Académique Documents
Professionnel Documents
Culture Documents
ACKNOWLEDGEMENT
I would like to express my sincerest feeling of gratitude to my honorable Sir Mr. Md. Anwar
Hossain, Lecturer, Department of Marketing, University of Dhaka for his kind support and help in
carrying out my research in a new field. His guidance and inspiration has immensely strengthened
my confidence during my internship program.
I owe my profound sense of gratitude to Mr. Towhidul Islam, Director of Financial Institutions,
Standard Chartered Bank, and to Mrs. Rumana Hashem, Asstt. Relationship Manager of Financial
Institutions Dept., Standard Chartered Bank, for their kind help and co-operation which has made
possible to prepare this report. Finally, any shortcomings remaining in the report is of course mine.
Executive Summary
Banking service in Bangladesh is characterized as a highly competitive and highly regulated
sector. With a good number of banks already in operation and a few more in the pipeline, the
market is becoming increasingly competitive by the day.
With the global slowdown in the face of rising competition, the commercial banks are constantly
looking for ways to develop their market and product offerings to remain ahead of others. A
significant amount of regulation by Bangladesh Bank prevents the scope of introducing newer
products into the market and thereby restricts a banks ability to out perform others with a
diversified product range.
Standard Chartered Bank is the oldest multinational bank operating in Bangladesh. It has, over the
years, created one of the largest networks among all the foreign banks in Bangladesh. Although a
trendsetter in offering a various range of products in the market, the product offers of Standard
Chartered Bank are quickly imitated by competitors. Substitutes offered by other commercial
banks make their way into the market and thereby eat a portion of the margin. Corporate Banking
division is a very important part of banking activities because funds are mobilized; foreign trade
related activities are conducted here.
Based on above, this report looks in depth towards the opportunity for Corporate Banking division.
CHAPTER: I
INTRODUCTION
1. Introduction
Internship program is an external dimension of career development for a business graduate. At the
end of the graduation program (Academic part) the students of a University are sent to different
organizations to get some real life experience as internees. Usually this program has duration of
three months. Throughout these three months of internship program the internees are being
assigned some assignments, which help them to learn the attitude of working in the organization.
At the end of the internship program the internees are supposed to submit an internship report and
have to face interview regarding this report. This is the last step that brings a successful end up of
graduation program from University of Dhaka. Standard Chartered Bank, a leading & outstanding
foreign commercial bank in the arena of banking business, gives many fresh graduates an
opportunity to get a real taste of actual banking activities of various departments every year. This
program gives a student the opportunity to practice his/her knowledge of theory in the field of
practical life.
1.1 Origin of the Report:
This report has been prepared as a requirement of the internship program. The report is based upon
the organization Standard Chartered Bank. My organization supervisor is Mr. Towhidul Islam,
Director of Financial Institutions, and my institution supervisor is Md. Anwar Hossain, Lecturer,
Department of Marketing, University of Dhaka. The topic, which has been decided for doing the
report, is duly approved by my institute supervisor. The report will definitely increase the
knowledge of other students to know the banking industry of Bangladesh, and the various services
SCB is providing specially corresponding banking to sustain as leading foreign bank in
Bangladesh.
1.2 Objective of the Report:
The objective of the study is to gather practical regarding over all banking system and its
operations. Theoretical classes of BBA provide us theories regarding different subjects whereas
practical training gives us the chance to view those systems and their operations. The principal
intent of this report is to analyze the trend modern banking and their customer services. More
precisely we can identify the objectives of this report as follows:
To observe the customers satisfaction towards the products and services of
Financial Institution of SCB.
To observe the customers reactions towards the services of SCB.
5
Data Collection:
Both secondary and primary data are used for preparing this report. But the research was mainly
based on the clients survey. Information was collected directly from the bankers who are directly
dealing with the Standard Chartered Bank through Financial Institution Department. Printed
questionnaires and personal interviews are treated as the main instruments for data collection. In many
times, the telephonic interview was handy for collecting data.
1.4 Scope of the Report:
The scope of the report was to find the financial aspect of the operation of the bank.
The report focused on the feasibility study and practical market issues about new ventures and
operational procedures of Financial Institutions. An infrastructure of organization has been detailed,
accompanied by company corporate perceptive and look into the future. The scope of this report is
limited to the overall descriptions of the bank, its services, and its position in the industry, and its
competitive advantage. The scope of the study is limited to organizational setup, functions, and
performances.
1.5 Limitations:
Limitations I have faced while doing my internship report are discussed below:
* Confidential information regarding past profit, financial information was not accurately obtained.
Alike all other banking institutions, SCB is also very conservative and strict in providing those
information. In those cases, I have relied upon some assumptions, which in result have created
certain level of inaccuracy. Still, I had tried my best in obtaining those sensitive information, as
much as possible.
7
* Next, many of the analysis on the obtained data are based upon my sole interpretation. This in
result might bring some biases, as lack of knowledge and depth of understanding might hinder me
to produce an absolute authentic and meaningful report
* Time constraint was another limitation restricting this report from being more detailed or
analytical. The Relationship Mangers at the operation or strategic level of the concerned
department are awfully busy with meeting their targets. So, it was very difficult for me to get them
free and obtain some practical ideas regarding their expectations and opportunities regarding my
topic.
* Above all, this internship report was prepared just after starting my fist job at SCB. So, it was
very hard for me to accommodate time for preparing this report. Mostly, our office timing at SCB
is from early morning till 8 p.m. During office hours it's simply hard to manage time for working
with the report. And, working with the report after regular office hours is quite hectic.
CHAPTER II:
BANKING SECTORS IN BANGLADESH
2. Overview of Banking
Whoever, being an individual firm, company or corporation generally deals in the business of
money and credit is called bank. In our country, any institution, which accepts, for the purpose of
lending or investment deposits of money from public, repayable on demand or otherwise, and with
transferable by checks draft order and otherwise can be termed as a bank.
The purpose of banking is to ensure transfer of money from surplus unit to deficit units. Banks in
all countries work as the repository of money. The owners look for safety and amount of interest
for their deposits with Banks. Entrepreneurs try to obtain money from the banks as working capital
and for long-term investment. These entrepreneurs welcome effective and forward-looking advice
for investment. Banking sector thus owe a great to the deposit holders on the hand and the
entrepreneurs on the other. They are expected to play the role of friend, philosopher, and guide for
the deposit holders and the entrepreneurs.
The opening of PRIVATE and FOREIGN participants to the banking sector was intended to obtain
desirable results from banking. The authorization of private banks was designed to create
competition among the banks and competition in the from of efficiency with and the productivity
in enterprises funded by banks. Unfortunately, for the people, at large banking sector is yet to
obtain the credit for efficiency, credibility, and growth.
