of credit cannot be modified without the written consent of both the issuing bank and the beneficiary. Confirmed irrevocable letters of credit need also confirming

bank's written consent in order any modification or cancellation to be effective.

Local or Back to Back L/C:

Back -to -back L/C means one credit backs another. It is new credit in favor of another beneficiary. Sometimes beneficiary seller of a credit himself is unable to supply goods specified in the L/C and required to purchase from another supplier by opening second credit. Besides, the formalities and requirements for (L/C opening) the following formalities and documents are also required for opening back-to-back L/C.

For opening L/C the client is to submit to the bank an application in the printed format of the designated bank. This is called L/C application form which is also an agreement between the importer and the bank. The form is to be stamped under stamp Act. in force in Bangladesh. The importer must submit the LCA & IMP and indent or contract. Purchase order/pro-forma invoice (duly accepted by the importer) along with L/C application.

Application for opening of L/C duly signed by the importer, Membership certificate from Chamber of commerce or any other recognized business association, Valid IRC,TIN certificate, Three copies of declaration stating that that income tax for previous year has been paid or income tax return has been submitted, Trade license ,Vat registration certificate, Valid indent/pro forma invoice, Insurance cover note with money receipt, Any other permit if required as per instruction issued by CCI & E time to time under present IPO.

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The L/C application must be completed/ filled in and signed by the authorize person of the importer giving the following particulars:

Full name and address of the supplier of beneficiary and importer, brief description of the goods, L/C value for US$, etc. (CFR value) which must not exceed the LCA value, the unit price, quantity quality of the goods, Origin of the goods, port of loading and port of destination must be mentioned, Model of shipment (Sea, Air, Truck or Rail etc.),List date of shipment and negotiation time (must not be beyond 30 days from the shipment date),Insurance cover note number and name or the company, Tenor of draft (1.e, sight/ issuance/ deferred etc, Mode of advising L/C (i.e. airmail/ full telex short cable etc.),Opening of L/C under UCPDC publication No. 500/- ICC revision 1993, Whether shipment/ transshipment is allowed, Instruction to add confirmation if required, LCA Number, Any other relevant information and instruction if any must be mentioned in the L/C application form. A written application from opener is verified a relevant license/ LCA/ permit of the loan/ Barter must remain valid up to that period the extension is sought. Increase of L/C amount may be done provided the LCA covers the increase in amount. L/C amount can be decreased provided the relevant Indent is amending accordingly and with the consent of beneficiary. Each of clauses of the L/C can be amended provided the parties involve the L/C consent to it procedure or preparation and dispatch. Amendment is to be typed in the Banks printed format. The copies of the amendment must be dispatched to all concerned as done in dispatching the L/C. Amendment be kept in the L/C file chronologically date wise.

Step 3: L/C contains mainly the following instruction:

Issuing bank name and address, LC number, Date and place of Issue, Advising bank name and address, Beneficiary’s name and address, LC amount, Tenor and availability of credit, Last date of shipment, Number of days allowed for negotiation, Date of expiry and place of presentation, Description of goods, Port of shipment and port of delivery, Mode of transportation, Instruction for negotiation bank, Reference of UCPDC, Signature of the authorized office of issuing bank

Step 4: Preparation of L/C Proposal:

After checking all documents and other relative facts if the desk official gets satisfaction in all respects he will prepare the LC proposal in pre-audit memo and place the same to higher authority for approval.

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Step5: Transmission of LC:

Then transmission of L/C is done through tasted telex, fax or SWIFT to advice the L/C to the advising bank. The advising banks verify the authority of the L/C. JBL has corresponding relationship or arrangement throughout the world by which the L/C is advised. Actually the advising bank does not take any liability if otherwise not requested.

Mail L/C the L/C which is mailed by Beneficiary Form of L/C SWIFT L/C the
Mail L/C the L/C which is
mailed by Beneficiary
Form of L/C
SWIFT L/C the L/C which
is automatically sent to
Beneficiary

Figure: Types of L/C form

Step6: Advising:

The advising bank forwards the letter of Credit to the beneficiary (seller) stating that no commitment is conveyed on its part. However, if the advising bank has been asked to confirm the letter of Credit and agrees to do so, it will incorporate a clause undertaking to honor the beneficiary’s drafts, provided the documents evidence that all terms and conditions of the letter of Credit have been complied with.

Step 7: Adding Confirmation

The confirming bank does the confirmation. Confirming bank is a bank, which adds its confirmation to the credit and it is done at the request of the issuing bank. The confirming bank, May or May not advising usually, does not do it if there is not a prior arrangement with the issuing bank. By being involved as a confirming agent, the advising bank undertakes to negotiate beneficiary’s bill without recourse to him.

