CHAPTER -1:INTRODUCTION

ORIGIN OF THE REPORT

 
Masters of Business Administration is a specialized course. University of Dhaka arranges a one year specialized course to provide some efficient graduates in the business sector of the country. The whole course design is not limited within the theoretical boundary but it also extends to the practical exposure through the internship program.
Masters of Business Administration (MBA) course requires an internship program of three months attachment with an organization followed by writing a report. I have got an opportunity to do my internship program in EXIM Bank of Bangladesh Ltd.
 
Banking is service oriented organization. The outcome of this report is the result of enormous supportive effort with a large group of personnel of the bank along with the trainers, bankers & my respective supervisor teacher.
 
This internship report has been prepared on the basis of my practical experience in the general banking activities along with foreign exchange division activities. This report will also provide the essential information’s how the private commercial banks of the country contribute for the economic development of the country.
 
I have tried my best to utilize the opportunity to enrich my knowledge on banking system and incorporate it with the theoretical course.
 
BACKGROUND OF THE STUDY
 
This report is a practical requirement of my MBA program, and is submitted after completion of the three months Internship program in the EXIM Bank. I have done my Internship program under the supervision of Associate Prof.Mr.Md.Mosharraf Hossain,University of Dhaka. My Internship supervisor authorized me to submit the report of “A study on General banking and foreign exchange activities of Export Import Bank of Bangladesh Ltd”.
OBJECTIVES OF THE STUDY
 
The main objective of the study is to evaluate the performance of general banking & foreign exchange of EXIM Bank and to have an overall idea on how it operate and what functions it does, and prepare a report on it. The specific objectives of the study are:
 

• To be familiar with the general banking system of Export Import Bank of Bangladesh.
• To evaluate the performance of foreign exchange division.
• To analyze return on export, import & remittance.
• To analyze the financing systems of the Bank and find out whether the bank needs any improvement
• To familiarize different rules and regulations of export and import formalities.

 
SCOPE OF THE STUDY
 
The report is organized on the basis of obtained data from working experience at EXIM Bank Ltd. To prepare this report, working area was restricted within the Mirpur Branch. My study is limited to the performance of general banking and foreign exchange of EXIM Bank Ltd. I studied two functional areas which are:
 

• General banking.
• Foreign Exchange.

 
 
METHODOLOGY
 
While conducting smooth and accurate study it is necessary to collect information from different relevant sources. The information of this report has been collected from two sources:
 

1. Primary Sources
   • Practical deskwork.
   • Face to face conversation with the officers.
   • Getting information from face to face dealing with the customers.
   • Customers file study in the Loan & LC division.
   • Interviewing the persons who are treated as experts in respective areas
2. Secondary Sources
   • Different papers of respective department.
   • Different textbooks.
   • Financial reports of EXIM bank of Bangladesh Ltd.
   • Some articles on Banking sectors.

 
Analytical Review
 
A critical analysis of the study of the data has been made through the bar and line graph over the last two years. This will enable me to visualize the trend of the variable of interest over time. Indicators of banking performance have also been computed through ratio analysis.
 
LIMITATIONS OF THE STUDY
 
To prepare the report I had to face some problems & limitations. Those limitations are unavoidable for me. The limitations are:
 

• To prepare an Internship report a big deal of time is needed. As an Internee I had only 3 months time, which is not enough to prepare a totally perfect report.
• To collect information I faced difficulty because of the excessive nature of confidentiality followed the officials.
• Getting financial information is a very hard job.
• Available data also not verified. In some cases I have furnished these data without any verification.
• It required a lot of assistance from all level officers and staff but they are very busy to doing there own job.
• Shortage of written materials.
• During my internship program, I was placed in several sections as per the wish of the concerned officials. As a result I could not concentrate on a particular section/department for my study.

 
Although there are a lot of limitations, I have tried to put my best effort as far as possible to make the report useful.

CHAPTER-2: Organizational Profile

NAME AND LOCATION OF THE EXIM BANK

 
Export Import Bank of Bangladesh Limited is commonly known as EXIM Bank ltd. As the name replies a newly formed commercial bank but is the First of its kind of bank in Bangladesh. It has incorporated in Dhaka, Bangladesh as public Limited company and its head office is located at Printers building, 5 Rajuk Avenue, Dhaka-1000.
 
HISTORICAL BACKGROUND OF EXIM BANK
 
Export Import Bank of Bangladesh Limited (EXIM Bank ltd.) that was named before as Bengal Export Import Bank Ltd. (BEXIM Bank) being newly formed commercial bank of the country with a distinctive identity was opened in 3rd August 1999, with the permission of Bangladesh Bank under Banking Companies Act-1991. The bank received the certificate of incorporation      # C-37884 (2164)/99 under the company act (Act- XVIII) of 1994.
 