2.1 Banks in Bangladesh:
The commercial banking system dominates Bangladesh's financial sector. Bangladesh Bank is the
Central Bank of Bangladesh and the chief regulatory authority in the sector. The banking system
consists of four nationalized commercial Banks, around thirty private commercial banks, seven
foreign multinational banks and some specialized banks.
2.1.1 The Central Bank: Bangladesh Bank
Pursuant to Bangladesh Bank Order, 1972 the Government of Bangladesh reorganized the Dhaka
branch of the State Bank of Pakistan as the central bank of the country, and named it Bangladesh
Bank with retrospective effect from 16th December, 1971.
10
Sonali Bank
Janata Bank
Agrani Bank
Rupali Bank
AB Bank Limited
Citi Bank.NA
HSBC
Habib Bank
Woori Bank
Grameen Bank
Banks and 27 of the 30 private commercial banks in following chart. Please note that there are 48 banks now
operating in Bangladesh which includes 7 foreign commercial banks.
13
Bank
Figures in USD $ Mil
1USD$=70BDT
NATIONALIZED
COMMERCIAL BANK
Sonali Bank
Janata Bank
Agrani Bank
Rupali Bank
PRIVATE
COMMERCIAL BANK
Brac
EBL
DBBL
Dhaka
Islami
Pubali
Uttara
Arab
IFIC
National
City
UCBL
NCC
Prime
Southeast
Al-Arafah
Standard
One
EXIM
Mercantile
Mutual Trust
Premier
Bank Asia
Trust
Shahjalal
Jamuna
Basic
TOTAL
BANKING
SECTOR
Assets
Deposits
Loans
Net
Interest
Income
Equity
Net
Revenue
5041
3038
2201
1089
4319
2614
1842
981
3443
1978
1512
653
13
42
35
9
406
81
115
5
518
142
28
2
429
514
650
697
2146
834
646
686
515
669
678
550
466
870
783
305
241
331
597
531
375
388
435
303
305
288
420
34352
329
379
573
612
1892
716
562
601
409
594
582
486
414
782
678
247
210
289
516
464
318
356
372
271
258
247
344
24431
279
383
405
501
17
10
13
14
45
34
14
48
12
17
17
18
14
21
15
8
8
6
12
7
9
4
9
6
9
7
14
40
47
24
36
143
65
30
37
23
47
36
33
32
55
72
24
25
22
44
464
27
20
28
16
17
22
32
5
63
5
81
20
81
4
8
4
85
77
61
58
15
100
32
5
5
74
7
7
54
56
1
7
4
8
594
359
447
364
482
453
384
363
643
606
257
186
244
481
383
266
305
327
188
222
183
271
21837
14
Bank
Al-Arafah
Bank Asia
Basic
City
Dhaka
Eastern
EXIM
National
NCC
Premier
Pubali
Southeast
Standard
UCBL
Others
Asset %
0.888%
1.266%
1.223%
1.974%
2.029%
1.496%
1.738%
1.947%
1.357%
1.129%
2.428%
2.279%
0.702%
1.601%
77.90%
Bank
Deposits %
15
Al-Arafah
Bank Asia
Basic bank
City bank
Dhaka Bank
Eastern bank
EXIM
National
NCC
Premier
Pubali
Southeast
Standard
UCBL
Others
Bank
Al-Arafah
1.01%
1.52%
1.41%
2.38%
2.51%
1.55%
2.11%
2.43%
1.69%
1.46%
2.93%
2.78%
0.86%
1.99%
73.37%
LOANS %
1.18%
16
Bank Asia
Basic bank
City bank
Dhaka Bank
Eastern bank
EXIM
National
NCC
Premier
Pubali
Southeast
Standard
UCBL
Others
1.50%
1.24%
2.07%
2.29%
1.75%
2.20%
2.21%
1.66%
1.40%
2.72%
2.78%
0.85%
1.76%
74.39%
17
CHAPTER: III
ORGANIZATIONAL OVERVIEW
18
3. General Overview
Standard Chartered Bank (SCB) is an international bank, which primarily focuses its activities in
Asia, Africa, and Middle East. This bank plays an invigorating role in linking the worlds
developed economies with emerging markets and provides personal banking, corporate banking,
institutional banking, consumer finance and custodial services. The act of the bank is to provide
the most efficient, consistent and up to date services and to be the bank of choice in its principal
territories.
SCB is a multinational bank and financial services group that is incorporated in the U.K. with a
unique international network. It now spans in the developed and emerging economies of the world,
after having been in existence for 150 years now.
The name Standard Chartered comes from the two original banks from which it was founded The
Chartered Bank of India, Australia, and China, and The Standard Bank of British South Africa.
The Chartered Bank was founded by James Wilson following the grant of a Royal Charter by
Queen Victoria in 1853, while The Standard Bank was founded in the Cape Province of South
Africa in 1862 by John Paterson. Both companies were keen to capitalize on the huge expansion of
trade and to earn the handsome profits to be made from financing the movement of goods from
Europe to the East and to Africa.
In those early years, both banks prospered. Chartered opened its first branches in Bombay.
Traditional business was in cotton from Bombay, indigo, and tea from Calcutta, rice in Burma,
sugar from Java, tobacco from Sumatra, hemp in Manila and silk from Yokohama.
In South Africa, Standard, having established a considerable number of branches, was prominent
in financing the development of the diamond fields of Kimberley from 1867 and later extended its
network further north to the new town of Johannesburg when gold was discovered therein 1885.
Half the output of the second largest gold field in the world passed through The Standard Bank on
its way to London.
Both banks at that time still quite separate companies survived the First World War and the
Depression, but were directly affected by the wider conflict of the Second World War in terms of
loss of business and closure of branches. There were also longer-term effects for both banks as
countries in Asia and Africa gained their independence in the 50s and 60s.
19
Each and acquired other small banks along the way and spread their networks further. In 1969, the
decision was made by Chartered and by Standard to undergo a friendly merger. They decided to
counterbalance their network with expansion in Europe and the United States. Further expansion
also took place in Standard Chartereds traditional markets in Asia and Africa. All appeared to be
going well, when a hostile takeover bid was made for the Group by Lloyds Bank of the United
Kingdom in 1986.
In August 2000, the US $1.34 billion acquisition of Grindlays Bank was completed. This made
Standard Chartered the leading international bank in India and the other countries of South Asia
strengthened the Groups competitive position in the Middle East and brought to the Group a
respected private banking business.
Recently SCB acquires AMEX one of the biggest bank in the world as a result SCB is becoming
the third biggest bank on very short time. The acquisition has been started on 29 th February, 2008
and will be completed by December, 2008.
