FOREIGN EXCHANGE MANAGEMENT OF JANATA BANK LIMITED

F O R E I G N E X C H A N GE M A N A GE M E N T OF JANATA BANK LIMITED

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EXECUTIVE SUMMARY
Janata Bank Ltd is a govt owned bank with numerous branches spreading all over Bangladesh. It collects remittances from NRB from different countries and transfers the currency in BDT to the destined location. Here I have tried to describe the remittance processing structure of JBL. Along with, I have included the changes made by globally accepted protocol UCP-600 and wired transfer service SWIFT. In this report I have tried to show the contribution of JBLs remittance earning on national remittance earning. JBLs performance is not dissatisfactory but the remittance earning is not increasing as the rising national remittance curve.After analyzing the data of JBLs remittance earnings processthis report have suggested that JBL lacks in foreign currency collection structure. Its remittance earning is increasing but the increase is far below the national remittance increase. JBL should take up to the mark structural change in service to cope with the national trend and help Bangladesh earn more remittance. In addition, with this intern reporthave been included the regression analysis of import-export volume with regard of exchange rate.

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CONTENTS
1. 2. 3. Introduction .............................................................................................................................................................. 1 Origin of the Report ............................................................................................................................................... 1 Objectives of the report ........................................................................................................................................ 1 3.1. 3.2. 4. 5. 6. 7. 8. 9. Broad objective .............................................................................................................................................. 1 Specific Objectives ........................................................................................................................................ 2

Scope of the report ................................................................................................................................................. 2 importance of the report ..................................................................................................................................... 2 Limitations ................................................................................................................................................................. 3 Analysis techniques ............................................................................................................................................... 3 Required data ........................................................................................................................................................... 3 Sources of Data ........................................................................................................................................................ 4 9.1. 9.2. 9.3. Sample Information...................................................................................................................................... 4 Primary Source of Data ............................................................................................................................... 4 Secondary Sources of Data ........................................................................................................................ 4 Organizational Profile ...................................................................................................................................... 4 Historical Background of the organization .................................................................................... 4 Mission:......................................................................................................................................................... 5 Vision:............................................................................................................................................................ 5 Bills Collection: .......................................................................................................................................... 6 Payments made on behalf of Govt. .................................................................................................... 6 Services Areas ............................................................................................................................................ 7 Management Aspect ................................................................................................................................ 8 organization mission and vision .................................................................................................................. 5

10. 11.

10.1. 11.1. 11.2. 12. 12.1. 12.2. 12.3. 13. 14. 15. 16. 13.1.

offered Services by the organization ......................................................................................................... 5

Organizational structure ................................................................................................................................. 8 Future plans of the organization ...............................................................................................................10 Introduction .......................................................................................................................................................11 Swift .......................................................................................................................................................................12 The structure of SWIFT ......................................................................................................................................13 Cash Reporting: Supporting customers need for account information ..........................13 The Functions of SWIFt ........................................................................................................................14

16.1. 16.2. 17. 18.

Solutions for ............................................................................................................................................................14 changes made in UCP-600 ............................................................................................................................15 Opening Letter of Credit (L/C) ...................................................................................................................17 Procedure of opening the Letter of Credit (L/C) .......................................................................17 v

18.1.

18.2. 18.3. 19. 20.

L/C Application Form (L/CAF) .........................................................................................................18 L/C Authorization Form (L/CAF) ....................................................................................................19

Securities of L/C ...............................................................................................................................................21 Export ...................................................................................................................................................................21 Formalities of Export Procedure......................................................................................................22 Disposal of Export procedure............................................................................................................23 Import ..............................................................................................................................................................25 Import procedure ...................................................................................................................................25 Payment Modes .......................................................................................................................................26 Details Commodity Wise Export ......................................................................................................29 Export Target & World Economic Crisis .......................................................................................33 National and Janata Bank Limited's Export Performance .....................................................34 Comparison of Export of 2009 with Public Banks ....................................................................35 Commodity wise Import of Janata Bank Limited ......................................................................36 Import target and achieve in last 3 years .....................................................................................38 Contribution of Janata Bank in National Import........................................................................38 Income from Import ..............................................................................................................................39 Contribution to National Import of JB in last decade ..............................................................39 Country wise remittance of Janata Bank Limited .....................................................................41 Wage Earners' Remittances of Nation ...........................................................................................44 Foreign Exchange and Foreign Trade of JBL ...............................................................................45 analysis: effect of exchange rate change on import and export volume of bangladesh 46

20.1. 20.2. 20.3. 20.4. 20.5. 21. 21.1. 21.2. 21.3. 21.4. 22. 22.1. 22.2. 22.3. 22.4. 22.5. 23. 23.1. 23.2. 23.3. 23.4.

Export Finance ..................................................................................................................................................28

Details Export of Janata Bank Limited of 2006 to 2009 .................................................................................29

Import Finance ..................................................................................................................................................36

Foreign Remittance .........................................................................................................................................41

Data input.................................................................................................................................................................47 Regression analysis of import volume vs exchange rate ......................................................................49 Regression analysis of export volume vs exchange rate ......................................................................50 23.5. Problem of Foreign Exchange in Bangladesh .............................................................................51 conclusion ..........................................................................................................................................................................52 Reference ...........................................................................................................................................................................54

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1. INTRODUCTION
This report has a certain purpose to focus on the operations of Foreign Exchange of Janata Bank Limited. Without any doubt Foreign exchange catches the flash as it has great importance in the balance of trade in economy. Banks plays a vital role in this discipline.

2.

ORIGIN OF THE REPORT

Although total B.B.A. program combines an excellent blend of theoretical and classroom knowledge but aside this internship program facilitates a student to bring light on their theoretical knowledge to apply this in practical ground. I was assigned to Janata Bank, Hotel Sheraton Corporate Branch, and foreign exchange department for my practical execution. I am required to prepare an internship report under the supervision of our honorable teacher Muhammad MukhlesurRahmanon Foreign Exchange Management of Janata Bank Limited to conduct a precision analysis on the typical subject. I have always tried my best to reflect my experience of the practical incidence in this report.

3. OBJECTIVES OF THE REPORT

3.1. BROAD OBJECTIVE

The main purpose of the report is to get a clear idea about the management of and Foreign Exchange of Bangladesh as well as Janata Bank limited, and make an elaborate industry analysis on the banking sectoractivity of Bangladesh.

Introduction

3.2.

SPECIFIC OBJECTIVES

To analyze the real Foreign Exchange performance of Bangladesh. To find out critical problems of Foreign Exchange discipline of Bangladesh.

4. SCOPE OF THE REPORT

This study would focus on the following areas of Janata Bank Limited. Actual Foreign Exchange management of Janata Bank Limited. Overview the current procedure of export & import and remittance management. Opening LC and maintenance of other formalities of foreign exchange. Organizational structures and responsibilities of management. Each of the above areas would be critically analyzed to determine the properefficiency of Janata Banks Foreign Exchange Management system.

5. IMPORTANCE OF THE REPORT

Bangladesh is considered as a developing country in the world. The economy of this country has a lot left to go further and there are lots of scopes for massive improvement. In an economy like Bangladesh, Foreign Exchange can play a major role to improve the economic condition of the country. The banks play the role of an intermediary that can mobilize the excess fund from surplus sectors to provide necessary financing, to those sectors, which need a proper go ahead for sound development of the economy. This report is a total effort to reflect a clear idea about the strategies, activities, and performance of Bangladesh regarding Foreign Exchange Business.

Scope of the report

6. LIMITATIONS
I have faced some limitations, when I was preparing this report which is mentioned below. Time limitation It was one of the main constraints that affected covering all aspects of the study. Lack of Secondary Information: The import export data of Bangladesh is not much available over the net.Secondary source of information was not sufficient for the completion of the report. Limitation of the Scope:Much confidential information was not disclosed by respective personnel of the department.

7. ANALYSIS TECHNIQUES
Both qualitative and quantitative methods were applied for preparing this report. The data were analyzed and presented by Microsoft excel and shows percentage, graphical presentation and different types of charts. Best effort was given to analyze the numerical findings.

8. REQUIRED DATA
I have mainly focused on numerical data in preparing the report. Also I have used theoretical portion as the demand of the report. Analyzing foreign exchange management of a bank, both theoretical and technical knowledge are necessary for execution. Then everything with accuracy, I have analyzed and made conclusion.

