I joined the Southeast Bank Limited – Dhanmondi Branch on the 1st December , 2009 with an Office order issued by the Head office of the Southeast Bank Limited. Dhanmondi Branch is an active branch of The Southeast Bank Limited, full of ideal commercial activities through authentic performance. This branch performs the entire banking role as a result; one can easily get all the simple and intricate banking operations. In a word, this branch was appropriate for me as an intern. Dhanmondi Branch serves the people by the three sections, General Banking, Investment and Foreign Exchange.
This Internship Report Entitled ” Foreign exchange Operations Of Southeast Bank Limited- A Case Study of Dhanmondi Branch” has focused on the general banking activities in Southeast Bank Limited. I have worked there three for months as an intern to fulfill the requirement of MBA program. Internship program in SEBL – Dhanmondi Branch has given me practical orientations with the real professional life. During the internship period I worked with Foreign Exchange & General Banking Department and gathered practical experiences. This report will give a clear idea about Foreign Exchange Activities of SEBL – Dhanmondi Branch.
There have five chapters in this report. In the first chapter I discuss about “Company at a Glance” (introduction, vission, mission, corporate information, management team and so on.). In the second chapter I discuss about “General Banking Activities of SEBL – Dhanmondi Branch” (introduction, activities, account opening department, cheque book and so on.). In the third chapter I discuss about “Information about Dhanmondi Branch”. In the fourth chapter I discuss about “Work Area and Learning Experience” & finally I discuss about “SWOT Analysis, Recommendation and conclusion”.
So, considering the service sector of Bangladesh, SEBL – Dhanmondi Branch should become more conscious to deal with its customers as the customers have now more choice to bank with and there are institutions that are intensifying competition by focusing more on online customer service.
Banking system occupies an important place in a nation’s economy because of its intermediary role; it ensures allocation and reallocation of resources and keeps up the momentum of economic activities. A banking institution is indispensable in a modern society. It plays a pivotal role in the economic development of a country and forms the core at the money market of any country. In a developing country like Bangladesh the banking system as a whole has a vital role to play in the progress of economic development. The overall purpose of banking is to collect money from surplus unit and transfer it to the deficit unit. The Subject of my Report is “Foreign exchange Operation Of Southeast Bank Limited- A Case Study of Dhanmondi Branch ”.So my focus is mainly on Foreign Exchange activities of SEBL for contributing total profit of the bank.
Foreign trade plays an important role in economic development of a country. The economic development of a country is comprised with domestic production and foreign trade (especially the balance of export and import). It plays a vital role in the Balance of Payment (BOP) of a country. Surplus (export-import) is favorable for a country. Although Bangladesh usually exercise deficit BOP (import-export) it has to continue foreign trade.
To conduct foreign trade of a country, bank plays an important role; usually this duty is played by commercial banks. As a commercial bank, Southeast Bank Limited (SEBL) also engaged in the dealing of foreign trade in Bangladesh. Foreign trade operations play a significant role in the overall business of SEBL in order to strengthen its position. SEBL has further consolidated its relationship with the existing network of international correspondents.
The revenue earning sources of banks are mainly loans and advances. The credit facility can be of two types: funded & non-funded. Funded credit can be expensive as the bank has to pay interests. Non-funded credit includes LC, which is the main source of income for the Foreign Exchange business.
If a bank can increase its import and export transactions, its profit will obviously reach a higher level, as the costs are negligible.
In order to conduct a worthwhile report preparation of SEBL, it is necessary to go through the profiles of the banks understudy.
Origin of the Study
This report is originated as the course requirement of the MBA program under the business studies faculty Stamford University Bangladesh. Under this program students of every department of this faculty must go through an internship program of 3 months duration. As practical orientation is an integral part of the MBA degree requirement, I was sent by the department of Finance to take real life exposure of the activities of Financial Institutions from December 01, 2009 to February 28, 2010.
Background of the study
In the last two years Masters classes, we studied our courses on business studies from theoretical aspects. There was no scope to learn practical knowledge about business and its environment, theory and practices are inter-related and are equally important. Knowledge is not fruitful one unless it is a combination both theory and practical knowledge. MBA program allows its students to study and analysis a selected organization in order to get practical knowledge which also facilitates use of theoretical knowledge, students have already gathered. As a part of MBA program, I was also assigned to prepare a report “Foreign Exchange Operations of Southeast Bank Ltd.”
OBJECTIVE OF THE STUDY
The prime objective of this report is to achieve practical knowledge about the Foreign Exchange of SOUTHEAST BANK LIMITED, specific objectives are as follows:
- To oversee the nature and relationship among different components of Foreign Exchange transaction Operation regarding the business of commercial Banks viz. reduction, exchange rates and so on.
- To acquire practical experience about work environment, to know relation among staff, discipline and behavior of an organization that will help me to buildup future working life.
- To reveal the nature of foreign exchange transactions & Operation.
- To Identify Foreign Exchange activities.
- To distinguish Export- Import procedures.
- To acquire practical knowledge about foreign exchange activities of SEBL.
- To recognize the performance of SEBL in Foreign Exchange aspect.
- To know, if there is any relationship among SEBL profit and foreign exchange operations.
- Try to find out the growth rate of Export-Import operation & Credit Procedure of SEBL.
- To know how a credit proposal is treated in this branch.
- To learn about the credit analysis process of the branch.
- To point out the problems in fund utilization and recovery thereon.
- To analyze classified loan and advances.
The report is prepared on the extensive use of secondary data available in different text, reports, journals etc. as well as primary data collected from the bank personnel by means of informal interview. I consulted banks Annual report (Income Statement) and made discussion with the officials of Dhanmondi Branch, international division and other department about methods and procedures of export-import business, problems related to foreign exchange transactions I also had to talk to the exporters and importers for getting impression about SEBL. The methodology that was followed through out the study may be summarized below: For this study I have relied on both primary and secondary source of Data. The sources are as follows:
- Officials records of Southeast Bank Limited.
- Oral and informal interview of officers and employees in SEBL
- Informal interview with the exporters and importers.
- Annual report of NBL.
- Printed forms and documents supplier by SEBL.
- Booklets of international Division of SEBL.
- Relevant Books, Journals, Booklets etc.
- Study of old & current files and vouchers.
To make this report successful one researcher will analyze the data as follows:
- The analysis of this report is qualitative. In qualitative analysis researcher will cover the foreign Exchange Operation under commercial banking system.
- This researcher will also show some Ratio analysis for making comparisons among three month of this branch.
- Statistical comparison among three month of this branch will be described by spread sheet analysis.
SCOPE OF THE STUDY
Now in this global arena the activities of commercial banking are very fast. This report is an attempt to analyze the every banking operation of the Southeast Bank Ltd. This study focuses on the Foreign exchange division of Southeast Bank Ltd. This report has the crisp details of the procedure of the Foreign exchange division. Along with that, a relevant stream of discussion has been made on the theory and policy issues relating to Foreign exchange division. I had a great opportunity to have an in depth knowledge of all the banking activities practiced by the Southeast Bank Limited.
LIMITATION OF THE STUDY
It may agree to by the readers of the report that of such a report especially to enrich with empirical findings, wherever necessary, is a time to consuming matter. As the report prepared with a short span of time, the report could not be made comprehensive and conclusive. Mainly the report could be made descriptive. Some usual constraints I did face during the course of my investigation.
