mouri internship report( final)

8/7/2019 mouri internship report( final)

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Todays

Todays world is a business world. Business is the main force to the economic development ofany nation. So students are willing to study BBA to learn the rules and tactics of competitive

business world. After the theoretical courses, students are sent to internship program, the aim of

internship program is to make oneself familiar to the business practice and to make theoretical

knowledge effective by comparing it to the practical field. As part of practical orientation

program, Internship is offered.

Foreign Trade is one of the most important segments of Bank Business. With the changes of time

international trade is diversifying gradually, so it is important to know about the policy, rules,

regulation and changing mechanism of foreign exchange. To gain in depth knowledge about

foreign exchange, the topicForeign Exchange Mechanism- A study of Bank Asia has been

chosen.

1.2Origin f the study

With the real practical world, Internship is highly required to gain idea, knowledge and

experience and accustomed with corporate world.

In todays world only academic education does not make a student perfect to become

competitive r completing my BBA course in independent university Bangladesh, I was sent to

Bank Asia to gain practical knowledge and experience of modern banking system. I was also

assign to make a report to) on the experience that I gain two months long internship in the

different departments of Agrabad branch of Bank Asia Limited

1.3 Scope of the study

I have tried to prepare the report in such a way that it reflects what I learn during the orientation

period. The study covers analyzing the variable, like different deposits, loans and advances,

Customer Services, Foreign exchange mechanism and Policies and their impact on the

profitability of it.

Foreign Exchange Mechanism- A study of Bank Asia Page 1

1.1 Introduction


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1.4 Objective

The objective of the report is to familiarize with the operation in the Banking section. To graspan idea about bank involvement in Foreign Exchange including import and arena including

Management overview of bank and analysis of banking operation in different export and credit

facilities provided by the bank in Foreign Trade. The main objectives are:

1. This internship report intends to cover a comprehensive analysis of banking activities of

Agrabad Branch of Bank Asia.

2. The report is aimed to understand the activities of foreign exchange department of bank Asia.

3. To evaluate the performance of bank Asia, including its lackings and areas of correction.

1.5 About bank Asia

Bank Asia Limited is a scheduled commercial bank in the private sector established under the

Banking Company Act 1991 and incorporated in Bangladesh as a public limited company under

the Companies Act 1994 to carry out banking business in Bangladesh.

Its network Bank Asia began its journey on the 27 th of November 1999 with the inauguration of

the banks Corporate Office at the Rings Brabant. The overwhelming public response has

enabled the Bank to keep up the plan of expanding

Its mission is to assist in bringing high quality service to our customers and to participate in the

growth and expansion of our national economy. Bank Asia's vision is to have a poverty free

Bangladesh in course of a generation in the new millennium, reflecting the national dream.



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1.5 Methodology

An exploratory research has been conducted in order to make the report more meaningful and

presentable. Data were collected from two sources. They are:

1. Primary data source

2. secondary data source

The primary sources:

Face to face conversation with the respective officers.

Practical work exposures from different desks.

Reverent file study as provided by the officers concerned.

In-depth study of selected cases

Interview with the Clients

Secondary data source:

The secondary data source includes Reports. Relevant books, Journals, Relevant booklets etc.

Research approach:

* Qualitative and quantitative approach has been adopted for data analysis and

interpretation taking the processed data as the base.

* Finally, that way, collected data are classified, tabulated, analyzed, interpreted and

presented in the form of research report.

1.6 Limitations of the study

There were some problems while I conducting the internship program. Those are:

One major limitation was the time constraint as every department has many activities.This report could have been prepared in a much broader and extensive manner with more

time and space availability.

For the lack of our practical knowledge, some shortcoming may be available in the paper.

The study also suffered from inadequacy of data provided by Bank Asia.

Some essential data could not be gathered because of confidentiality concerns.



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2.1 History:

Bank Asia began its journey on the 27th of November 1999 with the inauguration of the banks

Corporate Office at the Rangs Bhaban. The overwhelming public response has enabled the Bank

to keep up the plan of expanding its network. The opening of the Principal Office was the big

leap forward and successively the opening of Gulshan and Chittagong Branch expanded the

horizon of Bank Asia to bring its services to the valued clients more effectively.

Bank Asia has been launched by a group of successful entrepreneurs with recognized standing in

the society .The paid up capital of the bank is 1116million. The management of the bank consists

of team led by senior management team is ably supported but group of professional many of

whom have exposure in the international market.

In the year 2003, the bank came to limelight with over subscription of the initial public offering

of the shares of the bank, which was a record 55 times in our capital markets history and it shares

commands respectable premium.

2.2 Corporate Objectives

Bank Asias objectives are reflected in the following areas.

Highly personalized service.

Customer-driven focus.

Total commitment to quality.

Outstanding products.

Contribute in the economy

Quality of human resources

Commitment to its clients at each level


2. Company overview


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2.3 Vision of Bank Asia

Bank Asias vision is to have a poverty free Bangladesh in course of generation in the new

millennium, reflecting the national dream. Our vision is to build a society where human dignity

and human rights receive the highest consideration along with reduction of poverty.

2.4 Mission of Bank Asia

To assist in bringing high quality services to our customers and to participate in the

growth and expansion of our national economy.

To set high standards of integrity and bring total satisfaction to our clients, shareholders

and employees.

To become the most sought after bank in the county, rendering technology driven

innovative services by our dedicated team of professionals.



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2.5 Organizational Hierarchy of Bank Asia Ltd.


CHAIRMAN

VICE CHAIRMAN

MANAGING DIRECTOR

SENIOR EXECUTIVE VICE

PRESIDENT NAGING DIRECTOR

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

FIRST EXECUTIVE VICE PRESIDENT

SENIOR EXECUTIVE OFFICER

EXECUTIVE OFFICER

SENIOR OFFICER

OFFICER

MANAGEMENT TRAINEE OFFICER

JUNIER OFFICER

ASSISTANT OFFICER

BANKING OFFICER

TELLER


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2.6 MANAGEMENT HIRARCHY OF BANK ASIA LIMITED

AGRABAG BRANCH


SENIOR VICE -PRESIDENT &

MANAGER

SENIOR EXECUTIVE OFFICER

EXECUTIVE OFFICER

NAGING DIRECTORSENIOR OFFICER

OFFICER

ASSISTANT OFFICER

JUNIOUR OFFICER

BANKING OFFICER

TRAINEE OFFICER

TELLER


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2.7 Product and service of bankAsia

Mobile Banking

Customer and clients of bank Asia can access their bank account from mobile phone. Newmoderate technology is used to support this system. Currently the users of Aktel can only use

this facility.

ATM Service

Bank Asia customers have access to 57 ATMs as a member of Cash Link Bangladesh. It is now

setting up its own ATM network at every focused point in the city with a view of providing retail

banking services. Under the ATM network the Stellar Online Banking Software enables direct

linking of a client's accounts.