Limitations

9. SOURCES OF DATA
9.1. SAMPLE INFORMATION

Main source of the information is annual report of Janata Bank Limited, report of annual meeting, brochures and web sites. The information incorporated in this report is heavily collected both from the primary sources and as well as from the secondary sources.

9.2.

PRIMARY SOURCE OF DATA

I have collected data directly from the different sectors of Janata Bank head office. This is called primary source of data.

9.3.

SECONDARY SOURCES OF DATA

The secondary data is collected from annual report, distinguished conceptualmatters, websites and several published matter as articles in different versions of printings . Secondary Sources are:
Annual Reports of different years of Janata Bank Limited. Annual Report of Bangladesh Bank of 2009. Other published documents of Janata Bank Limited. Respective sectors of foreign matter of the head office.

10. ORGANIZATIONAL PROFILE

10.1. HISTORICAL BACKGROUND OF THE ORGANIZATION

Janata Bank Limited is the 2nd largest state owned commercial bank in Bangladesh. Immediately after the liberation of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were renamed as Janata Bank. The established of Janata Bank was happened under the Bangladesh Bank order 1972. It was

Sources of Data

incorporated as a public Limited Company on 21, May 07 vide certificate of incorporation No-C66933(4425)07 in the early era of privatization. The Bank has taken over the business of Janata Bank at a purchase consideration of Tk. 2593.90 million as a going concern through a vendor agreement signed between the Ministry of Finance of the Peoples Republic of Bangladesh and the Board of Directors on behalf of Janata Bank Limited on 15th November 2007. The operation of Janata Bank Limited works through 851 branches and including 4 overseas branches at United Arab Emirates and a subsidiary company named Janata Exchange Company Srl in Italy. It is linked 1202 foreign correspondents all over the world.

11. ORGANIZATION MISSION AND VISION

11.1. MISSION:

As it is recognized as the leading commercial bank in the aspect of Bangladesh market and it is providing retail and corporate banking services, it is trusted and respected as a partner in the social and economic development program in our country and among our nation.

11.2.

VISION:

Becoming effective largest commercial bank in the perspective of Bangladesh to support socio-economic development of the country and assists go ahead for becoming leading bank in South-Asia.

12. OFFERED SERVICES BY THE ORGANIZATION

Beside regular banking operation, Janata Bank Limited offers specialized services to different walks of clients/agencies throughout the country. Under the network of utility services, customers of different govt. organizations, corporate bodies, local

organization mission and vision

bodies, educational institutions, students, etc are getting essential benefits from the Bank continuously. The utility services of Janata Bank Limited's are:

12.1.

BILLS COLLECTION:

Collecting the gas bills of Titas, Bakhrabad and Jalalabad Gas Transmission and Distribution Companies. Regular collection of electricity bills of Dhaka Electricity Supply Authority, Dhaka Electricity Company, Bangladesh Power Development Board and Rural Electrification Board. Regularly collects the telephone bills of Telegraph and Telephone Board. Collects Water/Sewerage bills of Water and Sewerage Authority. Municipal holding tax of City Corporation/ Municipalities is collected by JBL. A pilot scheme is going underway to provide personalized services to the clients.

12.2.

PAYMENTS MADE ON BEHALF OF GOVT.

Payment of non- Govt. teachers salaries

Providing girl Students scholarship/stipend & Primary Student Stipend. Provides army pension Payment of widows, divorcees and destitute women allowances Old-age Allowances Food procurement Bills As per decision of the govt. 46 (Forty Six) branches of JBL(40 branches in Dhaka city, 1(one) branch in Narayangonj city and 5(five) branches in Chittagong city) are involved to receive all utility bills in a same station from January'04.

offered Services by the organization

12.3.

SERVICES AREAS

Branches
There are 851 branches of Janata Bank Limited in home and abroad. Among them 443 branches are situated in urban areas including four foreign branches and 408 branches are in rural areas. And all foreign branches are situated in United Arab Emirates.

Table: Branches of Janata Bank Limited Limited

Division Dhaka Chittagong Rajshahi Sylhet Khulna Overseas Total Town 162 100 80 22 75 4 443 Rural zone 82 88 131 36 71 0 408 Total 244 188 211 58 146 4 851

offered Services by the organization

Overseas Branches:
Table: Foreign Branches of Janata Bank Limited SL.No: 01. 02. 03. 04. City Abu Dhabi Al-Ain Sharjah Dubai No of Branch 01 01 01 01 Status Foreign Foreign Foreign Foreign

13. ORGANIZATIONAL STRUCTURE

13.1. MANAGEMENT ASPECT

Like every other business organization, the foremost duty of the top management is to makes all the major decisions of Janata Bank. The boards of directors are being at the topmost level of organizational structure plays an important role in policy formulation and successful execution, but it is not a direct concern of the day-day operations of the bank. The duty was delegated to the management committee. The board mainly sets the objectives and policies of the bank.
The management consists of one chairman, eleven directors, one CEO & MD and one company secretary..

Mid and lower level employees get the direction and instruction from the Board of Directors about the tasks they have to meet. The chief executive provides the guideline to the managers and employees, but bears the responsibility for determining how tasks and goals are to be attained.

Organizational structure

Chairman Managing Director General Manager

Organization Monogram

Deputy General Manager Assitant General Manager Senior Principal Officer Principal officer Senior Officer Officer Sub Accountant Senior Clark

Organizational structure

14. FUTURE PLANS OF THE ORGANIZATION

1. Involvement in export activitylargely by maintaining good communication with diverse parties. 2. To collect new members in FY2010 to launch export related new business. 3. At least 2 new AD branch will open in FY2010. 4. More facilities will be provided to the exporters on the basis of export priority and facilitate them on the basis of performance. 5. Sufficient workforce has involved increasing export and import business, providing special services and initiated different training program of officers has been started. 6. Very dynamic new dimensional Credit Product willbe started in a large scale by name of BMRE Loan for export project to import machinery, expand factory, purchase transport among exiting parties. 7. To take the competitive position charge, decrease commission and other facilities will continue to complete the journey.

Future plans of the organization

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FOREIGN EXCHANGE IN JBL AND THE WORLD

15. INTRODUCTION
One of the most important businesses carried out by the commercial bank is foreign trading. General focusing states that, the trade among various countries falls for close link between the parties dealing in trade. The situation calls for expertise in the field of foreign operations. The bank, is referred to as rending international banking operation which provides such services. Transactions with overseas countries in respect of export, import and foreign remittance dealings are under the preview of foreign exchange department. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller. In this case the bank forms bridge between the buyer and seller. Among all departments Foreign exchange department of Janata Bank Limited is one of the most important. This department handles various types of activities. Among these main three are as follows: a) b) c) Export Import and Foreign remittance

Additionally I have included the global trends of money transfer method like SWIFT and recent changes in the global protocol of exchange like UCP-600.

Introduction

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16. SWIFT
SWIFT means High-value payment market infrastructures focus primarily on security and resilience to support time-critical payments, efficiency to have the right trade-off between risks and cost. Liquidity cost reduction by early finality, easy collateral coverage and better liquidity management through real-time interactive services Balancing cost, efficiency and risk are your key requirements, and SWIFT meets them with a reliable, secure and reusable messaging infrastructure, supporting international and proprietary standards. More than 62 high-value payments clearing and settlement systems covering more than 90 countries and carrying more than 240 million payments a year, rely on SWIFT for secure messaging services and common message standards essential to their smooth operation. Because customers are multilateral, customers need a trusted third party like SWIFT to provide secure, reliable and proven messaging solutions. SWIFTs offering is more compelling in terms of cost and risk than alternatives, thanks to reusability of participants existing SWIFT infrastructures, value-added services such as FIN Copy, and standard support services. SWIFT solutions for high-value payment clearing systems support the messaging layer for payment transaction processing, cash management, business administration functions, reporting and generic communication.

Swift

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THE STRUCTURE OF SWIFT

16.1. CASH REPORTING: SUPPORTING CUSTOMERSNEED FOR ACCOUNT INFORMATION

The need for standardized solutions in cash reporting is driven by the centralization of liquidity management and treasury functions, growing volumes of cross-border payments, increasing volumes of 'time-payments' (payment versus payment, delivery versus payment, real-time gross settlement systems), the emergence of cross-border real-time payment settlement systems, in addition to existing domestic systems, and regulatory pressure to manage liquidity and credit risk.