In the world map above the blue portion indicates the places where Standard Chartered Bank has
its prominent presence.
Standard Chartered Bank has its prominence presence in total of 48 countries:
20
Africa
Asia Pacific
Botswana
Cameroon
Gambia
Ghana
Kenya
Sierra Leon
South Africa
Tanzania
Uganda
Zambia
Zimbabwe
Australia
Brunei Darussalam
Cambodia
China
Hong Kong
Indonesia
Japan
Laos
Macao
Malaysia
Myanmar
Philippines
Singapore
South Korea
Taiwan
Thailand
Vietnam
Latin
America
Argentina
Brazil
Colombia
Mexico
Peru
Venezuela
Since liberation, Bangladesh has passed through fragile phases of development in the banking
sector. The nationalization of banks in the post liberation period was intended to save the
institutions and the interest of the depositors. But the performance of the public sector management
left some negative effects in the economy. Therefore, the authorization of private banks was
designed to create competition among the banks. Now, as it has come to the discussion of private
banks in Bangladesh, the first and foremost name that comes to the peoples mind is the Standard
Chartered Bank
The Chartered Bank opened its operation in Chittagong in 1948 which, at that time was the eastern
region of the newly created Pakistan. The branch opened mainly to facilitate the post war reestablishment and expansion in South East Asia. The bank opened its first branch in Dhaka in 1966
and shifted its headquarter from Chittagong to Dhaka after the birth of the Republic of Bangladesh
in 1971.
The bank increasingly invested in people, technology and premises as its business grew in relation
to the countrys thriving economy. SCB acquired ANZ Grindlays Bank for 1.34 billion dollars in
the year 2000. The new venture that is the merger was named as Standard Chartered Grindlays
Bank. Now after the takeover it is known as Standard Chartered Bank.
Extensive knowledge of the market and essential expertise in wide financial services underline
SCBs strength to build business opportunities and institutional clients at home and abroad.
Continuous upgrading of technology and control system has enabled the bank to offer new
services, which include ATM, Phone Banking, SMS banking and I-banking on a 24 hour basis.
Standard Chartered Bank services in Bangladesh, ranges from Personal & Corporate Banking to
Institutional Banking, Treasury and Custodial services.
Year of Establishment
Head office
Service
Coverage
1948
SCB House, 67 Gulshan Avenue, Dhaka
& Business or Corporate Financial Services
Customers
Products
Number of ATMs
Number of Bills Pay Centres
1 branch in Narayangonj
35 ATM booths
3 (Dilkusha, Gulshan, Dhanmondi 2)
Consumer banking division meets the needs of individual customers with various products like
Savings Account, Extra Value Savings Account, Access Account, Call Deposit, FCY Deposit,
NFCD Fixed Deposits, RFCD Account, Personal Loans, Auto Loans, Flexi loans, Cash Line,
Installment loans, etc. This department also deals with other savings instruments like education
savings scheme, rainy day scheme, marriage day scheme, millionaire scheme (some printed
brochures are enclosed in the Appendix)
Corporate and institutional banking meets the needs of companies, banks and other financial
institutions. Standard Chartered provides a full range deposit and loan products to it's corporate
23
Individual
Companies
Consumer Banking
Treasury
This focus allows the business to develop an in-depth understanding of the banks customers
evolving requirements. This in turn enables SCB to develop the products and services that help
them to stand out from the competition. Treasury provides support to the customers of both these
business and develops customers (both individual and organizational) of its own.
3.3.3 Organizational Structure of SCB
24
Standard Chartered Bank in Bangladesh follows a hierarchical pattern of command. The Chief
Executive Officer (CEO), David M. Fletcher reports to the Regional General Manager, MESA in
Dubai.
The entire department heads at the headquarters report to the CEO. In Chittagong,
however, since there are two major business activities, a manager or senior manager, who reports
directly to the head of the respective division in Dhaka, heads each. The Custodial Service division
at the headquarters reports to the Head of Corporate Banking.
The respective branch managers are responsible for the performance of their unit. Each branch is
organized functionally along line divisions with some support facilities and the manager assigns
tasks to his/her subordinate personnel and supervises their performance, instructions are often
given without necessary details and clarifications.
The organizational structure of Standard Chartered Bank as a whole:
Chief Executive
Officer (CEO)
Head of
Consumer
Banking
Head of
Finance &
Administrati
on
Head of
Corporate &
External
Affairs
Head of
Corporate &
Institutional
Banking
Head of
Human
Resources
Head of
Global Market
Head of Credit
Department
Head of
Treasury
Head of
Credit Cards
Head of
Legal &
Compliance
Head of IT
Chief
Operating
Officer
SCB Bangladesh operates with a functional structure with sufficient flexibility to reap the benefit
of matrix system of organizational structure. The functional structure that relies on grouping of
people on the basis of common expertise and experience allows ample opportunity to become
more specialized and productive by doing the same work repeatedly and over long exposure to the
work. SCB in Bangladesh can be broadly divided into two functional areas;
Business Division
Support Division
Business Division
Support Division
Local
Operations
Corporate Banking
Treasury
Multinational
Institutional Banking
Finance
IT Services
Custodial Services
Human
Resources
Consumer Banking
Legal and
Compliance
Card Division
Credit
External Affairs
Administration
26
CHAPTER: IV
PRODUCTS AND OPERATIONS OF FI
Telegraphic Transfers
Direct Credits (ACH/GIRO/Credit vouchers)
Local Bank Transfers (RTGS)
Book Transfers (account transfer between Standard Chartered branches in
28
different countries)
Payroll
Local Bank Cheques (Cashier order/Local bank drafts)
International Bank Drafts (Int. Bank cheque)
Guaranteed Credit
Comprehensive MIS
System Integration
Outsourcing of Collection
Types of collections
They provide collection services for:
Local currency cheques.
Foreign currency cheques.
Lock box services- retail and wholesale
Direct Debits
Credit Card Collections
Inward Telegraphic Transfers.
4.1.3 Liquidity Management
A corporate treasure's main challenge often revolves around ensuring that the company's cash
resources are utilized to their maximum advantage.
If need a partner bank that can help:
29
Based needs and the regulatory environment that can choose any of the following features:
Physical Sweeping
National Pooling
Interest Reallocation
Investment
Main features:
Multiple-layer sweep;
Standing instruction;
1-way Sweep; 2-Way Sweep
Zero-balancing Sweep; Target Balancing Sweep
Debit Sweep; Credit Sweep
Sweep with back Value transactions;
Comprehensive MIS reporting
4.1.4 Trade Services
SCB provide Trade Services that ensure prompt payment for the letters of credit and documentary
collections. They also provide expert processing of documentary transactions to get goods or funds
faster.
