main report

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Chapter One

INTRODUCTION

FOREIGN EXCHANGE MANAGEMENT OF JANATA BANK LIMITED

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1.1 Introduction

The primary purpose of this report is to get an idea about the operations of

“Foreign Exchange” of Janata Bank Limited. Foreign exchange plays an

important role in the balance of trade in our economy. In this regard

Foreign Exchange of Bangladesh, Banks plays an vital role. The word

“Bank” refers to the financial institution, which deals with money

transaction.

This report is an attempt to reflect the position of Foreign Exchange of

Janata Bank Limited side by side Bangladesh.

1.2 Origin of the Report

MBA program is designed with an excellent combination of theoretical and

practical aspects. As the classroom discussion alone cannot make a student

perfect in handling the real business situation, so it is an opportunity for

the students to know about real life situation through this internship

program. This internship program provides the students to link up their

theoretical knowledge with practical fields. In this connection, I was

assigned to Janata Bank, Foreign Exchange Corporate Branch, foreign

exchange department for my practical orientation.

I am required to prepare an internship report under the supervision of our

honorable teacher Niluthpaul Sarker on “Foreign Exchange Management of

Janata Bank Limited” to conduct a depth analysis on this subject matter. I

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have tried my level best to present my experience of the practical

orientation in this report.

1.3 Objectives of the report

1.3.1 Broad objective

The primary purpose of this report is to get an idea about the management

of and Foreign Exchange of Bangladesh as well as Janata Bank, and make

an industry analysis on the banking sector of Bangladesh.

1.3.2 Specific Objectives

• To analyze the comparative Foreign Exchange performance of

Bangladesh.

• To find out existing problems of Foreign Exchange of Bangladesh.

1.4 Scope of the report

The study would focus on the following areas of Janata Bank Limited.

Foreign Exchange management system of Janata Bank Limited.

Procedure of export, import and remittance management.

Opening of LC and maintain other formalities of foreign exchange.

Organization structures and responsibilities of management.

Each of the above areas would be critically analyzed in order to determine

the efficiency of Janata Bank’s Foreign Exchange Management system.

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1.5 Rationale of the study

Bangladesh is one of the developing country in the world. The economy of

the country has a lot left to be desired and there are lots of scopes for

massive improvement. In an economy like this, Foreign Exchange can play

a vital role to improve the overall economic condition of the country. The

banks by playing the role of an intermediary can mobilize the excess fund

of surplus sectors to provide necessary finance, to those sectors, which are

needed to promote for the sound development of the economy.

This report is an effort to reflect a clear idea about the strategies, activities,

and performance of Bangladesh regarding Foreign Exchange Business.

1.6 Limitations

To prepare this report, I have faced some limitations, which are mentioned

below.

• Limitation of time: It was one of the main constraints that hindered to

cover all aspects of the study.

• Lack of Secondary Information: The secondary source of information

was not enough to complete the report.

• Limitation of the Scope: Some confidential information was not

disclosed by various personnel of their respective department.

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Chapter TWO

Methodolog


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2.1 Techniques of Analysis

I have used both qualitative and quantitative methods to prepare this report. I have analyzed and presented the data by Microsoft excel and shows percentage, graphical presentation and different types of charts. I have tried my level best to analyze the major or numerical findings.

2.2 Data Required

To prepare this report I have mainly focused on numerical data. I have also used theoretical portion as report’s demand. Because to analyze foreign exchange management of a bank both theoretical and technical knowledge are necessary. Then based on everything I have analyzed and made conclusion.

2.3 Sources of Data

2.3.1 Sample Information

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Information is mainly collected from annual report of Janata Bank Limited,

annual meeting report, brochures and web sites. The information

incorporated in this report is also collected both from the primary sources

and as well as from the secondary sources.

2.3.2 Primary Source of Data

I collect data directly from the practical field of different sectors that

is Janata Bank head office. This data is called primary source of data.

2 .3.3 Secondary Sources of Data

The secondary data is also collected from annual report, different conceptual matters, internet and different articles published in different sessions.

Secondary Sources are:

Annual Reports of different years of Janata Bank Limited. Annual Report of Bangladesh Bank of 2011. Other published documents of Janata Bank Limited. Respective sectors of foreign department of head office.

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Chapter THREEOrganizational Profile &

Foreign Exchange Department


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3.1 Organizational Profile

3.1.1 Historical Background of the organizationJanata Bank Limited is the 2nd largest state owned commercial bank in

Bangladesh. Immediately after the emergence of Bangladesh in 1971, the

erstwhile United Bank Limited and Union Bank Limited were named as

Janata Bank. It was established under the Bangladesh Bank order 1972.

During the privatization process it was incorporated as a public Limited

Company on 21, May 07 vide certificate of incorporation No-

C66933(4425)07. The Bank has taken the over the business of Janata Bank

at a purchase consideration of Tk. 2593.90 million as a going concern

through a vendor agreement signed between the Ministry of Finance of the

Peoples’ Republic of Bangladesh and the Board of Directors on behalf of

Janata Bank Limited on 15th November 2007. Janata Bank Limited operates

through 851 branches including 4 overseas branches at United Arab

Emirates and a subsidiary company named Janata Exchange Company Srl

in Italy. It is linked 1202 foreign correspondents all over the world.

3.2 Objectives of the organization

3.2.1 Mission:

To be recognized as the leading commercial bank in the Bangladesh

market providing retail and corporate banking services and as a trusted

and respected partner in the social and economic development program of

our nation.

3.2.2 Vision:To become effective largest commercial bank in Bangladesh to support

socio-economic development of the country and to be a leading bank in

South-Asia.

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3.3 Services of the organization

Besides normal banking operation, Janata Bank Limited offers special

services to a large number of clients/agencies throughout the country.

Under the network of utility service, customers of different govt.

organizations, corporate bodies, local bodies, educational institutions,

students, etc are continuously getting benefits from the Bank. Janata Bank

Limited's utility services are:

3.3.1 Bills Collection:

Gas bills of Titas, Bakhrabad and Jalalabad Gas Transmission and

Distribution Companies.

Electricity bills of Dhaka Electricity Supply Authority, Dhaka

Electricity Company, Bangladesh Power Development Board and

Rural Electrification Board.