Credit card

Bank Asia offers credit card facilities which are acceptable throughout the country. Bank Asia

Credit Card is accepted more than 3,500 merchant outlets around the country. Our wide range of

merchants include hotels, restaurants, airlines, & travel agents, shopping malls and departmental

stores, hospitals & diagnostic centers, jewelers, electronics & computer shops, leather goods

mobiles & internet service providers, petrol pumps and many more.

Credit facilities

Bank Asia Credit Card offers free credit facility up-to 45 days & minimum 15 days without any

interest; you can also pay 8.33% of your billing amount or current dues every month and thus

have the flexibility to plan your payments.

Internet Banking

Bank Asia provides ATM service, SMS banking, and online banking service in the country

through Internet banking. All branches under online banking system will be able to do banking

practices using a common server (which is centralized) from where only the branches will be

able to enter using a common password.



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SMS banking

Though SMS facility you can access your account using your mobile phone from anywhere,

anytime at your convenience to know the account position.

Customized loan

One of the unique features of bank Asia is customized loan. Bank Asia introduced customized

loan for its valued customer according o customers convenience.

SME banking

Bank Asia offers different typed of SME loan for the entrepreneur of small and medium

enterprise. It offers different loans and schemes with different tenure and interest rates.

Customers can get loan according to their convenience.

2.8 Different schemes of bank Asia

Banking industry is now becoming more intense and competitive. Banking needs become more

diverse and exotic than ever before. For this reason Bank Asia introduce different schemes for its

customers. Modern Banking is a result of evolutions driven by changing economic activities and

lifestyles. Bank Asia Ltd. is a new entrant in the private banking scenario of Bangladesh with a

promise to fulfill every possible customer need with high efficiency and satisfaction. The

schemes include:

Deposit pension scheme

Bonus saving scheme

double benefit plus

Triple benefit plus

Monthly benefit plus

conversable loan

poverty alleviation



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3.1 Definition of Bank

Bank is the lifeblood of modern economy. It is an Establishment authorized by a government to

accept deposits, pay interest, clear checks, make loans, act as an intermediary in financial

transactions, and provide other financial services to its customers.

According to J.C. Wood Bank is the trader of money and loan.

According to H L. Hart An institution which accept the cheque, of the person from its

collected money in current account called bank.

A bank is an establishment which trades in money, an establishment from deposit, custody and

issue of money and also granting loan, discounting bills and fascinating transmission of

remittance from one place to another.

Imperial Dictionary:

Banks play very important role in the economic life of the nation. The health of the economy is

closely related to the soundness of its banking system. Although banks create no new wealth but

their borrowing, lending and related activities facilitate the process of production, distribution,

exchange and consumption of wealth.

3.2 Commercial bank

Commercial bank is an intermediary profit making organization.-prof. Ashutosh Nath

A commercial bank is a dealer of capital or more properly a dealer of money. He is the

intermediary party between the borrower and lender. He borrows from one party and lend to


3. Literature review


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another and the different between the terms at which he borrows and those at which he lends

from the source of his profit. -prof. Gilbert.

3.3 Foreign exchange

According to foreignExchange Regulation Act 1947, Anything that conveys a right to wealth

in another country is foreign exchange.

Methods and instruments used to adjust the payment of debts between two nations that employ

different currency systems. A nation's balance of payments has an important effect on the

exchange rate of its currency. Bills of exchange, drafts, checks, and telegraphic orders are theprincipal means of payment in international transactions. Foreign trade is one of the most

important segments of bank business. And bank plays an important role to regularize and to ease

the foreign trade. The bank which has authorized dealership (A.D) by Bangladesh bank only has

the right to do the foreign exchange business. As a modern bank, bank Asia also extended its

business arena to this sector

Almost countless thousands of separate import and export transactions occur every year, each

one creating a distinct debtor-creditor relationship. In its broader sense foreign commerceincludes much more than the ofgoods

- Book Title: Foreign Exchange Practice and Policy.

Contributors: Frank A. Southard Jr. - author, Philip F. Swart Jr. - author, A. N. Gentes -

author. Publisher: McGraw-Hill Book Company. Place of Publication: New York. Publication

Year: 1940. Page Number: 112.

3.4 Comparison between domestic and foreign trade

The domestic trader expects the money market to assist him in two ways: to provide the

instruments and the clearing facilities by which money payments may be transferred from buyer

to seller; and to provide credit if buyer or seller is unable or unwilling to "carry" the transaction



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until the goods are sold to the ultimate consumer. The foreign trader calls on the foreign

exchange market to perform the same two services, transfer and credit.

Ever-present difference between the functions of these two markets, of course, is to be found in

the fact that every foreign exchange transaction involves not only a transfer of funds from one

person to another and from one place to another but also from one currency to another. The

similarity of the services rendered by the two markets emphasizes the fact that the foreign

exchange market is simply a specialized section of the larger money market.

- Book Title: Foreign Exchange Practice and Policy. Contributors: Frank A. Southard

Jr. - author, Philip F. Swart Jr. - author, A. N. Gentes - author. Publisher: McGraw-Hill

Book Company. Place of Publication: New York. Publication Year: 1940.

3.5 History of foreign exchange

For trade between primitive communities in modern times was conducted mostly in the form of

barter, so that it did not involve foreign exchange transactions. Even though in many known

instances the goods employed by one community as a primitive currency were imported from, or

exported to, some other community, the latter must have regarded them simply as goods given or

accepted in exchange for other goods. There was, therefore, no exchange of the money of one

community against that of the other.

The first Foreign Exchange markets consisted of meeting-places of money-changers functioning

in commercial centers. They were familiar figures in market places and harbors in the Ancient

Middle East and Greece.

Progress in Foreign Exchange practice and in theoretical knowledge during the 16th and 17th

centuries was accompanied by comparable progress in the sphere of Foreign Exchange policy.

This was a consequence of the growing importance of Foreign Exchange in the national and

international economy, of the increasing familiarity with the technique and theory of the subject,

as well as of the growing realization of its importance by princes and their advisers.

-Book Title: The History of Foreign Exchange. Contributors: Paul Einzig - author.

Publisher: St. Martin's Press. Place of Publication: New York. Publication Year: 1962



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3.6 Foreign exchange market

The foreign exchange market is a worldwide decentralized over-the-counter financial market for

the trading of currencies. Financial centers around the world function as anchors of trading

between a wide range of different types of buyers and sellers around the clock, with the

exception of weekends. The foreign exchange market determines the relative values of different

currencies.

The Forex, and also known as "The Foreign Exchange" market exists wherever one currency is

traded for another. It's the largest financial market in the world. Simply if we compare the New

York Stock Exchange trades vs. changing hands in forex, we will discover Forex market is a lot

of times larger than both Equity and Treasury markets combined.

There is no central marketplace for currency exchange; trade is conducted over the counter. The

forex market is open 24 hours a day, five days a week and currencies are traded worldwide

among the major financial centers

The primary purpose of the foreign exchange is to assist international trade and investment, by

allowing businesses to convert one currency to another currency.

The purpose of foreign exchange market:

1. Foreign currency and financial instruments that can be used to make payments in foreign

countries.

