Foreign Exchange Practices of Southeast Bank Limited - Assignment Point
Foreign Exchange Practices of Southeast Bank Limited

The main objective of this report is to obtain a clear idea about the Foreign Exchange Business of Southeast Bank Limited also examine how the L/C is opened and how the Export and Import operation is done. This report evaluate the performance of the Southeast Bank Limited (Gulshan Branch) Export and Import Business. Here also discuss on Risk Management and way to Islami Banking. Finally draw SWOT analysis and suggest recommendation on basis problems.

 

Objectives of The Report:

The main objective of the study is to obtain a clear idea and reveal the true picture about the Foreign Exchange Business of SEBL. i.e To examine how the L/e is opened and how the Export & Import operation is done. Here broadly evaluate the performance of the Southeast Bank Limited (Gulshan Branch) Export and Import Business.

 

Brief Overview on Southeast Bank Limited:

Southeast Bank Limited is a second generation bank that was established in 1995 with a dream and vision to become a pioneer banking institution of the country and contribute significantly to the  growth of the national economy. The Bank’s journey began when it was incorporated as a public Limited Company on March 12.1995. The Registrar of Joint Stock Company and Firms issued the certificate of commencement of Business of the Bank on the same date. The Bank received its Banking License from Bangladesh Bank on March 23,1995. The Bank’s first branch was opened by late M. Saifur Rahman, the Honorable Finance Minister of the Government of the People’s Republic of Bangladesh as the chief Gust at the busiest commercial hub of the country at 1, Dilkusha Commercial Area. Dhaka on May 25.1995.

Presently Southeast Bank Limited is one of the country’s leading banks in the private sector contributing significantly the country’s economy. The Bank has 56 branches in operation. The Authorized capital of the Bank today is Tk. 10,000 Million, Its paid up capital and Reserve reached Tk. 9,927.16 Million as on December 31, 2009. The Bank had 1402 staff of whom 113 were Executives, 1141 were officers and 148 were other staff as on December 31.200.

The Southeast Bank Limited was established by leading business personalities and eminent industrialists of the country with stakes in various segments of the national economy. They established the Bank with a vision to bring efficient and professional banking service to the people and business community of Bangladesh to help the national economy to grow.

The Southeast Bank Limited has become a synonym of quality services and products. Is has a diverse array of products and services tailored carefully to cater to needs of the customers. In the growth graph, it has generated profit of Tk. 1870.19 Million after provision and income tax in the year 2009. The curve keeps ………. upward everyday making it one of the leading and most successful banking institution in Bangladesh with a total asset of Tk. 112,676.88 million as on December 31, 2009.

 

Main Operational Area:

As a commercial bank, Southeast Bank Limited does all traditional banking business including the wide range of saving and credit scheme products, retail banking and ancillary services with the support of modern technology and professional excellence. The bank has launched a number of financial products and services since its inception. Among them different types of monthly saving schemes have achieved wide acceptance among the people.

Bank Product’s and Services:

General Banking is designed to provide financial service to the general people in saving their money. Smoothing transactions for businessman and ensure security of the precious wealth of the clientele. Under bank products and services the Southeast Bank Limited to provides offers varies kind of accounts, issued demand draft, telegraph transfer, pay order etc. Since bank is confirmed to provide the services everyday general banking is also known as “Retail Banking”

Deposit Schemes: 

Bank has the following customer friendly deposit schemes:

  • Current Deposit Scheme (CD)
  • Saving Deposit Scheme (SB)
  • Short Notice Deposit Scheme (SND)
  • Monthly Saving Scheme (MSS)
  • Monthly Income Scheme (MIS)
  • Pension Saving Scheme (PSS)
  • Double Benefit Deposit Scheme (SBDS)
  • Millionaire Deposit Scheme (MDS)
  • Fixed Deposit (1,2,3,4,6 & 12 Month )

Accounts and general service division maintains the internal expenditure and internal audit of the branch. Here internal expenditure means the regular office maintenance and entertainment cost of the branch. More over internal audit means sorting, cross cheeking and summarizing of all documents of the bills, Vouchers, Cheeques and deposits for internal audit (Gulshan Branch). After that all documents are preserved in the branch for two year for any future reference.

Loans And Advances:

Credit is the confidence of the lender in the ability and willingness to the borrower to repay the loan at a future date. If is generally believed that confidence is the basis of all credit transaction. The fundamental principals, upon which credit is generally based on, are character, Capacity, Capital, Responsibility, Reliability and resources of borrower. Leading is a function that is crucial to the banker because of the associate risk and profit potential. Quality of lending depends on safety, liquidity, yield, diversity, productivity, purpose national and social interest, management ability borrower analysis and business analysis

Loan Schemes:

  • Time loan (5, 3 year)
  • Term loan (60 Installments)
  • Hypothecation (against fixed asset)
  • Secured Overdraft (against FDR)
  • Scheme (against DPS)
  • Consumer Credit Scheme (CCS)

In case of Foreign exchange  loan are:

  • Packing credit
  • In land Bill Purchase (IBP)
  • Foreign Bill Purchase (FBP
  • Trust Receipt (TR)

 

Foreign Exchange:

Foreign Exchange means exchange of foreign currency between tow countries Foreign Exchange deals with foreign financial transactions. There are three types of Foreign Exchange transaction

  • Import
  • Export
  • Foreign Remittance

The main topic of my internship report is “Foreign Exchange Practice of Southeast Bank Limited” (A case study on Gulshan Branch). I will discuss about the topic in the later chapter.

CAMELS Rating:

The acronym CAMEL refers to the five components of a banks conditions that are capital adequacy, Asset quality, Management Earning and Liquidity.

A six components a banks sensitivity to market risk was added in 1997. hence the acronym changed to CAMELS.

The CAMELS rating is a rating of the banks overall condition used to classing the nations fewer than 800 banks. This rating is based on financial statements of the bank.

Components:

The components of a bank conditions that are assessed:

  • C For Capital Adequacy.
  • A For Asset quality.
  • M For Management.
  • E For Earning.
  • L For Liquidity.
  • S For Sensitivity To Market Risk.

Capital Adequacy:

Southeast Bank Limited is a fast growing Bank It believes in gradual enhancement of share holder weather. Obviously, maintaining adequate amount of capital in rotation to its exposure to risk is a capital management.

The Authorized Capital of the Bank was T. 10,000.00 million and paid up capital was Tk. 3422.64 million as of December 31, 2009. The Capital of the Banks in 2009 stood at 9,9276.16 million compared to TK 7,657.01 million of the previous year showing on increase of 29.65 percent.

