A PROPOSAL LETTER

On

Foreign Exchange Operations of Janata Bank Limited (JBL)

Subimtted To
Department of Management Studies
Jagannath University, Dhaka.

Submitted By
Mithun Kumer Saha
ID: M120202103
MBA 4th Batch
Major in Human Resouce Management
Department of Management Studies
Jagannath University, Dhaka.

Supervised By
Prof. Md. Mosharraf Hossain Ph.D
Department of Management Studies
Jagannath University, Dhaka.

01.01. Introduction
The theoretical knowledge and practical training is not the same theme.
T h e t h e o r e t i c a l knowledge is fulfilled when it can be used in the practical field.
The goal of internship is to apply ones theoretical knowledge in practical fields. Generally by the
word Bank we can easily understand that the financial institution deals with money. But
there are different types of banks such as; Central Banks, Commercial Banks,
Savings Banks, Investment Banks, Industrial Banks, Co-operative Banks etc. But when we use
the term Bank without any prefix, or qualification, it refers to the Commercial
banks. Commercial banks are the primary contributors to the economy of a country.
a kind of commercial Bank in our country. J a n a t a B a n k a n a t i o n a l i z e d c o m m e r c i a l b a n k
e s t a b l i s h e d u n d e r t h e B a n g l a d e s h B a n k s (Nationalization) Order 1972. With its head
office at Dhaka the bank started its operations within initial authorized capital of Tk 50
million and paid up capital of Tk 10.5 million. The value of assets created by the OBS
activities of the bank was Tk 26.07 billion in 1998 and Tk 25.46 billion in
2000.J a n a t a B a n k h a s a l a r g e p a r t i c i p a t i o n i n f o r e i g n e x c h a n g e b u s i n e s s
i n c l u d i n g o v e r s e a s remittance services. The total volume of foreign exchange
business handled by the bank in servicing imports and exports and remittances
during 1999-2000 amounted to Tk 40.312 billion. In 2009, the bank had correspondent
relationships with 3,180 foreign banks/bank offices. In 1972, Janata Bank started its
banking operations with a total initial deposit of Tk 1.57 billion. A special deposit
mobilization programmed introduced by the bank in 1976 resulted in remarkable increases in the
volume of its deposits, which grew at a rate of approximately 63% and 42% during 1972-74 and
1978-80.Major areas that received financing from the bank were jute trade, jute
industries, tanneries, sugar industries, textile trade and industries, transport, iron and steel, tea
plantation and trade, livelihood trades/income generating activities and housing. During 1999,
Janata Bank disbursed Tk 16.383 billion in loans and advances and the recovery during the year
was Tk 4.541 billion.

01.02. Objective of the Report

01.02.01. Major Objectives
The major objective of the study is to observe & evaluate Foreign Exchange operations of Janata
Bank Limited .
01.02.02. Specific Objectives
Every report has an objective. The objective of the internship program is to familiarize students
with the real business situation, to compare them with the business theories & at the last stage
make a report on assigned task. Specific objectives are as follow:

To know the activities of the foreign exchange department.

To know function of foreign exchange.
To know export procedures of JBL.
To know import procedures of JBL.

01.03. Origin of the report

This report is being assigned as a part of the MBA Degree (Internship) of Jagannath University.
To prepare this report, I accommodate my internship program in Janata Bank Ltd. For the
completion of the course, as an essential part I had prepared a Report. This report
is being formed on the A Study on Foreign Exchange operations of the Janata Bank Ltd.,
Kaligonj Branch. From the very beginning of my internship I have
w o r k e d o n G e n e r a l banking. After few weeks later I was shifted on Foreign Exchange
department. For that reason I made my Report on Foreign Exchange activities of ., K a l i g o n j B r a n c h .
Janata Bank Limited (JBL) is a place where I could learn the business dealings. This
organization has created a positive image to the customers mind by providing better service.
This bank has introduced some modern banking scheme that has got high market demand. As an
intern, I have got the opportunity to work with this organization from January 1, 2015 to March
31, 2015 and acquire idea about foreign division.

01.04. Background of study

All over the world the dimension of Banking has been changing rapidly due to Deregulation,
Technological innovation and Globalization. Banking in Bangladesh has to keep pace with the
global change. Now Banks must compete in the market place both with local institution as well
as foreign ones. To survive thrive in such a competitive banking world, two important
requirements are
i)
ii)

Development of appropriate financial infrastructure by the Central bank and

Development of Professionalism in the sense of developing an appropriate
manpower structure and its expertise and experience.

To introduce skilled Banker, only theoretical knowledge in the field of banking studies is not
sufficient. An academic course of the study has a great value when it has practical application in
real life situation. So, I needed proper application to get some benefit from my theoretical
knowledge to make it more tactful, when I engaged myself in my practical life situation. Such all
application is made possible through Internship.

01.04. Scope
Scope means area of operations or field of the study. The scope of this report was extended to the
Foreign Exchange activities of JBL.

01.05. Methodology of the Report

The study requires a systematic procedure from selection of the topic to final report preparation.
To perform the study the data sources are to be identified and collected, they are to be classified,
analyzed, interpreted and presented in a systematic manner and key points are to be found out.
The overall process of methodology is given below:
A. Selection of the topic:
The topic of the study was suggested by our supervisor. Before assigning the topic it was
discussed with me so that a well organized internship report can be prepared.

B. Identifying data sources:

Essential data sources both primary and secondary are identified which will be needed to
complete and work out the study. To meet up the need of data primary data are used and
study also requires interviewing the official and staffs were necessary. The report also
required secondary data.
This report is mainly prepared by the secondary sources of information and some few primary
sources of information like
Primary Sources:

Practical desk work

Employees of the JBL
Clients of the JBL
Examine and study client files

Experts opinions and comments

Direct involvement in the foreign exchange activities in JBL
Direct Observation
Questioning the concerned persons
Secondary Sources:
Most of the necessary information will be collected from the clients document.

JBL Annual Report 2009-2014

Published documents
Website of JBL
Relevant books.

Various brochures
Daily summary sheet
Various type of statement

A. Collection of data:

Primary data are collected by using Questionnaire. The report is based on open ended
questions asked to the Bank official.
B. Classification, Analysis, Interpretations and Presentation of data:
Some graphical tools are used in this report for analyzing the collected data and to
classify those to interpret them clearly.
C. Findings of the study:
The collected data were scrutinized very well and pointed out and shown as findings.
Recommendations are also made for the improvement of the current situation.
D. Final report preparation:
On the basis of the suggestions of my honorable supervisor, some corrections were made
to present the report in this form.

01.06. Limitations of the Study

The report is written mainly on the basis of face to face conversation with the officials and little
practical experience in the bank. So, no perfect study is conducted to measure the viability of the
report. The following are some other limitations
Limitation of time was one of the most important factors that shortened the present
study. Due to time constraints, many aspects could not by discuss in the present study.
Lack of comprehension of the respondents was the major problem that created many
confusions regarding verification of conceptual questions.
Confidentiality of data was another important barrier that was faced during the conduct of
this study. Every organization has their own secrecy that cannot be revealed in publics.
Rush hours and business was another reason that acts as an obstacle while gathering
data.
As, I had more dependence on the primary sources, so there might be some level of
inaccuracy with those collected information.
Insufficient books, publications, Facts and figures narrowed the scope of accurate
analysis.
JBL does not have rich and wealthy collection of various types of Banking related Books
and Journals.

 Confidential information regarding past profit or product cost, financial information was
not accurately obtained. Alike all other banking institutions, JBL is also very conservative
and strict in providing those information. In those cases, I have relied upon some
assumptions, which in result have created certain level of inaccuracy. Still, I had tried my
best in obtaining that sensitive information, as much as possible.
01.05.07 Data Collection Method:
Most of the data required for the study was collected form primary
s o u r c e s t h r o u g h o r a l interviewing the employees.
01.05.08 Data Analysis Process:
To analyze the gathered data of foreign exchange department, I used different types of charts,
t a b l e s a n d g r a p h s . To d o t h a t a n a l ys i s I u s e d d i f f e r e n t t yp e s o f c o m p u t e r
s o f t w a r e l i k e Microsoft Word and Microsoft Excel.
Findings of the study:
After finding out the data problems of the study were pointed out and they were shown
under concerned heads. Recommendations were suggested thereafter to
overcome the problems.
Final report preparation:
On the basis of the suggestions of my honorable supervisor some deductions and
additions were made and final report was prepared thereafter.
Significance of the Report:
This report is the result of three month internship in JBL. And I have
completed this internship period successfully. This internship report contains all the
knowledge that I have gathered at the time of my internee at JBL in the Gadara Branch.
My topic is study on Foreign Exchange operations of JBL. This is the basic rationale
behind the study. Besides, it would be a great opportunity for me to get familiar with this
system. So this study is very significant for both the company and as well as for me.
01.06. Limitations of the Report
There were some problems while I doing internship. A whole hearted effort was applied to conduct the
internship and to bring a reliable and fruitful result. In spite of having the wholehearted effort,

there exit some limitations, which acted as a barrier to conduct the program. The limitations were
noted to this page:

Bankers dont want to disclose all the information I need.

Non-availability of some preceding and latest data.
Some information was withheld to retain the confidentiality of the bank.
Although the officers of the have been very helpful, they didnt have enough
time to provide, as they are very busy with their assigned works.
So, in some cases, observation was needed.

