Measuring the level of customer satisfaction of the Mudaraba Deposit Scheme of EXIM Bank Limited

RAB 8 Barisal

Background of the study

The BBA  program (Stamford University Bangladesh) is designed to focus on theoretical and professional development of people open to take up business as a profession a well as service as a career. The program is three months duration. This internship provides the students to link up their theoretical knowledge into practical fields. After completing eleven semesters at Stamford University Bangladesh, under the Bachelors of Business Administration Curriculum, I was placed in Export Import Bank of Bangladesh Limited, Shimrail Branch, Shiddirgonj, and Narayangonj by the Human Resources Division of EXIM Bank Ltd. as part of the internship program requirement. This report is prepared for the internship program consisting of a major in depth study of the

Measuring the level of customer satisfaction of the Mudaraba Deposit Scheme of Exim Bank Limited: A case study on Shimrail branch”

The internship program exercises a significant importance as it enables a student to familiar with the practical business activities. The students work closing with the people of an organization and learn about the function of that organization. This program enables a student to develop his analytical skill and scholastic aptitude.

Students are required to prepare an internship report under the guidance of supervising teachers on a selected subject matter to highlighting his experience and to conduct an in depth analysis on the subject matter. I have tried my level best to present my experience of the practical orientation in this report.

Rational of the study

In today’s modern and globalization world, business sector is competitive. Theoretical knowledge is not enough for a business student because there is a gap   between theoretical knowledge and practical field. It is more competitive in the financial institution like bank. Now a day’s local banks are playing a key role for economic growth and development of the country. In that case Exim Bank is playing a pioneer role for structural development of the country. Exim bank also provides some social responsibility. As a part of BBA program in Stamford University Bangladesh, I was assigned in Exim bank for 2 two months internship program. This study mainly covered the areas of performance of Exim bank, its services, types of deposits, remittance, loans & advance, recovery system and its growth. So as an internship I thought I should have profound knowledge on this field of increased importance.

Objectives of the study

General objectives

The General objectives of the study are:

To fulfill the requirement for the completion of (MBA) program.

The general objective of this report is to fulfill the requirement for the completion of (BBA) program through internship report.

To acquire practical experience in different banking services of EXIM Bank.

Understand the Islamic Shariah Based General Banking, Foreign Exchange and Investment Management of Exim Bank Limited, Shimrail Branch Narayangonj.

Specific Objectives

The Specific objectives of the study are:

  • To gather knowledge about the transaction of different department of the branch.
  • To know about the conventional banking and their operation.
  • To know about the operational activities of Exim Bank Ltd  based on Islamic Shariah.
  •  The problem- prospects of Islamic bank.
  • To study existing banker-customer relationship.
  • To identify the problems of financing by EXIM Bank Limited.
  • To familiar with banking environment, clients, working hours, values, conditions and other things related to bank
  • To understand the real management situation and to gather practical knowledge.
  • To analyze the financing system of the bank and to have greater contribution towards    country’s economy
  • To understand present an overview of Exim Bank Limited.
  • To know about investment facility provided by Bangladesh Bank.

Scope of the study

Exim Bank Limited is now well growing and it’s containing Thirty Five branch in Dhaka and outside of the Dhaka. The scope of the study will be limited to the organizational setup, function and operation of the EXIM BANK LTD in the Bangladesh specially concentrating on EXIM BANK LTD operations in Foreign Exchange Branch but not the entire area of the EXIM BANK LTD. This report mainly encompasses

Measuring the level of customer satisfaction of the Mudaraba Deposit Scheme of Exim Bank Limited: A case study on Shimrail branch”.

For the purpose of my internship program, I was assigned in the Shimrail Branch at EXIM BANK LTD and this paved me the way to get myself familiarized with banking environment for the first time indeed. I have an opportunity to gather experience by working in different departments of the Branch.

 

Methodology of the study

Different data and information are required to meet the goal of this report. Those data and information were collected from various sources, such as, primary and secondary which is showed below:

 

Research Design:

Descriptive research has been conducted for gathering better information that will give a better understanding on various consumers’ opinions. Both primary and secondary sources of data collection procedure have been used in the report. Primary data has been collected mainly through the deposit user of Exim bank’s. Secondary data are collected through writer’s observation of the approval process and monitoring techniques, Annual Report of Exim Bank, Statement affairs and Bank Rate sheet of the Bank, Exim Bank’s General Regulation, Website of Exim bank etc.

Sampling Technique:

Convenience sampling technique was used to obtain accurate information from the respondents.

 

Population:

Clients having deposit schemes of EXIM Bank Limited in Bangladesh have been taken into consideration as the population of this report.

 

Sample:

Sample element:  Clients having deposit schemes of Shimrail Branch of EXIM Bank Limited have been taken into consideration as the Sample element of this report.

Sample Size:

Sample size is 100.

 

Data Analysis:

For the analysis purpose I have basically undergone some financial analysis and also judged some qualitative factors responsible for the Exim bank position in banking sector.

To continue the study, I have collected the useful data by two methods:

1)      Conceptual approach.

2)      Empirical approach.

These two data analysis techniques provided independently derived information that could be crosschecked, thus enhancing validity.

Conceptual approach:

A theoretical section is given in this report (i.e. the organization part) to give an overview of related literature; overview of Exim Bank (BSB) is given to facilitate the understanding of this report.

Model used:

The analytical model used to bring out the findings.

 

Variables Covered

 

To complete this report I have followed a systematic study which include working, inspecting and talking to the executives at different levels of the organization to know the present scenario of the banking practice.

 

Presentation of data

This report is an exploratory and descriptive one in nature and involved with both oral and written source of data in being used and has been administered by collecting both primary and secondary data. Personal interview through oral questionnaire technique is being used in this report

 

Sources of collecting data:

The information incorporated in this report has been gathered from primary and secondary sources. Apart from this, a review of related circular and office circular as well as face-to-face interview of the executives, officials and clients were carried out.

 

Limitations of the study

There is a certain boundary to cover this study. To achieve the objective of the study, i.e. through knowledge about the organizational function specially General banking Activities of EXIM Bank Ltd. It was not possible due to shortage of time to cover each and every activity performed by the bank. So the study has covered only the General banking Activities of EXIM Bank Limited.

Like any other articles and theories, this study is not free from limitations. I have tried my level best to overcome these limitations through extensive study, hard and sincere devotion to the assigned duty. The major limitations are:

  • I complete my internship in a small town branch, Shimrail branch. So I don’t get the proper information which I need.
  • The bank personnel and officials were very busy with their occupational activities. Hence it was little bit difficult for them to help within their high schedule.
  • Time is an important issue in report writing. As I have been given a specific dead Line for submission, observation and learning all the banking operation within three month and also to prepare the report all along which is really tough.
  • Relevant data and document collection were difficult due to the organization confidentiality.
  • Non availability of data in a systematic way.
  • Shortage of written material
  • Another limitation of this report is the banking policy is not to disclose any information earlier, which will publish in future. For this reason I could not collect any data of 2008 in May.
  • Large-scale research was not possible due to access constraints.

In spite of all these limitations I have tried to put the best effort as far as possible.

Time frame of the study

Departments Duration
General Banking From 18 March To 18April
Deposit Department From 19 April To 05 may
Investment Department From 06 May To 17 May

 

Report review

Students of BBA program of Stamford University Bangladesh are required to undergo an internship program at the end of the final semester. As part of the program, I was placed in EXIM Bank Ltd. Shimrail Branch, Shiddirgonj, Narayangonj for a period of two months as an internee. This internship is an orientation to the entire working activities of EXIM Bank Ltd. and a study on operational activities that I can make detail research and present my understanding in the report. From this perspective, on completion of 2 months internship program, I have prepared this report. I highly appreciate this assignment and to do hope that it will play a great role in building my future career. The title of my internship report is “Measuring the level of customer satisfaction of the Mudaraba Deposit Scheme of Exim Bank Limited: A case study on Shimrail branch”

 

Historical Background of EXIM Bank Limited:

 

EXIM Bank Limited was established under the rules & regulations of Bangladesh bank & the Bank companies’ Act 1991, on the 3rd August 1999 with the leadership of Late Mr. Shahjahan Kabir, founder chairman who had a long dream of floating a commercial bank which would contribute to the social-economic development of our country. He had a long experience as a good banker. A group of highly qualified and successful entrepreneurs joined their hands with the founder chairman to materialize his dream. In deed, all of them proved themselves in their respective business as most successful star with their endeavor, intelligence, hard working and talent entrepreneurship. Among them, Mr. Nazrul Islam Mazumder became the honorable chairman after the demise of the honorable founder chairman.

Of its very beginning, EXIM Bank Bangladesh limited was known as BEXIM Bank, which stands for Bangladesh Export Import Bank Limited. But for some legal constraints the bank renamed as EXIM Bank, which means Export Import Bank Of Bangladesh Limited.

The bank starts its functioning from 3rd August 1999 with Mr. Alamgir Kabir, FCA as the advisor and Mr. Mohammad Lakiotullah as the Managing Director. Both of them have long experience in the financial sector of our country. By their pragmatic decision and management directives in the operational activities, this bank has earned a secured and distinctive position in the banking industry in terms of performance, growth, and excellent management.

Broad Performance Indicators:

 

EXIM Bank Ltd. was incorporated as a public Limited company on the 2nd June 1999 under Company Act 1994. The Bank started commercial banking operations effective from 3rd August 1999. During this short span of time the Bank has been successful to position itself as a progressive and dynamic financial institution in the country.

The Bank widely acclaimed by the business community, from small business/entrepreneurs to large traders and industrial conglomerates, including the top rated corporate borrowers from forward-looking business outlook and innovative financing solutions. In year 2007 EXIM Bank ltd. made commendable in all business arenas like Deposit, Credit, Fund Management, Investment and Foreign Exchange related business.

Export and Import Trade Handling and Financing

 

As a commercial Bank, we do all traditional Banking business including the wide range of savings and credit scheme products, retail banking and ancillary services with the support of modern technology and professional Excellency. But our main focus is, for obvious reason, on export and import trade handling and the development of entrepreneurship and patronization of private sectors

  

EXIM Bank at a Glance: Growth of Bank

Figure in Crore

Sl. No

Particulars

2004

2005

2006

2007

1 Authorized Capital 100.00 100.00 350.00 350.00
2 Paid-up Capital 62.78 87.90 171.38 214.22
3 Reserve Fund 35.73 57.00 81.09 113.46
4 Deposits 1907.82 2831.90 3503.20 4154.66
5 Investment (General) 1933.20 2604.60 3264.13 4019.52
6 Investment ( Shares on Bonds) 154.30 163.30 223.33 245.77
7 Foreign Exchange Business 4931.24 7294.00 9617.51 11790.01
a) Import Business 2678.10 4143.20 4959.67 6139.94
b) Export Business 2241.84 3128.50 4623.46 5579.04
c) Remittance 11.31 22.30 34.38 71.03
8 Operating Profit 83.58 117.58 137.87 190.82
9 Loan as a % of total Deposit 101.33% 91.97% 93.18% 96.75%
10 No. of Foreign Corresponden 200 222 246 246
11 Number of Employees 768 934 1020 1104
12 Number of Branches 28 28 30 35
13 Return on Assets 3.44% 1.65% 1.73% 2.00%

Capital:

The bank started with an authorized capital of Tk.100 million in 1999 and as on 31st December 2004 paid up capital stood at Tk. 62.78 million. The paid up capital stood at Tk.214.22 million as on 31st December 2007.

Analysis of capital structure:

Capital structure of EXIM Bank has changed from year to year. The components of the capital structure are paid-up capital; proposed issue of dividend, share premium, statutory reserve, proposed cash dividend, retained earnings and other reserve. Authorized and paid up capital of EXIM Bank:

 

Authorized Capital (TK) In Crore

Year

Paid Up Capital (Tk) In Crore

100

2004

62.78

100

2005

87.90

350

2006

171.38

350

2007

214.22

Table No: 1

Diagram Capital Position of Exim Bank:

Source: Annual Report 2004, 2005, 2006, 2007

 

In the annual report of the year 2004, capital structure contain 62.78 Crore taka value for the component of proposed cash dividend, but in the annual report of the year 2007  it was mentioned that cash dividend was 214.22 Crore taka for the year 2007

2.2.2 Deposit:

The total deposit of the bank increased to Tk. 2831.90 Crore as on December 31, 2005 from Tk. 1907.82 Crore as at the end of the previous year indicating an increase of taka 924.08 Crore than the previous year. The EXIM Bank remains committed to increasing deposit base by growing low cost personal and business accounts, and thereby lowering the banks over all cost of fund. As on December31, 2007 the banks deposit reached 4154.66 Crore, which is more than taka 651.46 Crore than year 2006.

Deposit Position of EXIM Bank:

Year

Amount Of Deposit (Tk In Crore)

2004

1907.82

2005

2831.90

2006

3503.20

2007

4154.66

Table no – 2

Diagram of Deposit Position of Exim Bank: 

Reserve fund:

In the year 2004 the total reserve was taka 35.73 Crore, but in the year 2005, it was increased on taka 57.00 Crore by the difference is taka 21.27 Crore. At the year of 2007 it is reached at taka 113.46 Crore.

Reserve fund Position of EXIM Bank:

Year

Amount (TK in Crore)

2004

35.73

2005

57.00

2006

81.09

2007

113.46

Table: 3

Diagram of Reserve fund position of EXIM Bank:

Investment

On December 31, 2005 the total amount of investment is taka 2604.60 Crore, which was taka 1933.20 Crore last year. On December 31, 2007 the total amount of investment is taka 4019.52 Crore, which was taka 3264.13 Crore last year. The amount has increased by taka 755.39 Crore. The notable investment represents deployment in Treasury bills and Shares, Prize bond & other.

 

Investment Position of EXIM Bank:

Year

Amount (TK in Crore)

2004

1933.20

2005

2604.60

2006

3264.13

2007

4019.52

Table No- 4

Diagram of Investment position of EXIM Bank:

 

5. Profit and operating results:

In year 2004 a growth in operating profit of the bank was Tk.83.58 Crore and in 2005 the profit reached to 117.58 million. In 2006 and 2007 profit after tax was 137.87 and 190.82 respectively.

Profit and operating results Position of EXIM Bank:

Year

Amount (TK in Crore)

2004

83.58

2005

117.58

2006

137.87

2007

190.82

Table – 5

Diagram of Profit and operating results position of EXIM Bank:

Import Business:

The total import business handled by the bank during the year 2005 was Tk. 4143.20 Crore as compared to Tk. 2678.10 Crore in the previous year showing an increase rate of 8%. The significant items of imports were industrial raw materials, consumer goods, machinery, Fabrics and accessories etc. As on December, 2007 EXIM bank Imported Tk. 6139.94 Crore of goods.

