Professional Documents
Culture Documents
banks.
To analyze the financing systems of the bank and find out whether the bank needs any
improvement to be done and make greater contribution towards the countrys economy.
To find out the contribution of private commercial banks for the economic development of
the country.
To have better direction to identify and suggest the scope of enhancement in foreign
L/C Opening.
To learn about the benefits and incentives provides to the export proceeds.
The main objective of the study is to obtain a clear idea about the Foreign Exchange business of
our banking operation i.e. how the L/C is opened and how the import & export is done
To meet the objectives of the study, I realized that a single method would not be effective. Formal
& oral discussion, direct observation, questioning clients & printed papers of the Banks were
found useful. To collect the necessary and meaningful information, the following methods were
applied. Both primary and secondary sources were used here.
1.5.1 Research Design
Exploratory research has been conducted for gathering better information that will give a better
understanding on different financial data. Both primary and secondary sources of data collection
procedure have been used in the report. Primary data has been collected mainly through the
writers observation of the approval process and monitoring techniques, informal interviews of
executives, officers and employees of selected banks.
To make the Report more meaningful and presentable, two sources of data and information have
been used widely.
Both primary and secondary data sources were used to generate the report. The information
incorporated in this report has been gathered from primary and secondary sources. Apart from
this, a review of related circular and office circular as well as face-to-face interview of the
executives, officials and clients were carried out.
1.6.1 Primary Sources
Face to conversation with the respective officers and stuffs of the banks.
A commercial bank (or business bank) is a type of financial institution and intermediary. It is a
bank that provides transactional, savings, and money market accounts and that accepts time
deposits.
2.4.1 Service
Accounts, Current, FDR, PDS & Deposit Scheme
Electronic Banking Service for Windows (EBSW) provides a full range of reporting capabilities,
and a comprehensive range of transaction initiation options.
The customers will be able to process all payments as well as initiate L/Cs and amendments,
through EBSW. They will be able to view the balances of all accounts, whether with Standard
Chartered or with any other banks using SWIFT. Additionally, transactions may be approved by
remote authorization even if the approver is out of station.
2.4.1.6 Automated Teller Machine (ATM)
Automated Teller Machine (ATM), a new concept in modern banking, has already been
introduced to facilitate subscribers 24 hour cash access through a plastic card. The network of
ATM installations will be adequately extended to enable customers to non-branch banking
beyond banking.
2.4.1.7 Tele Banking
Tele Banking allows customers to get access into their respective banking information 24 hours a
day. Subscribers can update themselves by making a phone call. They can transfer any amount
of deposit to other accounts irrespective of location either from home or office.
2.4.1.8 SWIFT
SWIFT is a bank owned non-profit co-operative based in Belgium servicing the financial
community worldwide. It ensures secure messaging having a global reach of 6,495 Banks and
Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an average
4 million message daily and estimated average value of payment messages is USD 2 trillion.
SWIFT is a highly secured messaging network enables Banks to send and receive Fund
Transfer, L/C related and other free format messages to and from any banks active in the
network.
Having SWIFT facility, Bank will be able to serve its customers more profitable by providing L/C,
Payment and other messages efficiently and with utmost security. Especially it will be of great
help for our clients dealing with Imports, Exports and Remittances etc.
2.5 Money and Banking sector review
2.5.1 Monetary & Credit Policy
The monetary and credit policy for the financial year that ended in June,2000 was formulated
with the objective of full utilization of domestic resources and rapid economic growth through
priorities for agriculture, industry, export, and expansion and strengthening of the private sector,
at the same time keeping inflation within tolerable limits. A modern expansionary monetary and
credit policy was adopted in order to make good the losses to agriculture, industry, and
infrastructure by the devastating floods of 1998. After the flood the economy remained sluggish in
the first quarter of 1999-2000 and the private sector demand for credit shrank. In view of this, the
Annual Development Programmed (ADP) was expanded and development activities in the private
sector were geared up. As a result, the public sector absorbed credit at an accelerated rate.
Though credit to the private sector picked up towards the end of the year, the overall annual
growth was smaller than programmed, although gross domestic credit expanded a little faster
than projected. Money supply increased by 15.3% in 1999-2000 compared to the expansion of
8.6% in the preceding year.
2.5.2 Narrow Money
Narrow Money increased by Tk. 2,631.90 crores or 15.3% to Tk.19,881.30 crores in 1999-2000.
Of the components of Narrow Money, currency outside banks went up by Tk.1,489.40 crores or
17.2% to Tk.10,176.00 crores, and demand deposits went up by Tk.1,142.50 crores or 13.3% to
Tk.9,705.30 crores.
2.5.3 Broad Money
Broad Money increased by Tk.11,735.70 crores or 18.6% to Tk. 74,762.40 crores in 1999-2000
compared to the increase of 12.8% in the preceding year. Of the components of Broad Money,
Narrow Money increased by 15.3% and time deposits rose by 19.9% compared to the increase of
8.6% in Narrow Money and 14.5% in time deposits in the preceding year. The shares of currency
outside banks, demand deposits and time deposits in Broad Money stood at 13.6%, 13.0%, and
73.4% respectively on 30th June, 2000 compared to 13.8%, 13.6% and 72.6% respectively on
30th June, 1999.Expansion of credit to the private sector, government sector (net), public sector,
and other assets (net), along with a surplus in net foreign assets contributed to the expansion of
Broad Money.
2.5.4 Reserve Money
Reserve Money increased by Tk.2, 321.80 crores or 15.7% to Tk.17,064.50 crores in 1999-2000
compared to the increase of 8.3% during the preceding year. Of the components of Reserve
Money, currency outside banks increased by Tk.1,489.40 crores or 17.1% compared to the
increase of Tk.533.30 crores or 6.5% during the preceding year. Scheduled banks balances with
the Bangladesh Bank increased by Tk.770.90 crores or 15.3% in 1999-2000 compared to the
increase of Tk.488.20 crores or 10.8% in the preceding year. Their cash in tills increased by
Tk.61.50 crores or 6.0% as against the increase of Tk.103.60 crores or 11.2% in the preceding
year. The increase in Bangladesh Banks credit to the government (net) by Tk.1,738.10 crores
and net surplus in the foreign sector by Tk.1,262.40 crores played the main role in exerting
expansionary influence on the Reserve Money. However the decline of Tk.333.60 crores and
Tk.44.90 crores in the borrowings by the scheduled banks and other financial institutions
respectively along with the fall of Tk.300.20 crores in other assets (net) partly offset the
expansionary impact of those sectors.
2.5.5 Domestic Credit
Total domestic credit increased by Tk.8, 581.20 crores or 13.6% to Tk. 71,489.00 crores (
including adjustment of bonds issued by the government) in 1999-2000 as compared to the
increase of Tk.7,267.60 crores or 13.1% in the preceding year. Expansion of credit to the
government, private, and public sectors to the extent of Tk.3,524.30 crores (31.3%), Tk.4,906.10
crores (10.7%), and Tk.150.80 crores (2.5%) respectively contributed to the expansion in total
domestic credit in 1999-2000. Credit to the government and private sector had increased by
21.3% and 13.8% respectively, while credit to the public sector declined by 3.7% in the preceding
year.
2.5.6 Bank Credit
The outstanding level of bank credit (excluding foreign bills and inter-bank items) increased by
Tk.5, 123.30 crores or 10.3% to Tk.54, 646.10 crores in 1999-2000 as compared to the increase
of 12.4% in the preceding year. Of the components of bank credit, advances increased by Tk.4,
892.70 crores or 10.3% and the bills purchased and discounted went up by Tk.230.60 crores or
11.3%.