2. The purchase or sale of foreign currencies.

- Book Title: Foreign Exchange Practice and Policy. Contributors: Frank A.

Southard Jr. - author, Philip F. Swart Jr. - author, A. N. Gentes



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4.1Customer service department

In service oriented organization, customer service department is very important because it deals

directly with customers. Customer service department is the service provider of the bank. Bank

Asia Agrabad has a separated department as customer service so that it can perform its

responsibilities correctly and efficiently. The customer service department has to carry a lot of

function such as:

4.1.1 Account opening task:

There are different types of account and deposit and the procedure for run these account is

sometimes different. There is Current account, savings account, short term deposit account, fixed

deposit etc. the mechanism of opening various account is also slightly different from one

another. For opening an account the bank requires:

Recent passport size photograph duly signed and attested by the introducer.

an account opening for provided by bank

National ID card/ certificate of chairman, Passport of the A/C holder.

Nominees photograph must be attested.

Account holder must have an introducer which should be a respectable person for the

bank


4. Finding and Analysis: OBJECTIVE ONE-Overview of overallbanking


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4.1.2 1Issue/payment

Customer service department have to perform various types of issue/ payment such as:

Issue or payment of demand draft, pay order, TT

Issuance of cherub book. Keeping cheque requisition form and custodian of cheque book.

Issuance of credit card, ATM card etc

Payment of corporate client salary

Stop payment of cheque as per instruction

4.1.3 Paper works

There are many paper works that should be done here. The submission of account statement

required by client, transaction profile statement and other office order and statement, which are

required by corporate office, Bangladesh bank and income tax department.

4.1.4 Balancing daily transaction

Customer service daily balance the demand draft pay order fixed deposit rate, monthly benefits

plus, double benefit plus, bank Asia Sanchaya plus blocks etc.

It also has to balance the payment of Inter branch cash transactions.

4.1.5 Providing information to the customer

An important job of customer service department is giving information about product and service

of the bank to the customer. This department gives information about different products with

mentioning its different mechanism and benefit of the product. And it also gives the proper

advice which one will be convenient and beneficent

4.2 Accounts department



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Account department is called as the nerve center of the bank. In banking business, many

transactions are everyday and these transactions are to be recorded properly and systematically

as the banks deal with the depositors money. Any deviation in proper recording may hamper

public confidence and the bank has to suffer a lot otherwise. Improper recording of transactions

will lead to the mismatch in the debit side and in the credit side.

4.2.1 Daily task of Accounts department

Preparing the daily statement of affairs showing all the assets and liability of the branch

as per.

Preparing the daily transaction of the branch

Making payment of all the expenses of the branch

Keeping and maintaining general ledger.

Daily cash position must match will computer entries and checking authorized signature.

Recording inter-branch fund transfer and providing accounting treatment in this regard.

Other day to day activities of Accounts department.

4.3Credit department

Credit department is the most sensitive side of a banks activity. It needs long procedure to take

decision about giving loans and advance. So the task of this department needs more attention and

efficiency. The making of loans and advances has always been prominent profitable function of

bank. Sanctioning credit to customers and others out of the funds at bank made in different

forms, such as, loans, overdrafts, Cash Credits, bills purchased and discounted etc.

4.3.1 Loan



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It is normally disbursed with or without security. There is no binding to obtain securities against

the loan. It is one time-disbursed loan. Customer cannot withdrawals the loan amount more than

one time after disbursement.

Type of Loan:

1. Personal Loan

2. Term Loan

3. Demand loan

4. Consumer durable Loan

5. Unsecured personal Loan

6. Staff loan

7. Shachyando

8. Continuous loan

4.3.2 Description of these loans

Personal Credit: This credit is given to customer for personal purpose. Such as Home loan,

Marriage loan, Car loan, land purchase loan etc. most of the time this are secured by collateral

Term Loan: A specific term is given this is below five years and above 5 years.

Demand Loan: There are many types of Demand loan .Such as

Loan against trust receipt

Pecking Credit

Foreign document bill purchase

Foreign document bill collection

Payment against Document

Continuous loan: In the continuous loan, borrower can withdraw any amount of loan within a

specific limit. The limit is usually 90% f the collateral there are many types of continuous loan

.such as:

Overdraft



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Secured Overdraft

Overdraft: Another name of overdraft is Cash credit (CC). Under this system, the banker

specifies a limit called the cash credit limit, for each customer, up to which the customer

permitted to borrow against the security of tangible assets or guarantees.

Secured overdraft: This is a special type S.O.D. If any client needs emergency money for a

short period of time he can takes S.O.D. general opportunity. But the client must be solvent,

faithful, reliable and familiar with the Bank to get S.O.D.

There is also SOD against F.D.R. before maturity if the depositor wants to without his F.D.R.

amount due to financial problem, he can get loan against F.D.R. up to 90% of the value of F.D.R.

4.4.3.3 T3.3 THEHE AAPPLICATIONPPLICATION FFORMORM (R(REQUESTEQUEST FFOROR CCREDITREDIT LLIMITIMIT) CONTAINS) CONTAINS

FOLLOWING PFOLLOWING PARTICULARSARTICULARS

Name of the borrower

A/C number

Business address

Residential address

Permanent Address

Introducers name, A/C no.

Letter of enlistment/Incorporation

Trade License/Issue date,

TIN Certificate

Constitution Status- Sole Proprietorship/partnership/ company, mutual fund etc

Full particulars of assets

Detailed nature of business

Detailed cause of loan required.

4.3.4 CIB



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It means Credit Information Bureau. After receiving the loan application form the bank sends a

letter to Bangladesh bank for obtain a report from there. This report is called CIB. This report is

very essential if the loan amount exceeds the proposed amount by the Bangladesh bank above

1.00 cores and above. If it the loan amount is above the amount then it will be reported to

Bangladesh bank to every quarter end.

4.3.5 Procedure of Giving Loan

The customer at the branches of the bank place credit proposals. When a customer comes with a

credit proposal, the Credit Department of the branch makes an open discussion with the customer

on different issues of the proposal to judge the worthiness of the proposal and the customer. If

the proposal seems to be worthwhile in all respects then the proposal is placed to the Zonal office

or head office.

Chapter 5. OBJECTIVE TWO: Foreign exchange Mechanism

5.1 Introduction

Foreign Trade is one of the most important segments of Bank Business. With the changes of time

international trade is diversifying gradually. Modern banks are playing significant role in foreign

trade. Foreign trade comprises of Import & Export business. Foreign Exchange is that section of

economic science which deals with the means and method by which right to wealth in one

countrys currency are converted into rights to wealth in terms of another countrys currency

Foreign exchange dealing is one of the main functions of the bank and it generates a significant

portions a banks income.