Handling the amount of Import Business:

Year

Amount (TK in Crore)

2004

2678.10

2005

4143.20

2006

4959.67

2007

6139.94

Table- 6

 

Diagram of Handling of Import Business in Exim Bank:

Export Business:

 

The total volume of export handled by the bank during 2005 was TK. 3128.50 Crore compared to TK. 2241.84 in the previous year are showing an increased rate of 6%. As on December, 2007 the total volume of export was Tk. 5579.04 Crore.

Handling the amount of Export Business:

 

Year

Amount (TK in Crore)

2004

2241.84

2005

3128.50

2006

4623.46

2007

5579.04

Table- 7

 

Handling of Export Business in Exim Bank:

 

Management Hierarchy:


2.4
Board of Directories:In the top of the hierarchy there are Chairman, Advisor and Board of Directors. Under Advisor there is Managing Director. Under managing director there is Senior Executive Vice President (one). Under Senior Executive Vice President there is Executive Vice President (five). Under Executive Vice President there is Senior Vice President (Seventeen). Under Senior Vice President there is Vice President (Eight). Under Vice President Senior Assistant Vice President (Nine). Under Senior Assistant Vice President there is Assistant Vice President (Twenty Five). Under Assistant Vice President there is Senior Principal Officer. Under Senior Principal Officer there is Principal Officer. Under Principal Officer there is Executive Officer. Under Executive Officer there is Officer. Under Officer there is Trainee Officer. Under Trainee Officer there is Junior Officer. Under Junior Officer Assistant Officer. Under Assistant Officer there is Trainee Assistant Officer. The number of Senior Principal Officer, Principal Officer, Executive Officer, Officer, Trainee Officer, Junior Officer, Assistant Officer and Trainee Assistant Officer differs on branch wise.

 

¨  Late Shahjahan Kabir, Founder Chairman

¨  Md. Nazrul Islam Mazumder, Chairman

¨  Alamgir Kabir, FCA, Former Advisor

¨  Kazi Masihur Rahman, Managing Director

Corporate Information at a Glance

 

Registered Name                                :  Export Import Bank of Bangladesh Ltd.

Registered Head office                      :  Printers Building (5th floor)

5, Rajuk Avenue

Motijheel C/A Dhaka – 1000

Phone No Bank                                 : 9566764, 9566418, 9553872, and 9561604

Fax No                                                :  880-2-9556988

E-mail Address                                  : eximho@bdonline.com

Web site:www.eximbankbd.com

SWIFT                                                           : EXBKBDDH

Date of incorporation                       : 3rd August 1999

Authorized Capital                           : Tk.100.00 Crore

Paid up capital                                   : Tk.62.78 Crore

Number of Branches                        : 35 (Thirty Five Branches)

Chairman                                           : MR. NAZRUL ISLAM MAJUMDAR

Managing Director                            : Mr. Kazi Masihur Rahman

Auditor                                              : Pinaki & Company, Chartered Accountants

 

Objectives of EXIM BANK:

Considering the inherent desire of the religious Muslims, EXIM bank has launched Islami Banking system and inaugurates two Islami banking branches in the year 2002 but from 1st July, 2004 they started to follow Islami Banking system. All the Branches perform their activities under the guidance and supervision of a body called “SHARIAH COUNCIL”. This council is consisting of 16 members.

 

  1. Islami Banking system plays very important role in the Muslim nation. As 90% people of our country are Muslim the bank wants to compete the Market.
  2. For interest free banking financing arrangements.
  3. To follow Quran, Sunnah and Shariah Rules.
  4. Due to profit sharing features of Islamic Banking Banks and entrepreneurs have a shared interest in the outcome of an investment, which fortes economic development.
  5. To establish equity & justice in the society through the legitimate business & income.
  6. Try to bring diversity in the investment portfolio in accordance with the need and demand of the time and nature of business by introducing various investment methods & techniques.
  7. Co – ordinate the economic development with the social development.

 

2.9.1 Our vision and mission are stated in the following bullets:

  • To be the finest bank in the banking arena of Bangladesh under the Shariah guidelines.
  • To maintain Corporate and business ethics.
  • To become a trusted repository of customers’ money and their financial advisor.
  • To make our stock superior and rewarding to the customers/share holders.
  • To display team spirit and professionalism.
  • To have a Sound Capital Base.
  • To provide high quality financial services in export and import trade.
  • To provide excellent quality Customer service

 

Values of EXIM Bank limited:

To be one EXIM by holding and guiding the following values:

ü  To have a strong customer focus and to build relationship based on integrity, superior service and mutual benefit.

ü  To strive for private and sound growth

ü  To work as a team to serve the best interests of the organization.

ü  To work for continues business innovation and improvements.

ü  To value and respect people and make decisions based on merit.

ü  To provide recognition and reward on performance.

ü  To value open and honest communication

 

Slogan of the Exim Bank- Local Bank Global Network:

Export Import Bank Limited as the name implies, is not a new type of Bank in global but is the first in Bangladesh. It believes in together with its customers, and aim is to the growth & its progress with services. To achieve the desired goal its intention is pursuit of excellent at all stages for continuous improvement.

 

 Functions of EXIM Bank limited:

  • To maintain all types of deposit A/Cs.
  • To make investment.
  • To conduct foreign exchange business.
  • To conduct other Banking services.
  • To work for continues business innovation and improvements

Department wise activities of Exim Bank

Introduction:

The General Banking department does the most important and basic work of the banks. All other departments are linked with this department. It also played a vital role in deposit mobilization of the branch. EXIM Bank provides different types of accounts and special types of saving scheme under general banking. For proper functioning and excellent customer service this department is divided into various sections namely as follows:

ü  Accounts Opening Section

ü  Cash Section

ü  Deposit Section

ü  Bills and clearing Section

ü  Remittance section

ü  FDR Section

ü  Accounts Sections

 

Accounts Opening Section

This section deals with opening of different types of accounts. It is also deals with issuing of checkbooks and different accounts openers. A customer can open different types of accounts through this department such as:

  1. CD – Al – Wadiah  Current Deposit
  2. SB – Mudaraba Saving Deposit
  3. STD – Short Term Deposit
  4. MTD – Mudaraba Term Deposit
  5. SS – Short scheme
  • MSS – Monthly Saving Scheme
  • MIS – Monthly Income Scheme
  • MPSS – Multi plus Super Saving Scheme
  • SSS – Super Saving Scheme
  1. ESS – Education Saving Scheme
  2. INV – Investment Account
  3. FC – Foreign currency Account
  4. BCD – Bearer Certificate Deposit
  5. EXIM Bank Hajj Account Project

As it is an Islami Banking Branch the following rules are applied here:

a)                  Current deposit will be received on Al – Wadiah principle & the same will not get any profit.

b)                  Savings deposit will be accepted on Mudaraba principle & such deposit will bear 0.62 weight age.

  

Islami Banking Terms:

For the convenient of the reader who are not familiar with the Islami Banking Term, the following are some terms of Islami Banking for mobilization of deposits and the schemes are becoming popular day by day:

 

Al Wadiah Account:

The characteristics of this account are almost similar to current account of conventional banks. The owner of the fund does not enjoy any profit nor bear any loss. But the bank obtains the permission from the depositors so that the bank has the option to use the fund when it is necessary.

 

Mudaraba Savings Account:

Mechanism is almost similar to the savings account of the conventional banks. The basic difference in this case is that the bank and the owner of the fund will share the profit from the investment while the loss from the investment will be borne by the owner of  the fund unless the loss is incurred due to the negligence or convenience of the bank. Generally, current account is opened for businessmen and traders for easy transaction. But a person can open CD account for special purpose also.

Requirements for the different types of accounts opening are discussed below

 

Individual / Joint Account:

1.   Introduction of the account.

2.   Two photographs of the signatories duly attested by the introducer.

3.   Identity [copy of passport]

4.   Joint Declaration form [For Joint A/C only]

5.   Employee’s Certificate [incase of Service holder]

 

Partnership Account:

1.   Introduction of the account

2.   Two photograph of the signatories duly attested by the introducer.

3.   Partnership letter duly sign by all partners [sign should be similar as stated in Partnership Deed]

4.   Partnership deed duly certified by Notary Public [Deed should be written in Bond of Tk. 500/= – if the capital is Tk. 25000/= by if the capital exceed Tk. 2500/= bond of Tk. 1000 is required.]

5.   Registration [if any]

6.   Rubber stamp

7.   Updated Trade License

 

Proprietorship Account:

1.   Introduction of the account

2.   Two photographs of the signatories duty attested by the introducer.

3.   Valid copy of trade License.

4.   Rubber stamp

5.   TIN Number certificate [if any]

6.   Identity [copy of passport]

7.   Permission letter from DC / Magistrate [in case of Newspaper]

Limited Company:

  1. Introduction of the account
  2. Two photograph of the signatories duly attested by the introducer.
  3. Valid copy of the trade License
    1. Board Resolution of opening account duly certified by the chairman Managing Director
    2. Certificate of Incorporation.
      1. Certified [Joint stock] true copy of the memorandum and Article of Association of the company. Duly attested by the Chairman of Managing Director.
      2. List of Director along with designation and specimen signature.
      3. Latest certified copy of Form – X11 [to be certified by the registrar of Joint stock

Companies] [in case of directorship change]

  1. Rubber stamp [seal]
    1. Certificate of registration [in case of Insurance company – obtained  from department of Insurance from the peoples Republic of Bangladesh]

Club / Societies Account:

  1. Introduction of account.
  2. Two photograph of the signatories duly attested by the introducer.
  3. Board Resolution for opening account [Duly certified by president / Secretary]
  4. List of Existing Managing Committee.
  5. Registration [if any]
  6. Rubber stamp
  7. By Laws
  8. Permission Letter from Bureau of N.G.O [in case of NGO account]
  9. Government Account

The following procedures are maintained for issuing of a check book:

At first the customer will fill up the check requisition form.

The leaves of the check book under issue shall be counted to ensure that all the leaves and the bank requisition slip are intact and the name and account number shall be written on the cover page of check book. The account number of the customers shall be entered on all the leaves of the check book and its requisition slip

The name and account number of the customers shall be entered in the check book register against the particular check book series.

Then the register check book and the requisition slip are signed by the officer in charge of the deposit department.

Then the check book is handed over to the customer after taking acknowledgement on the requisition slip and the register book.

A cover file containing the requisition slip shall be effectively preserved as vouchers. If the ledger keeper notices any defect, he will make a remark to that effect on the requisition slip and forward it to the cancellation officer to decide whether a new check book should be issued or not.

Cash section

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 plays 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 bellow:

Cash Department:

Cash section of any bank plays a vital role in general banking procedure. Because it deals with the most liquid assets. There is several counters work simultaneously in cash section of EXIM Bank, Shimrail Branch. There is also some electronic counting machines by which a huge amount of cash money can be counted within a few minutes.

 

Cash Receiving Procedure

The work of cash receiving counter is examining deposit slips.

Depositor uses the prescribed deposit slip supplied by the bank for deposit cash, check, draft pay order etc. In all types of deposits the teller must check the following things:

v  The slip has been properly filled up.

v  The title of the account and in its number.

v  The amount in figure and in words is same.

v  Instrument signed by the depositor.

v  Date of the instrument.

After checking all these things the teller will accept cash, check, draft, pay order etc. against deposit sleep. The teller will place the cash in the cash in drawer according to denominations. The teller will place signature and affix cash receipt, rubber stamp seal and record in the cash received register book against the account number. At the end of this procedure, the cash officer passes the deposit slip to the computer section for posting purpose and returns the customer’s copy.

 

Cash payment procedures

Precaution:

In order to safe guard the position the paying banker has to observe the following precaution before honoring a check:

A check must be looked whether it is an opened or crossed check.

The paying officer should see whether the check is drawn on his/her branch.

He must see if the check is post dated or pre dated. A letter must not pay any Post dated cheque

The office must carefully see the apparent tenor of the check. If it is mutilated Or materially altered then the officer must not honor it.

The officer must compare the signature of the check with the signature on the specimen signature card.

The officer must verify the regularity of the endorsement

The officer may allow overdue against a check if prior arrangement is done with the bank.

Functions of Cash Department

Cash Payment
  1. Cash payment is made only against cheque

2. This is the unique function of the banking system which is known as “payment on demand”

  1. It makes payment only against its printed valid Cheque
Cash Receipt
  1. It receives deposits from the depositors in form of cash
  2. So it is the “mobilization unit” of the banking system
  3. It collects money only its receipts forms

Cash packing:

After the banking hour cash is packed according to the denomination. Notes are counted and packed in bundles and stamped with initial.

Allocation of currency:

Before starting the banking hour all tellers give requisition of money through “Teller cash proof sheet”. The head teller writes the number of the packet denomination wise in “Reserve sheet” at the end of the day; all the notes remained are recorded in the sheet.

Local Remittance Section

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:

  • Between banks and non banks customer
  • Between banks in the same country
  • Between banks in the different centers.
  • Between banks and central bank in the same country
  • Between central bank of different customers.

The main ways used by EXIM Bank for remitting funds are

  • Payment order ( PO)
  • Demand Draft ( DD)
  • Telegraphic Transfer (TT)

So the basic three types of local remittances are discussed below

Points Pay Order Demand Draft TT
Explanation Pay Order gives the payee the right to claim payment from the issuing bank 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. Issuing branch requests another branch to pay specified money to the specific payee on demand by Telegraph /Telephone
Payment from Payment from issuing branch only Payment from ordered branch Payment from ordered branch
Generally used to Remit fund Within the clearinghouse area of issuing branch. Outside the clearinghouse area of issuing branch. Payee can also be the purchaser. Anywhere in the country
Payment Process of the paying bank Payment is made   through clearing 1. Confirm that the DD is not forged one.

2.Confirm with sent advice

3.Check the ‘Test Code’

4.Make payment1.Confirm issuing branch

2.Confirm Payee A/C

3.Confirm amount

4.Make payment

5.Receive adviceChargeOnly commissionCommission + telex chargeCommission     +

telephone

Test – key Arrangement:

Test key arrangement is a secret code maintained by the banks for the authentication for their telex messages. It is a systematic procedure by which a test number is and the person to whom this number is given can easily authenticate the same test number by maintaining that same procedure. EXIM Bank has test key arrangement with so many banks for the authentication of LC message and for making payment.

