The primary objective of this report is to analyze the Overall Branch Banking of EXIM Bank Limited, here discuss on operation of Export Department and to evaluate the performance of the different departments of Export Import Bank of Bangladesh Limited. This report also help formulating policy regarding the ideas relating to the feelings of the customers and bankers on the basis of overall branch banking. Finally draw SWOT analysis and find out problems and suggest recommendation.
Objectives of the Report:
The primary objectives of the report are:
- The main objective of this report is to find out the “Overall Branch Banking”.
- To gather comprehensive knowledge on overall banking functions and the expectations of the customers regarding the service level of the bank.
- Identify the factors contributing to the attractive and operative performance of the local branch of the bank.
- To make a study of the facts in order to arrive at certain conclusion about overall banking operation.
- Critically analysis the functions and operations of each level of the organization of Export Import Bank of Bangladesh Limited.
- To prevent current observation and unique aspects of the bank.
Organizational Overview of EXIM Bank Ltd.:
EXIM Bank Ltd. as the name implies a newly formed commercial bank but is the 1st of its kind in Bangladesh. It has been incorporated in Dhaka, Bangladesh as a public limited company and its Head Office of the Bank is located at Printers Buildings, 5 Rajuk Avenue, Motijiheel Commercial Area, Dhaka- 1000.
In the world of consumerism the business organization of the world strive for the consumers satisfaction as a number one business strategy whatever may be the product of the organization, either service or non. service. Service is the product of bank. There is a saying that customer service starts rights right from the stairs of the bank building. The guard at the door is first person pep resents of the bank, receives a customer with wishes in smiling face.
Historical Background of The EXIM Bank Ltd.
EXIM Bank Ltd. was incorporated under the companies Act 1994, on the 2nd June 1999. EXIM Bank Ltd. believes in togetherness with its customers, in its march on the road to growth and progress with service. As a commercial bank we will do all traditional banking business including introduction of a wide rang of savings and credit products, retail banking and ancillary services with the support of modem technology and professional skills.
The Export Import Bank of Bangladesh Ltd. commenced formal commercial banking operation from 3rd August 1999 with the permission of Bangladesh Bank. The sponsors of the Bank are leading business personalities and reputed industrialists.
The Bank has a sound capital base, its Authorized Capital is Tk. 1000.00 Million while its Initial Paid Up Capital is Tk. 225.00 Million subscribed by the sponsors. To solidify its capital base further the paid up capital will raise to Tk. 450.00 Million within a reasonable period by public offering of shares of the Company.
The Bank will be immensely benefited furthermore from the able leadership of the Chairman and the valuable advice and guidance of the Advisor.
Originally the name of the bank was BEXIM Bank of Bangladesh Ltd. Later the management of BEXIM Bank of Bangladesh Ltd. changes the name of the bank to EXIM Bank Ltd. because of the case lodged by Beximco Group of Industries.
The Board of Directors wants to carry out in the management all of this service industry’s administration and credit portfolio independent without any undue influence from out side. The board will formulate policy and give policy directives to the Management. The bank will operate with integrity, competence and farsightedness abiding by all principles and provisions laid down in the Bank. Company Act, 1991.
EXIM Bank Ltd. will endeavor it’s best in consolidating this sector in helping growth and development of the backward linkage industries. With continuous dependence on the imported raw materials, the country’s RMG sector might find base when the global apparel trade will be wide open in 2005 with the end of multi Fiber arrangements. Development of composite textile sector may be helpful to get out of this problem. Therefore the EXIM Bank will lead its mite of the development of this vital sector.
Objectives of EXIM Bank Ltd.
Bangladesh is now an integral part of global market. As such there is an urgent requirement for Bangladesh to place the Overall Branch Banking of a free market economy by following international banking customs, practices and standards. Today clients of a bank in Bangladesh are exposed as well as to international markets. They have to stay update with their practice and standards to meet the demands of achieving harmony in the high standards of a free economy.
EXIM Bank Ltd. fully appreciates the importance and implication of the rapidly emerging competition in the banking and finance sector of Bangladesh. It intends financing its customer suited to his or her place in the market. In this regards EXIM Bank Ltd. emphasizes in its employment the software aspects of human resource capability.
Mission of EXIM Bank Ltd.
The EXIM Bank Ltd. has completed its successful existence on its career. And now it has taken a revolution of it’s business operation in year 2001 searching for incremental improvement in productivity, operational efficiency and structure consequently, a new organization structure has been developing according to business focus and priorities and competitive pressures.
Performance of EXIM Bank Limited.
The business of banking consists of borrowing and lending. As in other businesses, operational must be based on capital but banks employ comparatively small of their own capital in relation to the total volume of their transaction. The purpose of capital an reserve accounts is primary to provide an ultimate cover against losses on loans and investments.