CHAPTER-2

Organization Part
02.01. An overview of (JBL)
is the leading sector bank in Bangladesh offering full range of Personal, Corporate, International
Trade, Foreign Exchange and Lease Finance. is the preferred choice in banking for friendly and
personalized services, cutting edge technology, tailored solutions for business needs,
global reach in trade and commerce and high yield on investments, assuring Excellence in
Banking Services.
02.02. Brief Overview of the Bank
Formation of Janata Bank:
Immediately after the independence of Bangladesh in 1971, the erstwhile United Bank
Limited and Union Bank Limited were nationalized and renamed as Janata Bank.
Date of Incorporation as PLC: May 21, 2007.
Authorized Capital:
Tk. 8,000 million (as on 31.12.08) (now 20,000 Million as
approved in the AGM/EGM dated 29.09.09).
Pre IPO Paid up Capital:
Tk. 2,593.90 million (as on 31.12.08) (however the bank has issued Bonus
shares amounting to Tk. 1156.10 million and rights shares of Tk.
1250.00in the said AGM/EGM i.e., paid- up would be Tk. 5,000 million).
No. of Branches:
Almost 850

02.03. At a Glance
Key points
Name
Logo
Date of incorporation as PLC

Particulars
JBL
janata bank ltd
May 21,2007

Status
Chairman
Managing Director

Public company ltd

DR. Abul Barkat
S.M. Aminur Rahman
Managing Director & CEO

02.04. Hierarchy of
Hierarchy of

2.05. Objective of organization

JANATA Bank Ltd will be the absolute market leader in the number of loans given to small and
medium sized enterprises throughout Bangladesh. It will be a world class organization in terms
of service quality and establishing relationships that help its customers to develop and grow
successfully.
02.06. Mission of (JBL)

will be an effective commercial bank by maintaining a stable growth strategy

delivering high quality financial products, providing excellent customer service
through an experienced management team and ensuring good corporate governance in every step
of banking network.
02.07. Vision of (JBL)
To become the effective largest commercial bank in Bangladesh to support socioeconomic development of the country and to be a leading bank in South Asia.
02.08. Core Values of (JBL)

Integrity
Fairness
Harmony
Courtesy
Commitment
Enthusiasm for work
Business ethics

02.09. Core Strengths of (JBL)

Quick Decision Making

Efficient team performance
Satisfied Customer
Internal Control

02.10. Foreign Corresponding

Janata Bank has already established a worldwide network and relationship with
international banking through its four (4) overseas branches in UAE, subsidiaries Janata
Exchange S.R.l in Italy & 1125 foreign correspondents all over the world.
02.11Business Philosophy
.Janata Bank Ltd, a full service commercial bank with Local and International
Institutional shareholding, is primarily driven by creating opportunities and
pursuing market niches not traditionally met by conventional banks. Today Janata Bank Ltd
is one of the fastest growing banks in the country to support the planned growth of its
distribution, network and for its various business segments. The reason Janata Bank Ltd is
in business is to build a profitable and socially responsible financial institution focused
on markets and businesses with growth potential, thereby assistingJanata and stakeholders

build a just, enlightened, healthy, democratic and poverty free Bangladesh. Which
mean to help make communities and economy of the country stronger and to help people achieve
their dreams. They fulfill the purpose by reaching for high standards in e v e r y t h i n g w e d o .
For

their

customers,

their

shareholders,

their

associates

and

t h e i r communities upon, which the future prosperity of their company rests.

02.12. Management of (JBL) :
For any financial and non financial organization Management is the most
v a l u a b l e a n d important resources of any kind of organization. And a well-organize
management provides the organization to reach its ultimate goal. Management means
planning, organizing, staffing, d i r e c t i n g a n d c o n t r o l l i n g o f a l l f i n a n c i a l a n d
n o n f i n a n c i a l r e s o u r c e s o f a n o r g a n i z a t i o n . Different aspects of management practice in
are discussed below.
Planning
has done its planning within the preview of the corporate plan. The
o v e r a l l p l a n n i n g a p p r o a c h o f i s Top - d o w n . E a c h b r a n c h c a n
p l a n according to the goal imposed by the corporate level. It doesnt
plan independently. And, has a planning division. This department is
mainly responsible for the overall planning.
Organizing
Is organized as per the existing business locations. It has 851 branches, e a c h o f
w h i c h i s a s e p a r a t e e n t i t y. E a c h u n i t i s r e s p o n s i b l e f o r i t s o w n
p e r f o r m a n c e a n d followed by Managers each. He is directly responsible for
performance of their unit. Within each branch it is organized functionally.
Staffing
The recruitment of is done in two ways. One as a probationary officer for the
management program and it has probation period of one year. Another
one is non-management level as Trainee Officer Probationary officer is
recruited in officer category and their career path is headed towards different
managerial jobs.
Directing and controlling

The management approach in is top-down or authoritative. Information just seeks

through lower management layer. Setting Management in all office is done in way
that the superior can monitor the subordinate can all time. Budgeting, rewarding,
punishing etc. are also practiced as control mechanism.
02.13. Product and services
JBL has a very broad line products under the various business group, from short term to longterm deposits, various types loans and advances, account service, it provides finance for export
and import, finance for working capital, project financing, capital investment,
remittance service, trade service, foreign exchange service, cash management
service, Profit & loss sharing and also has other miscellaneous product and services around
the nation.

02.14. Product of Trade service

3.3.1 Fund Based:
Cash Credit (CC Hypo)
Cash Credit (CC Pledge)
Overdraft (OD)
Trust Receipt (TR)
Foreign Bill Purchase (FBP)
Loan against Important Merchandise (LIM)
3.3.2 Non-Fund Based:

Letter of Credit (LC)

Deferred LC
Sight LC
Letter of Guarantee (LG)A limit (amount) is set by the bank that can be
availed by a particular Customer based on his /her Credit worthiness and
record of business transactions with the bank.
02.15. Business area of (JBL)
There are mainly eight major business areas where the Janata Bank Ltd. is performing with high
reputation. These areas are --------

General Banking
Foreign Exchange
Small & Medium Scale Enterprise (SME)
Large Scale Industries
Agriculture Sector
Transport Sector
Financing In Housing Sector& Land Developing
Finance in Home Appliance Since I completed my internship on foreign
exchange, it would be convenient for me to focus Foreign Exchange of
Janata Bank Ltd.

02.15.01 General Banking

It is most important side of the bank. Bank is nothing but a middleman
b e t w e e n l e n d e r s (surplus unit) and borrowers (deficit unit). To provide loan, a
bank needs a huge amount of money from the depositors. General banking is the side where
banks offer different alternatives to the clients to deposit and remit their money. To encourage the
clients, bank offers different options in front of their clients. Most of these options are very much
similar between the banks, but the customer services and facilities may not be the same. General
Banking of JBL is divided into 4 divisions:
Account opening
Remittance
Clearing
Cash.
2.15.1.1 Account Opening

The relationship between the banker and the customer begins with the opening of an account by
the customer. Initially all the accounts are opened with a deposit money by the customer and
hence these accounts are called deposit account. Usually a person needs to open an account to
take services form it. Without opening an account, one can get only a few services
from then. So the banking begins actually by opening an account with a bank. Generally, there
are four types of accounts in our countrys banking system:
1.
2.
3.
4.
5.
6.

Current account or Demand Deposit (C D Account)

Savings Deposit (S B Account)
Fixed or Time Deposit (F D R)
J B D S (Janata Bank Deposit Scheme)
M D S (Medical Deposit Scheme)
E D S (Education Deposit Scheme)

2.15.1.2 Remittance
Remittance of funds is ancillary services of JBL. It aids to remit fund from one place to
another place on behalf of its customers as well as non- customers of Bank. JBL has its branches
in the major cities of the country and therefore, it serves as one of the best mediums for
remittance of funds from one place to another. The main instruments used by JBL:i.
ii.
iii.

Payment Order Issue/Collection

Demand Draft Issue / Collection
T.T. Issue/Collection

i. Payment Order:
The pay order is an instrument issued by bank, instructing itself a certain amount of
money mentioned in the instrument taking amount of money and commission when it is
presented in bank. Only the branch of the bank that has issued it will make the payment of pay
order. Issuing of Pay Order: The procedures for issuing a Pay Order are as follows:
o Deposit money by the customer along with application form.
o Give necessary entry in the bills payable (Pay Order) register where payees name, date,
PO no, etc is mentioned.
o Prepared the instrument.
o After scrutinizing and approval of the instrument by the authority, it is
delivered to.

ii. Demand Draft:

The person intending to remit the money through a Demand Draft (DD) has to deposit
the money to be remitted with the commission which the banker
c h a r g e s f o r i t s services. The amount of commission depends on the amount to be
remitted. On issue of the DD, the remitter does not remain a party to the instrument:
Drawer branch
Drawn branch
Payee. Customer. Signature of customer is taken on the counterpart.

iii. Telegraphic or Telephonic Transfer (TT)

This Method transfers money to one place to another place by telegraphic message. The
sender branch will request another branch to pay required money to the required payee on
demand. Generally for such kind of transfer payee should have account with the paying bank.
Otherwise it is very difficult for the paying bank to recognize the exact payee. When sending
money is urgent then the bank uses telephone for remittance. This service is only
provided for valued customers, who is very reliable and with which banks have
longstanding relationship.

TT (Issue)
Customer fills up the TT form and pays the amount along with
commission in cash or by cheque.
The respected officer issues a cost memo after receiving the TT form with
payment seal, then signs it and at last give it to the customer.
Next a TT confirmation slip is issued and its entry is given in the TT issue
register.
A test number is also put on the face of the slip. Two authorized officer

signs this slip.

The respective officer transfers the message to the drawer branch
mentioning the amount, name of the payee, name of the issuing branch,

date, test number and hasher power of attorney (P.A.) number.

The confirmation slip is send by post.

2.15.1.3 Clearing
Clearing house is an assembly of the locally operating scheduled banks
f o r e x c h a n g e o f cheques, drafts, pay orders and other demand instruments drawn on each
other and received from their respective customers for collection. The house meets at the
appointed hour on all working days under the supervision of two central bank officers or its
agent as the case may be, and works within the regulations framed therefore on the basis of
prevailing banking practices. I n B a n g l a d e s h , c l e a r i n g h o u s e s i t e s a t B a n g l a d e s h
b a n k w h e r e t h e r e i s n o o f f i c e o f t h e Bangladesh bank, Sonali Bank acts as agent of
Bangladesh bank. There are mainly two types of clearing systems in Bangladesh, such as:
Internal clearing or inter branch clearing or inward clearing
External clearing or inter banks clearing or outward clearing
What is clearing House?
In Bangladesh Bank, there is a very large room, which contains fifty (50) or more
tables for each bank that is called the clearing house.
Nature of clearing house:
1st Clearing House
Return Clearing House
Types of Clearing Cheque
JBL Gadara Branch, Dhaka performs the clearing function through Bangladesh Bank. JBLL o c a l
Office, Dhaka acts as the agent of all JBL branches for the clearing house
o f t h e Bangladesh Bank. There are two types of cheque which are Inward clearing Cheque.
Outward clearing Cheque.
Inward clearing Cheques
Inward clearing cheques are those ones which have drawn on the other branches of JBL, which
will be cleared / honored through the internal clearing system of JBL operated by
the Local Office of JBL.