Commission for PO:

EXIM Bank charges different amount of commission on the basis of Payment order amount. The bank charges for pay order are given in the following chart:

Table no Commission & VAT for PO

 

Total Amount of PO Commission VAT
Up to TK. 10,000.00 25 4
TK. 10,001.00 – TK .1,00,000.00 60 9
TK. 1,00,001.00 –  and above 120 18

 

Commission for DD

Firstly bank Cheque the “Test Code” mentioned on the draft. If “Taste Code” agrees then believe that DD is not forged and makes payments. For further confirmation, the issuing bank sends an advice about the DD to the paying branch. For DD, commission is taken in the following way:

Particulars Charges
Commission @ 0.15% on total amount
VAT @ 15 % on commission
Postage Tk. 25

Source: Annual report 2007

Commission for TT

This service is only provided for valued customers. Who is very reliable and have long-standing relationship with bank, TT commissions are:

Particulars Charges
Commission @ 0.15% or Minimum Tk. 25.00
VAT @ 15% on commission minimum TK 25 on 10,000
Telephone Charge Tk. 50

Source: Annual report 2007

Passing the check:

After verifying the above – mentioned things the officer passes it to the computer section for more verification. After that it is passed to the cash officer to make payment. By  putting “seal the cash officer make it clear to pay. The cash officer gives the cash amount to the holder and record in the cash paid register.

Dishonor of Check:

A bank can dishonor a check in the following situations:

Ò Insufficient fund.

Ò Payment stopped by drawer.

Ò Alteration required drawer signature

Ò Effect not clear in the check.

Ò Exceed arrangement in check.

Ò Full cover not received.

Ò Payee’s endorsement irregular/illegible/required.

Ò Drawer signature different and required.

Ò Check is post dated/mutilated /out of date.

Ò Crossed check must be presented through a bank.

Ò Clearing stamp required cancellation.

Ò Check crossed “Account Pay only”.

Ò Collecting bank’s discharge irregular / required.

Deposit Section:

The function of the deposit section is very important. It is fully computerized. The officer of the deposit section maintains account number of all the customers of the bank. They are used different code number for different account. By this section a depositor/drawer can know what is the present position lf his / her account. The officer makes posting three types of transactions such as cash, clearing and Transfer. This section performs the following tasks:

  • Post all kind of transactions.
  • Provide on demand report.
  • Check maintenance.
  • Preparation of day transaction position.
  • Preparation of closing monthly transaction.

Bill and Clearing Section:

For safety and security in financial transaction people use financial instruments like DD, PO, Check etc. Commercial bank’s duty is to collect these financial instruments on behalf of their customer. This process that the banks use is known as clearing and collection. The main function of this section is to collect instruments on behalf of the customers through Bangladesh Bank Clearing House, Outside Bank Clearing

(OBC), Inter Branch Clearing (IBC).Upon the receipt of the instruments this section examines the following things:

  • Whether the paying bank within the Dhaka city.
  • Whether the paying bank outside the Dhaka city.
  • Whether the paying bank is their own branch.

Outward Clearing:

Outward clearing held if the instruments collected by specific branch within the Dhaka city and not of their own branch. Here the following procedures are followed:

The clients receive the duty signed instruments.

Checked for any apparent discrepancy.

Clearing stamps are affixed on the instruments and on the deposit slip.

Branch code number also affixed on the instruments.

The authorized signature endorses instruments.

Particulars of the instruments and vouchers are recorded in the outward

Clearing register.

The instruments with schedules send to the main branch of EXIM Bank

Bangladesh Ltd. With issuing an Inter Branch Debit Advice (IBDA).

Essential things for clearing the instruments:

There are three essential things required for clearing the instruments:

  1. Crossing seal.
  2. Endorsement seal.
  3. Clearing seal.

 

Accounts Section:

This is a very much crucial department for each branch of a commercial bank. Records of all the transactions of every department are kept here as well with other respective branches. Accounting department verifies all financial amounts and contents of transactions. If any discrepancy arises regarding any transaction this depart report to the concerned department.

Tasks of accounts department:

Accounts department plays a vital role in commercial banking. In private banking sector accounts department of EXIM Bank Bangladesh Ltd. Performs its tasks properly. The activities of accounts section are as follows:

Ä  Record al transaction in the cash book.

Ä  Record all transaction in the general and subsidiary ledger.

Ä  Prepare daily fund function, Weekly position, Periodic statement of affairs etc.

Ä  Prepare necessary statement for reporting purpose.

Ä  Pay all expenditure on behalf of the branch.

Ä  Make salary statement and pay salary.

Ä  Branch to branch fund remittance and support for accounting treatment.

Ä  Budgeting for branch.

Ä  Make charges for different types of duties.

 

Product Information:

 

Savings Scheme:
  • Monthly Savings Scheme(Money Grower)
  • Monthly Income Scheme(Steady Money)
  • Double the deposit in 6 years (Super Savings)
  • 10 years deposit-more than triple(Multiplies Savings)
  • Education Savings Scheme

 

MUDARABA SUPER SAVINGS SCHEME

Objectives of the Scheme:

Savings help to build up capital and capital is the principal source of business investment in a country. That is why savings is treated as the very foundation of development. To create more awareness and motivate people to save, EXIM Bank offers super savings scheme.

Terms and Conditions of the Scheme:

Ä  Any individual, company, educational institution, government organization, NGO, trust, society etc. may invest their savings under this scheme.

Ä  The deposit can be made in multiples of Tk. 5,000.00.

Ä  Any customer can open more than one account in a branch in his/her name or in joint names. A Deposit Receipt will be issued at the time of opening the account.

Ä  The Deposit will approximately be double in 6 (six) years.

Highlights of the Scheme:

Ä   Some examples are given in the table below. Any amount can be deposited in   multiples of Tk. 5,000.00.

Deposit Payable (approximately) at maturity
5,000.00 10,002.00
10,000.00 20,004.00
20,000.00 40,008.00
50,000.00 1,00,020.00
1,00,000.00 2,00,040.00
2,00,000.00 4,00,081.00
5,00,000.00 10,00,203.00

Ä   Savings will be treated as projected and it will be adjusted after the declaration of profit at the end of the year. The weightage of deposit will be 1.17.

Ä   Not less than 65% of investment income shall be distributed among the Mudaraba Deposit holders as per weightage of deposit.

Premature encashment of the scheme:

Ä   In case of premature encashment before 1 year no profit shall be paid.

Ä    In case of premature encashment after 1 year but before 3 years profit shall be paid at Savings Rate plus 0.75%.

Ä   In case of premature encashment after 3 years but before maturity profit shall be paid at Savings Rate plus 1.00%.

In case of any unexpected situation:

Ä   In case of death of depositor before the term, the amount will be given to the nominee according to the rules of premature encashment. In the absence of nominee, the heirs/ successors will be paid as per succession certificate.

Ä    In case of issuing duplicate receipt the rules of issuing a duplicate receipt of Term Deposit will be applicable.

Ä   The nominee may, at his option continue the scheme for the full term.

Quard facility under the scheme:

Ä   A depositor can avail quard up to 90% of the deposit under this scheme.

Additional terms and conditions:

Ä   Bank reserves the right to change the weightage of deposit & percentage of distribution of Investment Income.

Ä   At the time of payment, Income Tax shall be deducted upon profit.

 

MUDARABA MONTHLY SAVINGS SCHEME (MONEY GROWER)

 

Objective of the scheme:

A monthly savings scheme. Secure your future with ease. A small savings of today will provide you comfort tomorrow.

Savings Period and Monthly Installment Rate:

  • The savings period is for 5, 8, 10 or 12 years.
  • Monthly installment is Tk. 500/-, 1000/-, 2000/- or 5000/-.
  • Not less than 65% of investment income shall be distributed among the Mudaraba Depositors as per weightage. The deposit will bear weightage 1.16, 1.17, 1.18, 1.19 respectively.
  • Bank reserves the right to change the weightage of deposit & percentage of distribution of Investment Income.

Monthly Installment Deposit:

  • The savings amount is to be deposited within the 10th of every month. In case of holidays the deposit amount is to be made on the following day.
  • The deposits may also be made in advance.
  • The depositor can have a separate account in the bank from which a standing instruction can be given to transfer the monthly deposit to the scheme account.
  • If the depositor fails to make the monthly installment in time, then 5% on overdue installment amount will be charged. The charged amount to be added with the following month(s) installment and the lowest charge will be Tk. 10/- (Taka Ten).

Withdrawal:

  • Generally, withdrawal is not advised before a 5 (five)-year term, but if it is withdrawn before the above term, profit will be paid at savings rate. However, no profit will be paid if the deposit is withdrawn within 1 (one) year of opening the account.
  • In case the depositor wishes to withdraw between the 5, 8, 10 or 12 years period then full profit will be paid for a completed term and savings rate will be applicable for the fractional period.

Quard Advantage:

  • After 3 (three) years of savings in this scheme the depositor (if adult) is eligible for a quard up to 90% of his/her deposited amount. In that case, profit rates on the quard will be applicable as per prevailing rate at that time.

 

Reasons for disqualification from this scheme:

  • If the depositor fails to pay 3 (three) installments in a row, then he/she will be disqualified from this scheme and profit will be applicable as mentioned in withdrawal clause.
  • If a depositor fails to pay 5 (five) installments in a row after completion of any one of these terms, then the Bank reserves the right to close the account and profit will be paid as mentioned in withdrawal clause.
  • In case of death of the depositor the scheme will cease to function. The amount will be handed over to the nominee of the deceased depositor. In case of absence of the nominee, the banks will handover the accumulated amount to the successor of the deceased.

Achievement from the scheme:

The accumulated amount may be more or less of following table:

Term Monthly Installment
500/- 1,000/- 2,000/- 5,000/-
5 yrs. 39,041/- 78,082/- 1,56,164/- 3,90,411/-
8 yrs. 74,202/- 1,48,404/- 2,96,809/- 7,42,024/-
10 yrs. 1,05,095/- 2,10,190/- 4,20,380/- 10,50,952/-
12 yrs. 1,44,461/- 2,88,923/- 5,77,847/- 14,44,618/-

Rules:

ì  A form has to be filled at the time of opening the account. Attested photographs are advised.

ì  The depositor can select any of the installment amounts which cannot be subsequently changed.

ì  In case of minors, the guardians may open and supervise the account in his favor.

ì   A single person can open more than one account for saving under several installment amounts.

ì  The accumulated deposit with profit will be returned within one month of completion of a term.

ì  The depositor should notify the bank immediately on any change of address.

ì  The government tax will be deducted from the profit accumulated in this scheme.

ì  If necessary, at the request of the depositor, the scheme can be transferred to another branch.

ì  The Bank reserves the right to change the rules and regulations of the scheme as and when deemed necessary.

ì  Income Tax on profit paid shall be deducted at the time of payment.

 

Deposit Rate

 

Deposit Name Provisional Profit Rate
Mudaraba Savings Deposit 7.00%
Mudaraba Short Term Deposit 6.00%
Mudaraba Term Deposit :  
1 Month 10.50%
2 Month 12.25%
6 Month 12.40%
1-3 Years 12.50%

 


MUDARABA MONTHLY INCOME SCHEME(STEADY MONEY)

 

Objectives of the scheme:

ì  A monthly scheme that really makes good sense. A sure investment for a steady return. Actually, steady money makes your money work for you.

ì  Proper utilization of savings from stipend, wage earning, retirement benefit and so on.

ì  Higher monthly income for higher deposit.

Formalities of opening an account:

ì  An account is to be opened by filling up a form.

ì   The Bank will provide the customer a deposit receipt after opening the account. This receipt is non-transferable.

 

 Highlights of the scheme:

ì  Minimum deposit Tk. 1, 00,000/-.

ì  The scheme is for a 3 (three)-year period.

Deposit Amount Income (Tk.)
1,00,000/- 1,000/-

ì  The income is estimated which may be more or less at the year end and accordingly the same shall be adjusted. The deposit will bear 1.15 weightage.

ì  Not less than 65% of Investment Income shall be distributed among the Mudaraba Deposit holders as per weightage.

ì  Bank reserves the right to change the weightage of deposit & percentage of distribution of Investment Income.

Quard facility:

ì  A depositor can enjoy investment facility (excluding Quard) up to 80% of the deposited amount under this scheme complying investment norm of the bank. In this case, profit, will be charged against the investment facility as per Bank’s norms. During the tenure of the investment, the Monthly Income will be credited to the investment account until liquidation of the invested amount inclusive of profit.

Disbursement of monthly income:

ì  Monthly income will be credited after one month i.e., on the due date of the next month to the depositor’s account.

Premature encashment of the account:

ì  If the deposit is withdrawn before a 3 (three)-year term, then saving rate plus 0.75% of profit will be applicable and paid to the depositor. However, no profit will be paid if the deposit is withdrawn within 1 (one) year of opening the account and monthly income paid to the customer will be adjusted from the principal amount.

Additional terms and conditions:

ì  Applicant must open/have an Al-wadia CD or Mudaraba SB A/C with the branch in which monthly income will be credited automatically.

 

MUDARABA MULTIPLUS SAVINGS SCHEME

Objective of the scheme:

— To gather public’s idle money in exchange of high return within the shortest possible time.

Terms and Conditions of the Scheme:

— Any individual, company, educational institution, government organization, NGO, trust, society etc. may invest their savings under this scheme.

— The deposit can be made in multiples of Tk. 5,000.00.

— Any customer can open more than one account in a branch in his/her name or in joint names. A Deposit Receipt will be issued at the time of opening the account.

— The period of deposit is 10 (ten) years.

 

Highlights of the Scheme:

— Some examples are given in the table below. Any amount can be deposited in multiples of Tk. 5,000.00.

Deposited Amount Amount payable approximately after maturity
5,000.00 15,879.00
10,000.00 31,758.00
50,000.00 1,58,793.00
1,00,000.00 3,17,587.00

— Payable amount will depend on projection and will be adjusted after the declaration of profit at the end of the year. The weightage of deposit will be 1.17.

— Not less than 65% of investment income shall be distributed among Mudaraba Depositors as per weightage.

In case of premature encashment:

— In case of premature encashment before 1 year no profit shall be paid.

— In case of premature encashment after 1 year but before 3 years profit shall be paid at Savings Rate plus 0.75%.

— In case of premature encashment after 3 years but before 5 years profit shall be paid at Savings Rate plus 1.00%.

— In case of premature encashment after 5 years but before 8 years profit shall be paid at Savings Rate plus 1.50%.

— In case of premature encashment after 8 years but before maturity profit shall be paid at Savings Rate plus 2.00%.

In case of unexpected situation:

— In case of death of depositor before the term, the deposit amount will be given to the nominee according to the rules of premature encashment. In the absence of nominee, the heirs/ successors will be paid on production of succession certificate.

— In case of issuing duplicate receipt the rules of issuing a duplicate receipt of Term Deposit will be applicable.

—  The nominee may, at his option continue the scheme for the full term.

 Quard facility against the scheme:

— The depositor can enjoy loan up to 80% of the deposit under this scheme.