In Bangladesh, there are many types of Banks, which are formed as commercial banks. But above all, EX 1M Bank of Bangladesh Limited is a new generation of private commercial bank. The full abbreviation of EXIM Bank Ltd. is Export Import Bank of Bangladesh Limited.
The bank has got leading personalities businessmen and reputed industrialist as its sponsors. The bank will be immensely benefited from the valuable advice of the experienced sponsors of the bank. The late chairman of the bank contributed much for the sofid foundation of the bank at the initial stage. Unfortunately his untimely death caused a vacuum in the leadership of the bank. But within the shortest possible time, the sponsors who in a position to select the next chairman of the bank.
In year 2000 EXIM Bank Ltd. made commendable in all business arenas like Deposit, Credit, Fund Management, Investment and Foreign Exchange related business. The Bank achieved satisfactory progress in all areas of its operation and earned an operating profit fork. 99.67 Million.
The Authorized Capital of EXIM Bank Ltd. is Tk. 1000:00 Million and the initial paidUp- Capital of the Bank is Tk. 225.00 Million. It may be mentioned here that the reserve funds of total Tk. 40.24 Million include satisfactory reserve of Tk. 16.04 Million, Retained Earning Tk. 0.59 Million, Exchange Equalization fund of Tk. 2.11 Million and 1 % General provision of Tk. 21.50 Million made for the unclassified loans, which are also available for determination of capital adequacy requirements of the Bank
The total deposit of the Bank, which includes Bills Payable of Tk. 30.24 million rose to Tk. 3934.47 million as on December 31,2001 showing a substantial increase of more than 192.60 % compared to that of last year which enabled the Bank to expand its Business and improve upon the profit position.
Deposit Mix In EXIM Bank Ltd.
Loans and Advance In EXIM Bank Ltd.:
The total Loans and Advances of the EXIM Bank Ltd. stood at Tk. 2170.53 million as on December ~ I, 2003 against Tk. 233.78 million of last year. During the year WIder review, the bank extended loans and advances Tk. 1936.76 million for domestic and international trade as well as to project finance and working capital. Due to liberal credit to export sector, the Bank was able to handle larger volume of Foreign Exchange Business. The EXIM Bank Ltd. also extended a number of project finance and Industrial Loans singularly or in syndication with other Banks.
Human Resources Department.
There is no alternative to skilled and trained manpower in service Industry. Bearing this in mind the well educated, promising and honest workers are being appointed and trained. Bank has given top priority for developing skilled manpower and introducing them with modem technologies with the purpose to develop quality customer services. We have recruited experienced Bankers as well as fresh university graduates. The fresh recruits are being trained through BIBM and other Training Institute. As on 31 December 2001, the human resources strength was 237 including 63 sub ordinate staff members.
The Sources and Uses of Fund.
The composition of sources of Banks fund are Paid Up Capital, Reserves, Customers Deposit and Call Loan from different Banks. The Bank used major portion of this fund for Investment in Loans and Advances. The Bank also invested in Securities and Shares. The surplus fund was prudently applied in Call Money Market to earn satisfactory returns.
Financial Products and Services.
The Bank has already introduced number of financial products such as Monthly Savings Scheme (Money Grower) and Monthly Income Scheme (Steady Money), Lease Finance. In addition schemes like Consumers Credit, Credit Card, A TM, On Line Banking and other lucrative schemes will be introduced soon.
- Wide Image
- Enthusiastic employee.
- High deposit
- Higher profit rate to client.
- Excellent Management.
- High commitment of customers.
- Qualified & Experienced human resource. · Satisfactory Environment.
- Lack of proper software for Islamic banking.
- It has high cost of fund.
- It has highly exposed to volatile garment business.
- It has highly exposed dependency on term of eposit.
- Inadequate it infrastructure.
- Increasing demand of client finance.
- Investment potential of Bangladesh.
- Good prospect of more export import business at Uttara turning to commercial area.
- Relationship management.
- Complacency among rival firms.
- Lack of customer awareness regarding Islamic asking.
- Some other bank also follow the Islamic banking policy
- Similar type of retail banking products.
- Certain Bangladesh bank’s rules and regulations.
Bangladesh is one of the less developed countries. So the economic development of the country depends largely on the activities of commercial banks. So we need to emphasis whether these commercial banks are effectively and honestly performing their functions, assigned duties and responsibilities. In thus respect we need to know about the general banking function of those banks as well as The EXIM Bank Ltd. is to provide the general banking service.
A bank is essentially an intermediary of short-term funds. It can carry out extensive lending operations only when it can effectively channels the saving of community. A good banker is one who effectively mobilizes the saving of the cornmw1ity as well as makes such use of saving by making it available to productive and priority sectors of the economy thereby fostering the growth and the development of the nation’ s economy.
Therefore deposit is the blood of a bank. From the history and origin of the banking system, we can know that deposits collections the main function of a bank.