Swift

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16.2.

THE FUNCTIONS OF SWIFT

SOLUTIONS FOR

For payments Cash Reporting Supporting your real-time account information needs Payments and cash management

Economic changes in the payments landscape have forced the banking community to find new ways to reduce their operational costs, mitigate their liquidity risk and increase the revenue and efficiency of their core payment products. Under the pressure of regulators, the cash management service offering becomes more transparent to meet new customer expectations. While conforming to regulation is a must, service quality becomes a key differentiator. SWIFT has developed offerings in payments and cash management to help the banking community meet these urgent challenges:

Enhance customer service: automate exceptions and investigations in order to reduce enquiry turn-around time and to provide transparency on enquiry status to your customers, provide a compelling value proposition for corporates or personto-person retail payments for immigrants (workers remittances) including mobile payments.

Improve liquidity and risk management: receive end-of-day as well as intraday cash reports information vital to get visibility on cash positions across your organization and to improve liquidity management. In addition, SWIFT is considering extending its value proposition to include liquidity risk management tools.

Increase operational efficiency and save costs: SWIFTs single window allows you to rationalize your connectivity channels with:

1. Correspondent banks for clearing and settlement of domestic or foreign currency payments using SWIFTs payments clearing messaging services

Swift

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2. High value payments clearing and/or settlement systems operating on a realtime gross settlement basis using SWIFTs secure and reliable FIN domestic services for high value payment market infrastructures 3. Retail payments clearing systems using SWIFTs cost efficient services for retail payments market infrastructures: the services help to clear batches of payments prior to settlement at discrete intervals, with or without netting.

17. CHANGES MADE IN UCP-600

Every single article has been redrafted and perhaps that is the most important change from a corporate perspective. Language of article has been made more clear and simple. Changes have made UCP 600 more user friendly set of rules. Failure to comply with UCP 600 rules can put payment at risk. More than 220 rules and subrules are covered by UCP 600 articles covering trade and services issues and problems. Change is very user friendly. Main features of UCP 600 which the 7th revision as follows: A leaner set of rules with 39 articles rather than 49 articles of UCP 500. Five article from UCP 500 were not included in UCP 600

Article 5 Instruction to issue/amend credits Article 6 Revocable credit Article 8 Revocation Article 12 In complete and unclear instructions Article 38 Other documents Following articles have been changed and appear in new form either as combination, adoptions or rewarding based on position papers issued by Banking Commission. 2, 6, 9, 10, 20, 21, 22, 30, 31, 33, 35, 36, 46 & 47. Main focus has been to make the language more simple and clear. The responsibilities of the parties to documentary credit transaction have been more transparent. Article covering advising of L/C and amendments has clear responsibility of the bank.

changes made in UCP-600

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Every single article has been redrafted and is most important change for corporates. New Section of definition containing terms such as honour and negotiations etc. New article for interpretation of the terms used in L/C to avoid misunderstanding When the issuer decides to refuse to honour the documents, it must give a single notice to that effect to the presenter Replacement of the term reasonable time with five working days for examining and determining compliance of documents. New standard for examination of documents

A new provision concerning address of beneficiary and the applicant has been added. An expanded discussion of original documents required 4 Redrafted transport articles, amended to resolve confusion over the identification of carrier & agents In UCP 600 articles on transport, various changes have been made like definition of transshipment and the reference to charter party bill of lading

Period of presentation of 21 days is applicable to submission of original documents Now the responsibility is on the issuer of L/C to reduce misinterpretation by clear prescribing the terms & conditions in L/C Confirming bank has been authorized to discount deferred payment L/C Insurance document can be signed by proxies on behalf of issuance company or underwriter and document may contain reference to any exclusion clause.

For transferable credits the transferring bank may send second beneficiary invoices/draft if first beneficiary fail to perform.. Miscellaneous provisions in UCP 500 have been replaced. eUCP, bank practices are related to UCP 600

changes made in UCP-600

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18. OPENING LETTER OF CREDIT (L/C)

In global business environment, buyers and sellers are often unknown to each other. So seller generally demands guarantee of payment for his exported goods. In this situation bank has an important role. Bank gives export guarantee that it will pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit or LC. Thus by letter of credit the contract between importer and exporter find a legal sphere.

18.1. PROCEDURE OF OPENING THE LETTER OF CREDIT (L/C)

After receiving the preform invoices from the exporter, by applying for the issue of documentary credit, the importer requests his/her bank to make a promise of payment to the supplier. Obviously, the bank will only agree to this request if bank can relyfully on reimbursement by the applicant. According to the accepted custom as the sole security for the credit, particularly if they are not the sorts of commodity that can be traded on an organized market, such an agreement would make the bank to bear excessive risk outside its specialized field. The applicant must therefore have adequate fund in the bank account or a credit line sufficient to cover the required amount. Banks deals with documents and notwith goods. Once the bank has issued the credit its obligation to pay is conditional on the presentation of the stipulated documents within the prescribed time limit. The applicant cannot prevent a bank from honoring the documents on the grounds that the beneficiary has not delivered goods. The importer submit the following documents with the application for opening the L/C Tax Identification Number (TIN) Valid trade license Import registration certificate (IRC) The bank will supply the following documents before opening the L/C LCA form IMP form Necessary charger documents for documentation

Opening Letter of Credit (L/C)

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The above documents/papers must be completed duly signed and filled by the parties according to the instruction of the concern banker. After scrutinizing above-mentioned documents carefully, bank delivers the following forms to be filled up by importer and banker then check it carefully: Whether the goods to be imported is permissible or not. Whether the goods to be imported is demanding or not.

18.2.

L/C APPLICATION FORM (L/CAF)

L/C Application Form is a sort of an agreement between customer and bank on the basis of which letter of credit is opened. Bank provides a printed form for opening of L/C to the importer. A special adhesive stamp of value Tk.200 is affixed on the form in accordance with Stamp Act currently in force. While opening, the stamps are cancelled. Usually the importer expresses his decision to open the L/C quoting the amount of margin in percentage. Usually the importer gives the following information 1) Full name and address of the importer 2) Full name and address of the beneficiary 3) Draft amount 4) Availability of the credit by sight payment/ acceptance/ negotiation/ deferred payment 5) Time bar within which the documents should be presented 6) Sales type (CIF/FOB/C&F) 7) Brief specification of commodities, price, quantity, indent no. etc. 8) Country of origin 9) Bangladesh Bank registration no. 10) Import License/LCAF no. 11) IRC no. 12) Account no. 13) Documents no. 14) Insurance Cover Note/Policy no., date, amount 15) Name and address of Insurance Company 16) Whether the partial shipment is allowed or not 17) Whether the transshipment is allowed or not
Opening Letter of Credit (L/C)

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18) Last date of shipment 19) Last date of negotiation 20) Other terms and conditions (if any) 21) Whether the confirmation of the credit is requested by the beneficiary or not. 22) The L/C application must be completed/filled in properly and signed by the authorized person of the importer before it is submitted to the issuing bank.

18.3.