Additional Terms and Conditions:

— Bank reserves the right to change the weightage of deposit & the portion of distribution of Investment Income.

 

SMART SAVER:

Smart Saver is a high return investment plan, which helps a customer build up sizeable amount in a period of 5 years. This scheme offers a customer to buy Smart Saver Term Deposit 5 times the invested amount. Smart Saver is a 5-year term deposit scheme.

Terms and conditions

  1. One unit of Smart Saver Term Deposit is Tk. 25,000.
  2. During the tenure of the loan the Term Deposit will be kept in the Bank as security.
  3. The customer will have to open an account and monthly installment of loan will be debited from the account commencing from 30 days after opening loan account.
  4. Within the 1st year if the customer fails to repay 3 consecutive installments then only the principal amount of Smart Saver Term Deposit will be encased and the loan will be liquidated inclusive of accrued interest and balance paid to the customer. After completion of 1 year, Savings rate will be added to the principal amount of Smart Saver Term Deposit. In both cases closing charge will be Tk. 500.
  5. For missed installments on due date customer will be charged Tk. 25 per unit per month.
  6. In the event of death of the customer, the bank shall be entitled to encash the Term Deposit and adjust the dues first before any refund is made to the nominees/ successors.
  7. The bank reserves the right to amend the rules and rates as and when deemed necessary.

Hajj Savings Scheme

Hajj is one of the fifth rukan in Islam. In the socio – economic perspective of our country low income group can not provide necessary money in together for Hajj. For not taking profit rather for meeting their desires and hopes EXIM bank has introducing “EXIM Bank Hajj Account Project”.

 

Communication Strategy of Exim Bank:

Exim Bank is a third generation bank. It has converted into Islami Banking in July 1, 2004 with the approval of Bangladesh Bank. Exim Bank mainly emphasis on public relation out of four communication strategy. Exim Bank does following activities for their market promotion and advertising.

  1. When they open new branch send letter to elite persons, officers and industries in that area for opening account in their bank.
  2. Every year they arrange get together for their loyal customer in Dhaka & Chittagong. For that reason Exim Bank build good relationship with their clients. Exim Bank also solved the clients problems and they show the procedures the overcoming the problem.
  3. They arrange the ceremony of award to the honorable person in every year.
  4. They send gift item at the beginning of the year to the senior citizen of the society. These items include pen, dairy, calendar, pen stand, wall clock etc.
  5. They also give special gift to the elite person in different occasion.
  6. In every month the higher authority of Exim Bank give information about the market condition and suggestion to the branch manager.
  7. The managers of every branch tell present condition of his branch to the head office in every month.
  8. Head office updates deposits And investment guideline to the branch manager..
  9. Exim Bank sponsors different types of national games.

 

Place strategy of EXIM Bank:

One of the simplest method for segmenting markets by their geographic location. People who are living in one region of the country have consuming and purchasing habits that differ from those who live other regions. For example, the usages of woolen sweaters and jackets is higher in north India, due to extreme cold during the winter months compared to consumers in south India.

Even in local markets, geographic segmentation is important. A bank branch in the western part of the city may attract account holders form that part of town to the bank. However, the bank branch manager may find it difficult to attract customers from the eastern part of the due to the location inconvenience. When marketers analyze geographic data, they study sales by region, by state, city size, specific locations and the kind of retail outlets where sales are made.

Its may be seen and unseen it is not necessary that bank perform its activities by branch network. Bank may be deal contracts with a client or corporation in different location out of bank branch. Exim bank has 35 branches in urban and rural area. But most of them are in urban commercial area.

 

Different communication channels for EXIM BANK:

Advertising Public relation Promotion Personal selling
Print ads Press kits Give away Branch Manager
TV & Radio Ads Speeches Fairs & Trade Show Account officer
Cinema Ads Seminars Exhibits Relationship

ManagerMailingAnnual ReportDemonstrationsPersonal managerDirectoriesSponsorshipSpecial DiscountsTelemarketingIn Brach Leaflets Free BankingSeminar sellingDisplay signs   Promotional Magazines Investments Audiovisual Materials Special Investments Brochures bulletins


Management practice In Exim Bank:

 

For any financial and non- financial organization, management is the most valuable and important resources of any kind of organization. And a well-organize management provides the organization to reach its ultimate goal. Management means planning, organizing, staffing, directing and controlling of all financial and non- financial resources of an organization. Different aspect of management practice in EXIM Bank is discussed below.

 

Planning:

 

EXIM Bank has done its planning within the preview of the corporate plan. The overall planning approach in EXIM Bank is top down. Each branch can plan according to the goal imposed by the corporate level. It doesn’t plan independently. And EXIM Bank has a planning division. This department is mainly responsible for the overall planning.

Organizing:

EXIM Bank is organized as per the existing business locations. It has twenty-four branches each of which is a separate entity. Each unit is responsible for own performance and a senior vice president (SVP) followed by Manager Heads each. He is responsible for the performance of their unit.

Staffing:

 

The recruitment in EXIM Bank is done in two ways. One as a ‘probationary officer’ for the management program and it has a probation period of one year. Another one is non- management level as ‘Trainee Officers’. Probationary officer’ is recruited in officer category and their career path is headed towards different managerial jobs.

Directing and controlling:

 

The management approach in EXIM Bank is top down. Information just seeks through lower management layer. Works are designed in such a way that one cannot leave without clearing the tasks as he is assigned for a day. Sitting arrangement in all office is done in a way that the superior can monitor the subordinate all time. Budgeting, rewarding, punishing, etc. are also practiced as control mechanism.

Human Resource Practices in EXIM Bank

Employees are the core resource of any organization. Without them, one cannot run their organization. And human resources approach is concerned with the growth and development of people toward higher level of competency, creativity and fulfillment. It helps employees become better, more responsible person, and then it tries to create a climate in which they may contribute to the limits of their improved abilities. It assumes that expanded capabilities and opportunities for people will lead directly to improvements in operating effectiveness. Essentially, the human resources approach means that better people achieve better results. Management is the process of planning, organizing, leading and controlling the work of organization members and of using all available organizational resources to reach stated organizational goals. The strength of a bank depends of the strength of its management team. EXIM Bank is proud to have a team of highly motivated, well-educated and experienced executives who have been contributing substantially to the continued progress of the bank. Managerial effectiveness has been measured in EXIM Bank in terms of come selected criteria such deposit mobilization, loans and advances made, loan recovery, profitability and productivity. It has been found that EXIM bank is effective in respect of branch expansion, loan disbursement, loan recovery etc.

With a short span of time, EXIM Bank has become one of the leading and most successful bank not only among the third generation banks but also it superseded many other banks and financial institutions belonging to second and even first generation banks from the point of view of its excellent business performance, extraordinary corporate culture and strong team work under the dynamic leadership of its management. Management is trying to support and assist well-motivated and experienced affairs to run the day to day affairs of the bank smoothly. For maintains quality management, it is required to train-up more official at head office and branch level in respect of sanctioning, disbursement and recovery of credit, project appraisals, customer services etc.

Hunan resource is the fundamental asset of the organization. Human resource approach is concerned with the growth and development of people toward higher level of competency, creativity and fulfillment. Therefore, human resources development has been given its due importance in an environment that values performance, teamwork, fairness and integrity, it has both qualitative and quantitative dimension. EXIM Bank recognizes that intellectual capital is the most important asset for a financial institution.

Without proper and efficient human resources, no organization can run its operations. The bank believes that the professional competence bank personnel and its commitment for accomplishing assigned responsibilities are a first line of defense to prevent irregularities.

The objectives of Human Resource management of EXIM Bank are as follows:

  • Conducting job analysis
  • Planning employee needs and recruiting job candidates
  • Selecting job candidates
  • Orienting and training new employees
  • Managing wages and salaries (Compensating Employees)
  • Providing incentives and benefits
  • Appraising performance
  • Communicating (interview, counseling, disciplining)
  • Training and developing managers
  • Building employee commitment

Service offered by the Exim Bank

 

E-cash/ ATM Service:

 

The bank is currently providing Credit Card Service (MasterCard) to the privileged customers of the bank in collaboration of Prime Bank. Floating VISA card for both Debit and Credit card service is under process.

 SWIFT service

The SWIFT services helped the bank in sending and receiving the messages and instructions related to our NOSTRO account operations and L/C related matters. We have brought 6 of our Branches under SWIFT network. Other Branches will come under the network hopefully by the year 2004. Besides we have BKE arrangements with 430 Bank Branches in 100 countries.

 

Number of Branch

 

Branch Information (EXIM Bank has 35 Branches in Bangladesh)

List of branches in Dhaka division:            

SL Branch Name
01 Motijheel Branch
02 Panthapath Branch
03 Gazipur Chawrasta  Branch
04 Imamgonj  Branch
05 Gulshan  Branch
06 Nawabpur  Branch
07 Narayangonj  Branch
08 Shimrail  Branch
09 Rajuk Avenue  Branch
10 New Eskaton  Branch
11 Uttara  Branch
12 Elephant Road Branch
13 Mawna  Branch
14 Mirpur  Branch
15 Malibagh  Branch
16 Ashulia  Branch
17 Ashugonj  Branch
18 Sat Mosjid Road  Branch
19 Bashundhara Road  Branch
20 Savar  Branch
21 Karwan Bazar  Branch

List of branches in Chittagong division:

SL Branch Name
22 Agrabad Branch
23 Khatungonj  Branch
24 Jubleeroad Road
25 Sonaimuri  Branch
26 Laksham  Branch
27 CDA Avenue  Branch
28 Chowmuhani  Branch
29 Comilla  Branch

List of branches in Sylhet division:

SL Branch Name
Sylhet  Branch
31 Fenchugonj  Branch
32 Moulvibazar  Branch

List of branches in Khulna division:

SL Branch Name
30 Sylhet  Branch
SL Branch Name
33 Jessore Branch

List of branches in Rajshahi division:

SL Branch Name
34 Bogra Branch
35 Rangpur Branch

List of branches in Borisal division:

No Branch in Barisal.

Number of Employee

The number of employees engaged for the whole year is 1104.

Image:

The image of Exim bank is very good in banking sector.

Sources of image:

The image is comes from the word of mouth communication of the client and the employees of this bank. Web site is another source of having a good image.

Competitors

The main competitors of Exim Bank are Prime bank, Shimrail branch. Duch Bangla Bank   Chittagong Road branch.

Threats of new entrants

SWOT Analysis

SWOT analysis is the detailed study of an organization’s exposure and potential in perspective of its strength, weakness, opportunity and threat. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in comparison to their competitors. As though this tool, an organization can also study its current position, it can also be considered as an important tool for making changes in the strategic management of the organization.

Strengths:

►EXIM Bank Limited has already established a favorable reputation in the banking industry of the country. It is one of the leading private sector commercial banks in Bangladesh. The bank has already shown a tremendous growth in the profits and deposits sector.

►EXIM Bank has provided its banking service with a top leadership and management position. The Board of Directors headed by its Chairman Mr. Md. Nazrul Islam is a skilled person in business world. Alamgir Kabir, the Advisor of the bank is a reputed senior chartered accountant having 30 years vast experience in accounts, audit, finance and banking at home and abroad. Mr. Kazi Masihur Rahman as the Managing Director of the bank management team. The top management officials have all worked in reputed banks and their years of banking experience, skill, expertise will continue to contribute towards further expansion of the bank.

►EXIM Bank Limited has already achieved a high growth rate accompanied by an impressive profit growth rate in 2004. The number of deposits and the loans and advances are also increasing rapidly.

EXIM Bank has an interactive corporate culture. The working environment is very friendly, interactive and informal. And, there are no hidden barriers or boundaries while communicate between the superior and the employees. This corporate culture provides as a great motivation factor among the employees.

►EXIM Bank has the reputation of being the provider of good quality services   too its, potential customers

 

Weakness

►The main important thing is that the bank has no clear mission statement and strategic plan. The banks not have any long-term strategies of whether it wants to focus on retail banking or become a corporate bank. The path of the future should be determined now with a strong feasible strategic plan.

►The bank failed to provide a strong quality-recruitment policy in the lower and some mid level position. As a result the services of the bank seem to be Deus in the present days.

►The poor service quality has become a major problem for the bank. The quality of the service at EXIM Bank is higher than the Dhaka Bank, Prime Bank or Dutch Bangla Bank etc. But the bank has to compete with the Multinational Bank located here.

►Some of the job in EXIM Bank has no growth or advancement path. So lack of motivation exists in persons filling those positions. This is a weakness of EXIM Bank   that it is having a group of unsatisfied employees.

►In terms of promotional sector, EXIM Bank has to more emphasized on that. They have to follow aggressive marketing campaign.

Opportunity

►In order to reduce the business risk, EXIM Bank has to expand their business portfolio. The management can consider options of starting merchant banking or diversify into leasing and insurance sector.

►The activity in the secondary financial market has direct impact on the primary

financial market. Banks operate in the primary financial market. Investment in the

Secondary market governs the national economic activity. Activity in the national economy controls the business of the bank.

►Opportunity in retail banking lies in the fact that the country’s increased population is gradually learning to adopt consumer finance. The bulk of our population is middle class. Different types of retail lending products have great appeal to this class. So a wide variety of retail lending products has a very large and easily pregnable market.

►A large number of private banks coming into the market in the recent time. In this competitive environment EXIM Bank must expand its product line to enhance its sustainable competitive advantage. In that product line, they can introduce the ATM to compete with the local and the foreign bank. They can introduce credit card and debit card system for their potential customer.

►In addition of those things, EXIM Bank can introduce special corporate scheme for the corporate customer or officer who have an income level higher from the service holder. At the same time, they can introduce scheme or loan for various service holders. And the scheme should be separate according to the professions, such as engineers, lawyers, doctors’ etc.

Threats:

►The default risks of all terms of loan have to be minimizing in order to sustain in the financial market. Because default risk leads the organization towards to bankrupt. EXIM Bank has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem if not elimination.

►The low compensation package of the employees from mid level to lower level position threats the employee motivation. As a result, good quality employees leave the organization and it effects the organization as a whole.

 

Organization Culture

 

This bank is one of the most disciplined banks with a distinctive corporate culture. Here we believe in shared meaning, shared meaning and shared sense making. Our people can see and understand events, activities, objects and situation in a distinctive way. They mould their manners and etiquette, character individually to suit the purpose of the bank and the needs of the customers who are of paramount importance to us. The people in the bank see themselves as a tight knit team that believes in working together for growth. The corporate culture we belong has not been imposed; it has rather been achieved through our corporate conduct

 

Social Commitment:

 

The purpose of our banking business is, obviously, to earn profit, but the promoters and the equity holders are aware of their commitment to the society to which they belong. A chunk of the profit is kept aside and/or spent for socio-economic development through trustee and in patronization of art, culture and sports of the country. We want to make a substantive contribution to the society where we operate, to the extent of our separable resources


 Investment

 

This is the survival unit of the bank because until and unless the success of this department is attained, the survival is a question to every bank. If this section does not properly work the bank it may become bankrupt. This is important because this is the earning unit of the bank. Banks are accepting deposits from the depositors in condition of providing profit to them as well as safe keeping their interest. Now the question may gradually arise how the bank will provide profit to the clients and the simple answer is – Loans & Advance.