Telephone bills of Telegraph and Telephone Board.

Water/Sewerage bills of Water and Sewerage Authority.

Municipal holding tax of City Corporation/ Municipalities.

A pilot scheme is underway to provide personalized services to our

clients.

3.3.2 Payments made on behalf of Govt.

Non- Govt. teacher’s salaries

Girl Students scholarship/stipend & Primary Student Stipend.

Army pension

Widows, divorcees and destitute Women Allowances

Old-age Allowances

Food procurement Bills

As per decision of the govt. 46 (Forty Six) branches of our bank (40

branches in Dhaka city, 1(one) branch in N.gonj city and 5(five) branches

in Chittagong city) are involved to receive the all utility bills in a same

station from January'04.

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3.3.3 Services Areas

BranchesThere are 851 branches of Janata Bank Limited in home and abroad.

Among them 443 branches are situated in urban areas including four

foreign branches and 408 branches are in rural areas. And all foreign

branches are situated in United Arab Emirates.

Division Town Rural zone Total

Dhaka 162 82 244

Chittagong 100 88 188

Rajshahi 80 131 211

Sylhet 22 36 58

Khulna 75 71 146

Overseas 4 0 4

Total 443 408 851

Source: Annual Meeting Report 2010

Overseas Branches:

SL.No: City No of Branch Status

01. Abu Dhabi 01 Foreign

02. Al-Ain 01 Foreign

03. Sharjah 01 Foreign

04. Dubai 01 Foreign

Total 04


Table: Branches of Janata Bank Limited

Table: Foreign Branches of Janata Bank Limited

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3.4

Organizational structure

3.4.1 Management Aspect

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Like every other business organization, the top management makes all the

major decisions of Janata Bank. The board of directors being at the highest

level of organizational structure plays an important role in policy

formulation, but it is not directly concerned with the day-day operations of

the bank. They have delegated this duty to the management committee.

The board mainly establishes the objectives and policies of the bank.

One chairman, eleven directors, one CEO & MD and one company secretary

are consist of Board of Directors of Janata Bank Limited.

Mid and lower level employees get the direction and instruction from the

Board of Directors about the duties and tasks they have to perform. The

chief executive provides the guideline to the managers and employees, but

delegates responsibility for determining how tasks and goals are to be

accomplished.

Chart: Management Hierarchy of JBL

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3.5 Future plans of the organization

Chairman

Managing Directors

General Manager

Junior Clark

Senior Clark

Sub Accountant

Deputy General Manager

Assistant General Manager

Senior Principal Officer

Principal Officer

Senior Officer

Officer

ORGANOGRAM

ORGANOGRAM

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1. To involve in export activities in a large scale by maintaining good

communication with various parties.

2. To collect new members in FY2012 to start export related new

business.

3. At least 2 new AD branch will open in FY2012.

4. More facilities will provide to the exporters on the basis of export

priority.

5. New Credit Product will start in a large scale by name of BMRE Loan

for export project to expand factory, import machineries, purchase

transport among exiting parties.

6. To take the competitive position charge, decrease commission and

other facilities will continue.

7. To increase export business monitoring system has made stronger

in head office and respective branches.

8. To increase export business has appointed sufficient manpower,

providing special services and related different training program of

officers has been will be started.

Foreign Exchange Department

3.6 Introduction

One of the important businesses carried out by the commercial bank is

foreign trading. The trade among various countries falls for close link

between the parties dealing in trade. The situation calls for expertise in the

field of foreign operations. The bank, which provides such operation, is

referred to as rending international banking operation. Mainly

transactions with overseas countries in respect of import, export and

foreign remittance dealings under the preview of foreign exchange

department. International trade demands a flow of goods from seller to

buyer and of payment from buyer to seller. In this case the bank plays a

vital role to bridge between the buyer and seller.

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Foreign exchange department of Janata Bank Limited is one of the most

important departments among all departments. This department handles

various types of activities. Among these main three are as follows:

a) Import

b) Export and

c) Foreign remittance

3.7 Opening Letter of Credit (L/C)

In global business environment, buyers and sellers are often unknown to

each other. So seller always seek guarantee of payment for his exported

goods. In this situation bank plays an important role. Bank gives export

guarantee that it will pay for the goods on behalf of the buyer. This

guarantee is called “Letter of Credit” or LC. Thus the contract between

importer and exporter is given a legal shape by the banker by its Letter of

Credit.

3.7.1 Procedure of opening the Letter of Credit (L/C)

The importer after receiving the proforma invoices from the exporter, by

applying for the issue of documentary credit, the importer requests

his/her bank to make a promise of payment to the supplier. Obviously, the

bank will only agree to this request if it can rely on reimbursement by the

applicant. As a rule accepted as the sole security for the credit particularly

if they are not the shorts of commodity that can be traded on an organized

market, such an agreement would involve the bank in excessive risk

outside its specialized field. The applicant must therefore have adequate

fund in the bank account or a credit line sufficient to cover the required

amount.

Banks deals with documents and not goods. Once the bank has issued the

credit its obligation to pay is conditional on the presentation of the

stipulated documents within the prescribed time limit. The applicant

cannot prevent a bank from honoring the documents on the grounds that

the beneficiary has not delivered goods.

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The importer submit the following documents with the

application for opening the L/C

Tax Identification Number (TIN)

Valid trade license

Import registration certificate (IRC)

The bank will supply the following documents before opening

the L/C

LCA form

IMP form

Necessary charger documents for documentation

The above documents/papers must be completed duly signed and filled by

the parties according to the instruction of the concern banker.

After scrutinizing above-mentioned documents carefully, bank delivers the

following forms to be filled up by importer and banker then check it

carefully:

Whether the goods to be imported is permissible or not.

Whether the goods to be imported is demanding or not.

