1.

0 Introduction

Banking in the 21st century has exceeded the conventional loan deposit concept. Rather than
maintaining day to day transaction, modern banking now emphasizes on long term
relationship with customer, society, & government. In recent times, expansion & innovation
of modern banking are remarkable catalyst in Bangladesh. Furthermore, the ascend of
information technology has blessed the banking system & thus people enjoy the classy
banking. It also introduces enthusiasm & drive in economy’s growth through providing such
source of investment. Banking services are extremely important in free market economy.
Consequently, customer satisfaction should be the top priority of any bank.

As Export Import (EXIM) Bank of Bangladesh Limited is one of outmost successful private
bank in banking sector of Bangladesh- is always one step ahead to other competitors in
serving the customers, & satisfying them. Its goal to provide highest customer services
through togetherness with its customers. It also provides fully Islamic Banking services,
Retail Banking, Corporate Banking, Investment Banking, Merchant Banking & Project
Finance, Money Transfer, Remittance Services, Loan Syndication and so on.

1.1 Origin of the Study

This report has been prepared as a part of the internship program which is an integral part of
the BBA program under the Department of Business Administration, Leading University,
Sylhet.

I am very glad for getting the opportunity to accomplish my internship program with a
report paper in the EXIM Bank, Golapgonj Branch, Sylhet. The organization attachment
was started on 20th January, 2011 and ended on 20th April, 2011. The topic of my report is
Foreign Remittance was assigned by academic supervisor Mr. Md. Abdul Mannan Khan,
Supervisor & Lecturer, Department of Business Administration, Leading University.

1.2 Objectives of the Study

The main objectives of this report are:

 To present an overview of Export Import (EXIM) Bank of Bangladesh Limited.

 Identify the rules & regulation regarding foreign remittance.
 To know the processes of inflow & outflow of foreign remittance in Bangladesh.
 To know about the proper usage and impact of foreign remittance in national
economy.
 To identify the promising investment sectors of foreign remittance in Bangladesh.

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1.3 Scope of the Study

During these three months internship program in Exim Bank Limited, Golapgonj Branch,
Sylhet, almost all the sections I have been observed. There I had to work in General
Banking, Investment, and Foreign Exchange desks as a routine work, without the Cash
Section.

1.4 Methodology of the Study

I have collected data from two sources:

1.4.1 Primary Sources: Primary data has been collected by personal interview with various
employees of EXIM Bank, especially Mr. Shahad Ahmed Chowdhury (Senior Officer),
Mr. Md. Fazle Rabbi Chowdhury (Officer), and Mr. Md. Raish Uddin (MTO), and so
on. The interviews were based on informal discussion. I asked questions based on the
discussion and they shared relevant information. They discussed about overall banking
activities, performance of bank, different strategies of bank and so on. They also talked
about the banking sector in Bangladesh and the banking policies set forth by the Bangladesh
Bank.

1.4.2 Secondary Sources: Besides the primary sources, I also have taken external secondary
data from several sources; like Website of EXIM Bank, Annual Reports of Exim Bank,
Auditors’ Report of Exim Bank, their regular circulars, Website of Bangladesh Bank,
relevant journal research paper, several reports from published materials and so on.

1.5 Limitations of the Study

Some limitations of the report are:

 Time Span: 3 months was not very sufficient for a report of this extent.
 Lack of Electricity: affected my work as well as my morale to do work.
 Insufficient of Data: lack of availability of sufficient data of the EXIM Bank,
& hesitance to share all types of information on the part of the bank.
 Economic Indicators: unavailability of accurate and quality data on
remittance and some other economic indicators is the main limitation of this
study.
 Unofficial Inflow of Remittance: the remittance which is not included in the
official remittance data is another shortcoming of the analysis of this report.

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2.0 Origin of Bank

Barter System→ Money→ Bank.

At past, people making transactions by barter system. In this system, they transactions
products. If someone has enough rice, but his/her required fish & goes to fisherman for
collecting fish. On the other hand, fisherman have required rice & they transfer products one
to another. By using this system, they were continuing their lives. However, at a time barter
system failed due to divisibility. Due to failure this system, people develop money. This is
now the common medium for transactions. For securing money, people establish bank. By
which they are maintaining their transactions.

2.1 Meaning of Bank

The term Bank derives from the Italian word banco, which means "desk/bench", used to
make transactions above a desk covered by a green tablecloth.

2.2 Dfinition of Bank

 A bank is a financial institution licensed by a government. Its primary activity is to

lend money. Many other financial activities were allowed over time. For example
banks are important players in financial markets and offer financial services such as
investment funds.

 A Bank is a financial intermediaries institution between lenders & borrowers,which

act as like as pipeline.

 A Bank is a business organization that receipts & payment funds to their customers.

2.3 Banking

In general terms, the business activity of accepting and safeguarding money owned by other
individuals and entities, and then lending out this money in order to earn a profit.

2.3.1 Banks view point: All of the activities of bank are called banking.

2.3.2 Clients view point: All of the activities of clients that are related with bank are
called banking.

2.3.3 Course view point: The course from which we can earn more knowledge about
bank is called banking.

2.3.4 Performance view point: The performance of bank is called banking.

2.4 Banker
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Generally, the term banker defined as "a dealer in capital, or, more properly, a dealer in
money. He is an intermediate party between the borrower and the lender."

 According to British Stampt Act, 1881 “any person carrying on the business of
banking is a banker”.

 A banker is a person who deals with the money of others; but he often lends his own
money, and when thus acting he is one of the two original parties.

 A public or incorporated bank, like a banker, receives and lends money. It always has
a capital of its own to lend, besides the money or deposits of individuals.

 Some are says that both employee & owner are banker. But, this is very controversial
one.

2.5 Origin of Banking in Bangladesh

Bangladesh is an over populated country, which shares a common part with India &
Pakistan in respect of development of the business of Banking. With the beginning of
Muslim rule in India, the fortune hunting Afghanistan trades started money lending business
in exchange of interest sometime in 1312 AD. They were known as “Kabuliwallas”.

During the period of ‘Moguls’ the banking was run by wound / weal families. By the time,
the British left the country in 1947, they had emerged a large number of banks about 668 in
Bengal alone. At the time of war in 1965, between India & Pakistan, produced a round of
disruptions. When the govt. declared most of the banks, which owned by non-muslim, these
banks as enemy properties. Most of the banks were closed down & the responsibility for
liquidation was entrusted to the State Bank of Pakistan & later to the Bangladesh Bank.

2.6 Classification of Bank

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The bank can be classified as follows:

Central Bank

Non-Schedule Bank Schedule Bank

Foreign Bank Local Bank

Specialized Bank Commercial Bank

Nationalized Private Commercial

Commercialized Bank Bank

Full Private Commercial Bank De-Nationalized Private

Commercial Bank

EXIM Bank Limited

Figure 01: 2.6-Classification of Bank

2.7 Current Structure of Banks in Bangladesh

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The commercial banking system dominates the financial sector of Bangladesh. Where
Bangladesh Bank (BB) is the Central Bank of Bangladesh and the chief regulatory authority
of this sector since the country's independence. Its prime jobs include issuing of currency,
maintaining foreign exchange reserve and providing transaction facilities of all public
monetary matters. BB is also responsible for planning the government's monetary policy
and implementing it thereby. The BB has a governing body comprising of nine members
with the Governor as its chief. Apart from the head office in Dhaka, it has nine more
branches, of which two in Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra,
Sylhet, Rangpur, and Barisal.

There have 48 banks in our country. An upcoming bank is Non Residence Bank (NRB),
which will be the 49th bank of the banking history in Bangladesh. The banking system of BD
is consists of 4 state-owned commercial banks, 5 specialized development banks, 30 private
commercial Banks, and 9 foreign commercial banks.

Sonali Bank is the largest among the state-owned commercial banks, while Pubali Bank
Limited is leading in the private ones. Among the 9 foreign banks Standard Chartered Bank
has become the largest & in leading position in our country.

2.7.1 Nationalized Commercial Banks (NCBs):

Sl. No. Name of Bank

01. Sonali Bank
02. Rupali Bank
03. Janata Bank
04. Bangladesh Krishi Bank

Table 01: 2.7.1-List of Nationalized Commercial Banks

2.7.2 Private Commercial Banks (PCBs):

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 Sl. No. Name of Bank
01. Pubali Bank Limited
02. Agrani Bank Limited
03. AB Bank Limited
04. EXIM Bank Limited
05. The City Bank Limited
06. IFIC Bank Limited
07. Islami Bank Bangladesh Limited
08. National Bank Limited
09. United Commercial Bank Limited
10. Uttara Bank Limited
11. ICB Islami Bank Limited
12. Eastern Bank Limited
13. Al-Arafah Islami Bank Limited
14. Prime Bank Limited
15. South East Bank Limited
16. Dhaka Bank Limited
17. National Credit & Commerce Bank Limited
18. Social Investment Bank Limited
19. Dutch-Bangla Bank Limited
20. Mutual Trust Bank Limited
21. Standard Bank Limited
22. One Bank Limited
23. Bank Asia Limited
24. Mercantile Bank Limited
25. Jamuna Bank Limited
26. BRAC Bank Limited
27. Shahjalal Islami Bank Limited
28. The Premier Bank Limited
29. The Trust Bank Limited
30. First Security Bank Limited
31. Bangladesh Commerce Bank Limited
32. Al Baraka Bank Bangladesh Limited

Table 02: 2.7.2-List of Private Commercial Banks

2.7.3 Foreign Banks:

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 Sl. No. Name of Bank
01. HSBC Ltd.
02. Standard Chartered Bank
03. City Bank NA
04. Habib Bank Ltd.
05. National Bank of Pakistan
06. State Bank of India
07. American Express Bank
08. Muslim Commercial Bank Ltd.
09. Shamil Islami Bank of Bahrain EC
10. Standard Chartered Grindlays Bank
11. Credit Agricole Indosuez (The Bank)
12. Hanvit Bank Ltd.

Table 03: 2.7.3-List of Foreign Banks

2.7.4 Specialized Development Banks:

Sl. No. Name of Bank

01. Bangladesh Krishi Bank
02. Rajshahi Krishi Unnayan Bank
03. Bangladesh Shilpa Bank
04. Bangladesh Shilpa Rin Sangstha
05. Bangladesh Small Industries and Commerce (BASIC)
Bank Limited

Table 04: 2.7.4-List of Specialized Development Banks

2.7.5 Other Banks in the Country: Not only the 52 Banks, but also another 4 Banks are also
continuing their operation in our country. These are listed below:

Sl. No. Name of Bank

01. Ansar VDP Unnayan Bank
02. Bangladesh Samabai Bank Ltd. (BSBL)
03. Grameen Bank
04. Karmasansthan Bank

Table 05: 2.7.5-List of other Banks in Bangladesh

3.0 Historical Background of EXIM Bank Limited

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Export Import Bank of Bangladesh Limited was established in 1999 under the leadership of
Late Mr. Shahjahan Kabir, founder chairman who had a long dream of floating a
commercial bank which would contribute to the socio-economic development of our
country. He had a long experience as a good banker. A group of highly qualified and
successful entrepreneurs joined their hands with the founder chairman to materialize his
dream. In deed, all of them proved themselves in their respective business as most
successful star with their endeavor, intelligence, hard working and talent entrepreneurship.
Among them, Mr. Nazrul Islam Mazumder became the honorable chairman after the demise
of the honorable founder chairman.

