Overall Banking Performance of Pubali Bank Ltd

STAMFORD UNIVERSITY BANGLADESH

INTERNSHIP REPORT ON

Overall Banking Performance of Pubali Bank Ltd

SUBMITTED TO Sanjida Haider Lecturer Department of Business Administration (Finance) Stamford University Bangladesh

SUBMITTED BY Dalia Akter BBA (Major in Finance) ID NO: 02808828 Batch: 28(Q) Stamford University Bangladesh

Date of Submission: 8th October, 2009

Letter of Transmittal
October 03, 2009. To Sanjida Haider Lecturer Department of Business Administration (Finance) Stamford University Bangladesh Subject: Submission of the Internship Report. Dear Madam, Here is the report of my internship program in Pubali Bank Ltd, Principal branch. I have truly enjoyed my three months internship program with Pubali Bank Ltd Principal Branch and highly appreciate their co operation in this regard. I tried to reflect the practical operational aspects of the bank, which is complementary to the theoretical lessons. I am very much glad that you have given me the opportunity to prepare this report. So I therefore pray and hope would you be kind enough to accept my internship report and oblige thereby. Sincerely yours (Dalia Akter) ID BBA-02808890 Major-Finance Batch-28(Q) Department of Business Administration Stamford University Bangladesh

Supervisors Certification

This is to certify that analysis paper titled Overall Banking Performance of Pubali Bank Ltd, submitted in partial fulfillment of the requirements for the award of the degree in Bachelor of Business Administration of Stamford University Bangladesh is a record of the analysis carried out by Dalia Akter, ID No-02808890 under my active supervision and guidance and that no part of this report has been submitted for the award of the degree. I wish her success in the future.

Supervisor . Sanjida Haider Lecturer Department of Business Administration (Finance) Stamford University Bangladesh

Declaration

I, Dalia Akter, student of Stamford University Bangladesh, solemnly affirm and hereby declare that the analysis report titled Overall Banking Performance of Pubali Bank Ltd submitted in partial fulfillment of the requirements for the award of the degree in Bachelor of Business Administration of Stamford University Bangladesh, is my original work and not submitted for the award of any degree, under the extensive supervision and guidance of Mr.Sayeed Ahmed (CFO), Pubali Bank Ltd. and Ms.Sanjida Haider, Lecturer of Business Administration of Stamford University Bangladesh.

Sincerely yours

(Dalia Akter) ID BBA-02808890 Major-Finance Batch-28(Q) Department of Business Administration Stamford University Bangladesh

Acknowledgement
At the very beginning I would like to express my deepest gratitude to Almighty Allah for giving me strength and composure to finish the task within the schedule time. Internship program is an integrate part of BBA degree. Every BBA student is deputed to different organization to learn something within the pre-stipulated time by observing their organization daily practices. In this regard my internship was arranged at Pubali Bank Limited, Principal Branch with deliberate counseling of lecturer Ms. Sanjida Haider, Faculty of Business Administration, Stamford University Bangladesh. My heartiest gratitude for her enthusiastic guidance and consideration during the entire phase of the study made it possible for me to prepare this report. I could not possibly thank all of those people who have contributed a lot to prepare this report. They are of course very special people who cannot go without mention. Further more I want to pay thanks Mr. Sayeed Ahmed (CFO) to give me full support to acquire knowledge. Here again I have to mention who receive me as a member of their Banking family in introduce with me whom I worked last three months. I would like to express my deep sense of gratitude and thank to all officials and members for all their continuous guidance valuable knowledge and suggestion during my Internship Program.

Executive Summary
The report is a prepared as part of practical orientation of BBA program a description of all activities done by Pubali Bank, Principal branch. The report is lively narration of various banking activities like General Banking, loans and advance management and foreign trade financing and other ancillary services. As a conventional bank branch it has a general banking section where the primary task of deposit collection, maintenance of accounts, cash and all local services are done. It performs the job of fund management on behalf of the whole bank. Other main duty of the department is maintenance of the accounts and dealing with the clearinghouse. The loans and advance section is in charge of proper disbursement of the funds to productive as well as profitable ventures. The foreign trade department is in charge of foreign trade financing. The bank work as both issuing bank, negotiating bank and reimbursement bank to international trading. Remittance of foreign currencies is another important job of the department. In this age when management requires proper flow of accurate information to run an organization successfully than the banks way of information handling is quite outdated from the view point of sophisticated management information science. Facts and figures of the branch clearly indicates that the Principal Branch of Pubali Bank Limited is as well run branch and the trends of graphs shows a sign of improvement and expansion of activity in all spears of banking.

TABLE OF CONTENTS

SUBJECT
CHAPTER ONE
1.1 Introduction 1.2 Objective of the Study 1.3 Scope of the study 1.4 Methodology 1.5 Sources of Data 1.6 Limitation of the study -

PAGE NO
12-16
13 14 14 15 15 16

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CHAPTER TWO
2.1 History of Pubali Bank Ltd 2.2 About Pubali Bank Ltd 2.3Present Status of PBL 2.4 Vision of Pubali Bank Ltd 2.5 Mission of Pubali Bank Ltd

17-22
18 19 19 22 22

-------------------------------------------------------------------------------------------CHAPTER THREE Introduction General Banking

3.1 Introduction

23-53 25 26-53
26

SUBJECT
3.2 3.2.1 3.2.2 3.3 3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 3.3.6 3.3.7 3.3.8 3.3.9 Token Issue Procedure Maintenance of the subsidiary registers for receipt of cheques, drafts Account Opening Section Classification of Customer Different types of A/C of PBL Principal Office Documents required for opening new account Account opening procedure Precautionary Measures of A/C Opening Formalities for opening Current A/C and STD A/C Formalities for opening Private foreign currency A/C Issue of Duplicate cheque book Formalities maintained for closing an account

PAGE NO
27 27 27 29 30 30 31 31 32 32 33 34 35 36 36 37 38 38 40 46 48 49 49 49 50 50

3.3.10 Interest rate on deposit 3.3.11 Learning of This Section 3.4 3.5 3.5.1 3.5.2 3.5.3 3.5.4 3.6 3.6.1 3.6.2 3.6.3 3.6.4 Clearing Section Local Remittance Section Telegraphic Transfer (TT) Demand Draft ( DD ) Pay Order Learning of This Section Cash Function of cash department Cash Received tools Cash Receiving Procedure Cash Payment tools

3.6.5

Cash Payment Procedure

51 52

3.7 Accounts Department

SUBJECT
CHAPTER FOUR Foreign Exchange
4.1 4.2 4.3 4.4 4.4.1 4.4.2 4.4.3 4.4.4 4.4.5 4.4.6 4.4.7 4.4.8 4.4.9 Introduction International Trade Function of Foreign Exchange Department Import Section Importers Application for L/C Limit/Margin The L/C Application IMP-Form Scrutiny of L/C Application Precautions for issuing L/C Amendment of L/C Credit Report on Beneficiary Presentation of the Documents Examination of Documents

PAGE NO
54-90
56 58 59 63 63 64 65 66 66 67 67 68 69 72 73 73 74 75 75 76 76 78 82 82

4.4.10 Handling of Discrepant Import Document 4.4.11 Receiving Documents 4.4.12 Lodgment & Retirement 4.4.13 Payment against document (PAD) 4.4.14 Loan against Imported Merchandise (LIM) 4.4.15 Loan against Trust Receipt (LATR) 4.5 4.5.1 4.5.2 4.6 4.6.1 Export Section Back-to-Back L/C Export L/C Exchange rate and foreign remittance Exchange rate

4.6.2 4.7

Foreign Remittance My Learning

83 90

SUBJECT
CHAPTER FIVE Loans and Advances
5.1 Introduction 5.2 Managers Concern 5.2.1 How to locate purpose 5.2.2 How to locate security 5.2.3 How to locate borrower 5.3 Advance Secured and Unsecured 5.4 Function of Advance Department 5.5 Types of Loan 5.6 Process of Loan 5.7 State of Classification and Provision for 5 Years of PBL -

PAGE NO
91-104

92 92 92 93 94 95 95 97 101 102

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CHAPTER SIX
6.1 SWOT Analysis -

105-107
106

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CHAPTER SEVEN
7.1 Findings 7.2 Recommendation 7.3 Conclusion

108-112
109 110 112

-----------------------------------------------------------------------CHAPTER EIGHT 113-115

114 115

8.1 Acronyms
8.2 Bibliography

CHAPTER ONE

1.1 Introduction 1.2 Objective of the Study 1.3 Scope of the study 1.4 Methodology 1.5 Sources of Data 1.6 Limitation of the study

Introduction
A bank is a financial institution licensed by a government. Its primary activities include borrowing and lending money. Many other financial activities were allowed over time. All over the world the element of Banking has been changing speedily due to Technological innovation and Globalization. Banking in Bangladesh has to keep pace with the global change. Now banks must complete in the market place both with local institution as well as foreign ones. To survive ad thrive in such a competitive banking world, two important requirements are development of appropriate financial infrastructure by in the the central sense Bank of and development and of Professionalism developing appropriate

manpower structure and its expertise and experience. To introduce skilled Banker, only theoretical knowledge in the field of banking studies is not sufficient. An academic course of the study has a great value when it has practical application in real life situation.

1.2
General Objectives:

Objective of the Study

This study is intended for providing me invaluable practical knowledge about banking operation system in Bangladesh. The prime objective of the study is to examine the performance of Pubali Bank Ltd. Specific Objective: To accomplish the partial requisite of BBA program and achieve of good judgment with theoretical base. To have a revelation on the banking environment of Bangladesh. To review the consumer banking service and operating system of Pubali Bank Ltd. To evaluate the factors affecting performance of the Bank. To suggest the better ways of enhancing the performance of the Bank. To make myself confident and active in future to finger my job.

1.3

Scope of the study

This report covers the organizational overview of the Pubali Bank Ltd, Management and Organizational Structure, functions performed by the Pubali Bank Ltd. It also covers overview of the general banking, identification of problems regarding general banking, of The Pubali Bank Ltd. Principal Branch.

1.4

Methodology

While conducting the study, sources were explored for primary information and data. But hardly any updated data could be found. In the absence of updated information or data dependence on secondary has been inevitable. However, wherever possibly primary data has been used. Data were also collected by interviewing the responsible officers and from some documents & statements printed by the bank and the website of PBL. There have been used some statistical tools and graphical representation to find out different types of analytical results and interpretations.

1.5

Sources of Data

The following sources have been used for the purpose of gathering and collecting data as required. Primary data 1. Practical desk work 2. Face to face conversation with the officers and clients. 3. Official record of PBL. 4. Data collection of own supervision. Secondary Data 1. Annul report of PBL. 2. Official files and folders. 3. Working papers 4. Selected books. 5. Published and unpublished documents 6. Memo and circular

7. Website.

1.6

Limitation of the study

The limitation of the study is defined by the extensive of the facts covered by the study and those that left out. However, these limitations can be presented in the following lines: The first limitation is that I failed to sketch the complete picture of the Pubali Banks activities at the period of my internship programmed. So I tried my best to focus on what I have done and also tried to make it consistent with other part of the report. The second limitation is the lack of intellectual thought and analytical ability to make in a perfect one. I have to offset with quality due to time constraint, which apparently seems to be the most severe limitation. Another limitation of this report in non-availability of the most recent data & information of different activities of Pubali Bank policy of not disclosing some data & information for some reasons, which could be very much useful. In spite of all these limitations, I have tried to put the best effort as far as possible.

CHAPTER TWO
2.1 History of Pubali Bank Ltd 2.2 About Pubali Bank Ltd 2.3 Present Status of PBL 2.4 Vision of Pubali Bank Ltd 2.5 Mission of Pubali Bank Ltd

2.1

History of Pubali Bank Ltd

The Bank was initially emerged in the Banking scenario of the then East Pakistan as Eastern Mercantile Bank Limited at the initiative of some Bengali entrepreneurs in the year 1959 under Bank Companies Act 1913. After independence of Bangladesh in 1972 this Bank was nationalized as per policy of the Government and renamed as Pubali Bank. Subsequently due to changed circumstances this Bank was denationalized in the year 1983 as a private bank and renamed as Pubali Bank Limited. The Government of the People's Republic of Bangladesh handed over all assets and liabilities of the then Pubali Bank to the Pubali Bank Limited. Since then Pubali Bank Limited has been rendering all sorts of Commercial Banking services as the largest bank in private sector through its branch network all over the country.

2.2

About Pubali Bank Ltd

Pubali Bank Limited is a scheduled private commercial bank established on May 20.1984. Licensing no Bl/DA/1/84. In exercise of the powers conferred on the Bangladesh Bank under section 28(1) of the banking companies ordinance 1962 as adopted in Bangladesh Pubali Bank Limited; Bank authorized to open the branch at 26 Dilkusha commercial area (Local Office) P.S Motijheel district Dhaka. Condition mention in this office letter no. BCD(D) 200/42(a)/145. The bank has been widely acclaimed by the business community from small entrepreneurs to large traders and industrial conglomerates within this very short period of time it has been able to create an image for itself and has earned significant reputation in the countrys Banking sector as a bank of vision. Presently it has 371 branches in operations Principal branch is one of the big and important branches of PBL. This intended to ensure the trust and confidence of the customers through focused customers orientation qualities of services and state of art technology. The company philosophy-A Bank for the 21st century has been precisely the essence of the legend of the Bank success.