5.2 Definition

The term foreign exchange has different connotations in different contexts. Sometimes it refers

to the transaction of one country to another, sometimes is referred to as the process of conversion

of one currency into another. In Bangladesh it has a legal definition too. in terms of section 2(d)

of the F.E.R Act,1947, as adapted in Bangladesh, 'foreign exchange' means foreign currency and



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includes instruments expressed in foreign exchange , all deposits credits, and balances payable in

foreign currency as well as foreign currency instruments such as draft, tt, bills of exchange,

promissory note and letter of credit payable in any foreign currency.

5.3 Necessity of foreign exchange

The science of economy stands on two problems, one is limited resource and another is unlimited

needs. No people in this world are self sufficient, and also no country in this world is self-

sufficient. There is no country that has all types of resource such as land, labour, capital, money

etc. So no country can produce all types of good and service which is necessary to survival for

human. So everyone is more or less dependent on another, for goods or services. Foreign

exchange department plays significant roles through providing different services for thecustomer. Facilitating the trade with foreign country is the most important among those services

the key instrument which facilitates this trade is L/C (Letter of Credit).


BUYER/

IMPORTER

SELLER/

EXPORTER/

BENEFICIARY

ISSUING BANK

L/C OPENNING BANK

ADVISING BANK

CONFIRMING BANK

NEGOTIATING

BANK

PAYING / REIMBURSING BANK

INDENTOR

Issuing L/C

Forwards Documents

Makes

payment

Sales/ purchase Contract

MakesPayment

Presentdocum

ents

PayorReimbu

rses

InstructstopayorReimburse

Applicationf o

ropening

L/C

MakesPaymentagainst

documents

Submitsdocuments

AdvisesorconfirmsL/C


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5.4 Figure: Mechanism of foreign exchange

5.5 Activities of foreign exchange

There are three kinds of foreign exchange transactions:

Import

Export

Remittance

5.6 Objective of Foreign exchange

The main objective of foreign exchange department is to maintain international trade and

regulate international business.

To settle the transaction of business related to import and export.

To make the foreign investment more safe and trustworthy.

To enhance the foreign investment.



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To help the people to remit money who are working in abroad or the foreigner who are

working in the home country.

To help the own people in abroad to send their money.

To contribute the countrys prosperity by making the foreign transaction more fast, easy,

reliable.

5.7 Functions of Foreign exchange Department of Bank Asia Ltd.

L/C opening

Sanctioning PAD, LIM, LTR, Packing Credit

Foreign Currency Remitting

Foreign document Bill Purchase Foreign document bill collection

Local document Bill Purchase

Local document bill collection

Foreign Currency Account Maintaining

5.8 Foreign trade and foreign Exchange

Foreign trade refers to trade between the residents of two different countries. Each country

functions as a sovereign state with its of regulations and currency. The difference in the national

of the exporter and the importer presents certain peculiar problems in the conduct of international

trade and settlement of the transactions arising there from.

Important among such problems are:

a) Different countries have different monetary units.

b) Restrictions imposed by countries on import and export of goods.

c) Restrictions imposed by nations on payment from and into their countries.

d) Differences in legal practices in different countries.

5.9 Local regulation of Foreign Exchange



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In Bangladesh foreign exchange transactions are being controlled by the some local rules. These

are:

Foreign exchange regulation act 1947.

Bangladesh Bank issues Foreign exchange circular from time to time to control the

export, import and remittance business.

Ministries of commerce issues export and import policy giving basic formalities for

import and export business.

Sometimes CCI and E issues public notice for any kind of change in foreign exchange

transaction

Bangladesh bank published two volumes in 1996. This is compilation of the instruction to

be followed by the authorised dealers in transitions relation to foreign exchange.

5.10 International Regulation for foreign exchange

There are some international organizations influencing our foreign exchange transactions. These

are:

International chamber of commerce (ICC) is a worldwide non-governmental organization

of thousands of companies. It was founded in 1919. ICC has issued some publications

like UCPDC, URC, and URR etc, which are being followed by all the member countries.

There is also an international court of arbitration to solve the international business

disputes.

World trade Organization (WTO) is another international trade organization establishedin 1995.

General agreement on Tariff and Trade (GATT) was established in 1948, after

completion of its 8th round the origination has been abolished and replaced by WTO.

This organization has role in international trade, through its 124 member countries.



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5.11 Import Mechanism

Imports are foreign goods and services purchased by consumers, firms, & Governments in

Bangladesh. Government is sincerely committed to fostering a gradual development of free

market economy in the light of GATT agreement. In the interest of export promotion &

investment in the country it is necessary to have a long term, stable, facultative & liberal Import

Policy.

5.11.1 Objectives of the Import Policy

(a) To make the Import Policy Compatible with the changes in the world market that have

occurred as a result of the introduction of market economy and signing of the GATT

Agreement;

(b) To simplify the procedures for import of capital machinery and industrial raw materials with

a view to promoting export, and

(c) To ensure growth of the indigenous industry and availability of high quality goods to the

consumers at a reasonable price.

3. Achievement of the aforesaid objectives will depend on the help and cooperation of other

relevant Ministries, Divisions of the Government and the Trade Organizations in the private

Sector.

5.11.2 Regulation of Import

Import of goods under this Order shall be regulated as under

(a) Banned list: Unless otherwise specified, items included in this list cannot be imported. List

of import banned items has been attached in annexure - I;



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(b) Restricted list: Any item included in this list shall be importable only on fulfillment of the

conditions (b) specified there in against the item. The list of restricted items has been attached

in annexure - I (b);

(c) Freely Importable Items: Unless otherwise specified, any item, which does not appear either

in banned or in restricted list shall be freely importable;

(d) In addition to the conditions mentioned in the Restricted and Banned Lists, the conditions,

restrictions and procedures for import of various items mentioned in the text portion of this

order, shall as usual apply in case of import of those items;

(e) If, while determining the import status of an item mentioned in the Restricted and Banned

Lists, the description of goods does not conform to the H. S. code mentioned against the item

or any discrepancy arises between the H. S. Code and the description of goods in that case the

description of good shall prevail;

(f) Conditions of Ban and Restriction: If the import of an item had been banned at any time

before the coming into effect of this Order or if such ban has been made effective by virtue of

the placement of the item in the control list annexed to this Order such (I) The concerned

sponsoring authority/Tariff commission shall strictly monitor production of the industrial unit

which is being afforded protection by the ban. The ban may be revoked on the recommendation

of the concerned sponsoring authority/Tariff Commission if the quality of products deteriorates

and the price of the product is not maintained at satisfactory level or if production level fails

leaving unutilized capacity. Such of the protected units as are now primarily engaged in

assembly type activities shall actively and expeditiously move towards progressive

manufacture.

(ii) The sponsoring authority concerned and Tariff Commission shall continuously monitor the

prices of the items covered by such ban to guard against undue increase of price. If the price of

any item is increased except for factors like rise in the price of raw materials or decline in the

rate of exchange or if the increase in the price of the item is disproportionately higher compared

to the rise in the price of the raw material, the ban may be revoked on the recommendation of

Tariff Commission/sponsoring authority.



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(iii) Whoever feels aggrieved by any decision regarding ban or restriction on import of any

item can represent his case to the Tariff Commission. The Tariff Commission will duly

examine such a representation and furnish as early as possible its recommendation.