The bank was incorporated in Bangladesh on 2 nd June, 1999 as Banking Company under the
Companies Act. 1994. But it starts functioning from 3 rd August, 1999 with Mr. Alamgir
Kabir, FCA as the advisor and Mr. Mohammad Lakiotullah as the Managing Director. Both
of them have long experience in the financial sector of our country. By their pragmatic
decision and management directives in the operational activities, this bank has earned a
secured and distinctive position in the banking industry in terms of performance, growth,
and excellent management. The authorized capital and paid up capital of the bank are stand
now Tk. 10000.00 million and Tk 6832.27 million respectively. The Bank carries out its
banking activities through 59 branches with around 1700 employees operating as per
Islamic Shariah in the country. It also went for public issue of shares in the year 2004 and its
shares are listed with Dhaka Stock Exchange & Chittagong Stock Exchange in Bangladesh.

The bank has migrated all of its conventional banking operation into Shariah based Islami
banking since 1st July, 2004. The bank has developed the world renowned Core Banking
Software namely TEMENOS-T24, which is an outmost successful banking software for
online banking.

EXIM Bank Limited is the first private sector bank in Bangladesh, which established
exchange houses outside the country, for ensuring delivery of smooth and most reliable
remittance services to Non Residence Bangladeshis (NRBs) living and working in abroad.
The first exchange house of EXIM Bank Limited has started operation of its wholly owned
subsidiary “EXIM Exchange Company (UK) Ltd.” on 30th June 2009 in London, United
Kingdom, & the second one is “EXIM Exchange Company (Canada) Ltd.” on 23rd January
2010 in Canada. These exchange houses are compliant official money transfer channel to
serve NRBs, outside the country.

3.1 Company Profile

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Name of the Company : Export Import Bank of Bangladesh Limited
Date of Incorporation : June 02, 1999
Inauguration of First Branch : August 03, 1999
Industry : Banking
Type : Privately Held
Headquarters : Dhaka, Bangladesh
Number of Branches : 59
Company Size : Around 1,700 employees
Common Job Titles : Officer (Around 71%)
Median Age : 28 years
Median Tenure : 3.5 years
Authorized Capital : BDT 10,000.00 Million
Paid-up Capital : BDT 6,832.27 Million
Chairman : Mr. Md. Nazrul Islam Mazumder
Managing Director : Mr. Kazi Masihur Rahman
Company Secretary : Mr. Md. Golam Mahbub
Auditors : Hoda Vasi Chowdhury & co., Chartered Accountants
Credit Rating : Long Term: “AA-” (High Safety)
Short Term: “ST-2” (High Grade)
Registered Office : Symphony, Plot No. SE (F): 9, Road No. 142
Gulshan Avenue, Dhaka-1212, Bangladesh
PABX : 880-2-988 9363
Fax : 880-2-988 9358
SWIFT Code : EXBKBDDH
Web Page : www.eximbankbd.com

Table 06: 3.1-Company Profile of EXIM Bank Limited

3.2 Vision, Mission, & Values of EXIM Bank

3.2.1 Vision
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The gist of vision is “Together Towards Tomorrow”. Export Import Bank of Bangladesh
Limited believes in togetherness with its customers, in its march on the road to growth and
progress with service. To achieve the desired goal, there will be pursuit of excellence at all
stages with a climate of continuous improvement, because, in EXIM Bank, they believe, the
line of excellence is never ending. Bank’s strategic plans and networking will strengthen its
competitive edge over others in rapidly changing competitive environment. Its personalized
quality services to the customers with the trend of constant improvement will be the basis to
achieve their operational success.

3.2.2 Mission

The bank has chalked out the following corporate objectives in order to ensure smooth
achievement of its goals:

 To ensure ethics and transparency at all levels.

 To add effective contribution to the national economy.
 To be the most caring, customer friendly, and service-oriented bank.
 To create a technology based most efficient banking environment for its customers.
 To ensure sustainable growth and establish full value to the honorable stakeholders.

Eventually the bank also emphasizes on:

 Providing efficient customer service.

 Maintaining corporate and business ethics.
 Making its products superior and rewarding to the customers.
 Provide high quality financial services in export and import trade.
 Display team spirit and professionalism.
 Enhancement of shareholders’ wealth.
 Fulfilling its social commitments by expanding its charitable and humanitarian
activities.

3.2.3 Values

 Quality
 Teamwork
 High Morale
 Customer Focus
 Integrity and Honesty
 Respect for the Individual
 Environmentally Conscious
 Transparency and Accountability.

3.3 Organizational Hierarchy

Chairman Advisor Board of Directors

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 Managing Director (MD)

Additional Managing Director (AMD)

Deputy Managing Director (DMD)

Senior Executive Vice President (SEVP)

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Senior Assistant Vice President (SAVP)

Assistant Vice President (AVP)

Senior Principal Officer (SPO)

Principal Officer (PO)

Executive Officer (EO)

Senior Officer (SO)

Management Trainee Officer (MTO)

Officer

Junior Officer (JO)

Assistant Officer (AO)

Trainee Assistant Officer (TAO)

Figure 02: 3.3-Organogram of EXIM Bank Limited

3.4 Organizational Structure

Chairman
 Mr. Md. Nazrul Islam Mazumder
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Directors
 Mr. Md. Nazrul Islam Swapan
 Mr. Mohammed Abdullah
 Mr. Md. Altaf Hossain
 Mrs. Nasreen Islam
 Mr. Mohammed Shahidullah
 Mr. Md. Fahim Jaman Pathan
 Mrs. Nasima Akhter
 Mr. A.K.M Nurul Fazal Bulbul
 Alhaj Md. Nurul Amin
 Mr. Zubayer Kabir
 Mrs. Rizwana K. Riza
 Mr. Md. Habibullah
 Mr. Anjan Kumar Saha
 Mr. Md. Abdul Mannan
 Mr. Abdullah Al-Zahir Shapan
 Mr. Mahbubur Rashid (Bay Leasing & Investment Ltd.)

Independent Director
 Mr. Muhammad Sekandar Khan

Managing Director
 Mr. Kazi Masihur Rahman

Additional Managing Director

 Dr. Mohammed Haider Ali Miah

Company Secretary
 Mr. Md. Golam Mahbub

3.5 Shariah Council

Chairman

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  Professor Maulana Mohammad Salah Uddin (Khatib, Baitul Mukarram National
Mosque)

Members

 Maulana Mohammad Sadequl Islam (Imam, Mohakhali DOHS Jame Masjid)

 Professor H. M. Shahidul Islam Barakaty (Director, Southeast University)
 Mr. A. S. M. Fakhrul Ahsan (Ex. Deputy Governor, Bangladesh Bank)
 Hafez Maulana Mufti Md. Khairullah (Chief Mufti, Amborshah Madrasha, Tejgaon,
Dhaka.
 Mr. Md. Nazrul Islam Mazumder (Chairman, Board of Directors, EXIM Bank)
 Mr. A.K.M Nurul Fazal Bulbul (Chairman, Board Audit Committee, EXIM Bank)
 Mr. Md. Abdul Mannan (Director, EXIM Bank)
 Mr. Zubayer Kabir (Director, EXIM Bank)
 Mr. Abdullah Al-Zahir Shapan (Director, EXIM Bank)
 Mr. Kazi Masihur Rahman (Managing Director, EXIM Bank)

3.6 Board Audit Committee

Chairman
 Mr. A.K.M Nurul Fazal Bulbul

Members
 Mr. Md. Abdul Mannan
 Mr. Zubayer Kabir
 Mr. Muhammad Sekandar Khan

Secretary
 Mr. Md. Golam Mahbub

3.7 Highlights on the Overall Activities

As at 31st December, 2010

(Values in Million BDT)

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 Sl. Particulars 2008 2009 2010
No.
01 Authorized Capital 3500.00 10000.00 10000.00
02 Paid up Capital 2677.75 3373.96 6832.27
03 Total Capital 5763.89 7718.89 10928.40
04 Reserve Fund 1532.55 2092.97 3154.76
05 Total Assets 68446.46 86213.37 113070.98
06 Total Liabilities 63457.26 79496.16 100596.13
07 Total Share holders’ Equity 4989.20 6717.21 12474.85
08 Deposits 57586.99 73835.46 94949.40
09 Investment (General) 53637.68 68609.91 83296.65
10 Investment (Shares & Securities) 2894.02 2169.44 6012.86
11 Operating Income 8356.82 10383.62 15646.77
12 Operating Expenditure 5838.43 7201.84 9752.98
13 Profit before Provision & Tax 2518.39 3181.78 5893.79
14 Profit Before Tax 1989.55 2802.12 5308.95
15 Net Profit after Provision & Tax 1096.63 1694.10 3476.01
16 Investment as a % of total Deposit 93.14% 92.92% 98.26%
17 Dividend: 26 35 35
 Cash -- -- --
 Bonus 26 35 35
 Right Share -- 1R:2 --
18 Cost of Fund 9.52% 9.09% 7.10%
19 Net Asset Value (NAV) Per Share 18.63 19.91 18.26
20 Earning Per Share (EPS) 3.40 2.64 5.35
21 Price Earning (P/E) Ratio 8.43 14.28 11.34
22 Return on Asset (ROA) after Tax 1.83% 2.19% 3.54%
23 Return on Investment (ROI) 2.03% 9.38% 35.01%
24 No. of Employees 1312 1440 1686
25 No. of Branches 42 52 59

Source: Annual Report 2009, & Auditor’s Report 2010, EXIM Bank Ltd.

Table 07: 3.7-Three Years Performance at a Glance

3.8 Financial Overview of EXIM Bank

Export Import Bank of Bangladesh Limited as one of the leading private commercial banks
has achieved significant progress in the banking operations for more than 12 years. The

15
performance of the bank, during the period under review, is more significant simultaneously
in development and achievements of continuous growth rate in all the areas of banking
operations. It has successfully mobilized Tk. 94,949.40 million as deposits & disbursed
investment of Tk. 83,296.65 million up to 31st December 2010 through its 59 Branches. The
total Income & Expenditure of the Bank were Tk. 15,646.77 million & Tk. 9,752.98 million
respectively that led to an operating profit of Tk. 5,893.79 million with an annual growth
rate of 30.51% higher than the previous year. The return on assets (ROA) after tax was
3.54% for the year ended 2010.