2.3

Present Status of PBL

PBL is one of the largest private sectors Bank in Bangladesh with years of experience. Adaptations of modern technology both in terms of equipment of banking practice ensure efficient service to clients. (a) Capital structure of PBL:

The bank was incorporated as a public limited company under the companies act 1994. The authorized capital and paid up capital of the bank stood at Tk. 5000 million and Tk. 2940 million respectively in 2008. Out of total 24153 shareholders, Bangladesh government held 72 shares of Tk. 7200 while taka remaining shares of Tk. 2939.99 million where held by various institutions and individuals.

(b) Management structure:

Organizational Chart of PBL

Chairman Vice Chairman Managing Director Company Secretary General Manager Law consultant Directors

Deputy General Manager Asst. General Manager Senior Principal Officer Principal Officer Officer Junior Officer Cash Officer

(c) Information Technology in Automation:

All the 371 branches have been computerized out of which 268 branches have been running successfully with the in-house developed software, PIBS (Pubali Integrated Banking System). Pubali Bank limited has implemented Centralized online Banking system in the year 2008 through its in-house developed software. In the mean time 10 branches in Dhaka, Chittagong and Sylhet have been brought under online banking system and more 40 branches will included during 2009. The remaining branches will brought under online banking system gradually. The bank will also extend services to its customers through internet Banking and mobile phone bank phase wise shortly. The bank has developed Islamic Banking Software and 2 (two) Islamic banking wings will be opened in Dhaka and Sylhet shortly. The bank has entered into the internet world through its website www.pubalibangla.com and has also been operating Automated trailer machine(ATM) and Point of sale (POS) services to meet the demand at the time.

(d) Other information:

Number of employees: 5321(annual report-2008) Number of shareholder: 24153(annual report-2008) Number of branches: 371(annual report-2008) Earning per ordinary share: 51.54(annual report-2008)

2.4

Vision of Pubali Bank Ltd

To excel as best private commercial Bank in Bangladesh with meticulous observance of rules and regulations and commitment to corporate social responsibility.

2.5

Mission of Pubali Bank Ltd

(A) To get recognition as a dynamic, innovative and customer supportive Bank. (B) To maintain continuous & steady growth with utmost transparency and to diversify development of resources. (C) To enhance continuous development of information & technology to meet the demand and challenges of the time.

CHAPTER THREE
Introduction General Banking
3.1 3.2
3.2.1 3.2.2

Introduction Token Issue

Procedure Maintenance of the subsidiary registers for receipt of cheques, drafts

3.3
3.3.1 3.3.2 3.3.3 3.3.4

Account Opening Section

Classification of Customer Different types of A/C of PBL Principal Office Documents required for opening new account Account opening procedure

3.3.5 3.3.6 3.3.7 3.3.8 3.3.9

Precautionary Measures of A/C Opening: Formalities for opening Current A/C and STD A/C: Formalities for opening Private foreign currency A/C Issue of Duplicate cheque book Formalities maintained for closing an account

3.3.10 Interest rate on deposit 3.3.11 Learning of This Section

3.4 3.5
3.5.1 3.5.2 3.5.3 3.5.4

Clearing Section Local Remittance Section

Telegraphic Transfer (TT) Demand Draft ( DD ) Pay Order Learning of This Section

3.6
3.6.1 3.6.2 3.6.3 3.6.5

Cash
Function of cash department: Cash Received tools Cash Receiving Procedure Cash Payment Procedure

3.6.4 Cash Payment tools:

3.7 Accounts Department

Introduction

PBL survive and thrive in such a competitive banking world, two important requirements are development of appropriate financial infrastructure by the central bank and development of professionalism in the sense of developing an appropriate manpower structure and its expertise and experience. PBL has contributed in the economy of the country through their dedicated services, business partnership and customer care over the last fifty years. They have seen enormous changes over the period and have continued to keep on adopting to changes their journey ahead. They has been widely acclaimed by the business communicate from small entrepreneurs to large traders and industrial conglomerates. PBL conducts all types of commercial banking activities. The bank involve in most of the areas of commercial banking operation. PBL has acted as the lead arranger in raising term loan for a number of projects under syndicate finance and also participate in some case under such financing arrangement. The also providing personal credit, service related to local and foreign remittances and several other product. PBL entered the market at a time when economic policy environment of the country is poised for higher levels of business activities and growth. The prevailing macro economic management and governments determination to carry on reforms in the banking sector provide a supporting and encouraging environment.

General Banking

3.1

Introduction

General banking is the starting point of all the banking operations. It is the department, which provides day-to-day services to the customers. Everyday it receives deposits from the customers and meets their demand for cash by honoring cheques. It opens new accounts, remit funds, issues bank drafts and pay orders etc. Since bank is confined to provide the services everyday, general banking is also known as retail banking.

According to World Bank, the general people understand the depositing and withdrawal of money and credit financing. But Bank performs numerous types of services. To deal these services bank has to maintain many register/ ledger and documents. Some different jobs that waive the General banking has shown in the following diagram

General Banking

Token Issue Section

A/C Opening Section

Cheque Clearing Section

Local Remittance Section

Cash & Accounts Section

3.2

Token Issue

The token issue department uses a register book and different types of tokens decorated with different letters for different types of accounts. There are two types of tokens. One is for savings A/C and another is current / other accounts.

3.2.1 Procedure: The client will encash money from his account will show his cheque to the respective officer of the desk. The officer will give him a token with particular number after being sure of his two signatures on the back of the cheque. The officer will give him a token with a particular number on the back of the cheque. The client will then proceed on for encashment. The officer then gives an entry about the token number, account name and the amount in the column of the register book. The token will be checked by the responsible officer for maintaining at the end of each business day. Tokens are then handed over to the supervising official concern to keep them in a locked box. Tokens are checked once a month by the supervising officer in charge whether tokens is ok or not. When a token is lost it is informed to the head office for a matter of precaution. 3.2.2 Maintenance of the subsidiary register for receipt of cheques, drafts : At the counter every cheque, demand draft and other credit instrument tender for the credit of the customers account will be delivered. Deposits received by post will sent by

the receiving officer to the bills department against acknowledgment of the dealing officer.

The dealing officer is concerned here about four types entries. They are 1. Local Clearing 2. IBC (Inter Branch Collection ) 3. SC (Short Collection ) 4. BT (Bank Transfer) In case of local clearing one bank sends money by cheque or DD which will be collected in the name of the account holder of this branch. This cheque or DD will be taken to the clearing house where agents of all banks exchange these instruments. Important thing is that the paying Bank must be in the local area (Dhaka). In case of IBC the branches must be of the same banks for short collection, the paying banker is in the area other than Dhaka whereas bank transfer will be between two accounts of the same branch. The dealing officer of this desk should be aware of the following things about instruments: Name of the account is very clearly written on the deposit slip. Full particulars of the deposit instruments such as cheque numbers, name of bank, etc are properly recorded on the paying slip as required. The pay in slip has been signed by the depositor. Full particulars of the railway receipts and instruments of title goods, bills of exchange, invoice etc. associated with an inland documentary bill received from the

depositors direct at the counter or by post from other branches/ banks endorsement thereon. All cheques, bills and other instruments are crossed with crossing seal . After categorizing all the instruments and checked out the preliminary mandatory things, the dealing officer gives entries in the appropriate column of subsidiary ledger for crediting the accounts.

3.3

Account Opening Section

When a customer want to open a deposit account in bank, he/she will have to go the A/C opening section to know the rules and regulations for opening account and to have the set of documents required. Since PBL is an authorized dealer it can open deposit A/Cs denominated both in Taka and approved foreign currencies. Deposits are like raw materials out of which credits are created. Deposit accounts are one of the important sources of funds. In order to attract customers the banks offer different facilities to various types of account holders. Competition in accepting deposits takes two forms: (a) Improvement in customer service (b) Offer a higher rate of interest. In our country PCBs and foreign banks are appreciated to attract deposit because of their superior customer services. PBL principal office branch with its traditions customer service approaches faces difficulties to draw attention of new customers. Main functions of account opening are given below: To give answers to the queries regarding account opening To supply the appropriate type of account opening form To put a/c number from a computerized sheet on advice of new account To input date into computer from a/c opening form. To maintain and update the a/c opening file for different types of accounts.

To maintain a register for cash type of recording details of a/c opening To supply deposit slip books and cheque book on requisition To act on request for closing and transferring of deposit a/c To act on request for closing and transferring of deposit a/c

3.3.1 Classification of Customer: a) Individual (personal) b) Proprietorship (Sole traders) c) Partnership firms (Register or Unregistered) d) Joint Stock Companies ( Private Limited and Public Limited ) e) Municipalities/Municipal Corporations/Local Bodies etc. f) Clubs / Societies / Associations /School / Colleges / Universities etc. g) Executors /Administrators h) Trustees i) Illiterate persons j) Constituted Attorney k) Wage Earners 3.3.2 Different types of A/C of PBL Principal Office: 1. Current A/C: Interest free and generously withdrawal. 2. Saving Bank A/C: Interest bearing and checkable with some restriction 3. Short Term deposit: Usually interest bearing and with draw able on short notice. 4. Fixed deposit: Interest bearing and definite period like one year or six month.

5. Non Resident foreign currency deposit: All non residents of Bangladesh can open this interest bearing account in the form of term deposit with a minimum amount of $1000 or equivalent. 6. Private Foreign Currency A/C: Bangladeshi National residing abroad or foreign nationals may open this a/c with deposit mode from inward. 7. Convertible Take Amount: A type of non-interest bearing current a/c designed specially for foreigners living here. 8. Private foreign Currency A/C: Bangladeshi nationals residing abroad or foreign nationals may open this a/c with deposit mode from inward. 3.3.3 Documents required for opening new account: 1. Documents Common for all types of Account & Customers a. Advise of New Account b. Specimen signature cards c. Account Opening Agreement Form d. Photographs of Account Holder e. Deposit Slips Book f. Cheque book Requisition slips g. Letter of mandate is required where necessary. 3.3.4 Account opening procedure: a. Applying in a printed application in a certain stipulated form printed by the bank itself. b. Supply a set of printed forms required for opening the account which will normally include i) Advise of new Account ii) iii) iv) v) i) Specimen Signature Cards Account Agreement Deposit slip Book Cheque Book Requisition slip An existing Current Account holder of the bank

b. The account should properly introduced by any one of the following

ii) iii)

Officials of the Bank not below the rank of an Assistant officer A respectable person of the locality well known to the Manager or Sub- Manger of the Branch concerned.

c. A number of photographs which must be duly attested by the introducer in front of the manager or responsible officer. The signature of the introducer must be attested. After being scrutinize the application and the manager or authorized officer may give his consent to open the account. d. A package with deposit book, cheque book with a unique A/C No. given to the Customer maintaining the A/C opening register book. 3.3.5 Precautionary Measures of A/C Opening: a. Soon after the opening of a new Account a letter of Thanks should be sent to the introducer. b. A letter of thanks as per prescribed should also be sent to the account holder immediately upon opening the account, under registered post with a/c for verification of postal address as well as genuineness of the Account holder. c. In case of a new account is opened a proprietorship / partnership firm, having local business address, a responsible officer of the branch will inform the firm to obtain the confidential report on the firm.

3.3.6 Formalities for opening Current A/C and STD A/C:

These accounts are meant for business firms and corporate bodies. Initial deposit requirement is Tk 5000 in addition to common documents required to open a saving a/c following additional documents will be required for depending upon the nature of the organization.

Joint Account of two or more persons Mandate for Operation of Account: A clear authority by all the joint A/C holders containing instructions as to who will operate the account and how the account is to

be operated should be obtained. The mandate should mention the name of the persons authorized to draw check. In case of death, insanity, insolvency of one or more of the joint a/c holders, the authority will cease to operate: For sole traders: i) ii) iii) iv) Trade license A certificate with tax identification number from income tax authority Seal In case of current account an agreement to accept all responsibilities for all over draws, interest cost and expenditures For Partnership firms: i) ii) iii) iv) v) vi) i) ii) iii) iv) v) vi) vii) Trade license Notarized deed of partnership A mended in agreement form regarding operation of the account signed by the entire partnership firm Sale/ Stump of the firms 2 copy photo of all partners National ID card photocopy for all partners. Memorandum and Articles of association Certificate of incorporation Certificate of commencement of business if its Public limited Copy of board resolution to open a/c certificate by the chairman and secretary Power of attorney to operate a/c in favor of any one or more of directors. Balance sheet and income statement List of Directors and their address and chairman certificate.