Before confirming, it has to observe followings-

L/C is issued and there is a request to add confirmationto him. Before confirming, it has to observe followings- Review the L/C terms Provide reimbursement Drafts

Review the L/C termsL/C is issued and there is a request to add confirmation Provide reimbursement Drafts to be

Provide reimbursementthere is a request to add confirmation Review the L/C terms Drafts to be drawn on

Drafts to be drawn on L/C opening bankadd confirmation Review the L/C terms Provide reimbursement Availability of credit facilities Line allocation from the

Availability of credit facilitiesProvide reimbursement Drafts to be drawn on L/C opening bank Line allocation from the business and

Line allocation from the business and ownership units in the importer’s countryProvide reimbursement Drafts to be drawn on L/C opening bank Availability of credit facilities Confirm and

Confirm and advise L/CAvailability of credit facilities Line allocation from the business and ownership units in the importer’s country

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Step8: Amendments of letter of credit

After issuance and advising of a L/C, it may be felt necessary to delete, add or alter some of the clauses of the clauses of the credit. All these modification are communicated to the beneficiary through the same advising bank of the credit. All these modifications are communicated to the beneficiary through the same advising bank of the credit. Such modifications to a credit are termed as amendment to a letter of credit. There may be some of the conditions in a credit are not acceptable by the beneficiary. In that case, beneficiary contact applicant and request for amendment of the clauses.

The issuing bank has to be done the followings Obtain written application from the applicant of the credit duly singed and verified by bank. Confirm that, in case of increase of value, application for amendment is to be supported by revised indent/pro-forma invoice evidencing consent of the beneficiary; Ensure, in case of extension of shipment period, that relative LCA is valid/ revalidated/ increased up to the period of proposed extension. Confirm that amendment of insurance cover note also be submitted in case of both credit amount and shipment period extension amendment. Maintain proper recoding and filing of amendments; Recover charges for amendment (if on account of applicant) and pass necessary voucher.

(if on account of applicant) and pass necessary voucher. The following clause of L/C and increase/decrease
(if on account of applicant) and pass necessary voucher. The following clause of L/C and increase/decrease
(if on account of applicant) and pass necessary voucher. The following clause of L/C and increase/decrease
(if on account of applicant) and pass necessary voucher. The following clause of L/C and increase/decrease
(if on account of applicant) and pass necessary voucher. The following clause of L/C and increase/decrease
(if on account of applicant) and pass necessary voucher. The following clause of L/C and increase/decrease

The following clause of L/C and increase/decrease of quality of goods- Increase/ decrease value of L/C and Increase/decrease of quality of goods. Extension of shipment/negotiated period. Terms of delivery, i.e. FOB, CFR, CIF etc. Mode of shipment Inspection clause Name and address of the supplier Name of the reimbursing Name of shipping etc Step9: Presentation of Document.

Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term
Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term
Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term
Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term
Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term
Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term
Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term
Name of shipping etc Step9: Presentation of Document. The seller is being satisfied with the term

The seller is being satisfied with the term and condition of the credit make shipment of the goods as per L/C. After making the shipment of the goods in favor of the importer to exporter submits the documents to the negotiating bank

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After receiving all document, the negotiating bank then check the documents against the credit. If the documents are found in order, the bank will pay, accept, or negotiate to JBL. Branch and bank receive seal to be affixed on the forwarding schedule. The bill of exchange and transport documents must immediately be crossed to protect loss or fraudulent JBL checks the document the usual document are

Invoice

Bill of lading

Non-negotiable copy of bill of lading

Certificate of origin

Packing list

Shipping Advice

Beneficiary certificate

Bill of Exchange

Pre-shipment inspection report

Shipment certificate.

Step 10: Settlement of letter of credit

Settlement means fulfillment of issuing bank in regard to affecting payment subject to satisfying the credit terms. Settlement may be done under three separate arrangements as stipulated I the credit.

Step 11: Settlement by payment:

Here the seller presents the documents to the nominated bank and the bank scrutinizes the documents. If satisfied, the nominated bank makes payment to the beneficiary and in case, this bank is other than the issuing bank, it sends the documents to the issuing bank and claim reimbursement as par arrangement.

Step12: Settlement by Acceptance:

Settlement in this arrangement, the seller submits the documents evidencing the shipment to the accepting bank (nominated by the issuing bank for acceptance) accompanied by draft down on the bank at the specified tenor.

Step 13: Settlement by negotiation:

This settlement procedure stars with the submission of documents by the seller to the negotiation restricted by the issuing bank, only nominated bank can negotiate the documents. A factor scrutinizing that the documents meet the credit requirement, the bank may negotiate the documents and give value to the beneficiary. The negotiating bank then sends the documents to the issuing bank. As usual, reimbursement will be obtained in the pre agreed manner.

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4.2 Export

Mainly Export L/C is the confirming from the Bank that, if the importer fails to make payment to the exporter, then the bank will pay the exporter on behalf of the importer. The exporter can lien the L/C to bank and can get the payment before the L/C expire date.

4.2.1 Export L/C:

L/C which is received to export/sale of goods from one country to another country or one place to another place within a country) is known as export L/C. it may be received from any bank of foreign country, local bank, another branch of the same local bank or received by the export desk from the import desk of the same bank. Exporters are allowed to export the commodity under irrevocable letter of credit. Under this type of export, exporter will ship the goods as pr terms of the credit and will get payment as per arrangement of the credit.

