A Research Report

On
Foreign Exchange Operations of Jamuna Bank

JAMUNA BANK LIMITED

2

JAGANNATH UNIVERSITY, DHAKA

Report
3

On

Prepared To:
A. K. M. Moniruzzaman Ph. D
Professor
Department of Management Studies
5

JAGANNATH UNIVERSITY, DHAKA.

Prepared By:
Name
ID
Sec
Session

: Md. Zakir Hossain

: 05122353
:A
: 2005-2006
Department of Management Studies
JAGANNATH UNIVERSITY, DHAKA.
6

Date of Submission: 20th November, 2011

Letter of Transmittal
To

A. K. M. Moniruzzaman Ph. D
Professor
Department of Management studies
7

Jagannath University Dhaka.

Subject: Submission of Internship Report.
Dear Sir,
It is my privilege to let you know that as partial fulfillment of the requirements for the
degree of Bachelor of Business Administration (BBA), I have completed my term paper
report in the Jamuna Bank Limited. I have to furnish a report based on my practical
experience. The report focuses mainly on the foreign exchange operations of Jamuna
Bank Limited.

It was stimulating opportunity and a valuable experience for me to the real business
world. I am grateful for providing me such an opportunity to gather practical experience
of working in a private commercial bank, like Jamuna Bank Limited.
Hope that you would be very pleased to accept my report and oblige me.
Sincerely Yours
Md. Zakir Hossain
ID 05122353
Department of Management Studies
9

Jagannath University Dhaka.

ACKNOWLEDGEMENT

10

At first I want to express my gratitude to almighty Allah for giving me the strength, ability and
opportunity to complete the report within the schedule time successfully.
My sincere gratitude goes to my respected internship supervisor, Professor A. K. M.
Moniruzzaman Ph. D, report would not have been possible and such endeavor really deserves
compliment. Thanks to him for giving me the opportunity to prepare this report which I think
will enhance my skill and help the practical application of my knowledge in future.
I received cordial cooperation from the officers and members of staffs of jamuna Bank Ltd,
Dilkusha / Principal branch, Dhaka and the teachers and staff of Jagannath University of Dhaka.
I want to express my cordial gratitude to them for their cooperation without which it would not
have been possible to complete the report.

11

I am reallythankful to Mr. Kamal Uddin, SAVP and operation in charge, Jamuna Bank Dilkusha
Branch for giving me the excellent opportunity to do my practical coordination in this branch. I
would also like to thank to Mr. Shahed Morshed Chowdhury, JAVP, Mr. A S.M Masouk, SEO,
Mr. ABM Mazharul Hoque Sikder, EO of Import Division, and Ms. Sapna Habib Srabanti,
Officer, Customer Care for giving me the excellent direction with their proper compassionate
with me.

12

Executive Summary
13

A few years back also, banks are nothing but a medium whose only task is to collect money from
people who have excess of it and give it to those people who need it.But very recently banks
have diversified their operations into various sectors. Even, they have notification able
contribution in maintaining the global relation among various countries of the world. The JBL is
one of the newest banks of Bangladesh; in fact, it has been doing business just over 10 years in
the country. However, in this short period of time, it has already made a significant impact on the
economic, financial, and social system of Bangladesh. Jamuna Bank Ltd has a long and relishing
heritage. Jamuna Bank Limited (JBL) started its journey in the financial sector of the country as
an investment company back in May 20, 1999. The company operated up to 1999 with 9
branches and thereafter with the permission of the Central Bank converted in a full-fledged
14

schedule private commercial bank in June 2, 1993 with paid up capital of Tk. 39.00 crore to
serve the nation from a broader platform. The Bank and its first Branch at the busiest commercial
hub of the country at 61, Dilkusha commercial Area, Dhaka was opened. My Report titled
Foreign Exchange Practices in Private Banks: A Case Study of Jamuna Bank Ltd. is conducted
to describe the section as well as the organization where I was placed as an Intern. The first
chapter gives a broad over view about the origin of the report, objective of the report,
methodology of preparing the report, data collection procedure and its source, scope and
limitations faced while preparing the report. After the first part it has been focused in the second
part of the report. The overview consists of the definition and objective of the bank, historical
background of the banking institutions and banking operations in Bangladesh.
15

The report part started from the third chapter. In that chapter, describe the theoretical framework
of foreign exchange and other foreign exchange activities.The fourth chapter is highlighted of
Jamuna bank with SWOT analysis.The fifth chapter consists General foreign exchange policy of
the bank.The sixth chapter consists of performance evaluation of the bank in 2009.The seventh &
last chapter highlighted with recommendations, problems and Conclusion.

Table of Contents
16

Chapter-1
Introduction
1.1
1.2
1.3
1.4
1.5

Statement of the research problem

Objectives of the Study
Methodology of the Study
Definition of terms used in the study
Limitation of the study

10
10
11
12-13
13

Chapter-2
Scenario of Foreign Exchange Operations in Bangladesh.
2.1

Illustrated the international trade in Bangladesh with the help

15
17

2.2

of a diagram
Scenario of Foreign Exchange Operations in Bangladesh.

16-17

Chapter-3
An Overview of Jamuna Bank LTD.
3.1
3.2
3.3
3.4
3.5
3.6
3.7

Background
Corporate Information
Organization Structure
Branches information
Number of employees
Vision statement of the Bank
Mission statement of the Bank

19
19-20
21
22
23
23
23
18

3.8
3.9
3.10
3.10.1
3.10.2
3.10.3

Product scheme
Principal Activities
SWOT analysis of JBL

Identification of Strengths, Weaknesses, Opportunities and

Threats of the JBL
Draw conclusion
Prepare action plan

24
24
25
26-27
27
27

Chapter-4
Foreign Exchange: Theoretical Background &
Practical Experiences
19

4.1
4.2
4.3
4.4
4.5
4.6

Objectives of Jamuna Bank

Strategies of JBL
Foreign exchange: its meaning and definition
Types of foreign exchange
Tools for foreign exchange