These are as follows:
- The main limitation of the study is availability of literature and data and in many cases the up-to date information is not yet published.
- Time constraints impede me to make in depth study.
- Entrance to every corner of the bank was not possible to me.
- Relevant paper and documents were not available sufficiently which can my writing this paper.
- I had to base on secondary data for preparing this report.
- This Bank has some policy for not disclosing some date and information for obvious reasons that could be very much essential.
- Only 12 weeks were not sufficient to visit all the desks of the division.
I may be impaired by resource constraint and limited experience and exposure in the field of foreign exchange Operation.
General banking is one of the major areas of formal sector. Through this section bank receive and disburse money to develop banker-customer relationship by opening different types of accounts and providing prompt services to the customers. It is called the nerve center of a bank. The officers’ staffs engaged in this department not merely deal with cash but also take important role rendering the better customer services. So cash offers should have well experienced and well behaved towards the valued customers by offering prompt services in receipt and payment of cash with always presenting smiling face. Since bank make profit by investing people’s money, so it need to collect money from customer by various way and need to make sure best services for attracting customers.
Commercial Based Banking Activities of this Bank are as following:
I. FORMAL SECTOR:
- Current Deposit Account
- Term Deposit Account
- Foreign currency Account
- Fixed Deposit Account
Different Schemes Accounts:
- I. Monthly Profit Deposit Account
- II. Education Saving Deposit Account
- III. Special Savings (Pension) Scheme Account
- IV. Millionaire Scheme Account
- V. Monthly Savings Based Term Deposit Account
- VI. Lakhopoti Deposit Scheme Account
- VII. Double Benefit Deposit Scheme Account
- VIII. Foreign Currency Term Deposit Scheme Account
- IX. Marriage Savings Scheme Account
The bank remits clients’ money both at home and aboard and completes all formalities of remittance in respect of Bangladeshi living abroad and other customers.
C. Special Banking Services:
In Addition, the bank:
- Issues Guarantees,
- Provides Safe Deposit Locker service for safe custody
- Discharges responsibility as investment trustee
- Carries on transactions on client’s behalf
- Acts as Banker to the issue on behalf of the companies
- Provides consultancy service to the customers
- Also provides all other banking services
D. Information Technology Services:
As regards to information technology, SEBL – Dhanmondi Branch has uploaded its website, which makes easy access in the world of communication technology. Introduction of Bank Ultimuse software at SEBL – Dhanmondi Branch enables to provide better service to valued clients.
I. NON-FORMAL SECTOR:
Southeast Bank Limited – Dhanmondi Branch has been successfully operating Family Empowerment Micro-Credit & Micro-Enterprise program under Non-Formal Banking Sector since the inception of the Bank in 2002. Meanwhile SEBL has become able to create job opportunities among significant numbers of Micro-credit & Micro-enterprise clients under SME(s) financing. Many of those clients manage to establish them as successful entrepreneurs and graduated them from Micro-Credit to Micro-Enterprise Program.
Account Opening Department:
Southeast Bank gives special Importance on savings. The objectives and principles of the savings policy are:
• To encourage people to save for so if and for the country as a whole.
• To develop a sustained savings habit among the people.
General Instruction While Open An Account In Local Currency:
- Stepwise work flow
- Any one of the following should properly introduce the account
- An existing account holder of the bank.
- Officials of the bank not below the officer provided that prospective account holder know the rank of an assistant officer.
- A respectable person of the locality well known to the manager / sub-manager of the branch concerned.
II. Determine the type of account the customer wishes to open and supply a set of printed forms / cards required for opening the account, which will normally include:
- Advice of new account (2 copies)
- Specimen signature cards (2 copies)
- Cheque book requisition slip
- Account agreement (where necessary)
Request the customer carefully read the printed form / cards supplied to him or her and fill-up the same properly according to the type of account wishes to open and get each of these forms signed at the appropriate place / columns of the forms. The responsible personnel should obtain signature of the customers on the reserve of the signature card. Any special instruction with regard to operation of the account should be noted on the relevant signature card duly authenticated by the A/C holder, obtained A/C number for the new account, from the opening register.
III. Obtained the signature and A/C number of the introducer on the advice of new account and signature card at the placement for the purpose and get the signature properly verified by an authorized official of the bank.
Account Opening / Deposit Mobilization
By deposit mobilization, it means bringing of potential deposit or idle savings of the people to the banking channel. In a wider sense, it may also mean bringing potential savings of the people to the banking channel. Deposit is the money kept by the customers, which are repayable on demand and withdraw able by cheques, drafts, order or using other acceptable instrument from bank. Bank gives profit to depositor for keeping money but also cut servicing charge from client. From collecting this deposit from depositor bank invest this deposit and earn profit from borrower. As more and more deposits are mobilized by a bank its entire activity enlarges and the bank starts making higher returns making profitable returns. The total process of deposit mobilization is showing in the following diagram:
OPENING OF DIFFERENT TYPES OF MUDARABA SAVING DEPOSIT:
SPECIAL SAVINGS (PENSION) SCHEME
Generally people wants save a portion of their income for economic assurance at old ages. For this reason a unique kind of savings scheme has to be introduced so that a portion of income can be deposited regularly for a long time span. This enables a person to get quite a considerable amount after maturity.
Taking the above reasons into account Southeast Bank Ltd, have introduced monthly installment based ” Special Savings (Pension) Scheme”.
Under this scheme any person can deposit a fixed amount monthly and after maturity the depositor will get a handsome amount with increased profit. The depositor may in cash the total amount at a time or can take as monthly pension until a stipulated time.
Intentions and Goal of the scheme:
1. To create awareness to deposit among average income people.
2. To create a chance for attractive deposit scheme.
3. To create an interest free investment.
EDUCATION SAVINGS SCHEME
Education expenditure especially for higher studies is increasing day by day. In many cases children loses the chance of education as their guardians become unable to adjust with the expenditure. But if proper financial planning is adopted earlier then it is easier for the parents to bear the expenses.
For these reasons SEBL has introduced “Education Savings Scheme”. This scheme would enable the parents to Dear child’s educational expenses in a planned manner.
OPENING OF DIFFERENT TYPES OF CURRENT DEPOSIT
Drawings are allowed from such an account without any restriction within the -ends available in its credit, no interest is paid on this deposit.
If someone open CD (Current Deposit), he fill up form and enclosed this type of paper shown as below:
1. For Sole Proprietorship
• Trade License
2. For Partnership
• Trade License
• Partnership Deed
3. For joint stock Company
• A Certificate Copy of the Memorandum and articles of Association duly attested by the signatory of the amount.
• Certificate of Incorporation
• Certificate of Commencement of Business
• Copy of the Last Balance Sheet
• List with Name Designation and Specimen signature of Person authorized to operate the account duly certified of the chairman
• Minutes of Board of Directors Meeting Authorizing the opening of accounts with us duly certified by the chairman / managing Director
• List of Directors with address.
Requirement For Opening Accounts
- Bank prescribed account opening form.
- Introduction of account to the bank (in all cases except limited company,).
- 2 (Two) passport size photographs duly attested by introducer of A/C in
- Signature card.
- Valid trade license (in case of proprietorship partnership & limited company account).
- Cheque requisition form.