5.11.3 Steps of import business

Import business includes several steps:

1. Procuring import bulletin

2. Enquiry of information

3. Placing order

4. Procuring foreign Exchange.

5. Opening letter of credit

6. Fixation of the rate of foreign exchange

7. Receiving advice of shipment

8. Receiving bills, payment and collecting documents

9. Observing formalities regarding tariff

10. Delivery of goods from ship.

To import through BA, a customer requires-

(i) Bank account

(ii) Import Registration Certificate (IRC)

(iii) Tax Paying Identification Number

(iv) Performa Invoice Indent

(v) Membership Certificate

(vi) LCA (Letter of Credit Authorization) form duly attested

(vii) One set of IMP Form

(viii) Insurance Cover note with money receipt

Other import procedure can be shown by the following flow chart



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5.11.4 Letter of credit

5.11.4.1 Definition

Letters of credit are often used in international transactions to ensure that payment will be

received. Due to the nature of international dealings including factors such as distance, differing

laws in each country and difficulty in knowing each party personally, the use of letters of credit

has become a very important aspect of international trade. The bank also acts on behalf of the

buyer (holder of letter of credit) by ensuring that the supplier will not be paid until the bank

receives a confirmation that the goods have been shipped.

A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and

for the correct amount. In the event that the buyer is unable to make payment on the purchase,

the bank will be required to cover the full or remaining amount of the purchase.

Any arrangement, however named or described, whereby a bank (the issuing bank), acting at

the request and on the instructions of a customer (the Applicant).

Is to make a payment to or to the order of a third party (the beneficiary), or is toaccept and pay bills of exchange (Drafts) drawn by the Beneficiary, or

Authorizes another bank to effect such payment, or to accept and pay such bills of

exchange (Drafts)

Authorizes another bank to negotiate, against stipulated document(s), provided

That the terms and conditions are compiled with.

5.11.4.2 Parties involved in Letter of credit

1. The applicant: The applicant is the party who approaches a bank in order to issue the letter of

credit. Generally, the applicant is an importer who reaches an agreement with the exporter before

approaching the bank to issue the letter of credit. The applicant is also normally obligated to

reimburse the issuing bank for any payments made under the letter of credit.



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2. Issuing Bank is the bank which opens / issues an L/C on behalf of the importer. It is also

called the importers / buyers bank.

3. Exporter/Beneficiary: beneficiary is the party in whose favor the L / C is advised to the

exporter. It is bank situated in the exporting country and it may be branch of the opening bank or

a correspondent bank.

4. Confirming bank: The confirming bank confirms that the issuing bank has issued a letter of

credit. The confirming bank becomes directly obligated on the credit to the extent of its

confirmation and by confirming, it acquires the rights and obligations of an issuer. Confirming

Bank is a bank, which adds its confirmation to the credit, and it is done at the request of the

issuing bank. The confirming bank may or may not be the advising bank.

5. Advising bank: The correspondent bank in the beneficiarys country to which the issuing

bank sends the letter of credit is commonly referred to as the advising bank.

6. Negotiating Bank:The bank that agrees to examine the documents under the letter of credit

and pay the called the beneficiary is negotiating bank. It negotiates the bill and pays the amount

to the beneficiary. It has to carefully scrutinize the documentary credit before negotiation in

order to see whether the documents apparently are in order or not. The advising bank and the

negotiating bank may not or may not be one and the same. Sometimes it can also be the

confirming bank.

7. Reimbursing bank: The bank nominated by the issuing bank to provide reimbursement to

the negotiating bank or the payee bank is referred to as the reimbursing bank.

5.11.4.3 The L/C Application for import:

To open a L/C the application must submit an application to the bank's printed format called L/C

application form. The application form must be completed and filled in and signed by theauthorised person of the importer giving the following details.

Full name and address of the importer and exporter

L/C value for USD, which must not exceed the LCA value

Brief description of the goods with its unit price, quantity, quality etc



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Origin of the goods, port of destination, port of loading etc

Mode of advising L/C

Opening of L/C under UCPDC published no 500 ICC revision 1993

LCA number Mode of shipment

insurance cover note

Whether shipment/Transhipment allowed

Last date of shipment and negotiation

Special instruction if any

5.11.4.4 Documents needed for L/C

Forwarding

Forwarding is the letter given by the advising bank to the issuing bank. Several copies are sent to

the issuing bank. All copies including original should be kept in the bank.

Bill of exchange

According to the section 05, Negotiable Instruments (NI) Act-1881, A bill of exchange is an

instrument in writing containing an unconditional order signed by the maker, directing a certain

person to pay [on demand or at fixed or determinable future time] a certain sum of money only to

or to the order of a certain person or to the bearer of the instrument. It may be either at sight or

certain day sight. At sight means making payment whenever documents will reach in the issuing

bank.

Invoice

An invoice or bill is a commercial document issued by a seller to the buyer, indicating the

products, quantities, and agreed prices for products or services the seller has provided the buyer.

An invoice indicates the buyer must pay the seller, according to the payment terms. The buyer

has a maximum amount of days to pay these goods and are sometimes offered a discount if paid

before. Invoice is the price list along with quantities. Several copies of invoice are given. Two



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copies should be given to the client and the other copies should be kept in the bank. If there is

only one copy, then its photocopy should be kept in the bank and the original copy should be

given to the client. If any original invoice contains the customs seal, then it cannot be given to

the client.

Packing List

Packing list is the letter describing the number of packets and there size. If there are several

copies, then two copies should be given to the client and the remaining should be kept in the

bank. But if there is only one copy, then the photocopy should be kept in the bank and the

original copy should be given to the client.

Bill of lading

A bill of lading is a type of document that is used to acknowledge the receipt of a shipment of

goods. A transportation company or carrier issues this document to a shipper. In addition to

acknowledging the receipt of goods, a bill of lading indicates the particular vessel on which the

goods have been placed, their intended destination, and the terms for transporting the shipment to

its final destination.

Certificate of Origin

A Certificate of Origin is a document used in international trade. It traditionally states from what

country the shipped goods originate, but "originate" in a CO does not mean the country the

goods are shipped from, but the country where their goods are actually made. One copy of the

certificate of origin should be given to the client and the remaining copy should be kept in the

bank. But if there is only one copy, then the photocopy should be kept in the bank and the

original should be given to the client.

NICO-Terms

Inco-Terms simply mean International Commercial Terms. These are also known as Contract

Terms or Trade Terms or Delivery Terms or Sales Terms or Purchase Terms. These are used in

the field of international trade or foreign trade.



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Nostro account

Foreign exchange account maintained by a non-local (correspondent) bank with a local bank in

local currency. For the local bank it is a vostro account. Nostro accounts are usually in the

currency of the foreign country. This allows for easy cash management because currency doesn't

need to be converted. All foreign exchange transactions are routed through nostro accounts.

Nostro Account means 'our account with you'.