L/C AUTHORIZATION FORM (L/CAF)

The Letter of Credit Authorization Form (LCAF) is the form prescribed for the authorization of opening letter of credit/payment against import and used in lieu of import license. The authorized dealers are empowered to issue LCA Forms to the importers as per basis of licensing of the Import Policy Order in force to allow import into Bangladesh. If foreign exchange is intended to be bought from the Bangladesh Bank against an LCAF, it has to be registered with Bangladesh Banks Registration Unit located in the concerned area office of the CCI&E. The LCA Forms available with authorized dealers are issued in set of five (05) copies each. First Copy is exchange control copy, which is used for opening of LC and effecting remittance. Second Copy is the custom purpose copy, which is used for clearance of imported goods from custom authority. Triplicate and Quadruplicate Copy of LCAF are to be sent to concerned area of CCI&E office by authorized dealer/Registration Unit of Bangladesh Bank. Quintuplicate Copy is kept as office copy by authorized dealer/Registration Unit. The Letter of Credit Authorization Form (LCAF) contains the followings Name and address of the importer IRC no. and year of renewal Amount of L/C applied for (both in figure and in word) Description of item(s) to be imported HS Code No. Signature of the importer with seal List of goods to be imported Forwarding Documentary Credit by Advising or Confirming Bank:

Opening Letter of Credit (L/C)

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There are usually two banks involved in a documentary credit operation. The issuing bank and the 2nd bank, the advising bank, is usually a bank in the sellers country. The issuing bank asks another bank to advise or confirm the credit. If the 2nd bank is simply advising the credit, it will mention that when it forwards the credit to seller, such a bank is under no commitment or obligation to pay the seller. If the advising bank is also confirming the credit, this mention that the confirming bank, regardless of any other consideration, must pay accept or negotiate without recourse to seller.Then the bank is called confirming bank also. Submission of Necessary Documents by Exporter to the Negotiating Bank: As soon as the seller/exporter receives the credit and is satisfied that he can meet its terms and conditions, he is in a position to load the goods and dispatch them. The seller then sends the documents evidencing the shipment to the bank. Exporter will submit those documents in accordance with the terms and conditions as mentioned in L/C. Generally the documents observed by the foreign exchange department are: Bill of exchange Commercial invoice Bill of lading / Air way bill / Truck receipt Certificate of origin Packing list Clean Report of Finding (CRF) Insurance cover note Pre-shipment certificate The Documents Sent To The Issuing Bank Through The Negotiating Bank: The negotiating bank carefully checks the documents provided by the exporter against the credit, and if the documents meet all the requirement of the credit, the bank will pay, accept, or negotiate in accordance with the terms and conditions of the credit. Then the bank sends the documents to the L/C opening bank. Making the Payment of Foreign Bill through the Reimbursing Bank: The L/C issuing bank getting the documents checks immediately and if they are in order and meet the credit requirements; it will arrange to make payment against L/C

Opening Letter of Credit (L/C)

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through reimbursement bank and will send the importer the document arrival notice.

19. SECURITIES OF L/C

Janata Bank Limited respective officials scrutinize the application in the following mannera) The terms and conditions of the L/C must be complied with UCPDC 500 and Exchange Control & Import Trade Regulation Act.1947. b) Eligibility of the goods to be imported. c) The L/C must not be opened in favor of the importer. d) Radioactivity report in case of food item. e) Survey report or certificate in case of old machinery f) Carrying vessel is not of Israel. g) Certificate declaring that the item is operation not more than 5 years in case of car.

20. EXPORT
Janata Bank Limited exports a large quantity of goods and services to many countries. Readymade textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea, hide and skin, vegetables are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest sector that exports the lion share of the country's export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export through Janata Bank Limited foreign

Securities of L/C

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exchange Branch are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers

20.1.

FORMALITIES OF EXPORT PROCEDURE

There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. These formalities or procedures are enumerated in brief as follows: Obtaining Export Registration Certificate ERC:No exporter is allowed to export any commodity for export from Bangladesh unless he is registered with Chief Controller of Imports and Exports (CCI & E) and holds valid Export Registration Certificate (ERC). After applying to the CCI&E in the prescribed from along with the necessary papers, concerned offices of the Chief Controller of Imports and Exports issues ERC. Once registered, exporters are to make renewal of ERC every year. Securing the order:After getting ERC, the exporter may proceed to secure the export order. He can do this by contracting the buyers directly through correspondence. Obtaining EXP: After having the registration, the exporter applies to Janata Bank Limited with the trade license, ERC and the Certificate from the concerned Government Organization to get EXP. If the bank is satisfied, an EXP is issued to the exporter. Signing of the contract:After communicating with buyer the exporter has to get contracted for exporting exportable items from Bangladesh detailing commodity, quantity, price, shipment, insurance and mark, inspection, arbitration etc. Receiving the Letter of Credit:After getting contract for sale, exporter should ask the buyer for Letter of Credit clearly stating terms and conditions of export and payment. 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.

Export

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 Endorsement on EXP:Before the exporter with the customs or postal authorities lodges the export forms, they should get all the copies endorsed by Janata Bank Limited. Before shipment, exporter submits EXP. form with commercial invoice. Then Janata Banks respective officers check it properly, if satisfied, certified the EXP. Without EXP exporter cannot make shipment. The customer must declare all export goods on the EXP issued by the authorized dealers

20.2.

DISPOSAL OF EXPORT PROCEDURE

Original:Customs authority reports first copy of EXP to Bangladesh Bank after

shipment of the goods.

Duplicate:Negotiating bank reports the Duplicate to Bangladesh Bank in or after

negotiation date but not later than 14 days from the date of shipment.

Triplicate:On realization of export proceeds the same bank to the same authority
reports Triplicate.

Quadruplicate:Finally, the negotiating bank as their office copy retains

Quadruplicate. Shipment of goods:Exporter makes shipment according to the terms and condition of L/C. Presentation of export documents for negotiation:After shipment, exporter submits the following documents to Janata bank Limited for negotiation. Bill of Exchange or Draft Bill of Lading Invoice Insurance Policy/Certificate Certificate of origin Inspection Certificate Consular Invoice Packing List

Export

23

 Quality Control Certificate G.S.P. certificate Photo Examination of Document:Banks deal with documents only, not with commodity. As the negotiating bank is giving the value before repatriation of the export proceeds it is advisable to scrutinize and examine each and every document with great care whether any discrepancy(s) is observed in the documents. The bankers are to ascertain that the documents are strictly as per the terms of L/C Before negotiation of the export bill. Bank officers assigned for examining the export documents may use a checklist for their convenience. Negotiation of export documents:Negotiation stands for payment of value to the exporter against the documents stipulated in the L\C. If documents are in order, Janata Bank Limited purchases (negotiates) the same on the basis of banker- customer relationship. This is known as Foreign Documentary Bill Purchase (FDBP).If the bank is not satisfied with the documents submitted to Janata Bank Limited and gives the exporter reasonable time to remove the discrepancies or sends the documents to L/C opening bank for collection. This is known as Foreign Documentary Bill for Collection (FDBC). Settlement of Local Bills: The settlement of local bills is done in the following ways, The customer submits the L/C to Janata Bank Limited along with the documents to negotiate Janata Bank Limited officials scrutinize the documents to ensure the conformity with the terms and conditions. The documents are then forwarded to the L/C opening bank. The L/C issuing banks gives the acceptance and forwards an acceptance letter. Payment is given to the customer on either by collection basis or by purchasing the document.

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24

20.3.

IMPORT

Import means purchase of goods or services from abroad. Normally consumers, firms and Government organizations import foreign goods or services to meet their various necessities. Main import items are food item, edible oil, fertilizer, petroleum, machineries, chemicals, raw materials of industry, cement clinkers etc. So, in brief, we can say that import is the flow of goods and services purchased by local agent staying in the country from foreign agent staying abroad.

20.4.

IMPORT PROCEDURE

Authorized Dealer, banks are always committed to facilitate import of different goods into Bangladesh from the foreign countries. Import Section, which is under Foreign Exchange Department of a bank, is assigned to perform this job. And to serve its parties demand to import goods, it always maintains required formalities that are collectively termed as Import Procedure. i) At first, the importer must obtain Import Registration Certificate (IRC) from the CCI&E submitting the following papers: Up to date Trade License. Nationality and Asset Certificate. Income Tax Certificate. In case of company, Memorandum & Articles of Association and Certificate of Incorporation. Bank Solvency Certificate etc. Required amount of registration fee ii) Then the importer has to contact with the seller outside the country to obtain the Proforma Invoice. Usually an indenter, local agent of the seller or foreign agent of the buyer makes this communication. Beside these other sources are: Trade fair. Chamber of Commerce.

Import

25

 Foreign Missions in Bangladesh. Journals etc. iii) When the importer accepts the Proforma Invoice, he/she makes a purchase contract with the exporter detailing the terms and conditions of the import. iv) After making the purchase contract, importer settles the means of payment with the seller. An import procedure differs with different means of payment. The possible means are Cash in Advance, Open Account, Collection Method and Documentary Letter of Credit. In most cases, the Documentary Letter of Credit in our country makes import payment. Purchase Contract contains which payment procedure has to be applied.

20.5.