L/c comes from the exporter Check the relevant document Check the credit worthiness of importer
L/c comes from
the exporter
Check the
relevant document
Check the credit
worthiness of
importer
Take the charge &
Give the L/C value to
the exporter
Forwarding the
L/C & add it to
FDBP register
Advice the L/C
Payment comes from
the Importer to the
bank

Figure: 4 Export L/C process

4.2.2 Obtaining Export Registration Certificate (ERC):

No exporter is allowed to export any commodity for export from Bangladesh unless he is registered with Chief Controller of Imports and Exports (CCI & E) and holds valid Export Registration Certificate (ERC). After applying to the CCI&E in the prescribed from along with the necessary papers, concerned offices of the Chief Controller of Imports and Exports issues ERC. Once registered, exporters are to make renewal of ERC every year.

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4.2.3

Securing Export Order

After getting the ERC the exporter may proceed to secure the export order. He can do this by contacting the buyers directly or through agent. In this purpose exporter can get help from Liaison office, Buyer’s local agent, Export promotion, Organization, Bangladesh mission abroad, Chamber of

commerce (local and foreign), Trade fair etc.

4.2.4 Obtaining EXP Form:

After having the registration, the exporter applies to Janata Bank Limited with the trade license, ERC and the Certificate from the concerned Government Organization to get EXP. If the bank is satisfied, an EXP is issued to the exporter.

4.2.5 Signing of the contract:

After communicating with buyer the exporter has to get contracted for exporting exportable items from Bangladesh detailing commodity, quantity, price, shipment, insurance and mark, inspection, arbitration etc.

4.2.6 Receiving Letter of Credit

After making contact with foreign buyers and reaching on agreed price and terms, conditions the exporters receive Letter of Credit.

4.2.7 Procuring the materials:

After making the deal and on having the L/C opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the contracted merchandise.

4.2.8 Endorsement on EXP:

Before the exporter with the customs or postal authorities lodges the export forms, they should get all the copies endorsed by Janata Bank Limited. Before shipment, exporter submits EXP. form with commercial invoice. Then Janata Bank’s respective officers check it properly, if satisfied, certifie the EXP. Without EXP exporter cannot make shipment. The customer must declare all export goods on the EXP issued by the authorized dealers

4.2.9 Disposal of Export procedure

Original:

Customs

authority

reports

first

copy

of EXP

to Bangladesh Bank after shipment of

the goods.

Duplicate: Negotiating bank reports the Duplicate to Bangladesh Bank in or after negotiation date but not later than 14 days from the date of shipment.

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Triplicate: On realization of export proceeds the same bank to the same authority reports Triplicate.

Quadruplicate: Finally, the negotiating bank as their office copy retains Quadruplicate.

4.2.10 Shipment of goods:

Exporter makes shipment according to the terms and condition of L/C. While shipment and after

shipment the exporter should obtain or prepare the following documents:

EXP Form

Photocopy of registration certificate

Photocopy of the contract

Photocopy of the L/C

Customs copy of ERF Form for shipment of jute goods and EPC Form for raw jute

Freight certificate from the bank in case of payment of the freight at the port of lading is

involved

Bill of Lading, Railway receipt, Postal receipt, Air way bill or Truck receipt

Packing list

Certificate of origin

Shipping instructions

Insurance policy.

4.2.11 Presentation of export documents for negotiation:

After shipment, exporter submits the following documents to Janata bank Limited for negotiation.

Bill of Exchange or Draft

Bill of Lading

Invoice

Insurance Policy/Certificate

Certificate of origin

Inspection Certificate

Consular Invoice

Packing List

Quality Control Certificate

G.S.P. certificate

Photo

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4.2.12

Examination

of Document:

Banks deal with documents only, not with commodity. As the negotiating bank is giving the

value before repatriation of the export proceeds it is advisable to

and every document with great care whether any discrepancy(s) is observed in the documents. The bankers are to ascertain that the documents are strictly as per the terms of L/C Before negotiation

scrutinize and examine each

of the export bill. Bank officers assigned for examining the export documents may use a checklist for their convenience.

4.2.13 Negotiation of export documents:

Negotiation stands for payment of value to the exporter against the documents stipulated in the L\C. If documents are in order, Janata Bank Limited purchases (negotiates) the same on the basis of banker- customer relationship. This is known as Foreign Documentary Bill Purchase (FDBP).If the bank is not satisfied with the documents submitted to Janata Bank Limited and gives the exporter reasonable time to remove the discrepancies or sends the documents to L/C opening bank for collection. This is known as Foreign Documentary Bill for Collection (FDBC).

4.2.14 Settlement of Local Bills:

The settlement of local bills is done in the following ways, -

The customer submits the L/C to Janata Bank Limited along with the documents to negotiate

Janata Bank Limited officials scrutinize the documents to ensure the conformity with the terms and conditions.

The documents are then forwarded to the L/C opening bank.

The L/C issuing banks gives the acceptance and forwards an acceptance letter.

Payment is given to the customer on either by collection basis or by purchasing the document.