Capital Adequacy Ration:

The Southeast Bank Limited maintained a capital adequacy ration of 11.72 percent of the risk weighted assets as on December 31.2009 against the requirement of 10 percent as set by Bangladesh Bank.

Asset Quality

This parameter is very helpful in measuring the magnitude to credit risk prevailing in the bank due to its composition and quality of load advances investments and off balance sheet activities.

As on 31 December 2009, the total assets of the bank stood at Tk 112,676.98 million The break up of the total assets are given bellow.

ParticularTaka in Million
a. Cash and Cash Equivalent7332.42
b. Investment21,350.23
c. Loan and advances77,497.57
d. Fixed Asset4,338.34
e. Other Asset2158.43
Total112676.93

Sources: Annual report 2009.

Management:

Management in the banking industry is a key issue linked to financial system stability. In a modern financial institution, risk management is a complex and constantly evolving task with focus on three critical elements. such as: risk identification, strategies to mitigate and the development of a formal risk management frame work.

The activities of Southeast bank Ltd. involves analysis, evaluation and management of different degree of risk management.

Earning:

This represents earnings for the year attributable to ordinary shareholder. That are

  • Return of assets compared to peer group averages and bank’s own trends.
  • Adequacy of provision for loan losses.
  • Quality of earnings.
  • Dividend pay out ration in relation to the adequacy of bank capital.

Liquidity:

Liquidity is basically defined as the ability to fund assets and meet obligations as they come due. Bank must have the ability to meet expected and unexpected cash demands from their customers and potential customer, to function profitably and maintain confidence in the banking system. As a result liquidity was easily measurable and entirely contained within the Balance Sheet of the bank.

Sensitivity To Market Risk:

This is a recent additions to the rating parameters and it reflects the degree to which in interest rate, exchange rate commodity prices and equity can affect earning and hence the bank’s capital.

Sensitivity of the financial institutions net earning on the economic value of its capital to changes in interest rates under various scenarios and stress environment.

CAMELS Rating of SEBL:

The CAMELS Rating of different commercial banks in 2008 were done recently by the regulatory authority. The serial is modem banks first than foreign bank.

Bangladesh Bank has divided five class of performance bank. Such as A-Class bank, B-Class bank. C-Class bank, D-Class bank. E-Class bank.

CAMELS Rating of the SEBL is the B-Class bank.

So CAMELS Rating as a summery measuary of the private supervisory information gathered during on-site bank exams, do contain information useful to the publice monitoring of commercial Bank

 

Foreign trade

Introduction:

Foreign trade can be easily defined as a business activity, which transudes national boundaries. These may be between parties or government ones. Trades among nations are a common occurrence and normally benefit both the Exporter and Importer.

Foreign trade can usually be justified on the principle of comparative advantage. According to this economic principle it is economical profitable for a country to specialize in the production of that commodity in which the producer country has the greater comparative advantage ant to allow the other country to produce that commodity in which it has the lesser comparative advantage. It includes the spectrum of goods, services, investment, technology transfer etc.

This trade among various countries causes for close linkage between the parties dealing in trade. The bank, which provides such transactions, is referred to as rendering international banking operations/ International trade demands a flow of goods from seller to buyer and of payment from to seller. And this flow of goods and payments are done through letter of credit (L/C.)

Foreign Exchange: 

As more than me currency is involved in foreign trade it gives rise to exchange of currencies which is known as foreign exchange. The term: Foreign Exchange” has three principal meanings. Firstly, it is a term used referring to the currencies of the other countries in terms of any single currency. To a Bangladeshi, Dollar, Pound Sterling etc, are foreign exchange. Secondly, the term also commonly refer to some interments used in international trade Such as bill of exchange, Drafts, Travel Cheque and other means of international remittance. Thirdly, the terms foreign exchange is also quite often referred to the balance in foreign currencies held by a country.

In exercise of the power conferred by section 3rd of the foreign exchange regulation, 1947. Bangladesh Bank issues license to schedule bank to deal with exchange. These banks are known as Authorized Dealers. Licenses are also issued by Bangladesh Bank to person or firms to exchange foreign currency instruments such as TC currency notes and coins. They are known as Authorized money changers.

Functions of Foreign Exchange Department

Export:

  • Pre-Shipment Advances.
  • Purchase of foreign bills.
  • Negotiating of foreign bills.
  • Advising/Confirming letters-Letters of credit.
  • Advance for deferred payments exports.
  • Advance Against bills for collection.

Import:

  • Opening of letter of credit (L/C).
  • Advance Import through LCAF.
  • Import Loan.

Remittances:

  • Issue of Demand Draft (DD), TT etc.
  • Payment of DD, Telegraphic Transfer (TT).
  • Issue and enhancement of traveler’s cheque.
  • Sale and enhancement of foreign currency notes.

The Most Commonly Used Document in Foreign Exchange:

  • Documentary/Letter of Credit.
  • Bill of Leading
  • Commercial Invoice.
  • Certificate of Origin of Goods Inspection Certificate.
  • Inspection Certificate
  • Packing List.
  • Insurance Policy.
  • Pro-forma Invoice/Indent.

Documentary Letter Of  Credit:

In Simple terms a documentary credit is a conditional bank undertaking a payment. Expressed more fully, it is a written undertaking by a bank (issuing bank) gives to seller (beneficiary) at the request and in accordance with the instruction of the buyer (applicant) to effect payment (that is by making a payment or accepting or negotiating bill of exchange) up to a staled sum of money, with in a prescribed time limit against stipulated documents. The customary clauses contain in L/C are the following:

  • A clause authorizing the beneficiary to draw bills of exchange up to certain on the opener.
  • List of shipping documents, which are to accompany the bills.
  • description of the goods to be shipped.
  • An undertaking by the opening bank that bills drawn in accordance with the conditions will be dully honored.
  • Instructs to the negotiating banks for obtaining reimbursement of payments under the credit.