2.5.7 Bank Deposit
Bank deposits (excluding inter-bank items) increased by Tk.11,044.70 crores or 18.6% to
Tk.70,278.70 crores in 2009-2010 compared to the increase of 14.2% in the preceding year. Of
this increase , time deposits went up by Tk.9,103.80 crores or 19.9% to Tk.54,881.10 crores,
government deposits by Tk.723.60 crores or 14.8% to Tk.5,615.20 crores and demand deposits
by Tk. 1,142.50 crores or 13.3% to Tk.9,705.30 crores. On the other hand, restricted deposits
increased by Tk.74.80 crores in 2009-2010.
3.1 Profile of Southeast Bank Limited
The emergence of Southeast Bank Limited was at the juncture of liberalization of global
economic activities. The experience of the prosperous economies of the Asian countries and in
particular of South Asia has been the driving force and the strategic operational policy option of
the Bank. The company philosophy A Bank with Vision has been precisely an essence of the
legend of success in the Asian countries.
Southeast Bank Limited is a scheduled commercial bank in the private sector, which is focused
on the established and emerging markets of Bangladesh. In Dhaka, the first branch was launched
in 1995 and the bank has been growing ever since. Southeast Bank Limited has 22 branches
throughout Bangladesh and its aim is to be the leading bank in the countrys principal markets.
The bank by concentrating on the activities in its area of specialization has achieved good market
reputation with efficient customer service. The Bank is committed to providing continuous training
to its staff to keep them up to date with modern practices in their respective fields of work. The
Bank also tries to fulfill its share in community responsibilities. By such measures the Bank
intends to grow and increase shareholders earning per share. Southeast Bank Limited pledges
to maximize customer satisfaction through services and build a trusting relationship with
customers, which has stood the test of time for the last nine years.
3.1.2 Vision of Bank
Creating employment opportunities within the bank through expanding its network
Cooperating with organizations such as Gramen Bank which are helping the poor through
In this respect, Southeast bank enjoys a team of sound professionals. It is managed by a team of
professionals having long experience in the banking industry. While the board sets the
management objectives and policies, the management is instrumental in providing the inputs and
implementing the strategies set by the board. The bank maintains a continuous policy of
developing its human resources. It believes that, the professionals are the key forces behind the
achievement of success in banking business at the face of prevailing rigorous competitive market
situation.
3.1.6 Management Information System
South east bank uses PC Bank/M a branch banking software developed by leads
Corporation- developed on SQ: on windows platform. The head office and branches use the
software for book keeping, automatic interest calculation, daily transaction listing and audit trials,
auto maturity and auto renewal of FDRS, automatic integration of customers ledger and general
ledger, printing of general ledger position including balance of subsidiaries, monthly income and
expenditure position etc.
3.1.7 Service & Products
SEBL always try to provide best services and products to their clients to
acquire their
satisfaction. The bank provides the following the products and services to consider clients
demand
Locker Services
Yearly Charge
Small
Tk. 750/-
Medium
Tk. 1,250/-
Service Available at
Security Deposit
Tk.2, 50/-
Gulshan Branch
(Refundable)
Dhanmondi
Branch
lockers.
Large
Deposit Schemes
Savings (SB)
7.50%
6.00%
Fixed Deposit
30 Days
7.00%
60 Days
7.50%
3 (Three) Months
8.25%
6 (Six) Months
8.50%
1 (One) Year
9.00%
2 (Two) Years
9.50%
10.00%
3 (Three) Years
Table: 3-2
3.1.2 Deposit
SEBL always try to collect deposits from their clients by providing high interest against the
deposits. The bank provides the following deposits to consider clients demand
Deposit Schemes
Pension Savings
Scheme (P.S.S.)
E Educa
Scheme (E.S.S)
Marriage Savings
S Scheme (M.S.S)
Table: 3-3
Savers Benefit Deposit Scheme
Deposited
Term
Amount:
50,000.00
term (T.K.)
st
1 Year
2
nd
45,000.00
Year
59,000.00
rd
3 Year
65,000.00
th
4 Year
72,000.00
th
5 Year
79,500.00
th
6 Year
89,000.00
Table: 3-4
Loan Schemes:
Loan Schemes
Agricultural Scheme
Lending Categories
12.00%
to
Input
agricultural
v
traders
13.00%
and
fertilizer
dealers/ distributors
Commercial Lending
Working Capital
Jute Trading
Other Commercial Lending
15.00%
Jute
14.00%
15.00%
15.00%
15.00%
15.00%
15.00%
Term Loan
13.00%
Term Loan
15.00%
7.00%
Industry
Large/Medium Scale
Industry
Loan against
Table: 3-5
3.1.3 Foreign Exchange Division
Foreign Exchange Department is international department of Bank. It deals globally. It facilitates
international trade through its various modes of services. It bridges between importers and
exporters. If the branch is authorized dealer in foreign exchange market, it can remit foreign
exchange from local country to foreign country. This department mainly deals in foreign currency.
This is why this department is called foreign exchange department.
Some national and international laws regulate functions of this department. Among these,
Foreign Exchange Act, 1947 is for dealing in foreign exchange business, and Import and Export
Control Act, 1950 is for Documentary Credits (UCPDC 1993 revision & International Chamber
of Commerce Publication no 500) is also an important law for settlement of terms and
conditions between exporter and importer in international trade. Governments Import &Export
policy is another important factor for import and export operation for banks.
3.1.4
Functions
of
Department
Import Operation
Import section helps business and other people to import goods. In international environment,
buyers and sellers are often unknown to each other. So seller always seek guarantee for the
payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will
pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the
contract between importer and exporter is given a legal shape by the banker by its Letter of
Credit.
When a buyer goes to import some goods from a foreign buyer, he request his bank makes
payments to the exporter of goods. And the bank recovers the amount from the importer.
Foreign Bills
Purchased
(FBP)
This loan is given to the exporter. When local exporter gets a Usance bill of
exchange, he has to wait until the maturity of the bill for receiving
payment.
Sometimes he cannot wait until maturity and request the bank to
purchase it. If
bank decides to purchase it, then it makes payments to the exporter
against the
bill of exchange. Upon maturity, banks present it to the drawee of the
bill for
encashment. Bank purchases it at discount.
IP Loan
open L/C, then bank provides him credit to purchase necessary foreign
exchange under the WES/SEM. This loan is called Import Loan under
WES/SEM or IP loan.
Export Operation
Bangladesh exports a large quantity of goods and services to foreign households. Readymade
textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea are the
main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the
largest sector that exports the lion share of the countrys export. Bangladesh exports most of its
readymade garments products to U.S.A and European Community (EC) countries. Bangladesh
exports about 40% of its readymade garments products to U.S.A. Most of the exporters who
export through SBLare readymade garment exporters. They open export L/Cs here to export their
goods, which they open against the import L/Cs opened by their foreign importers.
Export L/C operation is just reverse of the import L/C operation. For exporting goods by the local
exporter, bank may act as advising banks and collecting bank (negotiable bank) for the exporter.
a. As an advising bank: It receives documents from the foreign importer and hands it over to the
exporter. Sometimes it adds confirmation on the L/C on request from the Opening Bank. By
adding confirmation, it assumes the responsibility to make payment to the exporter.
1. b.