3.7.2 L/C Application Form (L/CAF)

L/C Application Form is a sort of an agreement between customer and

bank on the basis of which letter of credit is opened. Bank provides a

printed form for opening of L/C to the importer. A special adhesive stamp

of value Tk.200 is affixed on the form in accordance with Stamp Act

currently in force. While opening, the stamps are cancelled. Usually the

importer expresses his decision to open the L/C quoting the amount of

margin in percentage. Usually the importer gives the following information

–

Full name and address of the importer

Full name and address of the beneficiary

Draft amount

Availability of the credit by sight payment/ acceptance/

negotiation/ deferred payment

Time bar within which the documents should be presented

Sales type (CIF/FOB/C&F)

Brief specification of commodities, price, quantity, indent no. etc.

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Country of origin

Bangladesh Bank registration no.

Import License/LCAF no.

IRC no.

Account no.

Documents no.

Insurance Cover Note/Policy no., date, amount

Name and address of Insurance Company

Whether the partial shipment is allowed or not

Whether the transshipment is allowed or not

Last date of shipment

Last date of negotiation

Other terms and conditions (if any)

Whether the confirmation of the credit is requested by the

beneficiary or not.

The L/C application must be completed/filled in properly and

signed by the authorized person of the importer before it is

submitted to the issuing bank.

3.7.3 L/C Authorization Form (L/CAF)

The Letter of Credit Authorization Form (LCAF) is the form prescribed for

the authorization of opening letter of credit/payment against import and

used in lieu of import license. The authorized dealers are empowered to

issue LCA Forms to the importers as per basis of licensing of the Import

Policy Order in force to allow import into Bangladesh. If foreign exchange

is intended to be bought from the Bangladesh Bank against an LCAF, it has

to be registered with Bangladesh Bank’s Registration Unit located in the

concerned area office of the CCI&E. The LCA Forms available with

authorized dealers are issued in set of five (05) copies each. First Copy is

exchange control copy, which is used for opening of LC and effecting

remittance. Second Copy is the custom purpose copy, which is used for

clearance of imported goods from custom authority. Triplicate and

Quadruplicate Copy of LCAF are to be sent to concerned area of CCI&E

office by authorized dealer/Registration Unit of Bangladesh Bank.

Quintuplicate Copy is kept as office copy by authorized

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dealer/Registration Unit. The Letter of Credit Authorization Form (LCAF)

contains the followings –

Name and address of the importer

IRC no. and year of renewal

Amount of L/C applied for (both in figure and in word)

Description of item(s) to be imported

HS Code No.

Signature of the importer with seal

List of goods to be imported

Forwarding Documentary Credit by Advising or Confirming Bank:

There are usually two banks involved in a documentary credit operation.

The issuing bank and the 2nd bank, the advising bank, is usually a bank in

the seller’s country. The issuing bank asks another bank to advise or

confirm the credit.

If the 2nd bank is simply “advising the credit”, it will mention that when it

forwards the credit to seller, such a bank is under no commitment or

obligation to pay the seller.

If the advising bank is also “confirming the credit”, this mention that the

confirming bank, regardless of any other consideration, must pay accept or

negotiate without recourse to seller. Then the bank is called confirming

bank also.

Submission of Necessary Documents by Exporter to the

Negotiating Bank:

As soon as the seller/exporter receives the credit and is satisfied that he

can meet its terms and conditions, he is in a position to load the goods and

dispatch them. The seller then sends the documents evidencing the

shipment to the bank.

Exporter will submit those documents in accordance with the terms and

conditions as mentioned in L/C. Generally the documents observed by the

foreign exchange department are:

Bill of exchange

Commercial invoice

Bill of lading / Air way bill / Truck receipt

Certificate of origin

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Packing list

Clean Report of Finding (CRF)

Insurance cover note

Pre-shipment certificate

The Documents Sent To The Issuing Bank Through The

Negotiating Bank:

The negotiating bank carefully checks the documents provided by the

exporter against the credit, and if the documents meet all the requirement

of the credit, the bank will pay, accept, or negotiate in accordance with the

terms and conditions of the credit. Then the bank sends the documents to

the L/C opening bank.

Making the Payment of Foreign Bill through the Reimbursing

Bank:

The L/C issuing bank getting the documents checks immediately and if

they are in order and meet the credit requirements; it will arrange to make

payment against L/C through reimbursement bank and will send the

importer the document arrival notice.

3.8 Securities of L/C

Janata Bank Limited respective officials scrutinize the application in the

following manner-

a) The terms and conditions of the L/C must be complied with UCPDC 500

and Exchange Control & Import Trade Regulation Act.1947.

b) Eligibility of the goods to be imported.

c) The L/C must not be opened in favor of the importer.

d) Radioactivity report in case of food item.

e) Survey report or certificate in case of old machinery

f) Carrying vessel is not of Israel.

g) Certificate declaring that the item is operation not more than 5 years in

case of car.

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3.9 Export

Janata Bank Limited exports a large quantity of goods and services to

many countries. Readymade textile garments (both knitted and woven),

Jute, Jute-made products, frozen shrimps, tea, hide and skin, vegetables 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 Janata Bank Limited foreign exchange

Branch 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

3.9.1 Formalities of Export ProcedureThere are a number of formalities, which an exporter has to fulfill before

and after shipment of goods. These formalities or procedures are

enumerated in brief as follows:

Obtaining Export Registration Certificate ERC: No exporter is

allowed to export any commodity for export from Bangladesh

unless he is registered with Chief Controller of Imports and Exports

(CCI & E) and holds valid Export Registration Certificate (ERC). After

applying to the CCI&E in the prescribed from along with the

necessary papers, concerned offices of the Chief Controller of

Imports and Exports issues ERC. Once registered, exporters are to

make renewal of ERC every year.

Securing the order: After getting ERC, the exporter may proceed

to secure the export order. He can do this by contracting the buyers

directly through correspondence.

Obtaining EXP: After having the registration, the exporter applies

to Janata Bank Limited with the trade license, ERC and the

Certificate from the concerned Government Organization to get EXP.

If the bank is satisfied, an EXP is issued to the exporter.

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Signing of the contract: After communicating with buyer the

exporter has to get contracted for exporting exportable items from

Bangladesh detailing commodity, quantity, price, shipment,

insurance and mark, inspection, arbitration etc.

Receiving the Letter of Credit: After getting contract for sale,

exporter should ask the buyer for Letter of Credit clearly stating

terms and conditions of export and payment.