General Foreign exchange policy of JBL

29
29
30
30-31
31-32
33-35

Chapter-5
Data Analysis
& Findings
5.1

Findings

37
20

5.2
5.3
5.4

Performance of the Bank

Key Financial Indicators
Identified problems for the JBL

38-40
41-46
47

Chapter-6
Conclusions and Recommendations
6.1
6.2

Recommendation for the JBL

Conclusion
Bibliography
Acronyms

49
50
51
52

21

22

List of Tables and Figures

SL
01
02
03
04
05
06
07
08

List of Figure
Framework of the overall structure of the total work
Organization Structure of JBL
Branch Network
SWOT Analysis
The international trade can be illustrated by the following diagram
Types of Foreign Exchange
Profit scenario of JBL
Capital Tire-I

Page
16
28

29
30
44
49
50
71
23

09
10
11
12
13

Capital Tire-II
Capital Tire-I & II
Deposit & Deposit Mix
Import Trade
Export Trade

SL

01
02
03
04
05

88
97
98
98
98

List of Tables

Ways of classifying products and services

Import procedure Flow Chart

Export procedure Flow Chart
Highlights of Jamuna Bank
Capital adequacy ratio

Page
16

34
43
67
68
24

06
07
08
09
10

Deposit & Deposit Mix

Import Position
Export Position
Foreign Remittance position
Acronyms

73
96
100
101
101

25

Chapter One

Introduction
26

1.1 Statement of the research problem

To write a report it is necessary to select a topic. A well-defined topic reflects what is going on to
be discussed throughout the report. The topic that has been assigned by organization supervisor
is The foreign exchange operations the ultimate way to success. The report has discussed how
the bank can improve the foreign exchange operations.

27

1.2 Objectives of the study

Primary objective:
The primary objective of this report is to familiar with the working environment of present
institutions. And also fulfill the requirement of BBA theoretical knowledge gained from the
coursework of the BBA program in a specific field.

Secondary Objective:

To have exposure to the credit operation and other function of Jamuna Bank Limited.
28

To have a clear understanding of the business operation of Jamuna Bank Limited.

To discuss the services offered by Jamuna Bank Limitcd.

To assess and evaluate the growth trends of Jamuna Bank Limited.

To evaluate the profitability of Jamuna Bank Limited.
To identify the major strength and weakness of Jamuna Bank Limited in respect to
other banks.

To recommend ways and means to solve problems regarding banking of Jamuna

Bank Limited.
29

To get acquainted with the loan structure, size, profile of sector wise outstanding position
of loans and system of loan classification of Jamuna Bank Limited.

1.3 Methodology of the Study

To make the Report more meaningful and presentable, two sources of data and informations
have been used widely.
The Primary Sources are as follows:

Face-to-face conversation with the respective officers and staffs of the Branch

Informal conversation with the clients

30

Practical work exposures from the different desks of the four departments of the
Branch covered

Relevant file study as provided by the officers concerned

The Secondary Sources are as follows:

Annual Report (2009) of Jamuna Bank Ltd.

Periodicals published by Bangladesh Bank.

Various books, articles, complications etc. regarding general banking function, foreign
exchange operation and credit policies.
31

FRAMEWORK OF THE OVERALL STRUCTURE OF THE TOTAL WORK

Appointing
as an
intern
Dividing
the study
work

Doing work in
different
department of
ABBL

Selecting
the topic of
the study

Collecting
informatio
n from
ABBL

Analysis of
collected
data
ninformati

Preparation of
the Final Report

Preparing
outline

Collecting
secondary
informatio
32

1.4 Terms used in Foreign Exchange Operations

Foreign Exchange:
Foreign exchange refers to the process or mechanism by which the currency of one country is
converted into the currency of another country. According to Foreign Exchange Regulation Act
(FERA) 1947, "Anything that conveys the right to wealth in another country is foreign exchange.
33

Foreign exchange means and includes all deposits, credits and balances payable in foreign
currency as well as foreign currency instruments such as drafts, TCs. Bill of Exchange,
promissory Notes and Letters of Credit payable in any foreign currency. ".
Liquidity:
In terms of international trade, liquidity is the ease in which foreign currency is converted into
domestic currency. FX markets, such as the New York Jamuna Exchange, match buyers and
sellers to bring about speedy, orderly transactions.
International Trade:
34

Businesses rely on FX markets to buy currency that is spent to obtain overseas goods.
Corporations will also look to FX markets to convert international earnings back into the
domestic currency.
Imports and Exports:
Businesses all around the world are increasingly depending on buying and selling from other
countries. Although the international trade environment has changed substantially over the last
100 years, the risks have essentially remained the same. Jamuna Bank is ready to assist you with
your trade documentation and adherence to exchange control regulations.
35

SWIFT:Electronic payments are the most commonly used method of transferring any currency.
These payments are most commonly used for imports and exports, but holidaymakers may also
use them. They are done using SWIFT, a worldwide electronic payment and receipts network.
Traveller's Cheques:
If you are travelling out of the country either for business or holiday, you can buy Traveller's
Cheques directly from us.

Letter of credit (L/C):

Letter of credit means any arrangement whereby a Bank (the issuing Bank) is committed (on
behalf of the buyer/applicant) to pay certain amount at the sellers disposal under some agreed
conditions.
36

Foreign remittance:
Foreign remittance means remittance of foreign currencies from one place/person to another
place/person. In broad sense, foreign remittance includes all sale and purchase of foreign
currencies on account of Import Export, Travel and other purposes. However, especially foreign
remittance means sale & purpose of foreign currencies for the purposes other than export and
import. SOUTHEAST Bank Limited performs the remittance function with different countries. It
maintains the foreign remittance in the following form:
Foreign Demand Draft
Inward Remittance
Outward Remittance
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1.5 Limitation of the study

All the time of preparing my report I tried to gather every details of process but the major
limitation is lack of adequate information,
Lack of opportunity to visit more than one branch
Sufficient records, publications were not available as per my requirement.
Time constraint.
Non-cooperative behavior of some officials of the bank.
It is my first work, and inexperience was a problem.
38

39

Chapter Two

Scenario
of Foreign Exchange
Operations in
Bangladesh.
40

2.1 The international trade can be illustrated in Bangladesh by the following

diagram
of sale
(1)

Contract

Contract of sale
(1)
Ships Goods to

Exporter

(5)

(Beneficiary)

Forwards L/C to

(4)

Advising/ negotiating

Importer
(Applicant)