Functions:
Process trade services transaction s as per DOI/Trade policy and other internal
polices/Guidelines of the bank.
Liaison with CSE and resolve queries.
Maintain and update all records related to the trade services.
30
Deliver products within the set time frame and as per SLA.
Prepare customer positions for approval process
Conduct investigation to rectify errors or to conventional facts.
Deal with customers in other banks to respond touting quires or problem.
Identify risks in day to day roe ratios bring it to the attention of management.
Ensure that all charges are recovered while processing transaction.
Provide technical guidance to customers when needed.
Maintain quality systems as to meet quality standard as.
4.1.5 Exports
Document Preparation
Benefit
from
lower
costs,
faster
processing
and
fewer
processing
and
fewer
errors- out sources to Standard Chartered the paperwork and administrative functions related to
export activities based on letter of credit or purchase order.
Export Letter of Credit Advising
Benefit from timely receipt, expert advising and a wide international network when letter of credits
is advised through Standard Chartered.
Export Bilk for Collection
Simplify the administration, tracking and reconciliation export collections whether the customer
choose Standard Chartered's Documents against Acceptance, Documents against Payment or a
clean collection.
Letter of Credit Checking and Negotiation
Standard Chartered's through checking standards will ensure that the customer are fully aware of
any risk that the documents might be rejected. Strict services level in all their offices ensure that
the documents are negotiated and dispatched quickly.
To speed up process of receiving the full proceeds the exports, Standard Chartered offers to safe
keep original Letter of Credit whilst the customer keep a copy. This reduces the time required to
physically move the L/C between their service center and the back office.
To speed up process of receiving the full proceeds the exports, Standard Chartered offers to safe
keep original Letter of Credit whilst the customer keep a copy. This reduces the time required to
physically move the L/C between their service center and the back office
Pre-shipment Export Financing
SCB provide pre-shipment finance against irrevocable Letter of Credit from approved banks in a
number of currencies to allow the trade with confidence.
Standard Chartered offers tailored solutions to meet entire Bond and Guarantee needs. They also
issue Trade Bonds to guarantee an exporter's performance.
Import Financing Tap on Standard Chartered's expertise to structure a financing solution that best
suits Customer's working capital needs, trade terms and the goods involved to draw under a Letter
of Credit or an Import Collection.
4.1.7 B2Bex
Standard Chartered B2BeX offers a suite of web-based supply chain management tools designated
to streamline and accelerate the entire trade cycle- from sourcing, procurement, financial service,
shipping and issuance to payments.
The B2Bex Solution
The B2BeX solution can significantly reduce the amount of labor-intensive administrative work,
automate routine tasks, reduce paper-flow and radically improve overall speed of communication,
accuracy and clarity with the trading partners. Some of the major modules in B2BeX include.
Target Document Manager
Manage all your trade documents electronically.
PO Grouping Services
Consolidate multiple purchase orders into a single L/C application.
Trade Banking Services
Gateway to an extensive range of online trade banking services.
Catalogue Services
Sources and promote products to buyers and suppliers globally.
Logistics Services
Organize transportation, insurance and inspection with B2BeX partners.
Business Intelligence
Stay informed and make smart business decisions.
Management Information
Track all the B2BeX transactions and activities.
4.1.8 Supply Chain Financing
Standard Chartered offers Supply Chain Financing, as a solution to the financing needs for entire
supply chain.
Supplier Financing
If suppliers request to move from Letter of Credit to open account terms, Supplier Financing may
help for this solution. SCB can provide pre-shipment financing with or without resources.
Buyer Financing
If buyers need a longer credit term to raise the funds to pay for the goods than Buyer
Financing may help for this solution.
4.1.9 Receivables Services
Receivables Services helps to manage the balance sheet better. It offers quick and reliable
financing through the sale of invoices or accounts receivables or accounts receivables. Under this
programmed, SCB extended financing on approved receivables for up to 90 percent of invoice
values on a resource or non-resource basis.
The Receivables Solution:
Financing
Accelerate the cash flow converted from money tied up in accounts receivable soon after
the invoices are raised. Enjoy flexible funding that is geared to sales turnover.
Non-recourse arrangements
Protect against bad debts under non-recourse arrangement for all approved invoices in the
event the buyer defaults or becomes insolvent.
Tracing & Reporting
Keep track of customer's sales through their timely, computerized reports and analysis on
sales and overdue.
Better debt collection
Enhance the debt collection ability, especially for export sales, with the support of their
trained professionals worldwide.
Collateral
Customers are not normally required to pledge assets in order to enjoy their (SCB)
receivables services.
Beyond the borders
To monitoring the local and export receivables and the difficulties associated with language
barriers, unfamiliar commercial customs and laws, long distances communications in
different time zones etc.
4.1.10 Letter of credit confirmation
34
Assured Payments
SCB protect the customer against delayed or non-payments, subject to fulfillment of
specified terms and conditions in the Letter of Credit.
meeting in Bangkok. Bangladesh was the sixth signatory to this Agreement. The ACU commenced
operations in November, 1975 with the following participants:
1. Bangladesh Bank
2. Reserve Bank of India
3. Central Bank of the Islamic Republic of Iran
4. Central Bank of Myanmar
5. Nepal Rastra Bank
6. State Bank of Pakistan
7. Central Bank of Sri-Lanka
Objectives
Economizing on the use of exchange reserves through the utilization of national
currencies for settlement of import payments, thereby minimizing the need of member
counties to convertible currencies, and greatly reducing their dependency on them.
Shifting banking services from non-domestic ones, and thereby reducing reliance on
foreign banking centers outside the region.
Providing short term credit facilities by the system to the debtor participants for a period
of two calendar months.
Settlement of foreign payments through the ACU is a departure from the traditional
dependence on the west and therefore enhance economic, financial and commercial cooperation among nations of the region.
Bangladeshi trades with ACU member Countries
Bangladesh joined the ACU in 1975. The volume of transactions on Bangladesh's account under
the ACU recorded some increase during 1997-98. In all the six settlement that took place under the
ACU arrangements during the year, Bangladesh emerged as a net debtor. Receipts under the ACU
arrangements on Bangladesh's account increased by US $ 28.78 million or 31.47 % to US $ 120.24
million while payments increased by US $ 76.61 million or 8.0% to US $ 1038.60 million. As a
result, the debtor position of Bangladesh widened by US $ 47.83 million to US $ 918.36 million
during 1997-98. Receipts of Bangladesh under ACU arrangement record a decline of ACU Dollars
20.76m or 17.3% to ACU Dollars 99.48m while payments increased by ACU Dollar 334.49m or
32.2% to ACU Dollar 1373.09m. As a result, the net debtor position of Bangladesh widened by
ACU Dollar 1273.61m during FY 1998-99.
