Primary data: The primary data collection process includes:
For this report I have to gather primary data through questionnaire to the employees and clients of different banks about their Institutions. Also have to gather data by observing relevant people’s action & situations. So I can say, I used two type of research approach for primary data collection these are observational & survey research approach.
I use personal or face to face contact method which is flexible, quantitative, response rate is good & control of sample is fair.
Analysis & Reporting:
I have used different types of statistical tools and computer software for analyzing and reporting my gathered information, such as – Microsoft Excel, Microsoft Word.
Limitations of the Study:
The study had to be completed under certain constraints, which barred it to be more effective. Some of these constraints are listed:
Despite the limitations, we are tried our best to prepare the report. If you find any mistakes please consider it cordially.
EXIM Bank limited is the Private sector bank established on June 02 in 1999; the Bank has already occupied strong position among its competitors and has made significant contribution in national economy. The emergence of EXIM Bank Limited in the private sector is an important event in the Banking arena of Bangladesh. The important sector in economy they should more careful about their services and their ethics. EXIM Bank mainly focuses on export and import trade financing.
The Bank was established under the leadership of late Mr. Shahjahan Kabir, the founder chairman who had a dream to contribute in the socio-economic development of our country. A highly qualified group of entrepreneurs expanded their hands with the founder chairman to materialize his dream. All the sponsors are well experienced and successful in their respective business areas. Among them Mr. Nazrul Islam Mazumder became the honorable Chairman after the death of the founder Chairman.
At its inception in 1999, Bank was named as ‘BEXIM Bank Ltd’ (acronym for “Bengal Export Import Bank Limited”) and owing to raising an objection by BEXIMCO group regarding the similarity in names, the Bank was renamed in the same to the style of ‘EXIM Bank Ltd’ (acronym for ”Export Import Bank of Bangladesh Limited”).
Goals & Objectives of EXIM Bank Limited:
Mission of EXIM Bank Limited:
Vision of EXIM Bank Limited:
The gist of their vision is “Together towards Tomorrow”. Export Import Bank of Bangladesh Limited believes in togetherness with its customers, in its march on the road to growth and progress with services. To achieve the desired goal, there will be pursuit of excellence at all stages with a climate of continuous improvement, because, in EXIM Bank, they believe, the line of excellence is never ending. Bank’s strategic plans and networking will strengthen its competitive edge over others in rapidly changing competitive environments. Its personalized quality services to the customers with the trend of constant improvement will be cornerstone to achieve their operational success.
The Board of directors has formed ashariah supervisory Board for the Bank. Their duty is to monitor the entire Bank’s transactional procedures, & assuring its Shariah compliancy. This Board consists of the following members headed by its chairman.
The tasks of the Shariah supervisor in summary is replying to queries of the Bank’s administration, staff members, shareholders, depositors, & customers, follow up with the Shariah auditors and provide them with guidance, submitting reports & remarks to the Fatwa & Shariah Supervision Board and the administration, participating in the Bank’s training programs, participating in the supervision over the Al Iqtisad Al Islami magazine, & handling the duty of being the General Secretary of the Board.
This is the civil supervisory aspect that shapes the Bank’s main feature. Its existence is part of the shariah Supervision procedures. One of its main tasks is to check the shariah compliancy in the Bank’s transactional procedures in accordance to the Fatwa’s issued in that regard, under the guidance of the Shariah Supervisor.
The Shariah auditor is assigned the task of revising the Bank’s transactional procedures throughout the year to check the extent to which the staff members and the different department have abides by the regulations, advices, and Fatwa’s issued by the Fatwa & Shariah Supervision Board, forums, & banking conferences. As well assuring that all the contracts that states a right for the bank or an obligation on the bank is certified by the Fatwa & Shariah Supervision Board.
As a Commercial Bank, we provide all traditional banking services including a wide range of savings and investment scheme products, foreign exchange and ancillary, services with the support of modern technology and professional management. But our main stress is, as the name implies, put on export and import trade handling and financing and the bank has become the pioneer in promoting Readymade Garment industries and one of the largest financiers in this sector. Since inception, the Bank foresighted the bright prospects of this sector with financial support including market information and advice and today the garment sector constitutes the lion portion of the total export of the Company.