Why the bank provides Advances to (he Borrowers?

  • To earn profit from the borrowers and give the depositors profit.
  • To accelerate economic development by providing different industrial as well a agricultural advances.
  •  To create employment by providing industrial loans.
  • To pay the employees as well as meeting the profit groups.

Credit is continuous process. Recovery of one credit gives rise to another credit. Tn this process of revolving of funds, bank earns income in the form of profit. A bank can invest its fund in many ways. Bank makes loans and advances to traders, businessmen, and industrialists, Moreover nature of credit may differ in terms of    security requirement, disbursement provision, terms and conditions etc

Lending Principle:

The Principle of lending is a collection of certain accepted time tested standards, which ensure the proper use of loan fund in a profitable way and its timely recovery. Different authors describe different principles for sound lending.

► Safety

► Security

► Liquidity

► Adequate yield

► Diversity

Safety:

Safety should get the prior importance in the time of sanctioning the loan. At the time of maturity the borrower may not will or may unable to pay the loan amount. Therefore, in the time of sanctioning the loan adequate securities should be taken from the borrowers to recover the loan. Banker should not sacrifice safety for profitability.

EXIM Bank Ltd- exercises the lending function only when it is safe and that the risk factor is adequately mitigated and covered. Safety depends upon:

► The security offered by the borrower; and

► The repaying capacity and willingness of the debtor to repay the loan with interest.

Liquidity:

Banker should consider the liquidity of the loan in time of sanctioning it. Liquidity is necessary to meet the consumer need.

Security:

Banker should be careful in the selection of security to maintain the safety of the loan. Banker should properly evaluate the proper value of the security. If the estimated value is less than or equal to loan amount, the loan should be given against such securities. The more the cash near item the good the security, In the time of valuing the security, the Banker should be more conservative.

Adequate Yield:

As a commercial origination. Banker should consider the profitability. So banker should consider the interest rate when go for lending. Always Banker should fix such an interest rate for its lending which should be higher than its savings deposits interest rate. To ensure this profitability Banker should consider the prospect of the project

Diversify:

Banker should minimize the portfolio risk by putting its fund in the different fields. If Bank put its entire loan able fund in one sector it will increase the risk. Banker should distribute its loan able fund in different sectors. So if it faces any problem in any sector it can be covered by the profit of another sector.

 

Reasons for Loan Default

 

There are many reasons for loan default. The principle reasons are:

Sick management

Integrity Cooperation

Financial/Marketing knowledge/ Technical knowledge/Experience Endurance and Judgment

Sick market

Freedom Openness Growth Stability

Sick product

Quality

Competitiveness Demand Durability

Sick operation

Efficient machinery’s skilled labor/supervision Good labor relation Utilities of raw materials

Sick finance

Working capital Repayment period Flexible rate of interest Assets matching to liabilities Collateral’s Capital market

Other reasons

Reputation

Analysis of balance sheet

Lenin risk analysis

Process of Loan

Heads

Characteristics

Application

Applicant applies for the loan in the prescribed form of the bank describing the types and purpose of loan.

Sanction

1. Collecting credit information about the applicant to determine the credit worthiness other borrower. Sources of information 2. Personal Investigation, Confidential Report from other bank. Head Office/Branch/Chamber of Commerce. 3. CIB (Central Information Bureau) report from Central Bank. i. Evaluation of compliance with its lending policy. ii. Evaluating the proposed security. 4. LRA is must for the loan exceeding one crore — as ordered by Bangladesh Bank. 5. If everything is in accordance the loan is sanctioned

Documentation

Then bank prepare a loan proposal which contains terms and conditions of loan for approval of 11.0- or Manager. Takes the necessary papers and signatures from borrower

Disbursement

A loan Account is opened. Where customer A/C-————————Dr.

Respective Loan A/C ————————————-——Cr.

Types of Loans and Advances:

The different types of loans and advances that EX1 M Bank offers are as follows:

ì  Secured Overdraft (SOD)

ì  Loan against Imported Merchandise (LTM) t 3. Loan against Trust Receipt (LTR)

ì  Payment against Document (PAD)

ì  House Building Loan

ì  House Building Loan (staff)

ì  Term Loan. .8. Loan (general) 9. Bank Guarantee » 10. Export Cash Credit

ì  Cash Credit (Pledge)

ì  Cash Credit (Hypo)

ì  Foreign Documentary Bill Purchase (FDBP) 14. Local Documentary Bill Purchase (LDBP)

 

Secured Overdraft (SOD):

It is a continuous advance facility. By this agreement, the banker allows his customer to overdraft his current account up to his credit limits sanctioned by the bank. The interest is charged on the amount, which he withdraws, not on the sanctioned amount. EX1M Bank sanctions SOD against different security.

SOD (general):

Advance allowed to individual/ firms against financial obligation (i.e. lien on FDR    DR/PSP/BSP/ insurance policy share etc.) This may or may not be a continuous Credit.

SOD (others)

Advances allowed against assignment of work order or execution of contractual works falls under this head. This advance is generally allowed for a definite period and specific purpose i.e. it is not a continuous credit. It falls under the category “others”

SOD (Export)

Advance allowed for purchasing foreign currency for payment against L/Cs (Back to Back) where the exports do not materialize before the import payment. This is also an advance for temporary period, which is known as export finance and under the category “commercial lending”.

LIM (Loan against Imported Merchandise):

Advances allowed for retirement of shipping documents and release of goods imported through L/C taking effective control over the goods by pledge in go downs under Banks lock & key fall under this type of advance. This is also a temporary advance connected with import, which is known as post-import financing, falls under the category “commercial lending”.

LTR (Loan against trust receipt):

Advance allowed for retirement of shipping documents, release of goods imported through L/C falls under trust with the arrangement that sale proceed should be deposited to liquidate within a given period- This is also a temporary advance connected with import, which is known as post-import financing, falls under the category “commercial lending”.

 PAD (payment against document):

Payment made by the Bank against lodgment of shipping documents of goods imported through L/C falls under this head. It is an interim advance connected with import and is generally liquidated against payments usually made by the party for retirement of the documents for release of imported goods from the customer’s authority. It falls under the category “commercial Bank”.

House building Loan (General):

Loans allowed to individual/ enterprise construction of house (residential or commercial) fall under this of advance. The amount is repayable by monthly installment within a specified period, advances are known as Loan (HBL-GEN).

  • Introduction

House building loan is one of the common credit policies of banking sector. There was only one institution in our country, which is specified in HBFC, Bangladesh House Building Finance Corporation- Now a day, besides this bank many commercial bank and Leasing Company provides house-building loan to the customers.

  • Interest rate

Interest rate may changes from time to time depending on the market interest rate.

From the customer point of view this changes have an adverse impact on the Customers. Some times if they have to bear a higher interest on the principal amount which causes a great burden on them.

  • Disbursement Procedure

The Disbursement Procedure or timing of disbursement depends on the client or the progress of work of the construction. The disbursement can be made two or three stages or more depending on the above conditions.

 

  • Made of repayment

The loan shall be adjusted by monthly installment basis. The repayment will start from 6 (six) months, of the date of first disbursement (it may change according to   the terms and conditions of the agreement).

  • Collateral

The land and the construction on the land arc normally given as collateral. It may changes; –

  • The documents to be obtained

1. DP note.

2. Letter of disbursement

3. Letter of installment.

4. Letter of guarantee.

5. Letter of under taking.

6. Letter of agreement.

7. Irrevocable general power of attorney.

8. Memorandum of deposit of title deed.

9. Any other documents if considered

House building loans (staff):

Loans allowed to the Bank employees for purchase/construction of house shall be known as Staff Loan (HBFC-STAFP).

Term Loan:

EXIM Bank considers the loans, which are sanctioned for more than one year as term loan. Under this facility, an enterprise is financed from the starting to its finishing, i.e. from installation to its production.

Loan (general):

Short term and long term loans allowed to individual/ firms / industries for a specific purpose but a definite period and generally repayable by the installments fall under

  

this head. These types of lending are mainly allowed to accommodate financing under the categories.

a) Large and Medium Scale Industries-

b) Small and Cottage Industries, Very often term financing for agriculture and others are also included here.

Bank guarantee:

The bank is very often requested by his customer to issue guarantees on their behalf to a third party – committing to make an unconditional payment of certain amount of money to the third party, if the customer (on whose behalf it gives guarantee) becomes liable, or creates any loss or damage to the third party.

Export cash credit (ECC):

Financial accommodation allowed to customer for exports of goods falls under this head is categorized as “Export Credit “. The advances must be liquidated out of export proceeds within 180 days.

Cash Credit (Hypothecation):

The mortgage of movable property for securing loan is called hypothecation. Hypothecation is a legal transaction whereby goods are made available to the lending banker as security for a debt without transferring either the property in the goods or either possession. The banker has only equitable charge on stocks, which practically means nothing. Since the goods always remain in the physical possession of the borrower, there is much risk to the bank. So, it is granted to parties of undoubted means with the highest integrity.

Cash Credit (Pledge):

Bailer in this case is called the “Pawnor” and the bailee is called the “Pawnee”. In a contract of pledge, Pawnor must deliver the goods pledged to the Pawnee either actually or constructively. Transfer of possession in the judicial sense is essential in the valid pledge. In case of pledge, the bank acquire the possession of the goods or

a right to hold goods until the repayment for credit with a special right to sell after due notice to the borrower in the event of non-repayment.

The formalities for Opening cash credit:

The intending cash credit holder should submit the following documents and being fulfill properly:

1. Stock report. Rent receipt.

2. Trade license.

3. Up to date income tax clearing certificate.

4. Charge documents

5. Letter of continuity

6. Letter of arrangement

7. DP (Demand promissory) note.

8. Letter of guarantee.

9. Letter lien.

10. Limit sanctions advice.

11. Non-encumbrance certificate.

Observing the documents the bank authority prepares a CC proposal from that contains the following information.

  • Nature of business.
  • Banking with EXIM.
  •  Transaction with CD account by the client.
  • Allied deposit with SB/STD account.
  • Number of adjustment(S) (applicable only for renewal of CC)

Lending Authority:

 

As sure proper and orderly conduct of the business of the Bank, the Board of Directors’ will empower the Managing Director and other Executives of the Bank to lend up certain amount under certain terms and conditions at their discretion. The lending officer is broadly categorized as follows:

►Managing Director

►Deputy Managing Director

►Executive vice President Asstt.

►Senior vice President

►Vice President

►Senior Asstt. Vice President

►Asst. vice President.

The amount and scope of each Officer lending authority is a function of the amount and extent of authority required by the officer to carry out his/her responsibilities to the Bank and its clients may prudent, effective manner. It must be emphasized that an Officer will not be delegated lending authority only on the basis of his position. In other words, an officer does not automatically get lending authority by virtue of his corporate and/ or functional title. Specified lending authority will be delegated by the Managing Director to various Executives after taking into consideration his proven credit judgment, knowledge and experience. The amount of lending authority approved by the Board for various Executives form the upper limits of the authority that may be delegated to an officer holding corporate title. Each individual lending authority will be delegated to him in writing. The managing Director with the Executive Committee/ Board will review all lending authorities periodically.

CIB: Bangladesh Bank has established within itself a Credit Information Bureau (CIB), which collects credit information from the banks. Banks are required to furnish such information in respect of credit limit of Tk. 50000 and over. They mention the Name of facility, security and charge along with outstanding balance. After consolidating such information in respect of each customer, the central bank supplies to the total limits sanctioned to and the number of banks dealing with a party. Thus the banks can find out if any of their customers is having excessive borrowings from the banking system at any particular time.

Investment classification

Investment classification is a process by which the risk or loss potential associated with the Investment accounts of a bank on a particular date is identified and quantified to measure accurately the level of reserves to be maintained by the bank to provide for the probable loss on account those risky Investment.

Like other banks, all types of Investments of EXIM Bank fall into following four scales:

►Unclassified: Repayment is regular.

►Substandar: Repayment is stopped or irregular but has reasonable prospect of   improvement.

►Doubtful debt: Unlikely to be repaid but special collection efforts may result in partial recovery.

►Bad/ Loss: Very little chance of recovery.

Creation of a charge for securing Investment:

For the safety of Investment, bank requires security from the Investment so that it can recover the Investment by selling security if borrower fails to repay. Creation of a charge means making it available as a cover for an advance. The method of charging should be legal, perfect, and complete. Importance of charging security:

►Protection of profit

►Ensuring the recovery of the money lent

►Provision against unexpected change

►Commitment of the borrower

 Security

To make the Investment secured, charging sufficient security on the credit facilities is very important. The banker cannot afford to take the risk of non-recovery of the money lent. EXIM Bank charges the following two types of security, –

►Primary security: These are the security taken by the ownership of the items for which bank provides the facility.

►Collateral security: Collateral securities refer to the securities deposited by the third party to secure the advance for the borrower in narrow sense. In wider sense, it denotes any type of security on which the bank has a personal right of action on the debtor in respect of the advance.

Modes of charging security

There are different modes of charging the bank exercises security:

►Pledge:

Pledge is the bailment of the goods as security for payment of a debt or performance of a promise. A pledge may be in respect of goods including stocks and share as well as documents of title to goods such as railway receipt, bills of lading, dock warrants etc. duly endorsed in bank’s favor.

►Hypothecation:

In case of hypothecation the possession and the ownership of the goods both rest the borrower. The borrower to the banker creates an equitable charge on the security. The borrower does this by executing a document known as Agreement of Hypothecation in favor of the lending bank.

►Lien:

Lien is the right of the banker to retain the goods of the borrower until the Investment is repaid. The bankers’ lien is general lien. A banker can retain all securities in his possession till all claims against the concern person are satisfied.

►Mortgage:

According to section (58) of the Transfer of Property Act,1882 mortgage is the ‘’transfer of an profit in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of Investment, existing or future debt or the performance of an engagement which may give rise to a pecuniary liability”. In this case the mortgagor dose not transfer the ownership of the specific immovable property to the mortgagee only transfers some of his rights as an owner. The banker exercises the equitable mortgage.