Procuring the materials: After making the deal and on having the

L/C opened in his favor, the next step for the exporter is to set about

the task of procuring or manufacturing the contracted merchandise.

Endorsement on EXP: Before the exporter with the customs or

postal authorities lodges the export forms, they should get all the

copies endorsed by Janata Bank Limited. Before shipment, exporter

submits EXP. form with commercial invoice. Then Janata Bank’s

respective officers check it properly, if satisfied, certifie the EXP.

Without EXP exporter cannot make shipment. The customer must

declare all export goods on the EXP issued by the authorized dealers

3.9.2 Disposal of Export procedureOriginal: Customs authority reports first copy of EXP to

Bangladesh Bank after shipment of the goods.

Duplicate: Negotiating bank reports the Duplicate to Bangladesh Bank in

or after negotiation date but not later than 14 days from the date of

shipment.

Triplicate: On realization of export proceeds the same bank to the same

authority reports Triplicate.

Quadruplicate: Finally, the negotiating bank as their office copy retains

Quadruplicate.

Shipment of goods: Exporter makes shipment according to the

terms and condition of L/C.

Presentation of export documents for negotiation: After

shipment, exporter submits the following documents to Janata bank

Limited for negotiation.

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Bill of Exchange or Draft

Bill of Lading

Invoice

Insurance Policy/Certificate

Certificate of origin

Inspection Certificate

Consular Invoice

Packing List

Quality Control Certificate

G.S.P. certificate

Photo

Examination of Document: Banks deal with documents only,

not with commodity. As the negotiating bank is giving the value

before repatriation of the export proceeds it is advisable to

scrutinize and examine each and every document with great

care whether any discrepancy(s) is observed in the documents.

The bankers are to ascertain that the documents are strictly as per

the terms of L/C Before negotiation of the export bill. Bank officers

assigned for examining the export documents may use a checklist

for their convenience.

Negotiation of export documents: Negotiation stands for payment

of value to the exporter against the documents stipulated in the L\C.

If documents are in order, Janata Bank Limited 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 Janata Bank

Limited and 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).

Settlement of Local Bills:

The settlement of local bills is done in the following ways, -

The customer submits the L/C to Janata Bank Limited along with the

documents to negotiate

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Janata Bank Limited officials scrutinize the documents to ensure the

conformity with the terms and conditions.

The documents are then forwarded to the L/C opening bank.

The L/C issuing banks gives the acceptance and forwards an

acceptance letter.

Payment is given to the customer on either by collection basis or by

purchasing the document.

3.10 Import

Import means purchase of goods or services from abroad. Normally

consumers, firms and Government organizations import foreign goods or

services to meet their various necessities. Main import items are food item,

edible oil, fertilizer, petroleum, machineries, chemicals, raw materials of

industry, cement clinkers etc. So, in brief, we can say that import is the

flow of goods and services purchased by local agent staying in the country

from foreign agent staying abroad.

3.10.1 Import procedure

Authorized Dealer, banks are always committed to facilitate import of

different goods into Bangladesh from the foreign countries. Import

Section, which is under Foreign Exchange Department of a bank, is

assigned to perform this job. And to serve its parties demand to import

goods, it always maintains required formalities that are collectively

termed as “Import Procedure”.

i) At first, the importer must obtain Import Registration Certificate

(IRC) from the CCI&E submitting the following papers:

Up to date Trade License.

Nationality and Asset Certificate.

Income Tax Certificate.

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In case of company, Memorandum & Articles of Association and

Certificate of Incorporation.

Bank Solvency Certificate etc.

Required amount of registration fee

ii) Then the importer has to contact with the seller outside the country

to obtain the Proforma Invoice. Usually an indenter, local agent of

the seller or foreign agent of the buyer makes this communication.

Beside these other sources are:

Trade fair.

Chamber of Commerce.

Foreign Missions in Bangladesh.

Journals etc.

iii) When the importer accepts the Proforma Invoice, he/she makes a

purchase contract with the exporter detailing the terms and

conditions of the import.

iv) After making the purchase contract, importer settles the means of

payment with the seller. An import procedure differs with different

means of payment. The possible means are Cash in Advance, Open

Account, Collection Method and Documentary Letter of Credit. In

most cases, the Documentary Letter of Credit in our country makes

import payment. Purchase Contract contains which payment

procedure has to be applied.

3.10.2 Payment Modes

Cash in advance : Importer pays full, partial or progressive payment by

a foreign DD, MT or TT. After receiving payment, exporter will send the

goods and the transport receipt to the importer. Importer will take

delivery of the goods from the transport company.

Open Account : Exporter ships the goods and sends transport receipt

to the importer. Importer will take delivery of the goods and makes

payment by foreign DD, MT, or TT at some specified date.

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Collection Method : Collection methods are either clean collection or

documentary collection. Again, Documentary Collection may be

Document against Payment (D/P) or Document against Acceptance

(D/A). The collection procedure is that the exporter ships the goods

and draws a draft/ bill on the buyer. The exporter submits the

draft/bill (only or with documents) to the remitting bank for collection

and the bank acknowledges this. Then the remitting bank sends the

draft/bill (with or without documents) and a collection instruction

letter to the collecting bank. Acting as an agent of the remitting bank,

the collecting bank notifies the importer upon receipt of the draft. The

title of goods is released to the importer upon full payment or

acceptance of the draft/bill.

Letter of credit : Letter of credit is the well-accepted and most

commonly used means of payment. It is an undertaking for payment by

the issuing bank to the beneficiary, upon submission of some

stipulated documents and fulfilling the terms and conditions

mentioned in the letter of credit.

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Chapter FOURAnalysis and Findings


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4.1 Export Finance

Export through Janata Bank Ltd. for the year 2010 and 2011 is

Tk.85418.00 million and Tk. 87500.00 million respectively. In spite of

Global Financial Crisis the growth chart in export through Janata Bank Ltd.

remains upwards due to our timely steps regarding credit facilities and

services packages. We have already re-fixed our schedule of exchange at a

reduced rate the loan pricing is more competitive. With the credit lines our

experts have introduce the following new products:

Cash Credit: Working capital facility to dyeing unit and packaging

unit.

Mid term Loan: For procurement of machinery, space parts, boiler,

generator, vehicles etc. to export oriented industrial unit.