Organizational culture means the common perception held by the organization’s members; a system of shared meaning that distinguishes from one organization to other organizations. This bank is one of the most disciplined banks with a distinctive corporate culture Here they believe in shared meaning, shared understanding and shared sense making. Their people can see and understand events, activates, objects and situation in a distinctive way. They would their manners and etiquette, character individual lay to suit the purpose of the Bank and the needs of the customers who are of remount importance to us. The people in the Bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture they belong has not been imposed; it has rather been achieved through their corporate conduct.
EXIM Bank has been doing all traditional banking business including the wide range of savings, credit scheme products and trade services. Bank operates with a wide range of customers. If any innovative banking service launched then suddenly it is quickly duplicated by the other banks such as ATM, Tele-Banking, Online etc. hence the key to establish a competitive edge in banking industry of Bangladesh is to provide better customer service quality.
Usually bank is an establishment which trades in money; an establishment for deposit, custody, and issue of money and also for granting loans, discounting bill and facilitating transmission of remittances from one place to another.
The Principal functions of Bank’s are:
Banking means the accepting for the purpose of lending or investment of deposits or money from the public, repayable on the demand or otherwise and withdrawn able by cheques, draft, order or otherwise.
Islamic banking has been defined as banking in consonance with the ethos and value system of Islam and governed, in addition to the good governance and risk management rules, by the principles laid down by Islamic Shariah. Interest free banking is a narrow concept denoting a number of banking instruments or operations, which avoid interest. Islamic banking, the more general term is expected not only to avoid interest-based transactions, prohibited in the Islamic Shariah, but also to avoid unethical practices and participate actively in achieving the goals and objectives of an Islamic economy.
The General Secretaries of the Organization of Islamic Conference (OIC) defines an Islamic bank as “A financial institution whose statutes, rules and procedures expressly state banning of the receipt and payment of profit on any of its operation”. Section 2 of Islamic Banking Act 1983 of Malaysia (Act no. 276) has given the following definition:-
The banking system deal with interest and do not follow the rules of shariah is known as Conventional banking.
Usually the conventional banking system deals with the interest factor and in most of the cases we can see that it do not work in a partnership basis with its client.
Example: Mr. X want to start a plant. So he takes loan from a conventional bank. In this case bank interacts with him as a client because Mr. X as to repay the money with a specific interest, no matter Mr. X gains profit or loss. But Islamic banking system said there will be no specification of money up on the capital. The Islamic bank should claim money up on business profit (if gain) [as per contract]; The capital amount (loan) must repay within the specific time.
Definition of service:
Today service sector is growing faster. So we need to know about service clearly. Services are deeds, processes & performances. Its include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced and provides added value in forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser. Some examples of service industries are Banks, Health care, professional services, hospitality, travel etc.
Overall Differentiation: Islamic Banking vs. Conventional Banking:
Table 04: Islamic Banking vs. Conventional Banking
|1. The functions and operating modes of conventional banks are based on fully manmade principles.||1. The functions and operating modes of Islamic banks are based on the principles of Islamic Shariah.|
|2. The investor is assured of a predetermined rate of interest.||2. In contrast, it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur).|
|3. It aims at maximizing profit without any restriction.||3. It also aims at maximizing profit but subject to Shariah restrictions.|
|4. Lending money and getting it back with compounding interest is the fundamental function of the conventional banks.||5. Participation in partnership business is the fundamental function of the Islamic banks. So we have to understand our customer’s business very well.|
|5. Very often it results in the bank’s own interest becoming prominent. It makes no effort to ensure growth with equity.||5. It gives due importance to the public interest. Its ultimate aim is to ensure growth with equity.|
|6. For interest-based commercial banks, borrowing from the money market is relatively easier.||6. For the Islamic banks, it must be based on a Shariah approved underlying transaction.|
|7. Since income from the advances is fixed, it gives little importance to developing expertise in project appraisal and evaluations.||7. Since it shares profit and loss, the Islamic banks pay greater attention to developing project appraisal and evaluations.|
|8. The conventional banks give greater emphasis on credit-worthiness of the clients.||8. The Islamic banks, on the other hand, give greater emphasis on the viability of the projects.|
|9. The status of a conventional bank, in relation to its clients, is that of creditor and debtors.||9. The status of Islamic bank in relation to its clients is that of partners, investors and trader, buyer and seller.|
Difference between Bank Product & Service:
There is general agreement that inherent differences between goods & services exist and that they result in unique or at least different. These differences & associated marketing implications are shown in a table below:
Table 05: Difference between Bank Product & Service:
|Tangible||Intangible||Service cannot be inventoried.|
Service cannot be patented.