For Private and Public Limited Companies

3.3.7 Formalities for opening Private foreign currency A/C:

Foreign Currency account may be opened in US dollar, Pound Sterling, Douche Mark and Japanese Yen. Credit may be made to this A/C against inward remittance from abroad. Usually this a/c operated like a current a/c but no checkbook are issued against his a/c. Withdrawals may be made through withdrawals slips. Interest may be paid on this a/c if it is maintained in the form of term deposit for a minimum of 90 Days Bangladeshis living abroad can open even without initial deposit. A nominee can be appointed. Documents required: When an eligible person is interested to open an F/C account his passport is to be checked and signature verified. When he is staying abroad his signature is to be verified and attested by i) ii) iii) i) ii) iii) iv) v) Bangladeshi embassy on that country His banker in this country Notary public of that country Photocopy of 1st 4 pages of passport Photocopy of visa and work permit Nominees photo and account no. Declaration of source of income. National ID card photocopy for both a/c holder& nominee.

Following documents are needed to:

3.3.8 Issue of Duplicate cheque book: Duplicate cheque book in lieu of lost one should be issued only when A/C holder personally approaches the bank with an application. Fresh Cheque Book in lieu of lost one should be issued after verification of the signature of the Account holder from the Specimen signature card and on realization of required excise duty only with prior approval of manager of the branch. Cheque series number of the new cheque book should be recorded in ledger card signature card as usual. Series number of lost cheque book

should be recorded in the stop payment register and caution should be exercised to guard against fraudulent payment.

3.3.9 Formalities maintained for closing an account:

The customer may inform the bank in writing of his/her intension to close the account.

The customer has to apply to the branch in charge for closing the account. Then the in charge will remark on the account closing application for closing the account.

By drawing a cheque of the whole amount and a nil balance confirmation to be taken from the account holder.

Recover the unused cheque leaves and enter into the Broken cheque book register Remove the account opening form, specimen signature card and all other papers relating to the closed account.

Remarks of account closing at the ledger folio should be authenticated by the manager or supervising officials The banker may itself ask the customer to close the account when the banker finds that the account is not been operated for a long lime.

If the account is not operated upon for 6 months then the banker will try to do the bilateral communication with the account holder. But if the banker does not get any response from the account holder then the account becomes Dormant account.

If the is not the operated upon for 2 years then the account becomes inoperative account. A new register for unclaimed deposit account will be maintained called unclaimed deposit account. For withdrawal at any amount from tat account, permission from head office or controlling office wins is required.

3.3.10 Interest rate on deposit: Interest rate different types of deposit as prescribed by PBL head office from time to time irrespective of size of deposit Type of Deposits a. Saving deposit . Special notice deposit c. Fixed Deposit 3 Months 6 months 1year 3.3.11 Learning of This Section: The signature of the account holder use in all banking activities. The customer may appoint nominee who can handle his account in case of holders death even in special circumstances with the permission of the account holder. Present and permanent address with fathers or husbands name of the concerned account holder to be recorded very carefully. The type of account, the prospective Customer wishes to open should be determined. 6.25% 6.50% 8.50% 8.00% 8.25% 8.50% Interest rates

In case of proprietorship or partnership business account proper trade license in the name of business firm should be obtained. The required Account Number for the Account from the Account Opening register should be obtained. Signature and a/c number of the introducer and gets the signature properly verified by an authorized officer of the bank. The deposit slip properly filled in and signed by the customer in duplicate should be collected. Have to place the signature cards, advice of new account, a copy of deposit slip photographs and other necessary papers/documents etc in a file and obtain approval of the authorized officer for opening the new account.

Get each signature of the Customer/Introducer on the Advice of New a/c and on the signature cards admitted by the authorized officer of the Bank using a rubber stamp.

When delivering the cheque book account number, name of customer branch seal on each leaf of the cheque book have to check carefully..

3.4

Clearing Section

The Cheque Clearing Section of PBL principal office branch sends Inter Branch Debit Advice (IBDA) to the Head office on the receiving day of the instruments. The main Branch takes those instruments to the Clearing House on the following day. If the instrument is dishonored, Head office of PBL, sends IBDA to the PBL, Principal Office branch. The total procedure takes three days if everything goes orderly. The Cheque Clearing Section of PBL, Principal Office branch sends Outward Bills for Collection (OBC) to the concerned Paying Bank to get Inter Branch Credit Advice (IBCA) from the paying Bank. If the instruments are dishonored by the Paying Bank, the

Paying Bank returns it to the PBL, Local Officer Branch describing why the instruments are dishonored. The procedure takes around a week. The Cheque Clearing Section of PBL, Principal office branch sends Outward Bills for Collection (OBC) to the concerned paying Branch to get Inter Branch Credit Advice (IBCA) from the paying returns it to the PBL, Local Office branch describing why the instrument is dishonored.

3.5

Local Remittance Section

Local Remittance is used to transfer of funds denominated in Bangladesh Taka between banks within the country. It is an order from the Issuing branch to the Drawee Bank/ Branch for payment of a certain sum of money to the beneficiary. The payment instruction is sent by Telex / Telegram and funds are paid to the beneficiary through his account maintained with the Drawee branch or through a pay order if no a/c is maintained with the drawee branch. The cash department does remittance of cash. Instruments of local remittances at PBL branches are follows

Local Remittance

Telegraphic transfer TT

Demand Draft DD

Pay Order

3.5.1 Telegraphic Transfer (TT): Telegraphic Transfer is a quick mode of remitting funds over telex or Telegram. Now this term has used as Telephonic Transfer also which is faster than previous one for money transfer. Following points have to consider for the TT

1. On receipt of T.T payment instructions the following entries are passed by the Drawee branch if the T.T is found to be correct on verification of Test Number. i) ii) Dr. PBL General A/C Cr Remittance Awaiting Disposal- T.T Payable A/c Dr Remittance Awaiting Disposal-T.T Payable A/c Cr Clients Account P.O. A/C. If the beneficiary does not maintain any a/c with the Drawee Branch a P.O is issued in favor of the payee and sent to his banker/local address as stated. 2. Every branch maintains a prescribed T.T. Payable Register. All the particulars of T.T are to be properly recorded in this Register duly authenticated. A separate type of T.T confirmatory advice is sent to the Drawee branch on the same day. On receipt of the T.T Confirmatory advice/confirmation copy of telegram from the issuing branch, the particulars of the T.T are verified with reference to particulars already recoded in the T.T payable Register. The Confirmatory advice are kept attached with the relative Ticket No further responding entry is required to be passed on receipt of such confirmation copy. On payment of T.T the particulars are to be incorporated in the Extracts Responding Debit entries as usual as usual and sent to HORC.

Procedure of Issuing TT Customers fill up a printed application form. Cash Dept. receive cash with commission @ 15% telex charge Tk. 40 and issue debit ticket to L/R

On receiving debit ticket L.R dept. make entries into the register & issue TT and issuing credit advice in triplicate

LR dept prepares telex massage in duplicate for drawee branch and arrange to send the same through test key Dept.

3.5.2 Demand Draft (DD): Demand Draft is an instrument containing an order of the Issuing branch upon another branch known as Drawee branch, for payment of a certain sum of money to the payee or to his order on demand by the beneficiary presenting the draft itself. Precautions for Demand Draft 1. Get the application form properly filled up and signed by the applicant. 2. Complete the lower portion of the Application form meant for Banks Use. 3. Calculate the total amount payable including Banks commission/charges etc. 4. If a cheque is presented for the payment of the DD officer should get the cheque duly passed for payment by the competent authority and record the particulars of DD on the back of the cheque. 5. If the purchaser desires his account with the branch to be debited for the amount of DD the officer should get the A/c holders signature verified properly, from signature card on record of the branch and debit clients a/c for the total amount including commission charges etc. 6. If cash deposit is desired, request the purchaser to deposit the money at the Tellers counter. 7. The teller, after processing the application form, cash or cheque, will validate the Application form.

8. The first copy of the Application form is treated as debit Ticket while the second copy is treated as Credit Ticket and sent to Remittance Department for further processing. The third copy is handed over to the Applicant as customers copy. Each branch maintains a running control serial number of their own for issuance of DD on each Drawee Branch. This control serial number should be introduced at the beginning or each year which will continue till the end of the year.

Procedure of issuing D.D

Customers fill up a printed Application form.

Cash dept. Receive cash with commission and postage stamps.

Cash dept. verified the signature of the client and checks the balance of a/c L/R dept. Debit customers a/c

On receiving IDT or applicant form with signature verified L/R make entries in to the register and issue inter bank credit advice in favor of Drawee branch

The Remittance Department maintains prescribed DD Issue Register. All the required particulars of all DD issued should be entered in that Register duly authenticated. Separate folios are opened for each Drawee Branch. While issuing local Draft of Tk. 50,000/- and above, branches shall put a test number in Red-Ink on the upper portion of the drafts so that the drawee branch can immediately make payment of the DD on presentation after getting the Test agreed, if otherwise found in order.

Issuing a Duplicate DD Duplicate DD should not normally be issued unless thoroughly satisfactory evidence is produced regarding loss a draft. If the DD reported lost/stolen, a duplicate draft may be issued by the branch on receipt of a written request from the purchaser.

Before issuing a duplicate DD the branch should observe the following: 1. Verify the Purchase signature on the request letter from the signature appearing on the original application form. 2. Immediately issue a stop payment instruction to the Drawee branch under advice to Head Office and obtain confirmation of non-payment of the DD acquisition. 3. After the Drawee branch has acknowledgement the stop payment order and confirmed that the local draft in acquisition remains unpaid at their and confirmed that the local draft in acquisition remains unpaid at their end, the Issuing branch should obtain an Indemnity Bond on stamped paper/letter of indemnity branch should obtain an Indemnity Bond on stamped paper/letter of indemnity as per prescribed format from the purchase duly signed by hi,. The branch will therefore write to Head Office, for their approval to issue a duplicate draft. 4. The Head Office on receipt of request from the issuing branch will immediately issue a caution circular to all the branches regarding the loss of the local draft asking them to record stop payment. 5. The Head Office will therefore issue clearance to the Issuing branch for issuing a Duplicate draft in lieu of original reported lost.

6.

Receipt of clearance from Head Office, the issuing branch will issue a completely fresh draft marking clearly the words duplicate issued in lieu of original draft no. dated.in bold letter on the top of the front page of the draft. The printer serial number on the draft should not however be struck off. Intimation should be given to the drawee branch furnishing full particulars of the Duplicate draft. In case of issue of duplicate foreign draft (F.D.D) the Reconciliation Department, Head Office (HORC) should also be informed.

7. The particulars of the duplicate draft resemble those of the original draft in all respects that is all the particulars to the duplicate draft must be identical with those in the original draft. No further (Inter Branch Credit Advice) IBCA is to be issued for the duplicate draft. 8. Prescribed duplicate issuance charge is to be recovered for issuing the duplicate and credited to income a/c.

Cancellation of Demand Draft The following procedure should be followed for cancellation of a DD: 1) The purchase should submit a written request for cancellation of the DD attaching therewith the original DD. 2) The Signature of the purchase will have to be verified from the original application form on record. 3) Manager/ Sub-Managers permission is to be obtained before refunding the amount on cancellation. 4) Prescribed cancellation charge is to be recovered from the applicant and only the amount refunded. 5) The DD should be affixed with a stamps canceled under proper authentication and the authorized offices signature on the DD should also canceled with Red in but of the draft less cancellation charge should be refunded. Commission/Postage etc. Charge recovered for issuing the DD should not be

in no case should be torn. The canceled DD should be kept with the relevant ticket. 6) The original entries are to be reversed giving proper narration. An (Inter Breach Debit Advice) IBDA for the canceled DD should be issued on the Drawee branch. 7) Cancellation of the DD should also recorded in the L.D Issue Register.

Payment of DD 1. When a DD is presented for payment at the paying branch its details are to be carefully examined with references to the following points. i) ii) iii) Whether the draft is drawn on their branch Whether the draft is crossed or not Amount of a crossed draft is not paid in cash to the payee but to be paid to his account with a bank. Two authorized officials of the Issuing branch must have signed draft. Their signatures are to be verified from specimen signature book let to be sure that the draft is genuine. The verifier should out his initials in red ink against the authorized signature in the draft. iv) v) vi) Endorsement on the back of the draft must be regular in case the draft is presented through clearing. The amount of the draft should not exceed the amount protect graphed written in red ink on the top of the draft. The payee is to be properly identified in case of case payment.

vii)

The particulars of the draft i.e. the draft number date amount and the name of payee, should be verified from the DD payable Register.

2. On payment the DD is affixed with the branches Paid stamps and signatures there on are canceled with red ink. The data of payment is recorded in the DD payable register necessary accounting entries are also passed and recoded in the books of Account.