The deposits that are accepted by EXIM Bank like other banks may be classified in to,
A) Demand Deposits.
B) Time Deposits.
These deposits are withdrawn without notice, e.g. current deposits. EXIM Bank accepts demand deposit through the opening of.
A) Current Account ..
B) Saving Account
C) Call deposits from the fellow bankers
A deposit which is payable at a fixed date or after a period of notice is a time deposit. EXIM Bank accepts time deposits through Fixed Deposit Receipt (FDR). Short Time Deposit (STD) and Bearer Certificate Deposit (BCD) etc.
While accepting these deposits. a contract is executed between the bank and the customer. This contract will be a valid one only when both the parties are competent to enter into contracts. As account opening initiates the fundamental relationship & since the banker has to deal with different kinds of persons with different legal status. EXIM Bank Officials remain very much careful about the competency of the customers.
Procedure for Opening of Accounts:
Before opening of a currents or savings account. the following formalities must be completed by the customer:
- Submit application on the prescribed form.
- Furnishing photographs- 2 (Two) copies.
- Introduction by an account holder.
- Putting specimen signatures in the specimen card.
- if necessary.
After fulfilling above formalities, opens an account for the client and provide the customer with a pay-in-slip book and a checkbook in case of savings account and currents account.
Types of Deposit Accounts and Their Formalities:
In this kind of account a customer can deposit his money and can write one or more check to withdraw their money. For doing this notice is not required. He can deposit it whenever hell she wants to and also can withdraw it whenever hell she wants to.
In The Name of Individual:
The client has to fill up a light green account opening form. Terms and conditions are printed on the back of the form. The form contains the declaration clause, special instructions etc. two copies of passport size photograph duly attested by the introducer are affixed with the form.
In Joint Name:
In this type, the formality is same as individual account, but in the special instruction clause, either or ‘survivor’ or ‘former or survivor’ clause is marked.
In addition the customer has to submit the valid Trade License and Tax Paying Identification Number (TIN) along with the application.
In case of partnership account, the bank asks for,
- A copy of the partnership agreement (Partnership Deed)
- A letter signed by all the partners containing the following particulars.
- The name and addresses of all partners
- The nature of the firm’s business
- The name of the partner authorized to operate the account in the name of the firm,
including the authority to draw, endorse and accepting the bills and mortgage and sell the properties belonging to the firm.
On having the desire to open an account from a limited company, an EXIM Bank Officer asks for the following documents:
- Registration Certificate from the Registrar of Joint Stock of
- Companies Certificate of Incorporation
- Certificate of Commencement of Business
- Memorandum of Association
- Articles of Association
- Copies of Annual Accounts
- Copies of the Board’s resolution, which contains
a) The name of the persons who have been authorized to operate the bank account on behalf of the company.
b) The name of the persons who are authorized to execute documents with the bank on company’s behalf.
Societies, Clubs and Associations:
In case of these sorts of accounts EXIM Bank requires the following documents:
- Registration Certificate Under the Societies Registration Act,
- 1962 Copies of Memorandum, Articles of Association
- Resolution of the Managing Committee.
- Power of Attorney to Borrow.
Non-government Organization (NGO):
The account opening procedure is same but in exception is that the Registration Certificate from the Social Welfare Department of Government must be enclosed with the application.
Joint Account in The Name of Minor:
A minor cannot open an account in his own name due to the incapacity to enter into a contract. He can open an account in EXIM Bank in Joint name of another person who will be guardian of him.
Savings Bank Account:
This deposit is basically meant for small-scale savers. There is restriction on withdrawals in a month. Heavy withdrawals are permitted only against prior notice. Interest is paid on these types of accounts.
Short-term Deposit (STD):
In Short-term Deposit, the deposit should be kept for at least seven days to get interest. The interest offered for SID is less than that of savings deposit. In EXIM Bank various . big companies, Organizations, Government Departments keep money in STD accounts. Frequent withdrawal is discouraged and requires prior notice.
They are also known as time liabilities or term deposits. These are deposits, which are made with the bank for a fixed period specified in advance. The bank need not maintain cash reserv.es against these deposits and therefore, the bank offers high are of interest on such deposits.
In EXIM Bank, fixed deposit account is opened in two forms- Midterm (MTD), which is less then one year & the other is Term Deposit, which is more than one year.
Opening of Fixed Deposit Account:
The depositor has to fill an application form where in he mentions the amount of deposit, the period for which deposit is to be made & the namely names is which the fixed deposit receipt is to be issued. In case of a deposit in Joint name EXIM Bank also takes the instructions regarding payment of money maturity of the deposit. The banker also takes the instructions regarding payment of money on maturity of the deposit. The banker also takers the instructions regarding payment of money on maturity of the deposit. The banker also taker specimen signatures of the depositors.