Vostro account

Local currency account maintained by a local bank for a foreign (correspondent) bank. For theforeign bank it is a nostro account. Current Accounts of foreign banks with their correspondents

in the latters currency is called Vostro Accounts. Vostro account means 'your account with us'.

Loro Account

An account serviced by a bank on behalf of an account owner bank. Loro Accounts are current

accounts which the banks maintain with banks abroad on behalf of their clients. Loro Accounts

means 'their account with you'.

Swift technology

Swift Technologies is a leading business and technology consulting firm that enables companies

to achieve world-class business performance. Swift Technologists services are designed to

generate increased efficiency and business value in key functional areas such as finance, human

resources, information technology, supply chain management, and CRM.



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Chart: Processing of Letter of Credit

5.11.4.5 Process of Letter of Credit

Applicant approaches Issuing/ Opening Bank with LC application form duly filled and requests

Issuing Bank to issue a Letter of Credit in favor of Beneficiary.

1. Issuing Bank issues a Letter of Credit as per the application submitted by an Applicant

and send it to the Advising Bank, which is located in Beneficiarys country, to formally

advise the LC to the beneficiary.

2. Advising Bank advises the LC to the Beneficiary.

3. Once Beneficiary receives the LC and if it suits his/ her requirements, he/ she prepare the

goods and hands over them to the carrier for dispatching to the Applicant.

4. He/ She then hands over the documents along with the Transport Document as per LC to

the Negotiating Bank to be forwarded to the Issuing Bank.



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5. Issuing Bank reimburses the Negotiating Bank with the amount of the LC post

Negotiating Banks confirmation that they have negotiated the documents in strict

conformity of the LC terms. Negotiating Bank makes the payment to the Beneficiary.

6. Simultaneously, the Negotiating Bank forwards the documents to the Issuing Bank to be

released to the Applicant to claim the goods from the carrier.

7. Applicant reimburses the Issuing Bank for the amount, which it had paid to the

Negotiating Bank.

8. Issuing Bank releases all documents along with the titled Transport Documents to the

Applicant.

5.11.4.6 Types of Letter of credit

Documentary credit may be two types:

1. Revocable

2. Irrevocable

Revocable Letter of credit:

Revocable Letter of Credit means the payment against this L/C can be revoked by the issuing

bank. The buyer may either amend the Letter of Credit or cancel it without the approval of the

seller. The payment against Revocable Letter of Credit is not for sure and hence this type of

Letter of Credit is not commonly used. The Seller has meager chances to get loan against

Revocable Letter of Credit.

Irrevocable Letter of Credit:

Irrevocable Letter of Credit cannot be cancelled. This seller is assured of payment for his supply

of goods/services provided all terms and conditions of L/C are conformed to. This mode of

payment is generally used in international trade transactions. As the payment against this

Irrevocable Letter of Credit is guaranteed by the issuing bank and the holder of this Irrevocable

Letter of Credit (seller) can borrow short term finance from any other bank or lending institution

at a very low rate of interest and within a very short time.

Other types of Documentary credit:



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1) Revolving Letter of Credit

2) Transferable credit

3) Back to back credit

4) Anticipatory credit:

5) Red clause

Revolving Letter of Credit

Revolving Letter of Credit is used when the delivery of goods is in form of partial/ multiple

shipments. Revolving Letter of Credit keeps on revolving and is not restricted to a single

transaction. Revolving Letter of Credit (LC) can be utilized for subsequent business transactions

over a period of time on a continuous basis to the extent of limit sanctioned.

Transferable Letter of credit

A transferable documentary credit is a type of credit under which the first beneficiary which is

usually a middleman may request the nominated bank to transfer credit in whole or in part to the

second beneficiary.

The L/C does state clearly mentions the margins of the first beneficiary and unless it is specified

the L/C cannot be treated as transferable. It can only be used when the company is selling the

product of a third party and the proper care has to be taken about the exit policy for the money

transactions that take place.

This type of L/C is used in the companies that act as a middle man during the transaction but

dont have large limit. In the transferable L/C there is a right to substitute the invoice and the

whole value can be transferred to a second beneficiary.

The first beneficiary or middleman has rights to change the following terms and conditions of the

letter of credit:

Reduce the amount of the credit.

Reduce unit price if it is stated

Make shorter the expiry date of the letter of credit.

Make shorter the last date for presentation of documents.

Make shorter the period for shipment of goods.



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Increase the amount of the cover or percentage for which insurance cover must be

effected.

Substitute the name of the applicant (the middleman) for that of the first beneficiary (the

buyer).

Back to back letter of Credit

Back to Back Letter of Credit is also termed as Countervailing Credit. A credit is known as back

to back credit when an L/C is opened with security of another L/C.

A back to back credit which can also be referred as credit and counter credit is actually a method

of financing both sides of a transaction in which a middleman buys goods from one customer and

sells them to another.

The parties to a Back to Back Letter of Credit are:

1. The buyer and his bank as the issuer of the original Letter of Credit

2. The seller/manufacturer and his bank

3. The manufacturer's subcontractor and his bank

The practical use of this Credit is seen when L/C is opened by the ultimate buyer in favor of aparticular beneficiary, who may not be the actual supplier/ manufacturer offering the main credit

with near identical terms in favor as security and will be able to obtain reimbursement by

presenting the documents received under back to back credit under the main L/C.

The need for such credits arises mainly when:

1. The ultimate buyer not ready for a transferable credit

2. The Beneficiary does not want to disclose the source of supply to the openers.

3. The manufacturer demands on payment against documents for goods but the beneficiary

of credit is short of the funds

Red clause



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A documentary credit is to enable the beneficiary to obtain pre-shipment advances from the

advising or confirming bank, at the expense of the beneficiary, but under the responsibility of the

issuing bank. This red clause is so termed because it is usually printed in red on the credit to

draw attention to this special feature of the credit terms.

Risks involved in Letter of Credit.

1. Since all the parties involved in Letter of Credit deal with the documents and not with the

goods, the risk of Beneficiary not shipping goods as mentioned in the LC is still persists.

2. The Letter of Credit as a payment method is costlier than other methods of payment such

as Open Account or Collection

3. The Beneficiarys documents must comply with the terms and conditions of the Letter of

Credit for Issuing Bank to make the payment.

4. The Beneficiary is exposed to the Commercial risk on Issuing Bank, Political risk on the

Issuing Banks country and Foreign Exchange Risk in case of Letter of Credits.

4.11.5 Post shipment finance

The finance extended after arrival of the goods is termed as Post-Import finance, which may

be in the form of

Loan against Imported Merchandise (LIM)

Cash Credit (CC) &

Loan against Trust Receipt (LTR).

5.11.5.1 Loan against import merchandise



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Loan against Imported Merchandise (LIM) is connected with import facilities. There is an

arrangement with the importer the commercial bank will provide finance against imported

merchandise with usual margin. As per pre-arrangement or under forced situation when the client

is unable torture the LC documents, bank then clear the imported goods from the customs and

store it in banks warehouse. LIM is given for maximum 60days within which customer has to

adjust liability and take delivery of the imported goods from the banks custody.

