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1.1 Origin of the report

Now a day, education is not just limited to books and classrooms. In todays world, education is
the tool to understand the real world and apply knowledge for the betterment of the society as
well as business. From education the theoretical knowledge is obtained from courses of study,
which is only the half way of the subject matter. Practical knowledge has no alternative. The
perfect coordination between theory and practice is of paramount importance in the context of
the modern business world in order to resolve the dichotomy between these two areas. Therefore,
an opportunity is offered by Dhaka School of Bank Management (DSBM), BIBM, for its
potential MBM students to get three months practical experience, which is known as Internship
Program. For the completion of this internship program, I have been joined myself in a bank
namely, National Bank Limited. Internship Program brings a student closer to the real life
situation and thereby helps to launch a career with some prior experience.
This paper is entitled as General Banking Activities and Foreign Exchange Activities of
National Bank Limited originated from the fulfillment of the internship program. For the
internship program, each student is attached with an organization. My internship was at The
National Bank Ltd., Mohakhali Branch, Dhaka.
1.2 Objective of the report:

To get the real life exposure in the Banking sector.

To fulfill the requirement for the completion of MBM program.

To present an over view of National Bank Ltd.

To evaluate the performance of National Bank Limited.

To recommend suggestions for the successful Operations of National Bank Ltd.

1.3 Sources of data

Primary sources are:
Observation during internship period.
Conversation with the officers employed in the bank.
Secondary sources are:
Annual Report 2013 of National Bank Limited.
The banks website:
Miscellaneous article, etc.

1.4 Scope of the study

Well growing National Bank Limited (NBL) containing hundred and eighty Branches in Dhaka
and outside of the Dhaka. The scope of the study will be limited to the organizational setup,
function, operations and performance of the NBL in the Bangladesh specially concentrating on
NBLs operations in Mohakhali Branch, Dhaka.
This internship report mainly encompasses the General Banking and Foreign Exchange activities
of National Bank Limited. I was assigned in the Mohakhali Branch, National Bank Limited
(NBL) and thus paved me the way to get myself familiarized with banking environment for the
first time. I have an opportunity to gather experience by working in different departments of the
1.5 Methodology:
In order to prepare the report there is no technique used. This totally a theoretical part and here I
tried to note my daily experience and finally make a combination of them to prepare this report.
In this report both primary and secondary data are used which are collected from different type
of sources.

1.6 Limitation of the report:

The main problem faced in preparing the paper was the inadequacy and lack of availability of
required data. This report is an overall view of General Banking and Foreign Exchange
Activities of National Bank Ltd. But there are some limitations for preparing this report.
Firstly, due to sensitive issue they did not provide enough data, thats why I have not made vast
compare this bank with other banks.
Secondly, the Mohakhali branch of NBL is the busiest branch, the employees remain very busy
with their jobs, so they did not get enough time to share their experience and knowledge with
With all of this limitation I tried my best to make this report as best as possible. So readers are
requested to consider these limitations while reading and justifying any part of my study.

Chapter 2
Profile Of Nbl


2.1. Overview of NBL

National Bank started its journey with the noble vision of diversifying banking activities into
different activities of client service. The bank is also committed to fulfill its responsibilities to
the society and the country. National Bank Limited has its prosperous past, glorious present,
prospective future and under processing projects and activities. Established as the first private
sector Bank fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest
private sector Bank with the passage of time after facing many stress and strain.
National Bank Limited was born as the first hundred percent Bangladeshi owned Bank in the
private sector. The then President of the Peoples Republic of Bangladesh Justice Ahsanuddin
Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch at 48,
Dilkusha Commercial Area, Dhaka started functioning on March 23, 1983
Now NBL is on line to establish trade and communication with the Prime International banking
companies of the world. As a result NBL will be able to build a strong root in international
banking horizon. Bank has been drawing arrangement with well conversant money transfer
service agency Western Union. It has a full time arrangement for speedy transfer of money all
over the world.
2.2. Vision of NBL:
Ensuring highest standard of clientele services through best application of latest information
technology, making due contribution to the national economy and establishing themselves firmly
at home and abroad as a front ranking bank of the country are their cherished vision.
2.3. Mission of NBL:
Efforts for expansion of their activities at home and abroad by adding new dimensions to their
banking services are being continued unabated. Alongside, they are also putting highest priority
in ensuring transparency, account ability, improved clientele service as well as to their
commitment to serve the society through which they want to get closer and closer to the people
of all strata. Winning an everlasting seat in the hearts of the people as a caring companion in
uplifting the national economic standard through continuous up gradation and diversification of
their clientele services in line with national and international requirements is the desired goal
they want to reach.