Packing Credit: Working capital facility to pay wages salary utility

bills etc.

LTR, FC: Short term credit for procurement of capital machinery

from abroad.

Term Loan: For (Export oriented) Ship Building.

Export Project BMRE: Loan for factory building construction.

Expansion, development and Maintenance, construction of factory

godown, purchase of machineries from local and foreign markets,

covered van, generator and establish ETP.

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4.1.1 Details Commodity Wise Export

Here given details commodity wise export figures of Janata Bank Limited

from 2008 to 2011. It has shown here commodity wise and monthly wise

export figures in details.

Month Raw Jute

Jute Goods

Tea Hide & Skin

RMG F.FiSH Vegetables Others

January 3.04 38.56 1.33 58.76 244.75 47.91 13.7 85.31

February 2.68 35.07 0.56 37.7 260.93 41.94 12.54 61.67

March 10.16 23.2 0.9 67.21 295.23 34.05 7.17 67.67

April 4.95 33.55 0 64.01 337.37 46.25 8.54 121.69

May 1.8 89.94 0 75.84 269.97 75.46 19.37 79

June 6.4 29.18 0 82.22 302.17 65.55 10.48 151.68

July 2.71 37.11 0 76.66 329.88 77.37 13.58 83.59

August 2.72 33.18 0 54.31 322.15 65.13 17.77 165.86

Septmber 3.52 32.13 0 49.65 265.47 77.13 9.76 166.92

October 15.94 30.52 0 53.45 260.08 22.32 6.81 111.28

November 10.13 53.69 0 54.41 302.6 46.59 7.12 113.77

December 4.79 108.27 0 84.44 359.22 74.77 9.51 145.89

Total 68.84 544.4 2.79 758.663549.8

2674.47 136.35 1354.33

Grand Total 7089.66

Source: Photo Copy from Head Office

In 2008 total export of Janata Bank was Tk. 7089.66 crore. Ready Made

Garments was Tk. 3549.82 crore and it was the highest position. Hide &

skin and frozen fish took the second and third position consequently. It is

also clearly observed that in the month of August and September export

amount was highest through the year.

Table: Details Export of Janata Bank Limited of 2008

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Month Raw Jute

Jute Goods

Tea Hide & Skin


January 3.11 32.66 0 34.63 280.16 53.71 9.48 129.76February 2.06 43.5 0 60.85 285.08 21.21 9.32 106.83

March 6.75 44.96 0 86.3 270.15 29.4 6.95 124.47April 9.69 46.76 0 74.4 243.85 59.85 8.44 122.07May 5.92 35.41 0 75.02 291.78 69.91 11.06 195.85June 5.32 30.76 0 73.79 293.72 83.87 14.06 113.35July 6.11 40.35 0.33 63.69 338.71 72.26 14.69 101.07

August 6.92 38.62 0 55.82 338.56 91.98 12.02 100.1September 9.06 44.41 0 59.97 270.65 79.64 14.01 95.2

October 5.1 42.44 0.18 61.68 247.73 63.33 8.79 65.4November 7.69 41.55 0.68 56.04 269.27 88.15 9.14 92.92December 8.18 54.13 0.75 78.51 411.27 29.97 9.09 173.17

Total 75.91 495.55 1.94 780.7 3540.93 743.28 127.05 1420.19Grand Total 7185.55




skin and frozen fish took the second and third position consequently. First

half of the year 2009 export amount was comparatively better position

than the second half of the year. It is also clearly observed that total

export amount of 2009 is little bit higher than 2008.



1


Month Raw Jute

Jute Goods

Tea Hide & Skin


January 8.18 35.74 0.56 39.81 323.65 65.04 11.36 80.13February 1.55 57.35 0.83 52.56 332.52 45.16 11.34 90.25

March 4.88 90.44 0.47 74.6 348.78 53.54 10.22 99.13April 4.76 74.57 0.46 89.53 278.37 66.17 10.4 157.21May 3.66 48.59 0.3 69.31 284.77 44.88 13.17 200.85June 7.27 55.09 0 65.47 384.56 102.27 15.62 152.75July 9.73 45.29 0.34 58.16 376.99 111.91 18.97 127.65

August 4.79 46.03 0.37 65.4 358.42 65.73 16.15 200.13September 7.11 43.51 0 94.6 344.92 102.1 28.56 200.3

October 5.73 45.41 0 106.46 331.72 51.07 11.02 89.39November 4.7 55.21 0 72.86 368.23 71.88 8.77 159.13December 12.32 47.31 1.87 48.77 456.99 42.48 7.32 247.84





skin Tk. 837.53 crore and frozen fish Tk. 822.23 crore took the second and

third position consequently. Throughout the whole year 2010 export

amount was comparatively better than the last two years. It is also metion

here that total export amount was significantly higher than 2008and 2009.

In FY 2011 target export was Tk. 66480.00 million, but earned Tk.

88653.10 million against the target amount. This was 133% higher than

the target. It may mentioned here that up to October 2011 earned was Tk.

1


7231.80 million, that means target of export had attained before two

months end of the year.

Month Raw Jute

Jute Goods

Tea Hide & Skin


January 1.98 37.32 0.39 64.21 330.34 63.6 12.08 202February 3.5 38.15 0 65.37 385.78 40.83 9.82 146.68

March 3.03 38.56 1.05 74.3 447.59 35.75 9.74 114.08April 4.78 44.91 0 37.67 426.23 52.16 10.33 135.54May 4.32 39.01 0 103.5 325.72 80.79 14.15 178.66June 10.03 26.69 0.12 89.93 432.8 92.21 14.52 99.29July 2.96 41.8 0.07 118.53 396.29 77.5 16.67 146.8

August 6.65 44.05 0 99.85 397.05 97.43 17.96 77.58September 20.06 42.48 0.39 91.42 332.96 70.44 13.61 101.43

October 27.52 52.78 0 79.55 265.8 69.34 13.37 158.33November 11.55 72.35 0.07 127.69 353.31 76.36 12.88 153.26December 5.4 43.31 0 69.2 353.95 61.12 11.47 283.21




Fig: Export of JBL from 2008 to 2011

1


In spite of world economic crisis and political instability in the country

Janata Bank Limited has kept its upward export trend up to last year.