EXIM Bank Limited was established in 1999 under the leadership of Late Mr. Shahjahan Kabir, founder chairman who had a long dream of floating a commercial bank which would contribute to the socio-economic development of our country. Mr. Nazrul Islam Mazumder became the honorable chairman after the demise of the honorable founder chairman respectively.
The bank has migrated all of its conventional banking operation into Shariah based Islami banking since July/2004.
 
Vision of EXIM Bank:
 
The Vision of Export Import Bank of Bangladesh Limited is “Together Towards Tomorrow” expresses most of the vision of EXIM Bank, which is leading the Banking sector within 2010 with the blessing of satisfied customers.
Mission of EXIM Bank

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

 
Corporate Culture
 
EXIM Bank is one of the most disciplined Banks with a distinctive corporate culture. Here the bank believes in shared meaning, shared understanding and shared sense making. Banks people can see and understand events, activities, objects and situation in a distinctive way. They mould their manners and etiquette, character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to the bank. The people in the Banks see themselves as a tight knit team or as family that they believe in working together for growth. The corporate culture they belong has not been imposed; it has rather been achieved through their corporate conduct.
 
Social Commitment
 
The purpose of our banking business is, obviously, to earn profit, but the promoters and the equity holders are aware of their commitment to the society to which they belong. A mass of the profit is kept aside to spend for socio-economic development through trustee and in patronization of art, culture and sports of the country. EXIM Bank wants to make a substantive contribution to the society where it operates.
 
 
BRANCH INFORMATION OF EXIM BANK
DHAKA DIVISION                                                                            CHITTAGONG DIVISION
 
1. MOTIJHEEL BRANCH                                                                22. AGRABAD BRANCH
2. PANTHAPATH BRANCH                                                            23.  KHATUNGONJ BRANCH
3. GAZIPUR CHOWRASTA BRANCH                                         24. JUBLEE ROAD BRANCH
4.  IMAMGONJ BRANCH                                                                25. SONIMURI BRANCH
5. GULSHAN BRANCH                                                                    26. LAKSHAM BRANCH
6. NAWABPUR BRANCH                                                                27. CAD AVENUE BRANCH
7. NARAYANGONJ BRANCH                                                         28. CHOWMUHANI BRANCH
8. SHIMRAIL BRANCH
9. RAJUK AVENUE BRANCH                                                        SYLHET DIVISION
10. NEW ESKATON BRANCH
11. UTTARA BRANCH                                                                     29. SYLHET BRANCH
12. MIRPUR BRANCH                                                                     30. FENCHUGONJ BRANCH
13. ELEPHANT ROAD BRANCH                                                   31  MOULAVI BAZAR
14. MAWNA BRANCH
15. MALIBAGH BRANCH                                                              KHULNA DIVISION
16. ASHULIA BRANCH
17. ASHUGONJ BRANCH                                                                32. JESSORE BRANCH
18. SAT MOSJID ROAD BRANCH
19. BASHUNDHARA ROAD BRANCH                                        RAJSHSHI DIVISION
20. SAVAR BRANCH
21. KAWRAN BAZAR BRANCH                          33. BOGRA BRANCH
34. RANGPUR BRANCH
COMILLA DIVISION
 
MONOHORPUR BRANCH
 
 
Management Hierarchy of EXIM Bank limited
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management Executives
 
Managing Directors
Mohammed Lakiotullah
 
Additional Managing Director
Kazi Masihur Rahman
 
Deputy Managing Directors
Md. Ekramul Haque                                                                     Md. Sirajul Islam Bhuiyan
 
Executive Vice Presidents
Mohammed Haider Ali Miah                                                         Md. Karimuzzaman
 
Senior Vice Presidents
Sirajul Haque Miah                  Fazal Akhter                                        Md. Fazlur Rahman
Md. Akhter Hossain                 Khondoker Rumy Ehsanul Huq                       Md.. Alamgir
Md. Zakaria Faruq                   Md. Golam Mahbub                            A.Y.M. Naimul Islam
 
Vice Presidents
Khondoker Nayeemul Kabir
Md. Shahidur Rahman
Sheikh Moyeen Uddin
Md. Moniruzzaman
Md. Anisul Alam
Md. Shamsur Rahman Chowdhury
Mohammad Firoz Hossain
Md. Muhibbul Abrar Choudhury
Shaikh Bashirul Islam
Md. Shahidullah
Khorshed Alam Chowdhury
Md. Humayun Kabir
Shah Md. Abdul Bari
Moniruzzaman Chowdhury
Md. Shahjahan
Md. Zoshim Uddin
Md. Mosharraf Hossain
 
SHARIAH BOARD
The Board of directors has formed a Sharia Supervisory Board for the Bank. Their duty is to monitor the entire Bank’s transactional procedures, & assuring its Sharia complacency. This Board consists of the following members headed by its Chairman.
 