Standard Chartered is highly recognized as a leading cash management supplier across the
emerging markets. Their cash Management Services cover local and cross border payments,
Collections, Information management, Account Services and Liquidity Management for both
corporate and institutional customers.
They have more than 50 offices located in 50 countries throughout the world and, with 150 years
of on-the-ground experiences, they can help their bank clients with all their cash management
needs.
Clearing Services
Continuous Linked Settlement
Asian Gateway
Africa
37
The US Dollar is the primary currency for the settlement of foreign exchange and international
trade transactions. With a comprehensive range of US Dollar Clearing services and corresponding
reports available, they can tailor products to suit specific needs so that customers can operate more
efficiently and effectively. Automated Payments using SWIFT, detailed reporting and simplified
billing are all designated to streamline the Clearing process and improve liquidity.
Features:
One of the 1st foreign banks to be invited to join the Clearing House Inter bank payments System
(CHIPS), Standard Chartered is a major US Dollar Clearing provider. SCB understands the
markets where they do business, their clients' needs and the rapid changes.
Automated Payments: To making use of electronic transfer technology that reduces errors,
enhances processing times and minimizes costs-completing with maximum speed & efficiency.
Value added reporting: SCB offer comprehensive reporting on balances and transaction activities.
With this information, customers will be better able to track transactions, oversee the reconciliation
process and analyze usage patterns. Full reporting is also available through their Electronic
Delivery channels including the internet. Their extensive management information systems
provide clear and timely information to facilities the management decisions and simplify
reconciliation. At SCB their vast range of tailor-made reporting capabilities satisfies all record
keeping needs. Billing: SCB provides simple and transparent billing system. They offer innovative
pricing structures. As such customers will find that the billing covers tired pricing, volume rates as
well as standard fees and services.
The first copy and second copies of the messages must be removed from the printer by a
designated staff and checked for continuity of sequence numbers.
The sequences number range must be noted in the PC connect sequence number register.
The checker must also identify Test not verified/irrelevant messages actions to be taken
on such messages is defined bellow:
The designated staff must incorporate the first page serial no. of the messages in the
respective columns of the register.
At the end of the day /following day, the designated staff must perform the following
reconciliation
Incorporate the last Page Serial No. in the register
Check whether there is any missing serial number if any reprint the missing message and
incorporate the last serial number in the register.
40
CHAPTER V:
FI PRODUCTS AND OPERATIONS IN
BANGLADESH
41
42
Revocable:
A revocable credit is a credit which can be amended or cancelled by the issuing at any time
without prior notice to the seller.
ii.
Irrevocable Credit:
An irrevocable credit constitutes a definite undertaking of the issuing bank (since it can not be
amended or changed without the agreement of all parties thereto), provided that the stipulated
43
documents are presented and the terms and conditions are satisfied by the seller. An irrevocable
credit can be either confirmed or unconfirmed depending on the desire of the seller. The sort of
credit is always preferred to revocable letter of credit. Sometimes, Letter of credits are marked as
either 'with recourse to drawer' or 'without recourse to drawer'.
Importer/Buyer:
Importer/Buyer is the person who requests/instruct the opening bank to open a LC. He is also
called opener or applicant of the credit.
ii.
Opening/Issuing Bank:
Opening/Issuing Bank which open/issues a LC of behalf of the Importer. It is also called the
Importers or buyer bank.
iii.
Exporter/Seller/Beneficiary:
Advising/ Notifying:
Advising/ notifying is the bank through which the LC is advised to the exporter. It is a bank
situated in the exporting country and it may be the opening bank or a correspondent bank It may
also assume the role of confirming and negotiating bank depending upon the conditions of the
credit.
v.
Confirming Bank:
Is a bank which add its confirmation to the credit and it is done at the request of the issuing bank.
The confirming may or not be the advising bank.
vi.
Negotiating Bank:
It is the bank which negotiates the bill and pays the amount to the beneficiary. It has to carefully
scrutinize the documentary credit before negotiation in order to see whether the documents
apparently are in order or not. The advising bank and the negotiating bank may or may not be one
and the same. Sometimes it can also be the confirming bank
vii.
Paying/Reimbursing Bank:
Paying/Reimbursing Bank is the bank or home the bill will be drawn(as per conditions of the
credit). It is nominated in the credit to make payments against stipulated documents complying
with the terms of the credit. It may or may not be the issuing bank.
44
L/C Advising
Payments
Standard Chartered
Bank
Advising
Issuing Bank
Beneficiary
Beneficiary
Processing documents
Collection Payment
Payments
Negotiating Bank
L/C
Processing
Exporter
application
Documents
Importer
Goods
45
In this situation international or global banks or any other nominated banks, like Standard
Chartered Banks takes the responsibility to advice the letter of credit to the sellers or seller's bank.
The beneficiary receives the letter of credit promptly and the authenticity is checked though the
seller can start the process to deliver the goods right in time to the buyers.
46
On receipt of the instructions to confirm a letter of credit, the processing unit must ensure that:
Sufficient Product limits are available in the name of the Issuing Bank and Country-including
any tolerance allowed with regards to amount.
The beneficiary agrees to the payment of confirmation fees (when they are for his account).
This is particularly important in certain Asian markets.
When the forwarding the confirmed letter of credit to the beneficiary, it is critical that the amount
confirmed and the period of confirmation is clearly stated. In cases where discrepancies are found
in documents under an issuance Confirmed L/C, which are subsequently accepted by the Issuing
Bank, SCB must:
Obtain approval from the original approving units to extend the confirmation period if
appropriate (e.g. the L/C has expired or the amount has exceeded);or
Consider whether it still wishes to extend the confirmation period. If not, the L/C beneficiary
must be advised that SCB's confirmation has fallen away at the same time as they are advised
that the Issuing bank accepts the discrepancies.
In case of Reimbursement Authority, these should be a reimbursement claim from the Claiming
Bank to the Reimbursing Bank (SCB, New York). Except as provided by the
terms of its Reimbursement undertaking, a Reimbursing Bank (SCB, New York) is not obligated to
honor a Reimbursement Claim.
Local bank's branches in Bangladesh send reimbursement authorizations (RAs) to FI Unit at
Dhaka. These RAs are either collected by nominated courier service or sent directly by the branch.
On many occasions FI peon collects RAs from branches of customer banks.
RAs should contain L/C number, L/C Expiry, Amount, Charges, the account to be debited and in
some occasion the name of the claiming bank. Prior to process/forwarding, FI concerned official
checks these details and in case of any clarification, contacts the concerned branch.
As it is a legal requirement that all Reimbursement Authorizations and Reimbursement
Amendments must be issued in the form of an authenticated tele-transmission that's why RAs are
usually sent to respective network offices by Swift/Telex. RAs are sent through swift MT 799. RAs
are also sent by courier.