Service cannot be readily displayed or communicated.
Pricing is different.
|Standardized||Heterogeneous||Service delivery and customer satisfaction depends on employee action.|
|Production separate from consumption||Simultaneous production & consumption||Customer participation affects the transaction. When service provides is consumed at the same time.|
|Nonperishable||Perishable||Service cannot be returned or restore.|
Meaning of Export
Export means lawful carrying out of anything from one country to another country for sale.
Definition of Exporter
The importers and exports trade of the country is regulated by the Imports Exports control Act 1950. No person / firm is allowed to export anything from Bangladesh unless he is registered with CCI and E under the registration order (Importer and Exporter) 1952. To become an exporter an ERC (export Registration Certificate) must be obtained from the office of CCI & E.
Meaning of Import
Import means lawfully carrying out of anything from one country to country to country for buying. It will be occurred according to the government law
Problems for the Islamic Banking / Islamic banks:
Lack of Unified Shariah Rulings: In our country there is a problem of insufficient Scholars about shariah based banking, it causes the shortage of Scholar (shariah know ledged) human resource in the Central bank. As a result Islamic Banks in Bangladesh facing the problem, lack of Unified Shariah Rulings.
Absence of Islamic Inter-Bank Money Market: Islamic Banks do not deal with Interest. But there is no Islamic Inter-Bank Money Market within the country. So at the time of shortage of fund the Islamic Banks con not take loan form present money market. Because call money rate is involved with interest which is mostly used in the present money market.
Terrorism: Now a day it is the major problem with the all Islamic banks of the world. There is a negative thinking already imposed with the Muslims and with their religious rulings. And as Islamic Banking system rules by the rule of Allah given in Al-Quran, a negative thinking also works with it.
Shortage of Skilled and Trained Manpower in Central Bank for Islamic Banking: There is a huge shortage of skilled and trained manpower in the central bank for observing the activities of Islamic Bank’s. As a result Islamic banks miss the appropriate guidance of Central Bank.
Economic slowdown and Political Situation of the Country: The political instability is the major problem for the banking industry. Because it reduce the overall flow of money within the country. As a result the growth of economy going down. As Islamic banking system concept for this country, people feel more unreliable to invest in Islamic banks, it causes negative reflection for the bank.
Inadequate Track Record of Islamic Banking: As Islamic banking is comparatively new concept in this country it do not have a huge track record in the Banking Industry, so some time public got confused at the time of invest in these bank.
Defaulting Culture of the Borrower: The defaulting culture of borrower is another problem for the Islamic Banks as well as Islamic banking system. Because Islamic banking system deals with the profit. Some time borrower does cheating with the bank by showing negative profit to his business.
General Banking Functions of EXIM Bank:
General banking department is the heart of all banking activities. This is the busiest and important department of a branch, because funds are mobilized, cash transactions are made; clearing, remittance and accounting activities are done here.
Since bank is confined to provide the services everyday, general banking is also known as ‘retail banking’. In EXIM Bank LTD Principal Branch, the following departments are under general banking section:
Account Opening Section:
Account opening is the gateway for clients to enter into business with bank. It is the foundation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account. A customer can open different types of accounts through this department. Such as:
Banks, as a financial institution, accept surplus money from the people as deposit and give them opportunity to withdraw the same by cheque, etc. But among the banking activities, cash department play an important role. It does the main function of a commercial bank i.e. receiving the deposit and paying the cash on demand. As this department deals directly with the customers, the reputation of the bank depends much on it. The functions of a cash department are described below:
Function of Cash Department:
After the banking hour cash is packed according to the denomination. Notes are counted and packed in bundles and stamped with initial.
Carrying cash money is troublesome and risky. That’s why money can be transferred from one place to another through banking channel. This is called remittance. Remittances of funds are one of the most important aspects of the Commercial Banks in rendering services to its customers.
Types of remittance:
Pay Order gives the payee the right to claim payment from the issuing bank. Payment is made from issuing branch only. Generally remit fund within the clearinghouse area of issuing branch. Bank charge only commission for this. However party must have an account with the bank, so that whenever the fund refund they(party) can collect it. But for the student and the pay order for job purpose of any applicant, account with the bank is not mandatory. Because in this case fund are non-refundable.