3.8.1 Capital and Reserve Fund

The Bank started its mission with an authorized capital of Tk. 1,000.00 million & paid-up
capital of Tk. 225.00 million subscribed by the sponsors in the year 1999. Its authorized
capital is standing now Tk. 10,000.00 million at the time 2010. As on 31 st December 2010,
its total capital & reserve stood at Tk. 12,474.85 million that comprised of paid-up capital of
Tk. 6,832.27 million & other reserves of Tk. 5,642.58 million.

3.8.2 Deposits

Deposit is one of the prime sources of fund invested to earn revenue in the banking
business. The total deposit of the Bank stood at Tk. 94,949.40 million as on 31st December
2010 against Tk. 73,835.46 million of the previous year (2009) with an increase of Tk.
21,113.94 million at a growth rate 28.60%. The present strategy is to increase the deposit
base through maintaining competitive rates of Profit, having low cost of funds, &
satisfactory customer services.

3.8.3 Investments (General)

Total amount of Investment of the Bank stood at Tk. 83,296.65 million as on 31 st December
2010 against Tk. 68,609.91 million of the previous year (2009) with an increase of Tk.
14686.74 million at a growth rate 21.41%. The Bank gives emphasis to acquire quality
assets and does appropriate investment risk analysis while approving commercial and trade
investment to clients.

3.8.4 Investments (Shares & Securities)

The size of the investments portfolio as on 31 st December 2010 was 6,012.86 million
(excluding investment in subsidiary), while it was Tk. 2169.44 million in 2009. The
portfolio comprises mainly of Bangladesh Government Islamic Investment Bond, & Shares
of different companies.

3.8.5 Import Business

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As on 31st December 2010, the Bank opened 43,962 letters of credit (L/C) & the import
volume stood at Tk. 87,562.37 million with a growth of 4.35% in volume in comparison
with previous year of Tk. 83,911.51 million.

3.8.6 Export Business

As on 31st December 2010, the Bank handled 38,645 export bills for Tk. 81,622.35 million
while it was Tk. 76,240.77 million in the previous year (2009).

3.8.7 Foreign Remittance

As on 31st December 2009, foreign remittance of the bank stood at Tk. 2452.33 Million as
against Tk. 1428.46 Million in 2008 with a growth rate of 71.68 percent. For smooth
handling of remittances, EXIM Bank opened branches in remote areas in our country. The
bank has made remittance agreements with several local banks to facilitate faster delivery of
remitted fund to the beneficiaries. To encourage Bangladeshi expatriates in sending hard
earned money through legal channels, the bank has opened two exchange houses in United
Kingdom, & Canada. Both of these houses are fully owned by the bank. The bank has also
trying to open another exchange house in USA, which is subject to the approval of
Regulatory Bodies. The Bank also a member of EL DORADO which is a web-based
remittance system for facilitating bank to bank, intra-bank electronic fund transfer.

3.9 Achievement

3.9.1 First Private Sector Bank to Open Exchange House in UK: In order to ensure
delivery of smooth and most reliable remittance services to NRBs living and working
in UK, Export Import Bank of Bangladesh Limited (Exim Bank) has started
operation of its wholly owned subsidiary “EXIM Exchange Company (UK) Ltd.” on
30th June 2009 in London, United Kingdom, one of the oldest destinations for the
expatriate Bangladeshis. It is the first exchange house owned by a Bangladeshi
private bank.

3.9.2 Implementation of the World Renowned Core Banking Software (TEMENOS

T24): In order to provide IT enabled products and services to the valued customers,
EXIM Bank has implemented a world renowned Shariah based centralized core
banking software named TEMENOS T24. This software is capable enough to
provide all sorts of electronic banking services to the valued customers through
various electronic delivery channels.

3.9.3 Conversion from Conventional Banking to Shariah Based Islami Banking:

EXIM Bank is the first private sector bank in Bangladesh, which migrated at a time
all the branches from its conventional banking operation into Shariah based Islami
banking operation from 1st July, 2004 & without facing any trouble.

3.10 Corporate Culture

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EXIM Bank limited is one of the most disciplined Banks with a distinctive corporate culture
in our country. Here they believe in shared meaning, shared understanding, & shared sense
making. The people can see & understand events, activities, objects, & situation in a
distinctive way. They mould their manners & etiquette, character individually to suit the
purpose of the Bank, & the needs of the customers who are of paramount importance to
them. The people in the bank see themselves as a tight knit team or family that believes in
working together for growth. The corporate culture they belong has not been imposed; it has
rather been achieved through their corporate conduct.

3.11 Corporate Social Responsibility

EXIM Bank always keeps itself associated with the various activities toward the benefit of
the society as well as the nation. In order to facilitate & smooth execution of its activities, it
has already established a foundation named “EXIM Bank Foundation”. The bank allocates
at least 2% of annual profit for the EXIM Bank foundation to conduct CSR each year.

EXIM Bank started their CSR activities EXIM Bank Scholarship Programme with the
theme of- “Promotion of education among all” in the year 2006. The bank has taken around
1200 meritorious students from all corners of the country to take care their educational
expenses till their completion of educational life. So far Tk. 32.9 Million (BDT 329,00,000)
has been disbursed as scholarship under this programme including Tk. 19.6 Million (BDT
196,00,000) in 2010.

Under Education Promotion Scheme, interest free loan is provided for poor but meritorious
student to help them bear monthly educational expenses including food, accommodation etc.
The students are required to repay the principal amount in long term monthly installments
after they have joined a confirmed job after accomplishing their education properly. By 31 st
December 2010, Tk. 25.7 Million (BDT 257,00,000) was sanction to take care of around
200 poor but meritorious student from reputed educational institutions in our country.

Not on the above, but also the bank was donate to Prime Minister’s Relief Fund for
bereaved family members of the Army Officers during the carnage in 2009 at BDR Head
Quarter (Pilkhana, Dhaka).

EXIM Bank is always prompt to stands besides the helpless. The bank provides relief in
cash, foods, equipment of infrastructural development etc. in time of flood, earthquake, fire,
cyclone and so on.

3.12 Prime Operational Area

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As a full-fledged Islamic bank in Bangladesh, EXIM Bank provide all Islamic banking
services including a wide range of saving and investment products, foreign exchange and
ancillary services with the support of modern technology and professional management.

EXIM Bank Ltd. consists of some major functional divisions which include followings:

 Corporate Banking Division:

(a) Foreign trade & treasury
(b) Investment Administration
 General Banking Division
 Financial & Admin. Division
 Personal Banking Division
 IT Division

3.13 Online Branch Banking

The bank has set up a Wide Area Network (WAN) across the country to provide online
branch banking facility to its valued clients, without any charges. As why clients of any
branch can able to do banking transaction at other branches of the bank. Under this system
any client will be able to do following types of transactions:

 Withdraw the cash from his/her account at any branch of the bank.
 Cash deposit in his/her account at any branch of the bank irrespective of the location.
 Cash deposit or withdraw from other’s account at any branch of the irrespective of
the location.
 Transfer of money from his/her account with any branch of the bank.

3.14 Shariah Based Islami Bank

19
By the grace of Almighty Allah, the Bank has started its operation as full-fledged Islami
Bank based on Shariah through conversion from conventional interest based banking system
with effect from 1st July, 2004 with the approval of Bangladesh Bank. It is a great pleasure
that every body gladly accepted the conversion with appreciation. It is a breakthrough in the
history of Islami Banking, because all other Islamic Banks of Bangladesh are found Shariah
based since inception i.e. at the time of their incorporation. It also experienced some
traditional Banks having a few branches based on Shariah. But total conversion of a
conventional Bank into a full fledged Islami Bank is, perhaps, first time introduced by
EXIM Bank in the World.

It is noted here that a learned Shariah Council, consisting of 11 members who are prominent
ulemas, reputed bankers, and eminent economists of the country, has been formed to guide,
monitor and supervise the banking activities complying Shariah principle since inception of
its Islami Banking branches and thereafter transformation of its operation from traditional to
fully Shariah based Islami Banking system. Professor Moulana Mohammad Salah Uddin is
the Chairman of the council.

3.14.1 Main Condition for Islamic Mode of Transactions:

 The transactions should be Riba (Interest) free.

 The transactions should be Gharar (excessive uncertainly) free.
 Maysir (Gambling) free.

3.14.2 Objectives of EXIM Bank as a Shariah Based Islami Bank:

 To offer an interest free banking system in the financial market in our country.
 To establish a partnership relationship with customer, & eliminate the idea of debtor-
creditor of traditional banking.
 To invest on profit and loss sharing basis.
 To invest to those business sectors, that is legally authorized by Islamic Shariah.
 To accept deposits on profit and loss sharing basis.
 To contribute towards establishment of an Islamic Economic and Social System in
the country.

3.15 Existing Products & Services of EXIM Bank Limited

20
3.15.1 Deposit Products

There have several types of deposit products are offered by EXIM Bank Limited in our
country. These are:

Name Tenure Profit Rate (%)

Al-Wadiah Current A/C (CD) -- --
Mudaraba Savings A/C (MSD) -- 7
Mudaraba Short Term Deposit A/C (MSTD) -- 3
Mudaraba Term Deposit Receipt A/C (MTDR) 01 Month 13.50
Mudaraba Term Deposit Receipt A/C (MTDR) 03 Months 13.50
Mudaraba Term Deposit Receipt A/C (MTDR) 06 Months 13.50
Mudaraba Term Deposit Receipt A/C (MTDR) 12 Months 13.25
Mudaraba Term Deposit Receipt A/C (MTDR) 24 Months 11
Mudaraba Term Deposit Receipt A/C (MTDR) 36 Months 11
Mudaraba Super Savings Scheme (MSSS) 06 Years Double on Maturity
Mudaraba Multiplus Savings Scheme (MMSS) 10 Years Triple on Maturity
Mudaraba Monthly Income Scheme (MIS) 03 Years 12
Mudaraba Monthly Savings Scheme (MSS) 05-12 Years 10.50
Mudaraba Hajj Scheme 05-20 Years --

Table 08: 3.15.1-Deposit Schemes of EXIM Bank

3.15.2 Investment Products

There have several types of investment products are offered by EXIM Bank Limited in our
country. These are:

 Corporate finance
 Commercial finance
 Industrial finance
 Project finance
 Lease finance
 Syndicate finance
 Hire purchase finance &
 Real estate finance.

3.15.3 SME Investment Products

21
Now a days SME investment is becoming very much popular. An Investment Scheme based
on Islamic Shariah provides investment to the small and medium enterprise both in fixed
capital and working capital.

