BASIC Bank Limited

(Serving People for Progress)

Internship Report Analysis of Documents Used in Foreign !change Banking " A Case Study on BASIC Bank Limited#

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BASIC Bank Limited

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Executive Summary
Foreign Exchange is vast concept in banking sector, which generates another source of profit and gear up economic activities of the country. Moreover the uses of foreign exchange activities have to be well organized and well executed to reap the benefits to Foreign Exchange Department. Department understand is the more banking o Foreign Exchange to help with us to other effective

activities

countries and also helps to understand a portion of the economic growth of the country. !his report on Analysis of Documents Used in Foreign Exchange Banking. -A Case Study on BASIC Bank Limited . !his report gives a clear idea about the documents used in foreign exchange of "# $% "ank &td. #s my work place in "# $% "ank &td. 'ttara "ranch, in this report $ specially placed the documents and other data of 'ttara "ranch. !his report is alienated into three parts. !he main findings of this report are identification of documents used in foreign exchange banking, appraisal of export business of "# $% "ank limited,
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assessment of import business of "# $% "ank ltd., evaluation of foreign remittance of "# $% "ank ltd.

!ABLE "F C"#!E#!S

Letter of Transmittal Letter of Acceptance Acknowledgement Executive Summary Table of ontents Chapter 'ne ( Introduction !"! #rigin of t$e %eport !"& #b'ectives of t$e Study !"( )et$odology of t$e Study !"* Limitations of t$e Study Chapter ,$o ( An '-er-ie$ of the BASIC Bank Ltd% &"! +ackground of t$e BASIC Bank Ltd% &"& apital Position &"( ,unction of +AS- +ank Ltd" &"* #rgani/ational Structure &". Activities of +AS- +ank Ltd &"0 Performance of 1ttara +ranc$ Chapter ,hree ( ,heoretical Frame$ork of BASIC Bank Ltd% ("! )eaning of ,oreign Exc$ange )arket ("& Export Section ("( -mport ("* )a'or 3iscrepancies
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iii iv v vi )*")+ !! !! !& !& ).")/ !* !* !. !. !0 !2 +*".0 &! &( &. &2

BASIC Bank Limited

(Serving People for Progress)

(".

,oreign %emittance Section

(& .1"2) &2 &4 (2 (2

Chapter Four ( Analysis of Findings *"! -dentification of 3ocuments 1sed in ,oreign *"& *"( *"* Exc$ange +anking Appraisal of Export +usiness of +AS- +ank Ltd" Assessment of -mport +usiness of +AS- +ank Ltd" Evaluation of ,oreign %emittance of +AS- +ank Ltd" Chapter Fi-e( Conclusion 3 Recommendation ."! onclusion ."& %ecommendation Appendi!es 5uestioners for +anks #fficials 5uestioners for +anks lients +ibliograp$y List of ,a4les
,a4le 5o% +%) +%+ +%. 2%) 2%+ 2%.

2+"20 *( ** *0 *0 *2 .6 &age !2 !4 !4 (2 (4 *6

,itle Performance of at a 7lance 1ttara +ranc$ 3eposit mix of 1ttara +ranc$ +ranc$8s foreign exc$ange position Export ,inance -mport ,inance ,oreign %emittance List of Figures

,igure ("! ,oreign Exc$ange )arket ,igure ("& ,oreign Exc$ange )arket #perations ,igure ("( ,oreign Exc$ange Procedures List of 6raphs 7rap$ *"! Export ,inance
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+) ++ .0

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BASIC Bank Limited

(Serving People for Progress)

7rap$ *"& -mport ,inance 7rap$ *"( ,oreign %emittance

2* 2)

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BASIC Bank Limited

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(.( )rigin of the *eport+

!o fulfill the re,uirements of ""# program under $nternational $slamic 'niversity %hittagong -Dhaka %ampus., we have prepared this report on "# $% "ank &imited -'ttara "ranch. and their modern banking operation with foreign exchange procedure where $ have worked from /001. eptember

$.% "B&EC!I'ES "F !(E S!UD)*****************

(i) Main objectives:
The main objective of the study is to highlight on the major documents used by BASIC Ban !td" #hile dealings $ith foreign e%change ban ing"
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(ii) S&ecific objectives:

To identify the documents used in foreign trade of BASIC Ban !td" To a&&raise e%&ort' im&ort ( remittance of the same ban " To identify &roblems of foreign e%change ban ing of the selected ban " To suggest suggestions for im&rovement of foreign ban ing of the given ban "

$.+ ,E!("D"L"-) "F !(E S!UD)**************

a. 2rimary Data were collected by the Following 3ays+
Direct communication with bank officials & clients; Exposure on different desk of the bank; File study; Observing various organizational procedures

b. !he Main

econdary

ources from 3hich Data were

#ccumulated are as Follows+

!nnual "eport of #!$%& #ank 'td ; (eriodicals published by the #angladesh #ank; $$$%Assignment&oint%com

BASIC Bank Limited

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Different publications regarding foreign exchange operation; From )ewspapers and %nternet *e have covered both head office and +,,!"! branch of #!$%& #ank #ut the body of the report is prepared in the light of the branch Only %nternational Department -%D. part is covered in the /ead Office

$.. LI,I!A!I"#S "F !(E /E0"/!***************

Despite all out co0ordination from the bank officials1 we faced some limitations ,he notable some of these are as under0 'earning & gathering experience of all the banking functions was really tough !nother limitation of this report is #ank2s policy is not disclosing some data and information for obvious reason1 which could be very much useful 'arge0scale research was not possible due to time constraints )on0availability of data in a systematic way

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+%)
8888888888888888888888888
BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) registered under the Companies Act 1913 on the 2nd of August 19 ! started its operations from the 21 st of "anuar# 19 9$ It is go%erned &# the Banking Companies Act 1991$ 'he Bank (as esta&lished as the polic# makers of the countr# felt the urgenc# for a &ank in the pri%ate sector for financing small scale $$$%Assignment&oint%com