Documentation

Documentation can be described as the process or technique of obtaining the relevant documents. In spite of the fact that banker lends credit to a borrower after inquiring about the character, capacity and capital of the borrower, he must obtain proper documents executed from the borrower to protect him against willful defaults. Moreover, when money is lent against some security of some assets, the document must be executed in order to give the banker a legal and binding charge against those assets. Documents contain the precise terms of granting Investments and they serve as important evidence in the law courts if the circumstances so desire. That’s why all approval procedure and proper documentation shall be completed prior to the disbursement of the facilities.

Credit Disbursement

Having completely and accurately prepared the necessary Investment documents, the Investment officer ready to disburse the Investment to the borrower’s Investment account. After disbursement, the Investment needs to be monitored to ensure whether the terms and conditions of the Investment fulfilled by both bank and client or not.

Administration/ monitoring:

The administration of the Investment process shall ensure. Compliance with all laws and regulations at both local and global levels including bank policy as set out in this document and the Banks credit manual/ circulars.Proper analysis of credit proposal is complex and requires a high level of numerical as well as analytical ability and common sense to ensure effective understanding of the concepts and thus common sense. To ensure effective understanding of the concepts and thus to make the overall credit portfolio of the Bank healthy proper staffing of the credit departments shall be done through placement of qualified officials who have got the right aptitude, formal training in finance, credit risk analysis, Bank credit procedures as well its required experience. Where repayment and profit servicing performance of a credit deteriorates shall be identifies at an early state and closely monitored to avoid low losses.

Investment facilities, where appropriate and related security shall be monitored and reviewed by a separate unit unconnected with the credit approval process on a regular basis in order to assess the collect ability of the Investment and effectiveness of the security. This Unit will report to the Managing Director or his designated officer.

 

Foreign Exchange

 

Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country into that of another. Foreign Exchange Department (FED) is the international department Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers.  If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign countries.  So   EXIM Bank, Principal branch is an authorized dealer.

There are three kinds of foreign exchange transaction:

  1. Import
  2. Export
  3. Remittance.

Import:

To import, a person should be competent to be and importer’. According to Import and Export Control Act, 1950, the Office Of Chief Controller Of Import and Export provides the registration (IRC) to the importer. In an international business environment, buyers and sellers are generally unknown to each other. So seller of goods always seeks security for the payment of his exported goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the buyer does not pay. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by ‘Letter of Credit’.

 

Letter of Credit:

1.10     A conditional written undertaken issued by the importer’s (applicant) bank to the exporter (beneficiary) at the request of the importer to effect payment up to a stated amount within a stated time period against presentation of complaint documents.

The LC is governed by International Chamber of commerce (ICC) publication no.500.

1.11   Parties to the L/C:

Importer Who applies for L/C
Issuing Bank It is the bank which opens/issues a L/C on behalf of the importer.
Confirming Bank It is the bank, which adds its confirmation to the credit and it, is done at the request of issuing bank. Confirming bank may or may not be advising bank.
Advising or Notifying Bank It is the bank through which the L/C is advised to the exporters. This bank is actually situated in exporter’s country. It may also assume the role of confirming and / or negotiating bank depending upon the condition of the credit.
Negotiating Bank It is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank.
Accepting Bank It is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank.
Reimbursing Bank It is the bank, which would reimburse the negotiating bank after getting payment – instructions from issuing bank.

Steps for import L/C Operation – 8 steps operation    

Step 1 – Registration with CCI&E

  • For engaging in international, trade, every trader must be first registered with the Chief Controller of Import and Export,
  • By paying specified registration fees to the CCI&E. the trader will get [RC/ERC (Import/Export Registration Certificate), to open L/C with bank, this IRC is must.

Step 2 – Determination terms of credit

The terms of the letter of credit are depending upon the contract between the

Importer and exporter. The terms of the credit specify the amount of credit, name and address of the beneficiary and opener, tenor of the bill of exchange, period and mode of shipment and of destination, nature of credit, expiry date, name and number of sets of shipping documents etc

Step 3 – Proposal for Opening of L/C

To have an import LC limit an importer submits an application to department to EXIM Bank. The proposal contains the following particulars:

►Full particulars of the bank account

►Nature of business

►Required amount of limit

►Payment terms and conditions

►Goods to be imported

► Offered security

►Repayment schedule

Step 4 – Application by importer to the banker to open letter of credit

►For opening L/C, the importer is required to fill up a prescribed application form provided by the banker along with the following documents:

1. L/C Application form 7. Authority to debit account
2. Filled up LCA form 8. Filled up amendment request Form
3. Demand Promissory Note 9. IMP form
4. pro-forma invoice 10. Insurance cover note and money              receipt.
5. Tax Identification number 11. Membership certificate
6.Import registration certificate 12. Rate fluctuation undertaking

Step 5 – Opening of L/C by the bank for the opener:

►Taking filled up application form from the importer.

►Collects credit report of exporter from exporter’s country through his foreign correspondence there.

►Opening bank then issues credit by air mail/TEL EX/SWIFT followed by L/C advice as asked by the opener through his foreign correspondent or branch as the case may be, at the place of beneficiary. The advising bank advises the L/C to the beneficiary on his own form where it is addressed to him or merely hand over the original L/C to the beneficiary if it is so addressed.

Step 6 – Shipment of goods and lodgment of documents by exporter:

►Then exporter ships the goods to the destination of the importer country.

►Sends die documents to the L/C opening bank through his negotiating bank. Generally the following documents are sent to the Opening Banker with L/C:

1. Bill of Exchange 6. Packing List
2. Bill of Lading 7. Advice Details of Shipment
3. Commercial Invoice 8. Pre-shipment Inspection Certificate
4. Certification of Origin 9. Vessel Particular
5. A certificate stating that each packet contains the description of goods over the packet. 10.Shipment Certificate

Step 7 – Lodgment of Documents by the opening Bank from the negotiating bank

After receiving the documents, the opening banker scrutinizes the documents. If any discrepancy found, it informs the importer, If importer accepts the fault, then opening bankers call importer retiring the document. At this time many thing can happen. These are indicated in the following:

► Discrepancy found but the importer accepts – no problem occurs in lodgment.

► Discrepancy found and importer not agreed to accept – In this case, importer protest and send back ali the documents to the exporter and request his to make in the specified manner. Here banker is not bound to pay because the documents send by exporter is not in accordance with the terms of L/C.

► Documents are OK but importer is willing to retire the documents – In this case bank is obligated to pay the price of exported goods. Since importer did not pay for bill of exchange, this payment by bank is one kind of credit to the importer and this credit in banking is known as PAD.

      ► Everything is O.K. but importer fails to clear goods from the port and request bank to clear – In this case banks clear the goods and takes delivery of the same by paying customs duty and sales tax etc. So, this expenditure is debited to the importer’s account and in banking it is called LIM.

 

Step 8 – Retirement

The importer receives the intimation and gives necessary instruction to the bank for retirement of the import bills or for the disposal of the shipping document to clear the imported goods from the customs authority. The importer may instruct the bank to retire the documents by debiting his account with the bank or may ask for LTR (Loan against Trust Receipt .When the officer thinks fit the application to open a L/C, giving the following entries creates the following charge

Accounting Procedure in case of L/C Opening

                                                   Table- 21

Particulars

Debit/ Credit

Charges in Taka

Customer’s A/C

Debit

L/C Margin A/C

Credit

 

Commission A/C on L/C

Credit

50%

VAT

Credit

15% on commission

SWIFT Charge

Credit

3000/-

Datamax

Credit

1000/=

Stamp

Credit

I50/=

Postage

Credit

300/-

DHL/CourierCredit

1500

 

Amendment of L/C

After opening of L/C some time’s alteration to the original terms and conditions become necessary. These amendments involve changes in

a. Unit price

b. Extension of validity o the L/C

C. Documentary requirements etc.

Such amendments can be affected only if all the concerned parties agree i.e. the beneficiary, the importer, the issuing bank and the advising bank.

For any amendment the importer must request the issuing bank in writing duly supported by revised indent/ Performa invoice. The issuing bank then advises the required amendment to the advising bank. L/C amendment commission including postage is charged to the clients A/C.

Loan against Trust Receipts (LTR)

* Advance against a Trust Receipt obtained from the Customers are allowed to only first class tested parties when the documents covering an import shipment or other goods pledged to the Bank as security are given without payee

However, for such advances prior permission/sanction from Head Office must be obtained,

The customer holds the goods or their sale-proceeds in trust for the Bank, til! such time, the loan allowed against the Trust Receipts is fully paid off.

The Trust Receipt is a document that creates the Banker’s lien on the goods and practically amounts to hypothecation of the proceeds of sale in discharge of the lien.

Loan against Imported Merchandise (LIM)

Advance (Loan) against the security of merchandise imported through the Bank may be allowed either on pledge or hypothecation of goods, retaining margin prescribed on their Landed Cost, depending on their categories and Credit Restriction imposed by the Bangladesh Bank, Bank shall also obtain a letter of undertaking and indemnity from the parties, before getting the goods cleared through LIM Account.

Payment Procedure of Import Documents

This is the most sensitive task of the Import Department. The officials have to be very much careful while making payment. This task constitutes the following:

►Date of Payment

Usually payment is made within seven days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay.

►Preparing Sale Memo

A sale memo is made at B.C rate to the customer. As the T.T & O.D rate is paid to the ID, the difference between these two rates is exchange trading. Finally, an Inter Branch Exchange Trading Credit Advice is sent to ID.

►Requisition for the Foreign Currency

For arranging necessary fund for payment, a requisition is sent to the International Department.

►Transmission of Message

Message is transmitted to the correspondent bank ensuring that payment is being made.

Export

The goods and services sold by Bangladesh to foreign households, businessmen and Government are called export. The export trade of the country is regulated by the Imports and Exports (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry Of Commerce through Chief Controller of Imports and Exports (CCI & E). No exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed every year, The ERC number is to be incorporated on EXP forms and other documents connected with exports. The formalities and procedure are enumerated as following next page

           1. Obtaining exports LC: To get export LC form exporter issued by the importer.

            2. Submission of export documents; Exporter has to submit all necessary

             Documents to the collecting bank after shipping of goods

       3. Checking of export documents; after getting the documents banker used to

  Check the documents as per LC terms

       4. Negotiation of export documents; If the bank accepts the document and pays the value draft to the exporter and forward the document to issuing bank that is called a negotiating bank. IF the bank does buy the LC then the bank normally acts as collecting bank.

      5. Realization of proceeds: This is the period when the issuing bank has realized the payment.

      6. Reporting to the Bangladesh bank: As per instruction by Bangladesh bank the bank has to report to respective department of Bangladesh bank by mentioning latest payment.

    7. Issue to proceeds realization certificate (PRC): Bank has to issue precedee realization certificate of export LC to the supplier/ exporter for getting cash assistant.

Export operation

Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and woven). Jute, Jute-made products frozen shrimps, tea are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest sector that exports the lion share of the country’s export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export through

EXIM BANK are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers.

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 (negotiable bank) for the exporter,

►As an advising bank

It receives documents from the foreign importer and hands it over to the exporter. Sometimes it adds confirmation on the L/C on request from the Opening Bank. By adding confirmation, it assumes the responsibility to make payment to the exporter.

►As Negotiating Bank

It negotiates the bills and other shipping documents in Favor of the exporter. That is, it collects the proceeds of the export-bill from the drawer and credits the exporter’s account for the same. Collection proceed from the export bill is deposited in the bank’s NOSTRO account in the importer’s country. Sometimes the bank purchases the bills at discount and waits till maturity of the bill. When the bill matures, bank presents it to the drawer to encash it.

In our country, Export and Import operation of bank is very much related with one another because of use of Back to Back and maturity of payment for Back-to-Back L/C is set in such that it can be paid out of export proceeds..

  Back-To-Back L/C

1. Obtaining exports LC: To get export LC form exporter issued by the importer.

     2. Submission of export documents; Exporter has to submit all necessary documents to the collecting bank after shipping of goods

    3. Checking of export documents; after getting the documents banker used to Check the documents as per LC terms

     4. Negotiation of export documents; If the bank accepts the document and pays the value draft to the exporter and forward the document to issuing bank that is called a negotiating bank. IF the bank does buy the LC then the bank normally acts as collecting bank.

    5. Realization of proceeds: This is the period when the issuing bank has realized the payment.

    6. Reporting to the Bangladesh bank: As per instruction by Bangladesh bank the bank has to report to respective department of Bangladesh bank by mentioning latest payment.

    7. Issue to proceeds realization certificate (PRC): Bank has to issue precedee realization certificate of export LC to the supplier/ exporter for getting cash assistant.

 

Export operation

Bangladesh exports a large quantity of goods and services to foreign households. Readymade textile garments (both knitted and woven). Jute, Jute-made products frozen shrimps, tea are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest sector that exports the lion share of the country’s export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export through EXIM BANK are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers.

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 (negotiable bank) for the exporter,

►As an advising bank

It receives documents from the foreign importer and hands it over to the exporter. Sometimes it adds confirmation on the L/C on request from the Opening Bank. By adding confirmation, it assumes the responsibility to make payment to the exporter.

►As Negotiating Bank

It negotiates the bills and other shipping documents in Favor of the exporter. That is, it collects the proceeds of the export-bill from the drawer and credits the exporter’s account for the same. Collection proceed from the export bill is deposited in the bank’s NOSTRO account in the importer’s country. Sometimes the bank purchases the bills at discount and waits till maturity of the bill. When the bill matures, bank presents it to the drawer to encash it.

In our country, Export and Import operation of bank is very much related with one another because of use of Back to Back and maturity of payment for Back-to-Back L/C is set in such that it can be paid out of export proceeds..

Back-To-Back L/C

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 bank to Back L/C. Back-to-Back L/C is commonly known as Buying L/C. On the contrary, 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.

► Export L/C is at Sight but back to Back L/C is at Usance.

► 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 FOB value of relative Master L/C.

► Usance 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 are such that export L/C matures first then out of this export profit, import L/C is paid out.

Documents Required for Opening a Back-to-back L/C

In EXTM Bank Principal Branch, following papers/ documents are required for opening a back-to-back L/C-

1. Master L/C

2. Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC)

3. L/C Application and LCAF duly filled in and signed

     4. Performa Invoice or Indent

5. Insurance Cover Note with money receipt

6. IMP Form duly signed

In addition to the above documents, the followings are also required to export oriented garment industries while requesting for opening a back-to-back L/C –

1. Textile Permission

2. Valid Bonded Warehouse License

3. Quota Allocation Letter issued by the Export Promotion Bureau (EPB) in favor of the applicant for quota items.

Checklist of exports L/C:

Following defective points are usually found in the Master L/C. So, the bank officials so much carefully check these points. These are:

  1. Name of the Advising Bank.
  2. Name of Transferring Bank
  3. Form of Doc. credit:

►Name of Issuing Bank

►Documentary Credit No. and issuing date

►Date of shipment

►Expiry date and place

  1. Applicant/ for order of/ On Account.
  2. Beneficiary/ Favoring
  3. Amount
  4. Availability of Credit
  5. Partial shipment/ Transshipment
  6. Payment condition /Draft Sight
  7.  Category.
  8.  Description of goods:

►Item

►Total Qty

►Unit price

  1.  B/L Clause
  2.  Reimbursement clause.
  3.  UCPDC Clause
  4.  Net FOB value.

Payment of back to back LC

In case back to back as 60-90-120-180 days of maturity period, deferred payment is

made. Payment is given after realizing export proceeds from the L/C issuing bank.