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4.2.15 Modes of Payment

The most common methods of payment under a L/C are as follows:

Payment methods under L/C

under a L/C are as follows: Payment methods under L/C Sight or Payment credit Deferred Payment

Sight or Payment credit

Deferred Payment Credit

Acceptance Credit

Negotiation Credit

Figure: Modes of Payment

Sight or Payment credit

When the credit stipulates that drafts (bill of exchange) should be drawn under it on DP terms

involving payment to the beneficiary on presentation of documents, it is known as a “Sight or

Payment Credit”. In this credit the issuing bank nominates a bank in the exporter’s country as the

paying bank. If the paying bank accepts its nomination, its position is that of an agent of the issuing

bank. When the documents under the credit are presenter to it, it pays the beneficiary provided all the

terms and conditions of credit have been complied with. It gets reimbursement from the issuing bank

for the amount paid.

Deferred Payment Credit

The term “Deferred” means postponed to a future period or date. When a credit does not require the

payment to the beneficiary immediately on presentation of the documents but after a specified period

has elapsed, it is known as “Deferred Payment Credit”. According to this type of credit, the payment

is hot made in full on the tender of documents but by installments at pre-determined future dates.

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Deferred payment credit may be used where the beneficiary wishes to allow the importer time to pay for the document.

Acceptance Credit

When under the terms of a letter of credit drafts are drawn on DA terms involving payment to the beneficiary on the maturity of the accepted Bill of Exchange drawn under it, the letter or credit is referred to as an “Acceptance Credit” or a “Term Credit”. In this form of credit the beneficiary draws a draft for particular usance (e.g. 30, 60, 90 days sight or even longer), payable upon either the correspondent bank or the issuing bank.

Negotiation Credit

In a negotiation credit the documents are accompanied by a sight draft (bill of exchange). The bill of exchange may be drawn on the issuing bank or the importer or any other bank stipulated in the credit. The bank, which negotiates documents under the credit, purchases the bill of exchange and pays the amount to the beneficiary who tenders the documents. The issuing bank reimburses the negotiating bank

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4.3 Remittance

Remittance means sending or transfer money or money-worth from one place to another The word Remittance originates from the word remit which means to transmit money/ fund. In banking terminology, the work remittance means transfer of fund one place to another. When money transferred from one country to another is called Foreign Remittance.

Foreign remittance of JBL may be classified into:

Inward Foreign RemittanceForeign remittance of JBL may be classified into: Outward Foreign Remittance Remittance Inward Remittance

Outward Foreign Remittanceof JBL may be classified into: Inward Foreign Remittance Remittance Inward Remittance Outward Remittance Figure:

Remittance
Remittance
Foreign Remittance Outward Foreign Remittance Remittance Inward Remittance Outward Remittance Figure: Types of
Foreign Remittance Outward Foreign Remittance Remittance Inward Remittance Outward Remittance Figure: Types of
Foreign Remittance Outward Foreign Remittance Remittance Inward Remittance Outward Remittance Figure: Types of
Foreign Remittance Outward Foreign Remittance Remittance Inward Remittance Outward Remittance Figure: Types of
Inward Remittance
Inward
Remittance
Outward Remittance
Outward
Remittance

Figure: Types of Remittance of JBL

4.3.1 Instruments of Foreign Remittance

Cash: Dollar, Pound, France Fr. Riyal or any other currency.of Remittance of JBL 4.3.1 Instruments of Foreign Remittance T.C.: Travelers Cheque. F.D.D: Foreign Demand Draft.

T.C.: Travelers Cheque.Cash: Dollar, Pound, France Fr. Riyal or any other currency. F.D.D: Foreign Demand Draft. F.T.T: Foreign

F.D.D: Foreign Demand Draft.Fr. Riyal or any other currency. T.C.: Travelers Cheque. F.T.T: Foreign telephonic Transfer T.T: Telegraphic

F.T.T: Foreign telephonic TransferT.C.: Travelers Cheque. F.D.D: Foreign Demand Draft. T.T: Telegraphic Transfer, Cable transfer or swift transfer.

T.T: Telegraphic Transfer, Cable transfer or swift transfer.Foreign Demand Draft. F.T.T: Foreign telephonic Transfer M.T: Mail Transfer. I.M.O: International Money Order.

M.T: Mail Transfer.T.T: Telegraphic Transfer, Cable transfer or swift transfer. I.M.O: International Money Order. Cheque: By any person

I.M.O: International Money Order.Cable transfer or swift transfer. M.T: Mail Transfer. Cheque: By any person & institution. P.O: Payment

Cheque: By any person & institution.M.T: Mail Transfer. I.M.O: International Money Order. P.O: Payment Order D.D: Demand Draft O.B.C: Outward Bill

P.O: Payment OrderMoney Order. Cheque: By any person & institution. D.D: Demand Draft O.B.C: Outward Bill Collection I.B.C:

D.D: Demand DraftCheque: By any person & institution. P.O: Payment Order O.B.C: Outward Bill Collection I.B.C: Inward Bill

O.B.C: Outward Bill CollectionOrder. Cheque: By any person & institution. P.O: Payment Order D.D: Demand Draft I.B.C: Inward Bill

I.B.C: Inward Bill CollectionOrder. Cheque: By any person & institution. P.O: Payment Order D.D: Demand Draft O.B.C: Outward Bill

36

4.3.2

Inward Remittance:

Inward Foreign Remittance Means Remittance received from foreign countries from abroad. In other words remittance coming into our country from other countries by the remitter by way of permissible banking channel through freely convertible Foreign Currencies is called Inward Foreign Remittance i.e. payless point of view it is inward foreign remittance. On the other hand remitter’s point of view it

is called outward Foreign Remittance. Two forms as prescribed by Bangladesh Bank are used for purchase of Foreign Currencies such as-

EXP Form: Remittances received against exports of goods from Bangladesh are done by form EXP. : Remittances received against exports of goods from Bangladesh are done by form EXP.