A fixed deposit account is then issued to the depositor acknowledging receipt of the sum of money mentioned therein. It also contains the rate of interest & the date on which the deposit will fall due for payment.
Payment of Interest:
It is usually paid on maturity of the fixed deposit. EXIM Bank calculates interest at each maturity date and provision is made on that “Miscellaneous creditor expenditure payable accounts” is debited for the accrued interest.
Encashment of FD.R:
In case of premature FDR, EXIM Bank is not bound to accept surrender of the deposit. before its maturity date. In order to deter such a tendency the interest on such a fixed deposit is made cut a certain percentage less a the agreed rate. Normally savings bank deposit interest rate is allowed.
Loss of FDR:
In case of a lost FDR, the customer is asked to record a GD (General Diary) in the nearest Police Station. After that the customer has to furnish an Indemnity Bond to EX 1M Bank a duplicate FPR is then issued to the customer by the bank.
Renewal of F R. D.:
In EXIM Bank, the instrument is automatically renewed within seven days after the date of its maturity if the customer does not come to en-cash the FDR. The period for renewal is determined as the previous one.
The cash section of EXIM Bank deals with all types of negotiable instruments, cash and other instruments and treated as a sensitive section of the bank. It includes the vault that is used as the beyond this limit, the excess cash is then transferred to Bangladesh Bank. This section performs the following functions:
After the banking hour cash is packed according to the denomination. Notes are counted and packed in bundles and stamped with initial.
Allocation of Currency:
Before starting the Banking hour all tellers give requisition of money through” Teller cash proof sheet”. The head Teller writes the number of the packet denomination wise in “Reserve sheet” at the end of the day, all the notes remained are recorded in the sheet.
Outward Bills for Collection (OBC):
Collection of bills, which. is beyond the clearing range and collected through OBC mechanism.
Inward Bills for Collection (IBC):
Collection of bills, which EXIM Bank does as an agent is called collection through IBC mechanism.
According to the Article 37(2} of Bangladesh Bank Order 1972, the banks, which are the member of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the Cheque drawn upon one another through the clearinghouse. This is an arrangement by the central bank where everyday the representative of the member banks gathers to clear the Cheque. Banks for credit of the proceeds to the customer’s accounts accept Cheque Ana other similar instruments. The bank receives many such instruments during the day from account holders. Many of these instruments are drawn payable at other banks. If they were to be presented at he drawer banks to collect the proceeds it would be necessary to employ many messengers for the purpose. Similarly there would be many Cheque drawn on this the messengers of other banks would present bank and then at the counter. The whole process of collection and payment would involve considerable labor, delay, risk and expenditure. All the labor, risk, delay and expenditure are substantially reduced by the representative of all the banks meeting at a specified time, for exchanging the instruments and arriving at the net position regarding receipt or payment.
The place where the banks meet and ~ettle their dues is called the Clearinghouse. The clearinghouse sits for two times a working day. The members submit the climbable cheques in the respective desks of the banks and vice-versa. Consequently the debit and credit entries are given. At the debit summation and the credit summation are calculated. Then the banks clear the balances through the Cheque of Bangladesh Bank. The dishonored Cheque are sorted and returned with return memo.
Remittance can be done by telegraph transfer, mail transfer, traveler’s Cheque and drafts and Cherub. There are two steps of remittance:
By using ways we can do it. When one bank sends these T.T, M.T, T.C or Cheque to another bank than :1 will be called inland remittance. It is done within the country from’ one bank to another.
When a bank got this T.T, M.T, T.C and cherub from outside bank, which is not situated in the home country than it will be called foreign remittance. Using these methods also has done it.
Types of Remittance:
- Between banks and non-banks customers.
- Between banks in the same country.
- Between banks in the different centers.
- Between banks and central bank in the same country.
- Between central bank of different customers.
A telegraph transfer (IT) is an instruction for transfer of money by telegraph cable and telex from a bank in one center to another bank in a different center. Generally this is an instruction from the importer’s bank to the exporter’s bank or some other bank in the exporter’s country for transfer of money to a named person.
A mail transfer (MT) is the order to pay cash to a third party or for a credit to be passed to the account of the payee in the books of the agent. The order is to be made in writing and sent by mail. Mail transfers may be made by Anneal or Sea Mail, but in ordinary circumstances mail transfer are made by air unless a customer to the contrary makes a request.
Drafts and Chouse:
A draft is a pay order issued by one bank on another or on its branch. The purchaser of a draft makes to the seller in local currency at the domestic center while the paying after presentation of the draft by the beneficiary pays the beneficiary. There is also risk of loss of the draft in transit.