L/C under EDF:

• Exporter development Fund is created by Bangladesh Bank to give encourages to the exporter in Bangladesh.

• Generally Back-to-Back L/C is Usance L/C that is here bill of exchange is payable after some maturity date say 90 or 120 days after the date of acceptance/negotiation. But some foreign seller may require sight payment. Here import L/C matures first. In that case Bangladesh Bank gives me fund to the bank to pay the price of imported goods in favor of the local purchaser of raw materials. When export proceeds come, first Bangladesh Bank loan to the importer is adjusted and remaining part goes to the importer of raw materials.

Negotiation of exports documents:

The most common method of financing exporters is negotiation of documents under L/C.

It is a post-shipment credit. Here the bank acts as a negotiating bank. After the shipment ofForeign bill Purchased (F.B.P) register. The documents are sent to the L/C opening branch with a forwarding letter. The branch claim reimbursement from the issuing bank or from the reimbursing bank, giving clear instructions to credit the proceeds of the bill to the EXIM Bank head office NOSTRO A/C maintained with the named correspondent bank abroad under telex intimation to the Principal branch and Head Office (International Division).

Negotiation stands for payment of value to the exporter against the documents stipulated in the LC. If documents are in order, EXIM Bank purchases (negotiates) the same on the basis of banker- customer relationship. This is known as Foreign Documentary Bill Purchase (FDBP).

If the bank is not satisfied with the documents submitted to EXIM Bank gives the exporter reasonable time to remove the discrepancies or sends the documents to L/C opening bank for collection. This is known as Foreign Documentary Bill for Collection (FDBC)

Presentation of export documents for negotiation/Purchase:

 

After shipment, exporter submits the following documents to EXIM Bank for negotiation.

►Bill of exchange

►Bill of Lading

►Invoice

►Insurance Policy/Certificate

►Certificate of Origin

►Inspection Certificate

►Consular Invoice

►Packing List

►Quality Control Certificate

►G.S.P. certificate.

Payment Procedure for FDBP:

 

(i)           After purchasing the documents, EXIM Bank gives the following entries:

FDBP A/C —————————————————- Dr. (at OD sight rate)

Customer A/C ———————————————— Cr.

(Before realization of proceeds)

             Bank would realize only postage charges from the exporter.

(Subsequently, Bank will send the documents to the L/C opening Bank for payment with a forwarding letter detailing the enclosures. Upon realization of proceeds the Negotiating Bank would pass the following vouchers:

Head Office A/C ——————————————– Dr. (at T.T Clean rate)

FDBP A/C ————————————————— Cr.

Income A/C Profit on Exchange Trading ————— Cr.

               (Adjustment after realization of proceeds)

           A FDBP Register is maintained for recording all the particulars.

Foreign documentary bills for collection (FDBC):

EXIM Bank forwards the documents for collection due to the following reasons,-

►If the documents have discrepancies.

►If the exporter is a new client.

FDBC signifies that the exporter will receive payment only when the issuing bank gives payment. EXIM Bank make regular follow-up with the L/C opening Bank in case of any delay in getting payment.

Settlement of Local Bills:

 

  1. The settlement of local bills is done in the following ways, –
  2. The customer submits the L/C to EXIM Bank along with the documents to negotiate
  3. EXIM Bank official scrutinizes the documents to ensure the conformity with the terms and conditions.
  4. The documents are then forwarded to the L/C opening bank.
  5. The L/C issuing bank gives the acceptance and forwards an acceptance letter.
  6. Payment is given to the customer on either by collection basis or by purchasing the document.

Mode of payment of export bill under L/C:

As per UCPDC 500, 1993 revision there are four types of credit. These are as follows:

► Sight Payment Credit:

 

In a Sight Payment Credit, the bank pays the stipulated sum immediately against the exporter’s presentation of the documents.

Deferred payment Credit:

In deferred payment, the bank agrees to pay on a specified future date or event, after presentation of the export documents. No bill of exchange is involved. Payment is given to the party at the rate of D.A 60-90-120-180 as the case may be. But the Head office is paid at T.T clean rate. The difference between the two rates us the exchange trading for the branch.

Acceptance credit:

In acceptance credit, the exporter presents a bill of exchange payable to himself and drawn at the agreed tenor (that is, on a specified future date or event) on the bank that is to accept it. The bank signs its acceptance on the bill and returns it to the exporter. The exporter can then represent it for payment on maturity. Alternatively he can discount it in order to obtain immediate payment.

Negotiation Credit:

In Negotiation credit, the exporter has to present a bill of exchange payable to him in addition to other documents that the bank negotiates.

EXIM BANK LC nature of code:

►Cash LC (sight) Foreign                               –  01

►Cash LC (usance) Foreign                             – 02

►Inland back to back LC (sight)                       – 03

►Inland back to back  LC (usance)                    – 04

►Foreign back to back LC (sight)                     – 05

►Foreign back to back LC (usance)                    – 06

►LC under AID/Loan  ED                               – 07

►LC under STA                                          – 08

►Import from EPZ (cash LC) (sight)                  – 09

►Import from EPZ (cash LC) (usance)                 – 10

►Import form EPZ (B/B LC) (sight)                   – 11

►Import from EPZ (B/B LC) (usance)                  – 12

►Others (LC) cash LC Local sight or usance            – 99

EXIM BANK BACK-TO-BACK LC COMMISSION

►Back to Back (Foreign):

1st quarter- 0.50%

(LC issue date to asperity date with in 90 days than 90 days (0.50%+0.30% = 80%)

 Back to Back (foreign) other charge:

                                       Data max charge   – 1000

                                       Swift                 – 3000

                                       Stamp                – 150

►Back to Back  (Local):

                        1st quarter- 0.50%

(LC issue date to expiry date with in 90 days than 90 days (0.50%+0.30% = 80%).

►Back to Back (Sight Local) :

                        1st quarter- 0.50%

(LC issue date to expiry date with in 90 days than 90 days (0.50%+0.30% = 80%).

►Export Development fund:

                       1st quarter- 0.50%

(LC issue date to expiry date with in 90 days than 90 days (0.50%+0.30% = 80%).

►Export processing Zone:

                       1st quarter- 0.50%

(LC issue date to expiry date with in 90 days than 90 days (0.50%+0.30% = 80%).

        ►  Export processing Zone other charge:

                                       Data max charge   – 1000

                                       Courier charge      – 200

                             – 0.50%

(LC issue date to asperity date with in 90 days than 90 days (0.50%+0.30% = 80%)

 Back to Back (foreign) other charge:

                                       Data max charge   – 1000

                                        Swift                – 3000

                                       Stamp                      – 150

 Foreign Remittance

This bank is authorized dealer to deal in foreign exchange business. As an authorized

dealer, a bank must provide some services to the clients regarding foreign exchange and this department provides these services.

The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In the process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place at an agreed rate of exchange, which the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like any other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender.

Remittance procedures of foreign currency:

There are two types of remittance:

  1. Inward remittance
  2. Outward remittance.

 

Inward Foreign Remittance

Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, and bills, T.C. etc. sent from abroad favoring a beneficiary in Bangladesh.

Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C.

Outward Foreign Remittance:

 

Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired.

 

Working of this department:

  1. Issuance of TC, Cash Dollar /Pound
  2. Issuance of FDD, FTT & purchasing, Payment of the same.
    1. Passport endorsement.
    2. Encashment certificate.
    3. F/C Account opening &filing.
    4. Opening of Export FC retention Quota A/C& maintain.
    5. Maintenance of ledger of Cash Dollar, FC Deposit A/C & TC.
    6. Maintain FBC register &follow up FBC.
    7. Opening of Student file &Maintain.
    8. Preparation of all related statement, Voucher & posting.
    9. Preparation of Weekly, Monthly, Yearly Statement for Bangladesh Bank returns timely.
    10. Attending all related correspondence to other Bank or Institutions.

Modes:

The remittance process involves the following four modes

Cash Remittance

Dollar/ PoundSellBank sells Dollar / Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank publication of ‘Convertibility of Taka for Currency Transactions in Bangladesh’.PurchaseBank can purchase dollar from resident and non – resident Bangladeshi and Foreigner. Most dollars purchased comes from realization of Export Bill of Exchange.Traveler’s Cheque

(TC)Issue of TCTC is useful to traveler abroad. Customers can encash the TC in abroad from the drawee bank. TC is alternative to holding cash and it provides better security than holding cash in hand.Buying

Of TCIf any unused leaf of TC is surrendered bank buys it from the customer. All payments are made in local currency. Banks generally buy only those TC.Telex TransferOutward TTIt remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account.Incoming TTIt also makes payment according to telegraphic message of its foreign correspondence bank from the corresponding VOSTRO Account.Foreign Demand DraftBank issue Demand Draft in favor of purchaser or any other according to instruction of purchaser. The payee can collect it for the drawee bank in which the Issuing bank of Demand Draft holds its NOSTRO Account. Bank also makes payment on DD drawn on this bank by its foreign correspondence bank through the VOSTRO Account.

In these processes of remittance, bank must have to make profit as a business institution. Profit is made in two ways:

  1. Commission charged
  2. Difference in the buying and selling rate.

Miscellaneous Services by this Department:

►Student File: Students who are desirous to study abroad can open file in the Bank. By opening this file, bank assures the remittance of funds in abroad for study.

►F.C Accounts: Foreign Currency Accounts opened in the names of Bangladeshi nationals or persons of Bangladeshi origin working or self – employed abroad can now are maintained as long as the account holders desires.

►RFCD: Stands for Resident Foreign Currency Accounts. Persons ordinary resident in Bangladesh may maintain foreign currency accounts with foreign exchange brought in at abroad. Balance of such accounts is freely remittable abroad.

 

Formalities for opening foreign currency (FC) Account:

The AD may without prior approval of the Bangladesh Bank open Foreign Currency

(FC) account in the name of:

  1. Bangladesh national residing abroad.
  2. Foreign nationals residing abroad/ in Bangladesh and also foreign firms
  3. Registered abroad and operating in Bangladesh and abstract foreign missions and their expatriate employees.
  4. Resident of Bangladesh nationals working with the foreign / international organization operating in Bangladesh provided their salary in paid in foreign currency.

Foreign exchange earned through business done or service rendered in Bangladesh cannot be put into these accounts.

No payment in foreign currency (FC) may be made to any resident in Bangladesh out of the foreign currency (FC) account.

All citizens of Bangladesh and other persons are residing to Bangladesh who became the owner of any foreign currency (FC).

►Papers required:

  • Application duly billed in and signed.
  • Photograph (two copies).
  • Passport photocopy.
  • Work permit from board investment. (in case of foreign nationals).

►Rate of exchange:

 

It means the price of one currency expressed in terms of another currency. Rate of exchange is the rate by which the relation among different foreign currencies is established in terms of local currency of that country. Value at which one country currency can be converted into another’s country.

 In exercise of the power conferred by section three of exchange regulation ACT 1947, Bangladesh has issued license to certain bank to deal in foreign exchange is called authorized dealer.

  • Spot rate:

It is quoted for transaction where the foreign currency bought or sold is to be received or delivered immediately. The current rate of exchange quoted in the foreign exchange market.

►Forward rate:

When a rate is applied to a future date it is called forward rate at which foreign exchange can be sold or bought for delivery at a future time.

►Cross rate

The rate of exchange quoted expressing the quotation for any two currencies in term of a third.

►SWAO:

Sport rate against forward purchased or a spot purchase against forward rate.

►Pence rate / direct quotation:

 

Rates are quoted in term’s foreign currency per one unit of foreign currency.

►Currency rate / indirect quotation:

Rates are quoted in terms of foreign currency per one unit of home currency.

►Buying rate:

Authorized dealer applies this at the time of purchasing / negotiation of export document and payment against TT. MT, check and drafts required from abroad.

►Selling rate:

 

Authorized dealer applies this at the time of lodgment of import documents, realization of LC margin from importer and other foreign exchanges transaction on overseas bank.

►Telquel rate:

This is the rate when rate of foreign currency is quoted according to the since of the bill.

►Forward Rate at a discount:

When forward rate is higher than that of spot rate.

►Forward rate at a premium:

 

When for ward rate is lower than that of spot rate.

Literature review

 

Service:

 

Ä  Service can be defined as any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.  Its production may or may not be tied to a physical product. A company’s offerings often include some services.

      (Lovelock Christopher, 2004).

Ä  In other words, services are deeds, processes, and performances”.

      (Zeithaml and Bitner, 2003).

3.2 Characteristics of service:

 

ì  There are some basic differences exist between services and goods. Services posses the following Characteristics that make services difference from those of goods:

1.   Intangibility:

      Services can not be seen, tasted, felt, heard or smelled before they are bought. Consumers look for service quality signals. Example: Airline services.

2.  Inseparability:

      Services can’t be separated from their providers whether the providers are people or machine. If a service employee provides the service, then the employee is a part of the service, such as doctor services.

3.  Variability:

      The quality of services depends on who provides them as well as when, where and how they are provided. Employees and other factors result in variability. Example: Hotel services.

4. Perishability:

Services can’t be stored for later sales or use. Several strategies can produce a better match between demand and supply in a service business. Example: Seats of a theater hall for a particular movie.

Source: Philip kotler and Kevin lane Keller, 2005, Marketing Management

3.3. Service-quality Model:

The instrument used in this study was adapted from SERVQUAL (Parasuraman, Zeithaml and Berry, 1988). This model highlights the main requirements for delivering high service quality. The SERVQUAL instrument has many advantages (Buttle, 1994):

  • It is accepted as a standard for assessing different dimensions of service quality.
  • It has been shown to be valid for a number of service situations.
  • It has been demonstrated to be reliable, meaning that difference readers interpret the questions similarly.
  • The instrument is parsimonious in that it has a limited number of items. This means that customers and employees can fill it out quickly.
  • It has a standardized analysis procedure to interpret the results.

Few studies have used SERVQUAL to measure IT service quality (KIM 1990: Pitt, Watson and Kavan 1995; Shaw, Delone and Niedman 2002).

