Accounting System of Jamuna Bank Limited - Assignment Point
Accounting System of Jamuna Bank Limited

The major objective of this report is to analysis Accounting System of Jamuna Bank Limited. Other objectives are to know the legal framework of accounting and reporting practices of the commercial banks and review the general banking services of Jamuna Bank. Here also determine the present value of transactions according to head wise such, Cash receipt, Payment, DD, Pay Order, Account Opening, Closing etc. Finally observe the accounting and reporting system of Jamuna Bank Limited.

Objectives of the study:

The Primary objective of this report is to fulfill the requirement of BBA program. For this reason a student is attached with an organization for three months so that he can have some practical job related experience along with the academic knowledge. The other objectives are:

  1. To throw light on the legal framework of accounting and reporting practices of the commercial banks.
  2. To review the general banking services of Jamuna Bank Ltd.
  3. To determine the present value of transactions according to head wise such, Cash receipt, Payment, DD, Pay Order, Account Opening, Closing etc.
  4. To study the accounting and reporting system of Jamuna Bank Limited.

 Methodology of the study:

a) For completing this report I have studied the various literatures about bank and banking and the material which have provided by the HRM and training division.

b) I have also observed practical operation of the bank, interviewed employees and clients of the bank and some practical works by me are the main sources of this report.

c) I have got much information from Jamuna Bank Ltd. website and Annual report of the bank.

Types and sources of data:

The data collected from Jamuna Bank Ltd. are classified into categories;

  1. Primary data
  2. secondary data

 

Profile of Jamuna Bank:

Jamuna Bank Limited bears a unique history of its own. Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its head Office at Chini Shilpa bhaban (2nd floor, 3rd, & 8th floor), 3 Dilkusha, C/A, Dhaka-1000. The Bank started its operation   from 3rd June, 2001.

JBL came into being as a highly capitalized new generation Bank with an Authorized Capital of Tk. 1600.00 million and Paid-up capital of Tk. 390.00 million. The authorized Capital has been enhanced to Tk. 400.00 million. As of December 2007 Paid-up capital of the bank rose to Tk. 1225.71 million and number of branches increased to 41 (Forty-one): 16 in Dhaka, 2 in Gazipur, 8 in Chittagong, 3 in Sylhet, 1 in Bogra, 2 in Naogaon, 1 in Munshiganj, 1 in Narayanganj, 1 in Rajshahi, 2 in Comilla, 1 in Noakhali, 1 in Shirajgonj, 1 in Dinajpur and 1 in Kushtia (including 9 rural and 2 Islamic Banking Branches).

JBL undertakes all types of banking services to support the development of trade and commerce in the country. JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. The bank gives special emphasis on Export, Import, Trade Finance, SME Finance, Retail Credit and Finance to Woman Entrepreneurs.

To provide clientele services in respect of International Trade it has established wide correspondent banking relationship with local and foreign banks covering major trade and financial center sat home and abroad.
Main Features of Development:

Products & Services: (Million in Taka)

Particulars2006200731st March’ 0830th June’08
Authorized Capital1600400040004000
Paid-Up Capital1073122612261226
Reserve Fund6296587731075
Total Deposit

  1. Current Deposit
  2. Fixed Deposit
17825

2397

14888

20924

3159

17765

22025

3166

18859

25000

3500

21500

Loan And Advance12797166181739721588
Investment2553539050076000
Total Assets20157264012715028500
Total Revenue275031138872350
Total Expense204922796801800
Foreign Currencies in Conducting Business

  1. Export
  2. Import
  3. Remittance
29304

11584

15458

2262

38688

13990

22192

2506

12624

3977

7882

765

26980

8750

16550

1680

Total Human Resource (In Numbers)

  1. Managers
  2. Employees
670

524

146

861

682

179

882

698

184

918

728

190

Foreign Competitive Banks (In Numbers)643715766775
Branches (In Numbers)

In Bangladesh

Outside Bangladesh

27

27

35

35

35

35

36

36

Vision of Jamuna Bank Ltd:

To become a leading Banking Institution and to play a pivotal role in the development of the country.

Mission:

The bank is committed to satisfy diverse needs of its customers through an array of products at competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work-force.

Personal Banking:

Personal Banking of Jamuna Bank offers wide-ranging products and services matching the requirement of every customer. Transactional accounts, savings schemes or loan facilities from Jamuna Bank Ltd. make available a unique mixture of easy and consummate service quality.