Presents documents and

obtains payment from (6)

Bank

Recovers Amount from

Opens L/C and send it to

(3)

Applies for opening of L/C

(2)

(8)

Obtains reimbursement
from (7)

41

Issuing Bank

42

43

2.2 Scenario of Foreign exchange operations in Bangladesh

1. Foreign Exchange Regulation (FER) Act, 1947 (Act No. VII of 1947) enacted on 11th March,
1947 in the then British India provides the legal basis for regulating certain payments, dealings in
foreign exchange and securities and the import and export of currency and bullion. This Act was
first adapted in Pakistan and then, in Bangladesh. The Act is reproduced at Appendix-1.
44

Bangladesh Bank is responsible for administration of regulations under the Act. Appendix 4
provides a list of Bangladesh Bank's offices and their jurisdictions.
2. Basic regulations under the FER Act are issued by the Government as well as by the
Bangladesh Bank in the form of Notifications which are published in the Bangladesh Gazette.
Notifications issued by the Bangladesh Government and the erstwhile Government of Pakistan
and the Bangladesh Bank and the erstwhile State Bank of Pakistan are reproduced at Appendices
2 and 3. Directions having general application are issued by the Bangladesh Bank in the form of
notifications, foreign exchange circulars and circular letters.
45

3. Authorized Dealers (ADs) in foreign exchange are required to bring the foreign exchange
regulations to the notice of their customers in their day-to-day dealings and to ensure compliance
with the regulations by such customers. The ADs should report to the Bangladesh Bank any
attempt, direct or indirect, of evasion of the provisions of the Act, or any rules, orders or
directions issued there under.
4. Bangladesh Bank issues licenses normally to scheduled banks to deal in foreign exchange if it
is satisfied that the bank applying for this license has adequate manpower trained in foreign
exchange.
46

5. Licenses with limited scope are also issued to persons or firms to exchange foreign currency
notes, coins and travellers' cheques in places where money changing facilities are required.
6. ADs, on their own, are free to buy and sell foreign currencies forward in accordance with tile
internationally established practices however, in all cases the ADs must ensure that the cover is
intended to neutralize the risks arising from definite and genuine transactions.
7. All remittances from Bangladesh to a foreign country or local currency credited to on resident
Taka accounts of foreign banks or convertible Taka account constitute outward remittances of
foreign exchange
47

8. Lacking of experience related to foreign cxchange policy.

9. Lacking of skill manpower.
10. Lacking of proper knowledge about foreign exchange policy and related items.

48

49

Chapter Three

An Overview
of Jamuna Bank

50

51

52

3.1 Background
Jamuna Bank Limited (JBL) is a Banking Company registered under the
Companies Act, 1994 with its head office at Printers Building (2 nd floor and 8th
floor), 5, Rajuk Avenue, Dhaka-1000. The Bank started its operation from 3rd June
2001.
53

Jamuna Bank Limited is a highly capitalized new generation Bank started its
operation with an authorized capital of Tk.1600.00 million and paid up capital of
Tk.390.00 million, as of December 2006 Paid up capital of the Bank raised to
Tk.1072.5 million and number of branches raised to 29 (Twenty nine).
JBL undertakes all type of banking transactions to support the development of
trade and commerce in the country. JBLs services are also available for the
entrepreneurs to set up new ventures and BMRE for industrial units. The Bank
gives special emphasis on Export, Import, Trade Finance, SME Finance, Retail
Credit and Finance to Women Entrepreneurs.

54

To provide clientele services in respect of International Trade it has established

wide correspondent banking relationship with local and foreign banks covering
major trade and financial centres at home and abroad.

3.2 Corporate Information of Jamuna Bank

Registered Office:
55

Chini Shilpa Bhaban

3, Dilkusha C/A, Dhaka-1000.

Company Registration Number:

C-42780 (2139)/2001
External Audior(s)
Howladar Yunus & Co
56

Chartered Accountants
67, Dilkusha C/A (2nd Floor), Dhaka-1000
Legal Advisor
Mr. Habibul Islam Bhuiyan
Senior Advocate
Bhuiyan Islam & Zaidi
Advocates and Barristers
H# 29, Rd# 9/A, Dhanmondi R/A, Dhaka
Number of Branches & SME/ Agri Branches / Centers
57

Total Branches: 52
SME/ Agri Branches: 3
SME/ Agri Centers: 1
Allied Concern
Jamuna Bank Foundation
Hadi Mansion (4th Floor), 2, Dilkusha C/A, Dhaka
Subsidiary Company
Jamuna Bank Capital Management Ltd (Proposed)
58

Chini shilpa Bhaban

3, Dilkusha C/A, Dhaka-1000

Chairman

3.3Organization Structure of JBL:

Board of Directors

Board of Directors
Organization
Chart of Jamuna Bank Limited

Chief Adviser

Managing Director - HRD

Deputy Managing Director
GSD, CAD, A&I, GB,
D&M

59
Deputy Managing Director
ID, IT, CREDIT, R&P

Executive Vice President/

Company Secretary

Senior Vice President

Senior Vice President

Senior Vice President

Vice President
Senior Asst. Vice
President
Asst. Vice President

Senior Principle
Officer
Principle Officer
Senior Officer
Officer
Junior Officer
Asst.
Asst. Officer
Officer

Abbreviations:
GSD General Service Division
CAD Central Account Division
ASI Audit and Inspect
CB Central Bank
D&M Developing and
Marketing
ID International Division
R&P Research & Planning

60

Figure: 3.3
Organization chart
of JBL

61

3.4 Branch Information

Branch: 52 & SME / Agri Branch : 4

62

63

3.5 Number of employees

Number of employees in the main branch of Jamuna bank is 65

3.6 Vision statement of the bank

To become a leading banking institution and to play a pivotal role in the development of the
country.