2.4. Departments of NBL

National Bank maintains the jobs in a proper and organized considering their interrelationship
that are allocated in a particular department to control the system effectively. Different
departments of NBL are as follows:

Human Resources Division (HRD)

Personal Banking Division

Treasury Division

Computer and Information Technology (IT) Division

Credit Division

Operation Division

International Division (ID)

Card Division

Finance & Accounts Division (FAD)

Audit & Risk Management Division

Risk Management Unit

2.5. Brief Overview of NBL, Mohakhali Branch:

National Bank Limited (NBL), Mohakhali Branch 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. Moreover, this is an authorized
dealer Branch. Not all branches of a NBL provides foreign exchange department. The branches
which has foreign exchange department are known as authorized dealer. These authorized dealers
have permission from Bangladesh bank for their services. Further these authorized dealer
branches are under strict supervision of Bangladesh Bank. Authorized dealer can handle all kinds
of foreign transactions as per FER Act 1947 under the instructions of Bangladesh Bank.
2.6. Departments of NBL, Mohakhali Branch:

General banking
Credit department
Foreign exchange department

2.7. Departments where I have worked:

During my internship period I have worked on the following departments:

General Banking
Foreign Exchange Department

Chapter 3

Description of activities of General

Banking and Foreign Exchange
department of NBL

General Banking operation of NBL, Mohakhali Branch

General Banking is the heart of banking activities. Total banking activities start with this
department. By banking we mean, collecting money from the surplus unit and deploy it to the
deficit unit. General Banking is the department where this money is collected. In my orientation,
at first I observed this department. General Banking specially deals with account opening, local
remittance, cash and clearing department. I would like to discuss the duties of these desks and
some important things related to these departments or sections.


3.1.1 Introduction
Desk-1 is engaged in account opening and closing tasks. In Mohakhali branch, one executive
officer and three officers are engaged in this task. A to Z Bank software is used to operate the
account information. Following is the job description of desk-1 and some important discussion
regarding this desk.

3.1.2 Job Description

1. Opening different types of deposit accounts.
2. Handling operation of different types of accounts.
3. Responsible for issuing MICR and Non MICR (for staff only) cheque books.
4. Transferring & closing different types of accounts.
5. Opening & operating NMS accounts.
6. Making different vouchers regarding above transactions.
7. Giving support to the valued clients of the Bank.
3.1.3 General procedure of opening account:
Step 1: Bank provides account opening form to the prospective customer or applicant.
Step 2: Application submits the form dully signed by an introducer and along with 2 passport
size photo signed by the introducer.
Step 3: Application submits the form dully signed by an introducer and along with 2 passport
size photo signed by the introducer.

Step 4: if they are satisfied, they will open the account.

Step 5: they issue deposit slip and deposit must be made.
Step 6: After deposition one checkbook is issued.
Step 7: Bank preserves the specimen signature card to verify the signature of the client.
Step 8: Account is opened.
Various types of customers such as individual, joint, proprietorship, partnership, private limited
company, public limited company, associations, clubs, societies, trusts etc. can open their various
types of accounts as their requirements which are mentioned below:

3.1.4 Individuals Account

If individual wants to open current and savings account then an introducers must be
needed who has current or savings account in the bank.

The introducer must be signed in the two passport size photographs.

Individual must be submitted his/her certificate of word commissioner or the photocopy

of the passport (valid).

Individual must have a passport size photograph of his nominee signed by him.

Individual must have filled up the KYC form (Know Your Customer) for the full-fill of
requirement of Bangladesh Bank.

3.1.5 Joint Account:

This account can be opened by 2 persons or more than 2 persons and each person should fulfill
the requirements of individual account. The account holders should mention the mode of

3.1.6 Partnership current account:

For opening this A/c the Conditions are

It may be CD A/c

It must be opened by the name of the Partnership Firm

Partnership Deed must be submitted with the A/c opening form


Specific Rubber Stamp of the Firm

Photographs of the A/c operative persons

3.1.7 Limited Company current account:

To open an A/c in the name of a Company the following documents and papers must be
submitted with the A/c opening form:

Memorandum & Articles of Association of the Company

Certificate of Incorporation

Resolution of the Board to open A/c with the Bank

List of Directors with Signatures

Photographs of the operative persons

Public Limited Company Current A/c:

To open an A/c in the name of a Public Limited Company, the following documents and papers
must be submitted along with the A/c opening form:

Memorandum & Articles of Association of the Company

Certificate of Incorporation

Resolution of the Board to open A/c with the Bank

List of Directors with Signatures

Photographs of the operative persons

Certificate of Commencement of Business.

3.1.8 Proprietorship current account:

It may be CD A/c (Current Proprietor A/c). To open a Proprietorship A/c

Proprietor of the firm must fill up the Current Proprietorship A/c opening form

An Introducer acceptable to Bank must introduce the A/c.

Photographs of the Proprietor


The specific Rubber-stamp of the Proprietorship firm

Valid Trade License

3.1.9 Types of Deposit Accounts

Our Branch is collecting two types of deposits, such as:

Demand deposits

Time Deposits.