Every endeavor is made to ensure the clients’ satisfaction. Cooperative & friendly professionals working in the branches make the customers visit an enjoyable experience.

Deposits and Deposit Mix:

In commercial banks operation starts with mobilization of resources i.e. tapping of deposits and then the said resources are deployed as loans, advances and investments for the purpose of maximizing wealth which means deposits have dominance in commercial bank’s operations. That is why; there is common saying that deposit is the lifeblood of a bank. In keeping with this axiom JBL attaches utmost importance to the deposit mobilization campaign and to the optimal deposit mix for minimizing COF as far as practicable. A stiff competition persisted in the market as to deposit mobilization and there was a pressure on interest rate. Besides, instability in political atmosphere was adversely affecting business, which stood as a hindrance to the smooth operation of banks including deposit mobilization.

 

ACCOUNTING SYSTEM OF JAMUNA BANK LIMITED

Jamuna Bank normally maintains its accounting system in four different departments these are given below;

  1. Accounts Department
  2. Customer Service Department
  3. Credit Department
  4. Foreign Exchange Department

Accounts Department:

General expenses: General expenses are daily expenses like office stationary, printing stationary, entertainment expense, traveling expense etc. A ledger for each type of expense has to be maintained.

Direct payment of general expense: When any general expense is paid directly then the journal entry is made in that fashion;

Payment of general expense (particular head)                        Dr

Cash/Pay order/Customer account                                          Cr

Advance of direct payment: When any general expense is paid before its actual period which means in advance then the bank will pass this journal entry;

Advance payment of general expense (particular head)         Dr

Cash/Pay order/Customer account                                          Cr

Expire of certain period: if a certain period of advance payment expires then the bank will pass this journal entry;

Particular expense                                                                   Dr

Advance payment                                                                   Cr

After expiring the full period: when the period of advance payment becomes fully expired then the bank will write this journal entry;

Adjusted account/expense head                                             Dr

Cash/Pay order/Customer account                                          Cr

Provision of general expense: when the bank makes any provision for any particular expense (Provision is mainly made for monthly expenses) then it will pass this journal entry;

General expense/particular head                                             Dr

Adjusting account                                                                   Cr

 

Payment of provision/ particular period: when the bank pays the amount of provision of a particular period then it will pass this journal entry;

Adjusting account                                                                   Dr

General expense/particular head                                            Cr

After expiring of full provision period: when the bank pays the whole amount of provision which means after expiring of full provision period the bank passes this journal entry;

General expense                                                                      Dr

Cash/Pay order/customer account                                           Cr

Transfer of entry of expenditure: when the bank has to transfer the entries of expenditures or incomes to profit and loss account then it passes this journal entry;

(For expenditures)

Profit and loss account                                                           Dr

General expense/particular head                                         Cr

(For incomes)

Individual income Head                                                         Dr

Profit and loss account                                                            Cr

Deduction of tax at source: The bank deducts tax at source as per income tax ordinance 1984.

 

Deduction from other than salary: when the bank deducts tax from other account excluded salary then it will pass this journal entry;

Particular expense head                                                          Dr

Sundry deposit account (tax deducted amount)                    Cr

Cash/Pay order/Customer account                                          Cr

The bank has to open an account named sundry deposit and the accumulated amount of this account has to post under govt. revenue with the name BBK Cheque with all other revenues.

 

Deduction of tax payment: when the bank deducts the tax payment then it will pass this journal entry;

Sundry deposit                                                                        Dr

P/O Bangladesh Bank                                                              Cr

 

Deduction from salary: the bank has to make separate column in the salary sheet named tax deduction when it deducts tax from salary and passes this journal entry;

Salary                                                                                      Dr

Sundry deposit                                                                        Cr

Other deduction                                                                      Cr

Employee account                                                                   Cr

Every branch has to maintain tax deducted at source which has to be finalized in the month of June and deposited to Bangladesh Bank through head office. The bank determines TDS by using previous year assessment and passes this journal entry;

TDS                                                                                         Dr

JBLG/A pay order account/BBK                                       Cr

Advance against salary: there is a separate column for advance against salary in the salary sheet and for that this journal entry has to be passed;

Suspense account advance against salary                       Dr

Cash                                                                                        Cr

 

Reimbursement of advance salary: the bank passes this journal entry when it reimburses advance salary;

Salary                                                                                      Dr

Advance Salary                                                                       Cr

Individual stuff                                                                       Cr

 

Fixed Assets: Fixed assets can be owned by direct purchase or hire purchase.