64

3.7.Mision statement of the bank

The Bank is committed to satisfying diverse needs of its customers through an array of products
at a competitive price by using appropriate technology and providing timely service so that a
sustainable growth, reasonable return and contribution to the development of the country can be
ensured with a motivated and professional work-force.
The bank has some mission to achieve the organizational goals. Some of them are as follows as:
Jamuna Bank Limited provide high quality financial services to strengthen the well being
and success of individual, industries and business communities.
Its aim to ensure their competitive advantages by upgrading banking technology and
information system.
65

 JBL intends to play more important role in economic development of Bangladesh and its
financial relations with the rest of the world by interlining both modernistic and
international operations.
JBL encourages investors to boost up share market.
The bank creates wealth for the shareholders.
The bank believes in strong capitalization.
It maintains high standard of corporate and business ethics.
Jamuna Bank Limited extend highest quality of services, which attracts the customers to
choose them first.
66

 The bank creates wealth for the shareholders.

The bank maintains congenial atmosphere for which people are proud and eager to word
with Jamuna Bank Limited.

3.8 Product Scheme

The products and services can be classifying in two ways & those arc.

The deposit products & services

The lending products & services

67

Deposits products & services

Lending/Investment products & services

Corporate Banking

Hi-her Purchase

Personal Banking

Lease Finance

Online Banking

Personal loan for woman

Monthly Savings Scheme

Project Finance

i Monthly Benefit Scheme

i Loan Syndication

Double/Triple Benefit Scheme

Consumer Credit

Marriage Scheme

Import and Export. Handling Financing

Education Scheme

68

Lakhpati Deposit Scheme

Q-Cash ATM

3.9 Principal activities of Jamuna bank Ltd.

The principal activities of the bank are to provide all kind of commercial bank activities
encompass a wide range of services including excepting deposits, making loans, discounting
bills, conducting money transfer and foreign exchange transactions and performing other related
69

services such as safe keeping, collections, issuing guarantees, acceptances and letters of credit to
its customers through its branches in Bangladesh.

3.10 SWOT ANALYSIS OF JBL

In the competitive area of marketing are SWOT analysis is based on product, price, place and
promotion of a financial institution like private Bank. By doing the SWOT analysis it is possible
70

to find out the strengths, Weaknesses, opportunities, and threats of the JBL. From the SWOT
analysis we can figure out on going scenario of the Bank.

SWOT Analysis

SWOT analysis two factors act as prime movers

Internal Factors

External Factors

Internal factors which are prevailing inside the concern which include Strength and
Weakness.
71

Strength

Weakness

Opportunity

Threats

 On the other hand another factor is external factors which act as opportunity and threat.

3.10.1 Identification of Strengths, Weaknesses, Opportunities and Threats of

the JBL
Strength:
1. The bank provides quality service to the clients compared to it other contemporary
competitors.
72

2. Experienced bankers and corporate personnel have formed the management.

3. The bank recently introduce on line banking which enable it to automate all of its
operations. At present, several banking functions are performed by computers. The bank
is also a member of SWIFT (Society for Worldwide Inter bank Financial
Telecommunication) alliance Access which enables the bank to exchange critical
financial messages swiftly and cost effective.
Weaknesses:
1. Delegation of authority is centralized which makes the employee to realize less
responsibility. Thus, the employee morale is deteriorated.
73

2. The credit proposal evaluation process is lengthy. Therefore, sometimes valuable clients
are lost and the bank becomes unable to meet targets.
3. No substantive use of Annual Confidential Report (performance evaluation form of the
employee) to reward or to punish the employee. Hence the employee becomes
ineffective.
4. The bank lacks aggressive advertising and promotional activities to get a broad
geographical coverage.
5. Computer facility for all the officers is not available. Moreover, all the officers have no
computer knowledge.
6. The bank has no any research and development division.
74

Opportunities:
1. The bank can introduce more innovative and modern products and services for then
customers.
2. It can diversity its portfolio by taking new sector.
3. Many branches can be opened to reach the banks services to the remote areas.
4. It can recruit more efficient and experienced persons to give fast and efficient service to
the customers
Threats:
1. The common attitude of Bangladeshi clients is default.
75

2. Multinational as well as the fast growing local banks with modern products and services
are capturing huge market within short period a resulting to switch over the existing
customers of the bank.
3. Bangladesh Bank Sometimes requires Private Commercial Banks to be abides by such
rules and regulations which are not suitable for every commercial Bank

3.10.2 Draw conclusion

The bank provides quality service to the clients compared to its other contemporary competitors.
The bank can introduce more innovative and modern products and services for then customers.
76

The common attitude of Bangladeshi clients is default. Delegation of authority is centralized and
the bank has no any research and development division.
Conclusions concerning the companys overall business situation:

Where on the scale from alarmingly week to exceptionally strong does the
attractiveness of the companys situation rank?

What are the attractive or unattractive aspects of the companys situation?

3.10.3 Prepare action plan

77

Use company strengths and capabilities as cornerstones for strategy.

Pursue those market opportunities best suited to company strengths and opportunities.

Correct weaknesses and deficiencies that impair pursuit of important market

opportunities or heighten vulnerability to external threats.

Use company strengths to lessen the impact of important external threats.

78

Chapter Four

Foreign
Exchange: Theoretical
Background &

Practical Experiences

79

4.1 Objective of Jamuna Bank

To earn and maintain CAMEL Rating 'Strong'
To establish relationship banking and improve service quality through development

of Strategic Marketing Plans.

To remain one of the best banks in Bangladesh in terms of profitability and assets

quality.
To introduce fully automated systems through integration of information

technology.
To ensure an adequate rate of return on investment.
To keep risk position at an acceptable range (including any off balance sheet risk).
To maintain adequate liquidity to meet maturing obligations and commitments.
80

 To maintain a healthy growth of business with desired image.

To maintain adequate control systems and transparency in procedures.
To develop and retain a quality work-force through an effective human Resources

Management System.
To ensure optimum utilization of all available resources.
To pursue an effective system of management by ensuring compliance to ethical

norms, transparency and accountability at all levels.

4.2 Strategies of JBL

To manage and operate the Bank in the most efficient manner to enhance financial
81

performance and to control cost of fund

To strive for customer satisfaction through quality control and delivery of timely
services
To identify customers' credit and other banking needs and monitor their perception
towards our performance in meeting those requirements.
To review and update policies, procedures and practices to enhance the ability to
extend better service to customers.
To train and develop all employees and provide them adequate resources so that
customers' needs can be reasonably addressed.
To promote organizational effectiveness by openly communicating company plans,
policies, practices and procedures to employees in a timely fashion
To cultivate a working environment that fosters positive motivation for improved
performance
To diversify portfolio both in the retail and wholesale market
82

To increase direct contact with customers in order to cultivate a closer relationship

between the bank and its customers.