BASIC Bank Limited

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Industries (SSIs)$ At the outset! the Bank started as a )oint %enture enterprise of the BCC *oundation (ith +, percent shares and the -o%ernment of Bangladesh (-.B) (ith the remaining 3, percent shares$ 'he BCC *oundation &eing nonfunctional follo(ing the closure of the BCCI! the -o%ernment of Bangladesh took o%er 1,, percent o(nership of the &ank on / th "une 1992$ 'hus the Bank is state0o(ned$ 1o(e%er! the Bank is not nationali2ed3 it operates like a pri%ate &ank as &efore$ BASIC Bank Limited is uni4ue in its o&)ecti%es$ It is a &lend of de%elopment and commercial &anks$ 'he 5emorandum and Articles of Association of the Bank stipulate that 6, percent of loan a&le funds shall &e in%ested in small and cottage industries sector$

/./ %#2$!#& 2) $!$)4********************* **

!uthorized capital (aid up capital ,otal "eserve and $urplus 3 ,k 4555 million 3 ,k 678 million 3 ,k 91467 55 million up to :9 94 455; ,he #ank is re<uired to transfer 45 percent of its net profit before ,ax to &apital Fund as per the #anking &ompanies !ct 9669

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+%. 888

88888888888888888888

TheBankOffers:
a b financing c to run d mobilization and ,erm loans to industries especially to small0scale enterprises Full0fledged commercial banking service including collection of deposit1 facilitating their international enterprises trade successfully

short term trade finance1 working capital finance in processing and manufacturing units and ,echnical support to $mall $cale %ndustries -$$ls. in order to enable them =icro credit to the urban poor through linkage with )on0 >overnment of resources

Organizations -)>Os. with a view to facilitating their access to the formal financial market for the %n order to perform the above tasks1 #!$%& #ank works closely with its clients1 the regulatory authorities1 the shareholders ->O#.1 banks and other financial institutions

+%2
,o achieve its organizational goals1 the #ank conducts its operations in accordance with the ma?or policy guidelines laid down by the #oard of Directors1 the highest policy making body ,he day to day operation of the #ank is looked after by the management A"

BOARD-of-DIRECTORS
!s stated earlier the >overnment holds 955 percent ownership of the #ank !ll the Directors of the #oard are appointed by the >overnment of #angladesh ,he secretary of the =inistry of %ndustries is the &hairman of the #ank Other Directors of the #ank are senior >overnment and central #ank executives ,he =anaging Director is an ex0officio member of the #oard of Directors ,here are at present @ Directors including the =anaging Director $$$%Assignment&oint%com

BASIC Bank Limited

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+"

MANAGEMENT
,he management is headed by the =anaging Director /e is assisted by the Deputy =anaging Director1 >eneral =anagers and Departmental /eads in the /ead Office #!$%& #ank is different in respect of hierarchical structure from other banks in that it is much more vertically integrated as far as reporting to the &hief Executive is concerned ,he #ranch =anagers of the #ank report direct to the =anaging Director and1 for functional purposes1 to the /eads of Departments &onse<uently1 <uick decision making in disposal of cases is ensured

+%0 a. Industrial Credit

999999999999999999

#!$%& #ankAs services are directed towards the entrepreneurs in the small industries sector ! small industry1 as per %ndustrial policy 9666 approved by the &abinet1 has been defined as an industrial undertaking whose total fixed investment is less than ,k 955 million ,he industrial loan reflected a significant growth of 44 86 percent over the previous year ,otal outstanding industrial loans including term and working capital stood at ,aka 94147: 8; million at the end of 455; compared to ,aka 616B@ 85 million of 4558 ,otal outstanding term loan stood at ,aka :1B6@ 94 million as on December :91 455; compared to ,aka :189@ B8 million in 4558 reflecting a growth of 95 @B percent ,he outstanding working capital finance extended to industrial units stood at ,aka B1:7; 77 million at the end of the reporting period compared to ,aka ;17@6 @9 million in 4558 >rowth rate here was 46 55 percent #!$%& #ankAs services are specially directed towards promotion and development of small industries %ts exposure to small and medium industries sector accounted for 8: 7: percent of the total loans and advances During the year total of 986 pro?ects were sanctioned term loan Out of which B6 were new and the rest were under #="E of the existing pro?ects !s on :9 December1 ;7@ pro?ects were in the portfolio of the bank ,he textile sector including garments being one of the ma?or contributors to national economy dominated the loan portfolio of the #ank Other sectors financed include engineering; food and allied industries; chemicals1 pharmaceuticals and allied $$$%Assignment&oint%com

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industries; paper1 board1 printing and packaging; glass; ceramic; and other non0metallic goods and ?ute products "ecovery rate of pro?ect loan was B6 percent

. Co!!er"ial Credit
,he #ank also supports development of trade1 business and other commercial activities in the country %t covers the full range of services to the exporters and importers extending various facilities such as cash credit1 export cash credit1 packing credit1 short term loans1 local and foreign bills purchase facilities !s on December:91 455; total outstanding commercial loans stood at ,aka ;1:6@ 49 million &ompared to ,aka 8159: 88 million in 4558

". Mi"ro Credit

#!$%& #ank launched a =icro &redit $cheme in 9667 =icro &redit $cheme provides for the poor for generation of employment and income on a sustainable basis particularly in urban and suburban ,hese )" 'ending to the )>Os who on0lend to their members !t present there are 98 such )>Os *" 'ending direct to the targets groups or ultimate borrowers under the #ank2s own management +" 'ending direct to the member0borrowers and )>Os providing nonfinancial services like group formation and monitoring and supervision on exchange for a supervision fee !t the end of 455;1 total amount of ,aka :86 47 million remained outstanding as against ,aka ::B :5 million in 4558 "ecovery rate during this period remained at a satisfactory level of 955 55 percent areas ,he #ank follows three systems of credit delivery are3

d. #orei$n Trade
,he bank achieved substantial growth in export in 455; and the performance of the bank in import business was also satisfactory ,he #ank handled total export business of ,aka 9817;: @7 million and import business of ,aka 9@1B57 4@ million in 4558 ,he export and import business grew by :6 :7 percent and 4; :4 percent respectively =a?or items of exports were garments1 ?ute