- Memorandum of articles & Articles of Association, Resolution of the company, certificate of In-corporation, Registration of RJSC, Letter of Commencement, List of Directors in case of limited company account.
- Prescribed nominee form with photograph of nominee except limited company account.
- Declaration of anti money laundering in the account (as per Bangladesh Bank prescribed form) in all cases.
- Rubber stamp of the firm in case of proprietorship, partnership & limited company.
- Transaction profile in case of all account.
- Partnership deed in case of partnership A/C.
Negotiable Instrument act, 1881, says that cheques, bill of exchange and Promissory’ notes are negotiable instruments (Section 13). The term cheque is defined under section 6 of Negotiable Instrument Act 1881 which states that “a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.” If we analyze this section: a cheque has the following characteristics:
• A cheque is a bill of exchange.
• A cheque is always drawn upon a banker.
• A cheque is always payable on demand.
There are three parties to a cheque:
a. Drawer i.e., a person who draws the cheque on a bank, such a person is usually a customer of the bank.
b. Drawee of a cheque i.e., a bank on which a cheque is drawn by the drawer (Customer).
c. Payee i.e., a person to whom the payment is to be made by the bank on whom the cheque is drawn.
Remittance means sending money for one place to another place without physical transfer of cash. If such transfer takes place between the two regions of a country it is, then ‘Inland Remittance’. If the transfer involves two sovereign countries it is, then ‘Foreign Remittance’.
Remittance through a bank is done in any of the following manner:
- Ø By issuing demand draft,
- Ø By issuing mail transfer,
- Ø By issuing telegraphic transfer.
Of these three types of remittance, issuing of demand draft is the most popular one. Demand draft is an order, issued by one branch of a bank upon another branch to pay certain amount to certain person or the order on demand.
A demand draft can also be issued by one bank upon another bank if prior arrangement exists.
- The Drawer (Issuing Branch),
- The Drawee (Paying Branch),
- The payee (Beneficiary),
- The purchaser (Remitter).
Issue of t. T.
The basic difference between the other types of remittance and T. T. is that; in other types of remittance the ‘Message of remittance is either sent by ordinary mail or registered mail but in this type of remittance the message, duly tested coded is sent by urgent Telegram / Telephone or Telex.’
The message, in other words, the telegraphic order upon the drawer branch, is given along with test number at the beginning to prove that the same is genuine.
Pay order is one type of remittance, which is also one of the popular in business circle of the country.
A payment can be made to one person to another person through pay order. Which is made authenticated & assured than the cheque. Moreover, it is more safe for payment rather carrying the cash from one place to another place.
In the clearing department the work is to clear and pay order through Bangladesh Bank that is submitted for cash collection. Everyday clearinghouse takes a place in Bangladesh Bank, once in the morning called house (1st house) another in the evening called return house (2nd house). In the house all the banks representative sit together and change their money receive instrument of the particular banks to clear and transfer the money to their particular accounts. There are two types of clearing:
Inward Clearing: The cheques or instruments of Southeast Bank Limited that are submitted to another Bank for collections are called Inward clearing.
Outward Clearing: The cheques of other banks that are submitted to the Southeast Bank Limited, for collection are called outward clearing.
Clearing house is a place that provides an arrangement by which various representative of each clearing banks assemble there act business day to exchange local cheques, drafts, bill of exchange etc. which are received by them for collection from their customers. Its object is to settle balances between the bank of the city, town or a region with minimum of inconvenience and labor. Before the establishment of clearinghouse, the bank had to send their bill of clerks to other banks for getting cash against those cheques. Obviously this was a laborious and time consuming process and waste full procedure.
A. INWARD clearing bills:
It refers the instrument drawn on Southeast Bank Limited Foreign Exchange Branch Limited, received from other banks in the clearing house by their representative(s). Settlement process is shown under below-
settlement process of inward clearing bills
• accounting entry passed by TINS branch
Respective A/C —————————————————–Dr.
General A/C (Main Br.)—————————————-Cr.
If cheques are returned, Southeast Bank Ltd. Forex. Branch passes a IBDA to Main Branch. Then the necessary accounting entries will be-
General A/C (Main Br.)————————————-Dr.
Respective A/C —————————————–Cr.
B. outward clearing bills
It refers the instruments drawn on the other banks received by Southeast Bank Ltd. Forex. Branch. They are of three kinds as follows –
a) Cheques drawn on another branch of SIBL. The settlement process –
b) Cheques drawn on another Bank which is situated within clearing house area.
The cash department is one of the most important parts of General Banking Department. So many banking activities are conducted by the cash department, which relate to cash or valuables. So, it is called a nerve center of the bank. The officers / staffs engaged in this department merely deal with cash but they also take important role rendering the better customer services. So cash officers should have well experienced and well behaved towards the valued customers by offering prompt services in receipt and payment of cash with always presenting smiling face. Service should be the motto of all bankers.
Briefly summarize the functions of the Cash Department as under:
CONTROL PROCEDURES OF CASH COUNTER
- Opening: Before the bank opens for business, each morning, each payment cash officer has to obtain his / her cash box directly from the vault with the acknowledge receipt in respective register.
- Cash Drawers: Cashiers / Officers working in each counter and maintain all their cash inside their respective drawers -as soon as received from the vault. During office hours drawing cash to be kept under the sole responsibility and single custody of the concerned officers with lock and key arrangement and payment should be made from the cash over the counter.
- Additional cash obtained from the Cash In-Charge during the day: Whenever additional working supply of cash is required by the payment officer in counter that has to be obtained from the chief Cashier / Cash In-Charge by signing cash transfer / respective register whenever cash surplus is found to be deposited to the Chief Cashier / Cash In-Charge with acknowledge receipt in case of receipt counter.
- Cash returned to Chief Cashier / Cash In-Charge at the end of the business hour: Branch or Bangladesh at the end of the business hours both payment (Surplus Cash) and receipt cash to be handed over to the cash In-Charge through obtaining acknowledge receipt or having signed in the cashier receipt books if balanced with computer scroll.
- Functions of Chief Cashier / Cash In-Charge: The Chief Cashier / Cash In- Charge should always look after the over all functions of Cash Department as Cash Manager. He will supervise the Cashier / Cash Officers working in the counters whether the counter insurance limit has exceeded, if so, the excess cash to be shifted in Value / Safe immediately.
Remittance of Cash/Vault maintenance
Branches have regular vault / safe limit holding of cash in UK-II custody as advised / approved by Head Office with the insurance cover. In cash of surplus cash branch has to remit to Principal Bank it is called only and renitence. On the other hand, whenever cash found shortage do to smooth withdrawal of cash by the clients the remittance is made from the principal branch / Bangladesh Bank is called inward remittance.
Background of South East Bank Limited:
Southeast bank is a schedule commercial bank in the private sector established under the under the ambit of a bank company act,1991 and incorporated as a public limited company under company act,1994 on march 12,1995.It started commercial banking operation on may 25,1995. during the short span of time the has succeeded in positioning itself as a progressive and dynamic financial institution in the country.
Southeast bank is one of the few banks permitted by the Bangladesh Bank in the early 90’s and fortunate to remain immune from the bad loan culture. Its performance is being reflected in its good loan being the 3.5 percent as against the national average of 33 percent in the private banking sector.