The tasks of the Sharia supervisor in summary is replying to inquiries of the Bank’s administration, staff members, shareholders, depositors, & customers, follow up with the Sharia auditors and provide them with guidance, submitting reports & remarks to the Fatwa & Sharia Supervision Board and the administration, participating in the Bank’s training programs, participating in the supervision & handling the duty of being the General Secretary of the Board.
 
Members of Shariah Council:
 
1. Professor Moulana Mohammad Salah Uddin.
2. Moulana Mohammad Sadequl Islam.
3. Professor H.M.Shahidul Islam Barakaty.
4. Mr. A.S.M. Fakhrul Ahsan.
5. Hafez Moulana Mufti Mohammad Khair Ullah.
6. Hafez Quari Moulana Mufti Mohammad Nur Uddin.
7. Mr. Md. Nazrul Islam Mazumder.
8. Mr.A.K.M Nurul Fazal.
9. Mr.Md.Abdul Mannan.
10. Mr.Zubayer Kabir.
11. Mr. Abdullah Al-Zahir Sawpan.
12. Mohammad Lokitullah.
 
Shariah Auditing
 
This is the civil supervisory aspect that shapes the Bank’s main feature. Its existence is part of the Sharia Supervision procedures. One of its main tasks is to check the Sharia complacency in the Bank’s transactional procedures in accordance to the Fatwa’s issued in that regard, under the guidance of the Sharia Supervisor.
 
The Sharia auditor is assigned the task of revising the Bank’s transactional procedures throughout the year to check the extent to which the staff members and the different departments have abided by the regulations, advices, and Fatwa’s issued by the Fatwa & Sharia Supervision Board, forums, & banking conferences. As well as, the Sharia Supervision Board certifies assuring that all the contracts that state a right for the Bank or an obligation on the Bank.
 
Moreover, the Sharia Auditing submits periodic reports to the Sharia Supervisor in order to be proposed to the Sharia Supervision Board to state what it finds appropriate in that regard.
 
Product & Service Information of EXIM Bank:
 
The following financial products are available for the customers. The products are customers friendly and easy to use. The product mix is maintained in accordance with the need basis for the customers and profit generating for the banks as well.
 
Super Savings Scheme              Monthly Savings Scheme                 Monthly Income Scheme
 
Multiplus Savings                             Hajj Deposit
 
Finance/Investment:

• Corporate Finance.

• Industrial Finance

• Commercial Finance

• Lease Finance

• Syndicate Finance

• Hire Purchase Finance

• Real State Finance

 
Modes of Investment:

• Murabaha

• Bai Muazzal

• Izara Bil Baia

• Wazirat Bil Wakala

• Quard

• Local Documentary Bill Purchased

 
 
Foreign Exchange:

• Non Resident Foreign Currency Deposit Account.

• Foreign Currency Deposit Account.

 
Deposit:

• Al-Wadia Current Deposit

 
Mudaharaba Saving Deposit:

• Mudaraba Monthly Saving Scheme (Money Grower)

• Mudaraba Monthly Income Scheme (Steady Money)

• Mudaraba Super saving Scheme (Double in6Years)

• Mudaraba Multiple Saving Scheme (More than triple in 10years)

• Mudaraba Education Saving Scheme

 
Mudaraba Short Term Deposit
 
Mudaraba Term Deposit:
One Month
 
Three Months
Six Months
Twelve Months
Twenty Four Months
Thirty Six Months
 
Market
 
Export Import Bank of Bangladesh Limited, one of the leading private commercial banks, is promoted by a group of renowned Bangladeshi entrepreneurs, and commenced its banking operation on 3^rd August 1999. Within an operative period as short as six years, the bank has arrived at a strong financial and business position by expanding its market share compared to its contemporaries and to some extent to the 2^nd even 1^st generation banks of private sector. In addition, the Bank has also made a significant contribution to the national economy under the prudent leadership and steady support of the member of the Board of Directors, who are leading business personalities and reputed industrialists of the country.
 