4.3 Foreign Exchange- its meaning and definition:

Foreign exchange refers to the process or 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 country's currency are converted into rights to wealth in another
country's 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.
83

According to Foreign Exchange Regulation Act (FERA) 1947, "Any thing that conveys the right
to wealth in another country is foreign exchange. Foreign exchange means and includes all
deposits, credits and balances payable in foreign currency as well as foreign currency
instruments such as drafts, TCs. Bill of Exchange, promissory Notes and Letters of Credit
payable in any foreign currency. ".
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 department of banks plays significant roles through
providing different services for the customers.
84

4.4 Types of Foreign Exchange:

There are mainly three types of transactions which lead to foreign exchange. These are:
a) Import
b) Export
c) Foreign Remittance

85

Foreign Exchange Department

L/C

Import

Export

Foreign
Remittance

Foreign
Currency A/C

Inward
Remittance

Outward
Remittance

86

4.5 Tools for foreign exchange

Importer (Buyer)/Applicant

The Issuing Bank (Opening Bank)

The Advising Bank/Notifying Bank

87

Exporter/Seller (Beneficiary)

Confirming Bank

Negotiating Bank

The Paying/Reimbursing/Accepting/Remitting Bank.

a) Applicant
The person/body (customer of the bank) who requests the bank (opening bank) to issue letter of
credit. As per instruction and on behalf of the applicant, bank open L/C in line with the terms and
conditions of the sales contract between the buyer and seller.
88

b) Opening bank/Issuing Bank

The bank which open/issue L/C on behalf of the applicant/importer. Issuing banks obligation is
to make payment against presentation of documents drawn strictly as per terms of the L/C.
c) Advising/Notifying Bank
The bank through which the L/C is advised/forwarded to the beneficiary (exporter). The
responsibility of advising bank is to communicate the L/C to the beneficiary after checking the
authenticity of the credit. The advising bank acts only as agent of the issuing bank without
having any engagement on their part.
89

d) Beneficiary
Beneficiary of the L/C is the party in whose favor the letter of credit is issued. Usually they are
the seller or exporter.
e) Confirming Bank
The Bank, which under instruction in the letter of credit, adds confirmation of making payment
in addition to the issuing bank. It is done at the request of the issuing bank having arrangement
with them. This confirmation constitutes a definite undertaking on the part of confirming bank in
addition to that of issuing bank.
90

f) Negotiating Bank
The Bank, which negotiate documents and pays the amount to the beneficiary when presented
complying credit terms. If the negotiation of documents is not restricted to a particular bank in
the L/C, normally negotiating bank is the banker of the beneficiary.
g) Reimbursing/Paying Bank
The Bank nominated in the credit by the issuing bank to make payment stipulated in the
document, complying with the reimbursing bank.

91

4.6 General foreign exchange policy of the Jamuna Bank LTD.

Import procedure in Flow Chart:
Registration with CCI&E, Import Registration Certificate

92

Purchase contract with foreign supplier directly or through agent

Registration of Letter of Credit Authorization Form(LCAF)
Opening/Issuance of L/C by the Importers Bank
Dispatch/Transmit the L/C to the beneficiary through issuing Banks correspondent in the beneficiarys
country

Receipt of import Documents from Negotiating/collecting bank

Scrutiny if import Document

Yes

Inform Negotiating Bank about

Discrepancies

93

Inform Opener about Discrepancies

Are the
documents

discrepant?

Yes

Lodgment of import Bill

Dr. PAD (Payment against Document)
Cr. H.O A/C Foreign Bank
(Negotiating Bank)

Do they agree to
accept document
despite

discrepancies?

No

Ask Negotiating Bank for

disposal Instruction

94

Ask the opener

to
take delivery of
Import
documents for
release of

Do they accept
documents on
collection basis?

No

Export

Send back documents

Dr. S.D A/C Margin on L/C
processCr.
inImporters
Flow Chart
A/C

Yes

Deliver the documents to the

Importer for release of goods

Collect Proceeds from Importer

Dr. S.D A/C Margin on L/C
Dr. Importers A/C
Cr. H.O Foreign Bank
(Collecting Bank)

95

Securing Export Order from Foreign Buyer directly or through agent

Receiving L/C from buyers bank through an advising bank in Banglades h
Certification of EXP from by Authorized Dealer(Bank)
Will the Exporter be allowed any preshipment Credit Facility?
If

Yes
Mark Banks Lien on the page of the original L/C

If No

Obtain necessary securities

Shipment of goods by Exporter

96

Arrange shipment of goods through Banks

approved C&F agent and instruct them to send the
original Bill of Lading etc. to the Bank Directly
Preparation of Export Documents for submission
to Negotiating Bank
Scrutinizing Export documents by Negotiating Bank
Are the document in order?

Yes

No

Are the discrepancies removed?

Ask the exporter to remove discrepancies

No

Inform opening Bank about

discrepancies

97

Yes

Negotiate documents

Do they allow negotiation?

Despatch documents with reimbursement

instruction

No

Check whether youre A/C with foreign bank

has been credited

Has it been credited?

No

Send the documents for collection

with reimbursement instruction

Send reminder to paying bank

98

FDBP
ImportLodgment
trade in/Retire
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 import functions of the branch as far I have understood are discussed bellow:

Documentary Requirements for Opening L/C

Importer shall submit following documents for opening L/C:
99

(a) Valid Import Registration Certificate (IRC) (commercial/industrial)

(b) Tax Identification Number Certificate
(c) VAT Registration Certificate
(d) Membership Certificate of a recognized Trade Association as per IPO
(e) A declaration, in triplicate, that the importer has paid income-tax or submitted income lax
return for the preceding year
(f) Pro forma Invoice or Indent duly accepted by the importer

100

(g) Insurance Cover Note with Money Paid Receipt covering value of goods to be imported plus
10 (Ten) percent above
h) L/C application Form (MF-fx l3) duly signed by the importer
i) Letter of Credit Authorization Form (LCAF), commercial or industrial as the case may be,
duly signed 'by the importer and incorporating New ITC number of at least 6(six) digits under
the Harmonized System as given in the Import Trade Control Schedule 1988.
j) IMP Form duly signed by the importer
Time Limit for Opening of L/C:
L/Cs shall be opened within 150 days from the date of issuance of LCAF.
101