It is the safest way to carry money from one country to another. It can be change in any country of the world. Even if the Traveler Cherub (TC) is lost then the holder of the T.C can infonn it to the bank and the bank will infonn it to the agencies so that no one can encash the T.C while issuing a Traveler Cheque (T.C) a signature is needed, so that no one can en-cash it except the holder and also another signature is needed in encashment in front of the. banker. So Traveler Cheque (T.C) is the safest way to carry out side the home country .
Advance Banking is one of the significant schemes of the EXIM Bank limited. It contributes a huge portion of income in the EXIM Banks total revenue. It provides different types of loan to its borrowers as a lender. The bank operates advance facilities through different branches but the entire loan sanction procedure is controlled and monitored by Head Office.
Certain tens – and condition are followed when the can is sanctioned to the borrowers. Now advance banking is discussed in detail as follows:
EXIM Bank is a new generation Bank. It is committed to provide high quality financial services/products to contribute to growth of G.D.P. of the country through stimulating trade & commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of limited: income group and over all sustainable socioeconomic development of the country.
To achieve the aforesaid objectives of the bank credit operation of the bank is of paramount importance as the greatest share of total revenue of the Bank is generated from it, maximum risk is centered in it and even the very existence of Bank depends on prudent management of its credit port-folio. The failure of a commercial bank is usually associated with the problem in credit portfolio and is less often the result of shrinkage in the value of other assets. As such, credit portfolio is npt only features dominants in the assets structure of the Bank also.
To provide a broad guide line for the credit operation towards achieving the objectives of the bank, for efficient and profitable deployment of its mobilized resources and to administer the credit Portfolio in the most efficient way, a clearly defined, well planned, comprehensive and appropriate Credit Policy and control guidelines of the bank is a prerequisite.
In view of the above, this credit policy and guidelines of the bank has been prepared subject to amendment, revision, re-adjustment and refinement as and when required by the Bank. The purpose of this policy statement, which replaces al previous ones, is to set out the credit policies of the Board of Directors.
Interest on various lending categories will depend on the level of risk and type of security offered. It should be keep in mind that rate of interest is the reflection of risk in the transaction. The higher is the is the higher is the interest rate. Interest may be reviewed at least once in 6 (six) months and more often when appropriate. Fixed interest rate should be discouraged; preferably all rates should vary with cost of funds fluctuation based on a spread for profit
Effective yield can be enhanced to the extent borrowers are required to maintain deposits’ to support borrowing activities. Commitment fee and service charges should further improve yield where possible. All pricing of loams should however have relevance with the market condition and be approved by the executive Committee Managing Director from time to time.
The administration of the loan process shall ensure, compliance with all laws and regulations at both local and global levels including bank policy as set out in this docwnent and the Bank’s credit manual/circulars.
Proper analysis of credit proposal is complex and requires a high level of nwnerical as well as analytical ability and common sense. To ensure effective understanding of the concepts and thus common sense. To ensure effective understanding of the concepts and thus to make the overall credit portfolio of the Bank healthy, proper staffing of the credit departments shall be done through placement of qualified officials who have got the right aptitude, formal training in finance, credit risk analysis, Bank credit procedures as well as required experience. Where repayment and interest servicing performance of a credit deteriorates it shall be identifies at an early state and closely monitored to avoid low losses.
Loans/facilities where appropriate and related security shall be monitored and reviewed by a separate unit unconnected with the credit, approval process on a regular basis in order to assess the collect ability of the loan and effectiveness of the security. This unit will report to the Managing Director or his designated officer.
Exception of Loan policy
It is recognized- that there will be exceptions to the state policy, which can be justified. However, the Board should approve these by the Executive Committee or and the circumstances must be fully documented in the credit file.
Global credit Portfolio Limits:
The nature of credit portfolio shall be governed within guidelines set down by Head Office and regulatory requirements. These guidelines will however be consistent with the . global limits identified below for the banks credit portfolio in aggregate. Criteria for exposure to customers are set as under:
RATE OF EXCHANGE:
It means the price of one currency expressed in terms of another currency. Rate of exchange is the rate by which the relation among different foreign currencies is established in terms of local currency of that country. Value at which one country’s currency can be converted into another’s currency.
In exercise of the power conferred by section 3 of Foreign Exchange Regulation ACT, 1947, Bangladesh Bank has issued license to certain Bank to deal in Foreign Exchange is called Authorized Dealer.
- Spot Rate: It is quoted for transaction where the foreign currency bought or sold is to be received or delivered immediately. The current rate of exchange quoted in the foreign exchange markets.
- Forward Rate: When a rate is applied to a future date it is called forward rate at which foreign exchange can be sold or bought for delivery at a future time.
- Cross Rate: The rate of exchange quoted by expressing the quotation for any two currencies in terms of a third.
- SWAO: Sport rate against forward purchased or a spot purchase against forward rate.
- Pence Rate/ Direct Quotation: Rates are quoted in terms of foreign currency per one unit of foreign currency.