Parties To A Letter of Credit (L/C):

  • Importer/Buyer: Importer/buyer is the person who request/instructs the opening bank to open a L/C. He is also called opener or applicant of the credit.
  • Opening/Issuing Bank: It is the bank which opens/issues a L/C on behalf of the importer. It is also called Importers/buyers bank.
  • Exporter/Seller/Beneficiary:It is the party in whose favor the L/C is established.
  • Confirming Bank: It is the bank which adds its confirming to the credit and it is done at request of issuing bank Confirming bank may or may not be the advising bank.
  • Advising/Notifying Bank: It is the bank through which the L/C is advised to the exporters. This bank is actually situated in exporter’s country. It may also assume the role of confirming and or negotiating bank depending upon the condition of the credit.
  • Negotiating Bank: It is the bank that negotiates the bills and pays the amount of the beneficiary. It has to carefully scrutinize the documentary credit before negotiation in order to see whether the documents apparently are in order or not. The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank.
  • Paying/Accepting Bank: It is the bank on which the bill will be drawn (as per condition of the credit). It is nominated in the credit to make payments against stipulated documents complying with the terms of the credit. If may or may not be the issuing bank.

Bill of Lading:

A bill of lading is a document that is usually stipulated in a credit when the goods are dispatched by sea. It is evidence of a contract of carriage is a  receipt for the goods and is a document of title to the goods. It also constituted a document that is, or may be needed to support an insurance claim.

The details on the bill of lading should include:   

  • A description of the goods in general terms not inconsistent with in the credit
  • Identify marks and numbers if any.
  • The name of the carrying vessel.
  • Evidence that the goods have been loaded on board.
  • The parts of Shipment and discharge.
  • The names of shipper consignee and name and address of the notifying party.
  • Whether fright has been paid or is payable at destination.
  • The number of original bills of leading issued .
  • The date of issuance.

A bilk of leading specifically status that goods are loaded for ultimate destination specifically mentioned in the credit.

Commercial Invoice:

A commercial document is the accounting document by which the sellers change the goods to the buyer. Its main purpose is to check whether the appropriate goods have been shipped and their unit price total value, marking on the packages etc are consistent with those given in other documents. A commercial invoice normally includes the following information:

  • Date
  • Name and address of the buyer and seller.
  • Weight of the goods, number of the package, shipping makrs and numbers.
  • Complete reference of the letter of credit number, the relevant import license number.
  • Terms of delivery and payment.
  • Shipment details.

 

Certificate of Origin:

A certificate of origin is a signed statement providing evidence of the origin of the goods and it  is required in compliance with exchange control/regulation in the importing country. It is issued by chamber of commerce. Trade Associations or any other authority authorized by the government to issue the certificate.

Inspection Certificate:

This is a certificate declaring that the goods have been examined and found to be in accordance with the contract of sale. This is signed by the manufacturer or supplier, but the contract of sale may require it is to be issued by a recognized independent inspection body. It is also called survey report.

Packing List:

The Exporter must prepare a packing list showing, item by item, the contains of them containers or cases to enable the importer of the goods check the shipment, If should give description of the goods, net weight and grows weight, specific packages and thus may facilitate assessment by the customs.

Insurance Certificate:

  • The Insurance Certificate documents must
  • Be that specified n the credit
  • Cover the risks specified in the credit.
  • Be consistent with the other documents in its identification of the voyage and description of the goods.
  • Unless otherwise specified in the credit.
  • Be a document issued and/or signed by an insurance company or its agent, or by underwriters.
  • Be dated on or before the date of the date shipment as evidenced by the shipping documents.
  • Be for an amount at least equal to the CIF value of the goods and in the currency of credit.

Pro-Forma Invoice/Indent: 

Pro-Forma Invoice is a memorandum of the term of contract of sale wherein the seller gives the quotation to a potential buyer. If the buyer approves its terms he sends definite order for supply.

 

Export Practices of SEBL: 

Practically by the term Export we mean out carrying of anything from one country to another. As banker we define export as sending of visible things outside the country for sale. Export trade plays a vital role in the development process of an economy with the caring we meet out import bills.

Although export trades is always encouraged, any body cannot export anything to any place. Line importer the exporters are also required to get them registered before entering into export trade Export Registration certificate (ERC) given by CCI & E is required for this purpose. The required documents to obtain ERC are also same as Import Registration Certificate (IRC). When a bank (authorized dealer) receives a L/C (Cable or original) it ascertains the correctness of the lest number and the authorized signature. Then the bank sends the original copy of the L/C to the beneficiary.

The export presents the relative documents to the negotiating bank  after the shipment of the goods. The L/C issuing bank undertakes to honor is obligation only if the beneficiary fulfills the conditions stipulated time. Even a slide deviation of the documents from these specified in the L/C may give an excuse to the negotiating bank. So the negotiating bank must be careful, promote, systematic and bias-free while scrutinizing the tender document after careful and thorough examination of the document, the banker has to list out the discrepancies.

Export Procedure:

The export and import trade in our country are regulated by imports and exports (control) Act 1950, Under the export policy of Bangladesh the exporter has to get the valid export Registration certificate (ERC) from Cheif controller of Import & Export (CCI&E). The ERC of required to renew every year. The ERC number is to be incorporated on EXP Forms and other papers connected with exports.

Registration of Exporters: 

For Obtaining ERC indenting Bangladeshi exporters are ruired to apply to the controller of import & export in the Prescribed form along with the following documents:

  • Nationality and assets certificate.
  • Memorandum and articles of Association and certificate of Incorporation in care of limited Company.
  • Bank certificate.
  • Income tax certificate.
  • Trade License etc .

Securing The Order:  

After getting the ERC (Export Registration Certificate) the exporter may proceed to secure the export order. He/She can do this by containing the buyers directly or through agent. In this purpose exporter can get help from:

  • Liaison Office.
  • Buyer’s Local Agent .
  • Export Promotion Organizations.
  • Bangladesh mission & Abroad.
  • Chamber of Commerce (local & Foreign).
  • Trade fair etc.

Signing The Contract:

After communicating with the buyer exporter has to get contracted (writing or oral) for exporting exportable items from Bangladesh detailing insurance and marks, inspection, arbitration etc.

Receiving the Letter of Credit

After getting contract for sale, exporter should ask the buyer for litter of credit clearly stating terms and conditions of export and payment. The following are the main points to be looked into for receiving/collecting export proceeds by means of documentary credit:

  • The terms of the L/C are in conformity with those of the contract.
  • The L/C is an irrevocable one preferable by the advising bank.
  • The L/C allows sufficient time for shipment and negotiation.

Terms and conditions should be stated in contract clearly in case of other modes of payment.:

  • Cash in advance.
  • Open Account.
  • Collection basis (documentary/etc.

Procuring The Materials:

After making the deal and on 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 materials/merchandise.

