Banks play a very important role in foreign exchange transaction of a country. Mainly transactions with overseas counties are respect of imports, exports and foreign remittance come under this. Banks are the vital sectors of Foreign exchange transactions. Central Bank record all sorts of Foreign Exchange transaction which is to be reported regularly (e.g. daily, fortnightly, monthly quarterly, yearly etc.) to Bangladesh Bank. This part of the report consists of the following areas
1) International Trade : Import & Export
2) Foreign Exchange related banking terms & rules
3) Foreign Exchange rate & foreign Remittance.
Foreign exchange transaction is classified according to there activities.
Back to Back
International trade is the trade between countries with the rest of the World. Now we live in a global economy. In the age of globalization each country has free access to the market of other with quality goods and services.
International Trade has two components – as following Import & Export.
To handle of International transaction in a sound and efficient manner there must have a written contract between the buyer & seller. For international trading purpose a Bank or Banks may involve in this contract and then the contract renamed into a letter of credit. It is the media under which the international trades are concluded.
Function of Foreign Exchange Department
- L/C Opening
- L/C Amendment
- Sanctioning PAD, LIM, LATR.
- T.C issuing
- Foreign Bill Purchase(FBP)
- Local Bill Purchase(LBP)
- Foreign Remittance
- FC A/C maintaining
- Foreign Currency remitting
Foreign Exchange Mechanism
01) L/C Opening
02) Issue the L/C by issuing Bank and send to advising bank
03) Advised and or confirm the L/C by Advising and Add confirming Bank
04) Submit the documents to Negotiating Bank by export
05) The Negotiating Bank makes payment
06) The Negotiating Bank forward/sends documents to issue bank
07) Issuing Bank makes payment to negotiating bank
08) A issuing bank instructs to pay or reimburse the paying bank and paying bank makes payment or reimburse to the negotiating bank
09) Issuing bank sends documents to the import
10) The import makes payment
Types of L/C Offered:
Letter of Credit (L/C) can be defined as a ‘Credit Contract’ whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some agreed conditions. It is also known as documentary letter of credit. It may be either:
(i) Revocable: A revocable credit is a credit which can be amended or cancelled by the issuing bank at any time without prior notice to the seller.
(ii) Irrevocable: It constitutes a definite undertaking of the issuing bank(since it can’t be cancelled or amended without the agreement of all parties thereto), provided that the stipulated documents are presented & the terms and conditions are satisfied by the seller.
Special documentary Credit:
- Revolving Credit: It is the credit which provides for restoring the credit to the original amount after it has been utilized.
- Transferable Credit: It can be transferred by the original beneficiary in full or in part to one or more subsequent beneficiaries.
- Back to Back Credit: It is a new credit opened on the basis of an original credit in favor of another beneficiary.
- Anticipatory Credit: The anticipatory credit makes provision for pre-shipment payment, to the beneficiary in anticipation of his effecting the shipment as per L/C conditions.
- Red Clause Credit: A red clause credit is a credit with a special condition incorporate into it that authorizes the confirming Bank or any other Nominated Bank to make advances to the beneficiary before presentation of the documents.
- Green Clause Credit
Parties Involved in L/C:
There are number of parties involved in a letter of credit and the right and obligation of the different involved parties will differ from each other. The involved parties to a letter of credit are named below:
01) The applicant/The importer/The buyer
02) Opening bank/Issuing bank
03) The beneficiary/The Exporter/The seller
04) The Advising Bank/The transmitting Bank/The notifying bank
05) The Confirming Bank
06) The Negotiating Bank
07) The Reimbursing Bank/Paying Bank
Characteristics of the importer who wants to open a letter of credit
- Must have an A/C in the branch
- Must be a member of the Chamber of Commerce
- Must be a TIN holder
- Must have IRC(Import Registration Certificate)
- VAT(Value Added Tax certificate)
Findings & Analysis
Major findings of the study:
- The organization has a human resource management.
- The organization has a prescribed salary structure.
- The organization has provided provident fund & gratuity facilities.
- The accounts department has professional accountant.
- The training department has needs more trainers.
- They have to recruit technologically sound people for their future project.
- The organization has to motivate the different personnel & provide different facilities to get best effort from them.
- Technical support department must be more conscious about customer care.
- Management will have to concern about the satisfaction of the employee.
- Leave & working hour are not maintained.
- Last two years the turnover rate of employee is getting higher.
Analysis of this report are as follows
Recruitment & Selection.
Bank Safety and security.
Recruitment involves assessing the nature of a post and advertising for suitable candidate.