NBL offers following accounts to its clients

Current Depository Account
Savings account
Short Notice Deposit (SND)
Fixed Deposit Receipt (FDR)
National Monthly Savings (NMS)
Monthly Benefit Scheme (MBS)
Double Benefit Scheme (DBS)
3.1.10 Demand deposits:
These sorts of Deposits are payable without any notification. Our branch is collecting the above
deposits through the following way:
By opening of;

Current account &

Saving account

3.1.11 Current Deposits: (CD A/c)

Current Deposits (CD A/c) is a running A/c where a customer can draw money
frequently/continuously. Funds of CD A/c shall be payable on demand. Bank does not allow any
interests on CD A/c. CD A/c is generally opened by Business men, Public Institutions, Corporate
Bodies & other organizations who want to operate his A/c numerously & frequently.
National Bank Limited provides the following types of current account:

Current account for individual (There must be a nominee)

Joint current account (There must be a nominee)


3.1.12 Time deposits:

Time deposits are payable at a fixed date or after notification. Our Branch receives Time deposits
through fixed deposits receipt (FDR), Short-term deposit (STD), MSS (Monthly Saving
Scheme), SDS (Special Deposit Scheme) etc.

3.1.13 Fixed Deposits (FD)

Fixed Deposits (FD A/c) shall be opened for a longer period such as 3 (three) months to 3
(three) years or more. Generally who wants to invest his money safely can open FD A/c. The
interest of FD A/c is negotiable & it depends on the volume of deposit and period. At present, our
branch is allowing interest from 8.50% to 9.00% in FD A/c. It may be noted that no introduction
is necessary to open FD A/c & the FDR is not negotiable instrument & cannot be transferred by

Interest rate on FDR:

The interest rate of the deposited amount depends on duration and volume of the amount.

a. 3 months & above
but less than 6
b. 6 months & above
but less than 1 year
c. 1 year & above
but less than 2year
d. 2 years & above

Below 10 crore

Above10 crore







3.1.14 Short-Term-Deposit (STD)


Short Term Deposit or STD Account Opening procedure is similar to that of the current account.
The rate of interest on this type of account is 5%. Withdrawals from this type of account require
a prior notice of seven days.

3.1.15 Monthly Installment Scheme (MIS)

For most of the people on fixed income the opportunity to supplement their monthly earning is a
golden one. And NBL Special Deposit Scheme gives a customer just that.
Under this scheme, customers can deposit money for a term of 5 years. The deposited money is
fully refundable at the expiry of the term. At the same time, during the term period they can
enjoy a monthly profit corresponding to their deposited amount. As for instance, under this
scheme a deposit of Tk,100000/- gives a monthly income of Tk.1050/-.
Deposited Amount
Tk. 100000/Tk. 200000/Tk. 300000/Tk. 400000/-

Monthly Benefit
Tk. 1050/Tk. 2100/Tk. 3150/Tk. 4200/-

3.1.16 Monthly Savings Scheme:

This scheme is specially designed for the benefit of the limited income group members. This
helps to accrue small monthly savings into a significant sum at the end of the term. So, after the
expiry of the term period the depositor will have a sizeable amount to relish on.
A monthly deposit of Tk.500/- or Tk.1000/- for 5 or 10 years period earns in the end Tk.39500/or Tk.110000/- respectively.

Tk. 500/Tk. 1,000/Tk. 2,000/Tk. 3,000/Tk. 4,000/Tk. 5,000/Tk. 10,000/Tk. 20,000/Tk. 30,000/-

Return after
@ 10.42%
TK.21,050/TK. 42,100/TK.84,200/TK.1,26,300/TK.1,68,400/TK.2,10,500/TK.4,21,000/TK.8,42,000/TK.12,63,000/-

Return after
5 years
@ 10.94%
Tk. 39,500/Tk. 79,000/TK.1,58,000/TK.2,37,000/TK.3,16,000/TK.3,95,000/TK.7,90,000/TK.15,80,000/TK.23,70,000/-

Return after
@ 11.21%

Return after
10 years
@ 11.66%
Tk. 1,10,000/Tk. 2,20,000/TK.4,40,000/TK.6,60,000/TK.8,80,000/TK.11,00,000/TK.22,00,000/TK.44,00,000/TK.66,00,000/12

Tk. 50,000/-



TK.76,00,000/- TK.1,10,00,000/-

3.1.17 Deposit process of National Bank Limited

Deposit process starts from collecting account opening application form and continue throughout
the following process:

Providing application form and

the list of required documents.
Acceptance of necessary
application form, photographs
and documents.
Fill up the KYC form


Permission of manager
Data entry and provide account
Depositing primary money
Scanning the card containing
account holders sign and
Issuing the cheque book
Depositors statement
Influence potential depositors

Figure: Deposit process of NBL.


3.2.1 Introduction
Cash department is mainly engaged with cash receipt and cash payment. This department is
under General Banking in charge. There is also another officer who is engaged with canceling
and verifying the cheques. There are five cash officer in this department. AtoZ Bank software is
used for posting the transaction. Few cash officer is engaged with payments with amount and
another officer receives the money.
3.2.2 Job Description

Keeping keys of vault and iron safe as joint custodian.