- Currency Rate/ Indirect Quotation: Rates are quoted in terms of foreign currency per one unit of home currency.
- Buying Rate: Authorized Dealer applies this at the time purchasing! negotiation of export documents and payment against T.T, M.T, Cheque and Drafts required form abroad.
- Selling Rate: Authorized Dealer applies this ,at the time of lodgment of import. documents, real” Ion of L/C margin from importer and other foreign exchange transaction on overseas Bank
- Tel One Rate: This is the rate when rate of foreign currency is quoted according to the since of the bill.
- Forward Rate at a Discount: When forward rate is higher than that of spot rate.
- Forward Rate at a Premium: When forward rate is lower than that of spot rate.
To import a person should be competent to be an “Importer”. According to Import and Export control Act 1950, the office of Chief Controller of Import and Export provides the registration (lRC) to the importer. After obtaining this person has to secure a letter of credit authorization from Bangladesh Bank. And then a person becomes a qualified importer. He is the person who requests or instructs to open an LlC. he is also called opener or applicant of the credit.
Importer’s Application for LIC Limit Margin:
To have an import L/C limit, an importer submits an application to the Department of EXIM Bank 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.
Now if the officer thinks the application to open an L/C in not fit, the following entries are given to realize the L/C, Charges, Postage and L/C margin.
Presentation of the Documents:
The seller being satisfied with the terms and the conditions of the credit proceeds to dispatch the required goods to the buyer and after that has to present the documents evidencing dispatching of goods to the negotiating ban1c After receiving all the documents the negotiation bank then checks the documents against the credit. If the documents are found in order the bank will pay and accept are negotiated to EXIM Bank checks the documents and the documents are stated below:
- Bill of Lading
- Certificate of Deposit
- Packing List.
- Weight List.
- Shipping Advice.
- Non-negotiable copy of bill of lading
- Bill of Exchange
- Pre-Shipment inspection report
- Shipment Certificate.
Advising a L/C:
It is customary to advise a credit to the seller through an advising bank. Advising through a bank is a proof of apparent authenticity of the credit to the beneficiary to whom it is addressed. Before forwarding/ advising the credit to the seller under appropriate forwarding coverage, the advising bank have to verify the signature of the officer of the opening bank and ensure that the terms and conditions of the credit are not violation of the existing exchange control regulations and other regulations relating to export. Very often advising bank receives requests from issuing ban to add their confirmation while advising credit to the beneficiary. The advising bank can do it if there is prior arrangement between advising and issuing bank or if it feels that the issuing is a reputed a reliable institution and good enough to discharge its obligation. It is also seen that sometimes banks receive credits addressed to them containing the name of the beneficiary in the body of the credit. In such case the advising bank prepares fresh letter of credit to the beneficiary containing all the terms and conditions of the original credit and signature by them selves.
Amendment of L/C
The buyer and seller satisfy the terms and conditions of a credit mutually before opening the same and the involved parties are expected to comply with the settled terms and conditions in course of performing their respective roles in the operations of a credit. But in real situation parties involved to a L/C, particularly the seller and the buyer cannot always satisfy the terms and conditions in full as excepted the time of settling the terms and conditions due to some obvious and genuine .reasons. The goal of establishing a credit might get frustrated. So in order to avoid such situation the credit should be amended. In case of revocable credit it can be amended or canceled be the issuing bank at any moment and without prior notice to the beneficiary. But the case of the issuing bank the confirming bank (if any) and the beneficiary. Partial acceptance of amendments. is not also effective without the agreement of an the above named parties. If a bank issues the services of another bank(s) to gave the credit advised to the beneficiary it mist also use the services of the same bank for any amendments must be completed and precise. If unclear or incomplete instructions are given to amend a credit, the bank requested to act on such instructions will give preliminary notification to the beneficiary.
- Import of Credit L/C Facility.
- Loan Against Import Merchandise (LIM). y Loan Against Trust Receipt (LTR).
A) Import of Credit (L/C) Facility.
Bank in favor of exporter on behalf of the importer issue L/C. L/C is issued to import goods for trading and manufacturing process.
B) Loan Against Import Merchandise (LIM).
Loan Against Import Merchandise (UM) is post import finance, which is granted in favor of the importer to retire shipping documents against import of goods. This is generally repaid within 30 days.
C) Loan Against Trust Receipt (LTR).
Loan Against Trust Receipt (L TR) is post import finance extended to the importer of goods. Importer issues a trust receipt favor of Bank and takes possession of the goods markets and sells the products and repay within the stipulated period.
The exports form Bangladesh is subject to export trade control exercise by the Ministry of Commerce through Chief Controller of Export and Imports (CCI & E). no exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The Export Registration Certificate (ERC) is required to be renewed every year. The Export Registration Certificate (ERC) is to be incorporated on EXP forms and other documents connected with exports.