The sets of documents usually obtained are:

DP Note

Letter of Arrangement

Letter of disbursement

Letter of pledge

Insurance policy covers.

5.11.5.2 Loan against trust receipt

This is a loan against a Trust Receipt provided to the client when the documents covering an

import shipment are given without payment. Under this system, the client will hold the goods of

their sale proceeds in trust for the bank, until the loan allowed against the Trust Receipt is fully

paid. In the trust receipt the importer specifies the goods and agrees that he is holding the goods

not as their owner but as an agent for the bank. Thus, the bank continues to have the rights of the

pledge. This type of facility is given to creditworthy and selective customer. It is allowed for a

period of 30 days to 90 days. In addition to the Trust Receipt the following documents are also to

be obtained

DP Note

Letter of Arrangement



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Letter of Disbursement

Import letter of Credit (L/C) limit - on DP/DA basis.

Inland L/C limits - on DP/DA basis

Loan against merchandises (Pledge).

Trust Receipt facility.

Revolving inland L/C including back to back L/Cs / Transferable L/Cs.

5.11.5.3 Payment against Document (PAD)

PAD Loan is created upon Lodgment of import documents. This Loan is created for 21 days -the

time being the tolerance for taking documents for the importer. If after 21 days the documents

are not taken by the importer, the Bank may sell the imported goods to recover the given amount.

5.12 Export Mechanism

5.12.1 Definition

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. Export brings the foreign

currency in the economy. Higher the export is higher the reserve of foreign currency. The export

section of bank Asia is engaged with various export-related activities for the encouraging the

exporter. The major function of this section is comprises with purchase, collection and negotiate

the export bill, provide the exporter in export financing and helps the exporter in different issues.

5.12.2 Objectives

The principal objectives of this policy are:



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To achieve optimum national growth through increase of export in regional and

international market

To narrow down the gap between the country's export earning and import

payment through achievement of the export targets

To undertake timely steps for production of exportable goods at a competitive

price with a view to exporting and strengthening existing export markets and

making dent in new markets

To take the highest advantage of entering into the post Uruguay liberalized and

globalizes international market

To make our exportable items more attractive to the market through product

diversification and quality improvement

To establish backward linkage industries and services with a view to using more

indigenous raw materials, expand the product base and identify and export higher

value added products

To simplify export procedures and to rationalize and solidify export incentives

To develop and expand infrastructure

To develop trained human resources in the export sector

To raise the quality and grading of export products to internationally recognized

levels

5.12.3 Documents needed for export

1. Export Registration Certificate (ERC) from CCI & E

2. L C Documents

3. E X P from duly signed by the exporter

4. Certificate of origin

5. Shipping documents



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6. Inspection Certificate

7. Packing List & Bill of Loading

8. Invoice & Certificate of export form by authorized dealer (Bank)

A person desired to export should make application to obtain ERC (Export Registration

Certificate) from CCI&E. Then the person should step in to a bank along with ERC to obtain

EXP from the bank. He must submit

Trade license.

ERC.

Membership Certificate from chamber of commerce.

The things done in export department:

1. Obtaining Export Registration Certificate ERC

2. Securing the order

3. Obtaining EXP

4. Advising of Export L/Cs to the beneficiary

5. Authentication of L/C and Amendments from other Correspondent Bank

6. Recording of Export L/C particulars in Export L/C Transfer Register

7. Receiving the Letter of Credit

8. Scrutiny of Export Shipping Documents

9. Lodgment of Export Bills (FBP, FDBC, IBP & IBC)

10. Maintenance of all records related to FDBP, FDBC and Inland Bills

11. Preparation of statement and all returns to Bangladesh Bank and Head Office

(Weekly/ Monthly/ quarterly)

12. All Correspondence relating to Export Department

5.12.4 Formalities of export

There are a number of formalities, which an exporter has to fulfill before and after shipment of

goods. These formalities or procedures are enumerated as follows



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1. Obtaining Export Registration Certificate ERC

The exports from Bangladesh are subject to export trade control exercised by the Ministry Of

Commerce through Chief Controller of Imports and Exports (CCIE). The exporter have to be

registered with CCI & E and holds valid Export Registration Certificate (ERC). The ERC is to be

renewed every year. ). 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.

2. 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.

3. Obtaining EXP

The exporter will apply for exp with certain documents: those are:

trade license

Certificate from the concerned Government Organization

Export Registration Certificate ERC

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

4. Signing 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.

5. 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.

The following points are to be looked for-

1. The terms of the L/C are in conformity with those of the contract

2. The L/C is an irrevocable one, preferably confirmed by the advising bank

3. The L/C allows sufficient time for shipment and a reasonable time for registration

4. If the exporter wants the L/C to be transferable, divisible and advisable, he should ensure

those stipulations are specially mentioned in the L/C



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6. 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.

7.Endorsement on EXP

Before the export forms are lodged by the exporters with the customs/postal authorities, they

should get all the copies endorsed by Bank Asia. Before shipment, exporter submits exp. form

with commercial invoice. Then Bank Asia officer checks it properly, if satisfied, certifies the

exp. Without it exporter he cannot make shipment. The customer must declare all exports goods

on the EXP issued by the authorized dealers.

Disposal of Export Forms

a. Original: customs authority reports first copy of EXP to Bangladesh Bank after

shipment of the goods.

b. 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 .

c. Triplicate: On realization of export proceeds Triplicate is reported by the same

bank to the same authority.

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

Quadruplicate

8. Shipment of goods

Exporter makes shipment according to the terms and condition of L/C.

9. Export document presentation for negotiation

Exporter submits the following documents to Bank Asia for negotiation after shipment. Bill of Exchange or Draft

Bill of Lading

Invoice

Insurance Policy/Certificate



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Certificate of origin

Inspection Certificate

Consular Invoice

Packing List

Quality Control Certificate

G.S.P. certificate

5.12.5 In the Export section, two types of L/C s are opened

Back to Back L/C

Export L/C

Back to back L/C

Like most LCs, back-to-back LCs is used primarily in international transactions, with the

first LC serving as collateral for the second documents required for submission for opening of

back-to-back L/C:

1. Master L/C

2. L/C application & LCA form duly filled in signed

3. Insurance Cover Note with money Receipt

4. Performa Invoice or Indent

5. IMP- form duly signed

6. Valid Import Registration Certificate (IRC) & Export Registration

Certificate (ERC)

Export L/C: After closing the deal, buyer will send an export L/C to seller. A bank will

receive the L/C for the seller. By asking the Bank to add its Confirmation to sellers L/C, the

Confirmation Bank guarantees payment to seller when the Issuing Bank fails to pay on time. the

seller will have double protection in receiving your payment



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5.12.6 Financing after shipment

5.12.6.1 Foreign document bill purchase (FDBP)

This is the terms used some Banks for their Foreign Bills Demand Purchase (FDBP) account. a

exporter send export bill with all documents through a Bank, with all necessary documents and if

the tenor of the bill is Payment against document in the buyers bank, it is called Demand Bill at

sight bankers classify it FDBP. A FDBP Register is maintained for recording all the particulars.