Processing of RA:
Where courier service is used for onward transmission of RAs:
Original copies are sent to receiving group office e.g. SCB NY, Attn. Trade Reimbursement Dept.
And copies are retained for future reference. Where RAs are sent by SWIFT :
48
FI- ops concerned official prepares the reimbursement authority in MT 1999 on behalf of
the local bank.
Another copy of the transmitted message is filed along with the original RA received
from the local bank.
Having completed the above, concerned official prepared an authority on behalf of the
local bank.
"Concerned Official" takes a print out of the message, checks and puts his initial on the
print-out. At the same time he also saves the file in a diskette for communications room.
A Manager/RM FI check the print-out against instructions received and puts his
signature in full on the print out and sends the same to communications room for
dispatch.
The following morning FI receives the original copy of the dispatched message and
ensures it agrees with the original instruction. Checking concerned official/officer
initials the copy.
The original transmitted copy is filed along with the original RA received from the local
bank.
49
from the Standard Chartered branches in the country where the issuing bank has established its
account relationship.
When the buyer uses a letter of credit along with that simplify send a separate reimbursement
Authorization to Standard Chartered to effect reimbursement, preferably in a written paper.
Standard Chartered Bank offers the flexibility to stipulate an exact or an approximate amount, as
well as choosing whether the claim may or may not be restricted. On the receipt of a claim from
any bank from the beneficiary, Standard Chartered will be processed on the day received or on the
following day depending on the agreement.
verified by any FI-Ops Staffs using Authorized Signature Booklet of the banks and / or List of
Authorized Signatories received from branches.
The FTs contain L/C number, Amount, Value date, Beneficiary details, Ordering customer,
Charges, the account to be debited etc. FI concerned official checks the FTs for all these details and
in case of any incomplete information/clarification, he/she contacts the concerned branch. Any
subsequent amendments are made through an authorized signatory of the concerned bank and this
is further verified at our end.
5.4.7 Negotiation of services against L/Cs :
As the Letter of Credit is a freely negotiable financial instrument, any bank in the seller's country
can be a negotiating of a letter of credit mean after delivering the goods to the buyers and fulfilling
all the terms and conditions of the letter of credit, the seller presents the documents to a bank, like
Standard Chartered. Then, it will examine all the documents as per the letter of credit. If the
documents are correct and up to date the negotiating bank pays the seller or its like just purchases
the documents from the seller. Standard Chartered advising and negotiation fees for each market
are based on local practices and applicable regulatory guidelines. This is subject to periodic review
and revision.
Obtaining Export Registration Certificate (ERC), intending Bangladeshi Exporters are required to
apply to the Controller /Joint Controller/Deputy Controller/Assistant Controller of Imports and
Exports, Dhaka/ Chittagong/ Rajshahi/ Khulna/ Mymensing/ Sylhet/ comilla/ Barishal/ Pabna/
Bogra/ Rangpur/ Dinajpur, as the case may be in the prescribed form along with the following
documents:
I. Nationality and Assets Certificate of the proprietary/ Directors
II. Registered Partnership Deed in case of Partnership concerns
III. Memorandum and Articles of Association and Incorporation Certificate in case of Limited
Company.
IV. Bank Certificate
V. Income Tax Certificate (GIR)
VI. Copy of Valid Trade License
VII. Membership Certificate of a trade Association
VIII. Affidavit from a 1st class magistrate
IX. Copy of Rent Receipt of business Premises
X. Any other certificate as required in the policy etc.
3. Registration or Renewal:
On receipt of necessary advice from the offices of the Controller of Imports and Exports,
applicants for Export Registration Certificate are required to deposit requisite Registration Fee to
the Government Head of Account "42- Trade and Commerce- Fees released under the imports and
Exports Control Act. 1950 " through Bangladesh Bank/ Government Treasury/ Sonali Bank.
4. Signing the contract:
Description of the commodity
Quantity of the commodity
Price of the commodity
Shipment
Insurance and marks
Inspection
Arbitration
5. Receiving the Letter of Credit:
The issue of the L/C are in conformity with those of the contract
The L/C is an irrevocable one, preferably confirmed by the advising bank
52
The L/C allows sufficient time for shipment and a reasonable time for negotiation
If the exporter wants the letter of credit to be transferable, divisible and advisable, he
should ensure that these stipulations are specifically mentioned in the L/C.
6. 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
7. Shipments of Goods
8. Preparation Procurement of Export Documents
9. Submission of the Documents to the bank for negotiation
53
An international payment trade, one may come across a number of modes of payments there are
being used for receiving trade proceeds.
A. Cash in Advance:
In these payments, the buyer places the funds at the disposal of seller (exporter) prior to shipment
of goods in accordance with the sales or purchase contract, which is certainly to be concluded
between exporter and importer before the trade transaction. If the exporter is not sure about buyers
creditor there are other circumstances which cast doubt on the certainty of getting paid. Since this
method of payment is expensive and contains a lot of risk on the part of buyer (because they have
no assurance that what they contracted for will be supplied and received in appropriate
manner),they may not be willing to accept such terms of payments. Thus it is rarely used in
Bangladesh.
B. Open Account System:
At the other end of the range of payment methods is the open account system. This is an
arrangement between the buyer and seller (sales/purchase contract) whereby the goods are
manufactured and delivered before payments is required. Open account provides for payments at
some stated specific future date and without requiring the buyer to issue any negotiable instrument
evidencing his legal commitment. The seller must have absolute trust that he will be paid at the
agreed date. Though the seller can avoid a lot of banking charges and other costs, but he has no
securities that he will be receiving payments in due course. For this reason, the exporter may not
be willing to accept this sort of mode of payment. This system is also uncommon in Bangladesh.
C. Documentary Collection:
This is an arrangement (sales /purchase) contract where by the goods are shipped and the relevant
bill of exchange draft is drawn by the seller on the buyer and documents are send to sellers bank
with clear instructions for collection through one of its correspondent banks located in the buyers
domicile. In this method, the export will hand over the shipping documents to his bank and ask it
to forward the documents to the buyer's bank, with instructions to release them to the buyer on
payment of his invoice. This is called cash against documents. The exporter can also give the
buyers trade credit by drawing a bill of exchange on him and requiring him to accept the bill when
he collects the documents. This is called documentary collections against acceptance because the
buyer accepts bill of exchange.
