Introduction of the report: -

This report basically focuses on the foreign Exchange Activities of Shahjalal Islami Bank Ltd,
College Gate Branch. Shahjalal Islami Bank Ltd was established as an public company on 1
st

April 2001 .But it has been converted to commercial operation in accordance with interest free
Islamic Shariah based commercial bank on the 10
th
May 2001.Moreover this report will help to
understand the culture of work in a bank. I have mentioned all the things in the report whatever I
have learned and have known from my internship in the Shahjalal Islami Bank Ltd., College
Gate branch.
Background of the Report: -
Internship is an important part of BBA program which is essential for a student to get a practical
knowledge that he has learned theoretically during his study about business or Job. As a student
of BBA (major in Finance) I have to choose a company where I can learn about finance
practically and introduced with the business environment and I have to work with a specific topic
to prepare an internship report. Shahajalal Islami Bank Limited is one of the leading Islamic
Bank in our country and Management Team is strong and supportive equipped with excellent
professional knowledge. So I choose this company for my internship. My supervisor Assistant
Professor Sheik Abdul Rahim, Faculty of Business and Economics, Daffodil International
University. This report will be prepared as a partial fulfillment of BBA program.
Objective of the report:
The main objective of this report is this report is to fulfill the requirement of BBA program. For
this reason I had to be attached with an organization and I choose Shahjalal Islami Bank Ltd. So
that I can have same practical job related experience with my academic knowledge.
The objective of the study may be viewed as:-
General objective
Specific objective.
General objective: - The general objective of the study is to prepare and submit a report on the
topic of foreign Exchange Activities of Shahjalal Islami Bank Limited.
Specific objective:-
Have a good idea about the export & import procedure of Bangladesh about L/C opening
procedures.
To understand day to day accounts and L/C functions of banking services.
Relevant policies, Strategic, System, theories and practices for banking.
To submit the practical work as a paper work that I have learned in my three months
internship of BBA program.
Methodologyof the Study:-
Different data and information are required to meet the goal of this report. Those data and
information were collected from various sources, such as, primary and secondary which is
showed below:
Primary Sources of Data:-
Personal observation & Intelligence.
Face to face conversation of the officers.
Face to face conversation of the client.
Working at different desks of the bank.
Secondary Sources of Data:
File study.
Annual report of Shahjalal Islami Bank Ltd.
Statement of affairs.
Bank Rate sheet.
Internet www.shahjalalbank.com.bd.
Progress report of the Bank.
Different publications regarding banking function and foreign exchange operation.
Scope of the study: -
The report will illustrate a basic reflection about the Shahjalal Islami Bank Ltd. Present condition
of the bank in private banking sector, various schemes of SJIBL, interest rate of the bank and
activities etc.
The activities of dispatch, foreign Exchange Activities of Shahjalal Islami Bank Limited, College
Gate Branch Dhaka Will are discussed in details. However, I could not get the opportunity to
work in general banking and investment Department which I feel necessary to have clear
understanding about the activities of the bank.
Rational of the study:-
The internship program is a mandatory part of the BBA program because this internship program
bridges the gap between the academic curriculums and practical works in an organization. The
internship program has been designed to gathered practical experiences by attaching one self
with the day to day activities of an organization.
In order to fulfill the requirement of the Internship program it has chosen Shahjalal Islami Bank
Limited. The Human Resource Division (HRD) of Shahjalal Islami Bank Limited placed me to
its College Gate Branch. The overall topic of the report has been given by course instructor. The
topic of my report is Foreign Exchange Activities of Shahjalal Islami Bank Limited. I have
done my internship in Shahjalal Islami Bank Limited, College Gate Branch. During this period I
tried to get familiarize myself with the theoretical concept and practical process of customer
service in Shahjalal Islami Bank Limited.
Limitation of the report: -
Major limitation of this report is time constrain. Availability of the reference book is another
limitation. College Gate Branch is so busy branch. In this branch employees get very little time
to teach theoretical knowledge to the trainee, and some employees were not so helpful to do so. I
faced some problem for preparing this report:-
In some cases, up to date information were not published.
Relevant papers and documents were not available sufficiently.
The organization maintains strict confidentiality about their financial and other
information. They are afraid of any type of information leakage to their competitors. So
there was always lack appropriate information.
Any type of such presentation requires a long time. But I did not have that much busy
time to concentrate on my work. Duration of this study was too short to have a sound
understanding of the overall banking.
Scope of my study is so wide that analytical and comprehensive study is not possible.
Lack of sufficient books, papers and periodicals take me go on serious brainstorming
while preparing this report.
Some officials were not so much prepared for giving the data which can help to prepare
this report.
slamic Banking Concepts:-
Islamic Banking is the banking activity that is consistent with the principles of sharia law and
its practical application through the development of Islamic economics. Sharia prohibits the
fixed or floating payment or acceptance of specific interest or fees (known as riba, or usury) for
loans of money. Investing in businesses that provide goods or services considered contrary to
Islamic principles is also haraam(sinful and prohibited). Although these principles have been
applied in varying degrees by historical Islamic economies due to lack of Islamic practice, only
in the late 20th century were a number of Islamic banks formed to apply these principles to
private or semi-private commercial institutions within the Muslim community.
Objectives of Islamic Banking:-
An Islamic Bank is a financial institution that operates with the objective to implement and
materialize the economic and financial principles of Islam in the banking area.
The main objectives of Islamic Banking are:
To conduct interest free banking.
To establish participatory banking instead of banking on debtor creditor creditor
relationship.
To invest through different modes permitted under Islamic Shariah.
To accept deposits on profit loss sharing basis.
To establish welfare oriented banking system.
To extend co-operation to the poor, the helpless and the low income group for their
economic enlistment.
To play a vital role in human development and employment generation.
Islamic Banking Movement Throughout the world:-
The establishment of the Islamic Development Bank (IDB) in 1975 gave momentum to the
Islamic Banking movement. Since the establishment of IDB, a number of Islamic Banking and
financial institutions have been established all over the world irrespective of Muslim and non-
Muslim countries. Over the past few decades, the Islamic financial industry has rapidly expanded
worldwide. Currently about 260 Islamic financial institutions (IFIs) have total combined assets
exceeding $250 billion in more than 57 countries. The Islamic financial market is estimated to
grow at annual rates averaging 15% in a year. Their rapid growth has gained considerable
attention in international financial circles where various market participants have recognized
promising potentials.
The Islamic finance market has become extremely sophisticated as well as increasingly
competitive. Today, virtually all large western financial institutions are involved in Islamic
finance whether through Islamic subsidiaries, Islamic windows, or the marketing of Islamic
products. In recent years, a range of new Islamic products have appeared, such as Islamic bonds
(or sukuk) and Islamic derivatives. While some of those products are widely accepted, others are
still controversial.
Islamic Banking Movement in Bangladesh:-
Bangladesh is the third largest Muslim country in the world with around 135 million populations
of which 90 percent are Muslim. The hope and aspiration of the people to run banking system on
the basis of Islamic principle came into reality after the OIC recommendation at its Foreign
Ministers meeting in 1978 at Senegal to develop a separate banking system of their own. After 5
years of that declaration, in 1983, Bangladesh established its first Islamic bank. At present, out of
49 banks in Bangladesh, 7 full fledged Islamic Banks and 19 Islamic Banking branches of 9
conventional banks are working in the private sector on the basis of Islamic Shariah. Islamic
banks in Bangladesh since their inception have been gaining popularity in spite of some
problems in their operation.
Overview of Shahjalal Islami Bank Limited:-
Shahjalal Islami Bank Limited, a Shariah Based Commercial Bank in Bangladesh was
incorporated as a Public limited company on 1st April, 2001 under Companies Act 1994. he
Bank commenced commercial operation on 10th May 2001 by opening its 1st branch, i.e. Dhaka
Main Branch at 58, Dilkusha, Dhaka obtaining the license from Bangladesh Bank, the Central
Bank of Bangladesh. Its Head Office is situated at 2/B, Uday Sanz, Gulshan South Avenue,
Gulshan-1, Dhaka1212, Bangladesh. The Bank so far opened 2 (two) branches in 2001, 6 (six)
branches in 2002, 2 (two) branches in 2003, 2 (two) branches in 2004, 4 (four) branches in 2005,
5 (Five) Branches in 2006, 5 (Five) Branches in 2007, 7 (Seven) Branches in 2008, 18 (Eighteen)
Branches in 2009, 12 (Twelve) Branches in 2010 and 10 Branches in 2011. Total number of
branches stood at 79 (Seventy nine). Besides this, the bank is working to expand its business by
opening more 11 (eleven) branches in Dhaka and some other important business location of the
country in the year 2012 for which we have already taken approval from the Bangladesh Bank.