Southeast bank has been licensed by the government of the Bangladesh as a schedule commercial bank in the private sector in pursuance of the policy of liberalization of banking and financial services and facilitates in Bangladesh. within a period of 14 years of its operation Southeast bank achieved remarkable successfully meeting capital adequacy requirement of Bangladesh Bank.
As evident from the financial statement for the last 10 years, it has been growing rapidly as one of the leaders of the new generation banks in the private sector in term of business and profitability.
The Bank philosophy – “A Bank with Vision” has been preciously the essence of the legend of banks success.
It has been growing faster as one of the leaders of the new generation banks in the private sector in respect of business and profitability as it is evident from the financial statement for the last 4 years.
Vision of the bank:
To stand out as a pioneer banking institution in Bangladesh and contribute significantly to the national economy.
Mission of the bank:
“Would become the most earning, focused for equitable growth based on diversified deployment of resources, and nevertheless would remain healthy and gainfully profitable bank”. Others are:
- Fast and accurate customer service.
- Steady return on shareholders equity.
- Attract and retain quality human resource.
- Innovative banking at a competitive price.
- Balanced growth strategy.
- High standard business ethics.
SEBL has executed a consistent strategy over the past decade by focusing on highly scalable, fee based security servicing. The bank is following low cost saving strategy by increasing their selling. their strategies are as follows:
- on-line banking
- new service offering
- integration between service channels
- market focus
- customer based expand and diversity.
A perfect organization must be supported with its structure. SEBL consists of Head office, principal branch and other branches throughout the country. The management style mostly resembles bureaucratic and authoritarian style. It imposes strict control and monitor over the activities of its employees. Head office is considered as a cost center in a whole and branch is known as investment and profit center. branch operates under the control of head office. All business functional activities are supervised by head office and the branches are executing the decisions made by the Head office.
South East Bank Limited (Dhanmondi Branch) at a glance:
Southeast Bank Ltd. Dhanmondi Branch is one of the profitable Branch for the bank. It is opened on 18th November,1998. this branch provides a great amount of profit per year. The name of the HOB is Abdul Hamid Miah (Executive vice President). A huge number of transactions are held per day. The total number of current, savings & STD accounts are 3608. Total deposit in this Branch is Tk.5,156,631 up to December,2009. The total amount of invested amount is Tk.3,754,609 up to December,2009. There is foreign exchange division in this Branch which contributes a lot to the income of this branch. The amount of profit of this branch is increasing day by day. The increment of the profit of this branch can be shown through the graph.
(Tk. in hundred)November DecemberJanuary
Table1: Net profit earned by Dhanmondi Branch for last 3 months of the year2009.
This graph shows that Dhanmondi branch contributes a lot to the total profit of the bank
South East Bank Limited (Dhanmondi Branch) at a glance:
The management hierarchy of southeast Bank Ltd. Dhanmondi Branch is given below-
|Name of the company:||South East Bank Limited|
|Vice chairman:||Ragib Ali|
|Managing Director(CC):||M.A. Muhith|
|Company secretry:||Muhammad Shahjahan|
|Legal status:||Public Limited Company|
|Date of Incorporation:||March12,1995|
|Registered Office:||Eunoos Trade Center, 52-53,Dilkusha C/A,Dhaka.|
|Authorized Capitral:||TK.3500 million|
|Paid up capital:||TK.2852.20 million|
|Year of IPO:||1999|
|Stock Exchange Listing:||April 10,2000(DSE)&April 24,2000(CSE)|
Board of Directors:
Chairman Executive Committee
Alamgir Kabir, FCA
Vice Chairmain Chairman
Ragib Ali Alamgir Kabir, FCA
M. A. Kashem Ragib Ali
Azim Uddin Ahmed M. A. Kashem
Jusna Ara Kashem Azim Uddin Ahmed
Duluma Ahmed Tahnoun A. Harun
Bangla Capital Limited represented by Dr. Zaidi Sattar
Tahnoun A. Harun M. A. Muhith
Syed Shahid Ali
Karnafuli Tea Co. Limited represented by
Abdul Hye Audit Committe
Dr. Zaidi Sattar
A. H. M. Moazzem Hossain Chairman
Azim Uddin Ahmed
Managing Director Members
(Current Charge) M. A. Kashem
M. A. Muhith Dr. Zaidi Sattar
Professor Moulana Mohammad Salah- Uddin
Special features of the bank:
- It has been performing conventional commercial banking activity and striving to introduce Islamic Banking functions.
- It is the pioneer in introducing and launching different customer friendly deposit schemes to tap the savings of the people for channeling the same to the productive sectors of the economy.
- For uplifting the standard of living of the limited income group of the population the bank has introduced Consumer Credit Schemes by providing financial assistance in the form of loan to the consumers for procuring household durables, which have had encouraging responses.
- The Bank is committed to continuous research and development so as to keep pace with modern banking.
- The operations of the bank are fully computerized so as to ensure quick, prompt flawless and services to the customers.
- The Bank has introduced camera monitor system (CCTV) to strength the security services inside the Bank premises.
SEBL has been able to achieve appreciable progress in all areas of its operations during the year 2007 and earned a pre-taxed profit of Tk.1222.97 million registering a growth of 38% over the profit of the previous year. We attribute the success to the dynamism displayed by all those who worked hard for the growth of this organization.
4.0. Internship position & duties
During my internship I have worked in following area:
- General Banking Division (15 Days)
- Accounts Division (15 Days)
- Foreign exchange (60 Days)
4.1. Duties in general Banking division:
In general banking I have worked in account opening section. So that I have talked with clients about how to open or what are the requirements for open different types of account such as :
Deposit per scheme(DPS)
Saving account (SB)
Current Account (CD)
To open DPS account, customers first needed to fill up a DPS application form. I usually help them to fill up the form.
At the same time opened this kind of account and posted them in the banks internal server named “Bank Ultimus”.
4.2. Duties in accounts division:
Accounts division keep the records of all the transactions performed by the branch. All kinds of statements of the bank is recorded here. In Dhanmondi branch clearing department is attached with accounts division. In accounts division I performed
¨ Completing audit trial.
¨ Monthly statement positioning
¨ Thursday positioning
¨ Voucher checking
¨ IBCA positioning
¨ IBDA poisoning
¨ OBC registrar maintaining
¨ IBC registrar maintaining
¨ Matching clean cash
¨ Online forwarding transaction to inter branches
Duties in foreign exchange division:
In foreign exchange division I was spent 45 days. In this division I have done different types of task which is more essential for banking operation and this is done every day basis. Those are given below:
¨ New Back to Back L/C opening register book maintaining.
¨ Voucher making and issuing.
¨ Acceptance of bill while bill received.
¨ Due date register maintaining
¨ Performance register maintain.
¨ FDBC & FDBP register book maintaining.
¨ Filling up IMP & EXP form which is needed to give information the BB about Import and Export.
¨ LC advising issuing and register book maintaining.
¨ Amendment register book maintaining
¨ BLC register maintaining
¨ L/C opening register book maintaining.
¨ Stamping of import L/C files.
¨ Helping to prepare lodgment voucher and charges realization sheet.
Preparing a Foreign Documents Endorsement.