As Negotiating Bank: It negotiates the bills and other shipping documents in favor of the
exporter. That is, it collects the proceeds of the export-bill from the drawee and credits the
exporters account for the same. Collection proceed from the export bill is deposited in the
banks NOSTRO account in the importers country. Sometimes the bank purchases the bills at
discount and waits till maturity of the bill. When the bill matures, bank presents it to the drawee to
encase it.
In our country, Export and Import operation of bank is very much related with one another
because of use of Back to Back and maturity of payment for Back-to-Back L/C is set in such that
it can be paid out of export proceeds. So export and import sections works as one unit. These
two operations can hardly be separated from one another in the branch.
Foreign Remittance Department
This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a
bank must provide some services to the clients regarding foreign exchange and this department
provides these services. The basic function of this department are outward and inward remittance
of foreign exchange from one country to another country. In the process of providing this
remittance service, it sells and buys foreign currency. In such transactions the foreign currencies
are like any other commodities offered for sales and purchase, the cost (convention value) being
paid by the buyer in home currency, the legal tender.
Miscellaneous Services by this Department:
Student
Students who are desirous to study abroad can open file in the bank.
File
By opening this file, bank assures the remittance of funds in abroad for
study.
Non resident Investors Taka Account is account
NRIT
Account
F.C.
Account
NFCD
Eligible persons may open such accounts even after their return to
Bangladesh, within six months of their arrival.
Table: 3-6
Analysis of this Department
Types of Account
No. Of Accounts
217
7968816.00
NFCD
2998707.05
RFCD
12
1554297.75
23010432.43
1.1.1.1.1.1
Table: 3-7
Number
of
Different
Accounts
Maintained
by
this
Department
2,852.20
485.93
Statutory Reserve
1,975.25
General Reserve
247.65
Retained Earnings
542.79
6,103.82
641.31
313.03
Sheet Exposures
Assets Revaluation Reserves
590.68
3.96
4.20
1,553.19
7,657.01
Table: 3-8
Mercantile Bank Limited, a private commercial Bank with head office at 61 Dilkusha C/A, Dhaka
Bangladesh started operation on 2nd June, 1999. The Bank has 45 branches spread all over the
country with assets of Tk. 44,940.54 million and more than 1000 employees, the bank have
diversified activities inertial banking, corporate banking and international trade.
3.2.1 World Economy
The year 2008 reminds us the worst financial meltdown since the 1930s. It is argued that the
meltdown of the financial system was made in America because it relaxes rules of providing
loans to the people with no income for buying houses, called sub-prime housing loans
amounting to about $2.1 trillion. Furthermore, US regulators did not monitor the way in which the
banks were providing loans during the housing-boom period. The regulatory bodies in the US
ignored warning signs of a financial storm since August 2007 and believed that the free market
system would take care of it. But free market could not prove its effectiveness in avoiding the
financial crisis. As a result, almost every country of the world faced the ongoing world economic
crisis.
World growth is expected to fall to 0.5% in 200, its lowest rate since World War 2. The US
economy, the worlds largest and the epicenter of the Financial Tsunami would shrink to 1.3% in
2009. Output in the advanced economies is now expected to contract by 2% in 2009, first
contraction during the post war period. Growth in emerging and developing economies is
expected to slow sharply from 6.25% in 2008 to 3.25% in 2009. China, the fastest growing
economy in the world is expected to slow down to 7.5% in 2009 from a double-digit growth rate
over the past several years, while Indias deceleration would be less steep to 5.0% from 6.2%
and the economy of Japan would shrink to 1.2% in 2009.
Sluggish real activities and lower commodity prices resulted from tiny demand caused by the
current economic meltdown have dampened inflation pressures. In the advanced economies,
headline inflation is expected to decline from 3.5% in 2008 to a record low of 0.25% in 2009,
before edging up to 0.75% in 2010. In emerging and developing economies, inflation is also
expected to subside to 5.75% in 2009 and 5% in 2010, down from 9.%% in 2008.
3.2.2 Bangladesh Economy
Bangladesh Economy recorded satisfactory growth in FY2008 in spite of experiencing two
consecutive floods and devastating cyclone Sidre, price hike of oil and other commodities in the
world market. Governments growth generating and poverty reduction programs coupled with the
prudent monetary policy of Bangladesh Bank lead to achieve 6.2% growth in FY2008, slightly
lower than 6.4% of FY2007. Nearly all sectors contributed to the GDP growth, particularly
significant were the growth of export-oriented sectors, inflow of remittances and some service
sector like transport and communication.
3.2.3 Background of MBL
Banking system occupies an important place in an economy. A banking institution is
indispensable in modern society. It plays a liberalization of economics policies in Bangladesh.
Mercantile Bank Limited emerged as a new commercial bank to provide efficient banking service
with a view to improving the socio-economic development of the country.
Mercantile Bank Limited has been incorporated on May 20, 1999 in Dhaka, Bangladesh as a
Private limited company with the permission of the Bangladesh Bank; Mercantile Bank Limited
commenced formal commercial banking operation from the June 2, 1999. The bank stood 45
branches all over the country up to December, 2008.
There are 28 sponsors involved in creating Mercantile Bank Limited. The sponsors of the bank
have a long heritage of trade; commerce and industry. They are highly regarded for their
entrepreneurial competence. The sponsors happen to be members of different professional
groups among whom are also renowned banking professionals having vast range of banking
knowledge. There are also members who are associated with other financial institutions like
insurance companies, leasing company etc.
3.2.4 Vision
Would make finest corporate citizen.
3.2.5 Mission
3.2.6 Objective
v Strategic Objectives: To achieve positive Economic Value Added (EVA) each year.
To be market leader in product innovation.
To be one of the top three Financial Institutions in Bangladesh in terms of cost efficiency.
To be one of the top five Financial Institutions in Bangladesh in terms of market share in all
significant market segments they serve.
v Financial Objective: To achieve a return on shareholders equity of 20% or more, on average.
3.2.7 Core values
v For the customers:Providing with caring services by being innovative in the development of new banking products
and services.
v For the shareholders:Maximizing wealth of the Bank.
v For the employees:Respecting worth and dignity of individual employees devoting their energies for the progress of
the Bank.
v For the community:Strengthening the corporate values and taking environment and social risks and reward into
account.
3.2.8 Hierarchy
of
Positions
in
Mercantile
Bank
Limited
3.2.9
Organ
gram
Fig. 3.5
Primary Function
Secondary Function
Time Deposit: Time deposits are repayable on the expiry of a fixed period of time only. Fixes
deposit Accounts, recurring Deposit Accounts and deposit payable at specified
Lends Money:
Banking system essentially involves lending. Depending on the requirements of the borrower,
banks lend money in the forms following:
Loans: In case of loan, the entire amount is paid to the borrower in lump sump, either in cash
or way of transfer to his account. The borrower can withdraw the amount at any time. Interest is
calculated and charged on the debit balance usually with quarterly rests. A loan once repaid in
full or in part cannot be withdrawn further. Thus, no cheque book is issued against the loan
account.
Overdraft: Overdraft is usually a temporary arrangement where the customer is allowed to
withdraw money exceeding the credit balance of the current account up to an agreed limit.
Interest in charged only for the amount drawn.
Cash Credit: A cash credit is an arrangement where the customer is allowed to withdraw
money up to the sanctioned limit. Unlike overdraft this is a permanent arrangement and usually
used to meet the working capital needs of business housed, industries etc. in cash credit account
withdrawals and deposits may be effected frequently. Interest is charged on the daily balanced.
Cash credit arrangement is usually made against pledge or goods but this could also be
extended against personal security.