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BASIC Bank Limited

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products1 textile1 leather etc %tems of import included mainly industrial raw materials1 garments accessories1 capital machinery1 food items and other essential commodities

,he #ank became a proud member of $*%F, -$ociety for *orldwide %nterbank Financial ,elecommunication. that would pave the way to achieving uninterrupted communication related to banking for international trade business and fund transfer "

e. Other A"ti%ities
,he #ank provides services for remittance1 underwriting1 guarantee1 public offering of shares etc ,he bank also provides funds to investment and leasing companies ,he #ank has recently created a venture capital fund for e<uity support to innovative but risky pro?ects

/ . 5

2erformance at a 6lance of '!!#*#

"ranch77777
a. (erformance of +,,!"! #ranch at a glance as on Canuary :91 455B

,able39
,ey Areas ,otal !sset ,otal Deposit Total Advance Im&ort /%&ort 0emittance in$ard 0emittance out$ard ,otal %ncome ,otal Expenditure 1ross 2rofit Amount in !ac T " 7B69 55 7:84 9; *-)."+. B8 :4 @7 89 89 58 78 86 :8 ;@ :8 5; 3".) Source! BASIC Bank Ltd$ 7''A8A Branch

b. Deposit =ix of +,,!"! #ranch as on Canuary :91 455B

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Table:2 Ty&e of Accounts &urrent Deposit $hort ,erm Deposit -$,D. Sundry 5e&osit Term 5e&osit $avings #ank Deposit Total 5e&osits Amount in !ac T " 9@7 68 99 75 :@ B5 :64@ @4 4 of Total 5e&osits 7 54 D 5 4; D 5 B@ D 65 48 D

455 46 7 ;5 D 6+7*"). )33"334 Source: UTTARA Branch, BASIC Bank Ltd.

c) +ranc$8s ,oreign Exc$ange position as on :anuary (!; &662

Table<( Key Areas Import Export Remittance Total Amount in Lac Tk. 85.32 53.38 % 74.51 46.62 % 0.00 159.83 100.00% Source: UTTARA Branch, BASIC Bank Ltd. % of total Business

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BASIC Bank Limited

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8.( Foreign Exchange

8oreign Exchange means foreign currency and it includes any instrument drawn1 accepted1 made or issued under clause -9:.1 !rticle 9; of the #angladesh #ank Order1 96@4 !ll deposits1 credits

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BASIC Bank Limited

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and balances payable in any foreign currency and draft1 travelers che<ue1 letter of credit and bill of exchange expressed or drawn in #angladeshi currency but payable in any foreign currencies #angladesh #ank issues !uthorized Dealer -!D. license by observing the bank2s performance and also the customers associated with the bank for conducting foreign dealings

orei ! n E xc" a! e

I m p ort S ect i o n

E xp ort S ect i o n R em i t a n ce S ect i o n

,igure < !

8oreign /%change $$$%Assignment&oint%com

BASIC Bank Limited

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/%&ort

Im&ort

0emittance

9 4 : 7 8

Export 'E& $crutiny #,# 'E& opening !cceptance of #,# '& (ayment of #,# '& Export #ill )egotiation & "epatriation of Export proceed $tatement1 "eturns & &orrespondenc e related to Export 'E& advising & ,ransfer &ash %ncentive

9 4

'E& Opening Document checking : 'E& (ayment -'odgment and retirement. 7 $tatement1 "eturns related to %mport

%nward & Outward "emittance 4 $tatement1 &orrespondence & "eturns related to "emittance

9 4

9 4 : i!#re:2

Overall supervision of 'ocal bill negotiation (urchase of 'ocal #ill !d?ustment of 'ocal #ill

&.' E()ORT SECTION:

Foreign Exchange "egulation !ct1 967@ nobody can export by post and otherwise than by post any goods either directly or indirectly to any place outside #angladesh1 unless a declaration is furnished by the exporter to the collector of customs or to such other person as the #angladesh $$$%Assignment&oint%com

BASIC Bank Limited

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#ank -##. may specify in this behalf that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner and within a period specified by ## #angladesh exports a large <uantity of goods and services to foreign households "eadymade textile garments -both knitted and woven.1 Cute1 Cute0made products1 frozen shrimps1 tea are the main goods that #angladeshi exporters exports to foreign countries >arments sector is the largest sector that exports the lion share of the countryAs export #angladesh exports most of its readymade garments products to + $ ! and European &ommunity -E&. countries #angladesh exports about 75D of its readymade garments products to + $ ! =ost of the exporters of #!$%& #ank are readymade garment exporters ,hey open export 'E&s here to export their goods1 which they open against the import 'E&s opened by their foreign importers

SC09TI:; A:5 :/1<TIATI<: <8 /=2<0T BI!!

#ank deals with documents not with goods ,he bankers are to ascertain that the documents are strictly as per terms of 'E& #efore negotiation of the export #ill the bankers are to scrutinize and examine each and every document2s with care )egligence on the part of the bankers may result in non repatriation or delay in realization of export proceeds as incorrect documents may put the importers abroad into unnecessary troubles

,he scrutiny of the #ill of Exchange -Draft. and other related documents should ensure that
,he documents are presented for negotiation before the expiry of the relative credit ,he amount does not exceed the amount available under the credit !ll the documents stipulated in the 'E& are submitted ,he corrections and alteration are properly authenticated in all documents

E*+ort do"u!ents "he"kin$:

)" >eneral verification3 a. 'E& restricted or not b. Exporter submitted documents before expiry date of the credit c. $hortage of documents etc $$$%Assignment&oint%com

BASIC Bank Limited

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*"

(articular verification3 a. Each and every document should be verified with the 'E&

+"

&ross verification3 a. Ferified one documents to another

,hile "he"kin$ the e*+ort do"u!ents follo-in$ thin$s !ust e taken in "onsideration.
!>C terms: Each and every clause in the 'E& must be complied with meticulously and ensure the following3 )" ,hat the documents are not state; *" ,hat the documents are negotiated within the 'E& validity1 %t a credit expire on a recognized bank holiday its life is automatically become valid upto the next works day +" ,hat the documents value does not exceeds the 'E& value

Draft.Bill of E*"han$e
Draft is too examined as under3 )" Draft must be dated *" %t must be made out in the name of the beneficiary2s bank or to be endorsed to the bank +" ,he negotiating bank must verify the signature of the drawer 6" !mount must be tallied with the %nvoice amount 7" %t must be marked as drawn under 'E& )o dated issued by GGG #ank

)resentation of e*+ort do"u!ents for ne$otiation:

!fter shipment1 exporter submits the following documents to #!$%& #ank for a b c #ill of Exchange or Draft; #ill of 'ading %nvoice $$$%Assignment&oint%com negotiation

BASIC Bank Limited

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d e f g h i ?