 

Direct purchase: when the bank directly purchases an asset then it passes this journal entry;

Particular asset                                                                              Dr

Cash/Pay order/Customer account                                           Cr

 

Hire purchase: if the bank uses the option of hire purchase to own an asset then it will passes these journal entries;

(Down payment)

Advance against asset                                                                     Dr

Cash/Pay order/Customer account                                              Cr

(Amortize down payment & monthly installment)

Rent                                                                                                 Dr

Advance against asset                                                                  Cr

Cash/Pay order/Customer account                                           Cr

(Period Expired)

Concerned fixed asset                                                                     Dr

Cash/Pay order                                                                                 Cr

 

In the book of receiving branch:  All treatments are same as transferring branch only one extra journal entry has to be passed;

Fixed asset                                                                                                  Dr

JBL general account                                                                                   Cr

Treatment of Treasury Operation:

(Purchase of Treasury bill)

Treasury bill                                                                                                  Dr

BBK                                                                                                                Cr

Other receipt in advance (interest)                                                          Cr

(The affect of the interest for monthly profit and loss account)

Other receipt in advance Treasury bill                                                      Dr

Interest received on Treasury bill                                                               Cr

(Encashment of Treasury bill at maturity)

BBK account                                                                                                   Dr

Advance tax (tax amount)                                                                            Cr

Treasury bill                                                                                                    Cr

 

Treatment of Bangladesh Bank bill:  Same treatment as Treasury bill operation which has shown above.

Treatment of Call money market:

 

Borrowing from other bank: when the bank borrows from other bank than it passes these journal entries;

BBK account                                                                                                            Dr

Money at call                                                                                                            Cr

(Pay back/Call back of borrow money)

Money at call                                                                                                             Dr

Interest on money at call                                                                                        Dr

BBK account                                                                                                              Cr

 

Landing money to other bank: when the bank lends money to the bank then it passes these journal entries;

Money at call                                                                                                              Dr

BBK account                                                                                                              Cr

(Return back of lending money)

BBK account                                                                                                              Dr

Call money (principal amount)                                                                              Cr

Interest                                                                                                                        Cr

Provision for interest on borrowing/lend at call:

 

Interest payable on borrowing:

Interest paid on borrowing                                                                                            Dr

Interest payable on borrowing                                                                                       Cr

(Beginning of next month)

Interest payable on borrowing                                                                                        Dr

Interest paid on borrowing                                                                                             Cr

 

Interest receivable on lending:

Interest receivable on lending                                                                                          Dr

Interest received on lending                                                                                            Cr

(Beginning of next month)

Interest received on lending                                                                                            Dr

Interest receivable on lending                                                                                         Cr

Inter branch fund remittance through BB (TT): On requisition from the branch situated other than in Dhaka Treasury department will arrange to send cash to that branch through Bangladesh bank by T.T.

In the book of Local office/Remitting Branch the following entry will be passed:

JBL general                                                                                                               Dr

Exp                                                                                                                            Dr

Bangladesh Bank a/c                                                                                                Cr


Share Capital:

Paid up capital: When capital is paid and subscribed then the entry would be passed in the account.

(Entry for capital paid by Share Holders’ in cash)

Cash                                                                                                                            Dr

Paid – up Capital                                                                                                        Cr

Subscribed for Share Capital: Share may be subscribed for issue to the public. When shares are oversubscribed, the excess amount of subscription to be refunded to the public and in case of less subscription as per company act or board decision the less subscribed amount of shares may be undertaken by the Sponsor Director or Under- writer.

(Subscription capital received in cash)

Cash                                                                                                                            Dr

Subscription of capital                                                                                             Cr

(Subscription money transferred to paid in capital)

Subscription of Capital                                                                                            Dr

Paid-up Capital                                                                                                          Cr

Reserve and Reserve Fund:

Statutory reserve and General reserve:

Statutory reserve is created from the net profit (before tax) as calculated at the end of the each year @ 20%. After the apportionment of net profit (after tax) the balance remain would be transferred to General Reserve a/c.