Bill Discounted and Purchase: Another mode of advancing money is discounting of the
issuance bill of exchange. The banks buy the bill before its maturity at a price less than the face
value. The amount, which the bank deducts from the face value of the instrument, is actually the
interest calculated up to the date of maturity of the bills.
Creates Credit: The creation of credit is one of the important functions of Commercial Bank.
The bank accepts deposits from the public and lends money to its customers. When a bank
extends loan, it does not pay the amount in the bank account of the borrower and allow
withdrawing the required amount by cheques. In this way the bank creates credit or deposit which
is regarded as money and can be used for the purchase goods and services and also for the
payment of debt just like currency notes.
Creates medium of Exchange: Commercial bank usually issues cheque which circulates like
money in the society and creates the medium of exchange.
3.2.11.2 Secondary Function
Modern commercial bank like MBL, besides performing the primary functions, cover a wide range
of financial and non-financial services to meet the growing needs of the time. Some of the
services are available only to the customer while others are available to the public in general. The
subsidiary services provided by a modern banker may be classified into the following two groups:
q Agency Services:
In many cases the Commercial Banks acts the agent of the customers. As agents the banks
provide the following services:
Collection of cheque, draft, bill of exchange, promissory note, dividends, salaries, pension, rent
etc. on behalf of the customer.
Acting as correspondent and representative of its customers, other banks, and financial
institutions.
Conducting stock exchange transaction i.e. purchase and sale of share and securities for the
customers.
Functioning as trustee, executor or administrator of estate of a customer.
q General Utility Services: Commercial banks provide a variety of general utility services to the
customers. They are given below:
Issue letter of credit (L/C)
A commercial Bank/MBL is involved in financing foreign trade apart from financing internal credit
requirement in the economy. This involves handling of import business through opening L/C and
handling of export business. As banking has become very keenly competitive, banks find it
convenient to involve in foreign exchange business as a lucrative source of earning income and
profit.
Apart from financing foreign trade, Commercial Banks also provide guarantees of various types to
their clients. While these facilities clients to undertake jobs assigned to them by various
corporations and organization, this enables the bank to earn commission.
A commercial Bank also provides the facilities of remittance to its clients for transfer of funds to
various traded centers within the country and also outside the country in keeping with the foreign
restrictions of the Central Bank.
3.2.13 Lone Products
Credit Schemes
Our Various Credit Schemes:-
Special Feature:
Special Feature
BDT 7.50 Lac for reconditioned Car/Jeeps/SUVs and BDT 25.00 Lac for new Cars/Jeeps/SUVs.
Objectives : Help new F.C.P.S. or post-graduate doctors for setting up chambers and buying medical equipment.
Help experienced doctors for refurbishing chambers and buying medical equipment.
Assist private clinics for acquiring modern medical equipment.
Interest rate will be charged at quarterly rest.
Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country
and also participated by the Government, UCB started its operation in mid 1983, company act
1962 and has since been able to establish the largest network of 85 branches as on 031.12.2006
among the first generation banks in the private sector.
With its firm commitment to the economic development of the country, the Bank has already
made a distinct mark in the realm of Private Sector Banking through personalized service,
innovative practices, dynamic approach and efficient Management. The Bank, aiming to play a
leading role in the economic activities of the country, is firmly engaged in the development of
trade, commerce and industry thorough a creative credit policy. It has resulted in great success in
all areas of operation with a view to improve the socio-economic development of the country. The
high profitability track record underpins value that the shareholders derive from investing in the
shares of United Commercial Bank. In doing business, United Commercial Bank follows the
fundamental
principles
of
Corporate
Governance
Accountability,
Responsibility
and
Transparency. United Commercial Bank Limited will uphold its business motto of people come
first and strive to provide the best banking products and services to its customers. In the process
of reform and development, the bank is trying to improve its management capabilities and service
standards through hard work and innovation. And such efforts have helped it gain a good
reputation from its customers.
3.3.2 Vision of the Bank
To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital adequacy,
asset quality, sound management and profitability having strong liquidity.
3.3.3 Mission of the Bank
To build United Commercial Bank Limited into an efficient, market driven, customer focused
institution with good corporate governance structure.
Continuous improvement in our business policies, procedure and efficiency through integration of
technology at all levels.
of shareholders, To offer standard financial services to the people, To keep business morality, To
develop welfare oriented banking service, To offer highest possible benefit to customers.
3.3.6 Corporate information of UCBL
Name of the bank
Status
Date of Incorporation
Authorized Capital
: Tk.350.00 Crore
Paid-up Capital
: Tk.171.375 Crore
Numbers of Branches
: 85 (Eighty Five)
Proposed Branches
: 15 (Fifteen)
Chairman
Company Secretary
Managing Director
Number of Employees
: 2500
Credit Rating
Registered Office
the following risk area in order to control and minimize the business as well as financial risks at
an acceptable level.
1. Policy guidelines on asset liability management
2. Policy guidelines on credit management
3. Policy guidelines on foreign exchange risk management
4. Policy guidelines on money laundering prevention
5. Policy guidelines on internal control and compliance
The bank has formed a management committee (MANCOM) to review proper implementation
and regular monitoring of core areas of risk management.
3.3.10 District Wise Branch Distribution
Dhaka Division
1.Bangshal Branch
2.Bhulta Branch
3. Dhanmondi Branch
4.Elrphant
Road
5.Faridpur Branch
Branch
6.Foreign
Exchange
7. Gulshan Branch
8. hasnabad Branch
9.Islampur Branch
10.Kawran Bazar
11.Madhabdee
12.Malibag
13.Mirpur
14.Mohakhali
15.Mohammadpur
16.Moulvibazar
17. Mymensigh
18. Narayangonj
19. Narsingdi
20.Nawabpur
21. Nayabazar
22.North
23. Paglabazar
24.Principal Branch
25. Tangail
Branch(AD)
Brook
Hall
Road
26.Uttara Branch
Chittagong Division
1. Agrabad
2. Anderkilla
3.Bahaddarhat
4.Brahmanbaria
5. Chandpur
6.Chawkbazar
7.Chowmuhani
8. Comilla
9. Coxs Bazar
10. Dhohazari
11. Fatickchari
12. Chokoria
13Feni Branch
14.Gohira
15.Jubilee Road
16. Kadamtoli
18.Khatungonj
19.Lakshmipur
20.Lohagara
21. Madunaghat
23.Muradpur
24. Nazirhat
Rajshahi Division
1.Bogra
2.Chapainawabgonj
3. Dinajpur
4. Naogaon
5.Natore
6. Pabna
7.Rajshahi
8. Rangpur
9. Searajgonj
Khulna Division
1.Chuadanga
2. Jessore
3. Jhenaidah
5.Khulna
6. Kushtia
7.Noapara Bazar
1.Amborkhana
2.Barolekha
3.Beani Bazar
4. Biswanath
5.Goala Bazar
6.Nabiggonj
7. Sherpur
8.Shibgonj
9. Sylhet
10.Zinda Bazar
11.Shahjalal Upashahar
Barisal Division
1.Barisal Branch
Sylhet Division
Online Service
Credit Card
2010
2009
Cash
2812.472
2178.45
661.34
652.13
2151.12
1526.31
2100.01
623.50
In Bangladesh
1841.8
253.97
Outside Bangladesh
258.17
369.53
100.00
1670.00
Investments
6100.77
2877.478
Govt.