%nsurance (olicyE&ertificate &ertificate of origin %nspection &ertificate &onsular %nvoice (acking 'ist Huality &ontrol &ertificate > $ ( certificate

&.& I!+ort:
%mports are foreign goods and services purchased by consumers1 firms & >overnments in #angladesh ,o import1 a person should be competent to be a Iimporter2 !ccording to %mport and Export &ontrol !ct1 96851 the Office of &hief &ontroller of %mport and Export provides the registration -%"&. to the importer

BASIC Bank "he"ks the do"u!ents. The usual do"u!ents are/i ii iii iv v vi vii viii ix x %nvoice #ill of lading &ertificate of origin (acking list *eight list $hipping advice )on0negotiable copy of bill of lading #ill of exchange (re0shipment inspection report $hipment certificate

I!+ort )ro"edures:
)" 0egistration $ith CCI(/ a For engaging in international trade1 every trader must be first registered with the &hief &ontroller of %mport and Export $$$%Assignment&oint%com

BASIC Bank Limited

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#y paying specified registration fees and submitting necessary papers to the &&%&E the trader will get %"& -%mport "egistration &ertificate. !fter obtaining %"&1 the person is eligible to import

'.)ur"hase Contra"t et-een i!+orters and e*+orter: a b c d &. )ow the importer has to contact with the seller outside the country to obtain the proforma invoice E indent which describes goods %ndent is got through indenters a local agent of the sellers !fter the importer accept the preformed invoice1 he makes a purchase contract with the exporter declaring the terms and conditions of the import %mport procedure differs with different means of payment %n most cases import payment is made by the documentary letter of credit -'E&. in our country Colle"tion of 0CA for!: ,hen the importer collects a 'etter of &redit !uthorization -'&!. form from #!$%& #ank +,,!"! #ranch 1. O+enin$ a 0etter of Credit 20.C3 %n international environment1 buyers and sellers are often unknown to each other $o seller always seek guarantee for the payment for his goods exported /ere is the role of bank #ank gives export guarantee that it will pay for the goods on behalf of the buyer ,his guarantee is called 'etter of &redit ,hus the contract between importer and exporter is given a legal shape by the banker by its I'etter of &redit2 a" 2arties of !>C i ii importer iii &onfirming #ank J %t is the bank1 which adds its confirmation to the credit and it1 is done at the re<uest of issuing bank &onfirming bank may or may not be advising bank iv !dvising E )otifying #ank J is the bank through which the 'E& is advised to the exporters ,his bank is actually situated in exporter2s country %t may also %mporter J $eller who applies for opening an 'E& %ssuing #ank J %t is the bank which opensEissues a 'E& on behalf of the

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assume the role of confirming and E or negotiating bank depending upon the condition of the credit v )egotiating #ank J is the bank1 which negotiates the bill and pays the amount of the beneficiary ,he advising bank and the negotiating bank may or may not be the same $ometimes it can also be confirming bank vi vii (aying E !ccepting #ank J is the bank on which the bill will be drawn -as per condition of the credit. +sually it is the issuing bank "eimbursing bank J is the bank1 which would reimburse the negotiating bank after getting payment J instructions from issuing bank b" A&&lication 8or !>C limit: #efore opening 'E&1 importer applies for 'E& limit ,o have an import 'E& limit1 an importer submits an application to the Department of #!$%& #ank 'imited furnishing the following information1 0 i branch ii iii iv v vi vii )ature of business "e<uired amount of limit (ayment terms and conditions >oods to be imported Offered security "epayment schedule Full particulars of bank account maintained with #!$%& #ank 'td +ttara

! credit Officer scrutinizes this application and accordingly prepares a proposal -&'(. and forwards it to the /ead Office &redit &ommittee -/O&&. ,he &ommittee1 if satisfied1 sanctions the limit and returns back to the branch ,hus the importer is entitled for the limit c" The !>C A&&lication: !fter getting the proforma invoice importer applies to the bank to open a letter of credit on behalf of him with re<uired papers i Documentary &redit !pplication Form3 #!$%& #ank provides a printed form for opening of 'E& to the importer ,his form is known as &redit !pplication form ! special adhesive stamp is affixed on the form $$$%Assignment&oint%com *hile opening1 the stamp is

BASIC Bank Limited

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cancelled +sually the importer expresses his desire to open the 'E& <uoting the amount of margin in percentage ii iii iv v vi vii 8 a b c d e f g (roforma %nvoice3 %t states description of the goods including <uantity1 unit price etc ,he insurance cover note3 ,he name of issuing company and the insurance number are to be mentioned on it ,he 'etter of credit authorization -'&!. form3 '&! form should be duly attested ,he Form0%=( ,ax %nformation &ertificate Forwarding for (re0$hipment %nspection -($%.3 %mporter sends forwarding letter to exporter for (re0$hipment %nspection #ut all types of goods do not re<uire ($% $ecuritization of 'E& !pplication3 ,he #!$%& #ank Official scrutinizes the application in the following manner1 0 ,he terms and conditions of the 'E& must be complied with +&(D& ;55 and Exchange &ontrol & %mport ,rade "egulation Eligibility of the goods to be imported ,he 'E& must not be opened in favor of the importer "adioactivity report in case of food item $urvey report or certificate in case of old machinery &arrying vessel is not of %srael or of $erbia0 =ontenegro &ertificate declaring that the item is in operation not more than 8 years in case of car