(Entry for Statutory Reserve)

Net profit                   Dr

Statutory Reserve   Cr

(Entry for General Reserve)

Net profit                    Dr

General Reserve:         Cr

 

Customer Service Department:

Opening of Account:

First job of Customer service is to open account of client’ as per nature of operation and clients; requirements. There is prescribed form to apply for opening of account. By fulfilling the form the operation starts.

Cash: In cash department the following books of records are maintained:

  • Main Cash Book
  • Tellers’ Cash Book

Main cash book shows the total cash movement and the tellers’ cash book show the detail cash movements (Receive and Payments) of Tellers’. In computerized recording system a print out of “Cash Journal” to be obtained after closing of the day’s transaction. It will show a summary of Cash Transactions and detail of cash movements by Tellers.

Cash Deposit:

Cash can be deposited to the customer’s account either by deposit slip or for P.O., DD., TT, and for any other purpose:

Cash:                            Dr

Customer’s Account: Cr

Cash Withdrawal by cheque:

Customer’s account:     Dr

Cash:                 Cr

Payment of Interest on savings Deposit and Short Term Deposit (STD): As per percent rule Interest is given on Savings Deposit at 6 (Six) monthly rest @ 8.00% p.a. and on STD at 6 (six) monthly rest @ 6.00%.

(Savings Account)

Interest paid on Savings Deposit: Dr

Client’s Saving Deposit:               Cr

Fixed Deposit Account:

Fixed deposit account is opened by depositing cash or by debiting customer’s account for fixed term 1/3/6 months or 1/2/3 years at a prescribed rate of interest. Fixed deposit is called FDR.

Cash/ Customer Account: Dr

Fixed Deposit:                    Cr

Payment at maturity: At maturity FDR amount is paid to the client with interest after deducting @10% Tax on interest.

Interest paid on Fixed Deposit (Amount of interest):       Dr

Fixed Deposit (Amount of interest):                                      Cr

Fixed deposit (Amount of tax):                                              Dr

Income tax on interest:                                                           Cr

Fixed Deposit (Amount of excise duty):                              Dr

Excise duty:                                                                              Cr

Fixed Deposit (FDR + Interest – Tax – Excise duty):        Dr

Cash/ Customer a/c:                                                                Cr

Deposit of Tax/ Excise Duty deducted at Source:

Amount of Tax deducted from the interest of FDR and Excise Duty would be deposited to Bangladesh Bank through TR challan and report on that need to be submitted to the Tax Authority.

Income tax on Interest        Dr

P.O/ BBK                               Cr

Excise Duty                            Dr

P.O/ BBK                               Cr

Accrued interest on FDR:

Interest paid on FDR              Dr

Interest payable on FDR         Cr

(At the time of payment of Interest)

Interest payable on FDR         Dr

Interest paid on FDR              Dr

Particular FDR                        Cr

(FDR is matured in the middle of any month)

Interest payable on FDR         Dr (Accrued Int. of a FDR)

Interest paid on FDR              Dr (Int. for the fraction period)

Particular FDR                        Cr (Accrued amount + rest period’s amnt.)

Internal Transfer:

On request of the customer bank may transfer the fund from one account to another account. This transfer could be made by the written request or by issuing cheque in favor of the beneficiary account. The journal entry will be like this;

Customer’s a/c            Dr

Beneficiary a/c            Cr

Prize Bond:

Prize Bond is purchased from Bangladesh Bank and Bank sells it to the public on cash. Entry will be like this;

Prize Bond                  Dr

BBK a/c                      Cr

(Entry on sale to the public)

Cash/Customer’s a/c   Dr

Prize Bond a/c Cr

(Entry to be passed to offset the stock certificate)

Govt.’s Savings Certificate                             Dr

Stock of Govt.’s Savings Certificates            Cr

(Entry for encashment)

Payment against PSP/BSP a/c                                    Dr

Cash/Pay order/Customer’s a/c                       Cr

(When Bangladesh Bank credit the proceeds in the a/c)

BBK a/c                                              Dr

Payment against PSP/BSP a/c                        Cr

(For receiving commission from BBK)

BBK a/c                                                          Dr

Commission on sale of Govt. Security           Cr

Clearing House Operation: When cheques are received on account of Customers’ a/c. for collection. On the next day all cheques are placed before the clearing house of Bangladesh bank. This is called Out-ward Clearing. Same day in the clearing house the Clearing Man receive the cheques drawn by the other bank. That is called In-ward Clearing