5954.187
2706.89
Others
146.586
170.58
26110.09
20210.64
24200.03
20065.17
2024.77
1327.21
291.20
277.54
Other assets
1123.00
974.96
38547.62
28812.59
264.69
89.2
33015.84
24559.33
4876.15
4488.85
Bills payable
581.00
541.59
7655.76
6861.99
Term deposits
19902.91
12666.88
Foreign currencies)
Total Assets
Liabilities& Capital
Other liabilities
2944.98
2509.46
36225.52
27077.72
Paid-up capital
230.15
230.15
Statutory reserve
898.79
689.89
General reserves
363.56
358.08
829.58
459.72
2322.09
1734.86
38547.62
28812.59
Total liabilities
Capital/ Shareholders equity
2010
2009
Tk.
Tk.
Operating income
Interest income
2303987311
1721378600
(1195364906)
(971684083)
1108622405
749694517
215152384
242857269
552266846
478710061
116577443
109185330
1992619078
1580447177
583011961
502619152
3457500
2685000
Operating Expense
81512694
69418169
Legal Expense
5122133
3238667
23413092
20107259
18496793
11428313
1225328
1798936
Auditors Fees
1645000
145000
56899102
52750930
Other Expense
65381462
59033895
840165065
723225321
1152154013
857221856
300000000
231154000
Other Provision
300000000
231154000
852454013
626067856
435357685
457716712
Current Tax
430702971
457716712
4654714
417096328
168351144
Stator Reserve
170490802
125213571
General Reserve
16447918
Dividends
Retained Surplus
230157608
43137573
Appropriations
417096328
168351144
181.22
73.15
financial institutions provides an extensive trade services network to handle the transactions
efficiently. International trade is an important constituent of the business portfolio of the Bank.
The import business of the Bank decreased to Tk. 40,380.10 million in 2007 from Tk. 42,442.80
million in 2006 and export bills decreased to Tk.32, 670.10 million in 2007 from Tk.34, 592.10
million in 2006. Remittances handled by the Bank increased and reached Tk. 3,510.40 million
and Tk. 2,989.10 million respectively in 2007 and 2006 It was tk. 679.10 million in 2005.
The number of foreign correspondents is 584 as of December 31, 2007. Efforts are being
continued to further expand the Correspondent Relationship to facilitate Banks growing foreign
trade transactions. The Bank is using SWIFT communication system for fast and accurate
handling for foreign trade. The Bank is connected to REUTERS also for up-to-date information on
the foreign exchange markets.
To have crystal clear idea about the Foreign Exchange of MBL Critical analysis of the following
are essential
Credit policy of the Bank
Credit sanctioning Authority of MBL and
Credit Monitoring / Supervision of Cell
Import section helps business and other people to import goods. In international environment,
buyers and sellers are often unknown to each other. So seller always seek guarantee for the
payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will
pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the
contract between importer and exporter is given a legal shape by the banker by its Letter of
Credit.
When a buyer goes to import some goods from a foreign buyer, he request his bank makes
payments to the exporter of goods. And the bank recovers the amount from the importer.
Sections:
Foreign exchange department of MBL, Main Branch is divided into two sections:
L/C Operation
Foreign Remittance
presentation of some specified documents, the letter of credit is called Documentary letter of
credit.
The Uniform Customs and Practices for Documentary Credit (UCPDC) published by International
Chamber of Commerce (1993) publication no 500 define Documentary Credit:
a)
Any arrangement however named or described whereby a bank (the issuing bank) acting
at the request and on the instructions of a customs (the Applicant) or on its own behalf,
b)
Authorize another bank to effect such payment or to accept and pay such bills of
exchange (Drafts).
d)
Authorize another bank to negotiate against stipulated documents provide that terms and
b)
the Issuing Bank and that the terms and conditions of the credit are complied with. Irrevocable
Credit gives the seller greater assurance of payments, but he/she remains dependent on an
undertaking of a foreign bank.
4.1.4
Classification
of
Letter
Form of L/C:
4.1.5 Documents Used in L/C Operation
The most commonly used documents in foreign exchange are:
1.
i.
2.
ii.
Bill of Exchange
Bill of Lading
3.
iii.
Commercial invoice
4.
iv.
Certificate of origin
5.
6.
7.
8.
v.
vi.
vii.
viii.
BILL OF EXCHANGE:
Inspection certificate
Packing list
Insurance document
Pro Forma Invoice (PI)/Indent
of
Credit
(L/C)
Bill of exchange is one of the important negotiable instruments in the mercantile world and used
as a vital document facilitating settlement of payments between buyer/importer and
seller/exporter at home and abroad. A bill when accepted by the drawee, gives evidence of the
claim as made by the drawer as well as testimony to the acceptance of the debt by the drawee.
The payment is done either in accordance with the terms of sale contract or under a L/C opened
by the buyer/importer in favor of the seller/exporter.
BILL OF LADING:
A bill of lading is a document that is usually stipulated in a credit when the goods are dispatched
by sea. It is evidence of a contract of carriage, is a receipt for the goods, and is a document of
title to the goods. It also constitutes a document that is, or may be, needed to support an
insurance claim.
The details on the bill of lading should include
A description of the goods in general terms not inconsistent with that in the credit.
Identifying marks and numbers.
The name of the carrying vessel.
Evidence that the goods have been loaded on board.
The ports of shipment and discharge.
COMMERCIAL INVOICE:
A commercial invoice is the accounting document by which the seller charges the goods to the
buyer. A commercial invoice normally includes the following information:
Date
Name and address of buyer and seller
Order or contract number, quantity and description of the goods, unit price and the total
Price
Weight of the goods, number of packages, and shipping marks and numbers
Terms of delivery and payment
Shipment details
CERTIFICATE OF ORIGIN:
A certificate of origin is a signed statement providing evidence of the origin of the goods.
INSPECTION CERTIFICATE:
This is usually issued by an independent inspection company located in the exporting country
certifying or describing the quality, specification or other aspects of the goods, as called for in the
contract and/or the L/C. The buyer who also indicates the type of inspection he wishes the
company to undertake usually nominates the inspection company.
PACKING LIST:
This is a unique document and not combined with other document. This is a listing of the contents
of each package, cartoon etc. and other relevant information.
INSURANCE DOCUMENT:
Insurance is a contract whereby the insurer is undertaking to indemnify the assured to the agreed
manner and extent against fortuitous losses. Insurance document generally contains the following
information:
We can simplify Import as a means purchase of goods and services from the foreign countries
into Bangladesh. Normally consumers, firms and Government of Bangladesh import foreign
goods to meet their various necessities. Import section of the Foreign Exchange Department
helps business and other people to import goods. So seller always seeks guarantee for the
payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will
pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the
contract between importer and exporter is given a legal shape by the banker by its Letter of
Credit. When a buyer goes to import some goods from a foreign buyer, he request his bank
makes payments to the exporter of goods. And the bank recovers the amount from the importer.