E*a!ination of shi++in$ do"u!ents:

One of the basic principles of documentary credit is that all parties deal with document and not with goods -!rticles ; of +&(D&0;55. ,hat is why the documents should be scrutinized properly %f any discrepancy in the documents is found1 that is to be informed to the party ! checklist may be followed for examining the documents

&.1 Ma4or Dis"re+an"ies:

After proper examination or c$ecking of a described Export document we may find following discrepancies<

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1/:/0A! 9 4 : 7 8 9 4 : 7 8 9 4 : 7 8 ; 'ate shipment 'ate presentation 'E& expired 'E& over0drawn (artial shipment or transshipment beyond 'E& terms BI!! <8 /=C?A:1/ (B>/) !mount of #EE differ with %nvoice )ot drawn on 'E& issuing #ank )ot signed ,enor of #EE not identical with 'E& Full set not submitted C<MM/0CIA! I:@<IC/(C>I) )ot issued by the #eneficiary )ot signed by the #eneficiary )ot made out in the name of the !pplicant Description1 (rice1 <uantity1 sales terms of the goods not corresponds to the &redit )ot marked one fold as Original $hipping =ark differs with #E' & (acking 'ist 2AC,I:1 !IST 9. >ross *t 1 )et *t & =easurement1 )umber of &artoonsE(ackages differ with #E' 4. )ot market one fold as Original :. )ot signed by the #eneficiary 7. $hipping marks differ with #E' BI!! <8 !A5I:1 > AI0#A; BI!! /TC (T0A:S2<0T 5<C9M/:TS) 9 4 : Full set of #E' not submitted #E' is not drawn or endorsed to the Order of (rime #ank 'td K$hipped on #oardL1 KFreight (repaidL or KFreight &ollectL etc notations are not marked on the #E' $$$%Assignment&oint%com

BASIC Bank Limited

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7 8 ; @ B 6

#E' not indicate the name and the capacity of the party i e carrier or master1 on whose behalf the agent is signing the #E' $hipped on #oard )otation not showing name of (re0carriage vesselEintended vessel $hipped on #oard )otation not showing port of loading and vessel name - %n case #E' indicates a place of receipt or taking in charge different from the port of loading. $hort Form #E' &harter party #E' Description of goods in #E' not agree with that of %nvoice1 #EE & (E'

95 !lterations in #E' not authenticated 99 'oaded on Deck 94 #E' bearing clauses or notations expressly declaring defective condition of the goods andEor the packages <T?/0S 9 4 : ) ) Documents not forwarded to buyers or forwarded beyond 'E& terms %nade<uate number of %nvoice1 (acking 'ist1 #E' & Others submitted $hort shipment &ertificate not submitted Invoice %t is to be scrutinized to ensure the following3 9 4 : 7 8 ; @ B 6 ,he %nvoice is addressed to the %mporter ,he full description of merchandise must be given in the invoice strictly as per 'E& ,he price1 <uality1 <uantity1 etc must be as per 'E& ,he %nvoice must be language in the language of 'E& )o other charges are permissible in the %nvoice beyond the stipulation on the 'E& ,he amount of draft and %nvoice must be same and within the 'E& value %f 'E& calls for consular invoice1 then the beneficiary2s invoice is not sufficient )umber of %nvoice will be submitted as per 'E& ,he shipping mark and number of packing list shown in the #E' must be identical with those given in the %nvoice and other documents 95 ,he %nvoice value must not be less than the value declared in EM( Forms 99 %nvoice amount must be correct on the basis of price1 <uantity as per 'E& 94 %nvoice amount1 indicate sale termsE %ncome terms F%N FO#1 &F"1 &%F etc $$$%Assignment&oint%com

BASIC Bank Limited

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9: &onsular %nvoice must be stamped by the local consulateEembassy of the country to which the goods are imported <T?/0 5<C9M/:TS #eneficiary statement1 F%$!EExport 'icense issued by E(#1 &ertificate of Origin1 *eight &ertificate1 (acking 'ist1 %nspection &ertificate &ertificate of analysis1 <uality certificate1 =&D duly signed and any other documents re<uired by 'E& each of these certificatesEdocuments conform to the goods invoice and are relevant to 'E& )egotiating #ank will check the above documents whether it is as per 'E& or not %f )egotiating #ank find everything in order or as per export 'E&1 bank will negotiate the document and will disburse the generated fund as per #anks norms %f the )egotiating #ank will find any discrepancies in the documents ,hey will send the documents on collection or they can negotiate under reserve by the re<uest of the exporter or they can seek permissionE)egotiation authority from issuing #ank to allow )egotiating #ank to negotiate the documents despite the discrepancies 'E& issuing #ank will inform the matter to buyer1 if the buyer accept the discrepancies mentioned by )egotiating #ank1 issuing bank will authorize the )egotiating bank to negotiate the discrepant documents CO00ECTION DOC5MENTS )ormally negotiating #ank will send the documents on collection basis mainly for the following discrepancies 9 4 : 7 8 ; @ B 'E& expired; 'ate shipment; 'ate presentation; 'E& overdrawn; +nit price differ between 'E& and &ommercial %nvoice; &onsignee )ame and address differ between 'E& and other documents Discrepancies in #E'; !ny other =a?or discrepancies

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BASIC Bank Limited

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8.5 F)*E$64 *EM$!!#4%E E%!$)4