Processing of voucher of cash receipt & cash payment.
Cancellation of cheques up to TK.1,00,000/- singly and above TK.1,00,000/- jointly.
Checking and rechecking of computer posting of all payment & receipt vouchers.

Ensuring collection of withdrawal notice against Savings account & verification of

signature thereof.
Supervising cash remittance to & from Mohakhali branch.
Checking of daily cash receipt and payment register.


1. Pay-in-Slip or Credit Voucher filled in by the customer or department is given to the cash
counter for depositing cash.
2. Cash Receiving Officer shall check the title of account, its number, amount in words and
figure in the Pay-in-slip and Credit Voucher.
3. After receiving the cash, Receiving Officer will record the denominations of the currency
on the back of the voucher and enter the particulars in the Cash Receiving Book under
progressive serial number. He will put his signature affixing the date stamp both in
counter folio and Pay-in-Slip/voucher and he will pass on the same along with the
Register to the Officer-in-charge of Cash Department for his signature.
4. Officer-in-charge of Cash Department detaches Pay-in-Slip from the counter folio and
returns it along with the Register to Receiving Officer and retains the Pay-in-Slip/Credit
5. Manger or Authorized Officer will check and sign the book at cash closing time.
6. Receiving Officer totals the amounts entered in the Cash Receiving Book at the close of
the business and he is agreed with the total of actual cash received.


1. Cash receipt later or in the evening shift is taken in the next day's date.
2. Procedure for receipt in same as explained in the previous paragraphs.
3. Cash so received and balanced are put separately in the safe of the locker.
1. Cheques, Demand Drafts, Pay Order, Pay Slip, Telegraphic Transfer Receipts and Debit
Cash Vouchers etc. are received from the customers and various departments for
2. The instruments are checked for any apparent discrepancy, posting and cancellation.
3. Specimen Signature of cancellation Officer should be made available with the paying
4. Cash is counted and denominations of notes are written on the reverse of the instrument.
5. Signature of the bearer is obtained on the reverse of the instrument.
6. Cash is paid to the bearer of the instrument.
7. Stamp is affixed on the face of the instrument and signed by the Paying Officer.
8. Particulars of the instrument are entered in Paying Cash Book.
9. Paid instruments kept with the Paying Officer.


10. At the close of business, the amounts entered in the Paying Cash Book are totaled. The
total is agreed with the amount paid.
11. The Officer in-charge of Cash Department checks the entries to ascertain that the
payment has been correctly made and realizes the instrument from the Payment.
12. The Officer-in-charge also checks and signs the book. After the cash is checked as
explained herein before the instruments are sent to the Accounts Department as the case
13. Instruments returned and unpaid by the various departments are received by the Paying
Cash Officer attached with Memorandum duly entered in the Register.
14. The particulars of the instrument are compared with those in the Register and
15. Entries in the print vouchers are initialed by the officer and the Register is returned to the
department concerned.


1. The practice of payment of instrument after banking hours is to be exercised very
sparingly and only in case of very good customers.
2. The instrument is posted in the Ledger Book in the next day's date and cancelled as usual
before payment is made.
3. Payment is made only to the drawer in case of cheques or the 1st payee in case of
Demand Draft, Telegraphic Report etc.

3.2.6 Balancing, Checking and Safe Custody of Cash

1. At the close of business when receiving and Paying Book are balanced, the Cash Balance
Book is written and agreed with the cash in hand. The book is checked and signed by
Authorized Officer.
2. After Cash Balance book is written, the Cash Position Memo is written in duplicate. The
Memo is checked and signed by Authorized Officer.
3. When the Cash Balance Book is balanced, The Manager or Second Officer, whoever is
assigned for checking of cash, is informed to check the cash.
4. The cash is counted by the Checking Officer and verified with the entries of Cash
Balance Book.
5. The Cash Balance Book is checked with the closing figures of the preceding day of the
Bock and dosing figures of Receiving and Paying Book.
6. The entries of denomination of notes and coins in the Cash Balance Book are compared
with denomination of notes and coins counted and recorded on the face of cash
denomination slip.


7. If found in order, the Checking Officer signs the Cash Balance Book, Receiving Book
and Paying Book.
8. The Cash Position Memo is checked and counter signed by the Checking Officer.
9. In the presence of Checking officer and the Officer, who has counted the cash and signed
the book, the cash is kept in the safe.
10. The Cash Position Memo is sent to the Accounts Department. The signature of the
recipient is obtained on the duplicate copy of the Memo and filed in the "Cash Position
Memo File".