Chapter- 5

Data Analysis
& Findings

102

103

5.1 Findings
104

While working at Jamuna Bank, I have attained to the newer kind of experience. After the
collecting and analyzing of data I have got some findings. These findings are completely from
my personal point of view. Those are given below.
Based on my experience, I can be said that Jamuna Bank should reconsider its services
that better satisfy customer needs and requirements Bank should be more tactful in
dealing with the customers and launch new products that fully meet customer
expectations.
Jamuna Bank Limited has already established a favorable reputation in the banking
industry of the country. It is one of the leading private sector commercial banks in
Bangladesh. The bank has already shown a tremendous growth the profits and deposits
105

sectors.
The bank follow the online banking system to provide the customer better services; but
all the branches of Jamuna bank are not follow the online banking system
During the last 6 years (2004-2010) the average growth of deposits and advance were
33% and 37% respectively, which was 20% in the case of import business. 72% in export
business and 36% in guarantee business during the period, shareholders equity grew at
the rate of 40%. The bank always fulfills Die provisioning requirements as set by
Bangladesh Bank reflecting sound financial health and discipline
The consistent and increasing growth trend of the above mentioned performance
indicators has increased depositors' confidence as well as good will/reputation of the
bank to a great extent and these have contributed to increase the shareholders value.
106

 The Banks Human resources Development strategy is to build up quality manpower with
conceptual/managerial Knowledge, skills through designing/arranging of continuous inhouse and outside training programs
The bank focuses on customer-friendly marketing approaches by offering various
efficient delivery of personalized banking services at the clients door steps and caters to
the ever-growing financing needs of clientele at a competitive price
The company philosophy to workout best solutions for customers and clients as a
business and customer friendly Bank
Jamuna bank has an interactive corporate culture & friendly working environment.
107

108

5.2 Performance of the bank:

The incessant fall-out of
international credit market due to world economic meltdown resulting sluggish growth has put
significant pressure on financial performance of banks and financial institutions worldwide.
Jamuna Bank Ltd has achieved continuous growth in almost all arenas of its business arenas
109

despite this economic crisis, facing intensified competition of the industry. The bank remained in
financial strong position with its continued focus on the vision of becoming countrys finest
corporate citizen , providing excellent and need-based customer service.
The bank mobilized deposits of BDT 42356 million as at December 31, 2010 compared to BDT
27307million, till 2009. Total loans and advances stood at BDT 32287million at the end of 2010
that was BDT 21036million at the end of 2009. Import business stood at BDT 46685 million in
2010 compared to BDT 30312 million in 2009. Export business stood at BDT 21407 million in
2010 as against BDT 18617 million in 2009. The bank collected foreign remittance of BDT 5.06
billion in 2010 compared to BDT 4.72 billion in 2009.
110

In 2010, the bank was able to make profit before tax BDT 1.66 billion as compared to 1.28
billion indicating 29.73% growth. Net profit attributable to shareholders stood at BDT 807.52
million. The return on equity remained 18.80% during 2010 and earnings per share (EPS) stood
at BDT at 56.92. Non performing loan (NPL) ratio reduced to 2.54% in 2009 as compared to
2.86% in 2008.
JBL made adequate provision against classified loans which is significantly higher than last year.
Adequate provision made the bank stronger than before. Tier-1 capital stood at BDT 3054.14
million at the end of 2010 compared to that of BDT 2131.02 at the end of 2009. Tier-2 capital
reached to BDT 943.52 million at the end of December 2010 as compared to that of BDT
313.32million at the end of 2009. Return of assets (ROA) increased to 1.89% in 2009 from
111

1.51% in 2009 and return on equity (ROE) also increased significantly to 18.80% from 17.75%
in 2009. The capital adequacy ratio (CAR) increased to 10.48% in 2009 as against that of
10.17% in 2009. Net interest margin (NIM) stood at 3.58% at the end of 2010, suggesting a
healthy growth in net interest income.

112

HIGHLIGHTS OF JAMUNA BANK LIMITED

Amount in Taka ( Except Ratio)
Sl.No.

P
a

2010

2009

113

Paid up Capital

1,621,882,500

1,313,265,200

Total Capital

3,997,664,705

2,444,338,501

Capital surplus/(deficit)

880,659,405

392,695,301

Total Assets ( excluding off balance sheet items)

48,730,951,557

31,646,629,499

Total Deposits

42,356,203,563

27,307,936,141

Total Loans & Advances

32,287,661,155

21,036,861,012

Total Contingent Liabilities & Commitments

14,718,947,868

9,169,471,638

Advance Deposit Ratio

76.23%

77.04%

% of classified loans against Total Loans

2.20%

2.84%

10

Profit after taxation & provisions

923,123,207

479,437,923

11

Amount of classified loans

710,858,000

598,309,000

12

Provision kept against Classified loan

465,638,000

296,285,000

13

Provision surplus / deficit

114

5.3 Key Financial Indicator:

115

Profit scenario of Jamuna Bank:

In 2009Jamuna Bank Limited posted an operating profit of Tk.1914.25 million as against
Tk.1040.20 million in 2008 with a spectacular growth of 84.03 percent over the preceding year.
After having made necessary provisions for loans and advances of Tk.351.05 million in
accordance with the instruction of Bangladesh Bank Net Income Before Tax (NIBT) stood at
Tk.1536.20 million in the year under review against Tk.865.82 million in the preceding year. An
amount of Tk.632.26 million has been kept as provision for payment of Tax. Thus Net Income
after Tax and provision stood at Tk.923.12 million in 2009 which was Tk.479.44 million in
2008.