,he basic function of this department are outward and inward remittance of foreign exchange from one country to another country %n the process of providing this remittance service1 it sells and buys foreign currency ,he conversion of one currency into another takes place at an agreed rate of exchange1 in where the banker <uotes1 one for buying and another for selling %n such transactions the foreign currencies are like any other commodities offered for sales and purchase1 the cost -convention value. being paid by the buyer in home currency1 the legal tender #or ings of this de&artment: Overall supervision of Foreign "emit Dept Foreign ,, payment & (urchase of F Drafts1 preparations of F # ( -Foreign #ill (urchased. %ssuance of outward ,, & FDD %ssuance of proceed responding certificate -("&. Foreign &ollection1 #angladesh #ank &learing &heck &ollection1 which comes from all branch of #!$%& #ank 'imited *ithdrawal from F & !E& Encashment of , & & &ash Dollar and $terling (ound Deduction of ,ax and F!, On behalf of #angladesh #ank (reparation of related statements including convertible ,aka !ccounts (reparation of %#&! & %#D! and #alancing of &ollection and other special assignment as desired by Department in charge #alancing of !ccount $tatements &ompliance of audit & inspection $tatement of all related works submitted to #angladesh #ank In$ard 8oreign 0emittance: %nward remittance covers purchase of foreign currency in the form of foreign , , 1 D D1 , & and bills etc sent from abroad favoring a beneficiary in #angladesh (urchase of foreign exchange is to be reported to Exchange control Department of #angladesh bank on Form0&

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BASIC Bank Limited

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<ut$ard 8oreign 0emittance: Outward remittance covers sales of foreign currency through issuing foreign , , Drafts1 ,ravelers &heck etc as well as sell of foreign exchange under 'E& and against import bills retired $ale of foreign exchange is reported to Exchange control Department of #angladesh #ank on form ,E= Foreign exchange means foreign currency and includes all deposits1 credits and balances payable in foreign currency as well as foreign currency instruments such as Drafts1 , & s1 bill of exchange1 and 'etters of &redit (ayable in any Foreign &urrency !ll foreign exchange transactions in #angladesh are sub?ect to exchange control regulation of #angladesh #ank #orei$n Re!ittan"e De+art!ent deals -ith the follo-in$ instru!ents: #ank sells DollarE(ound for using in abroad by the purchaser ,he maximum amount of such sell is Sell Cash 0emittance (5ollar> 2ound) 2urchase mentioned in the #angladesh #ank publication of I&onvertibility of ,aka for &urrency ,ransactions in #angladesh #ank can purchase dollar from resident and non J resident #angladeshi and Foreigner =ost dollars purchased comes from realization of Export #ill of Exchange %t remits fund by tested ,, via its foreign correspondence bank in which it is maintaining its )O$,"O !ccount %t also makes payment according to telegraphic message of its foreign correspondence bank from the

<ut$ard TT

Tele% Transfer

Incoming TT

corresponding FO$,"O !ccount #ank issue Demand Draft in favor of purchaser or any other according to instruction of purchaser ,he payee can collect it for the drawee bank in which the %ssuing bank of Demand Draft holds its )O$,"O !ccount #ank also makes payment on DD drawn on this bank by its foreign correspondence bank through the FO$,"O !ccount ,he procedure concerning issue of FDD is same as issue of ,ravelers check except that $$$%Assignment&oint%com

BASIC Bank Limited

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8oreign 5emand 5raft

the customer is not re<uired to submit his passport

8ollo$ing ste&s to be follo$ed in &ayment of 855: !t first the FDD is to be crossed $erial number is given Forwarding letter to the bank with which the bank has agreement (arty is given the cash or his account is credited 8oreign 5emand 5raft

8igure : + 8oreign /%change 2rocedures as follo$ing:

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BASIC Bank Limited

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(ort

(!!) Document (lacement

%mporter

Offers (roforma %nvoice -9. Offers %ndent -9.

Exporter

"e<uest for

Forward Document

'ocal !gent
(resent !fter $hipment %nform about 'E&

'E& opening -4. -B. Documents -;. -8.

%ssuing #ankEOpening #ank

Forward 'E& -7. (resent Document

!dvising #ankE)egotiating #ank

Order Of (ayment -:.

&laim for -6. (ayment

-95. (ayment

Foreign !E& maintaining #ankE "eimbursement #ank

8oreign /%change 2rocedures

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BASIC Bank Limited

(Serving People for Progress)

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BASIC Bank Limited

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2%) Identification of Documents Used in Foreign !change Banking(

,he Follo$ing Documents are Used in !port( #ill of Exchange or Draft; #ill of 'ading %nvoice %nsurance (olicyE&ertificate &ertificate of origin %nspection &ertificate &onsular %nvoice (acking 'ist Huality &ontrol &ertificate > $ ( certificate

,he Follo$ing Documents are Used in Import ( %nvoice #ill of lading &ertificate of origin (acking list *eight list $hipping advice )on0negotiable copy of bill of lading #ill of exchange (re0shipment inspection report $hipment certificate

,he Follo$ing Documents are Used in 8oreign 0emittance : &ertificate of origin $$$%Assignment&oint%com

BASIC Bank Limited

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"emittance application form %D card

6"* A&&raisal of /%&ort Business of BASIC Ban !td"

,he following table shows the Export Finance of #!$%& #ank 'td during 45550 455; TableA): /%&ort 8inance
Million Taka 9ear +*** +**) +**+ +**. +**2 +**0 +**1 A-erage !port Finance 000:%** 0/0:%/* 000:%1* 10+.%** :/*7%** )2*/2%/1 )021.%:2

7:+.%):) Source: Annual 0e&ort of BASIC Ban !td"

,he above table depicts that export finance of #!$%& #ank 'td in 4555; 4559; 4554; 455: ; 4557; 4558 & 455; were ,k 5557.00 million$ T%. 5&57.&0 million$ T%. 5557.60 million T%.
6523.00 million$ T%. 7&08.00 million$ T%. 140&4.&6 million ' T%. 15463.74 million re(pecti)el* an+ average ,k

B@4: 9@9 million and the annual growth rate is 48 7@D

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BASIC Bank Limited

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The figures of the above table (TableA3)) sho$n in the follo$ing gra&h (1ra&hA3)):

E !ort "inance
20000 Amount 15000 10000 5000 0 2000 2001 2002 2003 2004 2005 2006 #ear Source: TableA3) ,he above graph reveals that export finance of #!$%& #ank 'td increased in 4559; 455: to 455;1 while there is downward trend in 4554 Serie(1

$.3 Assessment of %m!ort Business of BA&%' Bank Lt(.