Sending money from place to another place for the customers is another important service of
banks and this service is an important part of countries payment system. For this service, people
specially businessmen can transfer funds from one place to another very quickly. There are three
types of remitting money in NBL, mohakhali branch such as;

1. Pay order (P.O)

2. Demand draft (D.D)
3. Telegraphic Transfer (T.T.)

3.3.1 Pay Order (P.O):

Pay Order gives the payee the right to claim payment from the issuing bank. It can be en-cashed
from issuing bank only. Unlike Cheque, there is no possibility of dishonoring pay order because
before issuing pay order bank takes out the money of the pay order in advance. Pay order cannot
be endorsed or crossed and so it is not negotiable instrument. Pay order issued if the clients need
to transfer the amount within the city where the bank located. For example if any one want to
pay tax through pay order in Dhaka zone then they can apply for pay order in any branch in
Dhaka city. In order to issue pay order the client can apply by cash payment or cheques payment.
There is no obligation to have an account with the issuing bank. In that case clients need to pay
commission and vat to issue pay order. If any account holders authorize any bearer to purchase a
pay order of TK.1 to TK.500000 then they need to pay commission and vat (Tk. 50 + Tk. 8).

3.3.2 Demand Draft (DD):


Demand draft is an order of issuing bank in another branch of the same bank to pay specified
sum of money to the payee on demand. It is generally issued when customer wants to remit
money in any place which is outside of the clearinghouse area of issuing branch payee can be
purchaser himself or another. Bearing money may be risky. It is a negotiable instrument and it
can be crossed or not. For payment of DD, paying branch first has to be confirmed that the DD is
not forged one. First bank Check the Test Code mentioned on the draft. If Test Code agrees
then believe that DD is not forged and makes payments. For further confirmation, the issuing
bank sends an advice about the DD to the paying branch. Without advice the paying branch
generally does not pay.

3.3.3 Telegraphic Transfer or Telephonic Transfer (T.T):

By this method money is transfer to another place by telegraphic message. The sender branch
will request another branch to pay required money to the required payee on demand. Generally
for such kind of transaction payees should have account with the paying bank. Otherwise it is
very difficult for the paying bank to recognize the exact payee. Test code is also furnished on the
TT message for the protection of it. When sending of money is urgent then the bank use
telephone for remittance.

In current time TT is not popular as before because of the advance service of On-line Banking.


3.4.1 Introduction
The main objective of clearing department is to provide an extra facility to the customer other
than cash receipt and payment. We can divide this department into two parts. One is Inward
Clearing section, and the other one is Outward Clearing section, in NBL, Mohakhali branch. I
am trying to present my findings in the following parts regarding these two sections.


1. The instruments drawn on National Bank are received from other Banks in the Clearing
House by the representing branch of the Bank.
2. The amount and number of instruments received are entered in the House Book from the
main schedules of respective banks.
3. The amount of instruments delivered, received and difference is written in a slip provided
in the Clearing House and the Slip is returned.
4. All instruments are posted as debit entry into the account mention in cheques slip.
5. The instruments returned are posted separately.
6. Print all the voucher of posting.
7. Check the voucher and the instrument.
8. Return instrument sent to the respective branches.
9. The instrument contain amount more than Tk. 1,00,000/- need to be cancelled by the
1. The instruments drawn on different bank are received from the clients.
2. The amount in figure and word and the payee name need to be checked.
3. If the issuing bank is in clearing zone then the officer posted it in NIKAS.
4. Then officer endorsed the instrument according to the payee name and initial it.
5. Then crossing and clearing stamp placed on the instrument.
6. After posting collect print out of different banks total separately.
7. Check the print copy and the instrument.
8. Then prepare Inter Bank Debit Advise and authorized it by different officer.
9. Finally all instruments are sent to the issuing bank through clearing house.
10. Rearrange all the credit blucher according to the account types and hold it for credit
posting in next day.
11. At last Print out of validation of the day is file up.
For payment of Bills presented to a particular branch of the Bank through another branch of the
Bank, the procedures are the same as those applicable to Inward Clearing.


For collecting of Bills by a particular branch of the Bank, drawn on another branch of the Bank
the procedures are the same as those applicable to Outward Clearing.
The only exception in both cases is that there are no clearinghouse formalities. The concerned
branches of the Bank directly deal with Inter-branch clearing.
3.4.6 Return of the Cheque:
A cheque may be returned by the following reason:

Account Closed.
Insufficient funds / not arranged for.
Payment stopped.
Refer to drawer
Drawn against uncollected funds. May be presented again.
Amount in words and figure differ.
Drawers signature differs.
Alternation requires drawers full signature.
Mutilation required drawers confirmation.
Cheque postdated /out of date.
Date incomplete/ missing.
Payees endorsement required / irregular.
Payees endorsement requires bank confirmation.
Clearing house stamp missing.
Not drawn on us.

Foreign Exchange operation of NBL

4.1 Modes of the Foreign Exchange:
Various services regarding foreign exchange provided by NBL can be segregated into four broad




Foreign Remittance

Issuing T/C & Endorsement of Dollar

This section perform the major function of import procedure in favor of its clients and provide
import financing through guarantee, LIM, PAD, LTR etc.