Foreign Exchange Division
Foreign Exchange Operation:
Every country has certain natural advantages and disadvantages in producing certain commodities while they have some natural disadvantages as well as in other areas. As a result we find that some countries need to import certain commodities while other need to export their surpluses. Foreign trade brings the fruits of the earth to the homes of the humblest among the countries. This transactions are on the basis upon which international trade is made. As one currency is involved in foreign trade, it gives rise to exchange of currencies which is known as foreign exchange. In exercise of the powers conferred by sec-3 of the foreign exchange regulation-1947, Bangladesh bank issues license to scheduled banks to deal with foreign exchange.
Foreign exchange operation is divided into three sections.
- Foreign Remittance
Foreign exchange accounts:
Nostro account: It means “Our account with you”. It is a foreign currency account bank maintained by its foreign correspondents abroad. For example, US dollar account of Southeast Bank Ltd. Is maintained with Citibank N.A, New York, USA, is a nostro account of Southeast Bank Ltd. i.e. from the point of view of Southeast Bank Ltd., it is their Nostro account.
Vostro account: It means “your account with us”. It is a foreign currency account bank maintained by its foreign correspondents in a bank of a particular country is known as Vostro account. For example, State Bank of Indias Taka accont is maintained with Southeast Bank Ltd. Is the Vostro account . from the point of view of Southeast Bank Ltd., it is a Vostro account held for State Bank of India.
Loro account: It means “their account with you”. Account maintained by third party is known as Loro account. Suppose Southeast Bank Ltd. Is maintained an account with Citi Bank N.A and at the same time Dhaka Bank is also maintaining an account with Citi bank N.A. . from the point of view of Southeast Bank Ltd., Dhaka banks account with Citi N.A is the Loro account.
Foreign exchange buying rates:
The rates at which the banks are willing to purchase foreign currencies are said to be buying rates, i.e. at these rates foreign currencies are converted into home currency. The various types of buying rates are:
T.T (Clean): The T.T clean buying rates is the basic rate of exchange from which other types of buying rates are computed, since in case of T.T.s fund are paid over at the other end on the same day involving no loss of interest, but may attract only small charges for Telex.
T.T (Documentary): This rate is applicable in which the handling of document is involved. Bank recovers handling charges on the transaction.
OD (Sight): This rate is applied for transaction resulting in the purchase or negotiating of export bills. OD (Sight) buying rates vary from TT buying rates to the extent of loss of interest for the period the bank remains out of funds i.e from the time the bank pays out cash at home.
Import means purchase of goods or services from abroad. Normally consumers, firms and government organization import foreign goods or services to meet their necessities. So, in brief, we can say that import is the flow goods and services purchased by economic agent staying in the country from economic agent staying abroad.
Regulation of Import:
Import of goods into Bangladesh is regulated by the ministry of commerce in terms of the Import and Export (control) Act, 1950 with Import policy order issued periodically and public notices issued from time to time by the office of the Chief controller Import Policy (1997-2002), which has come into effect on June14, 1998. And the import policy directs certain Import procedure, which administers the whole activity.
Import procedures followed by SEBL:
As an authorized dealer, Southeast bank, dhanmondi branch is always committed to facilitate import of different goods into Bangladesh from the foreign countries. Import section, which is under Foreign Exchange Department of the branch, is assigned to perform this job. And to serve its clients demand to Import goods , it always maintains required formalities that are collectively termed as the Import procedure.
- At first, the Importer must obtain Import registration certificate (IRC) from the CCI & E submitting the following papers:
¨ Up to date trade license.
¨ Nationality and Asset Certificate
¨ Income tax certificate
¨ In case of company, Memorandum & Articles of Association and certificate of Incorporation.
¨ Bank solvency certificate
¨ Required amount of registration fee
- Then the Importer has to contact with the seller outside the country to obtain the Proforma Invoice. Usually an indenter, local agent of the seller or foreign agent of the buyer makes the communication. Other sources are:
¨ Trade Fair
¨ Chamber of Commerce
¨ Foreign Missions in Bangladesh
¨ Journals etc
3. When the Importer accepts the Proforma Invoice, he/she makes a purchase contract detailing the terms and conditions of the Import
- After making the purchase contract, importer settles the means of payment with the seller. An Import procedure differs with different means of payment. The possible mean are in cash in advance, open account, collection method and Documentary letter of Credit. In most cases Documentary letter of Credit in our country makes the import payment. Purchase contract contains following which payment procedure has to be applied.
Different means of payment:
- a. Cash in advance: Importer pays full, partial or progressive payment by a foreign DD, MT or TT. After receiving payment, exporter will send the goods and the transport receipt to the importer.
- b. Open account: Exporters ships the goods and sends transport receipts to the Importer. Importer will take the delivery of the goods makes payment by foreign DD, MT or TT at some specified date.
- c. Collection method: Collection method are either clean or documentary collection. Again documentary collection Document against Payment (D/P) or Document against Acceptance (D/A). the collection procedure is that the exporter ships the good and draws a draft/bill on the buyer. The exporter submits draft/bill to the remitting bank for collection and the bank acknowledges this. Then the remitting bank sends the draft/bill and a collection instruction letter to the collecting bank. The title of goods is released to the importer upon full payment or acceptance of the bill/draft.
- d. Letter of Credit (L/C): The method by which a commercial bank undertakes to make payment on behalf of the importer to the Exporter is known as Letter of Credit (L/C). on the other hand it is a credit contract whereby, the buyers bank is committed to place an agreed amount of money at the sellers disposal under some agreed conditions. Since the agreed conditions include amongst other things, the presentation of some specified documents. The letter of credit is called documentary.
An Importer of a country requesters his banks to open a Credit in foreign currency in favor of the exporter at a bank in the letters country. The Letter of Credit (L/C) is issued against payment of the amount by the by the Importer. The Letter of Credit (L/C) authorized the exporter
Forms of Letter of Credit:
Letter of credit is basically classified in to two:
Revocable L/C: if any L/C can be amendment or changed of any clause or cancelled by consent of the exporter and importer, it is known as revocable L/C.
Irrevocable L/C: if any L/C can not be amendment or changed of any clause without any consent of all concern parties –importer, exporter, issuing bank, and confirming bank is known as irrevocable L/C.
The banks involved in L/C:
- The Issuing Bank(Opening Bank): The opening bank is one that issues the letter of credit at the request of the buyer. By issuing a letter of credit it takes upon itself the liability to pay the bills drawn under the credit.
- The Advising Bank: The letter of credit is transmitted to the beneficiary through a bank in the letters country. The bank may be a branch or a correspondent of the opening bank. The credit is sometimes advised to this bank by a cable and then transmitted by it to the beneficiary on own its specified form
- The Negotiating Bank: This the bank that honored the documents presented as per letter of credit. The negotiating bank has to be careful scrutinize that the draft and the documents attached there to are in conformity with the condition laid down in the letter of credit. Any discrepancies may result in refused in the part of the opening bank to honor the instrument is such an eventually the negotiating bank has to look back to the beneficiary for refund of the amount paid to the beneficiary.
- The Reimbursing Bank: It is the bank in which the issuing bank maintains a Nostro account and this will make the payment to the beneficiary.
Documents Used in operation of L/C:
- Pro forma Invoice: Performa Invoice is the sale contract between seller and buyer in import-exporter business. The sale contract, which is direct correspondence between importer and exporter, is called Performa Invoice. This is no intermediary between them. On the other hand, there may be an agent of exporter in importer’s country. In this regard, if the sale contract is occurred between the indent of exporter and importer then it is called indent.