4.2.1 Letter of Credit:
Letter of Credit is a guarantee or undertaking or commitment to the beneficiary/exporter for
making payment issued by the issuing bank on behalf of the importer upon fulfillment of some
conditions. Central Banks, therefore assure these things to happen simultaneously by opening
Letter of Credit guaranteeing payments to seller and goods to buyer. By opening a Letter of
Credit on behalf of buyer in favor of seller, commercial banks undertake to make payments to a
seller subject to submission of documents drawn on in strictly compliance with Letter of Credit
terms giving title of goods to the buyer. It is a conditional guarantee. The Letter of Credit thus
constitutes one of the most important methods of financing foreign trade. In the Import Policy
Order 2003-2008 Letter of Credit denoted as Letter of Credit means a letter of credit opened
for the purpose of import under this Order The expression Documentary Credit(s) and Standby
Letter(s) means any arrangements, however named or described, whereby a bank (the issuing
bank) acting at the request and on the instruction of a customer (the Applicant) or on its own
behalf,
v Is to make a payment to or the order of a third party (the Beneficiary), or is to accept and pay
bills of exchange (Drafts) drawn by the Beneficiary, Or
v authorizes another bank to effect such payment, or to accept and pay such bills of exchange
(Draft(s)),Or
v authorizes another bank to negotiate,
v Against stipulated document(s), provided that the terms and conditions of the Credit and
complied with.
On the other hand Letter of credit can be defined as a Credit Contract whereby the buyers bank
is committed (on behalf of the buyers) to place an agreed amount of money at the sellers
disposal under some agreed conditions. Since the agreed conditions include amongst other
things, the presentation of some specified documents, the letter of credit is called Documentary
letter of credit. The uniform customs and practices for documentary Credit (UCPDC) published by
international Chamber of Commerce (1993) revision, publication no 500 define Documentary
Credit:
v Any arrangement however named or described whereby a bank (the issuing bank) acting at the
request and on the instructions of a customs (the Applicant) or on its own behalf,
v Authorize another bank to effect such payment or to accept and pay such bills of exchange
(Drafts)
v
Authorize another bank to negotiate against stipulated documents provide that terms and
A revocable credit may be amended or cancelled by the issuing bank at any moment and without
prior notice to the beneficiary. That is to say, this type of letter of credit can be revoked or
cancelled at any time without consent of, or notice to the beneficiary.
In case of seller (beneficiary), revocable credit involves risk, as the credit may be amended or
cancelled while the goods are in transit and before the documents are presented, or although
presented before payments has been made. The seller would then face the problem of obtaining
payment on the other hand revocable credit gives the buyer maximum flexibility, as it can be
amended or cancelled without prior notice to the seller up to the moment of payment buy the
issuing bank at which the issuing bank has made the credit available. In the modern banking the
use of revocable credit is not widespread.
In this case the issuing banks must perform the following two roles:
Reimburse another bank with which a revocable Credit has been made available for sight
payment, acceptance or negotiation for any payment, acceptance or negotiation made by such
prior to receipt by it of notice of amendment or cancellation, against documents which appear
on their face to be in compliance with the terms and conditions of the Credit;
Reimburse another bank with which a revocable Credit has been made available for deferred
payment, if such a bank has, prior to receipt by it of notice of amendment or cancellation, take up
documents which appear on their face to be in compliance with the terms and conditions of the
Credit.
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.
The only difference between cash Letter of Credit and deferred Letter of Credit lied in the terms of
payment. Payment under deferred Letter of Credit is made after certain days of presentation of
the export bill. Letter of Credit the differed payment basis may be opened for the following cases:
Items Period
The back to back credit is a new credit opened on the basis of an original credit in favor or
another beneficiary. Under back to back concept, the seller as the beneficiary of the first credit
offers it as security to the advising bank for the issuance of the second credit. The beneficiary of
the back to back credit may be located inside or the out side the original beneficiarys country.
Anticipatory Credit
The anticipatory credits make provision for pre-shipment payment to the beneficiary in
anticipation of his effecting the shipment as per L/C conditions.
4.2.3 General Conditions of Import of Goods:
Import Trade Control Schedule Number For import purpose, use of ITC Number (H.S. Code) with
at least six digits corresponding to the classification of goods as given in the Import Trade Control
Schedule 1988, based on the Harmonized Commodity Description and Coding System, shall be
mandatory. The seven Digit H.S. Code published by Bangladesh Bureau of Statistics may also be
mentioned in the Letter of Credit. Form, Letter of Credit and other relevant paper within a bracket
in addition to normal H. S. Code as mentioned above. No bank shall issue Letter of Credit
Authorization form or open Letter of Credit without properly mentioning I. T. C. number (H. S.
Code) thereon.
APPLICANT FOR THE CREDIT: The importer or buyer on whose request and on whose behalf
the letter of credit is opened is called the applicant.
ISSUING BANK/ OPENING BANK: The bank that opens a Letter of Credit, at the request of the
importer, is known as Issuing Bank. The Issuing Bank is the buyers bank and is also called
opening bank.
BENEFICIARY: The party, normally the supplier of the goods, in whose favor the Letter of Credit
is opened is called beneficiary. The seller, after shipping the goods as per terms of the credit,
presents the documents to negotiating bank/conforming bank for negotiation.
ADVISING BANK: The bank is the exporters country, usually the foreign correspondent of the
importers bank; through which Letter of Credit is advised to the supplier is called the advising
bank.
CONFORMING BANK: If the advising bank also adds its own undertaking to honor the credit
while advising the same to the beneficiary, it becomes the conforming bank. The conforming bank,
in addition, becomes liable to pay for documents in conformity with the Letter of Credit terms and
conditions.
NEGOTIATING BANK: The Bank, which negotiates the bill (draft) of the exporter drawn under the
credit, is known as negotiating bank. If the advising bank is also authorized to negotiate the bill
(draft) drawn by the exporter it itself becomes the negotiating bank.
ACCEPTING BANK: A bank that (as specified in the Letter of Credit) accepts time or usance
drafts on behalf of the importer is called the accepting bank. The Letter of Credit issuing bank can
also take on the responsibility of an accepting bank.
PAYING BANK: The bank that effects payment to the beneficiary (as named in the Letter of
Credit) is known as paying bank/drawee bank.
REIMBURSING BANK: If the issuing bank does not maintain any account with THE
NEGOTIATING bank an alternate arrangement is made to reimburse it for the amount payable
under a credit form some other bank. The later bank is termed as reimbursing bank. An authority
to debit his account is sent to the bank with whom the account is maintained to honor the claims
placed by a negotiating bank.
4.2.5 Preparation of Proposal and submitting it to the Competent Authority for Obtaining
Permission of Opening Letter Of Credit:
Before opening Letter of Credit the applicant must take permission from the competent authority.
Whether the authority has to be taken form the Branch or from the Head Office depends on the
amount of Letter of Credit and the percentage of margin. A proposal for obtaining permission for
opening Letter of Credit generally contains the following points:
System
(H.S.) Code, country of origin, quantity, unit price and purpose of import.
Particulars/ Terms of LC along with name and address of the beneficiary, tenor of payment, port
of loading and discharge, shipment validity and expiry date etc.;
For engaging in international trade, every trader must be first registered with the chief Controller of
Import and Export.
By paying specified registration fees to the CCI & E. the trader will get IRC/ERC to open L/C with
Bank, this IRC is must.
Nature of business
Goods to be imported
Offered security
Repayment schedule
For opening LC, the importer is required to fill up a prescribed application form provided by the
banker along with the following documents:
1. L/C application form
1. Filled up LC form
9. IMP form
1. Pro-forma invoice
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 on his own from where it is
addressed to him or merely hand over the original L/C to the beneficiary if it is so addressed.
Then exporter ships the goods to the destination of the importer country
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:
Bill of exchange
Packing list
Bill of lading
Advice details
Commercial invoice
Vessel particular
Certification of origin
shipment certificate
Step 7- Lodgment of document by the opening bank from the negotiating bank:
After receiving the document, the opening banker scrutinizes the documents. If any discrepancy
found, it inform 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 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 is failed to clear goods from the port and request bank to clear- in this
case banks clear the clear the goods and takes delivery of the same by paying custom duty and
sales tax etc. so, this expenditure is debited to the importer account and in banking it is called LIM.
interest and charges payable. Bank prepares cost memo in printed form on account of the
concerned party giving details head of charges payable.