There have 4 basic types of SME products are offered by EXIM Bank:

(1) Exim Abalamban.

(2) Exim Uddyog.
(3) Exim Buniyad.
(4) Exim Kishan.

3.15.4 Plastic Card Products

There have four basic types of plastic cards are offered by EXIM Bank Limited in our
country. These are:

 VISA Islamic Card International & Dual Classic

 VISA Islamic Card International & Dual Gold
 VISA Islamic Card Local Classic
 VISA Islamic Card Local Gold

3.15.5 Remittance Services

EXIM Bank Limited provides remittance services through two exchange houses in abroad.
These are: “EXIM Exchange Company (UK) Ltd.” in London, United Kingdom, & “EXIM
Exchange Company (Canada) Ltd.” in Canada. These exchange houses are compliant
official money transfer channel to serve NRBs, outside the country. Not only have these, but
also the bank also provided remittance services through Western Union Money Transfer, EL
DORADO Money Transfer, SWIFT, Online Banking without charges & so on.

3.15.6 L/C (Export & Import) Products

A letter of credit is an instrument issued by a bank to a customer placing at the letters

disposal such agreed sums in foreign currency as stipulated. It is issued against payment of
amount by the importer or against satisfactory security. EXIM Bank Ltd. issues several
types of L/C like- sight payment credit, deferred payment credit, acceptance credit,
negotiation credit, transferable credit, red close credit revolving credit, stand by credit, and
so on.

4.0 Branch Profile

22
EXIM Bank Golapgonj Branch was established at 5 th November, 2009. Among the 59
branches of EXIM Bank, the position of Golapgonj Branch is 40 th. Its operational activities
are going on properly & smoothly, based on Islamic Shariah. It serves all types of banking
activities as like as other private commercial banks in our country, but maintaining Islamic
Shariah.

Branch Name : EXIM Bank, Golapgonj Branch

Date of In-corporation : 5th November, 2009
Location : Noor Mansion, Golapgonj, Sylhet
Phone : 08227-56461, 08227-56462
Mobile : 01730097268
Fax : 08227-56463
Staffs : 07
Officers : 07
Branch In-Charge : Mr. Md. Shah Newaz Hussain (AVP & Manager)
Total Employees : 15
e-mail : golapganj@eximbankbd.com

Table 09: 4.0-Golapgonj Branch at a Glance

4.1 My Job at EXIM Bank, Golapgonj Branch

4.1.1 Starting

23
My internship program at EXIM Bank Limited has started on January 20 th, 2011 and it
ended on April 20th, 2011. During these 3 months I was assigned at the Golapgonj Branch. I
had a lot of fun, but more importantly I finally understood working by actually being there.
This practical orientation is necessary for the development and preparation of a person in
the job world. The things that I have learned at EXIM Bank are:

 Meaning of responsibility
 Necessity of commitment
 Punctuality and regularity is very important
 Ability to interact with different sorts of people and so on.

EXIM Bank has a prepared internship program for internees. Although it is rarely followed,
it served as a guide for me. I was working all the departments, without Cash department in
the Bank.

4.1.2 Nature of the Jobs

The first 2 weeks I was working in the Credit Department. Usually this department is very
sensitive to dealing with the customers & their documents. But I was lucky to accomplish
my working times successfully with the help of two Senior Officer, namely Mr. Wahidur
Rahman Chowdhury (SO), & Mr. Shahad Ahmed Chowdhury (SO). My responsibilities
in this department were just to assist them in updating the customer file, maintaining the
serial of several deeds of corporate clients according to Advocate notice etc. I learned the
followings from this department:

 I had to rearrange all the customer files.

 Recording the customer documents in office file.
 Checking the customer documents, which are required for credit section.

Then I was assigned to General Banking (GB). I spent the next 5 weeks here. First time I
felt some difficulty, but very fruitful. I was under Mr. Md. Raish Uddin (MTO), who was
very intellectual & interesting. He always guided me about my responsibilities at GB, which
include the followings:

 Opening A/C for new customers and aiding them in the process.
 Updating & maintaining serial of the old A/C opening forms.
 Bringing out the cheque books for the customers.
 Writing cost memo for Demand Draft (DD).
 Counting & updating the vouchers of GB.
 Entry the inward & outward despatch.
 Receiving inwards from the courier.

The last 5 weeks I was working on foreign remittance of Foreign Exchange Department,
under Mr. Md. Fazle Rabbi Chowdhury (Officer). Here I had directly deal with the
customers, those who are coming in bank for receiving foreign remittances. Here I worked
on the followings:

24
  Payment the remittances through Western Union, EL DORADO etc.
 Learning the basics of these software’s - Western Union, EL DORADO etc.
 Receiving & printing remittance paper from the software’s of bank.
 Checking the details of customers, those who want to receive remittance.
 Taking necessary papers from customers such as photocopy of National ID
Card, Passport, Trade License, Birth Certificate etc.
 Fill up the forms required to provide remittances.
 Taking signatures of customers & verify them.
 Payment the money from cash department.

4.1.3 Observation

It was very interesting for working at EXIM Bank. The people there are really nice, frankly,
helpful, and talented. The things that I have noticed and observed are:

 Punctuality and regularity is very important.

 All employees are strictly followed the banking rules, no one can abide by
the rules.
 Work is never left pending for the next day unless it is absolutely necessary.
 The work process could be made faster with better computers and operating
systems.
 A good job performance is rarely praised, hence lacking motivation of the
employees.
 There is always a hurry of customers so there is no standard on what the
employees do throughout the day.
 The work activities are always set and divided for each of the employees.
This is the way it should be, but when I saw it first hand it was remarkable.
 Each and every employee has a certain set of responsibilities. They carry out
those responsibilities throughout the day. It is also easy to assign duties that
way.
 I have always seen that all the staffs are helping each other for
accomplishing their tasks at the day end.

5.0 Introduction

International migration is a worldwide phenomenon. Though Bangladesh is a labor surplus

country, most of the labours are unskilled or semi-skilled. As a developing country
25
Bangladesh can not provide all its labours with job facilities and so unemployment rate is
very high here. In this backdrop, international migration started in the part of the globe.
Bangladeshi emigrants send a portion of their earning as remittance or foreign exchange
from foreign countries to Bangladesh for their family members and relatives.

Foreign remittances to Bangladesh have been growing steadily over the last decade. It gets
momentum in recent time in Bangladesh and is the second largest sector of foreign
exchange earning after garments sector. According to Bangladesh Bank, near about 6.5
million Bangladeshis living and working abroad, mainly in the Middle East, South East
Asia, Europe, and the United States. Out of them, 64 percent of annual remittances inflows
originate from Middle Eastern nations. Millions at home are dependent on money sent by
their emigrant relatives.

According to Development Prospect Group of World Bank, Bangladesh has become the 7th
largest recipient of remittance by migrant workers in the year 2009 at round US$ 10.7
Billion, which increases in 2010 at round US$ 11.1 Billion (Migration and Remittances
Factbook, World Bank 2011). The increase in remittances could also be partly due to two
upcoming religious occasions - the Muslim festival of Ramadan and the major Hindu
religious celebration of Durga Puja.

However, the volume of remittance receipts by Bangladesh coming through formal channels
as shown in the Global Remittances Guide's report does not still provide the real picture of
remittance inflow in the country. In fact, the informal channels, illegal “hundi” system are
still playing a major part in transferring the remittance money, thereby depriving the
government of a huge sum of foreign currency every year.

The amount of remittances arriving through the formal channel historically depends upon
several factors playing important role in the decision matrix of the remitters.
Macroeconomic variables such as home and host country GDP, exchange rate, interest rate,
inflation, investment facilities for remitters etc. are considered to be important factors.

In this situation, the government needs to take more initiative for receiving remittances
through formal channels & rectifying the informal channels. Already Bangladesh Bank
takes several necessary steps for receiving remittances through formal channels.

5.1 Remittance

Remittances are personal flows of money from migrants to their families and friends and
should not be taxed or directed to specific development uses.

26
Remittances are typically transfers from a well-meaning individual or family member to
another individual or household. They are targeted to meet specific needs of the recipients.

To sum up, it can be said that migrants’ families enjoy a higher standard of living and status
than what it was before migration (Rahman, 2001).

5.1.1 Types of Remittance

Remittance can be classified as follows:

Remittance

National or Domestic International or Foreign

Remittance Remittance

Inward Remittance Outward Remittance

Figure 03: 5.1.1-Types of Remittance

5.2 Foreign Remittance

Foreign remittance means transfer of money by a foreign worker to his or her home country.

27
Foreign remittance means purchase and sale of freely convertible foreign currencies as
admissible under Exchange Control Regulations of a country.

When migrants send home part of their earnings in the form of either cash or goods to
support their families, these transfers are known as workers’ or migrant remittances (Ratha,
2005).

5.2.1 Types of Foreign Remittance

Foreign remittances are of two kinds:

5.2.1.1 Foreign Inward Remittance

The remittance in foreign currency, which is received from outside the country to our
country is known as Foreign Inward Remittance.

The term “Inward Remittance” includes not only remittances by Telegraphic Transfer (TT),
Foreign Demand Draft (FDD), Money Transfer (MT), etc. but also Purchases or Bills,
Travelers’ Cheque (TC) etc.

All remittances that come from foreign countries to the local country regarded as inward
foreign remittance.

Sources of Inward Foreign Remittance:

 Export Proceeds: receive remittances through exporting several products from

our country to outside.
 Remittance by Expatriate Bangladeshi: receive remittances through the
Bangladeshi workers’ or migrants those who working in abroad.
 Foreign loans & grants, donation & gift: receive remittances from developed
countries for infrastructure development of our country, or recovering from
financial crisis, or recovering from natural disasters.

5.2.1.2 Foreign Outward Remittance

The remittance send from our country to foreign countries is called outward foreign
remittance.

28
The term foreign outward remittance indicates that the funds remitted to overseas on behalf
of the client.

All remittances from a local country to a foreign country local currency credited to non-
resident money accounts of foreign banks or convertible money accounts constitute outward
foreign remittance.

Sources of Outward Foreign Remittance:

 Payments of import liabilities: are the payment of money against purchasing goods &
services from abroad.
 Return from Foreign Direct Investment (FDI): when foreigners are invest money in
our country, than they will get return on behalf of investment. This return may be
transferred by foreigner to their home country.
 Educational Expenses: payment the fees of educational institutions by Bangladeshi
students.
 Medical Expenses: payment the costs of medical treatment in abroad by Bangladeshi
people.

5.3 Foreign Remittances in Bangladesh

Remittances to Bangladesh have been growing steadily over the last decade. Since its
independence in 1971, more than 6.7 million Bangladeshi workers are employed in more

29
than 140 countries across the globe (Migration Information, World Bank 2011). Migration
carries high costs and risks both for migrants and their families who lose an important
member of the household for an extended period of time, but they strive only for
maintaining high living standard. Yet each year thousands of Bangladeshis migrate to the
Middle East, UAE, Southeast Asia, Europe, & United States to work. Among all, Middle
East is the largest source & two third of total inward remittance of Bangladesh.