- Import Registration Certificate(IRC): The importer collects from the C.C.I & E office by submitting required documents and payment of required fees.
- Bill of exchange: The Bill of exchange is a negotiable instrument through which payment is effected in the trade deals. It is an unconditional order or writing , addressed the buyer to seller by which the seller can obtain payment from the buyer for the invoiced value of the goods.
- Bill of Lading: It is the list of goods being shipped which the captain gives to the person sending the goods to show that the goods have been loaded.
- Airway Bill: Sometimes goods are transported through small bulk or those are perishable in nature then the mode of transport other that shipping may be resorted to far carriage of the goods, Airway Bill receipt take place of loading depending on the nature of the carrier.
- Commercial Invoice: It is the sellers bill for the merchandise. It contains a description of goods, the price per unit, total value of the goods, packing specifications etc. the seller under his own form and signature in the name of the buyer issues the invoice.
- Certificate of Origin: This is the certificate issued by a recognized authority. In the exporting country certifying the country of origin of the goods. It is usually made by the chamber of commerce.
- Packing list: The exporter prepares an accurate packing list showing item by item. The content of the consignment to enable the receiver of the shipment to check the contents of the goods and marks of the packages, quantity, weight etc. of the goods exported.
- Bill of Entry: It is a document, which contains the particulars of the imported goods as well as the amount of customer duty payable.
- Clean Report of Findings: The certificate is provided by the Pre shipment Inspection concerns. The entire world has been brought under the three supervision of the three pre shipment inspection concerns based on different territory.
Procedure of opening the letter of credit and Payment:
- NBL identify whether the goods (will be imported) are in the import list, which is selected by the government of Bangladesh.
- Justify the clients credit worthiness by collecting social status- information form after business or from after bank credit report.
- Judge whether the importers goods bear good quality and more is a market of goods.
- Secures the documents efficiently.
- If every thing is OK, then the client proposes to fill up the prescribed form,
- The sum percent of total amount of L/C should be deposited and get admonition form.
- Then it is registered in L/C register book.
- Three copies of L/C are prepared.
- Two out of three is sent to advising bank and rest are sent to reimbursing bank with order to pay claim to the negotiating bank.
- Advising bank sent one copy with advice to ship to the importer.
- Exporter submits necessary documents to the negotiating bank and receipts his/her claim.
- Negotiating bank sent two same letter of payment to the issuing bank and importer. Simultaneously the negotiating banks demand his/her claim from reimbursing bank.
The importer submit the following documents with the application for opening the L/C:
Tax Identification Number (TIN)
Valid trade license
Import registration Certificate (IRC)
The bank will provide the following documents before opening the L/C:
Necessary charger documents for documents
L/C Authorization Form (L/CAF):
The letter of credit authorization form is the form prescribed for the authorization of the Letter of Credit against importer and used in lieu of import license. The authorized dealers are empowered to issue LCA Form to the importer as per basis of licensing of the import policy order in force to allow import into Bangladesh. In foreign exchange is intendment to be bought from Bangladesh Bank’s against an LCAF. It has to be registered with Bangladesh bank registration unit located in the concerned area office of the CCI&E. The LCAF form contains the followings-
- Name and address of the importer
- IRC no. and year of renewal
- Amont of L/C applied for
- Description of items to be imported
- HS Code no.
- Signature of the importer with seal
- List of goods to be imported goods.
|APPLICANT||Appollo Ispat Complex LTD.|
|FCY AMOUNT||USD 45,600.00|
|L/C Type||At Sight/ Defer Payment|
|PSI Handing Charge|
|Stamp In Hand|
|L/C Application Set|
|Vat on Swift,PSI,Handing Charge|
|DEBIT Tk||CREDIT Tk|
The L/C Confirming Process:
Dhanmondi Br.(L/C issuing Bank)
Issue L/C & request to add confirmHSBC (L/C confirmrng Bank)
Forwarding Documentary credit by confirming bank:
There are usually two banks involved in a documentary credit operation. The issuing bank and the 2nd bank, the advising bank is usually a bank in the sellers country. The issuing bank asks another bank to advise or confirm the credit.
If the advising bank is confirming the credit, this mention that the confirming bank, regardless of another consideration, must pay accept or negotiate without recourse to seller. Then bank is also called a confirming bank.
Submission of necessary documents by exporter to the Negotiating Bank:
As soon as the seller or exporter receives the credit and is satisfied that he can meet its terms and conditions, he is an position to load the goods and dispatch them. The seller then sends the documents evidencing the shipment to the bank.
Generally the documents are:
- Bill of Exchange
- Commercial Invoice
- Bill of Lading/ Air way bill/ Truck Receipt
- Certificate of Origin
- Packing List
- Clean Report of Findings (CRF)
- Insurance Cover Note
- Pre-shipment certificate
Lodgment and Retirement of shipping documents:
After scrutinizing the import negotiating department, if no discrepancies is found then it is treated to be accepted after the end of seven banking day following the day of receipt of the document under “Article 1(b) of UCPDC-500”. If any discrepancy found then the banker inform it to the importer that whether he accepts the bills with discrepancies or not. If the importer does not accept, the banker informs it to the negotiating bank within seven banking days from the date of receipt of the documents, otherwise it is treated to be accepted and the opening bank must bound to pay against the bill and no complain against the bill will be accepted more than 4 banking days following the date of receipt of the documents.
The local office oases the following vouchers after negotiation:
|BLC (Payment against document) A/C||Dr.|
|H.O. International A/C||Cr.|
Reverse Entry is given:
|Bankers liability A/C||Dr.|
|Customers liability A/C||Cr.|
Then shipping document then stamped with PAD number and entered in the PAD register. As soon as the above formalities are completed, the importer is served with PAD bill information for retirement of concerned import documents.
Import financing can be divided into two types:
- Pre shipment finance
- Post shipment finance
PRE SHIPMENT FINANCE:
This types of finance refers to the facilities extended to the importers in the form of Letter of Credit.
Actually Banks do not invest any fund at this stage of financing. But from the definitions of Letter of Credit we understand that by Opening L/C on behalf of the customer, Bank undertakes to make payments to the supplier of goods against the L/C subject to submission of certain documents. Normally bank allows the customer to open L/C against certain margin i.e, without having full coverage of the L/C value. As such Letter of credit is a sort of direct finance of the customer.
Before allowing Pre shipment finance, a bank normally considers:
- Credit worthiness
- Import performance
- Import Regulation
- Marketability of goods.
POST SHIPMENT FINANCE:
This types of finance refers to the credit facility refers to the credit facility refers to the importer after shipment of goods. Post shipment finance is allowed in the following forms:
- Payment against Documents (PAD)
- Loan against Imported Merchandise (LIM)
- Loan against Trust Receipt (LTR)
The bank who established Letter of Credit is bound to honor the suppliers claim when these are presented in strict conformity to the terms and conditions of the Letter of Credit.
Upon receipt of documents, the duty of opening bank is to carefully examine the same. If everything is all right, bank arranges payment against the bills to the debit of PAD A/C. In most of the cases documents are received with comments that Negotiating Bank has already claimed reimbursement if the bill is drawn in restrict conformity to the L/C. In that situation Opening Bank responds the debit entry of their Nostro account to the Debit of PAD A/C.