Shipment of Goods:

Then the exporter should take the preparation for export arrange for delivery of goods as per L/C and INCO-terms, prepare and submit shipping documents for payment/Acceptance/Negotiation in due time. Documents for shipment are:

  • EXP Form.
  • ERC (Valid).
  • L/C Copy.
  • Customer Duty Certificate.
  • Shipping Instructions.
  • Transport document.
  • Insurance Documents.
  • Other Documents.
  • Bill of Exchange (if required).
  • Certificate of Origin.
  • Inspection Certificate.

Final Steep:

After those, exporter submits all these documents along with a letter of Indemnity to Southeast Bank Limited (Gulshan Branch)  for negotiation. An officer scrutinizes all the documents. If the documents are clean, Southeast Bank Limited (Gulshan Branch) purchased the documents on the banker-customer relationship. This is known as Foreign Documentary Bill purchases (FDBP).

Discrepancies:

The negotiating bank much be careful promote and bias free will scrutinizing the lender documents. After careful and thorough examination of the documents the banker has to list out the discrepancies.

The Following types of Discrepancies may be noted while the negotiating Bank Examines the Documents:

  • L/C Expired.
  • Late shipment.
  • Amount drawn in excess of the L/C.
  • Bill of exchange not properly drawn.
  • Description of goods differ.
  • Bill of lading or Airway Bill state.
  • Bill of lading closed.
  • Insurance cover note as per terms L/C.
  • Insurance Cover obtained after the Bill of lading or Airway Bill date.
  • Enough number of copies not submitted as required by L/C/
  • Negotiation under L/C restricted.
  • Packing list and certificate of analysis not as per the L/C.
  • Document not properly endorsed in favor the Bank.
  • Full shipment not effective and part shipment prohibited.
  • Gross weight and net weight shown in different documents differ.
  • Same of the documents required by L/C not submitted and.
  • Document inadequately stamped.

Documents with major discrepancies, which could not be negotiated, should be sent on collection basis with the permission of the exporter.

Procedure For Foreign Documentary Bills for Purchase (FDBP):

After Purchasing the documents SEBL (Gulshan Branch) gives the following entries

  1. FDBP A/C——————————————Dr.

Customer A/C ——————————— Cr.

(Before realization of proceeds)

2. Head office A/C———————————–Dr

FDBP A/C——————————————Cr

(Adjustment after realization of proceeds)

A FDBP Registered is maintained for recording all the particulars.

Foreign Documentary Bills for Collection:

Southeast Bank Limited (Gulshan Branch) forwards the documents for collection due to the following reasons:

  • If the documents have discrepancies.
  • If the exporter is new client.
  • It the bankers is in doubt.
  • Foreign Documentary Bills of collection Signifies that the exporter will receive payment only when the issuing bank gives payment.

 

Export Bill Serutinty sheet:

Bank Scrutinizes the export bill on they following points:

General:

  • Late shipment
  • Late Presentation.
  • L/C Expired.
  • L/C Over drawn.
  • Partial shipment or Tran’s Shipment beyond L/C terms.

Bill of Exchange:

  • Amount of bill differs with invoice.
  • Not drawn on L/C issuing bank.
  • Not Signed.
  • Tenor or B/E not identical with L/C.
  • Full —— not submitted.
  • Not issued by the beneficiary.
  • Not issued by the beneficiary.
  • Not made out 1 name of the applicant.
  • Description, price, quantity sales terms of the goods not correspond to the credit.
  • Not marked one fold as original.
  • Shipping marks different will B/A & Packing list.

Packing List:

  • Grossweight, net weight & measurement number of cartoons/packages differ with bill of lading (B/L).
  • Not marked me fold as original.
  • Not signed by the beneficiary.
  • Shipping marks differs with B/L.

Bill of Lading:

  • Full set of bill not submitted.
  • Bill of lading is not drawn or endorsed.
  • “Bill of lading (B/L) Shipping on Board”, “Freight Prepaid” or “Freight collect” etc. notations are not marks on the B/L.
  • B/L not indicate the name and capacity of the party i,e, carrier or master on whose behalf the agent is signing the B/L.
  • Shipped on board notation not showing name of pre-carriage. vessel/intended vessel.
  • Shipped on Board nation not showing part of loading and vessel name (Incase B/L indicates a place of receipt or taking in charge different from the port of loading).
  • Sort form B/L.
  • Charter Party B/L.

Others:

  • Non-negotiable documents not forwarded to buyers or forwarded beyond L/C terms.
  • Inadequate number of Invoice, Packing List & others submitted.

Settlement of Local Bill:

The settlement of Local Bill is done in the following ways:

The customer submits the L/C to Southeast Bank Limited (Gulshan Branch) along with the documents to negotiate.

Southeast Bank Limited (Gulshan Branch) official scrutinize the documents to ensure the conformity with the terms and conditions.

  • The documents are then forwarded.
  • The L/C issuing bank gives the acceptance and forwards on acceptance letter.
  • Payment is given the customers on either by collection basis or by purchasing the documents.

 

Accounting Treatment of or Purchase of Local Bill:

Local Bill Purchase Documentary————-Dr

Party A/C —————————————-Cr.

Commission————————————–Cr.

Interest——————————————–Cr.

A LBPD (Local Bill Purchase Documentary) register is maintained to record the acceptance of the issuing Bank until the acceptance is obtained; the record is kept in collection register.

Modes of Payment of Export bills under L/C:

The Most common methods of payment under a L/C are as follows:

Sight Payment Credit: In at sight Payment credits the bank pays the stipulated     sum immediately against the exporter’s presentation of the documents.

Negotiation credit: In negotiation credit, the exporter has to present a bill of exchange payable to his in addition to other documents that he bank negotiation.

Deferred Payment Credit: In deferred pay payment, the bank agrees to pay on a specified future date or went after presentation of the export document. In SEBL, payment is given to the party at the rate of A.A 60-90-120-180 as the case may be.

Acceptance Credit:In acceptance credit, the exporter presents a bill of exchange payable to himself and drawn at the agreed tenor (that is, on a specified future date event) on the bank that is to accept it.

Advising Letter of Credit (L/C):

When exporter L/C is transmitted to the bank for advising the bank sends an advising letter to the beneficiary depicting that L/C has been issued.

 

Valued Export Customer Of SEBL (Gulshan Branch):

  • Florence Fashion Ltd.
  • Generation Next Fashion Ltd.
  • Chaity Composite Ltd.
  • MP Sweater.
  • Niponika Garments Ltd.
  • Atlantis Garments and Buying Ltd.
  • Claxton Apparels Limited.
  • Keya Composite Limited.
  • Repon Knitwear Limited.
  • Gold Land International Limited.