116

117

Operating Profit
Year

Tk.(Million)

2005

419.94

2006

701.32

2007

824.20

2008

1040.20

2009

1914.25
118

2000
1800
1600
1400
1200
1000
800
600
400
200
0

2005

2006

2007

2008

2009

119

Capital Structure:
Jamuna Bank Limited has a conviction of maintaining a strong capital base in carrying on opereat
operation on June 03, 2001 with a paid-up capital of Tk.390.00 million divided into 3.90 million
120

ordinary shares of Tk.100 each. The authorized capital of the Bank is Tk.1600 million divided
into 16.00 million of Tk.100 each. The Bank's paid-up capital as at 31st December 2009 stood at
Tk.1621.88 million. Tk429.00 million was raised through initial public issue of 4.29 million
ordinary shares of TkA 00 each with a premiu- each while Tk.214.50 million was raised by issue of
Bonus Shares in the ratio of 1:4, i.e. one bonus _s-holding of 8.58 million ordinary shares as on
31.12.2005, for every 4 shares out of profits upto the Thus, as on 31st December 2009, the total
shareholder's equity and reserve stood at Tk.3997.66 million!"
Capital Tire-I

Capital Tire-II

121

3500

2010

3000

2009

2500

2008

2000

2007

1500

2006

1000

2005

500

2004

2003
2005

2006

2007

2008

2009

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Total capital Tire-I & II

122

4000
3500
3000
2500
2000
1500
1000
500
0
2005

2006

2007

2008

2009

CAPITAL ADEQUACY RATIO

123

The Bank adopted BIS risk adjusted capital standards to measure the capital adequacy in line with
set by Bangladesh Bank. According to the instructions contained in Bangladesh Bank's BRPD
Circ dated May 14, 2007 relating to Capital Adequacy every commercial bank operating in the
required to maintain at minimum 9 percent of its risk-weighted assets as capital. Jamuna Bank
Li-maintain Capital Adequacy ratio of 12.83 percent as at 31.12.2009 which was higher than the
require Adequacy Ratio. The amount of capital with break-up is given below:

Particulars

"Fig in BDT Million"

2008
2009
124

Tier I Capital
Paid up Capital
Non-repayable Share Premium Account
Statutory Reserve
Retained Earnings
Proposed Bonus Share
Tier II capital
1 % Provision against Unclassified Loans
Exchange Equalization Fund

3054.14
1621.88
816.48
615.78
943.52
332.64
0.33
3997.66

2131.02
1313.27
503.84
313.91
313.32
213.80
0.33
2444.34

Total Capital (Tier I +Tier 11)

125

126

DEPOSITS AND DEPOSIT MIX

In commercial banks operation starts with mobilization of resources i.e. tapping of deposits and
then the said resources are deployed as loans, advances and investments for the purpose of
maximizing wealth which -sans deposits have dominance in commercial bank's operations. That
is why; there is a common saying that deposit is the lifeblood of a bank. The comparative
position of deposit mix of the Bank as on 31.12.2009 and 31.12.2008 is depicted below:
Type of Deposit

As on
31.12.2009

As on
31.12.2008

Changes
(+)/(-)

Changes in
% over the
127

Current A/C & other

Bills Payable
Savings Deposit
Short term Deposit
Fixed Deposit
Scheme Deposits
Foreign Currency Deposit
Total Deposits

4715.31
516.31
2891.25
25201.52
2762.49
6118.32
151.00
151.00

3283.21
412.03
1679.40
16360.18
1335.16
4131.80
106.16
27307.94

+1432.10
+57.59
+1211.85
+8841.34
+1427.33
+1986.52
+44.84
+15048.26

year
43.62
25.30
72.15
54.04
93.54
48.07
42.24
55.10

128

45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2005

2006

2007

2008

2009

129

Import, Export & Remittance Position

Import Trade
The total import business handled by the bank in 2009 was Tk.46684.73 million compared to
Tk.30311.71 million in the preceding year registering a growth of Tk.16373.02 million being
54.02 percent. A sizable L/Cs were also opened by the bank in the year under review. The
import items included industrial raw materials, machinery, consumer goods, fabrics, accessories,
food item etc.

130

50000

Year
2005
2006
2007
2008
2009

Import
Tk. (Million)
12152
15458
22192
30312
46685

40000
30000
20000
10000
0
2005

2006

2007

2008

2009

Export Trade
131

The Bank handled export business worth Tk.21406.94 million in the year under report. In 2008
export business handled by the Bank was Tk.1861.43 million. Thus there was an increases of
Tk.2789.51 million in export business handled by the Bank, being 14.98 percent over the
preceding year. The major export item was Readymade Garments.

132

Export
Year
2005
2006
2007
2008
2009

25000

Tk. (Million)
6522
11584
13990
18617
21407

20000
15000
10000
5000
0
2005

2006

2007

2008

2009

133

Foreign Remittance
Total foreign remittance in a single year,i.e. in 2009 made a record high to the tune of BDT
5061.30 million compared to that of BDT 4722.90 million in 2008. The Bank has deepened its
step on the foreign soils further by establishing more and more remittance arrangements with
overseas exchange companies where Bangladeshi expatriates are working. These Include U.K,
U.A.E, Kuwait, Baharain, Canada, Italy, France etc. Moreover, for prompt and safe distribution
of this hard earned money to their near and dear ones in every corner of the country, the Bank
has made an arrangement with Bangladesh Post Office, Western Union and some other agencies.
Particulars

Impo

a.
b.

L/C (Cash)
L/C (BTB
Local)

Upto Last Date on

23/06/2010
No
Amount
741
447.35
2389
397.23

As on 23/06/2010
No.
15
17

Amount
5.29
2.82

Total
Amount is Crore Tk.
No.
Amount
756
452.64
2406
400.05

134

r
t

c.

Export
Remi
ttanc

L/C (BTB
Foeign)
Sub Total BTB
L/C
Total
a)Export Bill
(Gen)
b) Export Bill
(RMGF
c) Export Bill
(RMGL)
Total
Inward
Outward
Total

890

290.80

4.15

893

294.95

3279

688.03

20

6.97

3299

695.00

3992
374

1135.38
107.16

35
1

12.26
0.67

4027
375

1147.64
107.83

2350

711.01

19

5.33

2369

716.33

1626

229.87

12

1.88

1638

231.75

4350
0
0

1048.03
51.57
5.30
56.87

32
0.00
0.00
-

7.88

4382
0
0

1055.91
51.57
5.30
56.87

135

Banking industry has entered into the new Risk Based Capital Adequacy Framework (Basel II )
arena from 2010. JBL has already taken necessary steps to comply with this accord properly. The
bank will also continue strengthen its position by expanding the core business activities.