General Incentives:
q National Export Trophy to successful exporters;
q Training course on external trade;
q Arrangement of international trade fairs, commodity-based exhibitions in the country and
participation in foreign trade fairs.
Other Incentives:
q Assistance in improvement of quality and packaging of exportable items;
q Simplification of export procedures;
4.3.2 Export Procedure:
The import and export trade in our country are regulated by the Import and Export (Control) Act,
1950.
Under the export policy of Bangladesh the exporter has to get valid Export registration Certificate
(ERC) from Chief Controller of Import & Export (CCI&E). The ERC is required to renew every
year. The ERC number is to incorporate on EXP forms and other papers connected with exports.
4.3.3 Registration of Exporters:
For obtaining ERC, intending Bangladeshi exporters are required to apply to the controller/ Joint
Controller/ Deputy Controller/ Assistant Controller of Imports and Exports, Dhaka/ Chittagong/
Rajshahi/ Mymensingh/ Sylhet/ Comilla/ Barisal/ Bogra/ Rangpur/ Dinajpur in the prescribed form
along with the following documents:
q Nationality and Assets Certificate;
q Memorandum and Article of Association and Certificate of Incorporation in case of Limited
Company;
q Bank Certificate;
q Income Tax Certificate;
q Trade License etc.
Signing the Contract:
After communicating buyer, exporter has to get contracted (writing or oral) for exporting
exportable items from Bangladesh detailing commodity, quantity, price, shipment, insurance and
marks, inspection and arbitration etc.
4.3.4 Receiving the Letter of credit:
After getting contract for sale, exporter should ask the buyer for Letter of Credit (L/C) clearly
stating terms and conditions of export and payment.
The following are the main points to be looked into for receiving/ collecting export proceeds by
means of Documentary Credit:
(1) The terms of the L/C are in conformity with those of the contract;
(2) The L/C is an irrevocable one, preferably confirmed by the advising bank;
(3) The L/C allows sufficient time for shipment and negotiation.
(Here the regulatory framework is UCPDC-500, ICC publication)
Terms and conditions should be stated in the contract clearly in case of other mode of payment:
Cash in advance;
Open account;
The goods and service sold by Bangladesh to foreign households, businessmen and government
are called Export. The export trade of the country is regulated by the imports and export Act,
1950. There are a number of formalities, which an exporter has to fulfill before and after shipment
of goods. The exporters from Bangladesh are subject to export trade control exercised by the
ministry of Commerce through Chief Controller of import and export. No exporter is allowed to
export any commodity permissible for export from Bangladesh unless he is registered with CCI &
E and holds valid export registration Certificate. The ERC is required to be renewed every year.
The ERC number is to be incorporated on EXP forms and other documents connected with
exports.
4.4.1 Type of Export:
Export must be done as under:
1. Export against L/C or firm contract
2. Export against advance payment
3. Export under consignment basis.
COMMERCIAL BANK are readymade garments exporters. They open export L/C here to export
their goods, which are open against the import L/Cs opened by their foreign importer.
As an advising bank:
It receives documents from the foreign importer and hands it over to the exporter. Sometimes it
adds confirmation on the L/C on request from the opening bank. By adding confirmation, it
assumes the responsibility to make payment to the exporter.
As Negotiating Bank:
It negotiates the bills and other shipping documents in favor of the exporter. That is, it collect the
proceeds of the export bill from the drawee and credit the exporter account for the same.
Collection proceeds from the export bill are deposited in the bank NOSTRO account in the
importers country. Sometimes the bank purchases the bills at discount and waits till maturity of
the bill. When the bill matures, bank presents it to the drawee to encash it.
The import L/C is opened for 75% of the value of export L/C.
In united commercial bank, following papers/ documents are required for opening a back to back
L/C1. Master L/C
2. Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC).
3. L/C Application and LCAF duly filled in and signed
4. Proforma Invoice or Indent
5. Insurance Cover Note with money receipt
6. IMP from duly signed
7. Textile permission
8. Valid Boned Warehouse License
Date of shipment
1. On account
2. Beneficiary / Favoring
3. Amount
4. Availability of credit
5. Partial shipment
6. Payment condition
7. Category
8. Description of goods:
Item
Total Quantity
Unit price
1. B/L Clause
2. Reimbursement clause
3. UCPDC clause
4. Net FOB value.
Generally back to- back L/C is that is here bill of exchange is payable after some maturity date
say 90 or 120 days after the date of acceptance. But some foreign seller may require sight
payment. Here import L/C matures first. In that case Bangladesh gives the fund to the bank to pay
the price of imported goods in favor of the local purchaser of raw materials. When export proceeds
come, first Bangladesh bank loan to the importer is adjusted and remaining part goes to the
importer of raw materials.
United commercial bank forwards the documents for collection due to the following reasons
FDBC signifies that the exporter will receive payment only when the issuing bank gives payment.
UCB make regular follow up with the L/C opening bank in case of any delay in getting payment.
The settlement of local bills is done in the following ways1. The consumer submits the L/C to United Commercial Bank Ltd. Along with the documents to
negotiate
2. United Commercial Bank Ltd. Official scrutinizes the documents to ensure the conformity with the
term and conditions
3. The documents are then forwards to the L/C opening bank
4. The L/C issuing bank gives the acceptance and forwards an acceptance letter
5. Payment is given to the customer on either by collection basis or by purchasing the documents.
Foreign remittance is the transfer of foreign currency from one country to another country. In
another word, foreign remittance means, remittance in foreign currency that are received in and
made out abroad. Actually, foreign remittance is purchase and sale of freely convertible foreign
currencies as permissible under exchange control regulations of the country. Foreign remittance
is very important for the country as valuable foreign exchange is involved in the transfer
mechanism. Foreign remittance takes place in two ways4.4.7 Foreign Process Remittance:
Fund transfer from one country to another country goes through a process which is known as
remitting process.
corresponding relationship with a foreign bank say-X, and maintaining Nostro Account in US $
with the bank. Bangladeshi expatriates are sending foreign remittances to their local beneficiary,
through that account. Now, when the Bangladeshi expatriates through other banks of different
countries remit the fund to their Nostro Account with X, then the local banks Head Office
international division will receive telex message and the remittance section will record the advice
and generate the advice letter to the respective branch of the bank. The branch will first decode
the test, verify signature and check the account number and name of the beneficiary. After full
satisfaction, the branches transfer the amount to the account of the beneficiary and intimate the
beneficiary accordingly. But some times the complexity arises, if the respective local bank has no
branch where the beneficiary maintains his account. Then the local bank has to take help of a
third bank who has branch there.
Inward Remittance:
Remittance comes from foreign countries to our country is called inward remittance. To the
bankers or ADs inward remittance means purchase of foreign currency by authorized
dealers. Generally, inward remittances are received by draft, mail transfer, TT, purchase of
foreign bills & travelers Cheque, export bills. Basically, these are the formal channels of receiving
inward remittance. A local bank also receives indenting commission of local firm also comes
under purview of inward remittance.
Outward Remittance:
Remittance from our country to foreign countries is called outward foreign remittance. On the
other word, sales of foreign currency by the authorized dealer or formal channels may be
addressed as outward remittance. The authorized dealers must utmost caution to ensure that
foreign currencies remitted or released by them are used only for the purposes for which they are
released. Out ward remittance may be made by appropriate method to the country to which
remittance is authorized. Most outward remittance is approved by the authorized dealer on
behalf of Bangladesh Bank.