Vision of SJIBL:- To be the unique modern Islamic Bank in Bangladesh and to make significant
contribution to the national economy and enhance customers trust & wealth, quality investment,
employees value and rapid growth in shareholders equity.
Mission of SJIBL:-

To provide quality services to customers.
To set high standards of integrity.
To make quality investment.
To ensure sustainable growth in business
To ensure maximization of Shareholders wealth.
To extend our customers innovative services acquiring state-of-the-art technology
blended with Islamic principles.
To ensure human resource development to meet the challenges of the time.
Objectives of SJIBL:-
To conduct interest free banking.
To establish participatory banking instead of banking on debtor-creditor relationship.
To invest through different modes permitted under Islamic Shariah.
To accept deposits on profit-loss sharing basis.
To establish a welfare-oriented banking system.
To extend co-operation to the poor, the helpless and the low-income group for their
economic uplift.
To pay a vital role in human development and employment generation.
To contribute towards balanced growth and development of the country through
investment operations particularly in the less developed area.
Principal Activities:-
The principal activities of the Bank is to provide all kinds of commercial banking products and
services to the customers including deposits taking, cash withdrawal, extending investments to
corporate organization, retail and small & medium enterprises, trade financing, project finance,
working capital finance, lease and hire purchase financing, issuance of Debit Card. Its vision is
to be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy,
asset quality, sound management and profitability.
Strategic plan for future growth
The Banking industry experienced intensification of competitive pressure as the national and
international banks operating in Bangladesh strongly pursued the banking and financing needs of
the Corporate, Retail, SME sector customers through diversification of products and services and
extending automated banking service with ATM, Debit card facilities and Internet Banking.
Besides, rates of profit became very competitive for deposit and lending; Customers are
demanding higher rate of return against their deposits, on the other hand asking the banks to
reduce their lending rates.
Considering the overall scenario, SJIBL continues to focus on its delivery channel, technology,
Human Resource and its brands along with branch network, Business promotion, Corporate
Social Responsibility and product diversification.
Strategies are means to achieve goals. Aligned with the vision and mission statements of SJIBL,
14 strategies have been identified to address the development and changes we need. It is
envisaged that this strategic plan will cascade effectively the vision-mission into concrete action
on priority basis and transform SJIBL into a dynamic, effective, and forward looking modern
Islamic bank in Bangladesh.
Nature of Business:-
The Bank is carrying out commercial, corporate, investment and retail banking related services
to its customers through its twenty-six branches following the provisions of the bank Company
Act 1991 as follows:
Corporate Finance.
Green Banking.
Correspondence Banking.
Documentary Credits.
Foreign Exchange.
Guarantees.
Syndicated Finance.
Other Related Business.
Shariah Supervisory Council of the Bank:-
As per Article 30 of the Articles of Association of the Bank, Shariah Council for the Bank has
been constituted. The Shariah council of the Bank consists of prominent Ulema, Bankers and
Economists to advice and guide on the implementation of Islamic Shariah in business activities.
The Council enjoys a special status in the structure of the Bank and playing a vital role to make
the bank as Shariah compliant. In the year 2011, the total number of meetings of the Shariah
Council of the Bank was 03 (three).
Products & Services:-
Shahjalal Islami Bank Limited accepts deposits on the basis of Mudaraba in the following types
of accounts, and pays profit, like that of dividend in these accounts.
Customers deposit their fund in the following types of Accounts:
1. Mudaraba monthly Scheme.
2. Mudaraba Double Money.
3. Mudaraba Monthly Deposit.
4. Mudaraba Millionaire.
5. Mudaraba Haji Deposit.
6. Mudaraba Housing Deposit.
7. Mudaraba Small Business.
8. Mudaraba Cash waqf Deposit.
9. Mudaraba Lakhopoti Deposit.
10. Mudaraba Bibaho Deposit.
11. Mudaraba Mohor Deposit.
12. Mudaraba Shikka Deposit.
13. Mudaraba Special Term Deposit.
14. 14. SJIBL School Banking.
15. 15. Mudaraba Money Spining.
Investment products, Corporate (Mode)
Murabaha
Bai-Muazzal
Hire Purchase under Shirkatul Meelk
Ijara
Bai-Salam
Quard-e-Hasana
Investment against LC
Investment against Scheme/Deposit
Investment Products (Retail)
Household Durable Scheme
Housing Investment Program
Car Investment Scheme
Investment for Self-employment
Investment Scheme for Executives
Investment Scheme for Doctors
Investment Scheme for Marriage
Investment Scheme for CNG Conversion
Investment Scheme for Overseas Employment
Investment Scheme for Education
Investment Products (SME)
Small Business Investment Program
Small Entrepreneur Investment Program
Medium Entrepreneur Investment Program
Rural Investment Program
Women Entrepreneur Investment Scheme
SJIBL Card
VISA Debit Card
VISA Prepaid Card (Local)
VISA Prepaid Card (International)
VISA Prepaid Card (Dual)
VISA Souvenir Card (Gift Card Local)
Computer services:-
Shahjalal Islami Bank Limited introduced a few schemes, which are very popular:
1. Online services
2. Automated Accounting
3. Integrated System
4. Signature Verification
5. Any Branch Banking
6. ATM Services
7. POS Services
8. SMS Push Pull Services
9. Other Delivery Channel Services (to be implemented)
Review of Operational Performance
The volatile macroeconomic conditions which heightened due to the Capital market crash and
Euro-zone debt crisis, posed a challenging year for the entire Banking industry. This resulted in a
deterioration of the performance measurement indicators across the industry. During the year
under review, the bank maintained the progress of business through its Seventy Three branches.
The net Investment Income registered an impressive growth of 55.29 percent during the year.
The operating profit before tax stood at Tk.2, 387 million which is 19.35% lower than 2010
figure. Due to capital market volatility and formation of separate subsidiary for brokerage house,
income from brokerage commission and income from investment in shares decreased
significantly, however, all others income increased substantially. Net profit attributable to
shareholders reached to Tk.1, 168 million, return on average equity remained at 13.80 percent
and Earning per Share (EPS) stood at 2.62. Non- performing investments (NPI) ratio is 1.89
percent, which is much below the industry average. Capital adequacy of the Bank is 11.40
percent, which is above the stipulated rate of 10 percent. Out of deposit of Tk. 83,350 million,
the bank has deployed Tk. 80,592 million in investment as on 31.12.2011. The Bank handled
total Foreign exchange business of Tk. 166,906 million in the year 2011.
Equity of the Bank
The Banks Equity is divided into two parts i.e. Tier-I and Tier-II capital. Tier-I includes Paid-up
Capital, Statutory Reserve, and Retained Earnings. Tier-II includes General Provision on
unclassified investments & Off -Balance Sheet items. The Authorized Capital of the Bank is Tk.
6,000 million and paid-up capital of the Bank is Tk. 4,453 million as on 31.12.2011. Total equity
was Tk 9,183 million as on 31.12.2011. Comparative position of Equity for the year 2011 &
2010 is given below:-
Capital Adequacy:-
Total equity of the Bank as on 31.12.2011 was Tk. 9,183 million and the total equity stood to Tk.
7,747 million on 31.12.2010, which was 11.40% of the Risk weighted Assets as against the
requirement of 10.00%. The core capital was 9.83% of Risk weighted Assets as on 31st
December 2011 as against requirement of 5%.
Risk Based Capital Adequacy for Banks (Basel-II)
Bank has established Basel-II implementation Unit and conducted some workshops with
Executives and officers of the Bank both in Head office and Branch level for its successful
implementation. A comparative quantitative feature of Risk Weighted Assets (RWA) and
Minimum Capital Requirement (MCR) for December ended-2011 & 2010 under Bessel-II is
furnished hereunder:
Liabilities:
Total liabilities (excluding equity) stood at Tk. 99,312 million at the end of year 2011, which
was 37.83% more than the previous years figure. Increase in liability is mainly due to increase
in deposit from customers.
Deposit:-
Total deposit of Shahjalal Islami Bank Limited stood at Tk. 83,350 million as on 31.12.2011 as
against Tk. 62,965 million of 31.12.2010 registering an increase of Tk. 20,385 million, i.e.
32.38% growth. This was possible due to superior customer service delivery at the branch level,
expansion of branch network to rural areas where foreign remittance flow is significant.
Expansion of our branches at rural areas has provided the lower income group an access to
modern banking system and prompt receipt of remittance. Deposit is the life-blood of a Bank.