(Receiving the clearing cheques)

Cheques in hand for collection                       Dr

Cheques in hand to be realized                       Cr

(After finalization of the clearing cheques)

Cheques in hand to be realized                       Dr

Cheques in hand for collection                       Cr

Cheques in hand to be collected                     Dr

Cheques in hand for clearing                          Cr

Exchange for Clearing Cheques                     Dr

Customer’s Individual a/c                               Cr

After 1st clearing the following entries are passed:

(Entry for Out-Ward and In-Ward clearing Cheques in the book of collecting branch)

Bangladesh Bank a/c                                      Dr

Exchange for Clearing a/c                               Dr

JBL general a/c                                               Cr

Exchange for Clearing Cheques                     Cr

After 2nd clearing the following entries are passed:

Clients’ a/c                                          Dr

JBL general a/c                                   Dr

Exchange for clearing cheques           Cr

(Dishonored Out-ward clearing cheque)

JBL general a/c                                   Dr

Clients’ a/c                                          Dr

Bangladesh Bank a/c                          Cr

(Dishonored In-ward clearing cheque)

Bangladesh Bank a/c                          Dr

Exchange for clearing                         Cr

(In the book of branch)

JBL general a/c                                   Dr

Exchange for Clearing Cheques         Cr

(Entry for In-Ward cheques of branch)

Clients’ a/c                              Dr

JBL general a/c                       Cr

(Entry for dishonored cheques in the book of branch)

Clients’ a/c                              Dr

JBL general a/c                       Cr

Collection of Local Bill/Cheque:

Two items are used for collection of local bills. They are given as follows;

OBC (Outward Bills for Collection): When one branch sends the cheques to another branch for collection of the proceeds that is called OBC. Contra entry to be passed on sending the cheques for collection:

Customer’s Liability OBC a/c                        Dr

Banker’s Liability OBC a/c                            Cr

(Entry on getting payment from collecting branch)

Banker’s liability OBC a/c                  Dr

Customer’s Liability OBC a/c            Cr

(Entry for payment after collection)

JBL General a/c or BBK a/c                           Dr

Customer’s a/c                                                Cr

Postage a/c                                                      Cr

Commission a/c                                               Cr

IBC (Inward Bills for Collection): The OBC of presenting bank which are received in the hand of collecting branch for collection are known as IBC. A contra entry is passed for recording the IBC from the presenting bank:

Customer’s Liability Inward Bills for collection                    Dr

Banker’s Liability Inward Bills for Collection                       Cr

(Reversal of contra entry)

Banker’s Liability Inward Bills for Collection                       Dr

Customer’s Liability Inward Bills for collection                    Cr

(Entry of payment)

Customer’s a/c                                    Dr

JBL general a/c                                   Cr

Commission a/c                                   Cr

Postage chg a/c                                   Cr

Local Remittance:

Sale of Pay Order (P.O) & Demand Draft (D.D):

Cash account/ Customer’s account                 Dr

Pay Order                                                        Cr

Commission                                                    Cr

 

Payment of Pay Order:

(Payment through BBK. Clearing)

Pay Order                                Dr

Bangladesh Bank a/c              Cr

Encashment/Cancellation of P.O.:

Pay Order                                Dr

Cash/ Customer’s a/c              Cr

Commission a/c                       Cr

 

Payment of P.O. through branch:

(In the book of payee branch)

JBL General a/c                      Dr

Customer’s a/c                        Cr

(In the issuing branch)

Pay Order                                Dr

JBL general a/c                       Cr

Demand Draft: Demand Draft is issued by one branch and paid by another branch on which it is drawn on.

Cash/ Customer a/c                 Dr

JBL general a/c                       Cr

Commission                            Cr

Postage                                    Cr

(Entry on drawing branch)

JBL general a/c                       Dr

DD payable                             Cr

Payment of Demand Draft:

(When DD is presented through BBK Clearing House)

D.D. Payable                           Dr

Cash/Customer’s a/c               Cr

(When DD is presented before IBCA receipt)

Paid without Advice                           Dr

Bangladesh Bank Clearing House      Cr

Telegraphic/Telex Transfer (T.T): TT is telegraphic order by a branch to pay certain to a particular account on another branch

(Entry in the book of issuing branch)

Cash/ Customer’s a/c                          Dr

JBL general a/c                                   Cr

Commission                                        Cr

Telex Charges                                     Cr

 

Payment of TT:

JBL general a/c                       Dr

Customer’s a/c / P.O               Cr

Commission                            Cr

Mail Transfer (M.T.): Mail transfer means transfer of fund through mail from one branch to another branch.