,he following table represents the Export Finance of #!$%& #ank 'td during 45550 455; TableA3*: Im&ort 8inance Million Taka 9ear +*** +**) +**+ +**. +**2 +**0 Import Finance :/27%2* :02+%7* 7120%** 7/.*%0* )+0*7%** ))*/:%+.

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BASIC Bank Limited

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):7*2%+: +**1 10)39.$) A-erage Source: Annual 0e&ort of BASIC Ban !td" ,he above table reveals that %mport finance of #!$%& #ank 'td in 4555; 4559; 4554; 455: ; 4557; 4558 & 455; were ,k *9$8.$0 million$ T%. *5$+.80 million$ T%. 8)$5.00million
T%.

8930.50 million$ T%. 1+508.00 million$ T%. 1109*.+3million ' T%. 1*80$.+*million 10)39.$) million and the annual growth rate is 9@ @9D

re(pecti)el* an+ average ,k

The figures of the above table (TableA3*) sho$n in the follo$ing gra&h ( 1ra&hA3*):

%m!ort "inance
20000 15000 10000 5000 0
00 01 03 04 02 05 20 20 20 20 20 20 20 06

Amount

Serie(1

#ear

$ource3 ,able 0 54 ,he above graph describes that there is an upward trend of import finance of #!$%& #ank 'td in 4554 to 4557 & 455; while there is a downward trend in 4559 & 4558

/valuation of 8oreign 0emittance of BASIC Ban !td"

,he following table shows the Foreign "emittance of #!$%& #ank 'td during 45550 455;3 TableA3+: 8oreign 0emittance Million Taka 9ear +*** +**) +**+ +**. Foreign Remittance 333$.+0 35*$.*$ 3)1+.$$ $1*$.*+

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BASIC Bank Limited

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2:22%7* +**2 +**0 +**1 5$8*.)0 A-erage Source: Annual 0e&ort of BASIC Ban !td" ,he above table describes that foreign remittance of #!$%& #ank 'td in 4555; 4559; 4554; 455: ; 4557; 4558 & 455; were ,k 333$.+0 million$ T%. 35*$.*$ million$ T%. 3)1+.$$
million$ T%. $1*$.*+ million$ T%. $*$$.80 million$ T%. 8$5).9* million ' T%. 10515.3$ million re(pecti)el* an+ average ,k 5$8*.)0

8$5).9* )*0)0%.2

million and the annual growth rate is :5 @@D

The figures of the above table (TableA3+) sho$n in the follo$ing gra&h (1ra&hA3+):

"orei,n -emittance
Amount 15000 10000 5000 0
00 01 02 03 04 05 20 20 20 20 20 20 20 06

Serie(1

#ear

Source< Table=6( ,he above graph ->raph05:. depicts that the foreign remittance of #!$%& #ank 'td has been increased during 4559 to 455; %n foreign exchange business #!$%& #ank 'td used the procedures that are usually used by other banks %n addition they use some safety material only for their foreign baking2s valued clients ,hey also buy the 'E& on 95D reduced rate from their clients when their clients need money #y giving this facility to their clients they also earn for their banks and make a profit $$$%Assignment&oint%com

BASIC Bank Limited

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BASIC Bank Limited

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%)4%&' $)4**************** *************

,his is a well established statement that practical situations always differ from theoretical explanation During our internship period with #!$%& #ank 'imited almost all the desks have been observed !nd we have found theory deviates from the practice more or less though three months are not enough time to find out all the discrepancy between theory and practice !mong all experiences some noticeable observations are described below3 ,he officers were mostly courteous1 friendly in nature and eager to help despite the tremendous workload !s a 955D >overnment owned bank1 #!$%& #ank is trying it2s best to extend their service to the public ! very working environment was remaining in the #!$%& #ank 'td 1 +ttara #ranch During our long relationship with +ttara #ranch1 it is found that the +ttara #ranch provides all kinds of commercial banking services to its customers Foreign Exchange department rendering all the services related to international trade and remittance 'oans and advances analysis credit proposal and disburse $$$%Assignment&oint%com

BASIC Bank Limited

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credit if proposal is sound >eneral banking is engaged in cash receipt and payment1 che<ue clearing1 local remittance etc %t is well established that theory without practice is blind During the practical orientation we observed the function of >eneral #anking1 Foreign Exchange1 and &redit department of #!$%& #ank which will help us a lot to understand the overall banking Out of the above discussion a conclusion can be drawn after saying that1 the present customer dealing procedure is <uite well at this moment ,he computerized transaction makes the system efficient and effective

*E%)MME4D#!$)4 ******** **********

*e had the practical exposure in (rime #ank 'td for ?ust twelve weeks1 without little experience in the bank in comparison with vast and complex banking system1 it is very difficult for us to recommend *e have observed some shortcomings regarding operational and other aspects of their banking On the basis of my observation we would like to recommend the following recommendations0 9 Document discrepancy charge varies form customer to customer ,hey don2t charge to prime customer *e think that the bank should review the customersA behavior for a period of time and should develop a certain policy in this regard

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BASIC Bank Limited

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*hen they calculate loan against documentary bill1 they provide dollar rate O;8 *hich is lower than other bank *e think they should increase the dollar rate

%n case of Export 'E&s1 the >overnment encourages the exporters by giving different facilities like tax0cuts *e think the bank should also think about such type of facilities to be given to the Exporters because #angladeshi Exporters like "eadymade garments Exporters are going to face a tuff situation in coming years from the exporters of other countries

%n case of Export 'E&s1 sometimes customers insist to give their payments though their documents are found discrepant %n some cases1 #ank has to give payment to these customers for different reasons #ut it lessens the credibility of the #ank hurting the customers *e think the #ank should be as stricter as possible about giving payments against discrepant documents without

Over burden of work and ill defined assignment unable the employee to discharge their duties in cool manner %t is also creates a hazardous situation in the work process $o all the employee should be assigned with proper and specific assignment

,hey should expand their business more balancing way which means they should not focus on a particular industry like readymade garments industries