PAYMENT MODES

Cash in advance: Importer pays full, partial or progressive payment by a foreign DD, MT or TT. After receiving payment, exporter will send the goods and the transport receipt to the importer. Importer will take delivery of the goods from the transport company. Open Account: Exporter ships the goods and sends transport receipt to the importer. Importer will take delivery of the goods and makes payment by foreign DD, MT, or TT at some specified date. Collection Method: Collection methods are either clean collection or documentary collection. Again, DocumentaryCollection may be Document against Payment (D/P) or Document against Acceptance (D/A). The collection procedure is that the exporter ships the goods and draws a draft/ bill on the buyer. The exporter submits the draft/bill (only or with documents) to the remitting bank for collection and the bank acknowledges this. Then the remitting bank sends the draft/bill (with or without documents) and a collection instruction letter to the collecting bank. Acting as an agent of the remitting bank, the collecting bank notifies the importer upon receipt of the draft. The title of goods is released to the importer upon full payment or acceptance of the draft/bill. Letter of credit: Letter of credit is the well-accepted and most commonly used means of payment. It is an undertaking for payment by the issuing bank to the

Import

26

beneficiary, upon submission of some stipulated documents and fulfilling the terms and conditions mentioned in the letter of credit.

Import

27

21.

EXPORT FINANCE

Export through Janata Bank Ltd. for the year 2008 and 2009 is Tk.85418.00 million and Tk. 87500.00 million respectively. In spite of Global Financial Crisis the growth chart in export through Janata Bank Ltd. remains upwards due to our timely steps regarding credit facilities and services packages. We have already re-fixed our schedule of exchange at a reduced rate the loan pricing is more competitive. With the credit lines our experts have introduce the following new products: Cash Credit: Working capital facility to dyeing unit and packaging unit. Mid term Loan: For procurement of machinery, space parts, boiler, generator, vehicles etc. to export oriented industrial unit. Packing Credit: Working capital facility to pay wages salary utility bills etc. LTR, FC: Short term credit for procurement of capital machinery from abroad. Term Loan: For (Export oriented) Ship Building. Export Project BMRE: Loan for factory building construction. Expansion, development and Maintenance, construction of factory godown, purchase of machineries from local and foreign markets, covered van, generator and establish ETP.

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28

21.1.

DETAILS COMMODITY WISE EXPORT

Here given details commodity wise export figures of Janata Bank Limited from 2006 to 2009. It has shown here commodity wise and monthly wise export figures in details.

DETAILS EXPORT OF JANATA BANK LIMITED OF 2006 TO 2009

Month January February March April May June 2006 July August September October November December Total Grand Total January February March April May June 2007 July August September October November December Total
3.11 2.06 6.75 9.69 5.92 5.32 6.11 6.92 9.06 5.1 7.69 8.18 75.91 32.66 43.5 44.96 46.76 35.41 30.76 40.35 38.62 44.41 42.44 41.55 54.13 495.55 0 0 0 0 0 0 0.33 0 0 0.18 0.68 0.75 1.94 34.63 60.85 86.3 74.4 75.02 73.79 63.69 55.82 59.97 61.68 56.04 78.51 780.7 280.16 285.08 270.15 243.85 291.78 293.72 338.71 338.56 270.65 247.73 269.27 411.27 3540.93 53.71 21.21 29.4 59.85 69.91 83.87 72.26 91.98 79.64 63.33 88.15 29.97 743.28 9.48 9.32 6.95 8.44 11.06 14.06 14.69 12.02 14.01 8.79 9.14 9.09 127.05 Raw Jute 3.04 2.68 10.16 4.95 1.8 6.4 2.71 2.72 3.52 15.94 10.13 4.79 68.84 Jute Goods 38.56 35.07 23.2 33.55 89.94 29.18 37.11 33.18 32.13 30.52 53.69 108.27 544.4 Tea 1.33 0.56 0.9 0 0 0 0 0 0 0 0 0 2.79 Hide & Skin 58.76 37.7 67.21 64.01 75.84 82.22 76.66 54.31 49.65 53.45 54.41 84.44 758.66 RMG 244.75 260.93 295.23 337.37 269.97 302.17 329.88 322.15 265.47 260.08 302.6 359.22 3549.82 F.FiSH 47.91 41.94 34.05 46.25 75.46 65.55 77.37 65.13 77.13 22.32 46.59 74.77 674.47 Vegetabl es 13.7 12.54 7.17 8.54 19.37 10.48 13.58 17.77 9.76 6.81 7.12 9.51 136.35 Others 85.31 61.67 67.67 121.69 79 151.68 83.59 165.86 166.92 111.28 113.77 145.89 1354.33

7089.66
129.76 106.83 124.47 122.07 195.85 113.35 101.07 100.1 95.2 65.4 92.92 173.17 1420.19

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Grand Total January February March April May June 2008 July August September October November December Total Grand Total January February March April May June 2009 July August September October November December Total Grand Total
1.98 3.5 3.03 4.78 4.32 10.03 2.96 6.65 20.06 27.52 11.55 5.4 101.78 37.32 38.15 38.56 44.91 39.01 26.69 41.8 44.05 42.48 52.78 72.35 43.31 521.41 0.39 0 1.05 0 0 0.12 0.07 0 0.39 0 0.07 0 2.09 64.21 65.37 74.3 37.67 103.5 89.93 118.53 99.85 91.42 79.55 127.69 69.2 1021.22 330.34 385.78 447.59 426.23 325.72 432.8 396.29 397.05 332.96 265.8 353.31 353.95 4447.82 63.6 40.83 35.75 52.16 80.79 92.21 77.5 97.43 70.44 69.34 76.36 61.12 817.53 12.08 9.82 9.74 10.33 14.15 14.52 16.67 17.96 13.61 13.37 12.88 11.47 156.6 8.18 1.55 4.88 4.76 3.66 7.27 9.73 4.79 7.11 5.73 4.7 12.32 74.68 35.74 57.35 90.44 74.57 48.59 55.09 45.29 46.03 43.51 45.41 55.21 47.31 644.54 0.56 0.83 0.47 0.46 0.3 0 0.34 0.37 0 0 0 1.87 5.2 39.81 52.56 74.6 89.53 69.31 65.47 58.16 65.4 94.6 106.46 72.86 48.77 837.53 323.65 332.52 348.78 278.37 284.77 384.56 376.99 358.42 344.92 331.72 368.23 456.99 4189.92 65.04 45.16 53.54 66.17 44.88 102.27 111.91 65.73 102.1 51.07 71.88 42.48 822.23 11.36 11.34 10.22 10.4 13.17 15.62 18.97 16.15 28.56 11.02 8.77 7.32 162.9

7185.55 80.13 90.25 99.13 157.21 200.85 152.75 127.65 200.13 200.3 89.39 159.13 247.84 1804.76 8541.76 202 146.68 114.08 135.54 178.66 99.29 146.8 77.58 101.43 158.33 153.26 283.21 1796.86 8865.31

In 2006 total export of Janata Bank was Tk. 7089.66 crore. Ready Made Garments was Tk. 3549.82 crore and it was the highest position. Hide & skin and frozen fish took the second and third position consequently. It is also clearly observed that in the month of August and September export amount was highest through the year. In 2007 total export of janata bank was tk. 7185.55 crore. Readymade garments was tk. 3540.93 crore and it was the highest position. Hide & skin and frozen fish took the second and third position consequently. First half of the year 2007 export amount
Export Finance

30

was comparatively better position than the second half of the year. It is also clearly position observed that total export amount of 2007 is little bit higher than 2006. In 2008 total export of janata bank was tk. 8541.76 crore. Ready made garments was tk. 4189.92 crore and it was the highest position. Hide & skin tk. 837.53 crore and highest frozen fish tk. 822.23 crore took the second and third position consequently. Throughout the whole year 2008 export amount was comparatively better than the last two years. It is also me mention here that total export amount was significantly port higher than 20060and 2007. In FY 2009 target export was Tk. 66480.00 million, but earned Tk. 88653.10 million against the target amount. This was 133% higher than the target. It may mentioned here that up to October 2009 earned was Tk. 7231.80 million, that means target of earned export had attained before two months end of the year.

Export comparison of JBL from 2006 to 2009

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2006 2007 Export (in mil) 2008 2009 7089.66 7185.55 8541.76 8865.31

In spite of world economic crisis and political instability in the country Janata Bank Limited has kept its upward export trend up to last year. Because Its expertise and experienced management team offered different promotional offer and financially

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31

assisted to the exporters to boost up the export trend. They main offered and assisted Concessional rate of interest. Export incentive programs. Export Processing Zone facility. Scope of establishment of export oriented industry by 100% foreign investment and by joint venture. Full-fledged infrastructural and logistic support for export i.e. project finance, working capital, pre-shipment & post-shipment export finance, guarantee, bonding facility, etc. Consulting facility by an expert group of officials.