 

Import Practice of SEBL:

Import is the flow of goods and services purchased by economic agents located in one country from economic agents located in another country.

Imports in the private sector under united foreign aid must be made on most competitive basis by procuring at least three quotation from two eligible countries. This restriction does not, however apply to import of goods worth up to Taka one lac.

Import policy:

Under the Imports and Exports (control) Act, 1950 the Government of Bangladesh formulates the Import Policy through Ministry of Commerce. The existing Import Policy (1997-2002) has come into effect from June 14, 1998 to June 30, 2002.

Main Features of Import Policy (1997-2002).

  1. Import Facility through import permit and clearance permit.
  2. Import facility through indent and pro-forma invoice;
  3. Import facility for specimen, advertisement related goods and gifts without permission in a limited amount;
  4. Temporary import facility for re-export;
  5. Import facility through barter;
  6. Joint Import facility (group of industrial consumers and commercial imports);
  7. Import facility on the basis of deferred payment and against suppliers credit;
  8. Import on the basis of deferred payment subject to the clearance of Bangladesh Bank (BB);
  9. Import of Export Processing Zone (EPZ) and export from it beyond the purview of this policy. It will be regulated by respective BB and PBR orders;
  10. Import facility up to $ 2,000 for actual user without permission;
  11. Import facility on the basis of direct payment in foreign countries;
  12. The number of banned and conditional items has been reduced to 121 from 703;
  13. DEPZA, BSC/C and BOI have been treated as patron organization in the case of industrial capital machinery import.
  14. Maximum customs duty has been reduced from 45% to 42.5% (now-from 42.5% to 40%): nominal rate has been reduced to 20.3%, 1991/91-54.5%)
  15. Import under L/C-L/C must be irrevocable. But in case of perishable items like food from $ 5,000 to $ 7,500 transported by road L/C is not required;
  16. Import through LCA (Letter of credit Authorization) form without opening of L/C: Books, Magazines, Publication (on the basis of sight draft/usance bill);
  17. Industrial raw materials and capital goods can be imported without opening L/C;
  18. Government sector bodies can import without any license, permit and ICR;
  19. Special import facility for non-resident Bangladeshi Scientists, doctors, engineers, etc, to import instruments and appliances without any permission;
  20. Facility of imports for export oriented industries by government, foreign exchange rate.
  21. Letter of credit (L/C) on imports for capital machinery and spare parts for new industrial units can be opened without IRC (Import Registration Certificate);
  22. Commercial Import by cash payment only.

Import Procedure:

Imports are purchase of foreign goods and services by consumers, firms and government in Bangladesh.

The Importer must obtain Import Registration Certificate (IRC) from the Chief Controller of Import & Export (CCI&E) Submitting the following papers:

  • Up to date trade License.
  • Nationality and Asset Certificate.
  • Income tax certificate.
  • Bank solvency Certificate,
  • In case of a Company, Memorandum & Article of Association and Certificate of Incorporation.

Than the importer has to Contact with the seller outside the country to obtain the pro-forma  invoice.

Usually a local agent of the seller or foreign agent of the buyer makes this communication other sources are:

  1. Trade fair.
  2. Chamber of commerce.
  3. Foreign mission in Bangladesh.
  4. Journals etc.

After the importer accepts the pro-forma invoice, he makes a purchase contract with the exporter detailing the terms and conditions of the import.

After making the purchase contract, import procedure differs with different means of payment. In most cases import payment is made by the documentary letter of credit in our country. The other means are cash in advance, open account, nostro and vostro account, loroaccount and collection methods. It is mentioned in the purchase contract, which payment procedure has to be applied.

 

Different Payment Procedures Are:

Cash in advance:

Importer pays full, partial or progressive payment by a foreign DD, TT. After receiving payment, exporter will send the goods and the transport receipt to the importer. Importer will take delivery from the transport company.

Open account:

Exporter ships the goods and sends transport receipt to the importer. Importer will take delivery and makes payment by foreign DD, TT, at some specified date.

Nostro Account:

Nostro accounts meaning “OURS” account and these accounts referred to as due from, A “due from” nostro account is the foreign currency accunt of a bank maintained with their corres pendent in foreign centre’s in terms of the latter’s currencies, for current requirements of their foreign exchange operation in those currency.

Example:

Southeast Bank Limited in Dhaka will maintain a nostro account with euro in Frankfurt, in euro, from which it will make payments on behalf of its customers to German banks.

Vostro Account:

Vostro accounts meaning “your” account and these accounts referred to as due to. A “due to” vostro account is current accounts of foreign banks with their correspondents in the latter’s currency. The nostro account of one bank is the vostro account of the another bank.

Example:

Southeast Banks account with Deutsche Bank is regarded by it as its due to or vostro account held for Southeast Bank Limited.

Loro Account:

Loro Account is current accounts of banks with foreign banks in terms of a foreign currency held n behalf their clients.

Collection Methods:

Collection methods are either clean collection or documentary collection. Again collection methods may be document against payment or document against acceptance. Another is direct collection in which the exporter obtains his banks pre-numbered direct collection letter.

 

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

L/C Opening Process:

In foreign exchange banking letter of credit (L/C) opening is an important part. L/C opening is a set of procedure which every imported needs to follow to import their product. At first importer need to contact with Exporter and with their mutual understanding exporter prepare pro-forma Invoice and sent it to the importer. After received the pro-forma invoice importer present it to their bank that is known as issuing bank that prepare L/C on behalf of importer. After preparing L/C proposal need to send Head Office of issuing bank for approval. After approval issuing bank open L/C on behalf of Importer, Signed it by proper authority of bank officer, and send it their authorized exporter country bank for authentication. The process is done through SWIFT. The bank that provides authentication then it called advising bank. After given the authentication seal-advising bank send it to the exporter bank as per requirement of invoice.

Papers required at the time of opening on L/C:

  • Import Registration Certificate.
  • Trade License.
  • IMP From.
  • Letter of Credit Authorization (LCA Form).
  • I dent in case of indenture.
  • Credit Report of the Importer.
  • Credit Report of the Seller should be collected from correspondent bank
  • In case of F.O.B/C&F. insurance cover note.
  • In case of quota item, quota allocation paper.