D. Documentary Credits:
54
The documentary credit or letter of credit is an undertaking issued by a bank on behalf of the buyer
(or for its own account), to pay the beneficiary the value of the draft and documents provided that
the terms and condition of the credit are complied with. This is the most frequently used method in
international trade. Although the one of the costliest, it is often considered the most secure because
the buyer assured that the seller will be paid only when the documents representing goods have
been delivered. Conversely, the seller assured that the buyer will receive the documents for
ultimate delivery of the goods only when a payment has been made. The security of the transaction
is assured by one or more third parties. This is normally buyers' bank, which issues the letter of
credit and the seller's bank, which informs the seller that the LC has been issued and perhaps adds
its confirmation to the LC in other words.
IMP form
The bank then scrutinizes the following points of the Master L/C:
Whether the Master L/C has been opened by a internationally reputed bank
Whether L/C is irrevocable
L/C should not contain unacceptable conditions, stipulations clause
Regarding terms of delivery i.e. FOB/CER/CIF price, we should prefer CIF as we can
payment the freight & insurance in local currency
If exportable goods are under quota, allocation of quota from E.P.B. is required
Terms of payment should be at straight.
Back to Back L/C:
While opening Back to Back L/C, Following additional papers must be obtained:
Export L/C (Master L/C)
Valid Bonded ware house license
Quota allocation
ERC in addition to IRC
Indemnity/undertaking of Importer/Exporter
Factory inspection Certificate
VAT registration
remitted by the bank without any prior approval of Bangladesh Bank but subject to report to
Bangladesh Bank.
Authorized dealers may also freely open and maintain taka accounts in the name of their foreign
correspondents against inward remittance in convertible currencies in convertible currencies only.
These accounts are termed as 'Nor-Resident Taka Account of Foreign Bank Branches or
Correspondents'.
Foreign currency accounts are frequently terms as 'Nostro'. 'Vostro and 'Loro'. These are all Italian
words, the Nostro means 'our', Nostro means 'your', Loro means 'their'.
Nostro Account:
Nostro Account means "our account with you". A Nostro Account is a foreign currency account of
a bank maintained with its foreign correspondents abroad. For EXAMPLE, Agrani Bank, Dhaka's
US Dollar account maintained with Citibank, NA. New York, USA is a Nostro Account of Agrani
bank i.e. from the point of view of Agrani Bank it is their Nostro Account.
Vostro Account:
Vostro account means your account with us. "The account maintained by a foreign correspondent
in a bank of a particular country is known as Vostro Account. For
Example: State bank of Indias taka account maintained with Agrani bank. Dhaka is a
Vostro Account i.e. from the point of view of Agrani Bank it is a Vostro Account held for State
Bank of India.
Loro Account:
Loro account means "their account with you". Account maintained by their party is known as Loro
account. Suppose Agrani Bank maintained a Nostro account with Citibank, N.A. New York and
simultaneously Janata Bank have also maintained a Nostro account with Citibank, N.A. New York.
From the point of Agrani Bank, Janata Bank's account with Citibank regarded as Loro account.
57
CHAPTER VI :
GENERAL DISCUSSION
58
6. GENERAL DISCUSSION
6.1 Discounting of Drafts
SCB can offer Corporate Customers without recourse discounting of local currency bills of
exchange and drafts that have been accepted by the buyers bank (the Accepting Bank). Such
drafts are hereinafter called Accepted Drafts and are transferable to a third party.
Transaction Process:
A typical transaction would be:
a)
Customer sells goods or services to its Buyer. The buyer issues a draft drawn on its bank and
asks its bank to Accept it. The date for payment of the Accepted Draft will reflect the
agreed payment terms between customer and the buyer.
b)
c)
Customer requires SCB to discount the Accepted Draft on a without recourse basis.
d)
Upon request to discount the Accepted Draft, SCB telex request via SWIFT the Acceptance
Bank to confirm by authenticated telex/SWIFT that proceeds are to be remitted to SCB on
due date (specifying the due date).
e)
At presentation on maturity, the Accepting Bank honors the Accepted Draft and remits
proceeds to SCB
Risk:
The main risks here are:
Risk
Credit Risk
Operational Risk
Market Risk
Country Risk
Credit Risk :
SCBs obligor under this program is the accepting bank SCB normally has no recourse to the
corporate customer, except in the event of fraud alteration of bills etc. Transactions should reflect
the nature/size of the customers business and the terms of trade. Local practice should be to
59
introduce nominal credit ceilings for borrowing customers but these should not be advised to
customers. For non-borrowing corporate customers, the value of Accepted draft per transaction
must not to exceed USD250, 000. Any exceptions must be approved by the SCO.
Bank and Country Risk:
This is the risk that SCB undertakes on the Accepted Bank (and associated country risk where
applicable) who has guaranteed the payment of the draft. In these circumstances the primary
recourse is to the Accepting Bank, and it is without recourse to the corporate exporter. Discounting
should only be undertaken where appropriate bank and country risk approval has been obtained.
In countries, where the risk of late or non-payment depends on individual branches of the
Accepting Bank, the limit approval must be on a branch basis. This must be covered in the Country
product Template.
Operational Risk :
Normal operational risk in the handling of drafts apply (e.g. safekeeping, presentation, checking
for alteration, fraud etc.)
To mitigate the risk of fraud or accommodation paper, the Customer should provide SCB with the
original supporting commercial documents to support the Accepted Draft including but not limited
to sales order, commercial/VAT invoice, transport/shipping documents etc.
Market Risk :
There may also be a basis risk due to movements between the reference rate for interest charges for
the product and the banks actual cost of funds (eg Prime/Inter bank spread etc.). The product
should, wherever possible, be match funded to remove this risk.
customer. FI intends to leverage on the strong relationship with local banks and use a portion of
trade limits currently extended to these banks for this product.
Product Description
SCB offers Corporate Customers with or without recourse discounting of bills of exchange / drafts
that have been accepted by the Issuing bank (the Accepting Bank) under local L/Cs. In some
countries these local L/Cs can also be issued in a form of Quasi Back to Back L/Cs with Export
L/Cs held as a security.
A typical transaction would be:
1. An exporter receives export L/Cs from its importer (the master L/C).
2. Local issuance L/Cs issued from the exporters bank in favor of its Domestic Suppliers (SCB
Customers) and advised through SCB. These LCs can be Quasi Back to Back LCs if the master
LC is held as security.
3. The Domestic Supplier (beneficiary of the local L/C) presents LC documents to SCB with an
issuance bill drawn on the Issuing Bank.
4. The Domestic Suppliers Bank (SCB) will forward documents to Issuing Bank on approval
basis acceptance under UCP 500.
5. The issuing bank of the local LC (the importers bank) accepts the documents and drafts and
sends the advice of acceptance mentioning the maturity date to the Domestic Suppliers bank
(SCB) under the L/C.
6. The Domestic Supplier asks SCB to discount the Bill on the strength of the Issuing Banks
confirmation of acceptance and maturity date of the bill for payment as per L/C terms.