“Recruitment is the process of finding and attracting capable applicants for employment. The process begins when new recruits are sought and ends when their applications are submitted. The result is a pool of applicants from which new employs are selected.”
The process of defining the recruitment should stunt with an analysis of the job. This is called Job analysis.
Job analysis has three components:
1. Job descriptions: a written statement of the job holder does, how it is done and why it is done.
2. Job specifications: statements indicating the minimal acceptations qualifications incumbents must posses to successfully perform the essential elements of their jobs.
3. Job Evaluation: specifies the relative value of each job in the organizations
In light of Pubali Bank’s job analysis practice
1. Job description: management generally offer for the post of probationary officer each year, they also offer higher post like executives, Senior vice president , Senior asst. vice president, Managing director, Deputy managing director.
2. Job specification: In this job specification section. Required qualification differs by the nature of the job.
The Job specification table of PBL is given below:
|MBA/MBM/MA from any reputed university. At least Two first division in the entire education life.(No third division)|
|MBA/MBM/MA from any reputed university.||At least five years of banking experience.||40 years(Maximum)|
Senior assistant vice president
|MBA/MBM/MA from any reputed university.||At least eight years of banking experience.||45years(Maximum)|
Senior vice president
|MBA/MBM/MA from any reputed university.||At least ten years of banking experience.||48years(Maximum)|
PhD in Finance/Management/
|At least fourteen years of banking experience.||55years(Maximum)|
Deputy Managing Director
PhD in Finance/Management/
|At least fourteen years of banking experience.||52years(Maximum)|
Classification of staff of Pubali Bank Limited:
There are four types of PBL staff. Those are as:
There are levels of Employee. The employee will work one year as a trainee before being permanent. After being permanent the staff may be come under the shade of provident fund. Assistant Officer, Junior Officer, Probationary Officer, Executive, vice president, senior assistant vice president, senior vice president, Executive senior vice president all are regular staff. The total number of regular staff is five hundred thirty two.
During a running project; the staff is appointed on the basis of project duration. Posting from the appointed project is not possible. Project staff will get benefit and opportunity on the basis of rules and regulation of the project and terms and condition of appointment letter. Managing director, Deputy Managing director, Secretary is the project staffs.
Service Staffs are graded staff. Period of probation is not applicable for the service staff. Service staff can be the member of provident fund after they join in the job. Office assistant, Guard, Cleaner is treated as service staff. There is seventy five service staff in PBL.
The duration of employment depends on the contracted time -limit. Job benefit and opportunity will determine by contract. The time-lime of contract can be renovated. Period of probation is not applicable for the contract staff. Contract staff will not get the benefit of provident fund, gratuity for service and festival allowance. Example-Chartered accounts.
Recruitment Process Of Pubali Bank Limited.
There are various methods which a company can select the right people for the right post .How ever Pubali Bank Ltd. do not apply all the methods that exist in the books of Management. The sources of man power have a great influence on the method of selection.
PBL recruit its employees from both internal & external sources.
Staff Recruitment Board:
The representative authorized by the human resource division and nominated by the program will take the viva of the applicants. To ensure the quality and subject oriented staff recruitment, the orientation of board member may be held if it is necessary.
If any relative applicant applies then it should avoid from being the board member.
At least one member of board should come from the human resource division.
Deployment of New Staff:
Regular staffs have to agree to work any place where Standard Bank Limited operates their operation in Bangladesh.
Joining of New Staff:
The staff will join on his/her specific joining date specified by the Pubali Bank Limited. In case of head office or branch office, each staff should have joined his/her work before 9.00 am. Staff can join on his work within seven days of his/her joining date and local authority can accept the joining report. After seven days it is not possible to join without the permission of human resource division. The new staff will submit the following papers or documents when he/she joins:
Interview Card: Issued by the HRD. Joining related all information are given in the interview card.
Bond of Security: Before joining the new staff has to sign the bond of security. Rules of this paper are if he/she leaves the job before three years then she/he must return 30% of his total salary.
Identity Card (Certificate issued by Chairman): name, residence-address, organization’s name, designation, blood group are given in the card.
Blood test report: The new employee should have to place his blood group, HIV& Hepatitis test report to the authority two days before joining.
Time Table of work:
The working day of Standard Bank Limited head office & in AD branches is Saturday to Thursday. The Friday is the weekend holiday. But in non AD branches, working day is from Sunday to Thursday.
Record of Attendance:
All staff should have to sign in the attendance register in attendance book which kept in workplace to record his attendance. Every employee has to sign in the attendance register before starting work.