The Formalities and Procedure Are Enumerated as Follows:
- Obtaining Exports L/C: To get export L/C form exporter issued by the importer.
- Submission of Export Documents: Exporter has to submit all necessary documents to the collecting bank after shipping of goods.
- Checking of Export Documents: After getting the documents banker used to check the documents as per L/C terms.
Negotiation of Export Documents: If the bank accept the document and pay the value draft to the exporter and forward the documents to issuing bank that is called a negotiating bank. If the bank does not buy the L/C then the bank normally act as a collecting bank.
Realization of Proceeds: This is the period when the issuing bank has realized the payment.
Reporting to The Bangladesh Bank: As per instruction by Bangladesh Bank the bank has to report to respective department of Bangladesh Bank by mentioning latest payment.
Issue to Proceed Realization Certificate (PRC): Bank has to issue Proceed Realization Certificate (PRC) of export L/C to the supplier exporter for getting cash assistant.
Following Papers To Be Obtained From The New Export While They Desire To Make Export Through Us:
1) Export Realization Certificate (ERC).
2) Trade License.
3) Membership Certificate Form Chamber EPB.
4) Account To Be Maintained With Bank.
5) Export L/C Contract.
6) EXP Form To Be Certified.
7) TIN Certificate.
8) VAT Certificate.
9) Memorandum and Article of Association of The Company. 10) Confident Credit Report To Be Obtain of The Importer.
Back to. Back Letter of Credit:
A back-to-back letter of credit is a new 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’s main surety/ security is the original credit. The original credit (selling credit) and the back-to-back credit (buying credit) are separate instruments independent of each other and in no way legally connected, although they both form part of the same business operation. The supplier (beneficiary of the back-to-back credit) ships goods to the importer or supplies goods to the exporter and presents documents to the bank as is specified in the credit. It is intended that the exporter would substitute hiss own documents and ships the goods to the importer, if necessary and present documents for negotiation under the original credit, his liability under the back-to-back credit would be adjusted out of these proceeds. The export L/ is marked lien and no margin is taken.
Foreign exchange can simply be defined as a process of conversion of one currency into another. A well know author of some popular books on foreign exchange, Dr. Paul Ensign tells that foreign exchange means “a system or process of conversion of one national currency into another and of transferring money from one country into another”. In ordinary sense “Foreign Exchange” means Foreign Currency, which refers to the rate of exchange the price of one unit of foreign exchange in terms of another currency. But in its complete sense, foreign exchange means the mechanism or the media used and the rate at which these media are exchange with another.
Foreign Exchange department is divided into two parts, the first one is the Export Department and the second part is the Import Department.
When any organization wants to export any product to other country than that particular organization usually opens an Export Letter of Credit (L/C) from this department.
Foreign Exchange Operation (Export Financing):
Exporter means any person lawfully exporting goods from Bangladesh to any other country in the world. After shipment the exporter has to tender the documents to the Bank . within the stipulated period for the negotiation of the documents are drawn under a Letter of Credit. If require, finance the duty drawback and cash compensatory support claims of the exporter.
Export credit means any credit provided by an institution to an exporter in the form of packing credit or post shipment credit. Packing credit means any loan or advance granted or any other credit provided by an institution to an exporter for financing the purchase, processing or packing of goods on the basis of Letter of Credit.
Post-shipment means any loan or advance granted or any other credit provided by an institution to an exporter of goods from Bangladesh from the date of realization of the credit after shipment of the goods to the date of extending the credit after shipment of the goods to the date of realization of the export proceeds and includes any loan or advance granted to an exporter in consideration of or on the security of any duty drawback or any cash payment by way of incentive.
Back-to-Back Letter of Credit (UC):
Back-to-Back Letter of Credit (L/C) is a type of Import L/C either in inland or in abroad, which open against lien on valid export L/C.
In our country in export of garments, this method of finance of widely used and is very well known to the manufactures of garments. Bangladeshi exporters received an irrevocable Letter of Credit (LIC) for supply of readymade shirts, :& ohm an American Bank. For manufacture of the ordered shirts the exporter does not have the required raw materials. To execute the order he is to import raw materials from Korea. Then the Bangladeshi exporter will have to open an import Letter of Credit (L/C) favoring Korean supplier for of fabrics and accessories. The Letter of Credit (L/C) is opened by the Bangladesh Bank lien against the American Banks Letter of Credit (L/C) under bonded warehouse system.
Restricted Letter of Credit (L/C)
When the negotiation is restricted to the Letter of Credit (L/C) advising bank only against adding confirmation to the credit. This type of Letter of Credit (L/C) is called restricted L/C.
Procedure for Opening Letter of Credit (UC):
An importer desirous to have an import Letter of Credit (L/C) limit must have applied to the designated bank in prescribed form for sanction of margin, Letter of Credit (L/C) limit it etc. .