Bank has given utmost importance in mobilization of deposits introducing a few popular and
innovative schemes. The bank always tried to give the highest return on the deposits of the
customers. The mobilized deposits were ploughed back in economic activities through profitable
and safe investments. The Deposit-mix of the Bank as on 31.12.2011 was as bellow:-
Total Assets:-
The Banks total assets posted a 36.08% increase in 2011, rising from Tk.78, 800 million to Tk.
107,229 million. A major contribution to this growth was the increase in investments (loans &
advances) which jumped by 31.17% or from Tk. 61,440 million to Tk. 80,592 million. Fixed
assets of the Bank also increase to Tk. 1,525 million from Tk. 1,473 million having an amount of
3.58%. Bank also had to increase its cash reserve requirement (CRR) maintain with Bangladesh
Bank and its agents. The earning assets grew at a rate of 37.88% to Tk. 92,569 million.
Investment:-
Total investment of the Bank stood at Tk. 80,592 million as on 31.12.2011 as against Tk. 61,440
million of 31.12.2010 registering an increase of Tk. 19,152 million, i.e. 31.17% growth. The
Bank is careful in deployment of the fund. Mode wise investment portfolio as on 31.12.2011 is
given below:
Foreign Exchange Business:-
Total Foreign Exchange Business handled during the year 2011 was Tk. 166,906 million as
against Tk. 115,079 million of 2010 registering an increase of Tk. 5, 1827 million, i.e. 45.04%
growth. The particulars of Foreign Exchange Business are given below:-
During the year 2011 our Bank branches opened 17,344 Import Letter of Credit as against
16,326 of 2010 and handled 21,473 Export bills in 2011 against 19,612 of 2010.
Operating Result:-
a) Income:
1. 1. I nvestment Income
Total Investment Income of the Bank as at 31st December 2011 was TK. 10,107.77 million as
against TK. 6,416.78 million of the preceding year registering 57.52% growth over last year,
which was 84.18% of the total income against 67.48% of 2010.
1. 2. Non-I nvestment Income
Total Non-Investment Income of the Bank as at 31st December 2011 was TK. 1,899.05
million as against TK. 3,092.10 million of the preceding year, which was 15.82% of the total
income compared to 32.52% of 2010.
b) Expenditure:
1. Profit Paid on Deposits
Bank distributed Profit of TK. 7,376.42 million among the Mudaraba Depositors in the year
2011 against TK. 4,657.92 million of the year 2010 which being 72.98% of the Investment
income earned from deployment of Mudaraba Fund and 81.88% of total Expenditure of 2011
against 77.89% of 2010.
2. Operating Expenses
Total operating expenses as on 31.12.2011 was TK. 1,632.50 million as against TK. 1,322.25
million of 2010, which was 18.12% of the total Expenditure of the year 2011 against 22.11% of
2010.
3. Operating Profit
During the year 2011, the Bank earned an amount of Tk. 12,006.82 million and spent an amount
of Tk. 9,008.93 million, resulting a total Operating Profit of Tk. 2,997.89 million which
decreased by 530.82 million over last year i, e. 31.12.2010. From the operating profit Tk. 310.00
million was kept as provision for investment, Tk. 63.00 million provisions was kept for Off -
Balance Sheets, Tk. 237.50 million provision was kept for diminution in value of investment in
shares, and then profit before tax stood total 2,387.39 million and deducting income taxes of Tk.
1,218.95 million, Net profit after taxation stood at Tk. 1,168.44 million. As appropriation of net
profit Tk. 477.48 million was transferred to statutory reserve as per Bank Company Act. 1991
and Remaining Tk. 690.96 million was transferred to retained earnings.
A summary of operating result of the bank as on December 2011 vis-a-vis the position of
December, 2010 is shown below:
Ethical Banking
Banks and the policies they pursue have an impact on the community around them. Their impact
has two dimensions: the way they operate i.e. internal operations and the types of companies
they help finance. SJIBL take care of both the dimensions in its operation. Many ethical issues
such as the environmental conduct of business customers are now part of standard risk
assessment and prudent banking. It is becoming increasingly common practice for banks to have
established guidelines for their staff on the major ethical issues covered. SJIBL has been trying
to follow the Equator Principles, a set of guidelines developed by the banks for managing social
and environmental issues related to the financing of development projects. Our investment is
based on Islamic values as defined by the principles of Shariah (Islamic law). The Islamic
Shariah attempts to maximize social welfare. Consequently Islamic investment involves the
screening out of those companies whose primary business does not conform to the shariah
principles.
An Introduction about SJIBL College Gate Branch:-
This branch was established in April 23, 2009. It is situated at Union Center (1st Floor), 1/5,
Mohammadpur Housing Estate, College Gate (Mirpur Road), Dhaka 1207. This bank is
designed under one floor. The entire department is situated in this floor. It has been providing
Islamic banking services for the customers of College Gate residential area.
Name of the Company Shahjalal Islami Bank Limited
Legal Form A public limited company incorporated in Bangladesh on 1st April
2001 under the companies Act 1994 and listed in Dhaka Stock
Exchange Limited and Chittagong Stock Exchange Limited.
Commencement of 10th May 2001
Corporate Information:
Uses and Importance of Foreign Exchange Business:-
Bangladesh earns foreign exchange mainly through export of goods and services. Remittances of
Bangladesh nationals working abroad, commonly known as wage earners, are also important
sources of foreign exchange. Foreign Exchange is also earned from aids, grants and credits from
donors. Foreign exchange is used for settlement of international payments for import of goods,
freight charges, insurance, banking, debt servicing, travel and education etc.
Business
Head Office Uday Sanz, Plot No. SE (A).2/B Gulshan South Avenue,,Gulshan
1, Dhaka-1212.
Telephone No. 88-02-8825457,8828142,8824736,8819385,8818737
Fax No. 88-02-8824009
Website www.shahjalalbank.com.bd
SWIFT SJBL BD DH
E-mail sblho@shahjalalbank.com.bd
Chairman Alhaj Anwer Hossain Khan
Managing Director Md. Abdur Rahman Sarker
Auditors M/S. Hoda Vasi Chowdhury & Co.
Chartered Accountants
Ispahani Bhaban
14-15 Motijheel C/A
Dhaka-1000
Phone: 88-02-9555915, 9560332
Tax Advisor M/S K.M Hasan & Co.
Chartered Accountants
87, New Eskaton Road
Dhaka.
Phone: 88-02-9351457, 9351564
Legal Advisor Hasan & Associates
Chamber of Commerce Building
(6th floor), 65-66 Motijheel C/A, Dhaka
No. of Branches 79
No. of ATM Booth 29
No. of SME Centers 06
Off-Shore banking Unit 01
No. of Employees 1,811
Stock Summary:
Authorized Capital Tk. 6,000 million
Paid up Capital Tk. 5,566 million
Face Value per Share Tk. 10
Foreign exchange business has been identified as one of the key areas for development of the
banks business. The recent liberalization of exchange control as provided an ideal opportunity to
break into new fields of activities including dealings in the domestic inter- bank foreign
exchange market, provision of forward exchange and arbitrage operation within the parameters
of Bangladesh Bank regulations. Shahjalal Islami Bank Limited would expect its officers and
staff to enlarge the banks business by developing professional excellence and dispensation of
efficient, quick and quality services to the clientele in order to lay a solid foundation for growth
and development of the banks business.
Exchange and Trade Controls:-
Bangladesh Bank has Foreign Exchange Departments in its offices at Dhaka, Chittagong,
Khulna, Rajshahi, Rangpur, Barisal, Sylhet and Bogra. Shahjalal Islami Banks branches located
within the jurisdiction of the relevant offices are normally required to deal with and report their
foreign exchange transactions to that office.
Responsibilities of Foreign Exchange Department/Section:-
Foreign Exchange Branches, Departments and Sections shall work in close harmony with the
International Division to exploit the business potentials, introduce innovative ideas and develop
expertise to transform the bank as an important player in the foreign exchange market. In dealing
with the clientele, it should be rigid in application of standard norms and practices to protect the
interest and security of the bank. At the same time, keeping in view the highly competitive
environment in Bangladesh, it should apply a flexible stance to accommodate special needs of
the clients in terms of prompt dispensation of services and pricing of their services.
Exchange Rates Quotations:-
Crucial to dealing in foreign currencies is the exchange rates that constitute the bread and
butter for the bank. Banks and dealers around the world quote the rates against US dollar except
in case of pound sterling, which is quoted in terms of other currencies including US dollar.
Dealing with the Client:-
To deal with the valued client the bank official emphasizes on the following topics and deal
carefully:-
1. Relationship Building.
2. Verification of Reputation and Credibility.
3. Maintenance of Records.
4. Handling of Notes, Drafts, and TCs etc.
Relationship Building:-Relationship building, personalized services and professional efficiency
would key to building up a satisfied group of clientele. The staff should constantly address the
special needs of the customers.