Importer’s Application For L/C limit/margin:

To have an import L/C limit, an importer submits an application to the department of (SEBL) furnishing the following information:

  • Full particulars of Bank account.
  • Nature of Business.
  • Required amount of limit.
  • Payment terms and conditions.
  • Goods to be imported.
  • Offered Security.
  • Repayment Schedule.

A credit officer scrutinizes this application and accordingly prepares a proposal and forwards it to the Head Office Credit Committee (HOCC). The committee,if satisfied, sanctions the limit and return back the branch. Thus the importer is entailed for the limit.

Before opening a L/C the issuing bank must check the following:

  • L/C application properly stamped, signature verified and margin approved and properly retained.
  • Indent/Pro-forma Invoice singed by the Importer and Indenter/Supplier.
  • Ensure that the relevant particulars of L/C application correspond with those stipulated in Indenter y/pro-forma invoice.
  • Validity of LCA entitlement of goods, amount etc, confirms to the L/C application.
  • Charges like commission, Postage, Teller charge, SWIFT charge, if any recovered.
  • Insurance Cover Note-in the name of issuing bank-A/\C importer covering required risks and Voyage role.
  • Incorporation of instruction for Negotiating Bank as per banks existing arrangement.
  • Reimbursement instruction for reimbursing bank.
  • If foreign bank confirmation is required, necessary permission should be obtained and according advising bank is existing arrangement.
  • If add confirmation is required on account of the applicant charge should be recovered from the applicant.
  • In case of askance L/C mention interest rate clearly n the letter of credit.

 

Liability of Issuing Bank:

As per Article 9(a) of UCPDC 600, An Irrevocable credit constitutes a definite undertaking of the issuing Bank, provided that the stipulated documents company with the terms and conditions of the credit.

Advising of the Letter of Credit:

Advising means forwarding of a Documentary letter of credit received from the issuing bank to the beneficiary (Exporter).

  • Signature of issuing Bank officials on the L/C verified with the specimen signatures book of the said bank when L/C received.
  • If the exporter L/C is intended to be an operative cable L/C Test code on the L/C invariable be agreed and authenticated by two authorized officers.
  • L/C Scrutinized thoroughly complying with the requisite of concerned UCPDC provisions.
  • Entry mode in the L/C advising Register L/C advised to the Beneficiary (Exporter) promptly and advising charges recovered

Adding confirmation:

The confirmation bank does adding confirmation. Confirmation bank is a bank that adds its confirmation the credit and if is done at the request of the issuing bank. The advising bank usually does not do it if there is not a prior arrangement with the issuing bank. By being involved as a confirming agent the advising bank undertakes to negotiate beneficiary’s bill without recourse to him.

  • Issue L/C and request to add confirmation.
  • Review the L/C terms.
  • Provide reimbursement.
  • Draft to be drawn on L/C opening bank.
  • Availability of credit facilities.

Amendments To Letter of Credit:

After issuances and advising of a L/C it may be felt necessary to delete, add or after some of the clauses of the credit. All these modification are communicated to the beneficiary through the some advising bank of the credit. Such modification to a credit are termed as amendment to a letter of credit.

SEBL transmits the amendment by tested SWIFT to the advising bank. In case of revocable credit it can be amended or cancelled by the issuing bank of any moment & without prior notice to the beneficiary. But in case of irrevocable L/C, it can neither be amended nor cancelled without the agreement of the issuing bank, the advising bank, & the beneficiary. All the amendment forms an integral part of the original credit. If the L/C is amended, service & SWIFT charge is debited from the party account.

The following caluses of L/C are generally amended:

  • Increase or decrease value of L/C and increase or decrease of quality of goods.
  • Extension of shipment/negotiated period.
  • Terms of delivery i.e, FOB, CFR and CIF etc.
  • Mode of shipment.
  • Inspection clause.
  • Name and address of the shipment.
  • Name of the reimbursing bank.
  • Name of the shipping line etc.

Settlement of Letter of Credit:

Settlement means fulfillment of issuing bank in regard to affecting payment subject to satisfying the credit terms. Settlement to may be done under three arrangements as stipulated in the credit.

Settlement by Payment:

Here the seller presents the documents to the nominated bank and the bank scrutinizes the documents. If satisfied the nominated bank makes payments to the beneficiary.

Settlement by Acceptance:

Under his arrangement the seller submits the documents evidencing the shipment to the accepting bank (nominated by the issuing bank for acceptance) accompanied by draft down on the bank at the Specified tenor. After being satisfied with the documents and the draft and at maturity the reimbursement will be obtained in the pre-agreed manner.

Settlement by Negotiation:

This settlement procedure starts with the submission of documents by the seller to the negotiating bank. After scrutinizing the documents the negotiating bank sends the documents to the issuing bank as usual; reimbursement will be obbined in the pre-agreed manner.

Accounting Treatment:

  1. Payment Against Documents (PAD) A/C————–Dr.

Head Office A/C + Exchange Trading A/C————-Cr.

(Amount given to Head Office ID and interest credit)

  1. Sundry Deposit L/C Margin A/C————————-Dr

PAD A/C—————————————————-Cr.

(Margin amount transferred to PAD A/C)

  1. Customer A/C——————————————–Dr.

PAD A/C—————————————————-Cr.

Income all (Interest on PAD) A/C———————–Cr

(Customer A/C debited for the remaining amount.)

Reversal Entries

Banker’s Liability A/C—————————Dr

Customer’s Liability A/C————————Cr.

(When Lodgment is given)

After realizing the telex charge, services charge, interest (if any) and the shipping documents is the stamped with PAD number & entered in the PAD Register. Intimation is given to the customer calling on the bank’s counter requesting retirement of the shipping documents. After passing the necessary vouchers, endorsements is made on the back of the bill of exchange as “receipt Payment” and the Bill of lading is endorsed to the effect “ please deliver to the order of M/S————————under two authorized signatures banks officers. Then the documents are delivered to importer.

Payment Procedure Of The Import Documents:

This is the most sensitive task of the import department. The officials have to be very much careful while making payment.

  • Date of Payment: Usually payment is made with in 5 days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay.
  • Preparing Sale Memo: A sale Memo is made at be rate to the customer. As the TT & OD rate is paid to the ID, the difference between these rates is exchange trading. Finally, an Inter Branch Exchange Trading Credit Advice is sent to ID.
  • Mode of Payment: In case of making payment to the foreign importers, Telegraphic Transfer is used to remit the fund and for local importers FDD is issued.
  • Requisition for the foreign Currency: For arranging necessary funds for payments , a requisition is send to the International Department.