Outward remittance may be made for following purposes
Travel
Medical treatment
Educational purpose
Technical assistance
F.C. remittance can be made for fare, exhibition from export retention quota.
Outward remittance in favor of beneficiaries outside Bangladesh may be made in any of the
following manners-
Informal Channel:
Fund transfer from one country to another country through hand by hand or over telephone in an
unofficial channel like as Hundy. Haque (1992) comments, that remittance collected by informal
Hundi rings operating in Middle East countries and UK are also used to finance illegal trade and
transactions.
Islam (2000) observes that as informal channel is needed for illegal trade of goods, as well as
gold and drugs into Bangladesh, and therefore, helping the ever-present problem of capital flight
out of Bangladesh.
Drug trafficking
Evasion of taxation
Paying random for kidnapper.Most common techniques for the performance evaluation of a
financial institution are:
Tk. In Million
Sl. No
Particulars
2006
2007
2008
2009
2010
14090
13363
11577
11791
13482
28325
33271
42442
40380
56528
13133
14975
18488
24386
29408
Table: 5.1
The above graph showed the total amount of import transaction of the selected banks. The SEBL
are continually stable in 5 years but the MTB are continuously improved the several years, In
2009 UCBL highly import.
5.1.2 Export Position of the selected banks
Tk. In Million
Particulars
2006
2007
2008
2009
2010
15125
22418
31285
46235
55790
17411
24108
34592
32670
43108
Sl. No
15309
15621
17492
20470
34785
Table: 5.2
Tk. In Million
Particulars
2006
2007
2008
2009
2010
348
123
356
355
290
671
679
298
351
472
193
256
295
322
329
Sl. No
Table: 5.3
The Bank is too much centralized. For each and every work branch office has to get
permission from the head office. The head office tightly controls each and every branch office.
This dependency on head office causes slow down their activities.
Interest rate on deposit is much higher than other banks, which increase their cost of fund
and it diminish the opportunity to provide loan at a lower interest rate. It makes high demand on
short term deposit and manages these liabilities with loan they might need to borrow from call
money market.
Mercantile Bank Limited has committed to their prospective customers to honor its of
cheque with in 30 second after submission but unfortunately they are not able to fulfill this.
MBL is 3rd generation bank of our country. The liquidity level of the bank is fluctuating year
The banks operating cost to income ratio is increasing year by year which is not desirable.
The banks net profit margin is decreasing yearly which indicates that the bank is run in a
worst situation.
The bank has financed on an average of above 93% of its total assets with debt in every
year. So the bank should more emphasize on equity capital than the debt capital.
to
facilitate
Banks
growing
foreign
trade
transactions.
The
Bank
is
using SWIFT communication system for fast and accurate handling for foreign trade. The Bank is
connected to REUTERS also for up-to-date information.
Recommendations of MBL:
Mercantile Bank Limited has been able to operate its all issues proficiently and more competently
in the operations of foreign Exchange and other related perspective around the Bank. To improve
the management culture and foreign exchange departments performance in future, MBL should
adopt some of the industry best practices currently. This are
The bank should give close attention on its interest expense. This cost is rising over year to
year. It has an affect on interest income. The bank should try to handle it on strictly and close
monitoring system have been maintained.
Amount of import and export was turn down last year but it is a concerning issue to have
direct monitoring system. Foreign Exchange departments main function is to handle export and
import procedures and there is a direct relationship between amount of Export & Import and
Exchange gain which is charged to customers on letter of credit and letter of guarantee are
credited to income at the time of effecting the transactions. The direct monitoring and supervision
process should develop where branch manager and head / in charge of the related department
are hold responsible
Total foreign remittance in a single year, in 2007 made a record high to the tune of BDT
3510.40 million. So the bank has deepened its step on the foreign soils further by establishing
more and more remittance arrangements with overseas exchange companies where Bangladeshi
expatriates are working.
Moreover for prompt & safe delivery of this hard earned money to their near and dear ones in
every corner of the country, the bank can established agency arrangements with some big banks.
MBL. Vacancies should fill up with qualified and experienced personnel by offering attractive
incentives. The bank should provide training facility for its existing employer for their betterment.
The procedure related with Export and Import and other formalities of foreign Exchange is
so lengthy that it would take more time to finalize one transaction. The bank and Foreign
Exchange department should take initiative to trim down the official formalities as possible
For proper documentation and keeping the record, it is essential to update Management
Information System (MIS). But currently they have PC Bank 2000, which is not enough for the
bank.
.At present the ATM, debit card, credit card etc services are so much popular. So the bank
should try to make this service available for each and every client.
Recommendations of UCBL:
The bank should try to arrange more training programs for their officials. Quality training will help
the officials to enrich them more recent knowledge of international trade financing. With more
professional base employees can better satisfy the customers. They should be taught about how
to deal with problem customer and how to deal problematic situations.
Margin and commission on L/C varies from customer to customer. A few customers are allowed to
open L/C even with nil margin and fees commission. I think the bank should review the customer
transaction behavior for a period of time and should develop a certain polity in this regard.
In many cases, the foreign banks want confirmation from other foreign banks with which this bank
has correspondence. This proves the poor financial condition of our country. Bank should try to
improve this situation.
Over burden of work and ill defined assignment unable to employee to discharge their duties in
cool manner.
To ensure efficient and timely credit flow it is important to ensure effective work and output from all
the subsections of credit department. Right now, there are four approval officers, four operation
stuffs to assist them where there is only one MIS officer. This MIS officer has to do a lot of
miscellaneous works along with giving loan in put to the database.
New investment scheme should be introduced to meet customer demands. Other banks have high
amount of investment schemes and services. New personal savings, future investment products
should be launched to sty ahead of competition and better satisfy customer requirements.
UCB is now facing image crisis problem. In stock market their share transaction stopped since 1
year. They do not call their AGM on time. The devaluation of their share price creates a negative
impact on the people mind. So I think now very first they should solve this problem.
Conclusion
All Departments are important tool used in international trade. They provide security for both
Customer and banker where conditions may be uncertain or there is little or no previous trading
relationship between the parties. As a student before thesis I have learned about the corporate
world through books and analysis. This program also taught me the differences between bookish
and Analytical knowledge.
I have truly enjoyed my work from the learning and experience viewpoint. I am confident that this
program at the selected banks will definitely help me to realize my further carrier in the job
market.
United Commercial Bank Limited is a first generation bank. it is provide high quality financial
service to contribute to the growth of GDP of the country through stimulating trade and
commerce, accelerating the pace of industrialization, boosting up export creating employment
opportunity for the educated youth, poverty alleviation, raising standard of living of limited income
group and overall sustainable socio economic development of the country. Already United
Commercial Bank Limited makes a strong position through it varies activities. Its number of
clients, amount of deposit and investment money increases day by day. This bank already has
shown impressive performance in investment. The bank now should think to start new services
and take different types of marketing strategy to get customer in this competition market of
banking and also the overall performance of despite some Mercantile Bank Limited criticism is
above the average of present banking industry. Solid revenue growth together with strict
discipline on expenses and a culture of sound risk management have upgraded the Bank to a
level of excellence. In its pursuit of excellence, the Bank constantly reviews its systems, policies,
process and prices of its products and services in line with the changing market reality. Thus,
MBL intends to pave the way for a new era in banking