Verification of Reputation and Credibility: - The bank should carefully verify the antecedents
and credibility of new customers approaching the bank for opening letters of credit, financing
exports and issue of guarantees or similar obligations.
Maintenance of Records:-Branches will maintain systematic records of transactions with the
customers, preferably in hard discs with backups so that these can be retrieved as and when
necessary.
Handling of Notes, Drafts, and TCs etc.:-The staff should familiarize themselves with the
technique for verifying genuineness of the foreign exchange instruments presented by the clients.
Three Services in Foreign Exchange Department of Shahjalal Islami Bank Limited
1. Remittance.
2. L/C Open.
3. Travel Related Services.
Remittance.
The process of sending money to remove an obligation. This is most often done through an
electronic network, wire transfer or mail. The term also refers to the amount of money being sent
to remove the obligation.
When a person sends a check to the government to pay for a tax bill, the check is remittance to
remove the tax obligation. If you were to send money to a friend in Europe through a wire-
transfer service, the sum of the payment is the remittance.
There are two types of Remittance:-
1. Private Non-commercial Remittances.
2. Commercial Remittances
Private Non-commercial Remittances:-
Remittance and Other Facilities for Foreign Nationals:
Family Remittance Facility: Foreign nationals who are resident in Bangladesh and have
income in Bangladesh are permitted to make monthly remittances to the country of their
domicile out of their current savings up to 50% of their net income to cover their commitments
abroad.
This remittance facility is not available to foreign born wives of Bangladesh nationals. The
branch that receives the pay cheques from the employer for credit of the personal account of the
foreign national shall process and approve such remittance applications.
Remittance of Sale Proceeds of Assets: Application for remittance of sale proceeds of real
assets such as household articles and real estates should be forwarded to the Bangladesh Bank
with the following documents/certificates:
Statement of sale proceeds realized in respect of locally purchased articles of value tk. 500 or
more mentioning:
1) Description,
2) Purchase price
3) Date of purchase
4) Date of sale, and
5) Sale proceeds realized.
Relative sale receipts or their certified true copies should be produced
Application and Supporting Documentation:-
Application as per pro-forma at Appendix 5/55 of BB Guidelines for Foreign Exchange
Transactions, 1996 duly filled in by the applicant and his employer should be accompanied by:
TM form signed by the applicant;
A certificate from the employer showing:
Net salary and allowances for each year,
Provident Fund and leave salary paid on retirement,
Bonus and other gratuitous payments for each year.
Cost of passage, if any, for self and family is payable by the employer.
A certified true copy of the employment contract approved by BOI/ appropriate Department
of the Govt. of Bangladesh should be produced in support of the above.
Remittance of Foreign Exchange for Education Abroad:-
Foreign exchange may be released for studies abroad by Bangladesh nationals in all regular
courses (subject to being consistent with the Education Policy of the Bangladesh Govt.) in
recognized institutions. The branch may allow exchange facilities for this purpose according to
the following drill:
Application and required papers:-
Application (Appendix 5/57 of BB Guidelines for Foreign Exchange Transactions, 1996)
duly filled in;
Original and photocopy of admission letter issued by the educational institution in favor of
the student (such as 1-20 in the case of US institutions);
Original and photocopy of estimate relating to annual tuition fee, board and lodging,
incidental expenses etc. issued by the concerned educational institution (1-20 in case of US
institutions);
Attested copies of educational certificates of the applicant; and
Valid Passport.
Family Maintenance Abroad by Resident Bangladesh Nationals:-
Applications for remittance of moderate amounts of foreign exchange for maintenance of family
members (dependent parents, spouses and children) living abroad may be forwarded by the
branch to the Bangladesh Bank for prior approval. The application should be supported by a
certificate issued by the relevant Bangladesh Embassy or High Commission regarding residency
of the beneficiaries, extent of income abroad along with the missions recommendation as to the
moderate requirement for family maintenance purpose. The certificate should also indicate the
purpose for which the family member(s) went abroad, reasons for continued residence and the
probable period of stay abroad.
Commercial Remittances:-
Outward Remittances:-
Outward remittances are those sent aboard in foreign exchange. These also include payment into
convertible Taka account or non-resident Taka Account of foreign banks maintained with banks
in Bangladesh. The branches must exercise utmost care to see that foreign exchange sold to a
client is used for the declared purpose. They should also systematically maintain proper record to
make these available to Bangladesh Bank as and when required.
Forms:-
For import payments, the branch will accept applications from the importers on form IMP while
in other cases of outward remittances the prescribed form of applications is called TM. These
Forms are also to be used for reporting to Bangladesh Bank. In case prior approval of
Bangladesh Bank is required, the branch will send the TM form, along with the necessary papers
to the Bangladesh Bank for approval. The TM Form or special permit, if any, or approval letter
issued by Bangladesh bank should be utilized within the period, if any stipulated therein and
conditions laid down by them must be carefully observed. Original copies of the IMP and TM
Forms must be submitted to the Bangladesh Bank along with the specified Returns.
Freight and Passage Collections:-
The branches may receive applications from airlines and shipping companies or their agents on
Form TM along with a declaration on Form FP for remittance of freight and passage fares
collected in Bangladesh. Bangladesh Bank has laid down elaborate guidelines in Chapter 16 of
the Guidelines for Foreign Exchange Transactions, 1996. Should a branch receive applications
for these types of remittances they should dispose them of strictly as per those guidelines.
Similarly, applications from Bangladesh Biman and Bangladesh Shipping Companies for
remittance of operation expenses of their vessels at foreign ports and stations should be disposed
of as per the instructions contained in the said Guidelines.
Remittances against Export Claims:-
The branch may remit export claims not exceeding 10% of repatriated export proceeds on the
following counts:-
Short weight claim;
Quality claim;
Part shipment.
Short weight claim:-
Proceeds Realization Certificate (PRC);
Debit note from the buyer;
Weighment Certificate/Note from a recognized weighing body;
LMD Certificate (for shipping weight basis shipment) in the case of raw jute.
Quality Claim:-
Proceeds Realization Certificate (PRC);
Debit note from the buyer;
A report from a recognized test house or an arbitration certificate from an approved body of
arbitrators;
Part Shipment:-
Proceeds Realization Certificate (PRC);
Debit note from the buyer;
Contract in original;
Arbitration certificate from a recognized arbitrator as referred to in the contract.
Amicable Settlement:-
Proceeds Realization Certificate.
Debit Note from the buyer.
Correspondence in original exchanged between the shipper and the buyer. Original cables
should be produced if cable charges are included in the Debit Note.
Commission:-
Proceeds Realization Certificate.
Debit Note.
Agreement regarding payment of commission.
Cancellation of the Contract:-
Debit Note.
Contract.
Correspondence in original passed between the buyer and the shipper.
Arbitration Certificate or Chamber of Commerces certificate for claims settled amicably.
Freight against Exports:-
Proceeds Realization Certificate.
Debit Note.
Contract.
Bill of Lading.
Moisture Claim:-
Proceeds Realization Certificate.
Debit Note.
Original Contract.
Original Arbitration Award or Test Report or Analysis Report.
Late Shipment Penalty:-
Original Contract.
Copy of Bill of Lading.
Shippers explanation regarding the reasons for late shipment.
BJAs letter declining to issue Unavoidable Delay Certificate.
Difference for Immediate Payment against Sight bills:-
Original Contract.
Correspondence showing the party who initiated the change in the payment method.
Bankers confirmation that the proceeds were realized at sight showing the date of
realization and particulars of returns in which the transaction was reported.
The basis on which the difference is claimed and evidence in support thereof.
Refund against over pricing:-
Original Contract.
Correspondence exchanged between buyer and seller in this regard.
Submission of Documents to Bangladesh Bank:-
The branch will submit to the Bangladesh Bank all the documents under various types of export
claims for post facto examination within 15 days from the date of remittance.
Policies Claim Settlement under Marine Insurance Policies:-
For remittances on account of settlement of claims arising under Marine Insurance Policies, the
branch will submit the following documents to the Bangladesh Bank with Form TM along with a
declaration as per Appendix 5/47 of BB Guidelines for Foreign Exchange Transactions, 1996 for
approval:-
Marine Polices:-
Shippers invoices relating to shipment against which claim is made?
Proceeds Realization Certificate.
Bill of lading.
Claim Note.
Original Insurance Policy/ Certificate.
Survey Report.
Short Contents Certificate from the Customs Authorities of the country of import in case claim
is made for short delivery of goods.
For other types of export claims not covered above, the exporters application should be
forwarded to Bangladesh Bank with full information and supporting documents.
Foreign Currency and Convertible Taka Account:-
Private Foreign Currency Accounts:-
Who Can Open the Accounts?