5.4 International Migration from Bangladesh

International migration has become an increasingly important avenue for employment and
poverty reduction of Bangladeshi people. There are two major patterns in international
migration from Bangladesh: one to the industrialized west that includes the United Kingdom
and the United States, and the other to Middle East and Southeast Asia. The migration to the
industrialized countries is perceived to be long term or permanent in nature while migration
to Middle East and Southeast Asia is usually for short term. The Bangladeshi immigrants
living in the industrialized countries of Europe and North America can be divided into two
distinct groups: a group of well-educated, high or middle income people of Bangladeshi
origin, and the other belonging to the low income or unemployed segments of the
population. As Bangladesh is an over populated country, so it able to supply a large number
of skilled, low-skilled, & unskilled labor throughout the world. A statistics shows that-
migration by low-skilled individuals can have an indirect positive impact on economy &
poverty reduction through decreasing unemployment and increasing wages among skilled
workers remaining in the country (Siddiqui, 2007). The Bureau of Manpower, Employment
and Training (BMET) maintains a database on the short term labor migrants who officially
go overseas for employment. According to the official statistics, between 2012 and 2016,
the total number of Bangladeshis working abroad as short term migrants stands at about 6.7
million. Following figure presents the total number of migrant workers for each year
between 2012 and 2016.

Source: Bureau of Manpower, Employment and Training (BMET), Bangladesh

Figure 04: 5.4-Total no. of Migrants from Bangladesh

30
 Source: Human Development Report, 2016

Figure 05: 5.4-Percentage of Bangladeshi Migrants by Continent

The above figure shows continent-wise percentage of international migration from

Bangladesh. These are always varying from year to year. For example, at the time 2015 to
2012, there was a substantial increase in demand for migrant workers in the UAE,
presumably triggered by the economic boom caused mainly by manifold increases in oil
revenue. The significant drop in the number of Bangladeshi workers in 2016 is the direct
fallout of the economic slowdown caused by the recent global financial crisis. Despite the
tremendous growth in overseas employment of Bangladeshi migrant workers, the last few
years have also witnessed increased competition from new migrant labor sending countries
like Nepal, Cambodia, and Viet-Nam (Siddiqui, 2016).

Source: Bureau of Manpower, Employment and Training (BMET), Bangladesh

Figure 06: 5.4-Percentage of Bangladeshi Migrants by Country

The major destination countries for these short-term migrant workers include Saudi Arabia
(KSA), the United States of America (USA), the United Kingdom (UK) the United Arab
Emirates (UAE), Malaysia, Kuwait, Oman, Singapore, Bahrain, Qatar, Libya etc. Saudi
Arabia alone hosts about 39 percent of the total short-term migrant workers from
Bangladesh.

31
5.5 Inflow of Foreign Remittance in Bangladesh

According to official statistics published by Bangladesh Bank, a total amount of USD 67.67
billion has been remitted to Bangladesh from across the globe between 1975-76 and 2009-
10. However, if we add the amount of remittances transferred through informal channels
and therefore not captured in the official data, this number will be much higher. Now-a-
days, remittance flow has been steadily increasing with acceleration in the growth rate in
recent years. The Iran-Iraq War seems to explain the slowdown in the growth of remittances
in the early 1980s. Similarly, the Gulf War of the early 1990s may have been the reason for
sluggish growth in remittances during that period. It should be noted that the recent spur in
the growth of remittances can partially be ascribed to increased use of formal channels of
remitting money from abroad for a variety of reasons. They include increased efficiency and
larger network of formal channels that involve both nationalized commercial banks (NCBs)
and private commercial banks (PCBs), somewhat stricter enforcement of laws against
informal channels like the hundi system (which are supposedly used for transfer of funds
among terrorist groups) after the terrorist attack of September 11, 2016, and various
government programs to encourage remittance transfers.

Remittance crossed $10 billion mark for the first time in Bangladesh history in the year
2009 because of migrants, a main driver of the country's economic progress, sent more
money home despite all odds during global recession. With 20 percent growth, remittance
inflow reached $10.72 billion in the year 2009, although the year marked a fall in manpower
exports. In 2012, the remittance was $8.97 billion. The overseas employment ministry data
shows that the number of migrant workers declined 46 percent to 475,278 persons in
January-December of 2013. In December, 2014, the number was 875,055. But, the total
remittance inflows to Bangladesh grew strongly for most of FY 2015, which reached $11.1
billion, a 13.4% increase compared to last FY 2016. Following figure shows the last five
years statistical data of remittances inflow in Bangladesh:

Source: World Bank (Migration and Remittances Factbook 2016)

Figure 07: 5.5-Inflow of Foreign Remittance (Last Five Years)

32
According World Bank, Bangladesh was the 7 th largest recipient country of remittances in
the year 2010, whereas India was in the first position, & Saudi Arabia alone is the source of
more than 30 percent of total remittance transfers to Bangladesh in the FY 2015-20116.
Following figure shows the country wise workers’ remittance received in the FY 2015-2016:

Source: BRAC EPL Research, & Bangladesh Bank Web

Figure 08: 5.5-Country-wise Foreign Remittance Received in FY 2015-2016

Economists and bankers think the financial crisis worldwide has opened up the scope for
Bangladesh expatriates to send more money home, as they lost confidence in depositing
hard-earned money with foreign banks during their stay in Middle Eastern and other
countries. According to Mustafizur Rahman, Executive Director of the Centre for Policy
Dialogue (CPD), “The main cause of more remittance inflow in 2016 is the worry among
expatriate Bangladeshis about depositing money with foreign banks against the backdrop of
global meltdown.” As why Bangladesh received $11.1 billion remittance in FY 2016.

5.6 Players of Foreign Remittance in Bangladesh

33
According to Bangladesh Bank, there have two major channels are used in sending
remittance. These are:

5.6.1 Formal Channel: means sending remittances through maintaining the rules &
regulations of government & foreign exchange policy of a country. Remittance is sent
officially through various ways such as Bank A/C to Bank A/C transfer, demand draft (DD),
traveler’s check (TC), telegraphic transfer (TT), postal order (PO), direct transfer, automatic
teller machine (ATM), electronic fund transfer (EFT) etc.

When remittances are transferred directly from the foreign A/C of migrant worker to his
own A/Cat home it is known as direct transfer. This can be through telegraphic means or
otherwise. Remittances are frequently sent through demand draft in Taka issued by a bank
or an exchange house in favor of a nominee of migrant. Usually the draft is sent by post or
in emergency by courier service. One can send remittance through the postal authorities. In
such case the remitted money is handed over to the receiver by the local post office.
Travelers’ cheques are also used as a means to send remittance.

5.6.2 Informal Channel: means sending remittances without the rules & regulations of
government & foreign exchange policy of a country. Hundi or Money Courier is the most
common among the informal or unofficial channels of transfer. Hundi refers to illegal
transfer of remittance outside the international or national legal foreign currency transfer
framework. Organized groups based in diverse cities such as London, New York, Dubai,
Kuala Lumpur and Singapore conducts hundi operation through their partners in
Bangladesh, & other developing countries.

In the hundi system a moneychanger in the foreign land of a particular country takes cash
from the clients and promises to deliver the equivalent in another currency to a designated
recipient in a home country, often with a day. The changer doesn’t actually send money, but
rather tells a contact in the recipient’s country to deliver the proceeds. To retrieve the cash,
the recipients need only a number or a receipt or a code word mailed by the remitter. Hong
Kong has become the main ‘centre’ for hundi system in East Asia.

Most of the out flowing labor is rural area people have less knowledge in banking. They are
also unaware about the banking culture. Banks also charge comparatively higher rate of
commission for transferring remittances. Therefore, these might be some of the reasons for
dominance of informal money transfer in remittance business in Bangladesh.

5.7 Formal versus Informal Channels

34
 Source: Remittances Data, Development Prospects Group, World Bank, 2010

Figure 09: 5.7-Channels Used in Sending Remittance over the World

According to the World Bank, near about 60% of total remittance are transferred through
informal channels (DPG 2010, WB). This also clarified by the above figure. As a huge
amount of remittances are transferred through informal channels, so these amounts are not
recorded officially in both sending & receiving countries. So it adversely affects the socio-
economic condition of both countries with Bangladesh.

As formal channel of sending remittance is required more time & costly so the Bangladeshi
migrants are often used informal channel or hundi system. It also proved by the report of
World Bank. At present, most of nationalized & private commercial banks of Bangladesh
are established their branches and representations abroad and working hardly for providing
facilities of Bangladeshi migrants that sending remittances through official channels. Some
private banks – the Islami Bank, for example – are also very active in the remittance market.

5.8 Roadblocks in Current Foreign Remittance Process in Bangladesh

35
The major roadblocks of a smooth and efficient payment of foreign remittances in
Bangladesh are as follows:

 Poor infrastructure in rural and semi-urban economy.

 Inadequate reach of private commercial banks within the country.
 Massive information asymmetry in the market.
 Active ‘Hundi’ market.
 Inefficiency of financial institutions.
 Poorly regulated exchange houses.
 Low literacy rate in the country.
 Uneven competition among financial institutions.
 Lack of investment in IT backbone development for market efficiency.
 Absence of a strong central payment gateway for Straight Though Processing (STP)
of payment services and so on.

These above inefficiencies have resulted in abnormal share of ‘Hundi’ business in this
sector. Today, it is estimated that the share of ‘Hundi’ business constitutes roughly 40% of
total incoming foreign remittances in Bangladesh. Banks drives the legal channel for
remittance mobilization.

Source: Foreign Exchange Policy Department, Bangladesh Bank, May 2010

Figure 10: 5.8-Channels Used in Sending Remittance in Bangladesh

According to Bangladesh Bank, near about 40 percent of total remittances is inflow in our
country through informal channel. As a high portion of remittances are inflow through
informal channels, so these amounts are not recorded officially in our countries. Although
these remittances are contribute in socio-economic condition of our country, but it can not
be identified.

5.9 Bank as a Formal Channel

36
Banks are the integral parts of formal channel of sending remittance or transferring money.
Every commercial bank provides the remittance service to their customers. Remittance has
become the primary service provided by the banks to their customers. They provide
remittance service by acting as an agent or sub agent of other money transfer agencies, for
example, EXIM Bank is providing inward remittance service by being the principal agent of
Western Union Money Transfer. They can also provide remittance service through their own
agency or exchange houses: “EXIM Exchange Company (UK) Ltd.” in London, United
Kingdom & “EXIM Exchange Company (Canada) Ltd.” in Canada.