Outward clearing Cheques

Outward clearing cheques are those ones, which have drawn on the other bank branches which
are presented on the concerned branch for collection through clearing house of
Bangladesh Bank. The cash section of any branch plays very significant role in Banking
Section. Because, it deals with most liquid assets. The JBL, Gandaria Branch has an equipped
cash section. This section receives cash from depositors and pay cash against cheque, draft, PO,
and pay in slip over the counter. Every Bank must have a cash counter where customer
withdrawn and deposit their money. When the valued clients deposit their money at the cash
counter they must have to fulfill the deposit slip his/her own, then they sing as the depositor
options then they deposit their money through cash officer at the cash counter.
Several Types of Deposit Slip
There are several types of deposit slip as follows:

Current Deposit A/C Slip,

Savings Deposit A/C Slip,
Fixed or Time Deposit A/C Slip, Other Types of Deposit A/C Slip,
Pay order Slip,
Demand Draft Slip,
T.T. Slip.
Receiving Cash
Any people who want to have deposit money will fill up the deposit slip and give
the form along with the money to the cash officer over the counter. The cash officer counts the
cash and compares with the figure written in the deposit slip. Then he put his signature on the
slip along with the cash received seal and records in the cash receive register book against A/C

number. At the end of the procedure, the cash officer passes the deposit slip to the counter section
for posting purpose and delivers duplicate slip to the clients.
Disbursing Cash
The client who wants to receive money against cheque comes to the payment
counter and presents his cheque to the officer. He verifies the following information:
o
o
o
o
o
o

Date of the cheque

Signature of the A/C holder
Material alteration
Whether the cheque is crossed or not
Whether the cheque is endorsed or not
Whether the amount in figure and in word correspondent or not T h e n h e c h e c k s t h e
cheque from computer for further verification. Here the following
information is checked:
Whether there is sufficient balance or not
Whether there is stop payment instruction or not

Whether there is any legal obstruction or not After checking everything, if

all are in order the cash officer gives amount to the holder and records in
the paid register.

2.15.1.4 New Technology

Adopting the state-of-the art technology in banking operations.

2.15.1.5 Management Hierarchy

Chairman

Board of Director

Managing Director

Additional Managing Director

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

First Vice President

Assistance Vice President

First Assistance Vice President

Principal Officer

Senior Executive Officer

Executive Officer

Officer

Assistance Officer

Trainee Assistance Officer

2.15.1.6 Features of Janata Bank Limites.

There are so many reasons behind the better performance of JBL than any other newly established
banks:

Highly qualified and efficient professionals manage the bank

JBL has established a core Research & Planning Division with efficient persons
The bank has established correspondent relationship with 240 of foreign banks
The computerized operation systems in all branches of JBL have provided the frequent and

prompt customer service

The strict leadership along with the supervision of efficient management directs all the
branches
The inner environment and teamwork, of all branches in MBL motivated all experienced
employees to achieve the ultimate object of JBL
JBL has become a member of the SWIFT system expedite foreign trade transaction

JBL has become introduced some scheme for the purpose of saving of low income people
which are not available in other banks like Family Maintenance Deposit (FMD),
Personal Loan Scheme, Car Loan Scheme etc.
The bank offers attractive saving rate than other financial institutes
JBL provides loan to the customers at lower interest with easy and flexible condition than
the others do
Along with the profit generation Janata Bank Limited also maintain social responsibilities
Janata Bank Limited charges lower commission from their customer in comparison with
other banks
The Bank is always guided their potential customers by giving valuable advises

2.15.1.7 MBL Brokerage House

Mercantile Bank Limited Brokerage House has been developed to ensure development of sound
capital market and to provide higher, better and diversified services to a wide range of customers.
MBL is offering high quality products and services at a competitive rate.
Mercantile Bank Limited Brokerage House offers full-fledged international standard brokerage
service with margin loan facility. They are also a full service Depository Participant (DP) of
Central Depository Bangladesh Ltd. (CDBL). The brokerage service is designed to provide
customers with necessary support profitably in the stock market.
MBL is dedicated to provide high level of professional and personalized services to its domestic
and international clients at a reasonable cost. MBLs services are comprehensive in nature,
including brokerage, margin loan, CDBL facilities, and research and custodian needs of
customers.

CHAPTER-3
Foreign exchange operation
03.01. Foreign Exchange
Foreign Exchange- its Meaning and Definition
Foreign Exchange is a process which is converted one national currency into
another and transferred money from one country to another country. Foreign exchange refers to
the processor mechanism by which the currency of one country is converted into the currency of
another country. Foreign exchange is the means and methods by which rights to wealth in a

countrys currency are converted into rights to wealth in another countrys currency. In banks
when we talk of foreign exchange, we refer to the general mechanism by which a bank converts
currency of one country into that of another. Foreign trade gives rise to foreign exchange.
Modern banks facilitate trade and commerce by rendering valuable services to the
business community. According to foreign exchange regulation act 1947, Any thing that
conveys the right to wealth in another country is foreign exchange. Foreign exchange
department plays significant roles through providing different services for the customers.
Opening or issuing letters of credit is one or the important services provided by the banks.
Every country has certain natural advantages and disadvantages in producing certain
commodities while they have some natural disadvantages as well in other areas. As a result we
find that some countries need to import certain commodities while others need to export their
surpluses. Foreign trade brings the fruits of the earth to the homes of the humblest among the
countries. These transactions are the basis upon which international trade is made. As more than
one currency is involved in foreign trade, it gives rise to exchange of currencies which is known
as Foreign Exchange.

This definition implies that all business activities relating to Import, Export, Outward & Inward
Remittances, buying & selling of foreign commissions, etc. come under the purview of foreign
exchange business.
Foreign exchange can simply be defined as a process of conversion of one national currency into
another and of transferring money from one country into another.

03.01.2.Principles of Foreign Exchange

The following principles are involved in Foreign exchange:
The entire system.
The media used.
The monetary unit.

03.01.3. Functions of Foreign Exchange Operations

The Bank actions as a media for the system of foreign exchange policy. For this
reason, the employee who is related of the bank to foreign exchange, especially foreign
business should have knowledge of these following functions:
Rate of exchange.

How the rate of exchange works.

Forward and spot rate.
Methods of quoting exchange rate.
Premium and discount.
Risk of exchange rate.
Causes of exchange rate.
Exchange control
Convertibility.
Financing of foreign trade.
Foreign exchange transaction.
Foreign exchange trading.
Export and import letter of credit.

Non-commercial letter of trade.

Nature and function of foreign exchange market.
Rules and Regulation used in foreign trade.
Exchange Arithmetic.

03.02. Different Types of foreign exchange operations:

There are three kind of foreign exchange transaction:
Import
Export
Foreign Remittance. The following chart is showing different types of activities
of foreign exchange operation:

Chart 14: Different Wings of Foreign Exchange Operation

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

03.03.1. Procedure of import

Import of merchandise essentially involves two things:

 Bringing of goods physically into the country

Remittance of foreign exchange towards the cost of the merchandise The Ministry of
Commerce through the Chief Controller of Import regulates physical import and
Exports being office at the important trade center while Bangladesh Bank
regulates the payment for the imports through its various departments. The following
are the steps involved in import of merchandise into Bangladesh.
Registration of importer
In terms of the Importers, Exporters and Indenters (Registration) Order 1981, no person can
import goods into Bangladesh unless he is registered with the Chief Controller of Import and
Export or exempted from the provisions of the said order. So the following
documents are required to be submitted to the licensing authority for registration as importers:

Questionnaire form duly filled in and signed

Income tax registration certificate
Trade License from the Municipal or Local Authority
Bank certificate
Nationality certificate
Partnership Deed where applicable
Certificate of Registration with the Registrar of Joint Stock Companies,

Certificate from the Chamber of Commerce/Registered Trade Association

Ownership documents or rent receipts of the place of business
Credit Authorization Form). Blank LCA forms can be obtained
by the importer from their banker. The following documents are

required to be submitted by the import to his banker.

LCA Form property filled-in and signed.
LC Application
Purchase Contract in the shape of an Indent or Pro forma Invoice.
Insurance Cover Note
Membership Certificate from a chamber of Commerce and Industry or Registered

Trade Association
Import Registration Certificate (IRC).
In case of Public Sector, attested photocopy of allocation letter issued by
the allocation authority, Administrative Ministry or Division specifying

the source, amount, purpose, validity, and other terms and conditions
against the imports.

03.03.2. Licensing for Imports

Most imports into Bangladesh require a license from the Licensing Authority. In recent years, the
task of licensing has been delegated to the commercial banks. It is done by LCA (Letter of
Credit Authorization Form). Blank LCA forms can be obtained by the importer from
their banker. The following documents are required to be submitted by the import to his banker.

LCA Form property filled-in and signed.

LC Application
Purchase Contract in the shape of an Indent or Pro forma Invoice.
Insurance Cover Note
Membership Certificate from a chamber of Commerce and Industry or Registered Trade

Association
Import Registration Certificate (IRC).
In case of Public Sector, attested photocopy of allocation letter issued by the
allocation authority, Administrative Ministry or Division specifying the source,
amount, purpose, validity, and other terms and conditions against the imports.

03.03.3. An Opening of Letter of Credit

o Importer applies to the bank to open L/C in favor of foreign supplier. The bank has
its printed application form and the importer should carefully fill in this form. On
receiving this application, the bank scrutinizes it to ensure that:
o Whether the customer fulfils all the required conditions/criteria to be eligible
as an importer as per provisions of the Import Policy Order and Guidelines
for

Foreign

exchange

Transactions

in

force

and

the

supporting

documents/papers required are submitted.

o Whether the items for import of which the documentary credit need to be
opened is permissible i.e. not included in the negative/restrictive list as per Import
Policy order in force.
o Whether we are holding satisfactory credit report on the beneficiary to satisfy
the relevant provisions of the guidelines for Foreign Exchange transactions

o On receipt of the L/C application over the counter or through dispatch/mail section, the
receiving date and time to be recorded on the L/C application.
o Signature of the customer on the L/C application to be verified by
a u t h o r i z e d / designated officers/C application with all supporting papers to be checked
to ensure that the required papers areas per requirement of Guidelines for Foreign
Exchange Transactions and are consistent to each
..L/C application must show the following clearly:

Full name & address of the beneficiary

The amount of the credit
The Credit whether to be irrevocable or confirmed irrevocable.
Whether the credit is available by payment, acceptance or negotiation
On which party the drafts are to be drawn and the tenure of such drafts
A brief description of the goods, including details of quantity and unit price
Whether freight is to be prepaid or not
The port of shipment and the destination
Whether the transfer of the goods from one vessel to another, or from one mode

of transport to another, route, is prohibited.

The last date for shipment
The date and place of expiry of the credit
Negotiation period
Details of the documents required and how those are to be dispatched to the
issuing bank i.e. by ordinary mail/courier: Whether the credit is to be a

transferable one. How the credit is to be advised i.e. by mail/telex.