With IBCA Dr Remittance Awaiting Disposal L.D payable a/c Cr. Clients Account/Tellers Cash With IBCA a. After receiving without Advice a/c Cr. Clients a/c/Tellers Cash b. After receiving the IBCA i. ii. Dr. PBL general A/c Cr Remittances Awaiting Deposit DD payable a/c Dr Remittances Awaiting Disposal DD payable a/c Cr DD Paid without Awaiting Disposal DD payable a/c. As the draft is issued by the Issuing branch, the payee or purchase of the draft cannot give stop payment instructions to the Drawee branch. If a paying branch receives any request from the payee/endorsee or the purchase of a draft for stopping payment of the draft, it will ask them to approach the issuing branch for the purpose. The paying branch should however exercise necessary precaution in this regard. Only the Issuing branch can issue

instructions for stop payment of draft under special circumstances. However, if a draft on which stop payment order is received from a court of law the same should be carried out. Only the purchase can request the Issuing branch for cancellation of a L.D. The drawee branch can not cancel a L.D. The Drawee branch can accept cancellation instructions only from the issuing branch. When a draft is cancelled by the Issuing branch the relative entry is the PBL general a/c is reversed and IBDA from the Issuing branch, the Drawee branch should reverse the original liability entries the strength of the IBDA and record suitable remarks in the L.D payable Register Related IBCA of the draft.

3.5.3 Pay Order: a. Pay order issue process For issuing a pay order the client is to submit an Application to the Remittance Department in the prescribed form (in triplicate) properly filled up and duly signed by application. The processing of the pay order Application form, despot of cash/cheque at the Tellers country and finally issuing a order etc, are similar to those of processing of L.D (loan Draft) Application. As in case of L.D each branch should use a running control serial number of their own for issuance of a pay order. This control serial number should be introduced at the beginning of each year which will continue till the end of the year. A fresh number should be introduced at the beginning of the next calendar year and so on. b. Charges For issuing each pay Order commission at the rate prescribed by Head Office is realized from the client and credited to Income A/c as usual. c. Entries Dr. Tellers Cash/clients a/c Cr pays Order a/c

Cr commission a/c d. P.O issue Register The remittance Department will issue the pay Orders duly crossed A/c payee and will enter the particulars of the P.O Issued in the prescribed P.O Register duly authenticated. e. Payment of pay orders As the P. Os crossed A/c payee, the same are presented to the Issuing branch for payment either through clearing of for credit to the clients A/c. Os when presented for payment are processed in the Remittance Department. On making payment, the relative entry in the P.O Register is marked of by entering the date of payment in the P.O Register duly authenticated. The paid instrument is treated as Debit Ticket. f. Refund of Pay Order The following procedure should be followed for refund of pay order by cancellation 1. The purchase should submit a written request for refund of pay order by cancellation attaching therewith the original pay order 2. The signature of the purchaser will have to be verified from the original application form on record. 3. Manager/Sub-managers prior permission is to be obtained before refunding the amount of pay order cancellation. 4. Prescribed cancellation charge is to be recovered from the application and only the amount of the pay order less cancellation charge should be refunded. 5. The pay order should be affixed with stamps cancelled under should also be canceled with RED ink but in no case should be torn. The canceled pay order should be kept with the relevant Ticket. 6. The original entries are to be reversed with proper narrations. 7. Cancellation of the pay Order should also be recorded in the pay order Issue register #Issue and payment of Pay-order:

Strictly speaking pay-order is not meant for remittance. Because it is payable by the issuing branch. An order is issued to facilitate fund transfer within a clearing area. Dr. Tellers cash/Client A/c Cr. Manages cheque Cr. Commission Up to Tk.1000 Tk.1001-100000 Tk.100, 001-500000 Tk. 10 Tk. 25 Tk. 50

Above Tk.500000Tk. 100 When paying against pay-order following entries are passed Dr. Managers cheque Cr Cash/Client A/c 3.5.4 Learning of This Section: The Applicant have to carefully fills up the relevant part of the prescribed Application form in triplicate, duly signs the same and then gives it to the Remittance Department Responsible Officer have to carefully fill up the commission part for Banks use and request the Applicant to deposit necessary cash or cheque at the Tellers counter. The teller after processing the application form, Cash or cheque has to validate the Application form. The first copy is treated as Debit Ticket while the second copy is treated as Credit Ticket and sent to Remittance Department for further processing. The third copy is handed over to the applicant as customers copy. While transferring money using the mobile responsible officer must be careful about the phone code of each branch and note the name of responding officer of that branch. Communication

through mobile must carefully handled otherwise any fraud transaction may happen. Necessary Advice has to prepare carefully considering the date, amount, branch code, customer name, transaction code etc. Debit Advice is sent to the clients a/c is debited for the amount of T.T

3.6

Cash

The cash section performs some important functions like cash payment and cash received. Except these two major functions it also performs some other functions like opening of cash every day balance calculation.

3.6.1 Function of cash department: Cash department is the busiest and the most important department of the branch. All cash receipts and payment including inter branch or inter bank cash transactions are done under the cash department. Accounting and recording process of this department are very scientific, transparent and modern. All cash transactions are put into computer in batches and balances are matched.

Unlike traditional banking, separate accounts are maintained for vault cash a/c and tellers cash a/c respectively. There is no strict division of work among tellers. Each of them is doing both receipt and payment. This is possible because cash is preparing separate tellers cash position.

3.6.2 Cash Received tools: Cash is received in following forms or slips i) ii) iii) iv) v) Deposit slips (for deposit into clients account) IBCA For inter branch cash transaction I.D.T (inter department ticket) Prize Bond Credit voucher

Cash department not only receives cash but also checks and drafts which are deposited for collection. Cash proof sheet from each teller and cash transaction with branches or BB (Bangladesh Bank) are recorded on reserve sheet to find out closing cash reserve. At the end of the day a summary cash position is prepared and matched with actual cash position and computer balance report. If their closing position along with the subsidiary register book then the transactions of the day is ok. 3.6.3 Cash Receiving Procedure: Received cash by the teller at cash counter on deposit slip, credit ticket etc. Counting the notes and checking denominations given on the back of the deposit slips, credit ticket etc. etc.

Filling the cash proof sheet

Having the original and the duplicate copy of deposit slips signed by the cash officer

Returning the duplicate copy to the client

Cash proof sheet from cash teller and each transaction are recorded on reserve sheet to find out closing cash reserve. At the end of the day a summery cash position is prepared and checked with actual position and computer balance report. If the three closing position matches, then the transaction of the day are ok .

3.6.4 Cash Payment tools: 1) Cheque, draft, pay order, TT 2) Debit voucher (Realization of FDR proceeds) 3) Debit tickets 4) IBDA (Inter Branch Debit Advice) issued from the branch. 5) IBCA (Inter Branch Credit Advice) issued by another bank of Head office. Vault Limited TK. 1.00 Crore Cheque Payment authority to cash in charge TK 1 lac 3.6.5 Cash Payment Procedure:

Presenting Check (By order or by holder)

Scrutiny of Cheque by the teller

Verification whether checked by the teller

Checking computerizes Statement of Balance of A/C by the cash in charge

Approving/canceling the Cheque by the sign of cash in charge

When cash is transferred to any other branch the following a/c entries are made with the passing of inter branch debit advice.

Dr. PBL general A/C Cr. Reserve cash When cash is received from any other branch of PBL following entries are made Dr. Reserve Cash Cr. Tellers Cash When tellers take cash from reserve following entries for total receipt Dr. Reserve Cash Cr Teller Cash For total cash received against Inter Department Ticket (IDT) following entries are made: Dr. Teller Cash Cr. IDT At the end of the day for all payments against cheques and debit vouchers following single entries are made: Cr Tellers a/c

3.7

Accounts Department

Accounts Department is called as the nerve Centre of the bank. In banking business transactions are done every day and these transactions are to be recorded properly and systematically as the banks deal with the depositors money. Any deviation in proper recording may hamper public confidence and the bank has to suffer a lot otherwise. Improper recording of transactions will lead to the mismatch in the debit side and in the credit side. To avoid these mishaps, the bank provides a separate department; whose functions are to check the mistakes in passing vouchers or wrong entries or fraud of forgery. This department is called as Account Department. Besides the above, the bank has to prepare some internal statements as well some statutory statements which to be submitted to the central bank. Accounts Department prepares these statements also. The department has to submit some statements to the Head Office, which is also consolidated by the Head Office later on. The tasks of the department may be seen in two different angles:

A. Daily Task: The routine daily tasks of the Accounts Departments are as follows, 1. Recording the transactions in the Clean cash books 2. Recording the transactions in general and subsidiary ledger 3. Preparing the daily position of the branch comprising of deposit and cash 4. Preparing the daily Statement of Affairs showing all the assets and liability of the branch as per General Ledger and Subsidiary Ledger separately. 5. Making payment of all the expenses of the branch 6. Recording Inter branch fund transfer and providing according treatment in this regard. 7. Checking whether all the vouchers are correctly passed to ensure the conformity with the Activity Report, if otherwise making it correct by calling the respective official to rectify the vouchers. 8. Recording of the vouchers in the Vouchers Register. 9. Packing of the correct vouchers according to the debit voucher and the credit voucher. B. Periodical Task: The routine periodical tasks performed by the department are as follows: 1. Preparing the monthly salary statement for the employees. 2. Publishing the basic data of the branch 3. Preparing the monthly position for the branch which is sent to the Head Office to maintain Statutory Liquidity Requirement (S.L.R) 4. Preparing the weekly positions for the branch comprising of the break of sector wise deposit, credit. 5. Preparing the weekly position for the branch comprising of denomination wise statement of cash in tills. 6. Preparing the quarterly statement (SBS-2 and SBS-3) where SBS-2 shows classifications of deposits excluding inter bank deposit, deposits under wage earners scheme and withdrawals from deposit account and SBS-3 shows classifications of advances (excluding inter bank) and classification of bills purchased and discounted during the quarter.

7. Preparing the budget for the branch by fixing the target regarding profit and deposit.

CHAPTER FOUR

Foreign Exchange
4.1 4.2 4.3 4.4
4.4.1 4.4.2 4.4.3 4.4.4 4.4.5 4.4.6 4.4.7 4.4.8 4.4.9

Introduction International Trade Function of Foreign Exchange Department Import Section

Importers Application for L/C Limit/Margin The L/C Application IMP-Form Scrutiny of L/C Application Precautions for issuing L/C Amendment of L/C Credit Report on Beneficiary Presentation of the Documents Examination of Documents

4.4.10 Handling of Discrepant Import Document 4.4.11 Receiving Documents 4.4.12 Lodgment & Retirement 4.4.13 Payment against document (PAD) 4.4.14 Loan against Imported Merchandise (LIM) 4.4.15 Loan against Trust Receipt (LATR)

4.5
4.5.1 4.5.2

Export Section
Back-to-Back L/C Export L/C

4.6
4.6.1

Exchange rate and foreign remittance

Exchange rate

4.6.2 Foreign Remittance

4.7

My Learning

Foreign Exchange
4.1 Introduction

Foreign trade financing is an integral part of banking business. Documentary Credit (also called letters of credit or "L/Cs") is the key player in the foreign exchange business. With the globalization of economies international trade has become quite competitive. Timely payment for exports and quicker delivery of goods is, therefore, a pre-requisite for successful international trade operations. Growing complexity of international trade, separation of commercial parties across the globe and operating In a totally unknown environment underlined the need for evolving a system that balances between the expectations of the seller and the buyer Documentary Credit has emerged as a vital

system of' trade payment, and fulfilled the requisite commercial need. This system substantially reduces payment-related risks for both exporter and importer. Not surprisingly, therefore, the letter of credit is the classic form of international export payment, especially in trade between distant partners. The bank upon presentation makes payment, acceptance or negotiation of the credit by the seller of stipulated documents (e.g., bill of lading, invoice, and inspection certificate).

This part of the report consists of the following areas 1) International Trade : Import & Export 2) Foreign Exchange related banking terms & rules 3) Foreign Exchange rate & foreign Remittance.

Foreign exchange transaction is classified according to their activities: Foreign Exchange

Export

Import

Back to Back

Remittance

Govt Sector

Private Sector

Outward Remittance

Inward Remittance

4.2

International Trade

International trade is the trade between countries with the rest of the World. Now we live in a global economy. In the age of globalization each country has free access to the market of other with quality goods and services. International Trade has two components as following Import & Export.

International Trade

Import

Export

To handle of International transaction in a sound and efficient manner there must have a written contract between the buyer & seller. For international trading purpose a Bank or Banks may involve in this contract and then the contract renamed into a letter of credit. It is the media under which the international trades are concluded.

4.3
1. 2. 3. 4. 5. 6. 7. 8. 9.