Every one should attend in office timely. If any staff attends after 15 minute of scheduled time then he/she will consider as late. If any employee comes lately 3 times in a month then it will consider as his 1-day casual leave. If any staff comes lately seven times in a month then the manager of the branch will give him a warning notice. One copy of that warning notice will send in human resource division.
If any employee gets continuous 3 warning notice then the staff may be terminated. If any employee is on leave then it should have a clear description of his leave and types of leave in the register book.
Pubali Bank is the largest bank in the private sector of our country. Increment in the net profit of the banking sector was on an average 10% last year. Though it is observed that credit management of the bank is quite satisfactory, the following recommendations can be taken into consideration to make it more effective.
Bangladesh Bank should monitor more closely the lending activities of Pubali Bank.
As once upon a time it was a nationalized bank, various rules regulations, office norms and working environment still exist like other nationalized banks of our country. Pubali bank has to come out from that footing and be organized like some reputed private sector banks, which are doing very well.
There exist various rules and also prescribed format for offering loans and advances to the customers. In maximum of the case these are not followed properly. Lending Risk Analysis (LRA) is not done regularly and properly.
Application forms of the customers remain erroneous and full of wrong information. It has been observed that the information given by the customer regarding business, property holding, inventory, bio data of entrepreneur do not tally on ground. Even after that the banker provides these customers with loans after doing necessary correction in the customer’s application by the banker. Close monitoring and supervision has to be ensured by the bank authority in this respect.
After assessing 3-4 years record it is found that near about half of the loans and advances have become classified. Moreover 4-5% of that classified loans are substandard or doubtful. Almost all the amount of classified loan is bad/loss percentage of which is 95%. Carrying forward of this loans have made the figure of the net profit of the bank an inflated one which is also misleading. Some bad/loss loan with long outstanding duration has to be written off.
Assessing the five years credit statement of the bank, it is found that recovery rate of classified loan is only 10% to 15% which is very much alarming. Though it slightly increased last year, a coordinated effort has to be undertaken by the bank to increase the recovery rate.
More incentive program needs to be undertaken for the officers and employees of the bank to improve the recovery rate. Here the incentive scheme taken by Bangladesh Krishi Bank named “MIRACLE” can be mentioned which has given fruitful result.
Credit information bureau (CIB) should act more efficiently. All the necessary information of a prospective borrower should be available to the bank authority also. Here the bank should use upgraded computer software for this purpose.
The bank itself should be much more cautious before sanctioning loan. The bank authority should strictly follow the loan appraisal procedure, and also ensure that all the information provided by the clients is correct.
All the officers and employees working specially in the recovery section should be more sincere to their respective job.
Long outstanding cases filed in the insolvency court should be resolved as early as possible with greater priority. For its own interest bank should employ well-reputed lawyers to settle all the outstanding cases.
More emphasis should be given on foreign exchange transactions. Timely collection of export proceeds has to be ensured. The bank should strictly follow all the means and ways to check the fraudulent activities in case of foreign exchange trade.
Opening an L/C involves lot of paper works and also time consuming. Officers and employees are not also very thorough and well conversant with the rules and policies of foreign exchange. They need to be trained on these and the whole system has to be made computerized so that it takes less time to open an L/C.
Due to non-availability of affiliation, negotiation becomes difficult with some of the foreign banks. For this some prospective exporter and importer are discouraged to do their business with all those particular countries. To expand the business activities, Pubali bank should make an endeavor to increase the affiliation with more number of foreign banks.
Normally in our country most of the report does not see the light, they remain in pen and paper. Even if it is published, the recommendations are not implemented. It is nice to observe that Government has already promulgated some rules basing on those recommendations. So the recommendations should be implemented despite of any hindrance for the betterment of banking sector.
During the seven weeks practical orientation at Corporate Branch, almost all the desks have been observed more or less. It has been arranged for gaining knowledge of practical banking and to compare this practical knowledge with theoretical knowledge. Comparing practical knowledge with theoretical involves identification of weakness in the branch activities and making recommendations for solving the weakness identified. Though all departments and sections are covered, it is not possible to go to the depth of each activities of branch because of time limitation. However, highest effort has been given to achieve the objectives the practical orientation.
With a view to analyzing the status of Pubali Bank Limited applied in indeed very much consistent and relevant to develop the rural areas. Human resource management is the process of acquiring, training, appraising, and compensating employees, and attending to their labor relations, health and safety, and fairness concerns. It’s true that any individual who works in Human Resources must be a “people person.” Since anyone in this department deals with a number of employees, as well as outside individuals, on any given day, a pleasant demeanor is a must.