Letter of Credit authorization from duly filled in and signed.
Indent or Performa Invoice issued by Seller or his agent (Indenter)
duly counter signed by the customer.
Insurance certificate or policy (Marine/Air/Mail/Truck) covering the goods at
10%a b o v e L / C v a l u e f o r t h e w h o l e j o u r n e y / s h i p m e n t t o g e t h e r
w i t h u n c o n d i t i o n a l premium paid receipt.
Prior permission/registered LCA form, No objection/any other certificates from
the concerned authority as required as per provision of the Import Policy Order.
I.M.P. form duly filled in and signed.
In case the L/C application is not complete or in consistence or the required
papers are not submitted, the customer should be promptly contacted for
rectification of the

 Check whether the opening of the Letter of Credit is approved

b y t h e c o m p e t e n t authority.
Review all documents including the Letter of Credit and vouchers.
If found in order, sign the letter of credit including the accounting vouchers.
The original L/C must be signed jointly by two authorized signatories.

3.3.4. Verification and Lodgment of Documents by the L/C Opening Bank

On receipt of the shipping documents from the negotiating bank, the L/C Opening Bank should
carefully examine these to ensure that they confirm to the term of the credit:

The documents have been negotiated within the stipulated date.

The amount drawn does not exceed the amount authorized in to credit.
The merchandise is properly invoiced.
The bill of Lading is clean, shipped on board, showing freight
p r e p a r e d a n d endorsed to the order of the issuing bank shows the
port of shipment, the port of destination, the name of the consignee and the

date of shipment are in keeping with the term of the credit.

It is properly signed by the shipping company
The Certificate of Origin
Other documents like weight list, packing list, pre-shipment Inspection
Certificate etc .After the lodgment, the bank asks the importer to retire the bill.
After retirement the amount of remittance towards cost of the merchandise is reported to
Bangladesh Bank on Form IMP.

03.03.5. Shipping Guarantee:

Shipping guarantee is a Letter of Guarantee/Indemnity issued jointly by importer
(consignee)together with a bank (L/C opening Bank) in favor of a commercial carrier
or their agent whereby they are authorized to release imported merchandise (title
being in favor of the co- issuer Bank) to a consignee in the absence of original shipping bill
i.e. bill of Lading/airway bill while the co-issuer furnish an assurance/undertaking to submit the
original Bill of Lading/airway Bill to the carrier as soon as the same is in their possession.
However against the issuance of a letter of indemnity, the bank should obtain a counter
indemnity signed by the importer in favor of the issuing bank whereby they assume full
responsibility for any obligation the bank assume in issuing the shipping guarantee and also

undertake acceptance/payment of documents/draft under the related Letter of Credit irrespective

of whether those are discrepant or not. Before Issuing the Shipping Guarantee:
o Head Office approval is essential in cash where the customer has not adjusted
the related import liabilities or do not have approved LIM/LTR facility limit.
o The Branch shall obtain counter indemnity from the customer in favor of the
Bank.
o The customer shall submit an unconditional undertaking to
a c c e p t t h e r e l a t e d shipping documents even with any discrepancies.
o The Shipping Guarantee/Letter of indemnity must be signed
j o i n t l y b y t w o authorized signatories.
Important points to prepare an L/C:
To prepare an L/C the branch takes care on the following points:
L/C number:
The branch will put a number for each L/C., which is the serial number of the L/C for a
particular year. First L/C of JBL SKB branch in 2009 may be numbered like JBL /SKB /
1742010401.
Place and date of issue:
L/C must indicate the place and date of issue.
Date and place of expiry:
L/C must have an expiry date. This is the last date of presentation of document under the L/C.
Place of expiry of the L/C also to be mentioned in the L/C. Normally it should be the counter of
the Negotiating Bank.
Shipment date:
There should be a last shipment date after which shipment is not allowed. Bank may
also fix-up a first shipment date before which shipment will not be allowed.
Presentation period:
Issuing bank will allow a period within which exporter must present the export documents to the
negotiating bank or to any other nominated bank. This may be 15 days from the date of
shipment. Maximum may be allowed one month, but within the expiry date of the credit.
Applicant:

Name of the applicant with business address to be put in the L/C.

Beneficiary:
Name of the beneficiary with address also to the indicated in the L/C.
Advising Bank:
Name of the advising bank with address to be mentioned in the L/C

Amount:
: Every L/C must show the amount of the L/C. The word About may be used with amount, which
means 10% more or less of the said amount.
Part-shipment and Trans shipment:
Issuing bank also clearly indicate in the L/C whether part-shipment and Trans shipment
are allowed or not.
Availability:
L/C must indicate whether the credit is available by payment, by negotiation or by acceptance.
Port of shipment and port of destination:
L/C will also indicate from where shipment to beamed and where goods to be delivered.
Tenure of the draft:
Whether the draft to be drawn at sight or since, also to be cleared in the L/C.
Documents required:
Bank will give the list of required documents and data content therein. Each and every term must
be supported by the documents, because any term without asking document is valueless.
Payment:
When, where and by whom payment is to be made, also to be indicated in the L/C.
Bill of lading:
B/L must be issued or endorsed to the order of the Issuing Bank. It should be clean and
freight prepaid if L/C is on CFR basis short form and charter party B/L to be
avoided. All these terms must be incorporated in the B/L clause of the L/C.
Bill of exchange:
bill of exchange to be drawn on the Issuing Bank.

Pre-shipment Inspection:
P r e - s h i p m e n t i n s p e c t i o n c e r t i f i c a t e i s c o m p u l s o r y f o r b o t h government and private
import except in few cases.
Data content:
Invoice and other documents if required should indicate the H.S. code number .LCAF No with
description of the item and country of origin.
Special conditions:
Special conditions, such as in case of food, machineries, vehicles and another items should be
incorporated in the L/C where required.
Authenticity of the credit:
L/C to be authenticated by putting a test number or signing by two authorized officers.
Additional confirmation to import Letter of Credit
The beneficiary of L/C may ask for the additional confirmation to a letter of credit
by an i n t e r n a t i o n a l l y r e p u t e d b a n k l o c a t e d i n b e n e f i c i a r y s c o u n t r y. I n t h a t
c a s e a f t e r a d d i n g confirmation, the negotiation becomes restricted to the bank who has
added their confirmation to the credit.
In case there is no branch of the advising bank of the beneficiarys country, the
reimbursing bank may confirm to the advising bank that they are holding reimbursing
authority. This may also serve the purpose of adding confirmation. As per normal practice,
the charges of adding confirmation are borne by the beneficiary. In case the charges
are to be borne by the importer, the L/C opening bank is to recover charges atthe time of issuance
of such instructions.

03.03.6. Amendment to Letter of Credit

The letter of credit opened by a bank may need amendment. If the supplier finds that the term of
the credit cannot be complied with in full, he would arrange for necessary amendment by the
opener before the goods are shipped. These amendments must be advised by the opening bank to
the supplier through advising bank. Sometimes the opener also may like to amend the
credit after it has been advised. These amendments may relate to the decrease or
increase in amount of credit, change in foreign currency, and change in the dates of

shipment or negotiation, change in merchandise and other t e r m s o f t h e c r e d i t . T h e s e

a m e n d m e n t s m u s t a l s o b e a d v i s e d b y t h e o p e n i n g b a n k t o t h e supplier through the
advising or confirmation bank before the shipment is made. For this kind of amendment, the bank
would need a written request from the importer who generally makes this request after
obtaining consent of the supplier. Such amendments will, of c o u r s e , b e e f f e c t i v e i f a l l
t h e p a r t i e s t o l e t t e r o f c r e d i t n a m e l y t h e L / C o p e n i n g b a n k , t h e advertising
bank and the supplies, agree to it. Amendment is to be typed, like L/C, in the printed
format in manifold. The copies of the amendment must be dispatched to all concerned as
done in dispatching the L/C. Amendment can be done by SWIFT or Airmail. Amendment
commission and other charges are to be realized from the party by debiting his
account. If the amount of L/C is increased, the liability voucher is to be passed including the
amount of increase on the date of amendment reserving the old entry passed at the
time of opening the L/C.

03.03.7. L/C Advising

The L/C duly signed by two authorized officers, whose specimen signatures are
already recorded with the correspondent banks, must be addressed to the beneficiary. Bank
generally does not enter into direct contact with the beneficiary. Instead they utilize
the services of its own branch office (if any) or correspondent bank at sellers country for the
purpose of advising it to the seller (beneficiary). Before forwarding/advising the credit to
the seller under appropriate forwarding coverage, the advising bank has to verify
the signatures of the officers of the opening bank and ensure that the terms and
conditions of the credit are not in violation of regulations relating to export. While
advising, the advising bank does not undertake any liability. Advising a letter of credit.

03.03.8. Lodgment
If import documents are found in order, they are to be made entry in the bill register
and necessary vouchers to be passed, putting Bill number on the documents. This process is
called Lodgment of the bill. The word Lodgment means temporary stay. Since the documents
stay sat this stage for a temporary period i.e. up to retirement of the documents, the process is
called lodgment. Bank must lodge the documents immediately after receipt of the same, not exceeding7 banking
days, following the day of receipt of the documents, (Article 14, UCPDC-500).
Security Documents
The L/C opening bank being received the documents from the negotiated bank will scrutinize the
documents with the respective L/C terms and condition.

Forwarding schedule of Negotiating Bank

Whether there is any instruction.
Whether these instruction can be complied with.
Whether the negotiating commission realized.
Bill of Exchange (Draft)
Whether it is drawn in order.
Whether the amount of draft corresponds with the L/C amount.
Draft amount should be equal or less than the L/C amount.
Whether the date of the draft of the within the date as per L/C etc.
Bill of Lading (B/L)
Whether the B/L is clean i.e. there is no clause like some cartons are broken or any other

clause.
Whether there is signature of shipping Authority.
Whether the date of B/L is within the date of shipment as per L/C.
Whether the freight is prepared or not as per L/C terms.
Whether the part of shipment and part of destination are similar as per L/C.
Whether the title of B/L belongs to L/C opening bank.
Whether the full sets of B/L dispatched by negotiating bank etc.
Commercial Invoice
Whether the full particulars of goods have been incorporated.
Whether the amount of invoice corresponds with the amount of Bill of Exchange and as

per the L/C terms.