Bangladesh nationals residing abroad,
Foreign nationals residing abroad or Bangladesh,
Foreign firms operating in Bangladesh or abroad, and
Foreign missions and their expatriate employees in Bangladesh.
Bangladesh Bank may specially allow opening of foreign currency accounts not covered by this
general authorization.
FC Accounts of Overseas Bangladesh Nationals:-
Bangladesh nationals working abroad or proceeding abroad to take up employment may open
foreign currency accounts.
No initial deposit is required to open this account.
Account holder may operate the account himself or nominate other persons in Bangladesh for
this purpose.
The account may be opened in pound sterling, US dollar, euro or Japanese yen.
The account may be maintained as long as the account holder desires.
These accounts should ordinarily be fed by remittances by account holder himself.
By funds sent by other wage earners,
Funds lying to the credit of FC accounts of Bangladesh nationals can be utilized for import of
goods and commodities as per Import Policy announced by the Government from time to time.
Resident FC Deposit Account:-
Who can open the Account?
Branches may allow persons ordinarily resident in Bangladesh to open and maintain Resident
Foreign Currency Deposit (RFCD) accounts with foreign exchange brought in at the time of their
return from travel abroad. Any amount brought into Bangladesh with declaration to the Customs
authorities in form FMJ and up to $5000 brought in without any declaration can be credited to
such accounts. Proceeds of export of goods or services from Bangladesh or commission arising
from business deals in Bangladesh cannot be credited to such accounts.
Non-Resident FC Deposit Accounts (NFCD):-
Who can open the Account?
All non-resident Bangladesh nationals and persons of Bangladesh origin including those with
dual nationality and ordinarily residing abroad may maintain profit bearing time deposit account
named Non-Resident Foreign Currency Deposit (NFCD) Account with the authorized dealers.
These accounts may be opened initially with minimum amount of US$ 1000 or pound sterling
500 or equivalent.
Convertible Taka Accounts:-
Who can open the Account?
The branches may open convertible Taka Account in the names of: Foreign
organizations/nationals viz., diplomatic missions, UN organizations, non-profit international
bodies, foreign contractors and consultants engaged for specific projects under the Government
or semi Government agencies, the expatriate employees of such missions / organizations who are
residents in Bangladesh.
Operation on Convertible Taka Account:-
A convertible Taka account may be debited for payments in foreign currency abroad for local
expenses, transfer to foreign currency account or other convertible account or for credits to a
non-convertible account.
Nonconvertible Taka Account:-
Foreign organizations and their expatriate personnel entitled to open convertible Taka account
may maintain non-convertible account with the branch without prior approval of Bangladesh
Bank. This account may be debited/ credited for the following purpose:
Joint Account of Resident and Non-Resident:-
If the account is operated solely by the resident or jointly with the non-resident it should be
treated as Resident Account but if solely a non-resident operates it, it should be treated as Non-
resident account.
All the activities are performed through the:-
Western Union.
Kushiara.
Money Gram.
SWIFT service
L/C (Letter Of Credit)
Definition of L/C:
On Behalf of the importer if the Bank undertakes to make payment to the foreign Bank is known
as documentary credit or letter of credit. A letter of credit is an instrument issued by a bank to a
customer placing at letter disposal such agreed sums in foreign currency as stipulated. An
Importer is a country requests his bank to open a credit in foreign currency in favor of his
exporter at a bank in the letters country. The letter of credit issued against payment of amount by
the importer or against satisfactory security. The L/C authorizes the exporter to draw a draft
under is terms and Sell to a specified bank in his country. He has to hand over the to the bank,
will the bill of exchange, shipping documents and such other papers as may be agree upon
between the exporter and the importer. The exporter is assured of his payment because of the
credit while the importer is protected because documents is respect of exports of goods have to
delivered by the exporter to the paying bank before the payment is made.
From of Letter of Credit:
A Letter of Credit (L/C) may be two forms. These as Below
Revocable L/C: -
If any letter of credit can be amendment or change of any clause canceled by consent of the
exporter and importer is known revocable letter of credit. A revocable letter of credit can be
amended or canceled by the issuing bank at any time without prior notice beneficiary. It does not
constitute a legally binding undertaking by the bank to make payment. Revocation is possible
only until the issuing bank or correspondent has honored the document. Thus a revocable credit
does not usually provide adequate security for the beneficiary.
Irrevocable L/C:-
An irrevocable L/C constitutes a definite undertaking of the issuing bank provided that the
stipulated documents are presented and the terms and conditions are satisfied by the seller. An
irrevocable L/C can not be amended or canceled without the agreement of all partys opinion. An
irrevocable credit can be either confirmed or unconfirmed depending on the desire of the seller.
This sort of credit is always preferred to revocable letter of credit.
Types of Irrevocable Letter of credit: -
An Irrevocable Letter of Credit (L/C) mainly three types. These as Below: -
Cash letter of Credit:-
Payment made form cash foreign exchange not from export proceeds; there is not export L/.C.
which backs the import LETTER OF CREDIT Payment term is at sight.
Deferred Letter of Credit:-
The only difference between cash Letter of Credit and deferred letter of Credit lied in the terms
of payment .Payment under deferred Letter of Credit is made after certain days of presentation of
the export bill.
Back-to-Back Letter of Credit:-
It is simply issued to the clients against an import Letter of Credit. Back-to-Back mechanism
involves two separate Letter of Credits. One is master Export Letter of Credit and another is
Back-to-Back Letter of Credit. On the strength of Master Export Letter of Credit bank to Bank
Letter of Credit.
Types of Letter of credit: -
Eight types of letter of credit
Sight payment Credit
Deferred payment credit
Negotiation Credit
Revolving Credit
Performance credit.
Performance bond credit
Sight payment Credit: -
The most commonly used credits are sight payment credits. These provide for payment to be
made to the beneficiary immodestly after presentation of the stipulated documents on the
condition that the terms of the credit have been complied with. The Banks are allowed
reasonable time to examine the documents.
Deferred payment credit:
Under a deferred payment credit the beneficiary does not receive payment when his presents the
documents but at a later specified in the credit On presenting the required documents he received
the authorized banks written undertaking to make payment of maturity. In this way the importer
gains possession of the documents before being debited for the amount involved.
Negotiation Credit:-
A credit available by negotiation is either payable at sight or at a since, usually at the counters of
the issuing bank. The L/C may authorize negotiation by any bank or may specify a particular
bank (in both cases: the nominated bank). The beneficiary utilizes the credit by presentation of a
draft (most often drawn on the issuing bank) accompanied by the stipulated documents, or of the
stipulated documents alone, i.e. a draft is not a prerequisite (Article 9a-iv of the UCP). The
validity for presentation of the drafts/documents expires at the counters of the issuing bank or, if
so prescribed in the credit terms, at the counters of the nominated bank. Nevertheless, the place
of payment still remains with the issuing bank and payment (at sight or maturity) is only made
by the issuing bank at the given time after it receives the documents and finds them in
conformity with the credit terms. The credit may also contain a clause authorizing the nominated
bank to claim reimbursement from another party (the reimbursing bank). In such a case, unless
the credit stipulates otherwise, the place of payment would then be with the nominated bank.
Revolving Credit: -
Buyers often order more merchandise than they actually need in order to obtain a better price.
However, the delivery of the goods is made in installments and at stipulated intervals. In such
cases, the seller can request that a revolving credit be issued which guarantees each part
payment.
Performance Letter of Credit: -
A performance LC guarantees performance of an obligation. In the event of failure by the
account party in the performance of an obligation e.g. contractual failure, failure to forward
documents, failure to ship goods, the LC may be invoked.
Performance Bond credit: -
As expressed in the BID situation, a performance LC (normally 10% of the entire contract
value) will be issued stating that the performance will meet specified standards, If the standards
are met, the credit expires, if not, the beneficiary would be reimbursed the amount of the LC. In
essence this can be described as penalty money.
Parties to an L/C:-
Applicant for the Credit/Importer: -
The importer or buyer on whose request and on whose behalf the letter of credit is opened is
called the applicant.
Issuing Bank/Opening Bank: -
The bank that opens a letter of credit, at the request of the importer, is known as Issuing Bank.
The issuing bank is the buyers bank and is also called opening bank.
Beneficiary/Exporter/Seller: -
The party, normally the supplier of the goods, in whose favor letter of credit is opened, is called
beneficiary. The seller, after shipping the goods as per terms of the credit, presents the
documents to negotiating bank/confirming bank for negotiation.
Advising Bank/Notifying Bank: -
The bank in the exporters country, usually the foreign correspondent of the importers bank,
through which letter of credit is advised to the supplier is called the advising bank.