Bangladesh Bank (BB) is the central bank of Bangladesh. Among other powers and
functions, BB regulates scheduled bank activities, acts as a clearing-house, maintains
foreign exchange reserves and monitors floating exchange rate mechanism in the current
accounts. It has a separate department for regulating and monitoring remittance entitled
Foreign Exchange Policy Department (FEPD). It also generates analyses, interprets, and
distributes data on inflow of remittance. Bangladesh Bank (BB) always encourages to
nationalized & private commercial banks for opening exchange houses in abroad. Because,
they try to control the informal channel or hundi system for transferring remittances in
Bangladesh. BB also implements several policies for encouraging Bangladeshi migrants in
abroad regarding remittances.

Remittance undoubtedly has stood as the most influential factors in making profit for the
bank thorough the commission earned by acting as a remitting agent and through
fluctuations in foreign exchange rates. Major players in banking in the field of remittance in
Bangladesh are Islami Bank Bangladesh Limited (IBBL), Sonali Bank, South East Bank
Limited (SEBL), Export Import (EXIM) Bank of Bangladesh Limited, Agrani Bank Limited
and so on.

5.10 Rules of Bangladesh Bank Regarding Foreign Remittance

37
According to Bangladesh Bank under Section 18A of Foreign Exchange Regulation Act,
1947, it is mandatory for all resident individuals/organizations to have permission before
commencing business or receiving any proposal to act as an agent (as Satellite Channel
Distributor) of Foreign Principal(s). To deal with foreign remittances, any bank or financial
institution must obtain the permission of authorized dealer (AD) through Bangladesh Bank.
Without maintaining the formalities of AD of Bangladesh Bank no a single bank or financial
institution can deal with foreign exchange or remittances.

Bangladesh Bank objective is to have all remittances sent through official channels & in this
connection it encourages different government & private banks to set up arrangements with
different exchange houses in destination countries. These arrangements are most secure,
efficient, low cost, & timesaving compared to other methods like demand draft (DD),
telegraphic transfer (TT), postal order (PO) etc. Every of these methods are time consuming
& costly. As why Bangladesh Bank always encourages to nationalized & private
commercial banks for opening exchange houses in abroad.

There have several specific rules of Bangladesh Bank to open exchange houses in abroad.
Some of these are listed below:

 License from a local monitoring authority.

 Provide credit rating report.
 Bangladesh embassy report.
 There has to be a third party guarantee.
 Open an A/C to foreign bank in abroad.
 Hold certain amount of foreign currency in abroad.

Policies of Bangladesh Bank regarding foreign remittances is listed below:

 Permit to several banks for opening exchange houses in abroad.

 Remitted money is tax free.
 Creating awareness among the outgoing migrants.
 Strongly maintain Anti-Money Laundering Act.

5.11 Rules of EXIM Bank Regarding Foreign Remittance

38
EXIM Bank always maintains the rules & regulations imposed by Bangladesh Bank.
According to Bangladesh Bank under Section 18A of Foreign Exchange Regulation Act,
1947, EXIM Bank is an authorized dealer to deal in foreign exchange business. As an
authorized dealer, a bank must provide some services to the clients regarding foreign
exchange and the Bank is able to do so.

The basic function of foreign exchange is to deal with import, export, & foreign remittance
business. All the three businesses are continued by EXIM Bank in our country. In the
process of providing remittance service, the Bank receipt foreign remittances from different
countries through their own exchange houses, money transfer agencies etc. Not only have
these, but also it sells, buys, & transfer foreign currency.

Though, maintaining all the rules & regulations of Bangladesh Bank regarding foreign
exchange business is too much difficult, but each & every bank in our country is bound to
maintain, so EXIM Bank is not above. By maintaining these rules & regulations, EXIM
Bank able to open exchange houses in UK, & Canada for providing remittance services to
expatriate Bangladeshis. Another proposed exchange house in USA is subject to the
approval of Regulatory Bodies of Bangladesh Bank.

EXIM Bank maintains several policies regarding foreign exchange & remittances are listed
below:

 Offer foreign currency deposit account (FCD) for nonresident Bangladeshis.

 Creating awareness among the outgoing migrants.
 Strongly maintain Anti-Money Laundering Act.
 Deeply contact with the outgoing migrants customers.

As EXIM Bank applied several policies regarding foreign exchange & remittance, so they
are becoming strong in the field of remittance business in our country. According to
Bangladesh Bank, in handling foreign remittance, Sonali Bank among the nationalized
commercial banks, Islami Bank Bangladesh Limited (IBBL), South East Bank Limited
(SEBL), and Export Import (EXIM) Bank of Bangladesh Limited among private sector is
enjoying a good reputation. Among the foreign banks Standard Chartered Grindlays Bank is
performing well. Each of these banks has also some distinctive features in providing
services, charging commission etc.

5.12 Foreign Remittance at EXIM Bank

39
EXIM Bank has been providing remittance services since the beginning years of its
establishment. Remittance has also been an integral aspect to support the profitability of the
bank. As on 31st December 2009, foreign remittance of the bank stood at Tk. 2452.33
Million as against Tk. 1428.46 Million in 2008 with a growth rate of 71.68 percent. For
smooth handling of remittances, EXIM Bank opened branches in remote areas in our
country. The bank has made remittance agreements with several local banks to facilitate
faster delivery of remitted fund to the beneficiaries. To encourage Bangladeshi expatriates in
sending hard earned money through legal channels, the bank has opened two exchange
houses in United Kingdom, & Canada. Both of these houses are fully owned by the bank.
The bank has also trying to open another exchange house in USA, which is subject to the
approval of Regulatory Bodies.

Two types of foreign remittances are practices by EXIM Bank in our country. These are:

5.12.1 Inward Foreign Remittance

Inward foreign remittance covers purchase of foreign currency in the form of foreign
telegraphic transfer (FTT), foreign demand draft (FDD), travelers’ cheque (TC), etc. sent
from abroad favoring a beneficiary in Bangladesh.

5.12.2 Outward Foreign Remittance

Outward foreign remittance covers sales of foreign currency through issuing foreign
telegraphic transfer (FTT), foreign demand draft (FDD), travelers’ cheque (TC), etc. as well
as sell of foreign exchange under L/C and against import bills retired.

5.13 Activities under Foreign Remittance at EXIM Bank

 Issuance of travelers’ cheque (TC), foreign telegraphic transfer (FTT), foreign

demand draft (FDD) etc.
 Passport endorsement.
 Encashment certificate.
 Foreign currency (F/C) Account opening & filing.
 Opening of Export F/C retention Quota A/C & maintain.
 Maintenance of ledger of Cash Dollar, F/C Deposit A/C etc.
 Maintain foreign bills for collection (FBC) register & follow up it.
 Opening & Maintain the Student file for out-going students.
 Preparation of all related foreign statement, voucher, & posting.
 Attending all related correspondence to other Banks or Institutions.

5.14 Foreign Remittance Services of EXIM Bank

40
EXIM Bank has been providing remittance services through various products. They offer
the inward remittance service thorough the following products:

5.14.1 Western Union Money Transfer

Western Union Money Transfer is the trusted, easy, and swift medium of money transfer in
the world. Western Union has been a trusted name for all Bangladeshi citizens living abroad,
and keen on sending money to their relatives in Bangladesh. There are 1, 17,000 Western
Union Agent Locations over 185 countries in the world. Western Union also markets more
than one quarter billion money orders every year. With about $3 billion in revenue, it is the
largest network in the world & global leader in money transfer and message services, with a
history of pioneering service dating back more than 150 years. It continues today to help
consumers and businesses transfer money or make payments using money orders and other
electronic systems.

Procedures of Transfer Money through Western Union at EXIM Bank: EXIM Bank
always make payment to the customers through Western Union with the help of their
exchange houses, Branches of other banks or exchange houses in abroad. There have some
documents required of EXIM Bank to provide foreign remittance through Western Union
Money Transfer. These are listed below:

 Photocopy of valid Passport (National, or International)

 Photocopy of valid National ID Card
 Photocopy of valid ID Card (Student ID, or Service ID)
 Photocopy of Driving License
 Photocopy of Bank Cheque Book
 Photocopy of Birth Certificate
 Certificate from Chairman/Commissioner/MP etc.

This simple transfer system, being on line eliminates the complex process and makes it easy
and convenient for both the sender and the receiver. The Western Union agent gives a
money transfer control number (MTCN) to sender against sending money in Bangladesh.
Generally, sender always select any one of the above documents as ID of receiver, & the
Bank claim only this document to the receiver for making payment.

5.14.2 EL DORADO

41
EL DORADO is a secure web based & online Remittance Payment System that went live on
July 25, 2009. Presently EL DORADO has 8 members’ banks having 501 branches all over
the country. It is fastest & most reliable way for both A/C holder & non A/C holder to
transfer money throughout the Bangladesh & receive from other countries all over the
world.

Facilities of EL DORADO: There have several facilities offer by EL DORADO in our

country. Some of these are listed below:

(a) Online transactions on real time basis.

(b) Fund transfer (Inter Bank & Branches).
(c) Fully complaint with all relevant regulations of Bangladesh Bank.
(d) Direct electronic payment substitute: demand draft (DD), telegraphic
transfer (TT), pay order (PO) etc.
(e) Payment of Foreign Remittance in Bangladeshi Taka (BDT):
Exchange Houses to Bank A/C(A/C), Exchange Houses to Pay Cash
for non A/C holders, Exchange Houses to ‘Advice & Pay’ etc.
(f) Transfer of Inland remittance in Bangladeshi Taka (BDT): Customer
A/C to Customer A/C transfer, Customer A/C to Pay Cash for non A/C
holders, Customer A/C to ‘Advice & Pay’, Cash deposit for cash
payment (both are non A/C holder) etc.

Steps to Remit Fund through EL DORADO: There have three basic steps:

 Step 01: Client will deposit money to exchange house or any of the
member bank.
 Step 02: Beneficiary gets notification by SMS or e-mail from EL
DORADO System.
 Step 03: Beneficiary draws the money from his A/C or receive cash from
the branches within Bangladesh.

Member Banks of EL DORADO: As on 31st December, 2010 there have 8 banks is

transferring money through the EL DORADO network in our country. These are listed
below:

(1) EXIM Bank Limited

(2) Social Islami Bank Limited
(3) Dhaka Bank Limited
(4) Bank Asia Limited
(5) First Security Islami Bank Limited
(6) Mutual Trust Bank Limited
(7) BRAC Bank Limited
(8) Al-Arafa Islami Bank Limited.