Whether IRC No. LCA No etc. have been incorporated.
Whether it is signed by the beneficiary
Whether all other documents are prepared as per L/C.
In case of discrepant documents The Article 16 of UCPDC (Publication 600) says,

 When the issuing bank determines that a presentation does not comply, it may refuse to
honor or negotiate.
When the issuing bank determines that a presentation does not comply, it may
in its sole judgment approach the applicant for a waiver of discrepancies.
When the issuing bank decides to refuse to honor or negotiate, it must give a
single notice to that effect to the presenter.
The notice must state:
That the bank is refusing to honor or negotiate; and
Each discrepancy in respect of which the bank refuses to honor or negotiate; and
a) That the bank is holding the documents pending further instructions from
the presenter; or
b) That the issuing bank is holding the documents until it receives a waiver
of the applicant agree to accept it, or receives for the instruction from the
presenter prior to agreeing to accept a waiver; or
c) That the bank is returning the documents; or
d) That the bank is acting in accordance with Instructions previously receipt
from the presenter.
The notice required in sub-article (c) must be given by telecommunication or, if that is
not possible, by other expeditious means no letter than the close of the fifth banking day
following the day of presentation. If the documents are found in order and these are
acceptable to the importer, the bank lodge the bill in PAD (Payment Against Documents)
by converting the foreign currency representing the bill amount and foreign
correspondences charges into Taka and asks the importer to retire the bill by sending a
cost memo indicating the amounts payable by him under different heads.

03.03.9. Retirement
When the importer release the import documents from the bank by acceptance/cash payment
or under post import bank finance, it is known as retirement of the import document. When the importer does
not come forward to retire the import documents, or requests the bank f o r f i n a n c e a g a i n s t
the imported consignment, then arises the necessity of post import
investment. If the consignment is not cleared within 45 days, from the date of arrival, custom
authority may auction the consignment under section 167 (8) and amended section 82 of the

Custom Act 1969. Under such a situation bank becomes compelled for forced clearance of the
consignments under Murayama post import investment. If the documents are discrepant, partys
acceptance is required for clearance of the goods.

03.3.11 Loan against Imported Merchandise- LIM (Post Import Finance)

Definition of (LIM):
Import Finance plays vital role in a country's foreign trade business. Import of
goods and service are needed not only for export production but also to supply domestic
industry with the necessary inputs which are not locally available or available at uneconomic
cost and are needed for expansion and development. Loan against Imported Merchandise (LIM) is a
facility provided by the Bank to the importers who are in shortage of fund to retire the import
bills and thus to clear the goods from the post authority. In other works it may be referred as an
advance against merchandise.

3.3.11.2. Cases of LIM account

LIM Accounts may be created in the following two cases:

LIM Account on importer's request.

Forced LIM Account.

3.3.11.3. LIM Account in importer's request

After lodgment of documents, the importers concerned to be intimated for early retirement of the
documents by paying outstanding bill amount including other charge. If the importer is not in a
position to retire the bill out of his own sources, at that moment they may request the bank to
clear the goods by creating LIM Account. On receipt of the importers request the official of the
import bills section will calculate the total landed cost of the consignment. To ascertain the
landed cost the following points are to be considered. Efforts should be taken so that at least 20%
to 30% margin of the landed cost may be r e a l i z e d f r o m t h e i m p o r t e r. R e a l i z a t i o n o f
margin

will

depend

marketability of the goods.

on

the

banker

c u s t o m e r relationship and also on the

The following charge documents have to be executed by the importer:

DP Note (Demand Promissory note).

Letter of Arrangement.
Letter of Disbursement.
Letter of pledge.
Any other document of necessary. The branch Managers are not empowered to sanction
the LIM A/Cs in favor of the importers for clearance the goods without obtaining the approval
from Head Office. On getting approval from Head Office the branch will send the
documents to the port city branch by endorsing the bill of lading in favor of them
with certification of invoice value for clearance the goods through importers nominated as well as
Bank's approved C&F agent. In the forwarding letter clear instructions to be given for
dispatching the goods either by train or by truck duly insured. Before sending the
documents to the port city branch the following charge documents have to be executed by
the importer:-

DP Note (Demand Promissory note).

Letter of Arrangement.
Letter of Disbursement.
Letter of pledge.
Any other document of necessary.

3.3.12. Comparative Position on Overall Import Performance for the last 3

Year of jbl Gandaria Branch--------(Figer in Million)
Item

2008

2007

of 2009

2010

of

Import

991.12

2056.79

Growth
108%

2056.79

2282.53

Growth
11%

From the above graph it is observed that the Import is increased steadily. In the year 2007 is
increased 108% as compared with 2006.And in the year 2008 it is increased 11% as
compared with 2007.

03.04 Export
Export means outflow of goods and services produced in one country, which
purchase by Government, Firms and individuals of other countries. Development of a country
depends on its participation in the international trade by increasing production and export of
commodities and service sector. By way of this a country can improve Employment

Generation-Income level-Savings-Growth-Economic Development. The imports and exports trade in

Bangladesh is regulated by the Import & Exports Control Act1950. There are number of
formalities an exporter has to fulfill before and after execution of export, some of areas under:

03.04.1. Benefits of Export

Development of a country depends on its participation in the international trade by
increasing production and export of commodities and service sector. By way of this a country
can improve Employment Generation-Income level-Savings-Growth-Economic Development.

03.04.2. Procedure/Formalities for Export

The imports and exports trade is regulated by the Import & Exports Control Act 1950.
There are number of formalities an exporter has to fulfill before and after execution
of export, some of areas under:
The intending exporter has to register with CCI&E and obtained Export Registration
certificate [ERC]. The ERC number is to be used in all places relating to exports

03.04.3. Securing Export Order

To secure export order the exporters may contact local chamber commerce of potential buyers,
the export promotion bureau, Bangladesh mission abroad and by direct contact with
foreign buyer through correspondences.

03.04.4. Receiving Letter of Credit

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

03.04.5. Procurement and Shipment of Goods

After receipt of LC the exporter has to procure or manufacture the contracted goods and ship the
same.

03.04.6. Preparation and procurement of Export Documents

After making shipment the exporter has to prepare documents i.e. Bill of Exchange,
Commercial Invoice, Beneficiarys certificates and procure some documents i.e.
Transport

Documents,

Certificate

of

Origin,

Insurance

certificate,

Inspection certificate and other documents as required as per LC terms.

03.04.7. Submission of documents to the bank for Negotiation

After preparation and collection of all documents as per LC terms the exporter has to submit the
documents to the bank for Negotiation/Payment/Purchase.

03.05. Role of Banks in the Export Sector of Bangladesh

All the financial requirements of an exporter, from the time he enters into a sale contract and
start working on it and till he receives final payment from abroad, are met by
commercial banks. In that case banks play an important role in the export sector of Bangladesh
and contribute by financing in the export sector by following categories:

Pre-Shipment Credit:
Pre-shipment credit is given to the exporters, for the activities prior to shipment of goods
for export. Some example of Pre-shipment credit: Cash for local procurement of raw
materials and its related expenses, Procuring & Processing of goods for export, Packing
and transportation of goods for export, Payment of insurance premium, Inspection fees,

Freight charges etc.

Post-Shipment Finance:
Usually the exporter cannot afford to wait for a long time for payment to local
manufacturer/supplier and other financial obligations. Resulting which the exporters
need post-shipment credit facility. Considering the genuine need, and
worthiness of export and other security measures bank allow credit facility to exporters.

03.06. Different parties involved Foreign exchange transaction

Normally the following parties are involved to a documentary credit:
Importer:
The buyer or the importer is he who initiates the credit. He applies to bank for issue foreign
documentary credit. The obligations between the importer and the issuing bank are governed by
the application-cum-agreement submitted by the importer to the bank. He is bound to reimburse the bank,

which effects payment or incurred a deferred payment undertaking or has accepted or negotiated
under the credit as per terms, and to take up the documents.
Opening Bank:
The issuing or opening bank is the importers bank and it issues a letter of credit
normally pursuant to the terms of sales contract as set out in the application for the credit by the
importer. The issuing bank should nominate the bank, which is authorized to pay or to accept
drafts or to negotiate, unless the credit allows negotiation by any bank.
Exporter:
The seller or exporter is the beneficiary of the credit. The letter of credit is opened in his
favor and addressed to him. The beneficiary has the obligation to make export as per the contract
and produce the documents as required by the credit.
The Advising Bank:
It is the bank in the exporters country (normally the exporters bank), which is
usually the foreign correspondent of importers bank through which the L/C is advised to the
supplier. If the intermediary bank simply advises/notifies the L/C to the exporter part, it is called
Advising Bank.
The 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. In addition, becomes liable to pay
for documents in conformity with the L/Cs terms and conditions. The liability of the
confirming bank is the primary liability and it is not contingent on the fulfillment of the
obligation by the issuing bank.
The Accepting Bank:
Accepting bank is the bank nominated in the letter of credit to accept bills drawn
under the credit. If the bank so nominated accepts the nomination, its responsibility to the
beneficiary is not only to accept the drafts drawn but also to make payment on their due dates.

The Paying Bank:

Paying bank is a bank in the beneficiarys country nominated in the letter of credit
to make payment against documents to be tendered under the credit. Paying Bank must examine
all documents with reasonable care to ascertain that these are drawn in accordance with the terms
and conditions of the credit.
Reimbursing Bank:
The issuing bank may indicate in the credit the name of a
bank.

From

whom

t h e paying/negotiating bank can obtain reimbursement. The

documents are sent to the issuing bank. The negotiating/paying bank simultaneously makes a
claim with the reimbursing bank for the payment effected. Normally the reimbursing bank would
be the bank with which the issuing bank maintains an account.
The Transferring Bank:
If the L/C is transferable, then the 1 st beneficiary of the L/C may transfer the L/C to
the 2 nd beneficiary, through a bank nominated by the Issuing Bank. This bank is called the
Transferring Bank.

03.07. Document required for Foreign Exchange Transactions

Export-Import transactions ask for the following documents:

Transport Documents
Letter of Credit
Insurance Documents
Commercial Invoice
Other Documents

03.07.1. Transport Documents

Transport documents comprises of Bill of Lading, Airway Bills, Truck Receipts,
Railway Receipts and Inland Waterway Receipts. Checking points of this document are:

The Bill of Lading is issued/endorsed to the order of Negotiating Bank.

Bill of Lading is clean, showing Shipped on Board notation, marked Freight

03.07.2. Letter of credit

A letter of credit is a letter issued by a bank (known as the opening or the issuing bank) at the
instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking
that the bills drawn by the beneficiary will be duly honored by it (opening bank)
provided certain conditions mentioned in the letter gave been complied with.
The following diagram brings out clearly the operation of letter of credit:

Chart 16: Flowchart of Letter of Credit Operation

03.07.3. Commercial Invoice

It include all types of information such as description of goods, Port of destination,
Port of loading, LC no, Importer name, name of issuing Bank etc.
Checking points of this document are:
The invoice dated and signed by the beneficiary.
The invoice is issued to the party concerned as stated in the LC.
Description of goods is as stated in the LC.