,o communicate with the )egotiating #ank1 !dvising #ank "eimbursing #ank the branch uses $*%F, !s well as these media the #ank could use the E0mail1 which is cheaper and faster than those media

#!$%& #ank 'td

now using software and that is Pastle

%t is very

dedicated software %t has real time online banking1 !,= facilities and E0 banking and lot of more $o we think it will be a great progress for the bank *e think the =anagement should employ at least few more employee in foreign trade department as we $ave seen from our practical experience that many customers wait for a long time for any $$$%Assignment&oint%com

BASIC Bank Limited

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service as they see that only one concerned official is doing their best to meet the re<uirements of the customers but as the foreign trade procedure is designed with many small tasks

#ppendix777777777777777777777 7777777777777
;uestioner for Bank 'fficials !) >$at type of transaction is $ig$er in t$e ,oreign Exc$ange department of 1ttara +ranc$? Export -mport %emittance &) -n Export 3ivision; >$at type of transaction is $ig$er? Local +ill (3eemed Export) $$$%Assignment&oint%com

BASIC Bank Limited

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,oreign +ill" () >$ic$ made of Export financing is popular according to your opinion? as$ credit@Packing redit Export 3evelopment ,und (E3,) -nland 3ocumentary +ill Purc$ase (-3+P); ,oreign 3ocumentary +ill Purc$ase (,3+P)" *) >$at type of transaction takes more time to be executed? as$ credit@Packing redit Export 3evelopment ,und (E3,) -nland 3ocumentary +ill Purc$ase (-3+P); ,oreign 3ocumentary +ill Purc$ase (,3+P)" .) After t$e s$ipment; w$at is t$e popular manner of dealing ,oreign +ills? ,3+ for ollection ,3+P" 0) After t$e s$ipment; w$at is t$e popular manner of dealing Local +ills? -3+ for ollection -3+P" A) -n case of ,3+P; >$at is t$e average time reBuired for t$e ad'ustment of a bills Purc$ased? At sig$t (&!3ays) (6 to 06 3ays 06 to 46 3ays 46 to !26 3ays"

2" -n case of -3+P; >$at is t$e average time reBuired for t$e ad'ustment of a bill purc$ased? At sig$t (&! days ) (6 to 06 3ays 06 to 46 3ays 46 to !26 3ays" 4" -n case of ,oreign +ills; >$at proportion of your clients (Exporter) generally takes res$ipment redit? +ellow (6C $$$%Assignment&oint%com

BASIC Bank Limited

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(6 to 06 3ays .6 to A6C Above A6C" !6" ======================= Post s$ipment credit? +ellow (6C (6 to .6 .6 to A6C Above A6C" !!" -n case of 3emand Export; >$at proportion of your clients (3eemed Exporter) generally takes post s$ipment credit t$eir +ack=to=+ack L@ ? +ellow (6C (6 to .6 .6 to A6C Above A6C" !&" >$ic$ service is more Profitable for +AS- +ank Ltd? According to your #pinion? >$y D========================? as$ redit ( ) @ Packing redit (P ) Export 3evelopment ,und (E3,)" -3+P ,3+P; >$y======================================? !(" >$ic$ service is more %isky================? as$ redit ( ) @ Packing redit (P ) Export 3evelopment ,und (E3,) -3+P ,3+P; >$y======================================? !*" 3o you t$ink t$e volume of Export financing transaction is increasing day by day in +asic +ank Ltd? Ees Fo -ndifferent !." >$at according to you s$ould be done to increase t$e volume of Export financing transaction and to ensure client Satisfaction in t$e up coming days? Providing best service $$$%Assignment&oint%com

BASIC Bank Limited

(Serving People for Progress)

%ecruiting more employees Simplifying t$e financing procedure Adding value (reducing t$e rate of interest @ c$anges etc )

;uestioner for Bank Clients

!" >$at type of services do you get from t$e foreign exc$ange department of +AS- +ank Ltd"? Export -mport %emittance" &" Gow long $ave you been engaged wit$ +AS- +ank Ltd" in onducting ,oreign Exc$ange Transaction? Less t$an ! year ! to . years )ore t$an . years" (" >$at is t$e type of your organi/ation? Hnitting I 3ying Textiles I ,abrics %eady made 7arments #t$ersJJJJJ""" *" >$ic$ of t$e following factors influenced you to c$oose t$is bank? +etter service 5uality ,inancial +enefits (lower interest rare; c$ange etc) Prior corporate %elations$ip (like syndication loan; group financing etc) #t$ers (like conveniently location attractive organi/ation promotion; suggestion of peer group etc")

." As an Export #riented -ndustry; >$at types of transaction does your organi/ation do most? ,oreign Export Local Export (deemed export)

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BASIC Bank Limited

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A" ,or w$ic$ type of transaction does your organi/ation take t$e financial $elp (facility of selling documentary +ills) of t$e bank? ,oreign Export Local export (demand export) +ot$ 2" >$ic$ mode of Export ,inancing is more complex according to your opinion? as$ redit @Packing redit Export 3evelopment ,und -3+P; ,3+P" 4" >$ic$ mode of Export ,inancing is popular according to your opinion? as$ redit@ Packing redits Export 3evelopment ,und -3+P; ,3+P" !&" Are you satisfied wit$ t$e services received from +AS- 8s ,oreign Exc$ange department? Gig$ly satisfied )oderately Satisfied 1n=satisfied; -ndifferent"

!(" >$ic$ services will increase t$e number of client It$eir satisfaction? %educing interest; c$arges etc -mproving service Buality %elaxing t$e Export ,inancing Procedure Strengt$ening t$e lient= +ank %elations$ip"

"ibliography777777777777777777 7777777777777
' " &howdhuryQQQQQQQQQQ! Dictionary of #anking and Finance $$$%Assignment&oint%com

BASIC Bank Limited

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!nnual "eport of #!$%& #ank 'imited "eading =aterials for Foreign Exchange and Financing in %nternational ,rade &ourse 000 #!$%& #ank 'imited & ' >upta QQQQQQQQQQForeign ,rade and %nternational =arket www basicbanklimited com

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