Function of Foreign Exchange Department

L/C Opening L/C Amendment Sanction Payment against Document (PAD), Loan against Imported Merchandise (LIM), Loan against Trust Receipt (LATR). T.C issuing Foreign Bill Purchase (FBP) Local Bill Purchase (LBP) Foreign Remittance FC A/C maintaining Foreign Currency remitting

Foreign Exchange Mechanism 1) L/C Opening 2) Issue the L/C by issuing Bank and send to advising bank 3) Advised and or confirm the L/C by Advising and Add confirming Bank 4) Submit the documents to Negotiating Bank by export

5) The Negotiating Bank makes payment 6) The Negotiating Bank forward/sends documents to issue bank 7) Issuing Bank makes payment to negotiating bank 8) A issuing bank instructs to pay or reimburse the paying bank and paying bank makes payment or reimburse to the negotiating bank 9) Issuing bank sends documents to the importer 10) The importer makes payment

Types of L/C Offered: Letter of Credit (L/C) can be defined as a Credit Contract whereby the buyers bank is committed (on behalf of the buyer) to place an agreed amount of money at the sellers disposal under some agreed conditions. It is also known as documentary letter of credit. It may be either: (i) Revocable: A revocable credit is a credit, which can be amended or cancelled by the issuing bank at any time without prior notice to the seller. (ii) Irrevocable: It constitutes a definite undertaking of the issuing bank (since it cant be cancelled or amended without the agreement of all parties thereto), provided that the stipulated documents are presented & the seller satisfies the terms and conditions. Special documentary Credit: Revolving Credit: It is the credit, which provides for restoring the credit to the original amount after it has been utilized. Transferable Credit: the original beneficiary in full or in part to one or more subsequent beneficiaries can transfer it.

 Back-to-Back Credit: It is a new credit opened on the basis of an original credit in favor of another beneficiary. Anticipatory Credit: The anticipatory credit makes provision for preshipment payment, to the beneficiary in anticipation of his effecting the shipment as per L/C conditions. Red Clause Credit: A red clause credit is a credit with a special condition incorporates into it that authorizes the confirming Bank or any other Nominated Bank to make advances to the beneficiary before presentation of the documents. Green Clause Credit

Parties Involved in L/C: There are number of parties involved in a letter of credit and the right and obligation of the different involved parties will differ from each other. The involved parties to a letter of credit are named below: 1) The applicant/The importer/The buyer 2) Opening bank/Issuing bank 3) The beneficiary/The Exporter/The seller 4) The Advising Bank/The transmitting Bank/The notifying bank 5) The Confirming Bank 6) The Negotiating Bank 7) The Reimbursing Bank/Paying Bank Characteristics of the importer who wants to open a letter of credit Must have an A/C in the branch Must be a member of the Chamber of Commerce Must be a TIN holder Must have IRC(Import Registration Certificate)

VAT(Value Added Tax certificate)

Documentary Credit:
1. Sales Contract Exporter 2. Shipment of Goods 5. Presents Documents for Negotiation Presenting/ Negotiating Bank 6. Sends Documents for Reimbursement 3. Issues L/C Pays or reimburse Paying/Reimbursing Bank 8. Instruct to pay or reimburse Importer

4. Advises/ Confirms L/C Export L/C Advising/ Confirming Bank

7. Asks for Settlement 2. Apply for L/C Import L/C

Issuing Bank

4.4

Import Section

The Ministry of Commerce in terms of the Import & Export (Controls) Act 1950 regulates import of goods into Bangladesh with import Policy Orders issued periodically & public notices issued from time to time by the office of the Chief Controller of Import & Export 9CCI&E). 4.4.1 Importers Application for L/C Limit/Margin: To have an import L/C limit, an importer submits an application to the issuing Bank furnishing the following information: 1) Full particulars of bank account 2) Nature of business 3) Required amount of limit 4) Payment terms and conditions 5) Goods to be imported 6) Offered to be imported 7) Offered security 8) Repayment schedule. A credit officer scrutinizes this application and accordingly prepared a proposal (CLP) and forwards it to the Head Office Credit Committee (HOCC). The Committee, If satisfied, sanctions the limit and returns back to the branch. Thus the importer is entitled for the limit.

4.4.2 The L/C Application: Pubali Bank Limited provides a printed form for opening of L/C to the importer. This form is known as letter of Credit Application form. A special adhesive stamp is affixed on the form. While opening the stamp is cancelled. Usually the importer expresses his desire to open the L/C quoting the amount of margin in percentage. 1) 2) 3) 4) 5) 6) 7) 8) 9) Full named and address of the importer. Full named and address of the beneficiary. Draft amount Availability of credit by sight payment acceptance/negotiation/deferred payment. Time bar within which the documents should be presented Sales type (CIF/FOB/C&F) Brief specification of commodities, price, and quantity, indent no etc. Country of origin Bangladesh bank registration no

10) Import license/LCAF No 11) IRC (Import Registration Certificate) no 12) Account No. 13) Documents required 14) Insurance cover note/Policy no, date amount 15) Name and address of insurance Company 16) Whether the partial shipment is allowed or not 17) Whether the transshipment is allowed or not 18) Last date of shipment 19) Last date of negotiation 20) Other terms and conditions if any 21) Whether the confirmation of the credit is requested by the beneficiary or not. The above information are given along with the following documents 1) Pro-forma invoice stating description of the goods including quantity, unit price. (i) Indent: An indent stating the description of the goods including quantity, unit price, etc. given by the Supplier/Exporter given by the Indenter.

(ii)

Proforma Invoice: Proforma Invoice states the description of the goods including quantity, unit price, etc. given by the Supplier/Exporter.

2) The insurance cover notes, issuing company and insurance number. 3) Four set of Import Form (IMP) form. The Letter Of Credit Authorization (LCA) Form contains the following: 1) Name and address of the importer 2) IRC no. and year of renewal 3) Amount of L/C applied for (Both in figure and in word) 4) Description of item(s) to be imported 5) ITC Number/HS code 6) Stamp and Signature of the importer with seal

4.4.3 IMP-Form: The IMP form contains the following 1) Name and address of the authorized dealer 2) Amount of remittance to be permitted (i.e. L/C amount) 3) LCA form number, date, and value in Tk. 4) Description of goods, quantity 5) Invoice value in Foreign Currency (i.e. L/C amount) 6) Country of origin 7) Port of Shipment 8) Name of steamer/airline (i.e. by road/by ship/by Air) 9) Port of Importation 10) Indenters name and address 11) Indenters Registration number with CCI & E and Bangladesh bank 12) Full name and address of the Applicant 13) Registration number of the Applicant with CCI & E 14) Type of LCAF

4.4.4 Scrutiny of L/C Application: The dealing Officer scrutinizes the application in the following manner1) The terms and conditions of the L/C must be complied with UCPDC 500 2) Exchange Control & Import Trade Regulation 3) Eligibility of the goods to be imported 4) The L/C must not be opened in favor of the importer 5) Radioactivity report in case of goods item 6) Survey reports in certificate in case of old machinery 7) Carrying vessel is not of Israel or of Serbia-Montenegro 8) Certificate declaring that the item is in operation not more than 5 years in case of car. 4.4.5 Precautions for issuing L/C: After submission of documentary letter of credit application form, the concerned officer scrutinizes the terms and conditions that mentioned in application. He must check the following things: 1) 2) 3) 4) 5) 6) 7) 8) 9) Whether the terms and conditions of L/C application are consistent with Exchange control and import Trade regulation UCPDC-500. L/C must not be opened in favor of the importer of his agent. The importer agreeing all terms and conditions mentioned in the application must sign L/C. Indenting registration number. Whether IMP form dully filled and signed. Validity of Import Registration Certificate (IRC). Insurance cover note with date of shipment. The Harmonize System (HS) code of the goods The balance of the accounts of the importer

10) The goods are not from Israel and vessels to be used is not of Israel 11) The issuing officer will try to keep as much margin as possible.

4.4.6 Amendment of L/C: Parties involved in a L/C particularly the seller and the buyer cannot always satisfy the terms and conditions in full as expected due to some obvious ad genuine reasons. In such situation, the credit should be amended. Issuing Bank transmits the amendment by tested telex to the advising bank. In case of revocable credit, it can be amended or cancelled by the using bank at any moment and without prior notice to the beneficiary. If the L/C is amended, service charge telex charge is debited from the party account accordingly. 4.4.7 Credit Report on Beneficiary: Before opening of letter of credit, the Authorized Dealer (A/D) branch must obtain a confidential report on the supplier/beneficiary through its correspondent bank/ recognized credit agencies. Accounting and voucher to be passed Vouchers for Margin Deposit At the time of opening the L/C the importer is to deposit cash margin as per sanction terms. After deposit of the cash margin the Authorized Dealer (A/D) or non- Authorized Dealer (A/D) branch shall credit the same in their Margin Deposit Account. The following vouchers are to be passed: Dr. Customers Current A/C Cr. Other Deposit-Margin Deposit L/C (Foreign) The following liability vouchers for L/C are to be passed Dr. Customers Liability under Foreign L/C Cr. Acceptance Liability under Foreign L/C

Showing Accounting Treatment at The Time Of L/C Opening

Particulars Customers A/C L/C Margin A/C Commission A/C on L/C VAT SWIFT Charge Foreign Courier Charge (FCC) Stamp Others

Debit/ Credit Debit Credit Credit Credit Credit Credit Credit Credit

Charges in Taka Commonly 10-30% 0.5% 15% on commission Tk. 2000/= US$ 25/= Tk. 150/= Tk. 200/=

Source: Principal Branch, Pubali Bank Ltd. 4.4.8 Presentation of the Documents: The seller being satisfied with the terms and the conditions of the credit proceeds to dispatch the required goods to the buyer and after that have to present the documents evidencing dispatch of goods to the negotiating bank on or before the stipulated expiry date of the credit. After receiving all the documents, the negotiating bank then checks the documents against the credit. If the documents are found in order then the bank will pay, accept, or negotiate to issuing bank checks the documents. The usual documents are 1) 2) 3) 4) 5) 6) 7) 8) 9) Commercial Invoice Bill of lading Certificate of origin Packing list Shipping advice Non negotiable copy of bill of lading Bill of exchange Pre-shipment Inspection report Shipment certificate

4.4.9 Examination of Documents:

Import documents include a lot of forms and certificates. Proper checking or inspection can only ensure the correct and smooth foreign exchange or trade. While checking those documents following things need to be ensured. The Letter of Transmittal Following points have to consider Addressed to L/C issuing branch. Current date. Documentary Credit number. Documents enumerated are attached. Value of the documents and the value mentioned in the cover are the same; Whether any discrepancy has been noted and whether payment, acceptance or negotiation was effected against an indemnity or under reserve.

The Documentary Credit Following points have to consider Correct referenced documentary credit. Still valid (not expired/cancelled). Balance in the Documentary Credit is sufficient to cover the value of the drawing.

Draft/Bill of Exchange

Following points have to consider Draft bears the correct L/C number; Correctly dated; Name of the Drawer corresponds with the name of the beneficiary; Drawn on the correct drawer indicated in the L/C; Amount in words agrees with the amount in figures; Beneficiary has duly signed the draft; Tenor is as required by the credit; No restricted endorsement; Value of the draft and the value of invoice are identical. Commercial Invoice Following points have to consider Beneficiary as stated in the documentary credit issues that. Issued in the name of the applicant (the buyer) named in the documentary credit. Description of goods correspondent exactly to that stated in the credit. Description of goods, value and unit price matches that of the documentary credit as regards to the amount and currency. Currency of the invoice is the same as stipulated in the credit. Value of invoice does not exceed the available balance of the credit. Invoice is signed as required in the credit. Correct numbers of original is presented. Terms of shipment, the invoice amounts correspond proportionally to the dispatched quantity.

Marine/Ocean Bill of Lading

Following points have to consider Issued by a shipping company. Full set of originals issued and presented. Consignees name and address and correct as stated in the credit; Bill of lading bears a date of issue, duly signed by the issuer and the name of the ship appears; Port of departure and post of destination are correct. Bill of landing bears an on board shipped notation Name of notify parts name and address are correct. Goods have been loaded on board, or shipped on a named vessel (indicates the name of the carrier and it is signed or authenticated by the master or a named agent for or on behalf of the master. Correctly marked Freight prepaid or Freight collect. Issuer has properly authenticated the alteration on the bill of lading. Goods are consigned as stipulated in the credit (to order of a named consignee i.e. to the order of the L/C issuing bank. Bill of lading has been properly endorsed; Bill of lading is issued to be correct order party as required by the documentary credit. Airway Bill Following points have to consider Consignees name and address and the airports of departure and destination are stated in the Airway bill are consistent and in agreement with the terms of credit. An air transport document is evidence of contract of carriage between the carrier and the sender. It is not a document of title of goods; Document indicates the name of the carrier; Issuer is the carrier (identifiable as the carrier) or a named agent of the named carrier;

 Airway bill indicates the actual flight date and flight numbers; Carrier signs that document; Consignees name and address and notify partys name and address are correct. Issuer authenticates any alternations; Correctly marked Freight Prepaid or Freight collect etc; Shippers (consignors) copy being presented. Certificate of Origin Following points have to consider Country of origin of the goods as stated as in the certificate agrees with the terms of the credit; Certificate has been signed as required by the credit; Stipulated authorities have authenticated the certificate.