 Unit price mentioned as stated in the LC.

Proper Trade-Term is mentioned.

03.07.4. Insurance Documents

Checking points of this document are (in case of CIF basis):

The Insurance Policy is valid.

The policy is issued in the name of LC Issuing bank a/c: importer.
The policy is signed by the authorized official of the Insurance Company.
The policy is in negotiable form, duly stamped and dated prior the BL date
Description of goods, name of carrying vessel shown in Insurance Policy are

same as shown in BL.

The policy covers Transshipment [if allowed in LC] clause.
Policy covers 10% above the value of consignment.
Policy indicates where and in which currency the claim [if any] will be settled.

03.08. Foreign Remittance

03.08.1. Outward remittance:
O n M a r c h 2 4 , 1 9 9 4 B a n g l a d e s h Tak a w a s d e c l a r e d c o n v e r t i b l e f o r c u r r e n t
i n t e r n a t i o n a l transaction. As a result remittances become more liberalized. Outward
remittance include sale of Foreign Currency by TT, MT, Draft, TC or in cash for
private, official and commercial purpose.
Issuance of outward DD and TT
ADs may also issue DD, TT on their foreign correspondent favoring Bangladesh nationals
or foreign nationals as per their entitlement. But foreign TT and DD are not issued in this branch.

03.08.2. Inward remittance:

The term inward remittance includes not only purchase of foreign currency by TT, MT, Draft etc.
but also purchase of bills, purchase of TC. Utmost care should be taken while purchasing notes,
TC, DD and similar instrument for protecting the bank from probable loss as well as
safety of the bank officials concerned. But this type of purchase is not done in this branch.

3.88.Remittance Earnings

It represents transfer of fund from one place to another via official channel.Bnaks have wide
network of branches all over the country and offers different types of remittance facilities to the
public:

JBL made a high record to the tune of BDT 5,061.30 million in 2009 compared to that of BDT
4,722.90 million in 2008. The Bank has deepened its step on the foreign soils further by
establishing more and more remittance arrangements with overseas exchange companys where
Bangladeshi expatriates are working. These include United Kingdom, Kuwait, Bahrain, Canada,
Italy, France etc.

03.08.3. Collection of foreign currency instrument

The Janata Bank Ltd. collects F.C. instruments on behalf of their customer. To collect proceed of
Foreign Instrument following procedures to be maintained:

Receive instrument with deposit slip

Affix crossing stamp of the bank
Entry in the register putting OFBC number
Affix endorsement pay to the order of any bank or trust company, prior

endorsement guaranteed.
Instrument to be sent to adjacent correspondents.

03.09. Different Methods of International Trade Payment:

Cash in Advance:

Under this arrangement, buyer pays the value to exporter against the goods t o b e s h i p p e d
a n d s e r v i c e s t o b e p r o v i d e d i n s o m e f u t u r e d a t e . Af t e r r e c e i p t o f p a y m e n t
exporter ship the goods and provides services to buyers. But the system is disadvantageous
for buyer because buyer blocking his fund in advances having no assurance of receipt of goods
and service in time as per contract. So such type of payment is considered as risky and expensive
for buyers but favorable for seller.
Open Account:
Under this method, the sellers are in risky situation because he has to deliver the goods and
service to buyer before receiving payment. Buyer makes payment only after receipt
of goods and services as per contract terms. So before going such transaction sellers
should check the past record, worthiness and business history of the buyer and if it
is found satisfactory only seller can proceed further.
Collection against Payment D/P:
Under this method, exporter ship the goods and draw bill of exchange on the buyer and
submit the documents to a bank with instruction to collect the proceeds through its
correspondent bank located in the buyers country. In this case documents delivered only against
payment.

Collection against Acceptance D/A:

Under this method, exporter ships the goods and draw bill of exchange on the buyer and submit
the documents to a bank with instruction to collect the proceeds through its correspondent bank
located in the buyers country. In this case documents delivered against acceptance of Drafts by
the buyer.
Documentary Credit:
D o c u m e n t a r y c r e d i t i s t h e c l a s s i c m e t h o d . T h i s m e t h o d r e d u c e d payment
related risks for both exporter and importer substantially. Because documentary credits
conditional payment undertaking of issuing bank to the exporter against compliance
of certain terms and conditions and submission of required documents as per credit
terms. Sounder this payment method both exporter and importers feel safe to deal.

03.10. Examination and Negotiation of Export Documents:

There are many instances where exporters involve themselves in committing fraud so while
exporters tendered export documents for negotiation, special care should be taken in checking
the said documents to avoid fraud forgery and protect the interest of the bank. Following are
some important checking points:
Know your exporter
You should know your customer considering his relationship with the bank, previous
track record and worthiness.
Proper checking of Export LC
Export LC is authenticated,

irrevocable,

valid,

Free

Negotiable

in

Bangladesh, Payment instruction is clear, issued under UCPDC.

Proper checking of Export Documents
Bill of exchange, Commercial invoice, Transport documents and other documents are
prepared and presented as per LC terms. Shipment After the contract the exporter takes all
necessary steps to ship the goods. He may procure or manufacture the goods. Failure to
maintain the delivery schedule will expose the exporter to claim from the buyers for
damages on account of non-shipment or late shipment, and in addition the
exporter may also lose the patronage of the buyer for future export orders. While shipment
and after shipment the exporter should obtain or prepare the following documents:
EXP Form
Photocopy of registration certificate
Photocopy of the contract
Photocopy of the L/C
Customs copy of ERF Form for shipment of jute goods and EPC Form for raw jute
Freight certificate from the bank in case of payment of the freight at the port of

lading is involved
Bill of Lading, Railway receipt, Postal receipt, Air way bill or Truck receipt
Packing list
Certificate of origin
Shipping instructions
Insurance policy.
Issuance of EXP Forms
A l l e x p o r t s m u s t b e d e c l a r e d o n E X P F o r m . AD b r a n c h e s
s u p p l y t h e s e f o r m s . T h e b a n k certifies EXP form only after confirming

the following:
Arrangements have been made for realization of export proceeds.
Bonfires of the importer/consignees abroad

Arrangements have been made for receipt by authorized dealer of documents of

title to goods,
The exporter has signed the EXP.EXP number should be as under:

Ads
0
1

Register serial No.

0
0
2
5

.
1

Year
0

Submission of Documents
After the shipment, the exporter submits all these documents to bank for
negotiation. The exporter remains in constant touch with the negotiating bank for
early negotiation of export bills. If any minor mistake is detected or any document is found
missing the same should immediately be corrected or supplied for early settlement of the matter.
Export Documents checking
After submission of exports documents by the exporter, bank must check, whether
all the required documents submitted or not. Bank must examine all documents stipulated in the
credit with reasonable care to ascertain whether or not they appear, on their face to be in
compliance with the terms and conditions of the credit. Documents not stipulated in the credit
will not be examined by the bank. The following points of documents should be carefully
scrutinized:

Bill of exchange
Amount of bill differs with invoice
Not drawn on L/C issuing branch
Not signed
Tenor of C/E not identical with L/C
Full set not submitted

Not issued by the beneficiary

Not signed by the beneficiary
Not made out in the name of the applicant
Description, price, quantity, sales terms of the goods not correspond to the credit
Not marked one fold as original
Shipping marks differs with B/L and packing list

Invoice:

Packing List:

Gross weight, net weight and measurement, number of cartoons/ packages differs

with B/L.
Not marked one fold as original
Not signed by the beneficiary
Shipping marks differs with B/L

Bill of Lading/Air Way Bill:

Full set of bill not submitted

B/L is not drawn or endorsed to the order of IBBL
Shipping on Board, Fright Prepaid or Freight collect

e t c . n o t a t i o n s a r e n o t marked on the B/L.

B/L not indicate the name and capacity of the party i.e. carrier or

master, on whose behalf the agent is signing the B/L.

Shipped on board notation not showing name of pre-carriage vessel/ intended

vessel
Shipped on board notation not showing port of loading and vessel name (in case
B/L .indicated a place of receipt or taking in charge different from the port of

lading)
Short form B/L.
Hatter party B/L.
Description of goods in B/L. not agrees with that of invoice, B/E.
Alterations in B/L. not authenticated
Loaded on deck

03.11. Modes of Payment

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

3.11.1. Sight or Payment credit

When the credit stipulates that drafts (bill of exchange) should be drawn under it on DP terms
involving payment to the beneficiary on presentation of documents, it is known as a Sight
or Payment Credit. In this credit the issuing bank nominates a bank in the exporters country as
the paying bank. If the paying bank accepts its nomination, its position is that of an agent of the
issuing bank. When the documents under the credit are presenter to it, it pays the beneficiary
provided all the terms and conditions of credit have been complied with. It gets reimbursement
from the issuing bank for the amount paid.

3.11.2. Deferred Payment Credit

The term Deferred means postponed to a future period or date. When a credit does
not require the payment to the beneficiary immediately on presentation of the documents but
after specified period has elapsed, it is known as Deferred Payment Credit. According to this
type of credit, the payment is hot made in full on the tender of documents but by installments at
pre-determined future dates.

3.11.3. Acceptance Credit

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

3.11.4. Negotiation Credit

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

Settlements of claim
Exporter very often claims of various natures from the foreign buyers against their exports. It
should be ensured that genuine claims of the foreign buyers are settled
expeditiously by the exporters concerned so that the reputation of the country is not
jeopardized in the international market. U n d e r t h e E x c h a n g e C o n t r o l i n s t r u c t i o n s i n
f o r c e , B a n g l a d e s h b a n k s p r i o r a p p r o v a l i n individual case is necessary for making
remittances against export claims.
General permission has, however, been accorded to the ADs to make remittances in foreign
exchange towards claims against exports of non-traditional items, provided the exporters are
willing to make such remittance from the exchange market. Settlement of claims against cash
foreign exchange resources of the country will, however, require Bangladesh Banks
prior approval.

03.12. Foreign Currency Accounts:

The Janata Bank Ltd opens the following accounts for dealing remittances:
NFCD Accounts:
Non-resident Foreign Currency Deposit (NFCD) accounts may now be maintained as long as the
account holders desire. Amounts brought in by non-resident Bangladeshis can be deposited in
foreign currency account any time after return to Bangladesh.
F.C Accounts of non-resident Bangladeshis
Foreign currency accounts opened in Bangladesh in the names of Bangladesh
nationals or persons of Bangladesh origin working or self employed abroad can now be
maintained as long as the account holders' desire.