 

Valued Import Customer of SEBL (Gulshan Branch):

  • Keya Spinning Mills Ltd.
  • Keya Cotton Mills Ltd.
  • Keya Knit Composite Ltd.
  • Keya Shore to Shore Bangladesh Limited.
  • STS Textiles Limited.
  • Chaity composite Ltd.
  • MEGACORP Ltd.
  • Ocean Auto.
  • Hameem Denim Ltd.
  • Swapan Washing Ltd.
  • Amtak Syndicate.
  • Ripon Packaging Ltd.
  • JUZ Treading international

 

Back-to-Back Letter Of Credit:

A Back-to-Back letter of credit is a now credit. It is different from the original credit based on which the Bank undertakes the risk under the back to back credit. In this case, The bank main security is original credit. The original credit (Selling Credit) are separate instrument independent of each other and in no way legally connected though they both from part of the same business operation.

The supplier (beneficiary) of the back-to-back credit) ships goods to the importer and presents documents to the bank as is specified in the credit. It is intended the exporter would substitute his our documents for negotiating under the original credit, his liability under the back to back letter of credit would be adjusted out of these proceeds The exporters L/C is market lien and no margin is taken.

In SEBL (Gulshan Branch), Papers/documents required for submission for opening of back to back L/C:

  • Master L/C
  • Valid Import Registration Certificate (IRC) & Export Registration Certificate (IRC).
  • L/C application & LCA form duty filled in Signed.
  • Performa invoice or Indent
  • Insurance cover note with money receipt.
  • IMD form duly Signed.

Detective Points Or Clauses Appear In The Master L/C:

  • Issuing Bank is not reputed.
  • Advising Credit by the advising bank without authentication.
  • Port of destination absent.
  • Inspection Clause.
  • B/L to blank endorse, to third bank to be endorsed to buyer or thirty party

Payment of back-to-back letter of credit:

In case of back –to-back as 60-90-120-180 days of maturity period, deferred payment is made. payment is given after realizing export proceeds from  the L/C issuing bank.

Accounting Treatment For Back-To- Back L/C

  1. When the document is arrived, the following vouchers are passed:

Customer’s A/C—————————Dr

Commission on Acceptance————-Cr

  1. 2. While payment, if the fund is at hand, the accounting entry is:

Sundry deposit margin on acceptance———-Dr

Customers A/C—————————-Cr

Under the back to back concept, the seller as beneficiary of the credit, offer it as security to the advising bank fool the issuance of the second credit. As application for this second credit the seller is responsible for reimbursing the bank for payment made under it regardless of whether or not be he is paid under the first credit. There is, however no. compulsion for the bank to issue the second credit, and in fact many banks will not do so.

 

Foreign Exchange Remittance:

Foreign Remittance means sending of fund. The word Remittance we understand sending or transferring of fund through bank from one place to another place, which may be within the country or between tow countries, one in aborted is called foreign Remittance.

So we see that there two types of Foreign Remittance:

  1. Foreign Inward Remittance
  2. Foreign Outward

Inward Remittance

The remittances that are received from abroad are called inward remittance.

Purpose of inward: 

  • Family maintenance.
  • Gift
  • Foreign investment.
  • Export Proceeds.

Mode inward remittance:

  • Foreign Telegraphic Transfer (FTT)
  • Foreign Demand Draft (FDD).
  • Foreign Currency Encasement.

Outward Remittance:

Remittances that are made from our country to abroad are called outward Remittance.

Purpose of Outward Remittance:

  • Import Proceeds.

Mode of outward remittance:

  • Foreign Telegraphic Transfer.
  • Foreign Demand Draft.
  • Foreign Currency Endorsement.

 

SWOT Analysis:

SWOT Analysis an examination of a banks strengths, weakness, Opportunities and threads. This analysis helps an analyst evaluate a bank’s strategies to exploit its competitive advantages or defend against its weakness.

  • Strength

Accessibility of Branches: At Present SEBL have 56 online branches, five (5) Islamic Banking Branches and ten (10) SME centers including one (1) off-shore Banking unit. So throughout those service centers or branches it facilitates easy access to their customer which is a enormous advantage of SEBL over its customers.

15 Years in Banking Sector (Experience):

Southeast Bank Limited, has been in the industry for around 15 years. This long-period of existence in the industry has helped SEBL to again in-depth knowledge about the industry trends as well as helped to build up strategic partnership with many corporation which most other banks would not achieve in the shorter period of time.

Strong Management:

From the initial level, SEBL Management term was well-known if terms of doing business in different sectors. Among them some are Yusuf A. Harun (Former FBCC I President & Founder chairman of the Bank), the incumbent chairman of the Bank is Mr. Alamgir Kabir, FCA, a professional Chartered Accountant, Mr. M.A. Kashem who is a well-known industrialists also one of the director of country’s first private University (NSU). For them so far the Bank is operating in this particular market with an efficient policy and Strategy.

Dual currency Visa credit card:

Southeast Bank Limited has launched both local and dual currency (BBT & Dollar) Visa credit card on 2005. According to the Annual Report 2009. SEBL have managed to book a net profit of TK 33.43 million in 2009 which projects 40% growth over the last year’s profit. also SEBL have been observing that the increasing demand of a card that has replaced cash and traveler’s cheque for travel abroad

  • Weaknesses

Less CSR Activities:

Today in corporate culture, CSR (Corporate Social Responsibility) activity is a core subject just to create positive image in the eyes of customers and differentiate one self in the whole industry. For this sort of activity, SEBL is far away comparing to some banks like: Dutch-Bangla Bank Limited, Prime Bank Ltd. And so on so, in future this well be harming the image of SEBL in the market.

Lower Service Quality:

Compared to some foreign banks like HSBS and SCB, SEBL’S service Standard is not Satisfactory for different purpose. But here expectations are some of the branch. Those are Gulshan, Danmondi and Motijheel Branch. Service standard is not satisfactory because majority of the branches do not have their car parking facility, don not have posh and neat interior decoration etc,. Most of the time customers are not fully satisfied or services were not up to their expectation level.

Promotion Period Is Not Consistent:

In Bank employees are aware of their upcoming promotion after completing his/her existing period. But, in SEBL most of the employees were not get their expected promotion with in the desired time period. For this SEBL already lost some of its Potential employees including some executive level professional. Fir this in past years SEBL’S overall performance was decreased.