Form C: Inward remittances equivalent to US$2000/- and above are done by Form” C”. However, declaration in Inward remittances equivalent to US$2000/- and above are done by Form” C”. However, declaration in Form C is not required in case of remittances by Bangladesh Nationals working abroad. Utmost care should be taken while purchasing Currency Notes, Travelers cheque, Demand Draft & similar Instrument for protecting the bank from probable loss as well as safety of the Bank officials concerned.

4.3.3 Mode of Inward Remittance of JBL:

T.T. = Telegraphic transferconcerned. 4.3.3 Mode of Inward Remittance of JBL : D.D. = Demand Draft I.M.O. = International

D.D. = Demand Draftof Inward Remittance of JBL : T.T. = Telegraphic transfer I.M.O. = International Money Order M.T.

I.M.O. = International Money Orderof JBL : T.T. = Telegraphic transfer D.D. = Demand Draft M.T. = Mail Transfer T.C.

M.T. = Mail TransferD.D. = Demand Draft I.M.O. = International Money Order T.C. = Travelers Cheque 4.3.4 Outward Remittance:

T.C. = Travelers ChequeI.M.O. = International Money Order M.T. = Mail Transfer 4.3.4 Outward Remittance: The remittance when we

4.3.4 Outward Remittance:

The remittance when we sent to abroad is called outward remittance. The term “Outward remittances” include not only remittance i.e. sale of foreign currency by TT. MT, Drafts, Traveler’s cheque but also includes payment against imports into Bangladesh & Local currency credited to Non-resident Taka Accounts of Foreign Banks or Convertible Taka Account.

Two forms are used for Outward Remittance of foreign Currency such as -

IMP Form: All outward remittance on account of Imports is done by form IMP. All outward remittance on account of Imports is done by form IMP.

T.M. Form: For all other outward remittances form T.M. is used. For all other outward remittances form T.M. is used.

4.3.5 Mode of Outward Remittance:

Outward remittance may be made by T.T, D.D, M.T, T.C etc payment of import bills are also included as outward remittance.

37

4.3.6 Remittance Chain:

4.3.6.1 Step-1 (Remittance Sending Process):

Remittance rush to the bank/exchange house nearest to their residence /work place.Chain: 4.3.6.1 Step-1 (Remittance Sending Process): Fill in the application form (in the case first time

Fill in the application form (in the case first time remittance)/submit membership card.bank/exchange house nearest to their residence /work place. Go to tellers, deposit form and currency. FDD

Go to tellers, deposit form and currency.(in the case first time remittance)/submit membership card. FDD : Teller make FDD Hand over to

FDD:

Teller make FDDcard. Go to tellers, deposit form and currency. FDD : Hand over to the remittance for

Hand over to the remittance for sending the same to the beneficiaryto tellers, deposit form and currency. FDD : Teller make FDD Send to beneficiary’s bank branch

Send to beneficiary’s bank branch through courier.to the remittance for sending the same to the beneficiary FTT: Teller prepare FTT massages Send

FTT:

Teller prepare FTT massagesSend to beneficiary’s bank branch through courier. FTT: Send soft copy to their processing unit at

Send soft copy to their processing unit at head office.branch through courier. FTT: Teller prepare FTT massages Deliver one copy of the massage to the

Deliver one copy of the massage to the remitter for remittance. Processing and Sending: Processing and Sending:

Processing unit at head office compiles messagesto the remitter for remittance. Processing and Sending: Sends to the drawee banks. 4.3.6.2 Step-2 (Remittance

Sends to the drawee banks.Sending: Processing unit at head office compiles messages 4.3.6.2 Step-2 (Remittance Receiving Process): FDDs: Drawee

4.3.6.2 Step-2 (Remittance Receiving Process):

FDDs:

Drawee branch receive FDDs from beneficiary or through courier.banks. 4.3.6.2 Step-2 (Remittance Receiving Process): FDDs: Make payment of FDDs drawn on the branch Send

Make payment of FDDs drawn on the branchbranch receive FDDs from beneficiary or through courier. Send FDDS for collection that are drawn on

Send FDDS for collection that are drawn on their banks/branches.or through courier. Make payment of FDDs drawn on the branch Credit proceeds of FDDs upon

Credit proceeds of FDDs upon collection.FDDS for collection that are drawn on their banks/branches. Send IBDAs to head office. FTTS: Processing

Send IBDAs to head office.banks/branches. Credit proceeds of FDDs upon collection. FTTS: Processing unit at head office processes FTT massages

FTTS:

Processing unit at head office processes FTT massagesof FDDs upon collection. Send IBDAs to head office. FTTS: Sends T.Ts to the branches. Branches

Sends T.Ts to the branches.FTTS: Processing unit at head office processes FTT massages Branches make payment of own remittances. Issue

Branches make payment of own remittances.office processes FTT massages Sends T.Ts to the branches. Issue and send payment order to the

Issue and send payment order to the branches of other banks beneficiaries. Spot Cash payment: Spot Cash payment:

Branches receive secret number from the beneficiarybranches of other banks beneficiaries. Spot Cash payment: Download remittance masseges from web application of

Download remittance masseges from web application of concerned institution.payment: Branches receive secret number from the beneficiary Get an application form filled in by the

Get an application form filled in by the beneficiary.masseges from web application of concerned institution. Ensure identity of the beneficiary. Make cash payment to

Ensure identity of the beneficiary.of concerned institution. Get an application form filled in by the beneficiary. Make cash payment to

Make cash payment to the beneficiary.of concerned institution. Get an application form filled in by the beneficiary. Ensure identity of the

38

Send IBDAs to head office. 4.3.7 Remittance Product/Service of JBL: Foreign Remittance Foreign remittance section

Send IBDAs to head office.

4.3.7 Remittance Product/Service of JBL:

Foreign Remittance

Foreign remittance section of Janata Bank Ltd. is an integral part of Foreign Exchange Department. And this section of Foreign Exchange Department deals with

Inward foreign remittance

Outward foreign remittance

Opening Foreign Currency Accounts.

Governing Wage Earner’s Bond.

Opening Student File etc.

Medical Purpose

Ravels Purpose

Inward Foreign Remittance:

Normally, Inward Foreign Remittance comprises all incoming foreign currencies. Remittances issued by the correspondent banks situated in the foreign countries and thereby drawn on Janata Bank, are considered to be its Inward Foreign Remittances. Followings are the Inward Foreign Remittances,

FDD Payable

FTT Payable

TC Payable

Purchase of foreign currencies.

Outward foreign Remittances:

Remittances issued by Janata Bank to their foreign correspondents to fulfill their customers’ needs are considered to be the Outward Foreign Remittances. It comprises the followings:

FDD Issued

FTT Issued

TC Issued

Endorsement of foreign currencies in the passport.

Sale of foreign currencies.

39

Foreign Demand Draft (FDD) Issued:

People used to send money abroad for various purposes. JBL issues most of the FDD for the purpose of payment of the application fees to the foreign universities. For the issuance of FDD; T/M Form has to be filled up duly. This form is filled up under the Foreign Exchange Regulation Act, 1947. This form contains

The purpose of travel,

Name of the country where the applicant will go,

Name of the air or shipping company,

Passport number,

Signature, name & address of the applicant

Traveler’s Cheque (TC) Issued:

JBL issues only American Express Traveler’s Cheque (TC). For TC, customer has to fill up T/M form. He has to fill up the purchase form also. For TC, JBL charges commission.

Procedure for issuing TC

There are some requirements that are to be fulfilled by the Traveler’s Cheque purchaser. The requirements are:

1. The client must be an account holder or proper reference from the bank is required

2. The passport must be a valid one

3. Air ticket has to be confirmed

4. Passport holder must be present physically

Steps involved in issuing of TC:

1. After verifying all these documents the customer is asked to fill up prescribed application form.

2. In the application the customer states the amount he is willing to endorse and it is to be verified that his required amount is within the stipulated.

3. Then the customer pays cash or by debiting his account the Traveler’s Cheque is issued.

4. Endorsement is given on the passport and on the ticket. Customer fills up the T/M Form.

5. Purchased application form has to be filled up by the purchaser.

6. Entry has to be given in the Foreign Currency Register and in the Traveler’s Cheque Register.

40

Following Documents must be retained form the clients:

Photocopy of passport

T/M form (Travel & Miscellaneous)

Others Copy of government order (in case of government employee)

Copy of invitation letter if issuance is against conference/training quota

Endorsement of Cash:

Cash foreign currency can also be remitted through the cash endorsement in the passport. In case of endorsing cash in the passport, the requirements are similar to those of Traveler’s Cheque. But according to the foreign exchange Regulation Act, 1947 an individual cannot take more than $1500.00 in cash in a year. That’s why; the concerned officer checks the last voyage of the purchaser. If he/she made any voyage and if he/she purchased dollar at that time, then the officer will deduct the amount and will give the rest to the purchaser.

JBL cannot endorse more than $1500.00 as cash at a time. For more than $1500.00, the customer has to purchase TC. For cash endorsement SEBL maintains a separate register. For giving cash foreign currency, JBL charges Tk. 200.00 as service charge per passport.

Foreign TT Payable:

Foreign remittance section also pays the claim of the foreign TT. After receiving TT payable, SEBL performs the following functions:

1. Customer has to fill up a “C Form” if the amount exceeds $2000.00. “C Form” describes the purpose of sending the TT.

2. The dollar amount comes to the Head office of JBL through American Express, New York.

3. JBL, branch sells the dollar to Head Office and collects the money in local currency.

Student File Opening:

Student can endorse $200.00 at a time in his own name. But if the amount exceeds $200.00, then the student has to open a student file. For opening a student file, the following documents are required:

Preliminary application and information for admission.