Because Its expertise and experienced management team offered different

promotional offer and financially assisted to the exporters to boost up the

export trend. They main offered and assisted-

Concessional rate of interest.

Export incentive programs.

Export Processing Zone facility.

Scope of establishment of export oriented industry by 100% foreign

investment and by joint venture.

Full fledged infrastructural and logistic support for export i.e.

project finance, working capital, pre-shipment & post-shipment

export finance, guarantee, bonding facility, etc.

Consulting facility by an expert group of officials.

4.1.2 Export Target & World Economic Crisis

From 2008 to 2011 export of Janata Bank is in increasing pattern. Even

during world economic crisis period Janata Bank’s management shows

2008 2009 2010 2011

1


their best performance. That is why export position remains in upward

condition.

In spite world economic crisis export growth has increased 4%. Which is

highest among four government owned banks.

Tk.(Million)Year Target Achievement Percentage of Target

2009 77983.8 71855.5 92.18%

2010 86226.6 85417.8 99.06%

2011 66480 88653.1 133.00%


Table: Export growth of Janata Bank Limited

Figure: Export growth of Janata Bank Limited

1


4.1.3 National and Janata Bank Limited's Export

Performance

2009 2010 2011

1


(Million US$)

National ExportContribution to National

Export of Janata Bank Limited

Financial Year

TargetAchievemen

tAchievement

Percentage

2004-2005 7227.70 7603.00 632.90 8.21%

2005-2006 8565.78 8655.00 692.80 8.00%

2006-2007 10159.20 10526.16 958.02 9.10%

2007-2008 12500.00 12187.5 1057.68 8.68%

2008-2009 14500 14411.1 1034.56 7.12%

2009-2010 16298.43 15565.1 1300 8.35%

Source: Web sites Annual Meeting Report 2011

Table: Contribution to National Export of Janata Bank Limited

Figure: Contribution to National Export of JB

1


For global economic recession and political instability inside the country contribution to national export of Janata Bank limited was lowest in the fiscal year 2007-2008 among last six fiscal years. And in fiscal year 2008-2009 it turned up warding.

Because to increase export business providing the exporter more foreign currency, to strengthen their production capacity, to facilitate the in every maximum scope, the bank has took four incentives. These have been proved to be fruitful adding Tk.2.00cr (approx.) more to the bank’s annual income through only export business.

These new four incentives are as follows in brief:

In addition with the existing working capital it provides exporters emergence need to execute their foreign order.

For importing bulk quantity of dies, chemical it is a great support for the exporter.

Loan for importing generator, small machines, vehicles for emergency need.

For importing capital machinery.

4.1.4 Comparison of Export of 2009 with Public Banks

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

1


Tk. (Mill.)

Janata Bank 88653.1

Sonali Bank 64243.3

Agrani Bank 44606.8

Rupali Bank 7458.1


Total export Janata Bank Limited in 2011 was Tk.88653.1 million. Sonali

Bank’s export was Tk.64243.3 million. Agrani Bank’s and Rupali Bank’s

export was Tk.44606.8 million and Tk.7458.1 million respectively. From

above table and graph we can say that Janata Bank Limited is the top

position among four government owned banks with a large difference. Its

nearest competitor is Sonali Bank Limited.

4.2 Import Finance

Table: Comparison of Export of 2011 with Public Banks

Limited

Figure: Comparison of Export of 2011 with Public Banks

Limited

1


Traditionally Janata Bank Ltd. is pioneer in handling major portion of country’s import business. The total volume of import as on 30-11-2011 is 107168 million. Major import items are industrial raw materials, chemicals, capital machineries, scraped vessels and petroleum etc.

4.2.1 Commodity wise Import of Janata Bank Limited

Tk. (Crore)

Items/Year 2011 2010 2009 2008

Commodities

Food Item 904 1075.91 396.25 12.14

Edible Oil 339.42 155.97 18.9 14.66

Fertilizer 2300.96 2779.16 1140.44 599.37

Petroleum 3483.1 4448.87 3659.86 8774.58

Machineries 1190.41 1108.28 853.11 1089.54

Chemicals 559.45 988.37 608.84 490.82

Raw Materials of Industry 2600.52 1306.44 1289.95 1408.16

Ship Breaking 23.31 177.95 101.4 144.25

Cement Clinkers 257 279.55 230.9 209.79

Others 194.33 620.8 106.89 137.59Total 11852.5 12941.3 8406.54 12880.9

Table: Commodity wise Import of JB from 2008 to 2011

1


Through quite a good number of Authorized Dealer Branches and 1198

nos. foreign correspondents world wide Janata Bank Limited has been

extending full range import and relevant finance facilities. Setting

Industrial vision to facilitate optimally, bank's involvement has been

showing sharp rising trend.

Year Taka in Million

2008 48005

2009 54666

2010 58889

2005 60477

2006 74920

2007 72912

2008 128809

2009 84065

2010 129413

2011 118525

Source: Web Sites of Janata Bank Limited

Table: Import Trend of JB from 2008 to 2011

1


From 2002 to 2008 import of Janata Bank Limited is gradually increasing.

But in 2009 the country was under caretaker government. Export, import,

foreign remittance, employment in abroad etc. were moving forward in

slow rate. For this reason import in 2009 sharply down compare with

2008. Again in 2008 import of Janata Bank Limited reached higher than

2009. And in 2009 import is dropped little bit.

Fig: Import trend of JBL from 2000 to 2009

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

1


4.2.2 Import target and achieve in last 3 years

Year Target AchievedPercentage of

Achieved

2009 8000 840.54 105%

2010 9247.19 12941.3 140%

2011 10172 11852.5 116%

4.2.3 Contribution of Janata Bank in National Import

YearNational Import

Tk.(crore)Growth

Import of Janata Bank Tk.(crore)

Growth

2008 111307 0 12880.9 0

2009 127221 14.30% 8406.5 -35.20%

20010 163505 27.78% 12941.3 54.17%

2011 18440 -9.23% 11852.5 -8.41%

4.2.4 Income from Import

Particulars 2007 2008

L/C Commissions and Other charges 77.87 86.53

Interest (PAD,LIM,LTR and Others) 387.63 278

Total 465.5 364.53

4.2.5 Contribution to National Import of JB in last decade

1


Fiscal YearNational Tk.