In order to get competitive advantage and to deliver quality service, top management should try to modify the services.
Rectify The Existing Problems
The synergy of dedicated manpower, technology, market opportunity can lead the organization to achieve the goal, a bank must establish and adhere to adequate policies, practices and procedures for evaluating the quality of asset and the adequacy of loan provision and reserve.
EXIM Bank should train up their branch personnel about all sort of Information regarding SWIFT and its service.
Due to lack of proper knowledge about the operation procedures and services provided to the customers by SWIFT, certain customers are facing problem, as they have to wait for certain time to get service. And sometimes personnel are not being able to operate SWIFT without any confusion. They are not fully independent of handling SWIFT. Official training is the solution to this problem.
EXIM Bank should always monitor the performance of its competitors in the . field of Foreign Trade.
It seems to me that day-by-day customers operation is increasing; individual employee has to handle different types of job. But that is pock a back for an employee. As a result it might be happen any big mistake by the employee and service is also timed consuming and customer has to suffer for this situation. May be it would be the reason for employee’s de-motivation as well as the customer’s dissatisfaction.
EXIM Bank Ltd. should focus on their promotional activities.
They should also focus on the marketing aspects to let customers know about their products and offerings and more promotion should be given to attract new customer.
EXIM Bank Ltd. must develop electronic banking system to moderate the service. Technological advantage of a bank ensuring its competitive edge in the market place can only be achieved by efficient manpower. It is market share to reduce its operating cost and to generate new revenue. Electronic banking system also allows increased access to the financial system by its customers.
Some other important factor that should be focused on the development process:
Time consumed at service level should be minimized at optimum level.
Evaluate customer’s needs from their perspective and explain logically the shortcomings. customer’s expectation and employee’s perception.
Only the cash section of the branch is computerized. Hopefully the management decided to provide to provide computer for departments, which will bolster services of the bank.
When a joint stock company comes to open an account if the company happens to be an existing one, the banker should demand copies of the balance sheet and profit & loss account, which will reflect the financial growth of the company and its soundness. But in practice companies and the bankers as well don’t even bother.
Encoding and decoding process of test number eat up the lion share of the time of the officer who works in that desk. But a simple computer program could do the same if the desk were computerized.
Officers of the bank are competent. Even though many of them simply know the working procedure of what they are doing but don’t know the philosophy behind doing those.
Project loan requires testing of feasibility of project and judging the marketability of the product. It requires infusion of knowledge of both the fields – marketing and banking. But the bank has hardly any person with this kind of ability.
Like most of the private banks, EXIM Bank Ltd. also imposes a target deposit for collection upon its employees. Every employee has to go out for the purpose of deposit collection, which they call “development purpose”. It is an effective method no question about it, since many banks of our country rely on this method. But sometime affect negatively and cause job dissatisfaction. Officer s of the desk, where workload is very high, hardly get the chance to go out for development purpose and always feel that their duties for the organization would not be evaluated unless they can show a good amount of deposit collection against their name.
Find the learning and experience point of view I can say that I really enjoy my internship at EXIM Bank of Bangladesh Ltd. fun the very first day. I am confident that this 3 three months internship program at EXIM Bank of Bangladesh Ltd. will definitely help me to realize my further carrier in the job market.
Predominance analysis of a department of a bank is not so sufficient to measure and express perfectly within this short time of my internship period. But it is a great opportunity for me to get use to with the operational environment of commercial banking of EXIM Bank. I have tried by soul to incorporate the research report with necessary relevant information in my report.
Few loyal committed customer base, lack of modem and effective technology or facilities, not enough skilled employee in some sector, considering all of these very important factors, EXIM Bank should always try to improve their service level in every terms.
The marketing department should think freshly about their marketing objectives and practices. Rapid changes can quickly make yesterday’s winning strategies out of date. As a developing private bank in Bangladesh, EXIM Bank shouldn’t allow their client to get dissatisfied with their service. They have their competitors who actively striving to take the advantages in every side.
During the course of my practical orientation I have tried to learn the practical banking to relate it with my theoretical knowledge, what I have gathered and going to acquire from Various courses.
In this age of global economy, the banks play the most vital role in almost in any economy. Local private banks are continuously enhancing their clientele services in order to be in a competitive position as well as intend to diversify country wide and globally as well. Having an appropriate infrastructure in terms of latest information technology and competent human resources, it is required for survival in this highly competitive financial world. During the last couple of years, the number of banks (both local and foreign) is expanding extensively in Bangladesh. Therefore, in this competitive banking sector, some banks have also deteriorated. One thing that can be said in these circumstances is that all of the banks (public, private or foreign) must have to have a good mix of exquisite operational network, appropriate strategies and proper marketing mix in order to survive and to be a one of leading bank in Bangladesh.