Demand Draft is an order of issuing bank on another branch of the same bank to pay specified sum of money to payee on demand. Payment is made from ordered branch. Generally remit fund outside the clearinghouse area of issuing branch. Payee can also be the purchaser. Bank confirm through checking the ‘Test Code’ Bank charge a commission and telex charge for it.
Cheques, Pay Order (P.O), Demand Draft (D.D.) Collection of amount of other banks on behalf of its customer are a basic function of a Clearing Department.
Clearing is a system by which a bank can collect customers fund from one bank to another through clearing house.
Clearing House is a place where the representatives of different banks get together to receive and deliver cheque with another banks.
Normally, Bangladesh Bank performs the Clearing House in Dhaka, Chittagong, Rajshahi, and Khulna & Bogra. Where there is no branch of Bangladesh Bank, Sonali bank arranges this function.
EXIM Bank LTD. is a scheduled Bank. 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.
1) Normal clearing house
2) Same day clearing house
Normal clearing house:
1) 1st house: 1st house normally stands at 10 a.m. to 11a.m
2) 2nd house: 2nd house normally stands after 3 p.m. and it is known as return house.
Same day clearing house:
1) 1st house: 1st house normally stands at 11 a.m. to 12 p.m
2) 2nd house: 2nd house normally stands after 2 p.m. and it is known as return house.
Accounts Department is called as the nerve Centre of the bank. In banking business, transactions are done every day and these transactions are to be recorded properly and systematically as the banks deal with the depositors’ money. . Improper recording of transactions will lead to the mismatch in the debit side and in the credit side. To avoid these mishaps, the bank provides a separate department; whose function is to check the mistakes in passing vouchers or wrong entries or fraud or forgery. This department is called as Accounts Department. If any discrepancy arises regarding any transaction this department report to the concerned department.
Besides these, the branch has to prepare some internal statements as well as some statutory statements, which are to be submitted to the Central Bank and the Head Office. This department prepares all these statements.
Advance Banking (Foreign Exchange):
In terms of the F.E.R act, 1947 as adopted in Bangladesh “Foreign Exchange” means foreign currency and includes all deposits, credits and balances payable in foreign currency as well as all foreign currency instruments like, cash currency notes, checks, drafts, bill of exchange, traveler’s cheques, postal money order, commercial letter of credit etc.
Opening of Letter of credit
Letter of credit is an undertaking on the bank’s part on behalf of its customer under some legal consideration. It is also known as documentary credit. Thus, the documentary credit is a commitment on the bank’s part to place an agreement at the seller’s disposal on behalf of the buyer under precisely defined conditions.
The Main Parties to Documentary Credit:
(Some time the advising bank and the negotiating bank become the same bank)
Documents required for opening a Letter of Credit are as follows;
Procedure, Scrutiny, Lodgment and Retirement
Imports and exports (control) Act 1950 regulate the import and export trade of the country. There are a number of formalities which on importer has to fulfill before import goods.
Procedures of import
The procedures which follow at the time of import are as follows:
Literally, the term export, we mean that carrying of anything of from one country to another. On the other hand bankers define export as sending of visible things outside the country for deal. Export trade plays a vital role in the development process of an economy. With the export earning, we meet import bills.
Like any other business it needs registration. The chief controller of import and (CC&E) makes export registration. For registration, prospective exporters required to apply through Q.E.X.P form the CC&E along with the following documents:
Remittance can be classified broadly into two types:
a) Outward remittance, and
b) Inward remittance.
Outward remittance include sell of foreign currency by TT, MT, Drafts, Traveler cheque and as well as payment against import into Bangladesh. Outward remittance can be classified into two types. These are as follows:
b) Inward Remittance
Inward remittance includes purchase of foreign currency by TT, MT, Drafts, Purchase of export bills and Traveler cheque. But due to lack of promotional activities the branch is failure to attract new customer for existing export and import business.
Investment Functions of EXIM Bank
Investment means ‘to lay out of money’ or fund provided for a legal purpose for a certain period. In Islamic Banking Investment means utilization of fund or deployment of fund a special legal purpose on profit /loss sharing basis for a certain period. Islamic Bank as per shariah deals goods & services, not money.