(Issuing mail transfer)

Cash/ Customer’s a/c              Dr

JBL general a/c                       Cr

Commission                            Cr

M.T Chg                                  Cr

(Payment of M.T.)

JBL general a/c                       Dr

Cash/ Customer’s a/c            Cr

 

Credit Department:

Credit department deals with the lending of the bank. There are the following broad head of loan and advances in a bank.

  • Loan
  • Overdraft
  • Cash Credit

Loan: Loan can be sanctioned to a customer in a lump sum amount. Repayment of loan may be fixed in installment or in a lump sum amount within the expiry period with interest. There will be Auxiliary ledgers of each head of Loan and Customer wise Subsidiary ledger for each category of loan. There will be three types of loan short term, middle term and long term.

(For sanctioning loan)

Loan a/c of concerned customer                     Dr

Customer’s current a/c / savings a/c             Cr

(For realization of charges)

Cash/ Customer’s current/ savings a/c          Dr

Misc. Earnings                                                     Cr

Payment of loan:

Cash/ Customer’s current/ savings a/c         Dr

Customer’s loan                                              Cr

Interest on loan                                               Cr

Overdraft (OD): Overdraft is sanctioned to the customer in their OD account with a drawing limit up to certain amount. Journal entry will be like this;

Overdraft                                Dr

Interest on OD                       Cr

Cash Credit: Banks very often make advances against Hypothecation/Pledge of Goods, Products and Merchandise. These advances are known as cash credit.

(Disbursement of cash credit)

Customer’s cash credit            Dr

Cash/ Pay Order                      Cr

Adjustment of Cash Credit: As and when the customer gets the fund in hand, he may deposit the amount in his CC account.

(Adjustment of cash credit amount with interest)

Cash                                        Dr

Customer’s Cash Credit          Cr

Interest on Cash Credit           Cr

Provision for Interest on Loan, OD, Advances:

Interest Receivable on Loan and Advances               Dr

Interest on loan                                                           Cr

Security Documents Held as Security of Loan and Advances:

Incontestable Security held                                        Dr

Incontestable Security held for Customer                  Cr

 

Export:

Export L.C.: After receiving the export L.C. it will be notified to the concerned client and to be recorded in a register. Then the client starts the process for exporting the goods. After shipment of the goods, client presents the documents to the bank for collection. After sowing if the documents are found complied the sight documents once paid by negotiation and in case of discrepancy the document are sent with the correspondent bank for collection.

(Recovery of advising commission in the branch’s book)

Client’s a/c                              Dr

Commission a/c                       Cr

Postage a/c                              Cr

Receiving funds from correspondent/ collecting bank:

(In the book of Head Office)

NOSTRO a/c (USD)               Dr

JBL general a/c (USD)            Cr

(In the book of branch)

JBL general a/c (USD)                        Dr

Client’s STD a/c (USD)                      Cr

FC Position a/c (USD)                        Cr

Exchange Transaction a/c                   Dr

Client’s a/c                                          Cr

Collection charges a/c                         Cr

Other related charges a/c                    Cr

Negotiation of Export Documents:

(In the book of branch)

(Negotiation of Sight Bill)

Sight Out-ward Bills Negotiated (USD) a/c              Dr

F.C. Position (USD) a/c                                              Cr

Exchange Transaction (Taka) a/c                                Dr

Client’s a/c                                                                  Cr

Commission                                                                Cr

Other Charges                                                             Cr

(Negotiation of Usance Bill)

Usance Out-ward Bills Negotiated (USD) a/c           Dr

F.C. Position (USD) a/c                                              Cr

Exchange Transaction (Taka) a/c                                Dr

Client’s a/c                                                                  Cr

Commission                                                                Cr

Other Charges                                                             Cr

(In the book of Head office)

Correspondent a/c (USD)                               Dr

JBL general a/c (USD)                                    Cr


Foreign Remittance:

It covers the transaction relating to foreign exchange Out-ward/ In-ward Telegraphic Transfer (FTT), Draft (FDD), Cheques (Bank’s and individual’s) and Travelers’ cheque (T.C).