Letter of approval by the university of the student.

A filled-in application form for foreign currency in abroad.

Transcript of Records” given for the last degree by the university.

Certificate given by the Board for S.S.C. / H.S.C. or equivalent examination.

A photocopy of I-20 form

41

42

42

5.0 Trend analysis

5.1.1 Import Finance:

Year

2008

2009

2010

2011

2012

Import Finance (In Million Tk)

129413

118525

183744

197285

188284

Growth (%)

54%

-8%

55%

7%

-5%

Source: Annual Report of JBL (2008-2012)

Table2: Total Import financing of JBL

Graphical Presentation:

Import Financing (In Million)

Import Financing 250000 197285 183744 188284 200000 129413 118525 150000 100000 50000 0 2008 2009
Import Financing
250000
197285
183744
188284
200000
129413
118525
150000
100000
50000
0
2008
2009
2010
2011 2012
Import Financing
129413
118525
183744 197285
188284

Figure 5: Total Imports Financing of JBL

Import Growth (%)

Import Growth 54% 55% 60% 40% 7% 20% -5% -8% 0% -20% 2008 2009 2010
Import Growth
54%
55%
60%
40%
7%
20%
-5%
-8%
0%
-20%
2008
2009
2010
2011
2012
Import Growth
54%
-8%
55%
7%
-5%

Figure 6: Imports Financing Growth Rate of JBL

Interpretation: From the trend analysis it has seen that the amount of import financing though JBL has increased over the years except in2009 and 2012. The import financing negative growth in 2009 and 2012

43

5.1.2 Export Financing:

Year

2008

2009

2010

2011

2012

Export Business (In Million TK)

85418

88653

118515

153758

156525

Growth (%)

19%

4%

34%

30%

2%

Source: Annual Report of JBL

Table 3: Total Export Financing of JBL

Graphical Presentation

Export Financing (In Million)

Export Financing 200000 153758 156525 150000 118515 88653 100000 85418 50000 0 2008 2009 2010
Export Financing
200000
153758
156525
150000
118515
88653
100000 85418
50000
0
2008
2009
2010
2011
2012
Export Financing
85418
88653
118515
153758
156525

Figure 7: Total Exports Financing of JBL

Export Growth (%)

Export Growth 34% 40% 30% 30% 19% 20% 4% 10% 2% 0% 2008 2009 2010
Export Growth
34%
40%
30%
30%
19%
20%
4%
10%
2%
0%
2008
2009
2010
2011
2012
Export Growth
19%
4%
34%
30%
2%

Figure: 8 Exports Financing Growth Rate of JBL

Interpretation: From the trend analysis it has seen that there is an increasing trend in amount of export financing of JBL over the years of analysis. The export financing has increased from TK 85418 (million) in 2008 to Tk 156525 (million) in 2012.But the export financing growth rate was fluctuating over the year.

44

5.1.3 Foreign Remittance:

Year

2008

2009

2010

2011

2012

Remittance(In

45924

56190

52640

72285

100089

Million TK)

Growth (%)

25%

22%

-6%

37%

38%

Source: Annual Report of JBL (2007-2012)

Table: 4 Total Foreign Remittance of JBL

Graphical Presentation:

Remittance (IN Million)

Remittance 150000 100089 100000 72285 56190 52640 45924 50000 0 2008 2009 2010 2011 2012
Remittance
150000
100089
100000
72285
56190
52640
45924
50000
0
2008
2009
2010
2011
2012
Remittance
45924
56190
52640
72285
100089

Figure: 9 Foreign Remittance Performance of IBBL

Remittance Growth (%)

Remittance Growth 60% 37% 38% 25% 40% 22% 20% -6% 0% -20% 2008 2009 2010
Remittance Growth
60%
37%
38%
25%
40%
22%
20%
-6%
0%
-20%
2008
2009
2010
2011
2012
Remittance Growth
25%
22%
-6%
37%
38%

Figure: 10 Foreign Remittance Business Growth Rate

Interpretation: From the trend analysis it has seen that the Foreign Remittance of JBL was increasing year to year. Highest Remittance was found during the year in 2012that was Tk 100089 million which was higher than previous years. The foreign remittance growth rate was high in 2012.

45

5.2 Income From Foreign Trade

5.2.1.

Import

Earning

and

Portion

of

Import

earnings

on

Total

Foreign

Trade

Earnings:

 
 

Year

2008

 

2009

2010

2011

2012

Total Earnings From Foreign Trade

 

2852.9

 

3417.69

4035.1

5149.21

5835.13

Import Earning (In million TK)

 

1235.47

 

1590.6

1995.77

2287.35

2515.49

Portion of Import Earnings

 

43%

47%

49%

44%

43%

Source: Annual Report of JBL (2008-2012)

Table 5: Import Earning & Portion of Import Income on Total Foreign Trade

Graphical Presentation:

Import Earnings

Import Earnings 3000 2515.49 2287.35 2500 1995.77 2000 1590.6 1235.47 1500 1000 500 0 2008
Import Earnings
3000
2515.49
2287.35
2500
1995.77
2000
1590.6
1235.47
1500
1000
500
0
2008
2009
2010
2011
2012
Import Earnings
1235.47
1590.6
1995.77
2287.35
2515.49

Figure 11: Earning from Import of JBL

Interpretation: From the trend analysis it has seen that the earning from import was gradually increasing while the highest earning from import of JBL obtained in the year 201.Every year performs better than previous year.