Confirming Bank: -
If the advising bank also adds its own undertaking to honor the credit while advising the same to
the beneficiary, he becomes the confirming bank. The confirming bank, in addition, becomes
liable to pay for documents in conformity with the LC terms and conditions.
Negotiating Bank: -
It is the bank, which negotiates the bill and pays the amount to the beneficiary. It has to carefully
scrutinize the documentary credit before negotiation in order to see whether the documents
apparently are in order or not. The advising bank and the negotiating bank may not be one and
the same. Sometimes it can also be the confirming bank.
Contents of the Letter of credit:-
Bank normally issued letter of credit (L/C) on forms, which clearly indicate the Banks name and
extent of the banks obligation under the credit. The contents of the L/C of different may be
different. In general L/C contains the following information:-
Name of the buyer: Who is also known as the accounted since it is for his account that the
credit has been opened?
Name of the seller: who is also known as the beneficiary of the credit?
Moment of the credit: This should be the value of the merchandise plus any shipping charge
intent to be paid under the credit.
Trade terms: Such as FOB and CIF tenor of the draft, which is normally dependent upon the
requirements of the buyer?
Expiration Date : which is specified the last date documents my be presented in this manner on
by including additionally a latest shipping date the buyer may be exercise control over the time
of shipment .
Documents required: Which will normally include commercial invoice consular or customers
invoice insurance policies as certificate if the source is to be effected by the beneficiary and
original bills or lading.
General Description of the Merchandise: Which is briefly and in a general manner duly
describes the merchandise covered by a later or credit.
Imports with L/C:-
Most imports into Bangladesh are subject to opening of irrevocable documentary L/C.
Imports without L/C: -
In Import Policy Order 2003 2006 (currently enforced), there are some items, can be imported
without opening L/C.
Time Limit for opening L/C: -
Unless otherwise stated, L/C should be issued within 150 days from the date of issue or
registration of LCA. L/C must be opened within the dates specified by the import control
authority for imports under loans and credits.
Opening of L/C:-
The branch should establish L/Cs against specific authorization only on behalf of their own
customers maintaining accounts with them and are known to be participating in the trade.
Payments in retirement of the bills drawn under L/Cs must be received by debit to the account of
the customer or by means of a crossed cheque drawn on the drawers other bankers. An
exception can be made in case of import of articles for private use as permitted in the Import
Policy Order.
Documents Called for Under LC:-
In a documentary LC the following documents are normally called for -
Signed commercial invoice in duplicate, certifying the country of origin of the goods, its
description, quantity, and quality grade and unit price and containing the LCA Form
number and indenters registration number with Bangladesh Bank.
Bill of exchange or Draft. The draft must bear the notation Drawn under SJIBL LC NO.
. . . Dated And the amount thereof endorsed by the negotiation bank.
Full set of clean Shipped on Board ocean B/L endorsed to the order of the bank
showing freight prepaid.
A copy of intimation to the insurance company after shipment, quoting the number and
date of the relative insurance cover note. A copy of such intimation should also
accompany the shipping documents.
Compliance certificate of other terms and conditions, if any.
Reshipments Inspection certificate in respect of quality and quantity of goods where
called for.
Packing List.
Scrutiny of Documents:-
On receipt of the import documents the branch shall immediately set itself to the task of
scrutinizing the documents. What they would ensure is that the documents received from the
negotiating bank are drawn strictly in conformity with the terms of the LC and respond to the
requirement of the underlying letter of credit in every respect. Examination of the documents
generally includes the following points:
Completeness of the documents;
Consistency of the documents with each other;
Compliance with the Uniform Customs and Practices for Documentary Credits issued by
the International Chamber of Commerce, Paris
Retirement of documents
On receipt of the cost memo/lodgments voucher the importer pays the required amount.
This stage of documentary credit operation is known as Retirement of Import Bills. The branch
will prepare the retirement vouchers to reflect the amount of cost and other charges from the
importer, adjustments of margin and PAD Account. Thereafter the documents may be handed
over to the importer against proper acknowledgement after certification and endorsement.
IMP Procedure:-
All payments for imports into Bangladesh are required to be reported to Bangladesh Bank on
IMP form. The importer submits the IMP form in duplicate duly filled in and signed by him or
by his authorized agent.
Back to Back LCs:-
General:-The branch may open back-to-back import LCs against export LCs received by export
oriented industrial units operating under the bonded warehouse system, subject to observance of
domestic value addition requirement (stated in terms of permissible limit of CFR value of
imported inputs as percentage of FOB export value of output) prescribed by the Ministry of
Commerce from time to time.
Opening of Back-to-back Import LCs:-
In addition to the general instructions in the foregoing sections, the following instructions
should be complied with while opening back-to-back import LCs:
Only recognized export oriented industrial units operating under bonded warehouse
system will be allowed the back-to-back LC facility. The unit requesting this facility
should possess valid registration with the CCI&E and valid bonded warehouse license.
The master export LC (against which opening of back-to-back LC is requested) should
have validity period adequate to cover the time needed for import of inputs, manufactures
of merchandise, and shipment to the consignee.
The back-to-back LC value shall not exceed the admissible percentage of net FOB value
of the relative master export LC (as per prescribed value addition requirement). For
computation of net FOB value of a master export LC, the freight charge, insurance cost
and commission, if payable by the exporter, shall be deducted from the LC value. If the
freight element is not shown separately, a certificate from the shipping company or the
shipping agent should be asked for.
Export Receipts and Finance:-
Customs and Practices:-
Familiarity with international customs and practices with regard to cross border transactions is
essential for efficient handling of transactions related to exports from Bangladesh. The
discussions in this section will concentrate on these practices and customs.
Contracts and Letters of Credit
Exports from Bangladesh, as indeed from anywhere else, are normally made either against firm
sale contracts or irrevocable LC. Shipments are also some times made without cover of an LC on
CAD, DP or consignment basis according to the terms of relevant sale contracts. The sale
contracts must stipulate the requirement of the buyer about the quality, quantity, price,
description of the commodity, schedule of shipment, insurance, marks, country of origin and
terms of payments, i.e. whether payments to be made against bills drawn at sight, D/P, D.A. or
CAD basis.
Term of Sale:-The sales contract may stipulate the price of the commodity as FOB, CFR, CIF
etc. These terms are described in some details in Chapter 16.
Insurance and Marks:-Insurance is taken and marks on the crate/bale are given as mutually
agreed upon by the buyer and exporter.
Inspection:-The buyers and sellers may agree to have goods inspected at the port of shipment or
at the port of destination by an internationally reputed inspection agency or other entity including
the buyer himself.
Arbitration:-Dispute or claim regarding short weight or short quantity, moisture, low quality
etc. on receipt of the goods at the buyers end is settled by a body composed of sellers and
buyers representatives with Port Trust and Government officials. This arbitration is to be done
in the port of destination. For goods like raw jute and jute goods the terms and conditions of the
contracts are applied as per the London Jute Association standard contract form and the
Bangladesh Jute Mills Association standard contract forms respectively.
Payment Terms:-The terms of payment i.e. when and how payments are to be received by the
exporters are incorporated in the sales contract as per mutual agreement between the buyer and
the seller. These are normally the following:
Advance Payment: This system of payment is not common in respect of exports from
Bangladesh. Under this method exporter may receive value of export in advance before actual
shipment of the goods. This may be done by cheque, draft, M.T. or T.T. favoring the exporter.
The exporter collects the remittance and subsequently exports goods as per terms of the contract.
CAD (Cash against Document): Sometime goods are exported on CAD (Cash against
Documents) basis. In this case the export documents are presented to the importer through a bank
in the country of importer and if the latter is satisfied with the documents he pays the bill in cash
and takes delivery of the shipping documents (B/L, Invoice, etc.) to clear the goods from the
port.
Trust Receipt: Sometimes the drawer may take possession of the goods against Trust Receipt.
In this case responsibility for repatriation of export proceeds lies with the foreign bank that
allows release of the goods to the importers against Trust Receipt. In this method exporter retains
the title to the goods until final payment by the importer.
Documents against acceptance (D.A. Bill): In this case documents are delivered to the importer
abroad on acceptance of the bill of exchange. He pays the cost on the due date but may also pay
before the maturity date and avail some discount.
Documentary against Payment (D/P): This is one of the widely used methods of payment in
export trade. The exporter ships goods and draws a sight bill of exchange (draft) on the importer
and the same is presented to the drawer (importer) along with the shipping documents for
payment. The drawer pays the draft (bill of exchange) and takes delivery of documents. The
bank in the importing country delivers the documents to the importer only against payment of the
bill.