The progression of marketing operation of any organization depends on the efficacy of customer service. To achieve superior customer responsiveness often requires that the company achieve superior efficiency, quality and innovation. To achieve superior customer responsiveness, a company needs to give customers what they want when they want it. It must ensure a strong customer focus, which can be attained through leadership; training employees to think like customers; bringing customers into the company through superior market research; customizing the product to the unique needs of individual customers or customer groups and responding quickly to customers’ demands. Customer service is the set of activities an organization uses to win and retain customer’s satisfaction. It can be provided before, during or after the sale of the product or exist on its own. The progress of EXIM Bank LTD is very rapid with the concern of its profit making and growth of its operation within the country towards the country’s economy.
 
 
About Mirpur branch
 
Location of Mirpur Branch: Mirpur Branch is established on 16^th June 2003. The address of EXIM Bank Mirpur branch is “Sroyoshe Tower, Plot # 7, Main Road-3, Rokeya Swarani, 10 no crossing, Mirpur, Dhaka-1216”.
 
About Mirpur branch
 
Location of Mirpur Branch: Mirpur Branch is established on 16^th June 2003. The address of EXIM Bank Mirpur branch is “Sroyoshe Tower, Plot # 7, Main Road-3, Rokeya Swarani, 10 no crossing, Mirpur, Dhaka-1216”.
 
Organogram OF Mirpur Branch
 
Assistance Vice President & Manager
Mr. F.M. Newaz Ali
 
Principal Officer
Mr. Mohammad Mostafizur Rahman
Mrs. Ruksana Mahboob Chowdhury
Mrs. Amina Afrooz
 
Executive Officer
Mr. Md. Taslim Hossain
Mr. Abdullah Al Mahmub
Mr. Kh. Reza Md. Ahsan
Mr. MD. Shahadat Hossain Bhuiyan
 
Officer
Mr. Shah Salauddin Ahmed
Mr. Md. Sufian Mozumder
 
Junior Officer
Mrs. Habiba Akhter                          Mrs. Satara Begum
Mr. Md hasanul Banna                         Mrs. Shamsun Nahar
Mr. Md. Mohsin                            Mr. Badrul Alam
 
Assistance Officer
Miss Monowara Akter                            Mr. Md Ibrahim Khalil
 
Trainee Officer
A. B. M. Mossadek Hassain                           Mr. Md. Rashidul Hasan
 
 
Account Information
Mirpur Branch Statement Affairs
As on 22/03/2009
 

Exim Bank
Mirpur Branch Statement Affairs
As on 22/03/2009
 

 
 
Total deposit      = 973,347,215.30
Total advance     = 664,984,412.43
Demand deposit  = 233,253,797.66
Time deposit       = 243,442,349.27
 
Total income/ loss = 5,797,189.36
 
 
Mirpur Branch Statement Affairs
As on 22^th March, 2009
 

 
 
 
 
 
 
 
N.B.: – This information collects on 22^th March, 2009
Mirpur Branch Statement Affairs
As on 22^th March, 2009
 

 
 
 
 
 
 
 
N.B.: – This information collects on 22^th March, 2009
 
Part-1
Chapter -3
 
Performance Analysis of EXIM Bank
 
SOURSES AND USES OF FUND
The composition of sources of bank fund is paid up capital, reserve and deposit from the customers and different banks. The bank uses the major portion of its fund for investment in loan and advances. The bank also invested in securities and shares. The surplus fund is applied in call money market to earn satisfactory returns.
 
CAPITAL
The bank started with an authorized capital of Tk. 1000.00 million and the paid up capital stood Tk 313.87 million as on 31st December 2003. Paid up capital became 627.75 and 879.00 million as on 31st December 2004 & 2005 respectively.
 
ANALYSIS OF CAPITAL STRUCTURE
 
Capital structure of EXIM Bank has changed from year to year. The components of the capital are paid-up capital, share premium, statutory reserve, proposed share dividend, retained earnings and other reserve.
 
Authorized and paid-up capital of EXIM Bank

 
Capital Position Of EXIM Bank:
SHAPE  * MERGEFORMAT

 
Component of Capital structure and correspondent contributions:
Figures of different components of the capital structure for the year 2003, 2004, 2005 & 2006 are shown below-
 
Capital Position of EXIM Bank at a glance
Figure in crore

 
Deposit:
 
The total deposit of the bank increased to Tk. 9945.23 million as on December 31, 2002 from Tk. 7255.02 million as at the end of the previous year indicating an increase of 37.08% than the previous year. The EXIM Bank remains committed to increasing deposit base by growing low cost personal and business accounts, and thereby lowering the banks over all cost of fund. As on December31, 2003 the banks deposit reached 15242.97 million, which is more than 5297.74 million than last year. In the year 2004 the deposit increased more then 25% from the previous year whereas in 2005 it increase almost 40% from 2004.
 
Deposit Position of EXIM Bank:

 
 
 
 
 
 
 
Table- Shows the deposit position of EXIM Bank.
 