RFCD Accounts:
Persons ordinarily resident in Bangladesh may maintain foreign currency accounts with foreign
exchange brought in at the time of their return to Bangladesh from visits
a b r o a d . T h e s e accounts are termed as Resident Foreign Currency Deposit (RFCD)
accounts. The amount brought in with declaration to customs authorities on form FMJ and up
to US $ 5000 brought in without declaration may be credited to this account. RFCD
accounts may be opened in US Dollar, Euro, Pound Sterling, Deutsche Mark or
Japanese. Interest may be paid on these deposits if these are for a term of not less than one
month and the balance is not less than US $1000 or Pound Sterling 500 equivalent.
F.C Accounts of other entities
ADs do not require prior permission of Bangladesh Bank for opening of foreign
currency accounts of:

Non-resident foreign persons/firms;

diplomatic missions in Bangladesh and their expatriates;
diplomatic bonded warehouses (duty free shops);
Local and joint venture contracting firms employed to execute
projects financed by foreign donors/international donor agencies.

Foreign Remittances occurs for the following reasons:

Investment in shares/securities by non-residents

Remittance of profits
Remittance of dividend/capital gain
Remittance of salaries and savings by expatriates
Remittance on account of training and consultancy
Remittance by shipping lines, airlines, courier service companies

Visit Abroad
Booking of Passage
Private Travel
Business travel quota for importers and manufacturers producing for domestic
markets
Education
Medical treatment
Taking out/bringing in of Bangladesh Taka

 Taking out/bringing in of personal jewelry

Miscellaneous Remittances

Remittance of membership fees

Evaluation and Visa Processing Fee
Visa fee:
Family maintenance

03.13. Other services

There

are

some

other

activities

performed

by

foreign

exchange

d e p a r t m e n t . T h e s e a r e mentioned in below:

NRB( Non-resident of Bangladesh) Share

Different types of security for NRB, Wage earner
Passport services

3.13.1. NRB Share:

Now Non-Resident of Bangladesh can invest in capital market. Every company provides
some benefit to attract NRB investors. They give quota on a portion of their authorized capital
for NRB. JBL also provide these services to their NRB clients.

JBL apply for NRB share on behalf of their clients

JBL issues DD
Other services like refund warrant, buy sell of their share etc.It is also most
profitable for the bank. The contribution of NRB share on total earnings
of foreign exchange will discuss in next part of the report.

3.13.2. Different Types of Securities for NRB:

JBL also issues different types of government securities for wage earners, these are:
Wage Earners Bond
Wage Dollar Bond etc.

03.14. Financial Performance of Foreign Exchange operation of JBL3.14.1

Import Earnings:

The import earning of the JBL from the import related services has increased to Tk
23,680.00million in 2009 from Tk 9,746.00 million in 2005.

Chart 18: Import earnings growth Source:

Annual Report of JBL, 2005 -2009
Interpretation:
In the year 2009, import earning is in the highest level, it was increasing from the year 2005. The
line is upward slopping. So it indicates a positive sign on import earnings of JBL.

3.14.2. Export Earnings:

The export earning of the JBL from the export related services has increased to 6078.79 million in 2008 from Tk
2636 million in 2004.
Year
2005
2006
2007
2008
2009

Export Earnings (Taka in Millions)

58394.00
70,897.00
71855.87
85418. 79
88653.00

Interpretation:
The table and graph show the same result that the export earnings are
increased year by year. In the year of 2009 it was in the highest point as the same time upward
slopping. It is also positive sign for JBL.

3.14.3. Foreign Remittance:

The foreign remittance of the JBL is increased to TK. 5789 million in 2008 from Tk
2612million in 2007. This indicates a 121% increase in remittance performance from the
previous year. The following graph shows the growth in the foreign remittance:
Year
2005
2006
2007
2008
2009

Foreign remittance (Taka in millions)

26572.80
29267.00
36788.00
45924.00
56190.00

3.14.3.Foreign Exchange Division

One of the largest businesses carried out by the commercial bank is foreign trading. The trade
among various countries falls for close link between the parties dealing in trade. The situation
calls for expertise in the field of foreign operations. The bank, which provides such operation, is
referred to as rending international banking operation. Mainly transactions with overseas
countries are respects of import; export and foreign remittance come under the preview of
foreign exchange transactions. International trade demands a flow of goods from seller to buyer
and of payment from buyer to seller. In this case the bank plays a vital role to bridge between the
buyer and seller.
In the JBL Kawran Bazar Branch there are six officials are working continuously with great
effort and teamwork there are quite efficient skill and talented the above jobs are performed in
this department. The Bangladesh Bank and the respected VP of this section control them. There
are more than 95 clients and 29 countries they are dealing with. They believe in teamwork and
extreme hard work.

Foreign Exchange Department is an international department of the bank. It deals

with globally and facilitates international trade through its various modes of services. It bridges
between importers and exporters. Bangladesh Bank issues license to scheduled banks to deal
with foreign exchange. These banks are known as Authorized Dealers. 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 with 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. Governments Import and Export policy is
another important factor for import and export operation of banks.
JBL Kawran Bazar Branch Foreign Exchange Department started foreign exchange operation
nine years ago it deals mainly in import but it also operates export remittance and other
activities.

3.14.4.Foreign Trade
Foreign trade can be easily defined as a business activity, which crosses national boundaries.
These may be between parties or government ones. Trade among nations is a common
occurrence and normally benefits both the exporter and importer. In many countries,
international trade accounts for more than 25% of their national incomes.
Foreign trade can usually be justified on the principle of comparative advantage. According to
this economic principle, it is economically profitable for the country to specialize in the
production of that commodity in which the producer country has the grater comparative
advantage and to allow the other country to produce that commodity in which it has the lesser
comparative advantage. It includes the spectrum of goods, services, investment, technology
transfer etc. This trade among various countries calls for loses linkage between the parties
dealing in trade it has been dealing with more than 40 Countries. The banks, which provide such
transactions, are referred to as rendering international banking operations. International trade
demands a flow of goods from seller to buyer and of payment from buyer to seller. And this flow

of goods and payment are done through Letter of Credit. MBL follows the rules of Bangladesh
government and Bangladesh bank strictly.

3.14.5.Import Earnings
Import earnings during financial year 2009 amounted to USD 22.51 billion compared to USD
21.63 billion in financial year 2008 showing 4.06% growth in import cost. Import trend, during
the last two quarter in financial year 2009 fall below compared to that of financial year 2008.

JBL has quality financing while facility import trade in 2000 to 2009. During the year 2008, the
bank executed a total of 20321 letters of credit amounting to BDT 56528.80 million. The
principal items were capital machineries, garments and accessories, ships breaking. Import
payments during FY08 amounted to USD 21.60 billion. ( 27.3% of GDP) compared to USD
17.16 billion (25.1 % of GDP ) In FY 07, showing an upward trend in import cost.

3.14.6.The Composition of Import

Item

Percentage

Food ,

16.14%.

Intermediate goods,

28.16%.

Petroleum and petroleum products,

Textile and articles,

9.2%.

Capital mechinery,

8.2%.

Iron steel and other base metals,

5.5%.

11.8%.

Raw cotton,

5.8%.

Chemicals,

3.9%.

Yarn

3.2%,

Fertilizer,

3.1%.

3.14.6.Back-to-Back Letter of Credit (BTB):

Bangladesh is a developing country. After receiving order from the importer, very frequently
exporters face problems of scarcity of raw material. Because some raw materials are not
available in the country. These have to be collected from abroad. In that case, exporter gives
lien of export L/C to bank as security and opens an L/C against it for importing raw materials.
This L/C is called Back To Back L/C. In back to back L/C, MBL keeps no margin.
Sometimes there is provision in the export L/C that the importer can use the certain portion of
the export L/C amount for importing accessories that are necessary for the making of the
product. Only in that case, BTB is opened.

3.14.7.Payment of Back-to-Back L/C:

Client gives the payment of the BTB L/C after receiving the payment from the importers. But
in some cases, client sells the bills to the MBL. But if there is discrepancy, the MBL sends it for
collection.
In case of BTB L/C, MBL gives the payment to the beneficiary after receiving the payment
from the L/C of the finished product (i.e. exporter). Bank gives the payment from DFC
Account (Deposit Foreign Currency Account) where Dollar is deposited in national rate.
For BTB L/C, opener has to pay interest at LIBOR rate (London Inter Bank Offering Rate).
Generally LIBOR rate fluctuates from 5% to 7%.
A schedule named Payment Order; Forwarding Schedule is prepared while making the
payment. This schedule is prepared when the payment of L/C is made. This schedule contains
the followings:
i.

Reference number of the beneficiarys bank and date.

ii.

Beneficiarys name.

iii.

Bill value.

iv.

Payment order number and date.

v.

Equivalent amount in Taka.

3.14.8.Advance against Red-clause L/C:

Under Red clause letter of credit, the opening bank authorizes the Advising Bank/Negotiating
Bank to make advance to the beneficiary prior to shipment to enable him to procure and store
the exportable goods in anticipation of his effecting the shipment and submitting a bill under
the L/C. as the clause containing such authority is printed in red ink, the L/C is called Red
clause and Green clause respectively. Though it is not prohibited, yet very rare in Bangladesh.

3.14.9.Post Shipment Credit:

This type of credit refers to the credit facilities extended to the exporters by the banks after
shipment of the goods against export documents. Necessity for such credit arises, as the
exporter cannot afford to wait for a long time for without paying manufacturers/suppliers.

Before extending such credit, it is necessary on the part of banks to look into carefully the
financial soundness of exporters and buyers as well as other relevant documents connected with
the export in accordance with the rules and regulations in force. Banks in our country extend
post shipment credit to the exporters through:
1. Negotiation of documents under L/C;
2. Foreign Documentary Bill Purchase (FDBP):
3. Advances against Export Bills surrendered for collection

3.15.0.Negotiation of documents under L/C:

The exporter presents the relative documents to the negotiating bank after the shipment of the
goods. A slight deviation of the documents from those specified in the L/C may raise an excuse
to the issuing bank to refuse the reimbursement of the payment already made by the negotiating
bank. So the negotiating bank must be careful, prompt, systematic and indifferent while
scrutinizing the documents relating to the export.
Foreign Documentary Bill Purchase (FDBP):
Sometimes the client submits the bill of export to bank for collection and payment of the BTB
L/C. In that case, bank purchases the bill and collects the money from the exporter. MBL
subtracts the amount of bill from BTB and gives the rest amount to the client in cash or by
crediting his account or by the pay order.
For this purpose, MBL maintains a separate register named FDBP Register. This register
contains the following information:
o

Date

o #Reference number (FDBP)

o

Name of the drawer

o Name of the collecting bank

o

Conversion rate

Bill amount both in figure & in Taka.