Client Base:
The target customers will be the entities mostly involved with Ready-made Garment Industries.
Fabric Manufacturers (includes Spinning, Weaving, Dyeing & Finishing Mills), Accessories
Manufacturers (Zippers, buttons, thread, carton, interlining etc) and other service providers such as
Washing and Embroidery.
Another segment will be the leather manufacturers who supply finished leather to Shoe; Bag and
other leather based end product manufacturers. Any other entity meeting their cash flow needs,
through LBD, will also be amongst the target market.
Except for the Spinning Mills and big Tanneries these entities are small companies and only a
portion of their deals are done through local letters of credit while the rest is on cash basis.
61
13.0% pa average
57.70
Revenue streams from a typical 120 days issuance, US$10,000 bill will be:
Interest Income
BDT 10,578.00
BDT 1,500.00
To achieve yearly revenue target of BDT45m (NII and Fees combined) FI will need about
US$45m (BDT2,500m) worth of bills per annum with an average usance period of 120 days. Peak
outstanding target based on that volume is BDT800m. Volume will gradually build up from the
beginning of the year and remain fairly static once the peak outstanding target is reached. A Chart
of monthly volume target and average peak outstanding is shown below.
200
150
Volume(in million B DT)
100
50
M onth
62
Risk
With Recourse
Customer Credit Risk
Secondary
Accepting Bank and Country Primary obligor
Without Recourse
No
Yes
Risk
Operational
Yes
Risks
fraud)
Market Risk
(including Yes
64
CHAPTER VII:
CONCLUSION AND RECOMMENDATION
7.1 Conclusion:
In retrospect of the marvelous growth of FI revenue over the last thirteen years and contemplating
the intensity of competition yet to come, it is crucial for SCB to rethink its strategies and
marketing plan to sustain the growth of FI revenue. Correspondent banking service providers
65
domiciled in Bangladesh are expected to be fighting for a bigger pie, as the growth prospect of the
countrys correspondent banking business is limited. One of the ways to achieve that objective is to
maximize FI revenue generated from local clients and introduces more local products. Because ,
there are huge potentials for inbound revenue.
However, export growth dropped below 6% while import soared by 8.5% in 2006/2007, putting
pressure on trade deficit. Although special incentives were extended to the garment, jute, and
leather sectors in the national budget, export income has been affected due to flood damage, which
has disrupted transport and communications and lowered industrial output and distribution.
Increase in import payments was due to drastic surge in imports of food grains and capital
machinery. Foreign exchange reserve position will remain stable. Import cover will average 2.2
months in 2006, compared with 2.8 months in 2005 and rise only marginally in 2007, to 2.3
months.
The major part of the credit exposure on Bangladeshi banks will be in the trade finance sector. The
export of ready-made garments from Bangladesh is initiated by buyers resident in the USA, Canada
and Europe. The buyer opens a sight letter of credit with a long expiry favoring garment
suppliers/manufacturers (export L/C) in Bangladesh who in turn use the same as collateral to open
issuance(60 to 180 days) L/C's favoring beneficiaries in local textile mills, spin mills, yearn suppliers,
dyeing factories to supply fabric and accessories. Under the present system, garment manufacturers
are allowed to import up to 75% of the value of the Export L/C. The fabric and accessories once
imported are cut, dyed, sewn and pressed into finished articles of wear as according to specifications
and exported to the buyer. Proceeds received under the export L/C are used first to settle import
liabilities (the issuance L/C), bank liabilities (if any) and local expenses. Bangladeshi Banks are
permitted to retain requisite foreign currency for settlement of the issuance bills and release the
remainder to the exporter.
The proportion of inland L/Cs, however, is increasing in the garments industry. This is because of the
tax benefits provided to firms going for backward linkages. The Government is also encouraging this
move since it wants to develop the countrys industry. So, the L/Cs, which were traditionally used to
import raw material, is now being replaced by local L/Cs favoring indigenous manufacturers. As such
local bill discounting (LBD) against acceptance from banks is also becoming a profitable window for
increasing local revenue.
66
100% financing should only given to customers with a forward foreign exchange deal
contract. As with a foreign exchange contract, the risk is captured under LER limit with
treasury through use of forward foreign exchange rate contract by the customer, it is easy to
assess the receivable amount in local currency.
Where no forward foreign exchange deal is contracted, the maximum margin of financing
permitted will be limited to 90% of the draft value. The actual % allowed in each country
must be set out in the Country Product Template, with appropriate market risk approval
obtained if exceeding 90%.
It is important to keep close personal and extra friendly relationship with management of NCB
banks for obtaining first hand information, as early as possible. As it is found that most NCBs
have high tendency of delaying in publishing statements and accounts. It usually requires
about 18 months before audited financials are published. The reason for this is a three-stage
audit process, which starts at the branch level.
Prevailing legal procedures is very lengthy and complicated. It takes longer period to settle
any kind of dispute. On the other hand, enforceability of intangible security is a long drawn
process, i.e. generally takes 5 6 years. So, FI should be more careful in risk assessing,
before confirming a discounting process.
A proper process must be in place to keep the Issuing Banks confirmation of acceptance
advice, and the maturity date must be closely tracked for follow up.
Financial institutions of Standard chartered have always played an imperative role in strengthening
the economic infrastructure of the country. Banks such as the Standard Chartered Bank have been
at the forefront on this role. Among its various products, LC advising, Fund transfer, RA,
Negotiation, Add confirmation and so on that plays an important role in maintaining its profit.
Although right now the products contribution in comparison to the other products is not that high,
it can certainly be hoped that with proper modification and policy change it will surely become a
large profit earning sector for the bank
The performance of the product also shows clear indication about the increasing trend of, the
products customer base. Here in my report I have tried to know the trade services of Financial
Institutions and also it is high time to improve the performance of the SCB. A set of
recommendation is set forth bellow to improve customer service for both the phase:
1. FI should arrange more and efficient KYC program to build up relationship with the customer.
2. They should not try to avoid the customer in telephonic conference.
3. They should be more careful about the competitor of the market.
4. They should analyze not only their performance but also the growth rate of the competitor and
take necessary steps to maintain the leading position of the market.
5. They should train junior officers to get more efficient services from them.
Appendices:
Appendix A: Bibliography
o International Financial Management, Jeff Madhura, 8th Edition.
o Financial Market & Institution, Jeff Madhura, 7th Edition
o www.standardchartered.com.
o www.standardchartered.com/global
68
o
o
o
o
o
www.standardchartered.org
Fact Book, Standard Chartered Bank 2007
Banks Annual Report
Sustainability Review 2007
www.bangladesh-bank.org
69