4.2.1 Letter of Credit:

Letter of Credit (L/C) is a letter from the importers bank to the exporter that the bills if drawn as
per terms and conditions are compiled with will be honored or accepted for deferred payment on

4.2.2 Requirements of opening an L/C are:

Trade license,


Membership Certificate,

TIN and VAT Certificate,

Bond License,

Memorandum of Articles (In case of a limited co.),

Registered Deed (Partnership Firm),

Resolution and Photographs

4.2.3 Parties to Documentary Credit:

Commercial Parties:
a) Applicant:
The applicant is normally the buyer of the goods, i.e. importer who requests his bank to issue a
L/C in favor of a named beneficiary against tendering of certain documents.


b) Beneficiary:
The beneficiary is normally the seller of the goods who receives payment under documentary
credit if he has complied with terms and conditions.
Parties to documentary credit may be an issuing bank, an advising bank, a confirming bank, a
reimbursing bank or a nominated bank.
a) Issuing bank: The issuing bank or the opening bank is one, which issues the credit.
b) Advising Bank: The Advising Bank advises the credit to the beneficiary thereby
authenticating the genuineness of the credit. It is normally situated in the country/place of the
c) Confirming Bank: A Confirming Bank is one which adds its guarantee to the credit opened
by another bank, thereby undertaking the responsibility of payment/negotiation/acceptance under
the credit in addition to that of the Issuing Bank.
d) Nominated Bank: A Nominated Bank is that bank nominated by the issuing bank to pay, to
incur a deferred payment liability, to accept drafts or to negotiate credit.
e) Reimbursing Bank: A Reimbursing Bank is the bank authorized to honor reimbursement
claims in settlement of negotiation/acceptance/payment logged with it by the
negotiating/accepting/paying Bank.

Other related parties:

a) Issuer: The Issuer has the responsibility for issuing the goods as provided in the credit.
b) Carrier: The Carrier is responsible for safe arrival of the goods at the destination.
Types of documentary credit:

Revocable D. credit

Irrevocable D. credit

Confirmed and unconfirmed D. credit

Fixed, revolving and installment credits

Standby credit

Red clause

Back to back credit


Transferable credit

Credit options

Documents in a documentary are Commercial Invoice, Certificate of origin, Analysis/quality

certificate, packing list, Draft, and Transport documents and Insurance Documents.
4.2.4 Steps for import L/C operation 8 steps operation:

Step-1 Registration with CCI &E

For engaging in international trade, even trader must be first registered with the chef
controller of import and export.

By paying specified registration fees to the VVI &E the trader will get IRC/ERC
(import/Export registration certificate).To open L/C with bank this IRC is must.

Step-2 Determination terms of credit

The terms of the letter of credit are depending upon the contract between the importer and
exporter. The terms of the credit specify the amount of credit, name and address of the
beneficiary and opener, tenor of the bill of exchange period and mode of shipment and of
destination, nature of credit, expiry date name and number of sets of shipping documents etc.

Step- 3 proposal for opening L/C

To have an import LC limit an importer submits an application to foreign exchange department
of National bank ltd. The proposal contains the following particulars:

Full particulars of the bank account

Natured amount of limit

Required amount of limit

Payment terms and conditions

Goods to be imported

Officered security

Repayment schedule


Step- 4 Application by importer to the banker to open letter of credit

For opening L/C the importer is required to fill up a prescribed application form provided by the
banker along with the following documents:
7. Authority to debit account
1. L/C Application form
8. Filled up amendment request Form
2. . Filled up LCA form
9. IMP form
3. Demand promissory Note

4. pro-forma invoice

10. insurance cover note and money

11. Membership certificate

5. Tax identification number

12. rate fluctuation undertaking
6. Import registration certificate

Step-5- Opening of L/C by the bank for the opener:

Taking filled up application form the importer.

Collects credit report of exporter from exporters country through his foreign
correspondence there.

Opening bank then issues credit by air mail / TELEX / SWIFT followed by L/C advice as
asked by the opener through his foreign correspondent or branch as the case may be at the

place of beneficiary. The advising bank advises the L/C to the beneficiary of his own
form where it is addressed to him or merely hand over the original L/C to the beneficiary
if it is so addressed.

Step- 6 shipment of goods and lodgment of documents by exporter:

Then exporter ships the goods to the destination of the importer country and sends the documents
to the L/C opening bank through his negotiating bank. Generally the following documents are
sent to the opening banker with L/C:
1. Bill of Exchange
2. Bill of Lading
3. Commercial invoice
4. Certificate of origin
5. A certificate stating that each packer
contains the description of goods over the

6. Packing List
7.Advice Details of shipment
8. Pre-shipment inspection certificate
9. Vessel Particular
10. shipment certificate

Step- 7 Lodgment of documents by the opening bank from the negotiating bank:
After receiving the documents, the opening banker scrutinizes the documents. If any discrepancy
found, it informs the importer. If importer accepts the fault, then opening bankers call importer
retiring the document. At this time many thing can happen. These are indicated in the following:

Discrepancy found but the importer accepts no problem occurs in lodgment.