Receiving the LC and advising it to the Beneficiary
On receipt of the LC the steps to be taken are the following:-
The branch should enter full particulars of the LC in the LC Advising Register allotting
separate serial number for each LC. Serial number of the Register should be recorded on
the left hand top corner of the printed LC advising form or on the original LC itself as the
case may be.
In case of cable LC, on receipt of mail confirmation update the record by noting the
particulars in the LC Advising Register.
Particulars of all amendments (if any) are also to be recorded in the same register
before advising the same to the beneficiary.
If the credit is an Air Mail LC Hand-on-credit, addressed to the beneficiary, dispatch
the same in original to the beneficiary under cover of the Banks forwarding letter either
by registered mail or through messenger, as may be convenient, retaining a photo copy
for the banks record.
If the LC is addressed to the branch, reproduce the text of the LC in the Banks printed
LC advising format and forward the same under covering letter to the beneficiary by
registered mail or through messenger, as may be convenient. Retain the original LC for
the banks record.
In case of full text cable/telex LC, make a photocopy of the LC and forward it to the
beneficiary duly attested under the cover of the banks forwarding letter by registered
mail or through messenger as might be convenient, retaining the original cable/telex for
banks record. The text of the cable/telex may also be reproduced in the banks printed
form.
Documents required for Shipment of Goods:-
The LC requires submission of various documents by the exporter for payment/negotiation.
Detail discussions of these documents are made in Chapter 18. The following important
documents should, however, be carefully collected:
EXP form in quadruplicate duly filled in and signed by the exporter and certified by the
authorized officer of the Bank under seal and signature, for submission to customs.
Photocopies of ERC, LC, firm contract.
Freight certificate in case of FOB contract.
R/R (Railway Receipt), B/R (Barge Receipt), S/R (Steamer Receipt) evidencing dispatch
of goods from up country to the port of shipment. If shipment involves finance from the
bank these documents should be made out to the order of SJIBL and should be consigned
to banks approved C&F agent (clearing & forwarding Agent).
Shipping instructions containing description of the goods, the name of the bank to whose
order the B/L is to be made out; full name and address of the consignee and the notifying
party; marks of the goods; freight clause etc., to enable the shipping agents to prepare
B/L accordingly.
Dispatch of Documents to Issuing Bank:-
Forwarding Schedule:-
A forwarding schedule should be prepared as per terms of LC and thereafter the documents
should be dispatched to the LC issuing bank under cover of the forwarding schedule by
Registered Airmail or courier service in two consecutive lots or as per terms of LC for realization
of the proceeds of the bill, stating clearly the mode of reimbursement.
The negotiating branch should claim reimbursement from the LC opening bank or from the
reimbursing bank as per the arrangement outlined in the LC. The branch should give clear
instruction to the reimbursing bank to credit the proceeds of the bill to the Shahjalal Islami Bank
Ltd., Head Office Nostro Account maintained with the named correspondent bank abroad under
telex intimation to the branch and Head Office (ID).
If the LC stipulates reimbursement from a bank other than the bank that opened the LC, all
documents should be forwarded to the LC opening bank. The copy of draft should be forwarded
to the reimbursing bank along with a certificate of compliance of all the terms of LC in the
unusual form for reimbursement of bill amount.
The branch should also prepare a statement of all export bills purchased/negotiated on each day
in the prescribed form and send the same to Head Office (ID) for arranging necessary forward
exchange cover.
Payments to Exporter:-
Negotiation/ Purchase of Documents:
On negotiation/purchase of the export bill, the exporter may be paid the value of the bill
after converting the bill amount into Bangladesh Taka at the ruling bill buying ratesOD Sight
Export buying rate for sight bill and long bill buying rate for usance bill. Other approved charges
of the bank may also be adjusted against the bill amount. If forward cover had been booked with
the branch, the conversion should be made at the booked rate of exchange.
Advance against export bill:
When shipment is not covered by an LC or the documents are found discrepant even though
shipment is made against LC, the export bill is sent to the correspondents for collection. In that
case, the bank may give advance to a trust worthy exporter against the security of the export bills
ranging from 50% to 80% of the value of the bill, depending upon the merit of each case. In such
cases, bank may also insist on collateral securities, like guarantee from third party or
equitable/legal mortgage of property.
As any LC does not cover the shipment, the Bank should obtain clear instructions from the
drawer (exporter) of the bill particularly on the following points:
DA/DP/Sight Bills:-In case of nuisance bills whether shipping documents are to be
delivered to the buyer against payment of the bill (D.P.) or against acceptance of the bill
(D.A.). In case of sight bills documents are to be delivered only against payment.
Noting/Protesting: In case of dishonor of the bill either by non-payment or by non-
acceptance, whether the dishonor should be noted and protested or protesting should be
waived in case of dishonor.
Advising fate of the bill: Whether the fate of the bill, notice of dishonor should be
advised by cable or by air mail, so that the exporter may arrange for extension of the
Insurance Cover and resale or return of the unaccepted goods.
Realization of Collection charges, interest etc.:- Whether the collection charges and
interest should be realized from the buyer.
Case in need:- Whether the bill should be presented to the case in need in case of
dishonor.
Clearance, storage, insurance etc. at destination: - Instructions should also be obtained
from the drawer regarding clearance, storage and insurance etc. of the goods on arrival at
the destination, if the bill is dishonored.
Mode of Presentation of the bill: - Clear instructions from the drawer must also be
obtained regarding the mode of presentation for payment/acceptance of the bill i.e.
whether immediately on receipt of documents or on arrival of the vessel at the
destination.
Red Clause LC and Green Clause LC
Red Clause LC:-
This clause in the LC authorizing the negotiating bank to make advance to the beneficiary of the
LC, is written or typed in red ink. It gives the name Red Clause LC. This advance is made at the
risk of LC opening bank and is restricted to the amount authorized under the red clause.
Before disbursement of the advance all necessary documents including an undertaking, must be
obtained from the beneficiary of the LC (exporter) in conformity with the terms and conditions
of the LC and Red Clause.
Green Clause LC:-
Under this type of Letter of Credit, which also is not commonly used in Bangladesh, a clause
printed or written in green ink is included in the LC, authorizing the negotiating bank not only to
make Pre-shipment advance to the exporter but also to provide the facility for storage of the
goods to be exported under the LC, in the name of the LC opening bank till the goods are
actually shipped.
Travel Related Services.
General Principles:-
There would be a large number of customers regular as well as casual coming to the bank to
buy foreign exchange for travel abroad on various purposes. The branches would attend to these
customers with special care. Bangladesh Bank has delegated authority to the Authorized Dealers
in Foreign Exchange to release foreign currency for travel abroad. In certain cases, especially
where the applicants require more than the prescribed foreign exchange quota, Bangladesh
Banks special approvals would be necessary.
Travel Quota:-
Up to US$ 1000 or equivalent per person may be issued during a calendar year to Bangladesh
nationals proceeding by air to destinations in SAARC member countries and Myanmar. Within
this annual limit, up to $ 500 or equivalent may be issued per person for overland travels to these
countries. For visits to destinations in other countries foreign exchange up to $ 3,000 per person
may be issued during a calendar year.
In all cases, visa of the respective country must be produced if release of foreign currency of
more than $500 is required. Besides, an amount of only up to $1500 may be released in the form
of bank notes i.e. foreign currency notes. The balance or the entire amount may be issued in the
form of TC or other forms of instruments.
Minors aged less than 12 years are entitled to have half of the adult quota. If a customer requires
a higher amount of foreign exchange his application may be forwarded to the Bangladesh Bank
along with documents, if any, produced by the client to support his claim for a higher quota.
The travel entitlement for private as also for other types of visits may be utilized also by way of
international credit cards issued in the names of the persons concerned.
Medical Treatment Abroad:-
All applications for release of foreign exchange for travel abroad on health ground should be
submitted in the form at Appendix 5/58 of BB Guidelines for Foreign Exchange Transactions,
1996, in duplicate. Up to $10,000 or equivalent may be released by the branch on the basis of a
recommendation of the Medical Board set up by the Health Directorate; foreign exchange may
be released as per the cost estimate given by the foreign medical institution. Applications for
release of exchange exceeding $10,000 should be forwarded along with supporting documents to
Bangladesh Bank for prior approval.
Travels by Government/Semi-Government Officials:-
For official or semi-official visits abroad by the officials of Government and autonomous/semi-
autonomous institutions etc, the branch may release foreign exchange as per entitlement of
various categories of officials fixed by the Ministry of Finance from time to time. In such cases,
the applicant for foreign exchange shall be required to submit the sanction letter and the
competent authoritys Order/Notification/Circular authorizing the travel.