Graphical show of Deposit position of EXIM Bank
 
SHAPE  * MERGEFORMAT

 
 
Deposit Mix of EXIM Bank
 

 
 
 
Fig: Graphical show of Deposit Mix of EXIM Bank (Annual Report 2006)
 
 
The figures shows different percentage of deposit items, by using this deposit items EXIM bank earns their total deposit amounts. Here term deposit earns highest deposit amount after that other items basically fulfill their deposit needs.
 
 
 
Return on Assets in EXIM bank
 
ROA is an indicator of managerial efficiency of any organization. We can easily realize the managerial efficiency of EXIM bank from the following ROA chart:
 
 
 

 
 
 
 
 
 
 
 
 
Investment:
Total amount of Investment of the Bank Tk. 26046.34/- million as on December 31, 2005 as against Tk. 19332.44 million as on December 31 2004 showing an increase of Tk. 6713.90 million with growth rate of 34.73%. Investment is the core asset of a Bank. It gives emphasis to acquire quality assets and does appropriate lending risk analysis while approving commercial and trade investment to clients.
 
Investment (Share & Bonds):
The size of the investment portfolio in 2006 is Tk. 2233.25 million while it was Tk. 1633.03 million in 2004. The portfolio companies Islamic Investment Bond, Shares and Prize Bonds.
 
From the graph we can see that the investment in share and Bonds has been decreased in 2005 and 2004 compared to 2003. The reason is, the rate of return in other investment is much higher than investment in share and Bond. Moreover, EXIM bank was able to invest in other sectors. If we compare the general investment and investment in bond and share, we can see that general investment is much higher.
 
 
 
 
 
 
Import Business:
During the year of 2006, the bank opened 25656 Import L/Cs and the import stood at Tk. 49496.7 million with a growth of 20.90% in comparison to previous year. 2006 year is no so good from 2005. Because during the year of 2005, the bank opened 21555 Import L/Cs and the Import Volume stood at Tk. 41432.1 million with a growth of 54.70% in comparison to previous year.
 
Export:
 
The growth of the export business has significantly been increased by 40.39%. It stood at Tk.46,234.60 core as of December 2006 against 31208.00 core of December 2005.
 
 
From the above graph we can see that both import and export business of EXIM bank in increasing. It is remarkable that import is increasing at a higher rate than export. It reflects the overall economy of the country. In the country the Export increased by 13.83% and the import increased by 21.4% during FY 2005-2006. That means in the country the growth rate for import was higher than the growth rate of export. EXIM bank is performing very well in the Export Import Business, as both the growth rate at the bank was much higher than the growth rate in the country.
 
 
 

SHAPE  * MERGEFORMAT

 
 
In the country, the volume of import is higher than the export. That means the country is facing a trade deficit. Same applied for the EXIM bank. The Import business of the bank is higher than the export rate. As the country is facing trade deficit, the bank has to face some import restriction which reduce the number of Letter of Credit.
 
Remittance: The growth of the remittance has significantly been increased by 62.39%. It stood at Tk.343.60 core as of December 2006 against 323.00 core of December 2005.
 
 
Prime Operation Area: As a commercial bank, EXIM bank provide all traditional banking services including a wide range of saving an investment scheme products, foreign exchange and supplementary services with the support of modern technology and professional management. The main stress of the bank is, as the name implies, put on export and import trade handing and financing and the bank has become the pioneer in promoting RMG sector and one of the largest financiers in the sector. Since the beginning, the Bank forecasted the bright prospects of this sector and extended finance to the deserving and promising entrepreneurs. The bank provides financial support including market information and advice to this sector and today the garments sector constitute about 76% of the total export of the company.
 
 
 
Management
 
For any financial and non-financial organization, management is the most valuable and important aspect. And a well organize management provides the organization to reach its ultimate goal. Management means planning, organizing, staffing directing and controlling of all financial and non-financial resources of an organization. Different aspects of management practice in EXIM Bank are discussed below:
 
 
Planning:
EXIM Bank has done its planning within the preview of the corporate plan. The overall planning approach in EXIM Bank is top-down. Each branch can plan according to the goal imposed by the corporate level. It doesn’t plan independently. EXIM Bank has a planning division. The department is mainly responsible for the overall planning.
 
Organizing:
EXIM Bank is organized as per the existing business locations. It has 35 branches, each of which is a separate entity. Each unit is responsible for own performance. Within each branch it is organized functionally.
 
Staffing:
The recruitment in EXIM Bank is done in two ways. One as a “Probationary Officer” for the management program and it has a probation period of one year. Another one is non­management level as “Trainee Officer”. Probationary Officer is recruited in officer category and their career path is headed towards different managerial jobs.
 