Soon after lodgment of documents in, PAD, opening bank inform the customer regarding receipt of the bill and request them to retire the documents by depositing the value of the documents with interest of any.
Loan again Imported Merchandise (LIM) is a facility provided by the bank provided by the bank to the importer who are in short in fund to retire the import bills and thus to clear the goods from the authority.
On the arrival of goods and lodgment of import documents, importer may request the bank of a clearance of goods from the port(custom) and keep the same to bank warehouse. proper sanction from the competent authority is to be obtained before clearance of consignment.
For giving this types of loan, officer makes loan proposal and sends it to H/O for approval. After getting approval from H/O, bank grants loan in the form of either LTR or LIM.
|LIM/LIR (Importer) A/C||Dr.|
After payment of the loan or delivery of goods:
Total Import Business of last three months as a chart in Dhanmondi Branch :
Table-1: Performance of Import Business of last Consecutive 3 Months.
Import Business of last five years as a graph of Southeast bank :
Table-2: Performance of Import Business of last 5 years of Southeast bank.
Here we clearly see that both graph indicates the increment of Import business of Southeast bank ltd. along with Dhanmondi Branch.
Export is the process of selling goods and services to the to other countries. Export L/C operation is just reverse of the import L/C operation. For exporting goods by the local exporter, bank may act as advising Banks and collecting bank (negotiating bank) for the exporter.
Regulation of Import:
Export policies formulated by the Ministry of commerce , GOV provide the overall guideline and incentives for promotion of exports in Bangladesh. Export policies also set out commodity-wise annual target. It has been decided to formulate these policies to cover a five year period to make them contemporaneous with five year plans and to provide the policy regime. The export oriented private sector, through their representative bodies and chamber are consulted in the formulation of export policies
and are also represented in the various export promotion bodies set up by the government.
The import and export trade in our country are regulated by the Import and Export(Control) Act,1950. under the export policy of Bangladesh the exporter has to get valid export registration Certificate (ERC) from chief controller of Import & Export(CCI&E). the ERC is required to renew every year. The ERC number is to incorporate on EXP forms and other papers connected with exporters.
Registration of Exports:
For obtaining Export Registration certificate(ERC), intending Bangladeshi exporters are required to apply to the controller/ assistant controller of Imports and Exports in the prescribed form along with the following documents:
- Nationality and Asset Certificate
- Memorandum and Article of Association and Certificate of Incorporation in case of limited company
- Bank certificates
- Income tax Certificates
- Trade License etc.
Securing the order:
After getting ERC certificate the exporter may proceed to secure the export order. He can do this by contacting the buyers directly or through agent.
In this purpose the exporter may get help from:
- License officer
- Buyer’s local agent
- Export promotion organization
- Bangladesh Mission Abroad
- Chamber of Commerce
- Trade fair etc.
Processing and opening of Back to back L/C:
Back to Back L/C is set in such that it can be paid out of export proceeds.
It is simply issued to the clients against an import L/C. Back to Back mechanism involves two separate L/C. One is master Export L/C and another is Back to Back L/C. on the strength of Master Export L/C bank issues back to back L/C. Back to Back L/C is commonly known as Buying L/C, on the country Master Export L/C is known as selling L/C.
Features of Back to Back L/C:
An Import L/C to procure goods /raw materials for further processing.
It is opened based on Export L/C.
It is a kind of Export Finance.
No margin is required to open Back to Back L/C.
Application is registered with CCI&E.
Applicant has bonded warehouse license.
L/C value shall not exceed the admissible percentage of net Free on Board (FOB) value of relative Master L/C.
Period will be up to 180 days.
The import L/C is opened for 75% of the value of Export L/C.
Here L/C issued against the lien of export L/C.
Arrangements re such that export L/C matures first then out of this export profit, import L/C is paid out.
Preparation of export Documents:
- Bill of Exchange or Drafts
- Commercial Invoice
- Bill of lading
- Inspection Certificate
- Packing List
- Export license
- Shipment Advice
- Certificate of origin
- Weight Certificate
- Certificate of Analysis
- Quality Certificate
- EXP Form
- Documents received through courier.
Procuring the materials:
After making the deal and on having the L/C opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the contracted merchandise to shipment of goods.
Shipment of goods:
Then the exporter should take the preparation for export arrangement for delivery of goods as per L/C and inciters, prepare and submit shipping documents for payment/Acceptance/negotiation in due time.
Documents for shipment:
- EXP form
- L/C copy
- Customer duty Certificate
- Shipping instruction
- Transport documents
- Insurance Documents
- Other Documents
- Bill of Exchange
- Certificate of Origin
- Inspection Certificate.
Then the documents are submitted to the bank for Negotiation.
Financing export constitutes an important part of a bank’s activities. Exporters require financials services at four different stages of their export operation. During each of these phases exporters need different types of financial assistance depending on the nature of the export contract.
Export financing can be divided into two types:
- Pre shipment finance
- Post shipment finance
PRE SHIPMENT FINANCE:
This types of finance refers to the credit facility extended to the exporter prior to the shipment of goods for export. Pre shipment finance is allowed in the following forms:
- For procurement of Raw materials
- For processing the raw materials
- For packing of finished goods
- For payment of transportation cost.
Before allowing Pre shipment finance, a bank normally considers:
- Credit worthiness
- Import performance
- Import Regulation
- Marketability of goods.
Pre shipment finance can be allowed in the following forms:
- Export cash credit
- Back to Back Letter of Credit
- Export credit against Trust receipt
- Packing Credit
- Back to Back Letter of Credit under EDF
POST SHIPMENT FINANCE:
This type finance refers to the credit facilities extended to the exporter against export documents after shipment of goods. Post shipment finance is allows in the following forms
- Negotiation of documents under L/C
- Foreign Documentary bill for purchase
- Advanced against Export Documents sent for collection
Negotiation of documents under L/C:
The exporter presents the relative documents to the negotiating bank after the shipment of the goods. A slight deviation of the documents from those specified in the L/C may raise an excuse to the issuing bank to refuse to reimbursement of the payment already made by the Negotiating bank. So, the Negotiating bank must be careful, prompt, systematic and indifferent while scrutinize the documents relating to the export.
Foreign Documentary bill for purchase:
Here the exporter are also made on the basis of contract between the buyer and the seller without the cover of the letter of credit. In such case, documents are delivered to the buyer through the intermediary of the foreign correspondence of the authorized dealer against payment.
Payment of Back to Back L/C:
In case of Back to Back L/C as 60-90-120-180 days maturity period, deferred payment is made. Payment is given after realizing export proceeds from the L/C issuing Bank.
Export Document Checklist:
- General verification: L/C restricted or not. Exporter asked to submit documents before expiry date of the credit. shortage of documents etc.
- Particular examination: each and every documents should be verified with the L/C.
Total Export Business of last three months as a chart in Dhanmondi Branch:
Table-3: Performance of Export Business of last Consecutive 3 Months.
Export Business of last five years as a graph of Southeast bank :
Table-4: Performance of export Business of last 5 years of Southeast bank.
Here we clearly see that both graph indicates the increment of Export business of Southeast bank ltd. along with Dhanmondi Branch.
Foreign Remittance section
Foreign remittance: Foreign remittance section of SEBL,Dhanmondi branch is an integral part of foreign exchange department. And this section of section of Foreign Exchange department deals with
¨ Inward foreign remittance
¨ Outward foreign remittance
¨ Opening foreign currency accounts
¨ Governing wage earners bond
¨ Opening student file etc.