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21.2.

EXPORT TARGET & WORL D ECONOMIC CRISIS WORLD

From 2006 to 2009 export of Janata Bank is in increasing pattern. Even during world economic crisis period Janata Banks management shows their best performance. That is why export position remains in upward condition. In spite world economic crisis export growth has increased 4%. Which is hig highest among four government owned banks.

Table: Export growth of Janata Bank Limited

Year 2007 2008 2009 Target 77983.8 86226.6 66480 Achievement 71855.5 85417.8 88653.1 Percentage of Target 92.18% 99.06% 133.00%

Export target and achievement of Janata Bank Limited

100000 80000 60000 40000 20000 0 2007 Target 2008 Achievement 2009

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21.3. NATIONAL AND JANATA BANK LIMITED'S EXPORT PERFORMANCE

Contribution to National Export of Janata Bank Limited (mil $) National Export Financial Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Target 7227.70 8565.78 10159.20 12500.00 14500 16298.43 Achievement 7603.00 8655.00 10526.16 12187.5 14411.1 15565.1 Contribution to National Export of Janata Bank Limited Achievement 632.90 692.80 958.02 1057.68 1034.56 1300 Percentage 8.21% 8.00% 9.10% 8.68% 7.12% 8.35%

For global economic recession and political instability inside the country contribution to national export of Janata Bank limited was lowest in the fiscal year 2007-2008 among last six fiscal years. And in fiscal year 2008-2009 it turned up warding. Because to increase export business providing the exporter more foreign currency, to strengthen their production capacity, to facilitate the in every maximum scope, the bank has took four incentives. These have been proved to be fruitful adding Tk.2.00cr (approx.) more to the banks annual income through only export business. These new four incentives are as follows in brief: In addition with the existing working capital it provides exporters emergence need to execute their foreign order. For importing bulk quantity of dies, chemical it is a great support for the exporter. Loan for importing generator, small machines, vehicles for emergency need. For importing capital machinery.

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21.4. COMPARISON OF EXPORT OF 2009 WITH PUBLIC BANKS

Comparison of Export of 2009 with other Banks (tk in Mil) Janata Bank Sonali Bank Agrani Bank Rupali Bank 88653.1 64243.3 44606.8 7458.1

Comparison of Export of 2009 with other Banks (tk in Mil)

Export (in Mil) 88653.1 64243.3 44606.8

7458.1

Janata Bank

Sonali Bank

Agrani Bank

Rupali Bank

Total export Janata Bank Limited in 2009 was Tk.88653.1 million. Sonali Banks export was Tk.64243.3 million. Agrani Banks and Rupali Banks export was Tk.44606.8 million and Tk.7458.1 million respectively. From above table and graph we can say that Janata Bank Limited is the top position among four government owned banks with a large difference. Its nearest competitor is Sonali Bank Li Limited.

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22. IMPORT FINANCE

Traditionally Janata Bank Ltd. is pioneer in handling major portion of countrys import business. The total volume of import as on 30-11-2009 is 107168 million. Major import items are industrial raw materials, chemicals, capital machineries, scraped vessels and petroleum etc.

22.1. COMMODITY WISE IMPORT OF JANATA BANK LIMITED

Commodity wise Import of JB from 2006 to 2009
Commodities Food Item Edible Oil Fertilizer Petroleum Machineries Chemicals Raw Materials of Industry Ship Breaking Cement Clinkers Others Total 2009 904 339.42 2300.96 3483.1 1190.41 559.45 2600.52 23.31 257 194.33 11852.5 2008 1075.91 155.97 2779.16 4448.87 1108.28 988.37 1306.44 177.95 279.55 620.8 12941.3 2007 396.25 18.9 1140.44 3659.86 853.11 608.84 1289.95 101.4 230.9 106.89 8406.54 2006 12.14 14.66 599.37 8774.58 1089.54 490.82 1408.16 144.25 209.79 137.59 12880.9

Through quite a good number of Authorized Dealer Branches and 1198 nos. foreign correspondents worldwideJanata Bank Limited has been extending full range import and relevant finance facilities. Setting Industrial vision to facilitate optimally, bank's involvement has been showing sharp rising trend.

Import Finance

36

Import Trend of JB from 2006 to 2009

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total Import (in mil) 48005 54666 58889 60477 74920 72912 128809 84065 129413 118525

Import Trend of JB from 2006 to 2009

140000 120000 100000 80000 60000 40000 20000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Total Import (in mil)

From 2000 to 2006 import of Janata Bank Limited is gradually increasing. But in 2007 the country was under caretaker government. Export, import, foreign remittance,

Import Finance

37

employment in abroad etc. were moving forward in slow rate. For this reason import in 2007 sharply down compare with 2006. Again in 2008 import of Janata Bank Limited reached higher than 2007. And in 2009 import is dropped little bit.

22.2.

IMPORT TARGET AND ACHIEVE IN LAST 3 YEARS

Year 2007 2008 2009

Target 8000 9247.19 10172

Achieved 840.54 12941.3 11852.5

Percentage of Achieved 105% 140% 116%

22.3. CONTRIBUTION OF JANATA BANK IN NATIONAL IMPORT

Year 2006 2007 2008 2009

National Import Tk.(crore) 111307 127221 163505 18440

Growth 0 14.30% 27.78% -9.23%

Import of Janata Bank Tk.(crore) 12880.9 8406.5 12941.3 11852.5

Growth 0 -35.20% 54.17% -8.41%

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22.4.

INCOME FROM IMPORT

Particulars L/C Commissions and Other charges Interest (PAD,LIM,LTR and Others) Total 2007 77.87 387.63 465.5 2008 86.53 278 364.53

22.5. CONTRIBUTION TO NATIONAL IMPORT OF JB IN LAST DECADE

Table: Contribution to National Import of Janata Bank Limited

Fiscal Year 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 National Tk. (Crore) 28303.78 30539.62 34183.13 38480.32 42130.6 50371 49049.1 55917.63 64256.56 80894.78 99130.07 118389.8 166974.3 Janata bank Tk. (Crore) 4009.87 3799.45 3731.94 4646.58 4754.46 5233.07 5345.2 6117.06 6952.62 8397.96 9230.42 10757.9 9466.11 Percentage 14.16726 12.44105 10.91749 12.07521 11.28505 10.38905 10.89765 10.93941 10.82009 10.38134 9.311423 9.086847 5.669201

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39

JBL's contribution from 1995 to 2007

12000 10000 Tk. in crore 8000 6000 4000 2000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 JBL Tk. (Cr) 4010 3799 3732 4647 4754 5233 5345 6117 6953 8398 9230 1075 9466

Increase of import indicates the country is less wealthy and decrease of import indicates that the country has sufficient resources and is able to fulfill its local demand. So as a publicly owned bank Janata bank Limited is less service providing attitude to the importers. It provides little facilities to its importers. As a result import contribution percentage to national is decreasing gradually from fiscal year 1995-1996 to fiscal year 2007 1996 2007-2008.