Packing List Following points have to consider A unique document and not combined with any other documents; List contains all the necessary information especially concerning the packing units; Data on it is consistent with that of the other documents. 4.4.10 Handling of Discrepant Import Document: While making scrutiny & examination of the documents, the A/D branches shall ensure thata) Full set of documents as stipulated in the credit has been received. b) The documents have been drawn strictly as per L/C terms.

The dealing officer checks whether these documents have any discrepancy or not. Here discrepancy means the dissimilarity of any of the documents with the terms and conditions of L/C. 4.4.11 Receiving Documents: If the beneficiary is being satisfied with the terms and conditions of the L/C then dispatch the goods to the buyer. After that dispatch the documents evidence dispatching of goods to the negotiating bank on or before the stipulated expiry date of the L/C. After receiving all the documents, the negotiating bank then checks the documents against the credit. If the documents are found in order, the bank will send it to the issuing bank. 4.4.12 Lodgment & Retirement: While lodgment of the import bills under cash L/C, A/D branch shall reverse the liability vouchers passed at the time of opening L/Cs. Reversal of the liability vouchers:-

Dr. Acceptance liability under Foreign L/C Cr. Customer liability under Foreign L/C Lodgment vouchers to be passed:Dr. PAD (Payment against document) Account Cr. Head Office ID through PB General A/C Cr. Interest Account Cr. Commission Account- L/C Misc. Handling Commission A/C Transfer of Margin to PAD Account:Dr. Other deposit-Margin deposit L/C (Foreign) Cr. PAD Account Lodgment means retirement of funds. If the documents receiving from the negotiating bank issuing bank also carefully scrutinize all the documents.

4.4.13 Payment against document (PAD): This is most sensitive task of the import department. The officials have to be very much careful while making payment. This task constitutes the following. Date of Payments: Usually payment is made within seven days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay. Preparing Sale memo: A sale memo is made at B.C rate to the customer. As the T.T & D.D rate is paid to the ID, the difference between these two rates is exchange trading. Finally an inter branch exchange trading credit Advice is sent to ID. Requisition for the foreign currency: For arrangement necessary fund for payment, a requisition is sent to the international Department. Transmission of telex For arranging necessary fund for payment bank ensure that payment is being made. For PAD the following voucher will be passed: Dr. PAD (Payment against Document) Dr. Margin on L/C Cr . Income A/C on PAD Cr. Income A/C interests on PAD Cr. Commission on PAD

Reverse entry is given: Dr. Acceptance liability under Foreign L/C Cr. Customer liability under Foreign L/C 4.4.14 Loan against Imported Merchandise (LIM): Loan against import merchandise through the bank may be allowed retaining margin prescribed on their landed cost, depending on the categories and credit restrictions imposed by the Bangladesh bank/head office from time to time. Branches shall also obtain letter of undertaking and indemnity from the clients, before getting goods cleared through LIM account clearance of the goods should be taken through Approved Clearing Agent of the Bank. The following point must be taken to consideration while allowing advance against the security of imported goods. Storage of imported goods under Lim facility may be allowed for specified time as prescribed by Bangladesh Bank/head office of the bank which period importer should take delivery of the goods against payment, generally part delivery is not allowed from LIM Account. This may however; it must be ensure that the landed cost the merchandise is properly worked out before the goods are delivered to the customers against proportionate payment. Landed cost of valuable and less valuable items should not be average together. LIM A/C should properly maintain by the bank, Vouchers will be Dr. LIM A/C Cr. PAD A/C 4.4.15 Loan against Trust Receipt (LATR): If the documents are required to deliver against LATR (Loan against Trust Receipt), prior approval is required from Head Office. Documents to be delivered to the Importer through approved C&F agent for clearance of good for a certain period on the merit of goods & nature of business. For LATR the following vouchers are to be passed:

Dr. LATR A/C Cr PAD A/C

4.5

Export Section

In the export section two types of L/Cs are opened Back to Back L/C Export LC

4.5.1 Back-to-Back L/C: A back-to-back mechanism involves two separate L/Cs. One is master export L/C and another is back-to-back L/C. On the strength of Master L/C Bank issues Back to Back L/C. Back to Back L/C is commonly known as Buying L/C. On the contrary, Master Export L/C is known as Selling. Features of Back-to-Back L/C: Is an import L/C procedure goods/raw materials further processing Is opened based on Export L/C Is a kind of Export Finance Export L/C is at sight but back to back L/C No margin is required to open Back to Back L/C Application is registered with CCI & E and has bonded warehouse License. The Master L/C has adequate period and has no defective clause L/C value shall not exceed the admissible percentage of net FOB value of relative Master LC Usage period will be up to 180 days Papers required opening back to back L/C Import registration certificate & Export Registration certificate L/C Application & LCA form.

Checklist to open Back-to-Back L/C:

Proforma Invoice/Indent Insurance Policy IMP form In addition to above following papers are required for read made garments industry Bonded warehouse license Quota allocation letter from EPB (where applicable) Letter of disclaimer from Landing if rented premises. Obtain all required papers Check the credit limit Prepare offering sheet if regular credit line is not available Mark lien on the master L/C Issue the L/C Payment at maturity out of exports proceeds In case of export failure or non-realization/Short realization of export proceeds forced loan i.e. Pad has to be created in order settle the back-to-back L/C payment.

Steps to issue Back-to-Back L/C

Payment under back-to-back L/C

Precautionary measures: Including the clause for pre-shipments inspection certificate Shipping guarantee under no circumstances Discrepant documents shall not be accepted Proper care regarding amendments of Master L/C

Accounting Treatment for Back-to-Back L/C When the documents is arrived the following vouchers are passed Customers Ac--------------------Dr Commission on acceptance Cr

In case of payment, if the fund is at hand, the accounting entries are sundry deposit Margin on AcceptanceDr Customers A/C..Cr If the party is paid foreign currency B.C rate is applied in this regard. International Department takes the T.T.O.D rate. If the payment is made to ID in local currency in national rate ID following T.T Clear rate. When the party is to pay OD sight rate is followed. If the fund is not available to make the payment, the following vouchers are to be passed. PAD.Dr Customers ACCr Reporting to Bangladesh Bank: At the end of every month, the reporting the following information is mandatory: a) Filling of E-2/P-2 schedule of S-1 category; which covers the entire month amount of import category of goods, currency, country etc. b) Filling of E-3/P-3 schedule for all charges, commission with T/M form. c) Disposal of IMP form, which including (i) (ii) (iii) (iv) 4.5.2 Export L/C: The other type of L/C facility offered by Pubali Bank Limited is Export L/C. Bangladesh export a large quantity of goods and services to foreign households. Ready made textile Original IMP is forwarded to Bangladesh Bank with invoice and indent Duplicate IMP is kept with the bank along with the bill of entry/certified invoice. Triplicate IMP is kept with the bank for office record. Quadruplicate is kept for submission to Bangladesh Bank in case of imports where documents are retired.

garments (both knitted and woven), jute, Jute made products frozen shrimps, tea are the main goods that Bangladesh exporters exports to foreign countries.

Formalities for Export L/C: The export trade of the country is regulated by the exports (control) Act, 1950. The formalities of export L/C are as follows 1) ERC: Exporters must hold a valid Export Registration Certificate (ERC). The ERC is required to be renewed every year. The ERC number is to be incorporated on EXP forms and other documents connected with exports. 2) Obtaining EXP: After having the registration, the exporter applies to Pubali Bank Ltd. With the trade license, ERC and the Certificate from the concerned the exporter, An EXP from contains the following particulars: Name and address of Authorized Dealer Particulars of the commodity to be exported with Code Country of Destination Port of Destination Quantity L/C value in Foreign Currency Terms of sale Name and address of Importer/Consignee Bill of Landing/Railway Receipt/ Airway Bill/Truck Receipt/Post Parcel received no and date x) Port of shipment/Post office of Dispatch xi) Land customer post xii) Shipment date xiii) Name of the exporter with address xiv) CCI & Es Register number and date of the exporter xv) Sector (Public or Private) under which the Exporter falls. Securing the order: Upon registration, the exporter may proceed to secure the export order. Contracting the buyers directly through correspondence can do this. 4) 5) Signing of the contract. Procuring the materials. After making the deal and on having the L/C opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the contracted merchandise. i) ii) iii) iv) v) vi) vii) viii) ix)

3)

6) 7)

Registration of Sale: This is needed when the terms proposed to be exported are raw jute and jute goods. Shipment of goods: The following are the documents normally involved at the stage of shipment. i) ii) iii) iv) v) vi) vii) viii) ix) Export form Photocopy of registration certificate Photocopy of the contract Photocopy of the L/C Customs copy of ERF form shipment of jute goods and EPC form for raw jute. Freight certificate from the bank in case of payments of the freight at the port of landing is involved Railway receipt, Berg Receipt of truck Receipt Shipping instructions Insurance policy

After that exporter submit all these documents along with a letter of indemnity to Pubali Bank for negotiation. An officer scrutinizes all the documents. If the documents is a clean one. Pubali Bank purchases the documents the documents on the basis of banker, customer relationship. This is known as foreign Documentary bill purchase (FDBP).

Procedure for Foreign Documentary Bill Purchase (FDBP) If all the documents are in order then the bank purchase the documents. Several things should be checked at the time of purchasing. How much back-to-back and PC (packing Credit) facility the client has taken. After taking all these charges, the rest amount is paid to the client and a FDBP account is opened.

After purchasing the documents, Pubali Bank given the following entries:FDBP A/CDr

Customer A/CCr (Before realization of proceeds) Head Office, ID A/CDr. FDBP A/C..Cr (Adjustment after realization of proceeds)

Foreign Documents Bills for Collection (FDBC): Pubali Bank forwards the documents for collection due to the following reasons i) If the documents have discrepancies ii) If the exporter is new client iii) The banker is in doubt. Foreign documentary bills for collection signify that the exporter will receive payment only when the issuing bank gives payment. The exporter submits duplicate EXP from and commercial invoice subsequently. The of the bill is calculated and the following accounting entries are givenHead office A/C Clients A/C Government Tax A/C Postage A/C Income A/C. Profit on exchange Cr. Dr. @ T.T Clean Cr @ O.D Sight Cr. % invoice value Cr

After passing the above vouchers, an inter Branch exchange trading debit advice is sent to debit the NOSTRO account. Pubali Bank has NOSTRO accounts with its reimbursing bank. An FDBC register is maintained, where first entry is given when the documents are forwarded to the issuing bank for collection and the second one is done after realization of the proceeds.

4.6
4.6.1 Exchange rate:

Exchange rate and foreign remittance

Exchange rate and is the rate at which a specific currency can be exchanged with a standard foreign currency. A foreign exchange transaction is either sells or purchase transaction. Therefore, the bank would quote two different rates of exchange. Buying Rate & Selling rate: The rate at which the central bank of any country buys foreign money is called buying rate. On the other hand, the rate at which the central bank of any country sells foreign money is called selling rate:

Classification of Exchange Rate: 1) Fixed Rate 2) Floating Rate: Independent Floating Managed floating Pegging o Single currency o Composite currency: a SDR, & b) Other basket Exchange Rate Quotation: Exchange rate quoted by the following two ways:

Direct: If the exchange rate is expressed in variable units of domestic currency for a fixed unit foreign currency. It is also called pence rate. Indirect: If the exchange rate is expressed in variable units of foreign currency for a fixed unit of domestic currency. It is also called currency rate.

4.6.2 Foreign Remittance: "Foreign remittance" means purchase and sale of freely convertible foreign currencies as admissible under Exchange Control Regulations of the country. Purchase of foreign currencies constitutes inward foreign remittance and sale of foreign currencies constitutes outward foreign remittance. The transaction of the authorized dealer in foreign exchange involves either outward or inward remittances of foreign exchange from one country to another. Foreign remittances of two kinds (i) (ii) Inward remittance & Outward Remittance

The term Inward remittance including not only remittances by TT, MT, Draft etc but also purchase or bills travelers cheque etc. On the other hand, remittance from our country is called outward foreign remittance. The foreign remittance department of Principal Branch, Pubali Bank, Dhaka is equipped with a number of foreign remittances facilities, which are 1) Issuance of Foreign Demand draft 2) Issuance of Traveling Cheques 3) Endorsement of US $ in Passport 4) Opening of Foreign Account 5) Opening of Student file Foreign Demand Draft (FDD):

Pubali Bank accepts the charges for TOEFL, SAT, GMAT etc. through foreign demand draft. Pubali Banks opens students files to issue foreign demand draft following the permission if Bangladesh bank. Before issuance of FDD Pubali Bank asks the students to fill up the Travel & miscellanies (TM) form, which contains the following particulars. 1) Name of the students 2) Full address of the students 3) Amount of FDD in foreign currency 4) Purpose of Remittance 5) Address of the institution to which the FDD will be favored 6) Country of receiving payment 7) Passport No of the students with date of issue 8) Signature of the student The TM is sent to Bangladesh Bank with photocopies of the Passport of the students and the FDD issued. Cancellation of FDD i. ii. iii. Application by party with original FDD. Signature verified, checking in the counterpart. Cash debit voucher to return money to customer: Dr- HO A/C @ T. T. clean Cr- Party /Cash A/C iv. v. IBETDA & Purchase memo @ T. T. Clean. Cancellation mark on the register & instrument.