But first two Inward and Outward foreign remittance are the main functions.
Inward foreign remittance:
Normally, Inward foreign remittance comprises all incoming foreign currencies. Remittance issued by the correspondents banks situated in the foreign countries and thereby drawn on SEBL, dhanmondi branch are considered to be its Inward foreign remittances. Following are the Inward foreign remittances of SEBL, Dhanmondi branch.
Encashment of foreign currencies
Purchase of foreign currencies
Outward foreign remittance:
Remittances issued by the Southeast bank, Dhanmondi branch to there foreign correspondents to fulfill their customers needs are considered to be the Outward foreign remittances. It comprises the following
Endorsement of foreign currencies in the passport
Sale of foreign currencies
1 Seller and Buyer conclude a sales contract, with method of payment usually by letter of credit (documentary credit).
2 Buyer applies to his issuing bank, usually in Buyer’s country, for letter of credit in favor of Seller (beneficiary).
3 Issuing bank requests another bank, usually a correspondent bank in Seller’s country, to advice, and usually to confirm, the credit.
4 Advising bank, usually in Seller’s country, forwards letter of credit to Seller informing about the terms and conditions of credit.
5 If credit terms and conditions conform to sales contract, Seller prepares goods and documentation, and arranges delivery of goods to carrier.
6 Seller presents documents evidencing the shipment and draft (bill of exchange) to paying, accepting or negotiating bank named in the credit (the advising bank usually), or any bank willing to negotiate under the terms of credit.
7 Bank examines the documents and draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate.
8 Bank, if other than the issuing bank, sends the documents and draft to the issuing bank.
9 Bank examines the documents and draft for compliance with credit terms. If complied with, Seller’s draft is honored.
10 Documents release to Buyer after payment or on other terms agreed between the bank and Buyer.
11 Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order.
Swot analysis enables an organization to have a comprehensive insight about its current position in the industry compared to the competitors. It provides the organization a scope to strategically improve its position in the market. Here, the internal strength of Southeast Bank limited is discussed as below:
SEBL has created a good reputation in the banking industry of the country among the new comers. It is created a strong grip in the banking sector in terms of deposit and profit within its sixth operation year.
Capital adequacy ratio:
Southeast Bank Ltd. Is maintaining a strong capital base. By the end of the end of December 2008,capital adequacy ratio of the bank was 11.12% that is well above the stipulated requirements of 9%. Positioning the Bank as one of the strong capital based Bank of Bangladesh.
The Bank has a strong relationship with its customer. The Bank believes in maintaining personal relationship with the clients. One of the major goals of the Bank is to build long term relationship with the customer and to create value for them. For this, SEBL waiver high charges for the valued clients who are linked with the Bank for long period of time.
Top management is the key strength to contribute heavily towards growth and development for any Bank. SEBL top management officials have the reputation of experienced banking skills, efficiency and proficiency.
Corporate culture of SEBL is an interactive compare to other commercial Banks. This interactive environment encourages employee to work attentively. As the job is very much routine oriented, its friendly environment encourage the working capability of the employee in their respective field.
Advertising and Promotion:
Advertising and Promotion is one of the weak point of SEBL. It doesn’t have effective work force in marketing activities. This lacking pushes the Bank far behind from the competitive environment.
Reference employment is very much effective in SEBL. For this reason a lot of people drawing salaries at the end of the month with minimum contribution to the organization. It creates problem with other employees who work hard but they are not appreciated accordingly.
Limitation of Information System(Bank Ultimus):
Bank Ultimus is not comprehensive software. It is desirable to set more comprehensive and effective software for online banking for providing instant service to its clients.
The recovery system is not very much effective. For this a huge amount money of the Bank is being defaulted.
It is a system of expansion strategy. By doing this SEBL can expand its current line of its business. With the help of top management SEBL can start merchant bnking.
Credit Card & Tele banking:
By expanding services through Credit Card and Tele Banking SEBL can enter into new form of retail banking, which will create another earning source.
SEBL is growing quickly all over the country. Besides expanding in the urban areas, SEBL has prospects to open more branches in sub-urban areas, which will eventually enhance the government effort at receiving rural economy as well as reaching more people by providing better service.
Level of competition:
Competition is always a major threat for any organization. In recent years. The number of private bank is increasing . these bank is always pose a threat for others by coming up with new product line, innovative technology, quality technology etc. thus the level of competition rises and create threat for SEBL.
With time, technology is getting advanced and most of the private banks are upgrading their operating system to survive in the industry. SEBL is lagging behind in this department and still mostly dependent on manual work rather than technology. Advancement technology is posing great threat of SEBL.
Contemporary Banks like SEBL others are its major rivals. They are carrying out aggressive campaign to attract lucrative corporate clients and big depositors. The bank should have to take some steps to compete for its growth as well as its expansion.
Rapid expansion of multinational Bank poses potential threats to the new comers. Since foreign banks are financially healthy and this will be a threat for SEBL to sustain in the long run if it does not take any strategy.
From the practical implementation of customer dealing procedure during the whole period of my practical orientation in SEBL, I have reached a firm and concrete conclusion in a very confident way. I believe that my realization will be in harmony with most of the banking thinkers. It is quite evident that to build up an effective and efficient banking system to the highest desire level computerized transaction is a must.
Success in the banking business largely depends on
- Effective lending
- Good customer service
- A good management
- A good training program
- Effective implementation of plans and
Southeast is an emerging Bank. To achieve the confidence of the customers, the Bank must execute some improvements in its marketing and operational areas-SEBL should try to win customers faith by providing them efficient and dependable services, credit facility and updating with user friendly modern technologies. The Bank should redesign all sorts of banking procedures to be more user friendly, attractive and impressive.
Southeast Bank Ltd. Started with a vision to be the most efficient financial intermediary in the country and it believes that the day is not far off when it will reach its desired goal. SEBL looks forward to a new horizon with a distinctive mission to become a highly competitive modern and transparent institution comparable to any of its kind at home and abroad.
In the branch where I’ve worked for three months are all the procedures are positive order in spite of this some prances are not properly done which is very effective an all respect it will increase profit and the strength of working capacity in all the departments in the branch.
From findings and analysis of the report, the following recommendations are formulated for the SEBL management.
- In foreign exchange department it is required to communicate with foreign banks frequently and quickly. They should used the modern communication media.
- Database networking is one of the most recent technologies to transfer from branch to branch . They should use this technology in Foreign Exchange Division.
- Against master L/C SEBL should not provide percent margin. The follow the BB’s rules and regulation.
- The Bank should increase its ATM booth in different locations and improve its facility throughout the country.
- It should emphasize more on customer relationship management to retain the existing customer and attract the potential customer.
- The Bank should apply to transform the branch as in AD branch to facilitate the foreign transaction or trade as the Foreign Exchange is the most profitable department of each branch.
- The Bank should take realistic and effective step to recover default loan.
- Annual Report of Southeast bank ltd., 2003-2008.
- Jeff madura, Financial market & Institution, 8th edition.
- Report from southeast bank ltd.
- State of Affairs of the bank.
- The brochure of Southeast Bank Ltd.
- Website of Bangladesh Bank.
- Website: www.southeastbank.com.bd