136

5.4 Identified Problems for the Jamuna Bank

The main constraint of the study was insufficiency of information that was highly
required for the study. Since the bank officials are very busy with their activities, as a
result it was though to have proper knowledge as was required for the study.
The duration was not enough to cover all aspects of banking.
Lack of depth knowledge and analytical ability for writing import.
The data and information related with the topic was not easily available because of
confidentiality of the concern.
137

 Foreign Exchange dealing is a technical job and has a great prospect in our country.
Floating Exchange Rate has been introduced and it has put the banking sector into a new
era. Bangladesh Banks total control is not there but there is some risk factor involved in
it. Jamuna Bank Ltd wanted to find whether the process of their foreign exchange
operation is good enough to avoid any unwanted risk and the prospect in foreign
exchange dealing in their present standing,
The office of JBL, Malibagh Branch, and Dhaka is not sufficient enough.
In JBL, Malibagh Branch, Dhaka maximum officers are working in a specific desk for a
long time and for this reason they may feel monotony and certainly they are not be able
to know the overall banking activities through they have enough eagerness to know.
138

 Foreign Exchange Section is one of the busiest sections in Bank. Sometimes it is found
that all works are not performed efficiently due to insufficiency to Officer/Staffs.
Training facility isnt sufficient especially for the lower level officers.
Still now, like most of the branches of JBL, Malibagh Branch, Dhaka, follows the
traditional banking system.
JBL, Malibagh Branch, Dhaka, has no reception section and has no receptionist that may
receive phone calls and complains from customer and supply the enough information.
In this branch there is lack of modern equipments.

139

140

141

Chapter- Six

Conclusion and
Recommendations

6.1 Recommendations

In view of the facts, the following recommendations are made to the respective concerned for
the consideration and implementation.
The bank should have standardized system of measuring customer satisfaction.
Need for integrity of the officials within reasonable limits.
142

 The officials should have a through knowledge of the product.

The officials should be trained up for their efficiency.
Reasonable interest rate for all kinds of loan.
Increasing number of staffs and cash terminals.
Officials should be more cooperative with the clients.
Officials should be trained up for self-management.
Customized new financial product development.
Officials should be faster during transaction.
Bank can accept new ideas from the customers for regarding improvement the quality
of their service.
143

They need to maintain an upgraded guideline for the employees to avoid any kind of
confusion.
They should enhance their savings facilities by introducing many other saving
schemes, because customers really look for various savings programs.
Special increment should be given to middle and junior level managers and executives
also to increase their motivation level.

144

6.2 Conclusion
From the beginning of greater change in the world economic structure, banking activities has
becoming an important thing. Now a day the idea of banking is also developed and a huge
number of private commercial banks are just on waiting for business. So it is a matter of think
that how to establish an idea with different techniques, In Bangladesh, Commercial banks are
playing vital role in the development of our economy and financial system. Standard Charted
145

Bank Limited has a strong position in the todays competitive market. The JBL, Malibagh
Branch, Dhaka also contributing a better proportion of profit in JBLs total earning. Total
analysis of the bank has the greater opportunity to do better in the future.
Day by day JBLs area of service is increased all over the country through setting up new
branches at new places. The reliability of the customer on JBLs increasing day by day for its
better services. But they may introduce online and ATM services comparing with other
commercial bank to improve their services and to make efficient and easy customer services.
They also may follow the given recommendations in order to improve day by day. Jamuna Bank
Limited may contribute a vital role in the socio-economic prospective and in the development of
our economy.
146

The JBL has been trying to operate its business successfully in Bangladesh since 1999. JBL has
already developed an image of goodwill among its clientele by offering its excellent services.
This success has resulted from dedication, commitment and dynamic
Leadership of its management over the periods. During the short span of time of its operation,
the bank bas successfully grabbed a position as a progressive and dynamic financial institution in
the country. If the bank goes this way. It is expected that in the near future JBL may become one
of the top performers in the banking sector.
Here I observed its deposit figure is strong. The bank should take necessary action for
maintaining .JBL has been able to maintain its recovery position in sector wise credit financing is
147

up to the satisfactory level. At last it should give more emphasis in this sector to acquire more
profit.

References

1.Annual Report of Jamuna Bank Limited, 2005, 2006,2007

148

2. Chowdhury, L.R; A Textbook on Foreign Exchange, Fair Corporation,139, Azimpur,

Dhaka, 1205
3. Foreign Exchange Manual, Jamuna Bank Limited., 1st November,2009
4. Collyer Gary, ICC Uniform Customs And Practice For Documentary Credits ,3rdEdition,
International Chamber Of Commerce, ICC Publication No.600
5. Bangladesh Bank Foreign Exchange Guidelines, Volume-1
6. www.jamunabankbd.com

149

150

Acronyms
A/C
AD
B/L
BB
BOE
C&F
C&F
CC
CCI & E
CIB
CIF
CRF
DD
DP Note
EPB
ERC
EXP
FC
FDD
FDR
HS Code
IBC
IBCA
IBCT
IBDA
IMP
IRC
L/C
LCAF
LIM
LTR
OBC
PAD
PO
PSI
STD
SWIFT
TC
TIN
TT

Account
Authorized Dealer
Bill of Lading
Bangladesh Bank
Bill of exchange
Clearing & Forwarding
Cost & Freight
Cash Credit
Chief Controller of Import & Export
Credit Information Bureau
Cost Insurance & Freight
Clean Report Findings
Demand Draft
Demand Promissory Note
Export Promotion Bureau
Export Registration Certificate
Export Form
Foreign Currency
Foreign Demand Draft
Fixed deposit receipt
Harmonized system of coding
Inward Bills for Collection
Inter Branch Credit Advice
Inter branch Credit Transaction
Inter Branch Debit Advice
Import Form
Import Registration Certificate
Letter of Credit
Letter of Credit Authorization Form
Loan against Imported Merchandise
Loan against Trust Receipt
Outward Bills for Collection
Payment against Document
Payment Order
Pre Shipment Inspection
Short Term Deposit
Society for Worldwide Inter bank Financial
Travelers Cheque
Tax Identification Number
Telegraphic Transfer

151

152

153

154