Foreign Exchange Quota for New Exporters and Importers:-
Up to $ 6,000 equivalent may be sold to a new exporter for business travel abroad against
recommendation letter from Export Promotion Bureau (EPB). Genuine requirement for higher
amounts may be forwarded to Bangladesh Bank with supporting documents for consideration.
Importers are entitled to a business travel quota @ 1% of their imports settled during the
previous financial year. Non-exporting producers for the local market are entitled to such
business travel quota @ 1% of their turnover during the preceding financial year as declared in
their tax return subject, in both cases, to annual upper ceiling of $ 5,000. A business organization
engaged in imports as well as production shall be entitled to this travel quota entitlement only on
one count.
Release of Foreign Exchange for Hajj:-
The Government of Bangladesh announces each year the scale at which foreign exchange may
be issued to intending pilgrims for performing Hajj. Release of foreign exchange for this purpose
should be made as per instructions issued for this purpose by Bangladesh Bank at the beginning
of Hajj season.
Duties and Responsibilities:-
Fore the requirements of partial fulfillment of BBA degree I had to work at SJIBL to know about
the practical field of knowledge. As an internee I always entered at the office at 10.00-10.10am
and leaved from the office at 5.00pm. At the internee period I was work with the various types of
activities. The main activities are discus below:-
Account opening:-
At the bank, Account opening is the first and important for the bank authorities and the Clint.
Most of the customers how came first time to open an account are not aware about the
procedures; in that cases them I helped theme to open the Account smoothly. In this section I
was careful about the following:
Mode of operation of different type of Account,
KYC and their formalities for opening.
General banking: -
It is the vital part for any internee even employee to know about the banking activities. I was
mainly related to the bellows;
Issuance of check book,
Issuance of Demand Draft,
Posting in register/Computer,
Posting of Voucher,
Accounts Department:-
All the transaction is the parts of accounting department. Regularly I did the work related to:
Sorting of daily vouchers.
Stitching of vouchers,
Daily affairs,
Reconciliation with Head office and other branches.
Foreign Exchange Department:-
My main focuses were the Foreign Exchange Department .In this part I was looking after the
Foreign Exchange related work. Always I tried to keep me busy with Mrs. Bilkis khanom senior
Officer and Mr. Abdus Salam, Officer of Foreign Exchange Department and tried to look
carefully what hew is doing and how. Basically I followed the dealing related to the points
below:-
Letter of Credit,
Formalities,
Handling of export document,
Passing of different entries,
Posting of Voucher.
I mainly tried to cover the above activities at the internee period, BUT I was also trying together
knowledge about all the operation of the bank. I had to communicate with the client after
entering into the bank. I also offer them help. Actually as an internee I had to do most of the
activities of the bank.
SOWT Analysis:-
A SWOT analysis is a modern analytical tool that can help analyze a business to examine the
interaction between the particular characteristics of your business and the external marketplace in
which you compete. The internal portion of a SWOT analysis looks at the individual strengths
and weaknesses of SJIBL. Similarly, the external analysis looks at the opportunities presented
by the marketplace and the threats that SJIBL face in market.
1. The Strength of this Branch:-
Full-functioning computerized accounts maintenance.
SWIFT is being used for foreign trade related operations like letter of credit, fund
transfer, guarantee, etc with optimum security.
Easy and prompt cash transaction by introducing Money counting machine
Healthy working facility
SJIBL provide ATM debit card and nonstop banking facilities.
2. The Weakness of this Branch:-
Excessive reliance on fixed deposits.
Very Limited number of branch network
Some officials dealing with retail products have not been as a professional as a private
bank does require.
Charges of statement or certificates are very high.
High ATM transaction cost
3. The Opportunity of this Branch:-
It has real time online banking.
New Product Innovation
More focus on SME and Agro based business to extend Loan facilities
Technical support to Small Industries to help them to run their business successfully.
Credit card in dual currency
Establishment of new branches to enlarge the market
provide full range of commercial banking services
4. The Threats of this Branch:-
Increasing market competitors day by day
Restless political condition in Bangladesh
Competitive deposit market
Market pressure for narrow down spread
Unexpected fluctuation of stock market
Findings:-
I observed that unskilled persons are available here. There are lacks of good, efficient and
knowledgeable person in the Shariah Council.
There are also limitations regarding memory and knowledge of responding.
Limited space for customers demand. It has to refer to the head office. This is one of the
reasons for delay of customer service.
Customer service of Shahjalal Islami Bank Ltd. is not satisfied. Employees of the SJIBL
are not well trained.
A very much little manpower against the huge advance portfolio of College Gate branch.
Due to day operational activities there is a little scope for proper monitoring.
Sometimes it has become burden for the officers to maintain the rules and regulations
Imposed by the central bank.
Insufficient Internet connection.
Clients are not in favor of introducing system.
Some officers would not like to spread out some informations because these were so
much confidential for the bank.
According to some clients opinion, introducer is one of the problems to open an Account
If a person who is new in the city wants to open an account it is a problem for him/her to
arrange for an introducer. Modern technical equipment such as Fax machine is not
sufficient in foreign Exchange department. As a result the exchange process makes a
delay and it is also complicated.
Recommendations
Actually there are no major Difference between Islamic banking system and Conventional
banking system. I have the practical experience in SJIBL for only three months, with my little
experience in the bank with vast and complex banking system, it is very difficult for me to
recommend. I have observed some shortcomings regarding operational activities of the bank. On
the basis of my observation I would like to recommend the following suggestions:
Shahjalal Islamic bank ltd is now an established bank of Bangladesh so Bangladesh Bank
should formulate a separate policy for the Bank.
Though the performance of general customer services is good, but their employees are
not well trained. The department needs to recruit expert human resources to provide good
customer service, which will bring effectiveness of the banks operation.
The employees are given deposit target, which creates extra pressure to them for that
reason they cannot freely provide customer service. They had to spend most of their time
to marketing to fill up their target. If the bank can reduce the pressure then they could be
able to provide good service.
In many cases, the foreign banks choose for a confirmation from other foreign banks,
which is dishonor for the local bank. It proves the poor financial condition of our country.
Bank should try to improve this situation.
Shairah council should be more educative and adaptive with the present situation. So the
shairah council should be consisted of taking both Islamic knowledgeable persons as well
as modern educated persons.
Shahjalal Islamic Bank ltd should be organized various seminars and symposium so that
both national and international people can be more familiar.
To provide quality service to the customer it is necessary to have a trained team of an
organization or an institution. For this reason the bank should recruit fresher, bright
energetic persons such as BBA MBA, and MBM etc.
One of the business strategies is promotion. Successful business depends on how they can
promote their products or services to the customer. In this connection to improve the
business status bank should introduce more promotional programs.
As the clients are not in favor of introducing system, if possible the rule of introducing to
open an account should be changed. Because many face in problem to arrange an
introducer at the time of opening accounts.
Letter of credit opening procedures and Margin requirement may be relaxed for SJIBL
customer, otherwise new and competitive bank will take the clients away by giving
special facilities.
In case of Export L/C, sometimes customers insist to give their payments through their
document, are found discrepant. In some cases, Bank has to give payment to these
customers for deferent reasons. But it credibility of the bank. I think should be as stricter
as possible about giving payments against discrepant document without hurting the
customers.
Sometimes I found that a new customer that comes first time to open L/C, they found it
difficult to do so. I think this customer should be given some advantage to open L/C. If
they treated well, they may gradually become prime customer for SJIBL.
Conclusion:-
The performance of a Banks today competitive business is important. Jus five years ago the
number of bank was very small. So the competition was not a strong as it is today. Things have
changed with the emergence of many new banks now the Customers have option to take the one
that the best so the current banking business scenario is simply highly competitive. The
performance of Shahjalal Islami Bank Limited during the Last five years has proved that with
strong desire and will power one achieve whatever target he may have. Almost all the leading
banks in our country have various Extra facilities in offer for the customers in comparison with
other Banks but SJIBL has succeed in achieving more customer than other competitors. This has
been possible only because of strong customer relation and excellent customer service.
For Banks credit is the main source of profit and on the other hand the wrong use of credit would
bring disaster not only for the Bank but also for the economy as a whole. The less the amount of
loan losses, the more the income from credit operations of the Banks and here lays the success of
credit Financing. The objective of credit management is to maximize the performing assets and
the minimizing of the none performing assets as well as ensuring the optimal point of loans and
advance and their efficient management.
Though there are some drawbacks in implementing credit facilities in Shahjalal Islami Bank
Limited As per manual it can be improved though involvement of more financial expert in the
decision making process and utilizing the tools to judge integrity of the customers Finally, it can
be urged that though the results achieved so far not satisfactory credit financing is a modern
scientific technique for enhancing Shahjalal Islami Bank Limited strength and there lies the
opportunities to make it more effective in the future for their benefit .