46

5.2.2. Export Earning & Portion of Export Income on Total Foreign Trade Earnings:

Year

2008

2009

2010

2011

2012

Total Earnings

2852.9

3417.69

4035.1

5149.21

5835.13

From Foreign

Trade

Export Earning (In million TK)

1050.6

1125.64

1543.36

1991.86

2139.3

Portion of Export Earnings

37%

33%

38%

39%

37%

Source: Annual Report of JBL (2008-2012)

Table: 6 Export Earning & Portion of Export Income on Total Foreign Income

Graphical Presentation:

Export Earnings

Export Earnings

2500 2139.3 1991.86 2000 1543.36 1500 1125.64 1050.6 1000 500 0 2008 2009 2010 2011
2500
2139.3
1991.86
2000
1543.36
1500
1125.64
1050.6
1000
500
0
2008
2009
2010
2011
2012
Export Earnings
1050.6
1125.64
1543.36
1991.86
2139.3

Figure 12: Earning from Export of JBL

Interpretation: From the trend analysis it has seen that the earning from export is in rising trend from 2008 to 2012. In 2012, export earnings were the highest. Export earnings performance is not awful

47

5.2.3

Remittance Earnings and Portion of

Remittance on Total Gain of Foreign Trade

Incpme:-

Year

2008

2009

2010

2011

2012

Total Earnings From Foreign Trade

2852.9

3417.69

4035.1

5149.21

5835.13

Remittance Business (In million TK)

566.83

701.45

495.97

870

1180.34

Portion of Remittance

20%

21%

12%

17%

20%

Source: Annual Report of JBL (2008-2012)

Table: 7 Remittance earnings & Portion of it on Foreign Trade

Graphical Presentation:

Remittance Earnings

Remittance Earnings

1400 1200 1180.34 1000 870 800 701.45 600 566.83 495.97 400 200 0 2008 2009
1400
1200
1180.34
1000
870
800
701.45
600
566.83
495.97
400
200
0
2008
2009
2010
2011
2012
Remittance Earnings
566.83
701.45
495.97
870
1180.34

Figure 13: Remittance on Foreign Trade

Interpretation: From the trend analysis it has seen that the earning from remittance is in rising trend but in 2010 the earnings fall dawn to 495.97 million from its previous year and after that the trend rising again upward. In 2012, remittance earnings were the highest

48

5.2.4. Comparison of Import, Export and Remittance Earnings:

Proportion of Export Income

Proportion of Import Income

Proportion of Remittance Income

39%

42%

20%

37%

43%

20%

33%

47%

21%

38%

49%

12%

39%

44%

17%

37%

43%

20%

Source: Annul report of JBL

Table: 8 comparisons of Import, Export, Remittance earnings

Graphical presentation:

Earning Parcentage of Export Import & Remittance

60%

50%

40%

30%

20%

10%

0%

49% 47% 43% 44% 43% 39% 42% 38% 39% 37% 37% 33% 20% 20% 21%
49%
47%
43%
44%
43%
39% 42%
38%
39%
37%
37%
33%
20%
20%
21%
20%
17%
12%
1
2
3
4
5
6

Propotion of Export Income37% 37% 33% 20% 20% 21% 20% 17% 12% 1 2 3 4 5 6 Propotion

Propotion of Import Income37% 37% 33% 20% 20% 21% 20% 17% 12% 1 2 3 4 5 6 Propotion

Propotion of Remittance Income39% 37% 37% 33% 20% 20% 21% 20% 17% 12% 1 2 3 4 5 6

Figure: 14 earning percentage of Import, Export, Remittance

Interpretation: From the last five years analysis it has seen that JBL earnings from import financing were highest, and bank earns also from export financing significantly and earnings from remittance section were fluctuating

49

5.3.0Correlation analysis: Profit vs. Remittance, Export, and Import

Calculation measures: Its calculation measure following:

If the result are between 0.00 to 0.25 than, it measure that Profit and remittance are poorly correlated. That means the change in one taka remittance profit will changes will 0.25 taka or lower.

If the result are between 0.25 to 0.50 than, it measure that Profit and remittance have medium correlation.

If the result are between 0.50 to 0.75 than, it measure that Profit and remittance have good correlation.

If the result are between 0.75 to 1.00 than, it measure that profit and remittance have very good correlation.

5.3.1 Coefficient correlation between Operating profit and Export:

Year

2008

2009

2010

2011

2012

Export

85418

88653

118515

153758

156525

Operating Profit

7003

8578

12037

15722

14691

Table 9: Operating profit and Export of JBL

Correlations

 

Export

Operating profit

 

Pearson Correlation

1

.981 **

Export

Sig. (2-tailed)

 

.003

N

5