The procedure seems to be peculiar as party depositing money and getting money back at the same time but this has been adopted to avoid complications.

Stop payment

When the instrument is lost party shou1d inform it immediately to the bank in application along with the photocopy of the draft. Bank should check it with ID whether payment has been made against this FDP if paid then party won't get back his money. But if it still lies outstanding, then a telex message is given to the drawn on bank instructing 'STOP PAYMENT'. Drawn on bank will reimburse the amount to ID, who then will give a credit memo to the issuing branch. The remaining procedure is same as draft cancellation.

Issuance of Travelers cheque (TC): Pubali bank limited issued only American Express Travelers cheque. For TC customer has to fill up TM from. He has to fill up the purchase form. Purchase for, has four copies. One copy for American Express Bank, one copy for Pubali Bank and two copy for the customer. For TC Pubali Bank limited charges 1% as commission. Requirements for purchasing TC: There are some requirements that are to be fulfilled by the Travelers cheque purchaser. The requirements are i) ii) iii) Passport holder himself has to present while issuing Travelers cheque. The passport must be a valid one Air ticket has to be confirmed

Opening of Foreign Account: Pubali Bank limited opens foreign account. Foreign account is used for receiving foreign currency from abroad or for sending the currency to abroad. It can be used in favor of a person or in favor of exporters. Following papers are required to open a foreign account: i) Exporters foreign currency account opening form (application form, two signature cards duly filled in an signed with authenticated seal and introduction) ii) iii) Two copies of passport size photographs of each operator attested by chairman of the company. Export registration certificate.

iv) v) vi)

Attested photocopy of the membership certificate of the concerned association (BGMEA) An export proceeds realization certificate-declaration/undertaking regarding the utilization of foreign currency. Incase of Limited company (a) Memorandum & articles of Association of the company. (b) Power of Attorney (c) Resolution of the Board of Directors. (d) Certificate of Incorporation. (e) Certificate of Commencement of Business (f) List of Directors (g) Trade License

Student file opening: Student can endorse $200.00 at a time in his own name. But if the amount exceeds $ 200.00 then the student has to open a student file. For opening a student file, the following documents are required: i) ii) iii) iv) v) Preliminary application and information admission Letter of approval of the student by the University. A filed up application form for foreign currency in abroad Transcript given by the Board for S.S.C/H.S.C equivalent examination. A photocopy of 1-7 form.

In case of tuition feeds, application must send the currency in favor of the institute. He can not take the fees of the institute with him personally. Usually a student has to endorse at least one third of the feeds of a year. As an authorized dealer the principal branch of PUBALI BANK LIMITED also provides its customer foreign remittance facilities by FBC, LFBC, sale and purchase of FCY, FTT.

Foreign Bills Collection

A foreign bill for collection refers to collection procedure of foreign DD/PO/Cheques as per arrangement between PUBALI BANK LIMITED and its corresponding banks. The collection procedure is as follows: i. Entries in the FBC register and get a FBC number. This number will be on the bill and be treated as reference no. ii. Forward the bill along with a forwarding letter to the corresponding bank. Send the draft through courier service and keep a courier receipt in the file. iii. Crossing on the bill indicating UC131, as a collecting bank. Endorsement on the back of the bill-"Payee's A/C will be credited on realization. iv. Prepare a liability voucherDr- Customers' liability @National rate Cr- Bankers' liability v. A photocopy of the bill to be kept on the file Realization ID will send a credit memo to the concerned branch informing that Nostro A/C has been credited. Prepare a credit advice: Dr- HO A/C @Ready buying Cr-Party A/C @T.T. clean Reversal Dr- Bankers liability @Notional rate Cr- Customers liability

Branch to Branch Whenever another branch of PUBALI BANK LIMITED forwards an instrument to the principal Branch to collect it on its behalf, the branch has to do it as the collecting agent but confirming branch endorsement and putting own FBC on the bill. Rest of the procedure remains the same. At the last stage an IBCA will be originated from the principal Branch crediting concerned branch and debiting HO A/C.

Balance Sheet Impact The Balance Sheet will display the figure of the bill until reversal voucher is released and thus will constitute contra item on the part of the bank in the following manner. ASSET - Bills Receivable being Bills for Collection.

LIABILITY - Bills for Collection being Bills Receivables. Local Foreign Bills Collection Instruments originating outside Bangladesh but drawn on a Bangladeshi Bank Is known as Local Foreign Bill. In LFBC forwarding letter is sent to the local drawn on bank/branch along with the instrument and payment instruction is given to them. However payment instruction differs depending on the currencies in which the A/C is maintained. The collection procedure involves payment instruction by a P.O./D.D. favoring the beneficiary. The instruments, after receiving will be send for collection through preparing a credit advice: Accounting Procedure Dr- Clearing A/C Cr- Party A/C LFBC: Collection of FTT Sometimes FTT arrives at another bank whereas beneficiary's account lies in PUBALI BANK LIMITED, In that case receiving bank of FTT informs to this bank to collect the proceeds. This collection procedure to come under LFBC mechanism. Here a letter is forwarded to that bank giving payment instruction and all other procedures remain the same. Sale of FCV (Cash) PUBALI BANK LIMITED sells US dollar only to the customers who want to visit abroad. No other currency is sold to public, as per the practice of this bank, not due to

any regulatory covenants. 'Travel quota entitlement of Bangladeshis for travel by air to countries other than SAARC countries and Myanmar shall now the US $3000 per person per calendar year. For SAARC countries and Myanmar this quota stands reaffixed at US $1000 for travel by air and US $500 for travel by land. The maximum limit of US $300 that may be taken in cash either in US dollar ($) or any other convertible currency. The stages of cash dollar ($) selling is as follows: 1) Application form filled in by the customers with two TM forms. Accounting treatment in this regard would be: Dr- Cash A/C Cr- FCY on hand $ SPL @Cash Book Rate Cr- Income A/C Cr- Income A/C Tk.200 (Endorsement charge) (Diff between Cash sell & Cash book rate)

2) Sale memo to ID @cash sale rate. 3) Photocopies of the passport of' first six pages, visa (only for student), PP renewal (if any) and pages recording endorsement of foreign exchange, and photocopies of the pages of ticket showing name of the passenger, route and date of journey and endorsement of foreign exchange along with the relative Travel & Miscellanies (TM) form. 4) Endorsement on the passport. 5) In each case of release of foreign exchange for travel abroad, photocopies of first six pages of the passport and the page recording endorsement of foreign exchange along with the relative TM form should be sent to Bangladesh Bank along with report of the transaction in the usual monthly returns. Purchase of Foreign Currency (FCY) Purchase of foreign currency means legal encashment of US $ from a bank. The procedures are as follows:

i. Prepare a debit voucher (equivalent to cash debit voucher) Dr- FCY on hand $ SPL @Cash Buy Rate Cr- Cash ii. Purchase memo @ Cash Buy Rate. iii. Proceeds Certificate (Legal Document of Encashment) for customer.

4.7

My Learning

1. Pubali Bank, Principal branch has SWIFT facilities. Very few bank in our country offer this. By using this modern technology Principal branch provide fastest service on L/C operating to its client. 2. Pre-shipment inspection certificate should obtain from the exporter of back-to-back L/C. Because it reduces fraud and forgery in case of import against master export L/C. But all the time the bank does not want it. 3. In some cases, this branch takes different Margin and commission on L/Cs from different customer. A customer is allowed to open a L/C even with 10% margin. I think that the bank should review the customers' behavior for a period and should develop a certain policy in this regard. 4. Pubali Bank, Principal branch do not practice revocable L/C. 5. The bank should try to arrange more training programs for their officials. Quality training will help the officials to develop the knowledge of International Trade Financing. 6. Pubali Bank, Principal branch does not have adequate number of skilled manpower in foreign exchange department. 7. With the pressure of the top management the employees are some time bound to do things, which is beyond the rules and regulations. In case of month end report so many register has to be maintained which is time consuming. Number of register can be lessening with the help of computers.

CHAPTER FIVE
Loans and Advances

5.1 Introduction 5.2 Managers Concern

5.2.1 How to locate purpose 5.2.2 How to locate security 5.2.3 How to locate borrower

5.3 Advance Secured and Unsecured 5.4 Function of Advance Department 5.5 Types of Loan 5.6 Process of Loan

5.7 State of Classification and Provision for 5 Years of PBL

Loans and Advances

5.1

Introduction

Major source of income of a bank is the earning from credit. Borrower selection is the main and prime task of this department. Advancing loans is the primary function of the commercial banks. Without loans countrys industrial and commercial development is not possible. Therefore, smooth loan system in banking sector is a catalyst for economic development of a country.

5.2

Managers Concern
1) How to locate purpose 2) How to locate security 3) How to locate borrower

In the process of loan Manager has to ensure three things:

5.2.1 How to locate purpose: Manger has to ensure that the loan will generate adequate cash. For that matter the loan should be engaged in productive activities. Such an employment will increase economic activities, promote trade and commerce, create employment avenues and increase

movement of goods and flow of cash. This flow of cash is known in the banking concept as cash generation. If there is enough cash generation, funds will automatically flow into the borrowers accounts with the bank and will show a satisfactory turnover in accounts which the lending bank always demands. This is why the managers speculation should be making the highest cash through the employment of the advances. 5.2.2 How to locate security: As soon as the evaluation of purpose is done manager will examine and evaluate in the following manner the securities offered by the prospective borrower: a) Security is the source of information on the prospective borrower. If offered are valuable properties like land, building, shares of stocks or pledged goods, these will offer adequate information about the borrower as to his financial position. b) If securities are hypothecated stocks of raw materials for production, these will offer adequate information about the borrower as to his ability or capacity to utilities c) Securities (tangible or intangible) offer a yardstick for measuring the extent of involvement of the borrower himself. The lending banks investment of funds is a joint venture of the banker and the borrower. The securities offered are the borrowers portion of involvement i.e. his equity or capital. Thus the greater is his involvement, the better for the banks. The borrower in that case will think twice that if the business goes wrong, it is who will suffer most. Thus it will be in his own interest that he will avail and utilize the loan as per agreed stipulations. Thus the best way to safeguard the lending banks interest is, as far as possible to maximize the banks commitment. d) The branch Managers responsibility as to provide security is also to see how much control he will be in a position to exercise on the entire stocks of the borrower.

5.2.3 How to locate borrower: In appraising a loan process, the selection of the prospective borrower is the most vital point. The borrower is the real actor and must be in position to achieve the purpose for which the loan has been requested. In selecting ideal borrower, the branch manager thus assumes the greatest responsibility. Capital is another point to indicate the borrowers position. He should be given loan in proportion to this own investment as working capital. As a general rule a bank should not sanction loan more than the investment of the borrower. Then the consideration of borrowers capacity - whether the borrower can utilize the funds or not. Of all the qualifications of a prospective borrower, character is undoubtedly the greatest. While the capacity and capital are the factors upon which depends his ability to repay the money advanced, the character of the borrower indicates his intention to repay the loan. To select the ideal borrower the following points have to consider: a) Branch records: The manager may have first hand information on a prospective borrower by a reference to his records. The turnover of his financial dealings is reflected in the ledger folios of his branch. b) Borrowers Record: The prospective borrower may be advised to submit his books of accounts balance sheet etc. for examination by the manager. These financial tools reflect the position of his assets and liabilities and a fair idea about the capital and capacity of the borrower.

c) Personal Enquires: As an individual the borrower must be a desirable person in the society. He must have integrity. There are some factors such as the sobriety, the promptness of payment goods habits personality, the ability and the willingness to carry a project

5.3

Advance Secured and Unsecured

1. Secured Advance: Secured advance are those advances which are secured by tangible securities of adequate value over which the bank has either absolute or constructive control in addition to the personal guarantee of the customer. 2. Unsecured Advance: The advances which are granted to a constituent of undoubted standing and reliability and only in exceptional circumstances and for short period without any tangible security are called unsecured advances.

5.4

Functions of Advance Department

Ensuring that funds are disbursed only after compliance with terms and conditions or required documents received. Make sure that the bank has always valid and current loan documentation. Ensuring that the collateral security is adequate at times to support the loans. Keeping the loan documentation under safe custody. Ensuring that the bank receives sufficient valid insurance cover whenever required from a recognized insurance company. Monitoring the receipt of periodical receivable. Debiting the client for all charges, interest etc.