There are mainly three types of investment in Islamic Banking. These are:
Customer Satisfaction Analysis:
These are the areas given below based on which, I was trying to find out the customer satisfaction level of EXIM Bank.
Grade Sheet for Satisfaction Area Selection:
Table-07: Grade Sheet for satisfaction Area Selection
|1||Delighted level||Above 90% (agree)|
|2||Desired level||71% up to 90% (agree)|
|3||Zone of Tolerance level||51% up to 70% (agree)|
|4||Adequate level||31% up to 50%(agree)|
|5||Dissatisfaction level||Up to 30% (agree)|
Performance of EXIM Bank from the year 2006 to 2010
Table 08: Performance of EXIM Bank from the year 2006 to 2010 (In million Taka)
|4||Total Capital (Tier I + Tier II)||3467.37||4569.56||5763.89||7718.89||13928.40*|
|10||Investment (Shares& Securities)||2233.25||2457.72||2894.02||2189.54||6012.86|
|11||Total Contingent liabilities||18994.09||22632.65||26070.57||30109.11||55098.36|
|12||Total Risk Weighted Assets||32401.36||40706.47||53428.99||69058.87||142057.50|
|13||Total Fixed Assets||178.43||200.7||293.53||381.98||463.75|
|16||Profit before Provision and tax||1378.67||1908.2||2518.39||3181.78||5793.79|
|17||Profit before tax||1199.49||1618.8||1989.55||2802.12||5308.96|
|18||Net profit after provision and tax||650.29||930.84||1096.63||1694.1||3476.01|
|19||Foreign Exchange Business||96175.1||117900.14||156434.57||162604.61||227966.60|
|a) Import Business||49596.7||61399.4||78540.49||83911.51||129570.73|
|b) Export Business||46234.6||55790.42||76465.62||76240.77||95395.45|
|20||No. of Foreign Correspondent||246||256||278||333||354|
|21||Profit earning assets||35161.48||42357.65||56192.52||69006.57||97501.97|
|22||Non profit earning assets||6632.07||9145.38||12253.94||17206.81||15569.01|
|23||Investment as a % of total Deposit||93.18%||96.75%||93.14%||92.92%||98.26%|
|24||Capital Adequacy Ratio||10.70%||11.23%||10.79%||11.18%||9.80%**|
|26||Cost of fund||9.17%||9.07%||9.52%||9.09%||7.10%|
|27||Net Asset Value Per Share||181.57||188.71||186.32||199.09||18.26|
|28||Earnings per share ( EPS)||43.48||34.76||40.95||50.21||5.35|
|29||Price earnings ratio (times)||7.74||9.02||7.85||7.52||11.34|
|30||Return on Assets (ROA) after tax||1.73%||2.0%||1.83%||2.19%||3.54%|
|31||No. of Shareholders||18771||23284||24387||29302||99882|
|32||Number of Employees||1020||1104||1312||1440||1686|
|33||Number of Braches||30||35||42||52||59|
Source: Annual Report of EXIM Bank 2009-2010
The following SWOT analysis describes EXIM Bank Ltd. present Strengths, Weakness, Opportunities and Threats.
The major Strength of the bank has a lot of capital.
They have skillful workforce.
Good combination of young and experience workforce.
Findings of the Study:
From my study on the overall performance and activities of EXIM Bank I have got some major findings, which are given below:
As a new Concept, Islamic banking system is facing some problems. Especially the Local Banks whose are performing the Islamic Banking system are the major sufferer. To avoid these problem Islamic Banks should take some steps which are given below:
The beginning of Islamic banking system in Bangladesh is not so far, it’s a new banking concept developing in Bangladesh, so there will be some problem what Islamic Banks have to face. But they must improve themselves too faster because the banking industry is growing too faster and many new banks are going to be open. So the competition is going to increase much more. Hence as for all banks the core product is same they have to emphasize on their supplementary product, price and also to the physical evidence and process. Because physical evidence affects the perception of the consumer and in case of Banks it required more to the customer. At last it can be said that in Bangladesh, Islamic Banking has a huge future and a bank like EXIM bank can prove itself as an Idol in Banking sector of Bangladesh. I hope that authority will consider my model and suggestions and apply them. And by implementing the model and suggestions EXIM bank and the other banks whose performs Islamic Banking will become a role model day by day.