 
Directing & Controlling:
Works of EXIM Bank are designed in such a way that one cannot leave without clearing the tasks as he or she is assigned for a day. Sitting arrangement in all office is done in a way that the superior can monitor the subordinate all time. Budgeting, rewarding, punishing, etc are also practiced as control mechanism.
Human Resources Management:
Employees are the core resources of any organization. Without them, one cannot run their organization. Human resources approach is concerned with the growth and development of people toward higher level of competency, creativity and fulfillment. It helps employees become better, more responsible persons and then it tries to create a climate in which they may contribute to the limits of their improved abilities. It assumes that expanded capabilities and opportunities for people will lead directly to improvements in operating effectiveness. Essentially, the human resources approach means that better people achieve better results.
 
Recruitment:
The set-vice rule of EXIM Bank states the recruitment policy of the bank. In, general the board of directors determines the recruitment policy of the bank from time to time. The minimum entry-level qualification for any official position other than supportive management is a Bachelor Degree. However, informally the management prefers a minimum Master’s Degree for the appointment of probationary officers in the Executive Officer position. The recruitment for entry level positions begins with a formal written test which is conducted and supervised by the Institute of Business Administration, University of Dhaka. After successful completion of the written test, a personal interview is conducted for the successful candidates by a panel of experts comprising of renowned bureaucrats and prominent bankers of the country.
 
Asset liability management:
The Asset Liability Committee (ALCO) of the Bank monitors Balance Sheet risk and liquidity risks of the Bank. The Balance Sheet risk is defined as potential change in earnings due to change in rate of interest, foreign exchange rates which are not of trading nature. Asset Liability committee (ALCO) reviews liquidity requirement of the Bank, the maturity of assets and liabilities, deposit and lending pricing strategy and the liquidity contingency plan. The primary objective of ALCO is to monitor and avert significant volatility in Net Profit Income (NPI), investment value and exchange earnings.
 
Foreign exchange risk management:
Foreign exchange risk is defined as the potential change in earnings arising due to change in market prices. The foreign exchange risk of the Bank is minimal as all the transactions are carried out on behalf of the customers against underlying Foreign Exchange transactions. Treasury Department independently conducts the transactions and the back office of treasury is responsible for verification of the deals and passing of their entries in the book of account. All foreign exchange transactions are revalued at Market-to-Market rate as determined by Bangladesh Bank at the month-end. All NOSTRO accounts are reconciled on monthly basis and outstanding entries beyond 30 days are reviewed by the management for their settlement.
 
Investment risk management:
Investment risk is one of the major risks faced by the Bank. This can be described as potential loss arising from the failure of a counter party to perform as per contractual agreement with the Bank. The failure may result from unwillingness of the counter party or decline his/her financial condition. Therefore, the Bank’s Investment risk management activities have been designed to address to all these issues. A separate Investment Division has been formed at Head Office since inception of the Bank which is assigned with the duties of maintaining effective relationship with the customer, marketing of investment products and exploring new business opportunities. In line with Bangladesh Bank guideline the Bank has segregated marketing, approval and monitoring/recovery functions. The investment risk management includes borrower risk analysis, financial statement analysis, industrial analysis, historical performance of the customer, security of the proposed investment facility and market reputation of the borrower etc. In determining single borrower/large investment, the instructions of Bangladesh Bank are strictly followed. Investments are classified as per Bangladesh Bank’s guideline.
 

Part-2:General Banking Division

 
The division of general banking plays an important role in all commercial banks. It’s mainly a liability side. EXIM bank facilitates sections and facilities of general banking. General Banking Division can be functioned in the following four ways:
 
 
General Banking Division
SHAPE  * MERGEFORMAT

Account Opening Section:
 
One who want to open an account, he has to fill up an account opening form. This form is a legal contract between the bank and prospective customers. First of a11 various types of customers such as individual, joint, proprietorship, partnership, private limited company, public limited company, associations, clubs, societies, trusts etc. can open their various types of accounts as their requirements which are mentioned below:
 
 
 
l. Individual Account (CD/ SB Account):
 

• If individual wants to open an account than introducers must be needed to open current and savings account, who has a current or savings account in the bank.
• The introducer must be signed in the two passport size photographs.
• Individual must be submitted his/her certificate of Word Commissioner or the photocopy of the passport (valid).
• Photograph of nominee.
• Signature of nominee in the nominee declaration form.
• TIN Certificate (If cash transaction exceeds Tk. 5.00 lac only.)