These studies have confirmed that SERVQUAL can be used with confidence in IT environment.

The SERVQUAL is based on the concept of a “service quality gap” that exits between the customers expected level of services (from the previous experience and word-of-mouth communication) and their perception of actual level of service delivery. And the model also identifies five gaps that cause unsuccessful delivery. The figure of the gaps of SERVQUAL Model is stated below:

 Figure: Model of Service quality gaps (Parasuaraman et al. 1985; Curry, 1999; Luk and Layton.)

Gap- 01:   Gap between consumer expectation and management perception: management does not always correctly perceive what customers want. Example: Hospital administrators may think that patients want better food, but patients may be more concerned with nurse responsiveness.

Gap-02:          Gap between management perception and service-quality specification: management might correctly perceive customers’ wants but not set a performance

Standard. Example: Hospital administrators may tell the nurses to give fast service without specifying it in minutes.

Gap-03:    Gap between service-quality specification and service delivery: personnel might be poorly trained, or incapable of, unwilling to meet the standard or there may be conflicting standards. Example: taking time to listen to customers and serving them fast.

Gap-04:    Gap between service delivery and external communications: consumer expectations are affected by statements made by company representatives and ads. Example: If the hospital brochure shows a beautiful room, but the patient arrives and finds the room to be cheap and tacky looking, external communications have distorted the customer’s expectations.

Gap-05:    Gap between perceived service and expected service: consumer misperceives the service quality. Example: the physician may keep visiting the patient to show care, but the patient may interpret this as an indication that something really is wrong.

Based on this service-quality model the researchers identified the following five determinants of service-quality in order of importance.

  1. Reliability: Ability to perform the promised service dependably and accurately.
  2. Responsiveness: Willingness to help customers and provide prompt service.
  3. Assurance: Employees’ knowledge and courtesy and their ability to inspire trust and confidence.
  4. Empathy: Caring, individualized attention given to customer.
  5. Tangibles: Appearance of physical facility, equipment, personnel and written materials.

Based on these five factors the researchers developed the 22-item SERVQUAL scale. These are listed bellow:

1.   Reliability:

  • Providing service as promised,
  • Dependability in handling customers’ service problems,
  • Performing services right the first time,
  • Providing services at the promised time,
  • Maintaining error-free records.

2.   Responsiveness:

  • Keeping customer informed as to when services will be performed,
  • Prompt service to customers,
  • Willingness to help customers,
  • Readiness to respond to customers’ requests.

3.   Assurance:

  • Employees who instill confidence in customers,
  • Making customers feel safe in their transactions,
  • Employees who are consistently courteous
  • Employees who have the knowledge to answer customer questions.

4.   Empathy:

  • Giving customers individual attention
  • Employees who deal with customers in a caring fashion,
  • Having the customer’s best interests at heart,
  • Employees who understand the needs of their customers,
  • Convenient business hours.

5.   Tangibles:

  • Modern equipment
  • Visually appealing facilities
  • Employees who have a neat, professional appearance
  • Visually appealing materials associated with the service.

Source: Philip kotler and Kevin lane Keller, 2005, Marketing Management

3.4 Definition of customer satisfaction:

Ä  The provision of goods or services which fulfill the customer‘s expectations in terms of quality and service, in relation to price paid.

Ä  Retailers know that satisfied customers are loyal customers. Consequently, retailers must develop strategies intended to build relationships that result in customers returning to make more purchases.

Ä  The degree to which there is match between the customer‘s expectations of the product and the actual performance of the product.

      Source: http://en.mimi.hu/marketingweb/customer_satisfaction.html

Ä  Customer satisfaction depends on the products/services perceived performance relative to buyer’s expectations. If the products/services performance falls short of expectations, the customer is dissatisfied. If the performance matches expectations, the customer is satisfied. If performance exceeds expectations, the customer is highly satisfied or delighted.

Source: Philip Kotler & Gary Armstrong, 2004, Principles of Marketing

 

3.5 Marketing concept:

  • Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user.
  • Marketing is the process by which companies create value for customers and build strong customer’s relationships in order to capture value from customers in return.
  • Marketing management wants to design strategies that will build profitable relationships with target consumers. But what Philosophy should guide these marketing strategies? What weight should be given to the interests of customers, the organization, and society? Very often this interest conflict.

There are five alternative concepts under which organizations design and carry out their marketing strategic:

a. Production concept:

The idea that consumers will favor products those are available and highly affordable.

b. Product concept:

The idea that consumers will favor products that offer the most in quality, performance, and features and the organization should therefore devote its energy to making continuous product improvements.

c. Selling concept:

The idea that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort.

d. Marketing concept:

The marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do.

e. Societal marketing concept:

A principle of enlightened marketing that holds that a company should make good marketing decisions by considering consumers wants, the company’s requirements, consumer’s long runs interests.

     Society

 (Human welfare)

Social

Marketing Concept

 

                           Consumers                                                   Company

                        (Want satisfaction)                                                           (Profit)

Figure: Social Marketing Concept

Source: Philip Kotler & Gary Armstrong, 2004, Principles of Marketing

 

Market Segmentation:

  • The division of the market place into distinct subgroups or segments, each characterized by particular tastes and requiring a specific marketing mix.
  • An organization cannot satisfy the needs and wants of all consumers. To do so may result in a massive drain in company resources.
  • The process of subdividing a market into distinct subsets of customers that behave in the same way or have similar needs. Each subset may conceivably be chosen as a market target to be reaching with a distinct marketing strategy.
  • The process of dividing the market into groups such that individuals/businesses within each group share common characteristics.
  • The method of identifying a group of consumers, within a broader market, that has similar characteristics and needs. Segments can be identified by examining demographic, psychographic, and behavioral differences.

Source: http://en.mimi.hu/marketingweb/market_segment.html

  • Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Geographic segmentation:

Calls for dividing the market into different geographical units such as:

  • Region.
  • Nation.
  • Country Neighborhood.
  • City or Metro Size.
  • Density.
  • Climate.
  • State.

Demographic segmentation:

 

It divides the market into groups based on variables such as:

  • Age.
  • Gender.
  • Income.
  • Occupation
  • Education.
  • Nationality.
  • Religion.
  • Race.
  • Generation.
  • Family size.
  • Family life cycle.

Psycho graphic segmentation:

Psycho graphic segmentation divides buyers into different groups based on

  • Lifestyle (Activities, Interests & Opinions)
  • Social class, and
  • Personality characteristics.

Behavioral segmentation:

Behavioral segmentation  divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. The variables are:

  • Occasions
  • Benefits sought
  • User Status
  • Usage Rates
  • Loyalty Status
  • Readiness Stage
  • Attitude Toward the Product/Service

Marketing Mix:

  • The set of controllable tactical marketing tools-product, price, place & promotion-that the firm blends to produce the response it wants in the target market.
  • The combination of marketing inputs that affect customer motivation and behavior. These inputs traditionally encompass four controllable variables ‘the 4 Ps’: product, price, promotion and place. The list has subsequently been extended to 7 Ps, the additions being people, process and ‘physical evidence’

 

Source: Philip Kotler & Gary Armstrong, 2004, Principles of Marketing

Product:

  • It means the goods and services combination the company offers to the target market.
  • It includes quality, design, features, branding, packaging, warranties, guaranties, product life cycle etc of the product offered by a firm.

Price

  • It is the amount of money customers have to pay to obtain the products.

Place

  • It includes company activities that make the product available to target consumers. It includes the decision of
  • What shipping method,
  • How and where to store the product until it is sold,
  • What intermediaries to use
  • What sales outlets to be used in specific locations throughout the country.

Source: Philip Kotler & Gary Armstrong, 2004, Principles of Marketing

Promotion:

Source: http://en.mimi.hu/marketingweb/promotion.html

4.1 Introduction:

I am, Md. Aminul Haque Bhuiyan, Student of Stamford University Bangladesh bearing ID no. BBA 02506197. After completing my BBA program, I joined in Export Import Bank of Bangladesh (EXIM Bank) for completing my internship program which is containing 03 credit courses in BBA program. I am joined there for very short time. Only for two months. The internship program in EXIM Bank, gave me the enormous opportunity to have practical knowledge on banking system as Financial Institution as well as the financial spheres of the Bank. My successful completion of the internship program is of the contribution of the concerned officers of EXIM Bank. Because of their cooperative and friendly attitude I felt quite easy during my internship period. The officers of the loan operation, the loan recovery, and the law department helped me, supported me, and guided me to understand the functions of their respective department. In my internship program, I have understood that the main crisis of BSB is image crisis.

4.2 Nature of work:

As I told before that I joined in EXIM Bank as an internee, so that I have done some sort of work. Most of the work is done in general banking sector for make direct communication the clients. Also I have done some work in deposit section. In Exim Bank, the bankers are using banking software, named “PC Bank 2000.”I also learned about how to use that software.

4.3 Department attached to:

EXIM Bank, Shimrail Branch is organized with 3 departments. I am working all the departments in a schedule basis. Those departments are describing bellow one by one…

As I describe all the departments in the previous chapter, so that I could not describe my working activities in very largely. But shortly I just narrate it.

General Banking Department:

In general banking department, I have done some different types of work. This are

Ä  Issuing cheque book

Ä  All sorts of Account openings

Ä  All sorts of accounts closing

Ä  Inward clearing

Ä  Outward clearing

Ä  Inward despatch

Ä  Outward despatch

Ä  Issue advice

Deposit Department

In deposit department, I have done some different types of work. This are:

  • Profit given on MTDR
  • Encashment
  • Closing of deposit scheme with cash slip.
  •  Open deposit account within 1st to 10th day of every month.

Remittance Department

  • Demand Draft
  • Payment Order
  • Telegraphic Transfer
  • Supplementary cheque
  • IBCA & IBDA issue

4.4 Acquired knowledge

I have acquiring some knowledge to joining Exim bank in my internship program. These are given bellow:

ü  Exim bank told that it is based on Islami Shariah but from my internship program, I had learned that all sort of banking activities is same as conventional banking, but only deference in investment sector.

ü  Exim Bank providing general baking, remittance, investment, deposit scheme for their clients.

ü  In what way the loans will be default.

ü  How investment department invest clients money by purchasing products

ü  When profit comes it is given to the clients & in return if the amount is going for loss, on that time it also shared with the clients.

ü  From general banking department, I had learned the regular activities provided by the employee to the clients.

ü  From deposit department, I learned how to give profit to the clients & how to open a deposit account.

ü  From remittance section, I know the commission & charges given on DD, PO, and TT.

ü  I acquired knowledge form the project part is what’s the customer’s reaction of EXIM bank, whether they are satisfied or not.

ü  I also familiar about their organizational environment.

ü  I also acquired knowledge about organization as whole which I already describe in organizational part.

4.5 Problem faced

  • In general banking department they follow the traditional banking system. The entire general banking procedure is not fully computerized. For this reason it is not easy for me to work properly.
  • In all the time I can’t clearly communicate with the clients
  • First time when I join, on that moment I can’t understand their working activies.
  • In Exim bank shimrail branch, only one person work for investment section. He was very busy with his work. For this reason I can’t communicate with him properly.
  • First time I can’t understand the bossing system.

Chapter – 5

Project part

Expectation

Bank should have modern looking equipment

 

Frequency

Percent

Strongly Disagree

1

1.0

Disagree

4

4.0

Neutral

32

31.7

Agree

48

47.5

Strongly Agree

15

14.9

Total

100

99.0

Missing System

1

1.0

Total

101

100.0

                                            Bank should have modern looking equipment

 

Frequency

Percent

Valid Percent

Cumulative Percent

Valid Strongly Disagree

6

5.9

6.0

6.0

Disagree

18

17.8

18.0

24.0

Neutral

23

22.8

23.0

47.0

Agree

45

44.6

45.0

92.0

Strongly Agree

8

7.9

8.0

100.0

Total

100

99.0

100.0

Missing System

1

1.0

Total

101

100.0

5.1 Analysis and findings

5.2 Findings

Chapter – 6

Conclusion Part

 

6.1 Recommendations:

  1. The entire department should be well informed regarding their goals and objectives. It is essential to execute company objectives into individual target.
  2. There must be a clear allocation of responsibility authority and accountability.
  1. One of the most import limitations is that it has no that much of advertisement of its EXIM bank operations. It can gain dual benefit of attracting deposit and credit.
  2. The bank should take the initiative to develop an effective research and development center to get innovative ideas to capture the competitive market.
  3. Job description should be clarified and proper training should be imparted to improve the performance of bottom level management.
  4. Selection and training must be focused to develop and exploit leadership and entrepreneurial qualities within the work place.
  5. While the other banks are launching “Consumer Credit Scheme” EXIM Bank is failing to launch this kind of scheme. The management can undertake such sort of schemes and earn profit.
  6. To meet today’s urging of the customer, the bank should introduce Automated Teller Machine (ATM).
  7. The bank should provide total investment money at once to the clients so that they can exploit money properly.
  8. Exim Bank should provides facilities to the internees through monthly allowance, proper placement and practical operations as well as job certainly to those who have shown better performance in doing their particulars. Because this internship program may act as promotional program.
  9. To fulfill the vision of “mass banking” this bank should grants investment portfolio to new entrepreneurs, young businessman and also to new small companies.
  10. The Bank has to open new branch in the rural but profitable areas so that it can attract new source of deposit and credit. By opening Shimrail Branch it shoes great success so taking this branch as a sample the bank should consider it as a model.
  11. The human resource management of the bank is done as the conventional banks do it. The banks should made a collaborate effort to improve the ways of human resource management.

6.2 Conclusions

As an internee of EXIM Bank Ltd. I have truly enjoying my internship from the learning and experience viewpoint. I am confident that this two months internship program at EXIM Bank will definitely help me to realize my further carrier in the job market. EXIM bank has converted all of their system and policy of traditional banking to Islamic Banking. I think which a very practical and bold decision is. As there are lots of local and foreign banks in Bangladesh the EXIM Bank Ltd. is promising commercial Bank among them. In this competitive market EXIM Bank has to compete not only the others commercial banks but also with the public Bank. EXIM Bank Ltd. is more capable of contributing towards economic development as compared with other bank. EXIM Bank Ltd. invested more funds in export and import business. It is obvious that the right thinking of this bank including establishing a successful network over the country and increasing resources will be able to play a considerable role in the portfolio of development. Success in the banking business largely depends on effective lending. Less the amount of loan losses, the more the income will be from Credit operations the more will be the profit of the EXIM Bank Limited and here lays the success of Credit Financing.

During the course of my practical orientation I have tried to learn the practical banking activities to realize it with my theoretical knowledge, which I have greathearted and going to acquire from various courses of my BBA program.


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Appendix I – Questionnaire

 

 

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