Maintaining the central liability records for all extensions of credit and balancing the totals with General Ledger

LOAN&ADVANCES
ADVANCE

Inland

Foreign

Advance (Loans)

Advance (Overdraft)

Advance (Discount)

PCS Transport Loan HBL( General) Loan( General) HBL( Staff) Project Loan Furniture Loan

TOD SOD CC(Hypo) CC( Pledge)

LTR LIM PC FPB IBP LPDB PAD

5.5

Types of Loan
Pubali Bank Principal Branch has the following loan schemes Continuous Loan

Demand Loan Term Loan Cash Credit (CC) Overdraft (OD) Bank Guarantee Staff Loan(PBL) The limited loans with expiry date of loan payment, which can be

Continuous Loan:

transacted without any particular payment schedule, are termed as continuous loan. Following are the various categories: 1. Small Enterprise Financing (SEF) 2. Consumer Financing (CF) 3. Other than SEF and CF

Demand Loan

The loans, which become eligible for payment when demanded by the bank, are termed as demand loan. If contingent or any other debt becomes forced loan, then those are also termed as demand loan. Following are the various categories: 1. Small Enterprise Financing (SEF) 2. Consumer Financing (CF) 3. Other than SEF and CF Term Loan The loans which are to be paid within limited term with a particular payment schedule are known as term loan. Following are the various categories: (a) Term loans up to 5 years 1. Small Enterprise Financing (SEF) 2. Consumer Financing (Other than HF & LP) 3. Housing Finance (HF) 4. Loans for Professionals to setup business. (LP) 5. Others (b) Term loan over 5 years 1. Small Enterprise Financing (SEF) 2. Consumer Financing (Other than HF & LP) 3. Housing Finance (HF) 4. Loans for Professionals to setup business. (LP) 5. Others

Short term Agro and Micro Credit:

The short-term loans which are listed in yearly

loan disbursement schedule served by the loan department of Bangladesh Bank, are termed as short-term agricultural loan and micro-credit. The loan given to the agricultural sector for less than 12 months is also included in this category. By short-term loan we mean the loan below Tk 10,000 to be paid within 12 months.

Cash Credit (CC) a. Cash credit is given through the Cash Credit (CC) account. b. Cash credit account is basically a current account, however a little difference exist between them. The distinction between a current account a CC account is that the former is intended to be an account with credit balance and the latter an account for drawing of advances. c. Operation of cash credit is as same as overdraft. The purpose of cash credit is to meet working capital needs of traders, farmers, and industrialists.

Over Draft (OD) a. Overdrafts are those drawings which are allowed by the banker in excess of the balance in the account up to a specified amount for definite period. b. Generally it is given to the businessmen to maintain their business activities. c. Any deposit in the SOD account is treated as repayment of overdraft. d. Generally provided against FDR, any primary security etc. OD and CC amount as on 30th June, 2008 Over Draft Cash Credit 11,787,897,330 12,202,851,147

Bank Guarantee a. The bank is very often requested by his customer to issue guarantees on behalf of their party committing to make an unconditional payment of certain amount of money to the third party, if the customer (on whose behalf guarantee is given) becomes liable, or creates any loss or damage to the third party. b. It is a contingent liability for the bank and 3% commission is charged for this. After the expiry of the period bank is no longer liable to the third party. c. Generally issued by the banker for payment of tender. Paying customs duty, sales tax, insurance premium, guarantees are also issued on behalf of the customer. Bid Bond Generally issued while dropping tender for work. It is issued when customer gets a specific work-order. Here bank Performance Bond Staff Loan
1.

guarantees that his customer is willing and able to complete the required work, and bank takes the responsibility of completing the contracted work.

STAFF HOUSE BUILDING LOAN SHBL 120 times of the basic salary is provided as SHBL Bank Rate + 1%, interest is charged to the employee Repayment is adjusted from their monthly salary Repayment is made at equal monthly installment

a. b. c. d.

2.

STAFF LOAN AGAINST PROVIDENT FUND SPF 10% of basic is contributed by employee in every month 10% of basic is also contributed to the PF by the Bank Repayment is adjusted from their monthly salary Maximum Sanction from PF

a. b. c. d.

5.6

Process of Loan

Application Applicant applies for the loan in the prescribed form of the bank describing the types and purpose of loan. Sanction a. Collecting credit information about the applicant to determine the credit worthiness of the borrower. Sources of information i. Personal Investigation, Confidential Report from other bank, Head Office/Branch/Chamber of Commerce. ii. CIB (Central Information Bureau) report from Central Bank. b. Evaluation of compliance with its lending policy. c. Evaluating the proposed security d. If loan amount exceeds 50 lac then bank goes for LRA Analysis. e. LRA is must for the loan exceeding one crore as ordered by Bangladesh Bank. LRA has described at the end of this chapter. If everything is in accordance the loan is sanctioned

Documentation a. Then the bank prepares a loan proposal containing terms and conditions of loan for approval of H.O. or Manager. b. Takes the necessary papers and signatures from borrower Disbursement A loan Account is opened where Dr customer A/C.

Cr Respective Loan A/C

5.7

State of Classification and Provision for 5 Years of PBL

(Figures in Million) SL No 1. 2. Deposit Total Loans & Advance a) Unclassified b) Classified 3. a) Required amount of Provision b) Provision Obtained 145.79 c) Not Obtained/Short 243.77 fall 4. Net Profit/Loss 134.70 573.45 845.53 1353.51 1515.23 216.87 102.95 111.48 65.05 117.67 36.88 142.78 49.57 39789.7 1 27542.3 3 19790.8 3 7751.5 321.85 44443.0 3 32639.6 8 24747.4 8 7892.2 289.22 48675.9 3 40386.6 5 35208.4 4 3206.82 104.97 2514.90 113.98 2219.31 137.82 57996.8 2 50549.1 6 46006.8 57450.27 61788.15 73016.51 Particulars 2004 2005 2006 2007 2008

With the passage of time the bank is expanding day by day. That is what we see that the amount of deposit is increasing gradually from year 2004 to 2008.Total deposit of the bank was TK 73016.51 million during 2008 showing 25.90% increase than the previous year.

Total advances of the bank as on 31st December 2008 stood at TK. 61788.15 million showing an increase of Taka 11238.98 million @22.23% growth. . Due to expansion the bank is offering more loans to its clients. That is why we see that the amount of loan is increasing gradually from year 2004 to 2008.

Again from the figures and graphs above we see that during the year the bank made provision of TK. 305.00 million against loans and advances, diminution in value investments, exposure of Off Balance sheet items and provision of TK. 1515.23 million which is higher than previous year. Profitability of the bank has increase 19.55% in the year of 2008.

CHAPTER SIX

SWOT Analysis

Introduction

SWOT is an acronym for the internal Strength and Weakness of a firm and the environmental Opportunity and Threat facing that firm. So if we consider Pubali Bank as a business firm and analyze its strength, weakness, opportunity and threat, the scenario will be as follows:

Strength:
(a) Good management. (b) Cooperation with each other. (c) Usage of faster pc bank software. (d) Membership of SWIFT. (e) Good banker-customer relationship. (f) Online Banking services. (g) Strong financial position. (h) Strong position of CAMEL rating. (i) Huge business area. (j) Excellent monitoring and supervision. (k) Energetic as well as smart teamwork.

Weakness:
(a) Lack of proper motivation, training and job rotation. (b) Lack of experience employees in junior level management. (c) Lack of own ATM services. (d) Tendency to leave the bank in quest of flexible environment.

Opportunity:
(a) Expand market. (b) Growth of sales service. (c) Change in political environment. (d) Lunching own ATM card.

Threat:

(a) Different service of FCBs (Phone Banking / Home Banking) (b) Daily basis interest on deposit offered by HSBC. (c) Entrance of new PCBs .

CHAPTER SEVEN

7.1 7.2 7.3

Findings Recommendation Conclusion

7.1

Findings

I have find out some points by screening the whole study, which is expressed as major findings. I have analyzed the data sincerely and carefully and have tried to identify appropriate findings. Moreover, conversations with the PBL officials were very significant for these findings. After overall appraisal of PBL, the major findings are as follows: # Position: Pubali Bank Limited is the pioneer in private sector banking operations of the country. # Operational Orientation: Its major operations are development & welfare oriented. # Management System: Management system of PBL is fully democratic. # Requirements of Bangladesh Bank: PBL always maintains the rules declared by Bangladesh Bank. #Training Facilities: PBL provides training facilities to its officer of the bank and also provides executive development & internship program. #Management Functions: The management functions (from planning to control) are not clearly present in their various activities. # Computerization: Most of the activities are computerized. # Manual Work: Paper-based works are still existed in branch. # Decoration: It is a leading bank of Bangladesh but it has no attractive appearance in office environment.

7.2

Recommendation

In order to get competitive advantage & to deliver quality service, top management should try to modify the services. For the improvement of the service the following measures should be taken: # Customers Convenience: For customers convenience, PBL should provide more personnel to deliver faster services to their honorable customer. # Human Development: Development of human resources should be ensured to increase efficiency in work. # Communication System: Ensure proper communication system and maintenance of files & machineries should modernize. # Interest: More interest should be paid on deposit account so that customers are convinced to deposit their money in bank. # R & D: Research & Development wing must be more extensive & rich. # Strategy: Effective strategies must be undertaken against defaulter. # Project Management: Project Management must be practiced in case of investing in the project. Feasibility study of the project, project planning, monitoring & evaluation should be undertaken. # Managerial Function: PBL must have to follow the management functions (from planning to control) strictly in all of their business activities and also operation the bank. # Financial Analysis: Branch should have a separate section to analyze the financial statement for fining its liquidity, profitability & ownership ratios.

# Strict Rules for arrival and departure for the employee: Management should strict about the arrival and departure time for the employees. # Job Rotation: In PBL job rotation is fully absent job rotation is very important to make the entire employee efficient for all departments. # Appreciation: No doubt that in PBL female employees is more efficient and hard working than male employees. It is very important to appreciate them and give them proper respect. Because if they get the appreciation then they can increase their volume of work. It is not only for the female it is also important both for male and female employees. # Image: Office should be fully redecorated to attract people to conic into it.

Some other important factor that should be focused on the development process: # Time consumed at service level should be minimized at optimum level. # Evaluate customers needs from their perspective and explain logically the shortcomings. # Improve office atmosphere to give customers better feeling. # Use of effective MIS (Management information system). # To deliver quality service top management should try to mitigate the gap between customers expectation & employees perception.

7.3

Conclusion

There are a number of nationalized and foreign banks operating their activities in Bangladesh. The PBL is one of them. For the future planning and the successful operation in achieving in its PBL goal in this current competitive environment this report can be a guideline. Bank always contributes towards the economic development of a country. PBL, compared with other banks are contributing more by investing most of their funds in fruitful projects leading to increase in production. It is obvious that right thinking of this bank including establishing a successful network over the country and increasing resources, will be able to play a considerable role in the portfolio of development financing in the developing country like ours. PBL continues to play its leading role in socio-economic development of the country as a companion of Independent Bangladesh. Besides its traditional function such as deposit mobilization, deployment of fund in trade, commerce, industry, agriculture, import & export business, outward and inward remittance as an agent of Bangladesh Batik of PBL has emerged as the pioneer of playing key role in the country. Pubali Bank is a private bank but it has no attractive environment ii their branch and all branches are not computerized, even total cash are not properly use when this bank develop their all branch by attractive environment and computerized. On the other hand cash are properly used at that time this bank reached in the top-level private bank in our country. If the Bank cannot fulfill these things, they cannot run in the future with their competitors Bank.

CHAPTER EIGHT

8.1 Acronyms 8.2 Bibliography

8.1
BB PBL BL CC C&F CIB CRF EPB ERC EXP For m IBCA IBCT IBDA ID IMP Form IRC LIM LATR MBM OBC PAD SOD SWIFT TIN

Acronyms
Bangladesh Bank Pubali Bank Limited Bill of Lading Cash Credit Clearing & Forwarding Credit Information Bureau Clean Report Findings Export Promotion Bureau Export Registration Certificate Export Form Inter Branch Credit Advice Inter branch Credit Transaction Inter Branch Debit Advice International Division Import Form Import Registration Certificate Loan against Imported Merchandise Loan against Trust Receipt Masters in Bank Management Outward Bills for Collection Payment against Document Secured Overdraft Society for Worldwide Inter bank Financial Telecommunication Tax Identification Number

8.2

Bibliography

Brigham, Eugene F Joel E. Houston, Fundamental of Financial Management, Ninth Edition, Harcourt Publisher International Company, 2001. Basudevan, S.V., Theories of Commercial Banking, Reading Materials on Theory & Practice of Banking (B-101), Bangladesh Institute of Bank Management (BIBM), 2000. Rose Peter. Commercial Bank Management, Third Edition, Irwin McGrawHill Publisher, 1996. Others

Diary-Diary has been maintained regularly to record all the activities of practical orientation.
Bangladesh Bank, Guideline for Foreign Exchange Transactions, Volume 1 & 2

Pubali Bank Limited, Manual of Foreign Exchange. Pubali Bank Limited, Annual Report 2008 Pubali Bank Limited, Financial Transactions Abstract.

Website

www.pubalibangla.com
www.google.com