 
2. Joint Account
 
This account can be opened by 2 persons or more than 2 persons and each person should fulfill the requirements of individual account. The account holders should mention the mode of operation. Here the account holders must declare how they operate their account that means “how many signatures will be needed for a check clearing.”
 
3. Sole Proprietorship Account:

• Introducer
• Two copy of color photograph attested by the introducer.
• Photocopy of Word Commissioner Certificate or Passport (First seven page).
• Up-to-date trade license & Rubber stamp.
• The form of sole proprietorship declaration of EXIM Bank must be tilled up.
• Photograph of nominee.
• Signature of nominee in the nominee declaration form.
• TIN Certificate.

 
4. Partnership Account:
 
Partnership account is as like as joint account it needs –

• Introducer
• Two copy of color photograph attested by the introducer.
• Must be submitted a copy of partnership deed.
• Photocopy of Word Commissioner Certificate or Passport (First seven page).
• Must be submitted their up-to-date trade license & Rubber stamp.
• The partners also fill up the partnership letter of EXIM Bank with their name and signature.

 
5. Public/Private Limited Company:
 

• Introducer
• Two copy of color photograph attested by the introducer.
• Board Resolution.
• Certificate of Incorporation.
• Certificate of commencement (In case of public limited company).
• Certified copy of memorandum of association & articles of association attested by the Chairman or Managing director.
• Photocopy of Word Commissioner Certificate or Passport (First seven page).
• Up-to-date trade license
• Rubber stamp
• List of Directors with designation & signature
• Certificate of registration (in case of insurance companies) obtained from Department of insurance republic of Bangladesh Govt.
• TIN Certificate.

 
Various Types Of deposit account:
 
EXIM Bank offers following types of deposit account:
 
1.         Current Account
2.         Fixed Deposit Receipt Account
3.         Savings Account
4.         Short term Deposit Account
 
 
1. Current Account:
 
Current account facilitates the account holder to draw money at any times (with in banking hour) but no profit is given to the current account deposited money. Current accounts can be opened by any individual or joint or any name of proprietorship business, private limited company or public limited company, association, clubs, societies, trusts etc. Generally, current account is opened for businessman and traders for easy transaction. EXIM Bank charges 100 Tk. as service charge for six months.
 
2. Fixed Deposit Receipt Account (FDR):
 
It’s a certain period deposited system which is not repayable before the maturity date of a fixed period. EXIM Bank offers higher rates of profit on such deposits. Usually customers are allowed to open this account for a certain period and the profit rate varies in accordance with the terms of the deposit. The features of FDR are as follows:
 
Minimum balance: TK 10000.00

 
General procedure of opening account:
 
 
Step 9: Account is opened
Step 8: Bank preserves the specimen signature card to verify the signature of the client.
 
Step 7: After deposition one checkbook is issue
 
Step 6: They issue deposit slip and deposit must be made for first time against the new account number.
 
Step 5: If they are satisfied, they will open the account
 
Step 4: The authorized officer scrutinizes the application form.
 
Step 3: Application submits the form dully signed by an introducer and along with    two copies of photograph
 
Step 2: Applicant fills up the form
 
Step l: Bank provides account opening form to the prospective customer or applicant.
 
3. Savings Account:
 
Savings account is very suitable for middle class and service holder persons. The attributes of Savings Account are:

• 500Tk. is the minimum amount of initial deposit.
• Client can not withdraw money more than twice a week,
• EXIM Bank paid 8% profit against Savings Account.

 
4. Short Term Deposit (STD):
 
Short Term Deposit has following attributes:

• 6% profit against STD account.
• No restriction over withdrawal of money
• 50,000 tk. is the minimum balance.

 
EXIM Bank extends some special schemes or products for clients:
a. Monthly Savings Scheme (MSS)
b. Multiply Profit Savings Scheme (MPSS)
c. Monthly Income Scheme (MIS)
d. Super Savings Scheme (SSS)
 
a) Monthly Savings Scheme (MSS)
It’s a sure investment for a steady return. It can be opened for 5, 8, 10, or 12 years for Tk.500, Tk.1000, Tk.2000, and Tk.5000. The savings amount is to be deposited within the 10th of every month. If the depositor has a separate account in the bank for which a standing instruction can be given to transfer the monthly deposit in the scheme’s account. Incase of failure to make the monthly installment in the schedule time 5% on overdue installment amount will be charged. The lowest charge will be Tk. 10 and this will be added with the following month’s installment. After 3 years of savings in this schemed the depositor is eligible for a loan up to 80% of his deposited amount.
 
Highlights of the Scheme

• Higher monthly income for higher deposit.
• This scheme is for a 5, 8, 10, 12 year of period.
• 500 tk. is the minimum deposit
• Monthly income will be credited to the depositor’s account on the 10^th of each month.