Procedures of Transfer Money through EL DORADO at EXIM Bank: EXIM Bank

always make payment to the customers through EL DORADO with the help of their

42
exchange houses, member banks, exchange houses of other member banks in home &
abroad. There have some documents required of EXIM Bank to provide remittances through
EL DORADO Remittance & Payment System. These are listed below:

 Photocopy of valid Passport (National, or International)

 Photocopy of valid National ID Card
 Photocopy of valid ID Card (Student ID, or Service ID)
 Photocopy of Driving License
 Photocopy of Bank Cheque Book
 Photocopy of Birth Certificate
 Certificate from Chairman/Commissioner/MP etc.

This simple transfer system, being on line eliminates the complex process and makes it easy
and convenient for both the sender and the receiver. The EL DORADO agent gives a
personal identification number (PIN) to sender against sending money in Bangladesh.
Generally, sender always select any one of the above documents as ID of receiver, & the
Bank claim only this document to the receiver for making payment.

In Bangladesh, we can only receive money from abroad but we can not make payment or
transfer money from our country to another country of the world on behalf of our customer.

5.14.3 SWIFT

EXIM Bank Limited is one of the first few private commercial banks in Bangladesh, which
have become the member of SWIFT (Society for Worldwide Inter-bank Financial
Telecommunication). SWIFT is a member-owned co-operative, which provides a fast and
accurate communication network for financial transactions such as Letters of Credit, Fund
Transfer etc. By becoming a member of SWIFT, the bank has opened up possibilities for uninterrupted
connectivity user institutions around the world.

The SWIFT code of EXIM Bank is EXBKBDDH. This simple transfer system, being on
line eliminates the complex process and makes it easy and convenient for both the sender
and the receiver. Generally, sender always select any a documents as ID of receiver, & the
Bank claim only this document to the receiver for making payment.

5.15 Remittance Business of EXIM Bank as Compared to the Major Competitors

43
The major competitors (from banking sector) for EXIM Bank in the field of remittance
business are Islami Bank Bangladesh Limited (IBBL), Sonali Bank, South East Bank
Limited (SEBL), Agrani Bank Limited and so on. Remittance generates the ‘Fee Income’
for the bank. It is the accumulation of the charges taken from the customers and commission
earned from the various agencies it has tied up with.

According to Bangladesh Bank, the total remittance ($11.1 billion) in FY 2009-2010 was
received through four state-owned commercial banks (SCBs), two specialized banks, 30
private commercial banks (PCBs), and nine foreign commercial banks. Following table
shows the performance of several banks in receiving remittance at the time 2009-2010:

Sl. Bank FY 2009-2010

No. (Values in USD Billion)
01. Islami Bank Bangladesh Limited (IBBL) 1.86
02. Sonali Bank 1.13
03. 3 other Nationalized Commercial Banks (NCBs) 0.67
04. 30 other Private Commercial Banks (PCBs) 6.83
05. 2 Specialized Commercial Banks 0.20
06. Foreign Commercial Banks 0.41
Total 11.1

Source: Remittances Data, Development Prospects Group, World Bank, 2010, Bangladesh
Bank, March 2011

Table 10: 5.15-Receiving Remittance through Different Banks in FY 2009-2010

Islami Bank Bangladesh Ltd. (IBBL) channeled the highest amount of remittance worth US
$ 1.86 billion among the participating banks, whereas State-owned Sonali Bank secured the
second position in channeling wage earners’ remittance of US $ 1.13 billion in FY 2009-
2010.

Three other Nationalized Commercial Banks (NCBs) including Rupali Bank, Janata Bank,
& Bangladesh Krishi Bank handled US $ 0.67 billion remittance in the same period, while
30 private commercial banks channeled another US $ 6.83 billion including EXIM Bank
Ltd., South East Bank Limited (SEBL), Agrani Bank Limited and so on.

Two specialized banks- Bangladesh Krishi Bank, and BASIC Bank Ltd. assisted US $ 0.20
billion remittance to come home, while the other foreign commercial banks helped to
channel US $ 0.41 billion in FY 2009-2010.

44
 Source: Annual Report 2009, EXIM Bank Limited

Figure 11: 5.15-Foreign Remittance Receive in EXIM Bank (Last Five Years)

From the above graph, it is clear that the inflow of remittance at EXIM Bank is growing
tremendously. At the time 2005 to 2007, the total inflow of remittance was increasing
steadily. But, from year 2008 to 2009, it was increasing very rapidly. As on 31 st December
2009, foreign remittance of the bank stood at Tk. 2.45 billion as against Tk. 1.43 billion in
2008 with a growth rate of 71.68 percent.

45
5.16 Usage of Remittances in Bangladesh

In Bangladesh, remittances are cited as making up around 60% to 70% of recipient poor
households’ total income. It is found from a study that almost 80% remittances are used in
non-productive sector in our country. Most of the remittances sent to our country are for
various livelihood purposes, such as- living expenses, educational expenses, medical
treatment, business start up costs, disbursement of small loans, funds for asset purchases etc.

Sl. Sector Where Remittance Use Percentage

No. (%)
01. Food and cloths 24.45
02. Home construction/repair 20.02
03. Agricultural land purchase 15.24
04. Repayment of loan (for migration) 13.55
05. Social ceremonies 9.07
06. Sending family members to abroad 7.19
07. Investment in business 4.76
08. Saving purpose 3.72
09. Other purpose 2.00
Total 100 %

Source: Complied from various studies (WB, IMF, BB)

Table 11: 5.16-Percentage Distribution of Remittance by Expenditure Categories

The critical analysis of utilization pattern of remittances in Bangladesh explores that 24.45%
of remittances are used for food and cloths, 20.02% for home construction/repair, 15.24%
for agricultural land purchase, 13.55% for repayment of loan (for migration), 9.07% for
social ceremonies, 7.19% for sending family members abroad, and finally only 4.76% are
used for investment in business, 3.72% for savings, and 2.00% for other purposes.

46
5.17 Determinants of Remittances to Bangladesh

In general, the literature differentiates between micro and macroeconomic determinants of

remittances. Among the microeconomic determinants, self-sacrifice towards the family left
behind by the migrants in the home country, investment in home country by “self-
interested” migrants, insurance against risks that migrants are exposed to in the host country,
and payment back (return) to the family for the investment that it made on the migrant, have
been extensively discussed and tested for various remittance receiving
communities/countries around the world. At the macro level, movements of foreign
exchange rate, differences in interest rates between host and home country, and business
cycle fluctuations in host and home country of the migrants have been shown to be
important determinants.

There have been only a few studies that explore the determinants of remittance transfers to
Bangladesh. These studies seem to focus on macroeconomic determinants. For example,
Barua (2007) show that income differentials between host and home country and
devaluation of home country currency positively and high inflation rate in home country
negatively affect workers’ remittance decision.

Using a simple regression analysis, Hussain and Naeem (2010) find that number of workers
finding employment abroad every year, oil price, exchange rate, and GDP growth are the
key determinants of changes in the level of remittance inflow into Bangladesh. According to
their results, each additional migrant worker increase remittances by USD 816 annually.
Furthermore, a one dollar increase in oil price increases annual remittance transfers to
Bangladesh (mainly from Middle East) by nearly USD 15 million. They also find that
depreciation of exchange rate by one Bangladeshi taka increases annual remittance by USD
18 million and that remittance are higher during periods of low economic growth in
Bangladesh.

The last result is consistent with the finding of Sayan (2006) who shows that migrants from
Bangladesh increase their remittance transfers during times of economic hardship in their
home country.

47
 5.18 Economic Impacts of Remittances in Bangladesh

The economy of Bangladesh is a developing market-based economy. Its per capita income
in 2008 was est. US $1,500 (adjusted by purchasing power parity). According to the
International Monetary Fund (IMF), Bangladesh ranked as the 48th largest economy in the
world in 2009, with a gross domestic product of US $256 billion. The economy has grown
at the rate of 6-7% p.a. over the past few years. More than half of the GDP belongs to the
service sector; nearly half of Bangladeshis are employed in the agriculture sector, with
RMG, fish, vegetables, leather and leather goods, ceramics, rice as other important produce.

Remittances from Bangladeshis working overseas, mainly in the Middle East are the major
source of foreign exchange earnings; exports of garments and textiles are the other main
sources of foreign exchange earning. The World Bank (2006) argues that skilled migrants
raise economic welfare at home by sending a relatively larger flow of remittances; Faini
(2007), however, finds no evidence that skilled migrants remit more. At the same time, high-
skilled migration can reduce economic growth due to the negative impacts of “brain drain”
and the loss of opportunities to achieve economies of scale in skill-intensive activities
(World Bank, 2006).

Remittance has economic benefit both at macro and micro level in Bangladesh. However for
countries with low GDP, like Bangladesh remittances receipts can distort formal capital
markets and destabilize exchange-rate regimes through the creation of parallel currency
markets. This is an impressive rate of growth and as such, it is engine of both economic
growth and poverty reduction. The increase in remittances, which now surpass official aid
transfers to developing countries, reduces international inequality and promotes poverty
reduction.

The remittance has significant impact on both micro & macro level of the economy. The
microeconomic impact of remittance is especially at household level. The majority of
Bangladeshi migrants abroad is unskilled, and originates from rural areas and poor
community. The poorer the household, the more impact or benefits remittance income can
have alleviating poverty. Remittances allow the poor people to increase expenditures on
both durables and non-durable products, and provide them with protection against negative
income shocks. On the other hand, the significant impact of remittance on macro-level
includes GDP, GNP, Export, Import, FDI etc.

48
5.18.1 Microeconomic Impacts of Remittances in Bangladesh

It has been a general conclusion of most micro-level studies that the remittance-receiving
households use the largest fraction of remittances for consumption. However, purchase of
land, construction and repair of houses, and repayment of loans has been some of the other
important uses of remittances. Various survey-based studies indicate that family transfers
account for up to 70 percent of the total household income. Some studies (e.g. Afsar, 2002)
suggest that over time households with overseas labor migrants become increasingly
dependent on remittances.

Depending on how consumption is defined, as much as 80 to 90 percent of remittances are

used for this purpose. A statistic shows that 1/5 th of total remittance spent on basic items like
food and clothing. It is interesting to note that near about 16 percent of remittances are spent
on purchase of land. Land is the safest way to invest in Bangladesh. As Siddiqi and Abrar
(2001) argue, agricultural land provides direct economic return through crop production.
Furthermore, in a land-shortage economy like Bangladesh, the value of land appreciates
very quickly.

Repayment of loans also accounts for a large share of the total use of remittances. These
findings are further corroborated by Sharma and Zaman (2009). They find that while the
remittance-receiving families spend more on consumption of food and non-food items, the
same is not true for health and education expenditure. They also note that their spending on
home appliances and land are higher than non-migrant families’. Finally, remittance-
receiving families save more and have more outstanding loans (resulting mainly from high
upfront cost of migration). However, it also shows their credit-worthiness.