Issuance FDD:

Cash                                        Dr

Exchange Transaction Cr

Foreign Currency (USD)        Dr

FDD payable (USD)   Cr

Cash                                        Dr

Commission on FDD  Cr

Payment of FDD:

(In the book of branch)

FDD payable (USD)               Dr

JBL general (USD)                 Cr

(In the book of Head Office)

JBL general a/c (USD)            Dr

Nostro a/c (USD)                    Cr

Issuance of Foreign TT

(In the book of branch)

Cash/ Customer a/c (Taka)                  Dr

Exchange Transaction (Taka)              Cr

Foreign Currency (USD)                    Dr

JBL general (USD)                             Cr

Cash/ Customer a/c                             Dr

Commission on FTT                            Cr

Telex charges                                      Cr

Payment of FTT

(In the book of Head Office)

JBL general (USD) a/c                        Dr

Nostro (USD)                                     Cr

 

REPORTING PRACTICES OF JAMUNA BANK LIMITED

Jamuna Bank reports its Financial Statement according to Bangladesh Accounting Standard (BAS) 1 “Presentation of Financial Statements”. Where it includes;

  • a statement of financial position at the end of the period,
  • a statement of comprehensive income for the period,
  • a statement of changes in equity for the period
  • statement of cash flows for the period, and
  • Notes, comprising a summary of accounting policies and other explanatory notes.

Basis of preparation of the Financial Statements:

Conventional Banking:

The bank prepares its financial statements on a going concern basis under historical cost convention and in accordance with First Schedule (Sec- 38) of Bank companies Act, 1991 as amended by Bangladesh Bank circulars, International Financial Reporting Standards adopted as Bangladesh Accounting Standard (BAS), the Company Act, 1994, the Listing Rules of the Stock Exchange, the Securities and Exchange Rule 1987 and other laws and regulations applicable in Bangladesh.

Islamic Banking:

The bank operates Islamic Banking in 2 (two) branches designated for the purpose fin complying with the rules of Islamic Shariah. The financial statements of the branches have also been prepared as per Bank Companies Act, 1991, Bangladesh Accounting Standard (BAS), Financial Accounting Standard issued by the Accountancy & Auditing organization for Islamic Financial Institutions for which a separate set of books and records are being maintained. Separate statements of accounts of consolidated accounts of 2 (two) Islamic Banking branches are enclosed herewith. Jamuna Bank also reports another two statements with those five statements mentioned above. These statements are called Value added statement & EVA statement;

Value added statement: This statement represents the value that the bank adds by its banking services and none banking services and how it distributes its added value.

EVA statement: This statement represents the amount of economic value that the bank is added for the particular year.

 

Findings of the study:

  1. The first Problem is related to increasing market competition. JBL has been facing some problems with some well-set banks.
  2. Lack of experience personnel, create some problem in case of offering better service to the customers and clients.
  3. High cost of setting the latest technology based services is an obstacle to its rapid expansion.
  4. In case of Online banking, low speed of network is a problem and it consumes valuable time of the busy customers.
  5. JBL uses Flora Bank (Online Banking Software), which is not comprehensive software for modern banking.

 

Recommendations to overcome the problems:

The following suggestion may put may be put forward for the improvement of the accounting and reporting practices of Jamuna Bank Limited.

  1. For better asset management timely monitoring and proper appraisal of loans and advances should be done.
  2. To reduce non-matching of inter branch transactions a computerized reconciliation department should be maintained
  3. Modern and efficient information technology department should be maintained for smooth running and recording of bank transactions.
  4. Manpower should be trained and they should be placed in the proper place to run the bank efficiently
  5. Emphasis should be given to recovery or realization of the loans and advances within stipulated time.

 

Conclusion:

Jamuna bank limited is one of the oldest banks in Bangladesh. Jamuna bank limited is a very well reputed bank in the banking business area. It is a private bank and at the same time it is a commercial bank in Bangladesh. The bank has maintained most of the BAS while preparing its accounting report. The bank has divided its accounting system into four departments as mentioned above. At first the bas prepares journal of all transaction then it prepares daily affaires of daily transaction from that daily affaires it prepares its accounting report according to BRPD Circular No: 03. It participates in the money market activity. It also participates in the non- security segment. The financial performance of the bank is quite good. Although the bank has some problems it can be a very successful bank in Bangladesh.