Discrepancy found and importer not agreed to accept in this case, importer protest
and send back all the documents to the exporter and request his to make in the specified
manner. Here banker is not bound to pay because the documents send by exporter is not
in accordance with the terms of L/C.

Documents are OK but importer is willing to retire the documents in this case bank
is obligated to pay the price of exported goods. Since importer did not pay for bill of
exchange, this payment by bank is one kind of credit to the importer and this credit in
banking is known as PAD.

Everything is OK but importer fails to clear goods from the port and request bank
to clear- in this case banks clear the goods and takes delivery of the same by paying
customs duty and sales tax etc. So, this expenditure is debited to the importers account
and in banking it is called LIM.

Step- 8 Retirements


The importer receives the intimation and gives necessary instruction to the bank for retirement of
the import bills or for the disposal of the shipping document to clear the imported goods from the
customs authority. The importer may instruct the bank to retire the documents by debiting his
account with the bank or may ask for LTR (loan against Trust Receipt).
* After opening of L/C some times alteration to the original terms and conditions become
necessary. These amendments involve changes in
1. Unit price
2. Extension of validity of the L/C
3. Documentary requirements etc.
Such amendments can be affected only if all the concerned parties agree i.e. the beneficiary, the
importer, the issuing bank and the advising bank.
For any amendment the importer must request the issuing bank in writing duly supported by
revised / Performa invoice. The issuing bank then advises the required amendment to the
advising bank. L/C amendment commission including postage is charged to the clients A/C.

4.3 Loan against Trust Receipts (LTR)

Advance against a Trust receipt obtained from the customers are allowed to only first
class tested parties when the documents covering an import shipment or other goods
pledged to the bank as security are given without payment. However, for such advances
prior permission / sanction from Head Office must be obtained.

The customer holds the goods or their sale proceeds in trust for the bank, till such time,
the loan allowed against the Trust Receipts is fully paid off.

The trust receipt is a document that creates the bankers lien on the goods and practically
amounts to hypothecation of the proceeds of sale in discharge of the lien.

4.4 Loan against imported Merchandise (LIM)

Advance (loan) against the security of merchandise imported through the bank may be allowed
either on pledge or hypothecation, of goods, retaining margin prescribed or their landed cost,
depending on their categories and credit restriction imposed by the Bangladesh bank . Bank shall


also obtain a letter of undertaking and indemnity from the parties, before getting the goods
cleared though LIM account.

4.5 Payment Procedure of Import Documents

This is the most sensitive task of the import Department the officials have to be very much
careful while making payment. This task constitutes the following:

Date of payment

Usually payment is made within seven days after the documents have been received. If the
payment is become deferred, the negotiating bank may claim interest for making delay.

Preparing Sale Memo

A sale memo is made at B.C rate to the customer. As the T.T &O.D rate is paid to the ID, the
difference between these two rates is exchange trading. Finally, an inter branch exchange trading
credit advice is sent to ID.

Requisition for the Foreign Currency

For arranging necessary fund for payment a requisition is sent to the international department.

Transmission of Message

Message is transmitted to the correspondent bank ensuring that payment is being made.

Export is the process of selling goods and services to the other country. It has an immense
contribution to generating income for the bank.

4.6.1 Requirements for the export procedure:

In order to export any goods or service to overseas, the exporter should have attested the
photocopies of the following documents with the up to date export registration certificate. Other
requirements are Commercial Invoice, Certificate of origin, Beneficiary certificate (where the
exporter tells about the goods he/she wants to export), Beneficiary fax (confirmation of sending
goods to the importer), Packing list, Draft, Transport documents and Insurance Documents.
If the bank authority satisfies with all the information provided by the exporter, steps are taken to
smooth out the process of export regarding collection of money or opening back to back L/C.

Opening back-to-back L/C is a letter of credit backed by the original L/C or the mother L/C to
open a new L/C. The bank provides it to the exporter to import the raw material from overseas in
order to produce the exportable commodity for the importer. It encourages the exporter to
produce more exportable goods. In this case the bank offers some additional facilities i.e. about
120 days to pay back the money where in case of import. L/C is issued for 60 days.


Foreign Remittance refers to the transfer of fund from one country to another through channel.
Foreign Remittance is an important sector where NBL earns a lot of foreign exchange every year.
Drawing Arrangements:
Drawing Arrangements is made to facilitate remittance through concluding accounting
relationship between a bank and corresponding, or an exchange house, which may exist in the
following three forms of accounts.
1. NOSTRO A/C: A foreign currency account that a local bank maintains with another bank in
2. VOSTRO A/C: An account, which a foreign bank maintains with a local bank, is called
3. LORO A/C: An account, which a third party maintains with a foreign bank, is known as

There are two types of Remittance:

a) Foreign Inward Remittance: The remittance in foreign currency, which is received from
outside the country to our country is known as Foreign Inward Remittance. The remittance can
be performed in two ways:

Visible Inward Remittance-such as export proceeds.