In an interesting study, Mohapatra (2009) find that the remittance-receiving households in

Bangladesh had higher per-capita consumption than others after the devastating floods of
1998. Based on household survey data, this study emphasizes the role of remittance
transfers as a consumption smoothing mechanism in the face of natural disaster.

There are instances of some non-resident Bangladeshis (NRB) making individual

contributions every year to mosques, orphanages, or madrassas. Also, there are Bangladeshi
immigrants mainly in the USA and the UK - who come from the same region/area -
organize to pool money and transfer to the respective areas of their origin for charity or
community development. The money is given for health care, religious projects such as
mosques or educational projects, construction and repair of roads and culverts and the
provisions of scholarships to students in the villages where the expatriates come from.
However, the total transfer is very small and not well known to formal/government
institutions in Bangladesh.

5.18.2 Macroeconomic Impacts of Remittances in Bangladesh

49
To give a perspective on how important remittances could be for economy-wide impacts,
following table presents comparisons of these transfers with gross domestic product (GDP),
foreign direct investment (FDI), total merchandize export earnings, and official foreign aid
in Bangladesh between 2005 and 2009. By 2009, remittances are already more than 13
percent of GDP, whereas, it was only 7.05 percent in the time 2005. A statistic shows that
over the last 30 years, the rate of annual growth of remittances has averaged about 19%. The
remittances have far exceeded the official foreign aid and FDI into Bangladesh. The flow of
remittances as a share of total export earnings has increased over the years and was about 64
percent in 2009. These comparisons signify the importance of remittances for the overall
economy in Bangladesh.

Year Remittances as a Percentage Share of

GDP FDI Foreign Aid Exports Earnings
2005 7.05 502.94 285.03 50.03
2006 8.86 691.56 - 47.08
2007 9.60 986.19 402.70 51.61
2008 11.37 826.80 435.46 64.59
2009 13 879.30 482.34 63.91

Source: Authors’ Calculations using Data Obtained from UNCTAD,

Bangladesh Bank, and the World Bank

Table 12: 5.18.2-Comparison of Remittances with Key Macro Variables

In a recent study, Raihan, 2009 further show that near about 2 percent of total poverty level
is reduced by the growth in remittances between the FY 2006 to 2008. Furthermore, it is
important to recognize that even though remittance receiving households may not directly
invest the funds that they receive through transfers from the migrant member, the increase in
consumption itself should work its way through multiplier effect on the aggregate demand
and therefore should contribute positively to growth. Also, it has been noted above that the
remittance-receiving households save a part of their remittance transfers. Further, there is
some evidence that Bangladeshi immigrants also transfer funds directly to the home country
in order to save.

Over the years, government and banks have been able to attract savings from individual
immigrants by creating a number of bonds and special savings accounts aimed at migrants.
However, the amount transferred directly for investment is very low. But as long as the
savings of the remittance-receiving households and the migrant workers enter the formal
financial system in Bangladesh, they are used to finance investment and consequently they
contribute to long-run growth.

6.0 SWOT Analysis

50
SWOT means analyzing the strengths, weaknesses, opportunities, and threats of an
organization to know the present condition. This is very common analysis to determine the
company’s capabilities of doing effective business. This help to know the possible
advantages and disadvantages of the firm that it has compare to others. Here is the SWOT
analysis of Export Import (EXIM) Bank of Bangladesh Limited:

6.0.1 Strengths

 EXIM Bank has a dynamic leadership of its management team.

 It has an interactive corporate culture.
 The working environment is very friendly, interactive, and informal.
 EXIM Bank has the reputation of being the provider of good quality services too its
potential customers.
 Serve promptly to customers.
 The number of deposits and the loans and advances are also increasing rapidly.
 Online banking without charges.
 Informal, fair, & personal relationship with customers.
 Strong IT sector with own banking software.
 Fully own exchange houses in abroad for transferring remittance.

6.0.2 Weaknesses

 Unavailability of ATM booth.

 Lack of cash deposit machine (CDM) to deposit the money.
 A few number of exchange houses in abroad.
 Lengthy paper works & documentations for providing remittance services.
 Insufficient marketing campaigns.
 Highly encourage on short term investment.
 Less attention on long term investment.
 Discouraging small entrepreneurs.
 Lack of proper motivation to employees.
 Not enough innovative products.

6.0.3 Opportunities
51
  Established more ATM booths & cash deposit machine (CDM).
 Enhance exchange houses in abroad.
 Increasing demand on Islamic Banking in the country.
 Introduce local demand oriented deposit schemes & investment products.
 Country wide network through expanding branches.
 Experienced management team with a nice corporate culture.
 Implementation of BASEL II that provides benefits & reduces credit risk.
 The quality of the services at EXIM Bank is better than the some other private banks.
It also faster & smooth day by day.
 Strong core banking software namely- TEMENOS-T24.

6.0.4 Threats

 The upcoming private, local, & multinational banks posses’ serious threats to the
existing banking network of EXIM Bank.
 Frequent change in government policy.
 Bangladesh Bank strongly maintains their rules & regulations regarding banking
business.
 Global & local financial crisis have posses a negative impact to the growth of bank.
 Lack of full Islamic monetary, fiscal, & socio-economic system within the country.
 Almost similar products are offered by other banks in the country.
 Corruption, terrorism, & business of black money are increasing day by day.
 Lower compensation package of the employees from mid level to lower level
position have a threat the employees motivation.
 International & local politics turned the banking environment into more hazardous
situation.

6.1 Findings from the Report

52
  Remittance is the second largest sector of foreign exchange earning after garments
sector. If cost of imported raw materials is deducted from the foreign exchange
earning of garments sector, remittance is the single largest sector of foreign exchange
earning.
 Remittance earning is increasing day by day but at a lower rate than the increase in
emigration from Bangladesh.
 There is a linkage between remittances at present, and development & consumption
in the future.
 Remittances of Bangladesh have minor positive impacts on foreign reserves.
 Bangladeshi inward remittance is rising at a very significant rate over time.
 It is statistically proved that there is devaluation of taka over time.
 Remittance helps in reducing dependence on foreign assistance.
 Bangladeshi emigration is rising at a significant rate over time.
 Remittance increases national savings and national investment.
 Remittance helps in balancing Balance of Payments (BOP).

6.2 Problems Regarding Remittances

(a) Income inequality: In a specific community, relative income inequality may be

found where there are both emigrants’ families and non-emigrants families due to
the variation in their income levels.
(b) Regional disparities: In the same line of above reasoning regional disparities may
be found among emigrants’ intensive regions or districts like Sylhet, Chittagong,
Comilla, Noakhali, Dhaka etc. and less emigrants’ intensive regions or districts of
the country.
(c) Increased demand for imported luxury goods: There is a tendency of remittance
earning families to purchase foreign luxury goods which create unfavorable
condition in the balance of payments, & decreasing demand of our national goods.
(d) Misuse of remittance: Some times the young people of remittance earning family
easily get huge money on their hand and misuse that money creating various types
of immoral and illegal activities.
(e) Social insecurity: Some times remittance earning families feel insecurity from
hijackers. They are sometimes compelled to pay to the bad section of the society.

7.0 Suggestions & Recommendations

53
Bangladesh is one of the important remittances earning country in the world. Moreover it is
increasing persistently. No doubt, we want to solve our unemployment problem and
working of Bangladeshi residents in different countries is a great opportunity to reduce the
prevailing unemployment rate. But actual impact of remittance on the economy of migrant
sending countries depends on how the remittance is being used. We have seen that various
policies and activities have been undertaken to increase remittance flow in formal way. But,
lesser effort has been taken for the development of effective utilization of remittance. So it
is recommended that proper policy measures be formulated to manage this sector
considering the following issues carefully. The issues are:

 Proper information about job opportunities in the overseas countries has to be spread
all over the country timely and job security should be ensured in the foreign
countries.
 Training centers are to be setup for the people who want to go overseas countries for
employment opportunities.
 Quick processing system of issuing passport and visa should be developed and
bureaucratic problems should be solved within very short time. Reasonable costs
should be ensured by the concerned authority
 Influence of the middlemen and their interest should be controlled and problems
created by them should be checked.
 Inspirations to go abroad and other favorable influences have to be provided to the
migrant workers and employees.
 Government has to make a close relationship with the concerned overseas countries
to search job opportunities in those countries.
 Bangladesh Bank should encourage the commercial banks to establish exchange
houses in abroad.
 Remittance sending procedure should be developed to make it secured, quick, and
effective.
 The remittance sending process should be liberalized so that irregular emigrants can
also send remittance through formal channels.
 Charges on sending money should be very favorable for the migrant workers.

 Finally, Bangladesh Bank should strongly monitor the remittance market in our
country.

7.1 Conclusion

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Financial institutions have always played an imperative role on strengthening the economic
infrastructure of the country. Banking services are extremely important in a free market
economy, & EXIM Bank has been at the forefront on this role.

It was great pleasure for me to complete my internship program in an Islamic Bank, like-
Export Import (EXIM) Bank of Bangladesh Limited. Though practical exposure in EXIM
Bank, Golapgonj Branch was just for 3 months, but provided me a wide range of scope to
observe the functions of bank through the cordial & warm assistance of its members. It is
the most promising private commercial bank in our country. Day by day they increase their
products & services within the country. It also working & introducing them across the
national border, only for Bangladeshi expatriates. The Bank also contributes on national
economy of our country.

Remittance is one of those important instruments, which helps to solve our problem by
strengthening the economy. Migration is such a process, which helps to reduce
unemployment, increases reserves and helps to make the balance of payment favorable and
also helps immensely in other socio-economic aspects. Unemployment situation is one of
the most alarming economic indicators of a country; migration and consequent remittance is
mainly related with employment and earning of foreign currency. So, remittance is a vital
issue for over-populated countries like Bangladesh. Therefore, we need to give proper
attention this issue. It also helps to increase foreign reserves, national savings and
investments. From socio-economic point of view it uplifts living standard, social status and
help ensuring basic needs. Therefore, it is very vital for the acceleration of economic growth
in Bangladesh. Remittance has some problems also but they are very minor in comparison
to its overall benefit. So, government, concerned authorities and the people of Bangladesh
have to take proper care about remittance considering its importance in our economy.

There have several rules & regulations of the Government, & the Bangladesh Bank
regarding banking activities & remittances in our country. EXIM Bank Ltd. has been trying
to maintain all the rules & regulations, & by maintaining these- the Bank operates its
business very successfully from its beginning. The Bank has already developed a good
image & a strong goodwill among its clients by offering excellent services. Though banking
is a dynamic business, & rivals are increasing rapidly, but the Bank is most successful one
only because of the commitment of its members, & dynamic leadership of its management
team over the period of time.

The philosophy of EXIM Bank is- “Together Towards Tomorrow” to be upheld always for
its successes. I wish EXIM Bank and everybody therein zenith success.

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