The salient contents of a FDBP register are Date, Ref. No. (FDBP), Name of the Party (Drawer),

Drawer, Name of collecting Bank, EXP Form no., Export L/C no and etc.

5.12.6.2 Foreign document bill collection

Foreign documentary bills for collection signify that the exporter will receive payment only

when the issuing bank gives payment. The exporter submits duplicate EXP Form and

Commercial Invoice. Bank Asia make regular follow-up with the L/C opening Bank in case of

any delay in getting payment.

5.12.7 Procedure for Payment

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

a. Sight payment

b. Deferred payment

c. By acceptance

d. Negotiation

5. 13 Remittance

5.13.1 Introduction



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A remittance is a transfer of money by a foreign worker to his or her home country. Foreign

remittance refers to the transfer of fund from one country to another either through the office

channel i.e. banking channel, Post office or the informal channel. Money sent home by migrants

constitutes the second largest financial inflow to many developing countries, exceeding

international aid. Remittance transfers can also promote access to financial services for the

sender and recipient, thereby increasing financial and social inclusion. Remittances also foster,

in the receiving countries, a further economic dependence on the global economy instead of

building sustainable local economies.

Remittances have emerged as a key driver of economic growth and poverty reduction in

Bangladesh, increasing at an average annual rate of 19 percent in the last 30 years

Foreign remittance has two wings i.e. inward and outward remittance. This can be shown below:

5.13.2 Foreign Inward remittance

Foreign inward remittance refers to the currency remitted from abroad to our country. Now I

shall describe inward remittance.

The remittance in foreign currency that receives from outside the country to our country is

known as foreign inward remittance. In case of inward remittance, TT/MT/Drafts etc. are drawn

in local bank by the foreign banks of exchange houses.


Foreign Remittance

Foreign Inward Remittance Foreign Outward Remittance


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5.13.3 Outward remittance

Foreign outward remittance refers to the remittances in foreign currency made from this country

to abroad. Foreign outward remittance includes issuance of TT, MT, FDD issued by local banks

on foreign banks.

6. OBJECTIVE THREE: Problems of bank Asia

6.1 Lack of training and development

Any kind of service oriented organization needs skillful and well trained workforce. So the

employees of bank Asia needs more tyrannizing program. It is needed not only generic training

but also specific training so that they can be efficient in one particular task as well as overall

task. . Sustaining growth and leadership require trustworthy and dedicated workforce. And forthis purpose proper training has no alternatives to create more efficient employees for any

organization

6.2 Limited workforce

Bank Asia has very limited human resources compared to its financial activities. There are not

many people to perform most of the tasks. As a result many of the employees are burdened with

extra work loads and works late hours without any overtime facilities. This might cause highemployee turnover that will prove to be too costly to avoid.

6.3 Centralized decision making for loan granting



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The process of loan sanction is very much centralized. A branch cannot sanction loan with its

own authority. It has the branch manager has to take permission before granting any amount of

loan or advances from Head Office or zonal office. It takes a lot of time to sanction any loan.

6.4 Poor telecommunication infrastructure

As previously mentioned, the world is advancing towards e-technology very fast. Though Bank

Asia has taken effort to join the stream, it is not possible to complete the mission due to the poor

technological infrastructure of our country.

Shortage of rural branch: The economy of Bangladesh is mainly depends on rural branch. No

economical development can be succeeding excluding rural area. Urban area and people

represent a small scenario of Bangladesh. So bank Asia should open branches in rural area.

6.5 Lengthy procedure to get loan

We all know than advance and loan department is very sensitive department. It needs well analysis before

taking decision of giving loan. It also needs many paperwork and formalities before giving any loan. But

loan giving procedure can be more prompt by proper management regularization.

6.6 Lack of ATM booth

Bank Asia has very small number of ATM booth relative to other leading commercial private banks,

which cause a great hassle for clients to withdraw the money with ATM card.

6.7 Lack of motivation

Bank Asia doesnt have annual performance appraisal system. Only one branch in whole Chittagong city

is awarded as best branch of the year. But there is no personal motivation for any employee. Its a

weakness point of the top level management.

6.8 Lack of Sales Executive



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Bank Asia has no sales executive in their branch office. Sales executive plays a very important role for

growth of a bank. They can collect deposits as well as to lend money so easily. This is also a major

lacking.

Decentralization of decision making to loan sanction

Loan sanction procedure should be decentralized and branch manger should be given some

power to sanction loan. It will be less time consuming and loan sanction procedure will be

speedier.

Establish more rural branches

Bank Asia should establish more branches in rural area. It will be benefited for the

competitiveness for the bank and also our society and economy will be benefited with it.

More training and development program

To motivate the employee, Bank Asia should arrange training program more frequently.

Sustaining growth and leadership require trustworthy and dedicated workforce. And for this


7. Recommendation


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purpose proper training has no alternatives to create more efficient employees for any

organization.

Renovation of Customer Service

Customer services must be made dynamic and prompt. Now a days, people especially business

people have very little time to waste.

Providing More Industrial Loans

Bank Asia should provide more industrial loan to customer. It will help to make our country

economically sound. The new entrepreneur will be benefited and motivated. And it will help the

economy to solve unemployment problem of our country.

Arrange award ceremony

Bank Asia should arrange award ceremony so that employee will be motivated to work. They

can achieve a prestigious award like Best employee of the year. And also can give bonus and

incentives according to performance.

Increase Office space

Bank Asia Agrabad Branch should increase the office space as well as sitting arrangement for

the customers, so that customer can be relaxed.

Increase workforce

Bank Asia has very limited human resources compared to its financial activities. There are not

many people to perform most of the tasks. Bank Asia should increase its workforce so that task

can be well divided and employee can be stress-free and give more attention to work.



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Countrys future economic prosperity depends on the success of banking industry as it is the

most important financial intermediary. As long as the banking sector remains sick, the economy

won't achieve the growth necessary to eradicate poverty.

I can conclude that Bank has been found consistent with their operations in this competitive

banking industry. Bank should diversify its banking services and add new features in its services

so that it can attract customers from all groups of people. Financial Engineers of Bank Asia

should be innovative in developing new banking services, which will attract customers and

reduce costs. It can introduce customer loan scheme, provide bridge loan, or can engage in lease

financing. It can also underwrite shares of newly incorporated public companies.


8. Conclusion


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Books:

Foreign Exchange Practice and Policy. Contributors: Frank A. Southard Jr. - author,

Philip F. Swart Jr. - author, A. N. Gentes - author. Publisher: McGraw-Hill Book

Company. Place of Publication: New York. Publication Year: 1940.

ForeignExchange Regulation Act 1947

The History of Foreign Exchange. Contributors: Paul Einzig - author. Publisher: St.

Martin's Press. Place of Publication: New York. Publication Year: 1962

9. Bibliography