Invisible Inward Remittance-such as family maintenance consultant fee etc. Cash is

remitted through TT (Telegraphic Transfer), DD (Demand Draft) etc.

b) Foreign Outward Remittance: Foreign Outward Remittance is funds remitted to overseas on

behalf of the client. It is of two types:


Visible Outward Remittance-such as, payment against import, sale of travelers cheque

Invisible Outward Remittance-such as, membership fee, subscription fee etc.

4.8 Issuing T/C & Endorsement of Dollar

NBL is an authorized dealer of American Express T/C. at the same time; they can sell T/C and
dollar. Every morning they get a telex from the Head Office, which carries the rate of the foreign
currency transaction of the day. The payment to the customer is made instantly by debiting
foreign bill purchase account.



From analysis and findings of the report and based on my everyday observation and perception, I
would like to give some recommendations about some facts that might help NBL management to
enhance its performance as well as success. Some recommendations that the bank may benefit
from are given below:

In the total banking system National Bank should implement modern banking process
instead of traditional system. It should be more computerized to facilitate of their

Database networking is one of the most recent technologies to transfer from branch to
branch. Therefore, NBL should use this technology in Foreign Exchange Division.


National Bank should upgrade their online banking services. Then it will give its
customer huge flexibility in withdraw or deposit an amount of cash.

In foreign exchange department it is required to communicate with foreign banks

frequently and quickly. So, NBL should use modern communication media.

Every LC has limits on its total value, imposed on them according to the Bangladesh
Banks regulations, and based on the risk factors. However, the Bank still has the authority
to make some changes to the limit within a certain specified range. If National Bank
becomes more flexible, then it can open more LCs with higher values thus increasing
their profitability.

Payments for LCs could also make through pre-arranged credit facilities that the
customer may have with the Bank. Usually, the rates of interest on these credits are
excessively high which actually discourage the customers. Reducing interest on such
credit facilities would actually induce the clients to do more global trade thus increasing
the banks profit as well as the well being of the countrys Economy.

A customer is required to pay the bank a certain percentage of the total LC value in
advance before opening an LC, which is called LC margin. If National Bank reduces the
rate of margin then perhaps they can attract more customers.

National Bank will be able to attract more customers by reducing some charges of foreign
trade such as SWIFT charges (Charge for sending the LC electronically), Document
Handling Charges, Stamps Charges as well as VAT.

NBL should conduct smaller LC request coming from SMEs if they want to pay more
attention to increase their customers.

They should publish manual for their foreign exchange section. Consequently, the
officers of this section will be able to conduct their affairs easily without any discussion
with the Vice Principal. As a result, it will save their time. Wherever they face any
problem, they will follow the manual directly.

More importance should be given on import because it assesses most of the variation in

As per coefficient of variation, remittance is the most risky sector. So attempts should be
taken for lowering the riskiness.

The Bank should increase its ATM booth in different locations and improve its facility
throughout the country.

NBL should emphasize more on customer relationship management to retain their

existing customers and attract the potential customers.



National Bank Ltd is one of the most potential banks in the banking sector. It has a large
portfolio with huge assets to meet up its liabilities and the management of this bank is equipped
with the expert bankers and managers in all level of management. So it is not an easy job to find
out the drawbacks of this bank. I would rather feel like producing my personal opinion about the
ongoing practices in Mohakhali Branch. The service provided by the young energetic officials of
the National Bank Limited is very satisfactory. As a commercial bank NBL has to follow the
rules of Bangladesh bank. During my internship in this branch I have found its general banking
section to be efficient but need to be more efficient; therefore this section plays a major role in
the overall profitability of the branch and to the Bank as a whole.


No matter whatever the challenges are in the area of Foreign Trade, National Bank is fully
equipped to face any obstacle. Even if National Bank had a slightly poor performance regarding
the percentage of contribution to total import of the country in the last year, still it has the
expertise to be on the top of foreign exchange business in the coming years.
As the economy of Bangladesh is swelling and import and export are one of the major sectors
that play important role in the economy, National Bank Limited always have played its role in
making sure that things go smoothly. However, since sky is the limit, the bank is still evolving
every day striving to provide the importers and exporters with the best possible service. Import
and exports are showing positive trends within all of the foreign trades even after the global
challenges that we are facing today. That is why there is least chance that National Bank could
possibly fail in facilitating foreign trade in the future.
Moreover, during the course of my practical orientation I have learned the practical banking
activities to realize it with my theoretical knowledge, which I have greathearted from various
courses of my MBM program.





Annual Report of NATIONAL BANK LTD. 2013

NATIONAL BANK Procedure manual 2008 General Banking
Foreign Exchange Guidelines, Bangladesh Bank
The banks website:
Miscellaneous articles