(Crore)Janata bank Tk.

(Crore)Percentage

1997-1998 28303.78 4009.87 14.16726

1998-1998 30539.62 3799.45 12.44105

1997-1998 34183.13 3731.94 10.91749

1998-1999 38480.32 4646.58 12.07521

1999-2000 42130.6 4754.46 11.28505

2000-2001 50371 5233.07 10.38905

2001-2002 49049.1 5345.2 10.89765

2002-2003 55917.63 6117.06 10.93941

2003-2004 64256.56 6952.62 10.82009

2004-2005 80894.78 8397.96 10.38134

2005-2006 99130.07 9230.42 9.311423

2006-2007 118389.8 10757.9 9.086847

2007-2008 166974.3 9466.11 5.669201

Table: Contribution to National Import of Janata Bank Limited

1


Increase of import indicates the country is less wealthy and decrease of

import indicates that the country has sufficient resources and is able to

fulfill its local demand. So as a publicly owned bank Janata bank Limited is

less service providing attitude to the importers. It provides little facilities

to its importers. As a result import contribution percentage to national is

decreasing gradually from fiscal year 2002-2003 to fiscal year 2010-2011.

4.3 Foreign Remittance

Figure: Contribution to National Import of JB

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

1


Inward foreign remittance through Janata Bank Ltd. up to November 2011

is Tk. 51508.55 million. Foreign remittance from NBRs reached record

high of Tk. 45924 million in 2010 against Tk.36788 million in 2009 and

continue to play an important supporting role in strengthening the

economy of the county Janata Bank ltd. by reducing lead-time, has ensured

quick delivery of foreign remittance, an NBR branch has been opened to

serve exclusively Non-resident Bangladeshis through Speedy Money

Remittance System with instant to the beneficiaries. Anybody willing to

remit foreign currency from any corner of the world can use wide network

of the bank. The remittance reaches to the beneficiary within 3 days

without charging any commission. Our worldwide network includes 4

branches in UAE, 2 exchange houses in Italy and correspondent

relationship with all the major Banks and all important trade centers of the

world.

Recently Janata Bank Ltd. has launched its Speedy Foreign Remittance

Payment System which enables beneficiaries to receive their money

within shortest possible time. The beneficiary also gets information of

remittance through automated SMS. It’s a secured, easy, cost effective and

speedy way of remittance for the remitter.

Janata bank Ltd. has signed an agreement with Western Union Network

to facilitate wide range of remittance of the globe. Both the organizations

make it possible to receive the money from about 300,000 locations of 200

countries instantly with prevailing mutual mechanism and workforce. The

achievement of Janata Bank Ltd. in attracting foreign remittance as

compared to country’s performance is given bellow:

4.3.1 Country wise remittance of Janata Bank Limited

1


To facilitate sending money in Bangladeshi Taka directly, Janata Bank Limited has Taka Drawing Arrangement with many banks/exchange companies in different countries. The expatriate Bangladeshis may send their money in BDT (Bangladeshi Taka) through the branches/subsidiaries of Janata Bank Limited and foreign banks/exchange companies. Remittance services are available at all branches and foreign remittances may be sent to any branch by the remitters favoring their beneficiaries. Remittances are credited to the account of beneficiaries instantly or within shortest possible time.

Tk.(Mill)

Country/Exchange Co./ Year 2006 2007 2008 2009 2010 2011

Janata Echange Co., Italy 1182.5 2077.1 3102.1 3513 2289.8 1446.8

Janata Bank, UAE Branches 5196 5638 5666.7 9188.3 12548.8 16207.7

Other Exchange Co. 2143.5 2279.5 2901.7 4714 6878.2 8738.1

Kuwait 3468.6 4089.3 5652.6 7615.9 7780.1 6764.3

Saudi Arabia 4057.9 3762.7 3598.3 3025.2 4536 7718.2

Oman 1129.8 1095.6 1106.2 1171 1341.6 1038.7

Bahrain 785.2 817.4 853.2 834.5 916.7 716.1

Greece 0 0 537.9 697.9 591.5 524.5

UK 0 0 0 0 2213.3 6174.9

Qatar 196.1 190.8 149.2 173.6 200.6 118.9

United States 26.9 29.2 132.8 153.6 222.3 285.7

Malaysia 1139.3 623.9 264.2 208.7 113.2 23.9

Singapore 0.2 0.4 5.3 0.7 20.2 98.1

Korea 0 23.2 2.5 0 0 0

Canada 166.7 0 6.6 7.2 0 0

Australia 14.4 0 0 0 0 0

Other sources (SWIFT/Telex) 4556.4 5945.7 5288 5484.4 6272.1 6334.2

Grand Total 24063.5 26572.8 29267.3 36788 45924.4 56190.1

Table: Country wise Foreign Remittance of JBL from 2006 to 2011

Figure: Country wise Foreign Remittance of JBL from 2006 to 2007

1


Inward remittance from Bangladeshi nationals working abroad continued

to play an important role in strengthening the current account. Receipts on

this sector increased gradually in every year from 2006 to 2009. The

underlying reason was that Bangladesh Bank has simplified the approval

policy of drawing arrangements between foreign exchange houses and

domestic bank. Janata Bank’s management has taken this opportunity.

For quick payment of TTs issued by 4(Four) UAE branches of Janata Bank

Limited ( Abu Dhabi, Al-Ain, Dubai & Sharjah branch) Foreign Exchange

Corporate Branch, Dhaka( FECB, Dhaka), Laldighi East Corporate Branch,

Chittagong(LDE, Ctg), Foreign Exchange Corporate Branch, Sylhet( FECB,

Sylhet), Khulna Corporate Branch, Khulna, Barisal Corporate Branch,

Barisal & Rajshahi Corporate Branch, Rajshahi are nominated. To facilities

to its remitters Janata bank Limited has started-

1. FECB, Dhaka will cover whole Dhaka Division,

2. LDE, Ctg will cover whole Chittagong Division, except branches under

greater Comilla and Noakhali Area.