National Import vs JBL's import in last decade (1995 to 2007)

180000 160000 140000 120000 100000 80000 60000 40000 20000 0

National Tk. (Crore)

Janata bank Tk. (Crore)

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23. FOREIGN REMITTANCE

Inward foreign remittance through Janata Bank Ltd. up to November 2009 is Tk. 51508.55 million. Foreign remittance from NBRs reached record high of Tk. 45924 million in 2008 against Tk.36788 million in 2007 and continue to play an important supporting role in strengthening the economy of the county Janata Bank ltd. by reducing lead-time, has ensured quick delivery of foreign remittance, an NBR branch has been opened to serve exclusively Non-resident Bangladeshis through Speedy Money Remittance System with instant to the beneficiaries. Anybody willing to remit foreign currency from any corner of the world can use wide network of the bank. The remittance reaches to the beneficiary within 3 days without charging any commission. Our worldwide network includes 4 branches in UAE, 2 exchange houses in Italy and correspondent relationship with all the major Banks and all important trade centers of the world. Recently Janata Bank Ltd. has launched its Speedy Foreign Remittance Payment System which enables beneficiaries to receive their money within shortest possible time. The beneficiary also gets information of remittance through automated SMS. Its a secured, easy, cost effective and speedy way of remittance for the remitter. Janata bank Ltd. has signed an agreement with Western Union Network to facilitate wide range of remittance of the globe. Both the organizations make it possible to receive the money from about 300,000 locations of 200 countries instantly with prevailing mutual mechanism and workforce. The achievement of Janata Bank Ltd. in attracting foreign remittance as compared to countrys performance is given bellow:

23.1. COUNTRY WISE REMITTANCE OF JANATA BANK LIMITED

To facilitate sending money in Bangladeshi Taka directly, Janata Bank Limited has Taka Drawing Arrangement with many banks/exchange companies in different countries. The expatriate Bangladeshis may send their money in BDT (Bangladeshi Taka) through the branches/subsidiaries of Janata Bank Limited and foreign banks/exchange companies. Remittance services are available at all branches and foreign remittances may be sent to any branch by the remitters favoring their beneficiaries. Remittances are credited to the account of beneficiaries instantly or within shortest possible time.

Foreign Remittance

41

Table: Country wise Foreign Remittance of JBL from 2004 to 2006

country JanataEchange Co., Italy Janata Bank, UAE Branches Other Exchange Co. Kuwait Saudi Arabia Oman Bahrain Greece UK Qatar United States Malaysia Singapore Korea Canada Australia Other sources (SWIFT/Telex) Grand Total 2004 1182.5 5196 2143.5 3468.6 4057.9 1129.8 785.2 0 0 196.1 26.9 1139.3 0.2 0 166.7 14.4 4556.4 24063.5 2005 2077.1 5638 2279.5 4089.3 3762.7 1095.6 817.4 0 0 190.8 29.2 623.9 0.4 23.2 0 0 5945.7 26572.8 2006 3102.1 5666.7 2901.7 5652.6 3598.3 1106.2 853.2 537.9 0 149.2 132.8 264.2 5.3 2.5 6.6 0 5288 29267.3 2007 3513 9188.3 4714 7615.9 3025.2 1171 834.5 697.9 0 173.6 153.6 208.7 0.7 0 7.2 0 5484.4 36788 2008 2289.8 12548.8 6878.2 7780.1 4536 1341.6 916.7 591.5 2213.3 200.6 222.3 113.2 20.2 0 0 0 6272.1 45924.4 2009 1446.8 16207.7 8738.1 6764.3 7718.2 1038.7 716.1 524.5 6174.9 118.9 285.7 23.9 98.1 0 0 0 6334.2 56190.1

Country wise Foreign Remittance of JBL from 2004 to 2006

60000 50000 40000 30000 20000 10000 0 Grand Total 2004 2005 2006 2007 2008 2009

Foreign Remittance

42

Inward remittance from Bangladeshi nationals working abroad continued to play an important role in strengthening the current account. Receipts on this sector increased gradually in every year from 2006 to 2009. The underlying reason was that Bangladesh Bank has simplified the approval policy of drawing arrangements between foreign exchange houses and domestic bank. Janata Banks management has taken this opportunity. For quick payment of TTs issued by 4(Four) UAE branches of Janata Bank Limited ( Abu Dhabi, Al-Ain, Dubai &Sharjah branch) Foreign Exchange Corporate Branch, Dhaka( FECB, Dhaka), Laldighi East Corporate Branch, Chittagong(LDE, Ctg), Foreign Exchange Corporate Branch, Sylhet( FECB, Sylhet), Khulna Corporate Branch, Khulna, Barisal Corporate Branch, Barisal &Rajshahi Corporate Branch, Rajshahi are nominated. To facilities to its remitters Janata bank Limited has started1. FECB, Dhaka will cover whole Dhaka Division, 2. LDE, Ctg will cover whole Chittagong Division, except branches under greater Comilla and Noakhali Area. 3. FECB, Sylhet will cover whole Sylhet Division, 4. Khulna Corporate will cover whole Khulna Division, 5. Barisal Corporate will cover whole Barisal Division, 6. Rajshahi Corporate will cover whole Rajshahi Division, 7. Comilla Corp. will cover all branches under greater Comilla district. 8. Noakhali Corp. will cover all branches under greater Noakhali district. Commission for issuance of Taka Drafts from our UAE branches has been reduced and refixed from AED 10.00 to AED 4.00 and commission for issuance of TTs drawn on Bangladesh and payable at any bank branches are re-fixed at AED 12.00 from AED 30.00. Commission for issuances of Taka drafts at UAE branches has been

reduced irrespective of amount. 1% interest above the normal savings deposit rate is offered to SB accounts receiving foreign remittance.

Foreign Remittance

43

23.2.

WAGE EARNERS' REMITT ANCES OF NATION REMITTANCES

Inward remittances from Bangladeshi nationals working abroad continued to play an important role in strengthening the current account of Bangladesh Bank. Receipts on Bangladesh this sector increased by 22.4 percent to USD 9689.3 million in FY 09 from USD 7914.8 million in FY 08. The underlying reason was that Bangladesh Bank has simplified the approval policy of drawing arrangements between foreign exchange houses and exchange domestic banks. As a result 40 banks have been allowed for establishing 820 drawing arrangements with 208 exchange houses all over the world for collecting remittances. Due to these measures, remittances have recorded a substantial increase by 22.4 percent to USD 9689.3 million during the year 2009. Remittances as percentage of GDP increased by 089 percentage points to 10.84 in FY 09 from 9.95 in FY 2008. The shares of major source countries in the remittance receipts of FY 2008 and FY 2009 are given bellow.

Wage earners' remittances 2008

Country Kingdom of Saudiarabia UAE UK Kuwait USA Other countries Total Percentage 29.40% 14.30% 11.30% 10.90% 17.50% 16.60% 100.00%

Wage earners' remittances 2008

Other countries 17% Kingdom of Saudiarabia 29%

USA 18% UK 11% Kuwait 11% UAE 14%

Foreign Remittance

44

Wage earners' remittances 2009

Country Percentage Kingdom of Saudiarabia UAE UK Kuwait USA Other countries Total 29.50% 18.10% 8.20% 10.00% 16.30% 17.90% 100.00%

Wage earners' remittances 2009

Other countries 18% Kingdom of Saudiarabia 30%

USA 16% UK 8% Kuwait 10% UAE 18%

This is the whole scenery of inward foreign remittance of 2008 and 2009 of Bangladesh. In the sector of foreign remittance earning 2008 Kingdom of Saudiarabia in highest position that is 29.40%, USA second position 17.50% and United Arab positionEmirates is third position 14.30%. And in 2009 Kingdom of Saudiarabia again top position, in second position United Arab Emirates and in third position USA. Their inward remittances are 29.50%, 18.10% and 16.30% respectively.

23.3.

FOREIGN EXCHANGE AND FOREIGN TRADE OF JB JBL

Foreign Exchange and Foreign Trade of JB Trade of JB 2008 ign

Year Import Export Remittance 2006 128809 70897 29267 2007 84065 71855 36788 2008 129413 85418 45924 2009 118525 88653 56190

Foreign Remittance

45

Foreign Exchange and Foreign Trade of JBL 2006 - 2008

140000 120000 100000 80000 60000 40000 20000 0 Import 2006 Export 2007 2008 2009 Remittance

Export and foreign remittance are in good position. They are in increasing trend from 2006 to 2009. And due to global economic crisis and for various trade barriers and quotas import does not grow much higher compare with export and foreign remittance. In 2007 export and import are comparatively low with other years du to due political instability inside the country. But inward remittance is continuously upward trend up to 2009.

23.4. ANALYSIS: EFFECT OF EXCHANGE RATE CHANGE ON IMPORT AND EXPORT VO LUME OF BANGLADESH VOLUME
The import and export volume is dependent on various variables. Exchange rate is one of them. It has some influence over the import and export volume. analyze volume.To the effect of change in exchange rate of between BDT and USD effects the import and export volume of Bangladesh, exchange rate, import and export data was Bangladesh, collected from September 2007 to October 2010. The monthly recorded exchange lected 2010. rate is averaged to calculate average monthly exchange rate and the import import-export data is gathered by accumulating total monthly trade in USD. The objective is to measure the relationship of exchange rate with import he relationship import-export volume. Thats why exchange rate was taken as independent variable and export exportimport volume is taken as dependent variable.