Export form number

Export L/C number

3.15.1.L/C Terms:
Each and every clause in the L/C must be complied with meticulously and ensure the
following:
1. That the documents are not state;
2. That the documents are negotiated within the L/C validity, It a credit expire on a
recognized bank holiday its life is automatically become valid upto the next works day.
3. That the documents value does not exceeds the L/C value.

3.15.2.Draft/Bill of Exchange:
Draft is to examined as under:
1. Draft must be dated
2. It must be made out in the name of the beneficiarys bank or to be endorsed to the bank.
3. The negotiating bank must verify the signature of the drawer.
4. Amount must be tallied with the Invoice amount.
5. It must be marked as drawn under L/C NoDatedIssued by..Bank

3.15.9Foreign exchange income

Foreign exchange income is a great source of revenue for the bank. This revenue comes in two
forms: commission and exchange gain. Here, six years data of foreign exchange income is
presented on the following way-

The different sources of income for foreign exchange business are revealed and the income is
showing a continuous increasing trend. The most dominant variable in foreign exchange income
is exchange gain. This is achieved from both export and remittance business. The graph is
showing that foreign exchange income is increasing. In year 2009 has achieved highest income
from foreign exchange.
Regulation for Foreign Exchange Transaction

Many regulation have been devbeloped to do smooth functioning and controlling the
international business. International Chamber of Commerce (ICC) has been playing a vital role
for effective and efficient function in international business. In our country, the Central Bank,
Bangladesh Bank published two foreign exchange guidelines (Foreign Exchange Guide line VolI and Vol- II) Bangladesh bank and CCI and E controls the foreign Exchange business. The
central Bank issued many circulars regarding foreign exchange transactions and they are the
monitoring authority by issuing up-to-date instruction circulars for smooth functioning. Ministry
of commerce issued IMPO ( Import Policy Order and Export Policy Order) and EXPO.
Foreign exchange transactions are regulated by the following Act/Guidelines/Circular etc:

Foreign Exchange Regulation Act, 1947.

Import and Export (Control) Act, 1950.

Circular issued by the Central bank.

Import Policy Order and Export Policy Order and EXPO published by the ministry of
Finance.

Public Notices- issued by Chief controller of Import and Export.

Guidelines / circulars of the bank.

Publications of international Chambers of Commerce (ICC) like UCPDC)-500, URC, and

URR.

CHAPTER-4
CONCLUDING PART
Findings
Janata bank Limited (JBL) is named from the name of a who dedicated his life for the cause of peace in
this world and hereafter and served the humanity. The prime objective of Janata bank Limited is to serve
the people for attainment of their economic goal and success in life here and hereafter.
I have tried to represents a concrete view of this bank and find out the following major concerns:
Total capital of the Bank is Tk. 9183 million as on 31 December 2011 but in 2010 & 2009 it was
Tk. 7747 million & 5430 million.
Paid up capital of the Bank stood at Tk. Tk. 4453 million on 31 December 2011 but it was Tk.
3425 million in the previous year.
Net profit After Tax in 2011 is tk. 1290176900 decreases from tk. 2072340363 in the year 2010.
The number of branches has increased from 63 in 2010 to 84 in 2012.
The bank performs corporate social responsibility with proper manner.
According to CRISL, the bank has achieved AA for long term and ST-2 for short term.
The bank has achieved an acceptable place to the customers and Government of Bangladesh by
complying rules and regulations.
Lack of attractive and new loan products for the customer.
From the clients view introducer is one of the problems to open an account. it is general problem
to all commercial bank
Lack of update products is also a drawback of the general banking area of the SJIBL bank .the
bank provides only some limited traditional services.
JBL has introduced its ATM service. But its not so popular like other banks such as DBBL,
BRAC Bank etc.
Lack of sufficient financial data and other information in JBL own website.

Positive Findings:
Import earnings and earnings from remittance quite satisfactory levels.
JBL have enough branches in our country.

 The Bank Introduce NRB (Non Resident Bangladeshi) branch, which is new idea in Bangladesh.
Negative Findings:

The first problem of this bank is employees are not punctual.

They have no uniform. For that reason some customer find it, difficult to identify

the bank employee.

Some superior officers of this bank are not available sometime.
Lack of motivation among mid and lower level officers.
Some employees are less trained to handle technologies. Such as computer ,

Interknitted.
Modern technology is hardly used to maintain documentations yet they are using

registered based document.

Where computer leads every sphere of lives including foreign exchange dept; Janata

Bank does not have experts in computer.

Though JBL has qualified employee in foreign exchange department, but bank should recruit some new

employee to run this department smoothly.

Most of the time they try to provide quality services to the known person, it may loses

general customer.
JBL charge very low margin to the known clients.
JBL also charge very low commission compare to another banks.
Long term training much required for the foreign exchange officers.
Lack of promotional initiatives to expand the foreign exchange business.

Recommendations:
A. Management of JB should pressurize employees for being punctual.

Janata Bank should arrange uniform for the employees.

Should be improving customer services.
JBL should take the motivational strategies among mid and lower level officers

to progress their activities.

The bank waste enough time of their clients in providing services as it lacks in expert

computer operators. So JBL has to hire computer expert.

In case of L/C opening, Bank provides NIL margin facility to only some known clients, but they

should also provide this facility to some small but efficient client.
In case of payment of remittance, they should introduce debit card so that customer
can withdraw money within a second.

JBL should be improving the promotional initiatives to expand the foreign

exchange business.
The bank has the provision of internship program but there is no organized program for internship.
The bank can properly utilize the interns at minimum cost. I believe these steps will be helpful
to improve the performance of and the financial sector of Bangladesh.

B. Recommendations for Future Strategic Actions

During my training at JBL I observed some areas that need attention of the management like:

Should use advanced software in clearing

Train up the employees to work more efficiently
Increase the number of employees
The branch must start money exchange facilities
Bank should offer more products and services
Expand the number of branches not only in urban area but also in rural area
The branch should come up with more marketing, CRM activities.
The branch should come up with some effective CSR activities.
The Bank should be increase ATM booth facilities.
Bank needs to use more marketing channels to make the public aware of its products and services. In
the presence of intense competition SJIBL has to realize the importance of marketing. Management
should distribute work equally among different employees. Some of the employees are overburdened
while some sections are overstaffed.
JBL needs to improve its website. More information relating to financial performance of the bank
should be available on the website.

JBL should immediately improve its Information Technology System. The software currently in use
should be made error free, as it is the need of the hour, and integrated data interchange should be
inculcated to enable top management to monitor all activities going about in all branches through
generation of special purpose reports.
The top management should immediately start thinking in terms of rotating the employees in various
departments, as this transforms work force into human capital. If a particular individual keeps on
employing his/her efforts in one sphere of banking it would not only create a sense of monotony and
boredom, but also not help improving the skill set of employees.
Bank should make a plan to gear up its recovery efforts on war footing and reorganize the recovery
function of global bases. In addition, bank should tighten up control on expenditure.
To save the time of the customers and other clients, bank should adopt computerized system for book
keeping and other filling systems. It will increase the efficiency of the bank. I know that there are
some branches which are computerized but most of the branches in various cities of the country are
not computerized. So the bank should mechanize all its branches in the country.
Bank should launch advertising campaigns throughout the year to promote the habits of savings in
the people. Bank should open more branches in the remote areas of the country to get deposits and
idle resources. Bank should provide similar facilities to all its branches in big cities. The standard of
service and other facilities are far better as compared to smaller cities.

Conclusion:
From the practical implementation of customer dealing procedures during the whole period of my
practical orientation in Janata Bank Limited Kawran Bazar Branch I have reached a firm and
concrete a conclusion in a very confident way. I believe that my realization will be in harmony with
most of the banking thinkers. It is quite evident that to build up an effective and efficient considered

as soon as possible. Besides, every bank has to survive amidst of a large number of banks including
local and foreign. Thats why to keep with expected profit margin of the time being and for the future
every bank should try heart and soul to please the customers in a smart and trusty way. But quite
regretful to mention that most of our bank face decreasing profit trend due to switch over of their
present customers to those foreign with higher customers service facilities. So, timely decision for
introducing sophisticated banking instruments should be taken as early as possible. After taking
effective and time defeating measures regarding efficient employees and instruments will help the
local office of Janata Bank Limited, Kawran Bazar Branch to reach the principle of success with high
profit and productivity. A bank they should be stronger in financial side as there is too competition
and banks are growing up. If Janata Bank Limited Kawran Bazar Branch adopts professionalism
within the frame work of Shariah, they will be able to earn handsome Halal Profit and higher
return to the depositors and shareholders. Ultimately, public will get more confidence on this type of
Banking.
Three months of internee is really short period of time and is not enough time to know all about the
function of the bank, its a step by step process. By talking with my supervisor Prof. Dr. M. Abu

Misir I have learned the basic function and strategy of the banking sector and about the bank. How
they provide service, how they fulfill their customer need & demand and how they compete in the
market with the competitor.
In my intern time I have learned theories in office time and learned practical things by doing field
work like Account Opening Section, Clearing Section, and Cash Section,. This kind of work
conducted for provide customer service.

Abbreviation
GDP Gross Domestic Product
JBL Janata Bank Limited

EC - Executive committee
MANCOM - Management Committee
ALCO - Asset Liability Committee
BIBM Bangladesh Institute of Bank Management
LC Letter of Credit
CIB - Credit Information Bureau
CRM Credit Risk Management
LRA - Lending Risk Analysis
ID - Investment Division
DMD - Deputy Managing Director
RM - Relationship Manager
IRM - Investment Risk Management
MD - Managing Director
CEO Chief Executive Officer

BIBLIOGRAPHY
Reference Books

 Rose, Peter S. (1999), Commercial Bank Management, Fourth Edition, Irwin-

McGraw-Hill New York

Research Methodology of C.R. Kothari

Annual Reports
Annual Report of Mercantile Bank Limited 2009
Annual Report of Bangladesh Bank 2009

Other References

Daily Statement of JBL

Monthly Reports
Schedule Bank Statistics
Statement of Affairs
Foreign Exchange Manuals
Guidelines for Foreign Exchange Transaction
Practical participation of JBL
Different Types of Forms of JBL

Website

www.jblbd.com
www.bangladesh-bank.org
www.janatabank.org.bd
janatabank@gmail.com

The end