2006 2007 2008 2009 2010 2011

1


3. FECB, Sylhet will cover whole Sylhet Division,

4. Khulna Corporate will cover whole Khulna Division,

5. Barisal Corporate will cover whole Barisal Division,

6. Rajshahi Corporate will cover whole Rajshahi Division,

7. Comilla Corp. will cover all branches under greater Comilla district.

8. Noakhali Corp. will cover all branches under greater Noakhali district.

Commission for issuance of Taka Drafts from our UAE branches has been

reduced and refixed from AED 10.00 to AED 4.00 and commission for

issuance of TTs drawn on Bangladesh and payable at any bank branches

are re-fixed at AED 12.00 from AED 30.00.

Commission for issuances of Taka drafts at UAE branches has been

reduced irrespective of amount. 1% interest above the normal savings

deposit rate is offered to SB accounts receiving foreign remittance.

4.3.2 Wage Earners' Remittances of Nation

Inward remittances from Bangladeshi nationals working abroad continued to play an important role in strengthening the current account of Bangladesh Bank. Receipts on this sector increased by 22.4 percent to USD 9689.3 million in FY 09 from USD 7914.8 million in FY 08. The underlying reason was that Bangladesh Bank has simplified the approval policy of drawing arrangements between foreign exchange houses and domestic banks. As a result 40 banks have been allowed for establishing 820 drawing arrangements with 208 exchange houses all over the world for collecting remittances. Due to these measures, remittances have recorded a substantial increase by 22.4 percent to USD 9689.3 million during the year 2009. Remittances as percentage of GDP increased by 089 percentage points to 10.84 in FY 09 from 9.95 in FY 2008. The shares of major source countries in the remittance receipts of FY 2008 and FY 2009 are given bellow.

1


Country Percentage

Kingdom of Saudiarabia 29.40%

UAE 14.30%

UK 11.30%

Kuwait 10.90%

USA 17.50%

Other countries 16.60%

Total 100.00%

Table: Wage earners' remittances 2008 20082008 2008

Figure: Wage earners' remittances 2011 20082008 2008

1


Country Percentage

Kingdom of Saudiarabia 29.50%

UAE 18.10%

UK 8.20%

Kuwait 10.00%

USA 16.30%

Other countries 17.90%

Total 100.00%

This is the whole scenery of inward foreign remittance of 2010 and 2011 of Bangladesh. In the sector of foreign remittance earning 2008 Kingdom of Saudiarabia in highest position that is 29.40%, USA second position- 17.50% and United Arab Emirates is third position 14.30%. And in 2009 Kingdom of Saudiarabia again top position, in second position United Arab Emirates and in third position USA. Their inward remittances are 29.50%, 18.10% and 16.30% respectively.

Table: Wage earners' remittances 2011 20082008 2008

Figure: Wage earners' remittances 2011 20082008 2008

1


4.3.3 Foreign Exchange and Foreign Trade of JB

Year 2008 2009 2010 2011

Import 128809 84065 129413 118525

Export 70897 71855 85418 88653

Remittance 29267 36788 45924 56190

Export and foreign remittance are in good position. They are in increasing

trend from 2006 to 2009. And due to global economic crisis and for

various trade barriers and quotas import does not grow much higher

compare with export and foreign remittance. In 2007 export and import

are comparatively low with other years due to political instability inside

the country. But inward remittance is continuously upward trend up to

2009.

Table: Foreign Exchange and Foreign Trade of JB Trade

Figure: Foreign Exchange and Foreign Trade of JB

Trade of JB 20082008 2008

2008 2009 2010 2011

1


4.3.4 Problem of Foreign Exchange in Bangladesh

As a developing country, here there is a great opportunity to expand a business easily. Human resources cost are also cheap. On the other hand people have strong faith to the banking sector. But this sector is not free from problems. Some challenges of the banking sector are:

1. Global economic crisis due to the financial meltdown in USA and

Europe.

2. Withdrawal of restriction on China for RMG export to Europe and

USA in 2009.

3. Export volume has dropped due to lack of global demand.

4. Lack of diversification, especially for export sector.

5. Very high dependency on Textile and RMG Sectors to export.

6. In case of import prices of commodities and raw materials in

international market.

7. Slow recycling of investment of commodity in commercial sectors.

8. Low level of project Finance in 2009.2010 &2011 due to the

national political instability.

1

Chapter FIVE

CONCLUSION


1


It is clear that the Janata Bank Limited Foreign Exchange department has

ensured both quality and services which helps to improve the overall

status of the Bank. For this reason Janata bank Limited has able to achieve

second position in country and top position among public banks in export

sector in 2009. However the branch may have scope to improve in a few

areas. Such as-

01. The number of exporter and importer who operate through this bank

is not enough to achieve the goal. So JBL should offer more facilities to

attract their clients.

02. In addition with the present services they should include more

services. It is badly needed to provide more quality services to their clients

in order to compete in the market.

03. Foreign exchange department should be fully computerized that the

exchange process would be convenient for both the bankers and the

clients.

05. Bank should offer more facilities to the customers such as debit card,

credit card, ATM machine etc. to survive in the competition.

06. One of the business strategies is promotion. Successful business

depends how they can promote their products or services to the

customers. In this connection to improve the business status the JBL

should introduce more promotional programs.

Lastly it can say that there are a lot of opportunities for increasing foreign

exchange in Bangladesh if stay political stability. The Human Resources

are cheapest here which play an important role in any business.

Bangladesh government should take proper steps to maintain congenial

atmosphere for sustainable foreign exchange business in the country.

1


Bibliography

1. Annual Report of Janata Bank Limited from 2008 to 20011

2. Annual Report of Bangladesh Bank .

3. Annual Meeting Report of JBL 2010.

4. Different hardcopy and soft copy provided by respective

departments of JBL.

5. Websites of JBL: www.janatabankltd.bd.

6. Different mouth references of JBL’s executives of respective

departments.

http://www.janatabankltd.bd/

main report

Documents

united arab emirates

political instability inside

foreign exchange management

ready made garments

janata bank limited1

janata bank limited

foreign exchange department

foreign exchange houses