 

  • Opportunities:

Dual Currency Visa Credit Card:

The card business of Bangladesh is booming since last five years. ATM’S, Debit cards & Credit Cards are becoming a priority product both for the customers and bank  it self for the employees. A major portion of the Banks’ income comes from cord business. But SEBL launched its Dual Currency Visa Credit card in 2005. Besides service, SEBL found it necessary to provide continued services to our customers without any disruption arising due to cessation of sales of American Express Travels cheque. Therefore, SEBL planned to design another product namely Travel Card.

Online Banking:

With the progress and availability of technology, the need for online banking to getting more priority. Both foreign and local banks are moving towards online banking to case the transaction process for the customers. SEBL has also token some incredible efforts. Already the Bank converted 56 of their branches into online branch and providing certain services through internet.

Finance In Leather Sector And Export Development Fund (EDF):

The Bank has ventured into a new avenue of financing through entering into an agreement with the leather Sector Business Promotion counsel (LSBPC). Initially Tk. 20.00 Million has been allocated on a revolving basis for the purpose of such financing which is expected to be raised in future based on repayment behaviour.

Another opportunity for SEBL is that, it allowed USD 3.45 million as of 31st December 2009, for import procurement under the EDF scheme of Bangladesh Bank and in 2010, this facility shall be futher increased basing on the requirement of the export clients.

 

  • Threats

Targeting Specific Market:

through we know that, SEBL contributing in different sector of Bangladesh. But their main target is to serve the country’s RMG Sectors. Recently, we knew that RMG Sector in Bangladesh faced different problems/burriers from the foreign investors. For this government did not play any major role for removing barriers, and for this last 1.5> years our RMG Sector was facing disastrous station.

Dual Currency credit card availability:

The city Bank Limited. has launched both local and dual currency (BDT & Dollar) Amex Credit Cards on 7th November, 2009, we can say this is just alternative to SEBL’S one service which is dual currency Visa credit Card. We know that, AMES is offering different discount rate in different places like: In restaurant, shopping center etc. Also CBL come up with a huge advertisement by using different media.

ATM Booth was not available:

So far SEBL just establish their on ATM Booth in north South University Bashundhara campus, another ATM booth Gulshan Branch. Though SEBL recently lanuched its ATM card facility collaboration with otehr bank liek Dutch Bangla Bank Limited, but SEBL did not establish it properly in the market.

 

Major Drawback of Southeast Bank Limited In Foreign Exchange Business:

In this era of globalization completion among the bank is increase intensively. So to compete in this competition SEBL should gain more efficiency in this banking sector. As the world is changing every second they need to upgrade their service and taka the chatting to provide service likes modern international banks.

As I have an opportunity to work with this bank in the light of my practical experience, I would like to discuses if major lacking:

  • As SEBL is one of the second generation banks, it operation and management system is not modernized. There is absence use of modern banking services like electronic banking system, Interent banking system. Phone banking system.
  • The bank use banking software named “Bank Ultimus” which is not user friendly and complicatedly to use as well as lengthy in processing.
  • Customers have to wait long time to get banking service, as they don’t have fully computerized service. As the whole process is so lengthy it increase banks hidden cost, and time.

In recent years, the foreign exchange business of Southeast Bank Ltd. is increasing of at faster rate. Now a day, is rendering a stable support to the national foreign exchange business. Although the foreign exchange business loading day by day there are also some obstacles around it they are as per observations:

  • Insufficient presence of modern communication equipment.
  • Inadequate ATM booth.
  • Application of modern technology such as computerization is not sufficient.
  • I think most profitable sector of bank is its foreign exchange department and advance department. But there officer space is congested and they fail to give customer good entertainment.
  • Lack of enthusiastic scheme for exporter & importer.
  • Less attractive remuneration package and motivation for the employees.

 

Recommendation:

One the basis of overall analysis, I would like to briefly say a few words on the overall policy and performance of the Bank. If following step can take it will help develop responsive sales and service culture within the Bank.

Strengthen Growth:      

The Bank continues to maintain its leading role to strengthen growth initiative in the private sector. These being the age of competition, the bank have to bring in gradually in gradually the use of more modern technology in their operations so as to introduce innovative practices and improved operational skill into management of the Bank’s affairs. This is very much necessary n the interest of the expanding client and to ensure them full range of banking services.

Strength Relationship

Despite many constrains, the Bank continues to move ahead with steady growth of business. If gives top priority to strengthen relationship with the members of trade , commerce and industry. So as to expand the arena of business as well as to earn greater confidence of the customers. To this end, greater public elation activities are being channeled from both Head Office and branch level to further enhance the image of the bank to the members of public.

Customer satisfaction

Customer satisfaction will continue to remain first priority in our professional perception. In all of their business activities, they should recognize their operation to establish an even greater benefit to their customers by providing quality banking services.

Innovative Services:

The financial services markets around the world are being reshaped due to change of policy measures of the bigger economies of developed countries and globalization. In consideration of all these factors they have to evolve new policy and action plans to further strengthening the working methodology suiting the need of new times and to adjust with prevailing situation.

Foreign Exchange Banking:

  • Effective and efficient initiative is necessary to recover the default loans.
  • Attractive incentive package for the exporter will help to increase the export Introduction of Internet Banking.
  • For a sound and state foreign operation, Southeast Bank Ltd.
  • Foreign Exchange operation of other renowned commercial banks is more dynamic and less time consuming. Southeast Bank Ltd. should take some initiative to compete with those banks.

 

Conclusion:

Southeast Bank Ltd. being a leading number of private sector banks in the country endeavored to adjust itself to this new situation by adopting pragmatic policies and strategies. The Bank faced the challenge as new banks are arising and many foreign banks start their journey, continued efforts have been made to enhance the growth and development through the realistic policy pursued by the Board of Directors and Management. In addition to that determined and dedicated professional efforts of the Executive, Officers, and Employees helped the bank to go ahead to fulfill the commitment.

The declaration symbolized a turning point in the country’s exchange management and exchange rate system. The period preceding this declaration saw an intensification of reforms undertaken by Bangladesh Bank to case control on foreign payments and exchange rate arrangement. Bangladesh now contributes 76% of the country’s total foreign exchange earnings.

In recent years of banking business, Southeast Bank Ltd. (Gulshan Branch) has shown better performance companring with other second generation bank

I expect the Southeast Bank Ltd. may hold its prospect in future and can contribute a vital role in the socio-economic development of Bangladesh.