Foreign Remittance

46

DATA INPUT

Import-Export volume and exchange rate data for regression analysis (Sep 2007 to Oct 2010)
2007-M09 2007-M10 2007-M11 2007-M12 2008-M01 2008-M02 2008-M03 2008-M04 2008-M05 2008-M06 2008-M07 2008-M08 2008-M09 2008-M10 2008-M11 2008-M12 2009-M01 2009-M02 2009-M03 2009-M04 2009-M05 2009-M06 2009-M07 2009-M08 2009-M09 2009-M10 2009-M11 2009-M12 2010-M01 2010-M02 2010-M03 2010-M04 2010-M05 2010-M06 2010-M07 2010-M08 2010-M09 2010-M10 IMPORT (IN MIL USD) 1173678 1077910 911127 863274 1206805 1081391 1197316 1205496 1058890 1132444 1432522 1384172 1376703 1267754 947948 1116305 1224113 1157303 1371920 1211932 1071066 1212953 1399738 1370168 1340855 1183320 977274 1120641 1120365 1125516 1361427 1325043 1172987 1342205 1391786 1683012 1617571 855785 RATE (BDT AGAINST USD) 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 59.6 64.81054 67.5895 67.5895 68.36333 68.78 68.78 68.78 68.86095 68.95 68.95 68.95 68.95 68.95 68.95 68.95 68.95 68.95 68.95 68.95 69.07687 68.76616 69.04641 69.11474 69.17916 69.18572 69.78913 EXPORT (IN MIL USD) 894416 919419 823967 942246 907999 822775 1053795 1149721 1219383 1242458 1245967 1222807 1207476 1060847 957916 1169821 947356 860481 1150489 1249552 1179575 1033356 1040726 1125030 1228856 1253137 1271118 1346689 1150258 1132371 1333799 1430597 1496174 1455841 1496609 1393738 1563642 1161274

Foreign Remittance

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import trend (in mil USD)

1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0

import

export trend (in mil USD)

1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0

export

Foreign Remittance

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REGRESSION ANALYSIS OF IMPORT VOLUME VS EXCHANGE RATE

Running the analysis with the data using spss the report that generated:
Variables Entered/Removed Variables Model 1 Variables Entered exchange rate
a b

Removed

Method . Enter

a. All requested variables entered. b. Dependent Variable: Import vol

Model Summary Std. Error of the Model 1 R .244

a

R Square .059

Adjusted R Square .034

Estimate 1.79733E5

a. Predictors: (Constant), exchange rate

ANOVA Model 1 Regression Residual Total Sum of Squares 7.555E10 1.195E12 1.271E12 df

Mean Square 1 37 38 7.555E10 3.230E10

F 2.339

Sig. .135
a

a. Predictors: (Constant), exchange rate b. Dependent Variable: Import vol

Coefficients

Standardized Unstandardized Coefficients Model 1 (Constant) exchange rate a. B 536726.574 10246.483 Std. Error 442746.405 6700.223 .244 Coefficients Beta t 1.212 1.529 Sig. .233 .135

Dependent Variable: Import vol

Foreign Remittance

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Coefficients

Standardized Unstandardized Coefficients Model 1 (Constant) exchange rate B 536726.574 10246.483 Std. Error 442746.405 6700.223 .244 Coefficients Beta t 1.212 1.529 Sig. .233 .135

We can say from the coefficient table that, the equation is YExport = 536726.574mil + 10246.483mil * (exchange rate) if the exchange rate increases or decreases by 1 tk against USD then the import volume will be increased or decreased by 10246.483mil USD worth. From the model summary table, we can say that R square is only .059. it means the changes in exchange rate can only explain 5.9% of the change in import volume. It also means that there are other important factors are there to influence the import volume rate.Its also true that Bangladesh is using controlled floating exchange rate with USD. The dispersion is not much significant for short time but with long time it has some effects.
REGRESSION ANALYSIS OF EXPORT VOLUME VS EXCHANGE RATE

Model Summary Adjusted R Model 1 R .273

a

Std. Error of the Estimate

R Square .074

Square .049

2.32013E5

a. Predictors: (Constant), exchange rate

ANOVA Model 1 Regression Residual Total Sum of Squares 1.598E11 1.992E12 2.152E12 df

Mean Square 1 37 38 1.598E11 5.383E10

F 2.969

Sig. .093
a

a. Predictors: (Constant), exchange rate

Foreign Remittance

50

ANOVA Model 1 Regression Residual Total Sum of Squares 1.598E11 1.992E12 2.152E12 df

Mean Square 1 37 38 1.598E11 5.383E10

F 2.969

Sig. .093
a

b. Dependent Variable: export vol

Coefficients

Standardized Unstandardized Coefficients Model 1 (Constant) exchange rate B 156722.528 14903.507 Std. Error 571528.004 8649.116 .273 Coefficients Beta t .274 1.723 Sig. .785 .093

a. Dependent Variable: export vol

We can say from the coefficient table that, the equation is Yimport = 156722.528mil + 14903.507mil * (exchange rate) If the exchange rate increases or decreases by 1 tk against USD then the import volume will be increased or decreased by 14903.507mil USD worth. The R square value is .074, which means the changes of exchange rate can influence only 7.4% of the variation of import volume.

23.5.

PROBLEM OF FOREIGN EXCHANGE IN BANGLADESH

As a developing country, here there is a great opportunity to expand a business easily. Human resources cost are also cheap. On the other hand people have strong faith to the banking sector. But this sector is not free from problems. Some challenges of the banking sector are: 1. Global economic crisis which decreases the consumptions of goods and also the exports. 2. Withdrawal of restriction on China for RMG export to Europe and USA in 2009. 3. Export volume has dropped due to lack of global demand.

Foreign Remittance

51

4. Lack of diversification, especially for export sector. 5. Very high dependency on Textile and RMG Sectors to export. 6. In case of import prices of commodities and raw materials in international market. 7.Slow recycling of investment of commodity in commercial sectors. 8 . Low level of project Finance in 2007, 2008 & 2009 due to the national political instability. It is clear that the Janata Bank Limited Foreign Exchange department has ensured both quality and services which helps to improve the overall status of the Bank. For this reason Janata bank Limited has able to achieve second position in country and top position among public banks in export sector in 2009. However the branch may have scope to improve in a few areas. Such as01. Insufficient number of exporter and importer is not enough to achieve the goal who operate through this bank. So JBL should offer more facilities to attract their clients. 02.. It is a crying needto provide more quality services to their clients in order to compete in the market.

CONCLUSION
Nearly edge is seen while inspecting the Foreign Exchange Department of Janata Bank Ltd.s success. That means, this bank successfully finished last year with an appreciable performance .JBL attained first place in the last year among the government banks forits flawless completion of blending of solid quality and sincere service. For a greater achievement and attain more priority among the customers and clients JBL can walk through the way under some precision direction: o JBL should approach more attractive facilities with clear go ahead. o To survive in the cut throat competition JBL must step into launching ATM service as well as debit and credit card facilities.

conclusion

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o Banking sector moves toward a very newer and wider type of voyage that results in ending up with some critical marketing overkill. Now a dayspeople are looking for a further opportunity to have some scheme in the same bank from where they have collected the remittance. o Total revival of investment of commodity in commercial sector requires a very rapid and complete action to provide a more accurate and fast recycling of invest/ o Less interesting export facilities should be proven improved. o Finding out the newer destination of our export goods and ending up with being adjusted with the newer sectors customs. o With successful promotional programs JBL can attract more people from this particular walk of life. o The overall matter of foreign remittance should be driven under a complete computerized system having a main server country wide to keep up a congenial environment.

conclusion

53

REFERENCE
1. 2. 3. 4. 5. JANATA BANK LTD WEBSITE JANATA BANK ANNUAL REPORTS EXPORT PROMOTION BUREAU TRADEMAP.ORG FOR IMPORT EXPORT DATA EXCHANGERATE.COM a. (http://www.exchangerate.com/past_rates.html?letter=B &continent=&cid=239USD&currency=20&last30=&date_from=09-302007&date_to=01-04-2011&action=Generate+Chart) 6. SWIFT.com

Reference

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