 
Conditions of the Scheme

• By filling up a form an account is opened.
• A non-transferable deposit receipt will provide to the customers after opening the     account.
• If the deposit is withdrawn before a 5 years term, then saving profit rate will be applicable and paid to the depositor. However, no profit will be paid if the deposit is withdrawn within 1 year of opening the account. Monthly Income paid to the customer will be adjusted from the principal amount.
• This scheme will be credited to the loan account until liquidation of the loan amount inclusive of profit. Depositor can withdrew as loan up to 80% of the deposit amount under this scheme.

 
b)  Multiply Profit Savings Scheme (MPSS):
Savings works as the foundation of development. Savings is the prime source of business investment of a country or for an entrepreneur. So it helps to build up capital. To create more awareness and motivate people to save, EX1M Bank offers Multiples profit Savings Scheme.
Conditions of the Scheme:

• The deposit can be made in multiplies of TK. 10,000.00.
• The deposit can be withdrawn at any time before maturity with profit. As an example, if deposit is withdrawn after completion of 1^st year profit will be paid for 1^st year only. The same rule will apply for other years. If deposit is withdrawn before 1^st year then no profit will be paid.
• The depositor can withdrew as loan up to 80% of the deposit under this scheme.

 
c) Monthly Income Scheme (MIS):
 
This scheme has given the opportunity for the people who try to save their excess money. In this scheme minimum deposit is Tk. 25,000. Deposit will be high in case of higher monthly income. The scheme is for a five year period. Monthly Income will be credited to the depositor’s account on the 5th of each month. If the deposit is closed before a five year term, the saving profit will be applicable and paid to the depositor. No profit will be paid if the deposit is withdrawn within one year of opening the account and monthly income paid to the customer will be adjusted from the principal amount. A depositor can avail loan up to 80% of the deposit amount under this scheme. In this case interest will be charged against the loan as per bank’s prevailing rate. During the period of the loan, the monthly income will be credited to the loan account.
 

 
Figure: Monthly income according to deposit amount.
 
 
 
d) Super Savings Scheme (SSS):
 
Capital is the prime source of business investment of a country, for this reason savings helps to build up capital. To create more awareness and motivate people to save, EXIM Bank offers Super Savings Scheme.
 
Conditions of the scheme:

• Any individual, company, educational institute may keep their savings under this scheme.
• The deposit can be multiplies of TK.10000.
•  The period of deposit is for eight years.
• Any customer can open more than one account in a branch in his name or in joint names. A deposit receipt will be issued at the time of opening the account.
• If the deposit is withdrawn before seven years, then savings profit will be paid however, no profit will be paid if the deposit is withdrawn 1^st year.
• A depositor can avail loan up to 80% of the deposited amount under this scheme.
• In case of the death of depositor before the term, the deposit (with profit +l %) will be given to the nominee.

 
Examples are given below:
 

 
Clearing Section:
 
The main function of clearing section is to operate with safety and security of financial transaction of financial instrument like DD, PO, check etc. on behalf of the customers through Bangladesh Bank Clearing House, Outside Bank Clearing (OBC), Inter Branch Clearing (IBC). This section examines in the following way:
 

• Whether the paying bank within the Dhaka city.
• Whether the paying bank outside the Dhaka city. Then these checks can be cleared by Outward bill for collection (OCB).
• Whether the paying is their own branch. These checks can be cleared by LBC, LBC stands for Local Bill for Collection.

 
Outward Clearing:
 
The financial instruments like P.O, D.D, Checks collected by specific branch within the Dhaka city and not of their own branch then the Outward bank clearing will be functioned. The procedures of Outward Clearing are followed:
 

• The instruments with schedules to the main branch of EXIM Bank Bangladesh Ltd. With issuing an Inter Branch Debit Advice (IBDA).
• Clearing stamps are affixed on the instruments.
• Checked for any apparent difference.
• The authorized signature endorses instruments.
• Particulars of the instruments and vouchers are recorded in the ‘Outward Clearing’ register.
• The clients receive the duty signed instruments and also branch code number affixed on the instruments.

 
Inward Clearing:
 
When the checks of a customer of the branch are received for collection from other banks, the following should be checked very carefully

• The check must be crossed.
• The check should not carry a date older then the receiving date for more than 6 months.
• The collecting bank must check whether endorsement is done properly or not.
• The amount both in words and figures in deposit slip should be same and also it should be in conformity with the amount mentioned in words and figures in the checks.

 
Essential elements for Clearing:
 
There are three essential elements are required for clearing the Instruments:

• Clearing Seal
• Crossing Seal.
• Endorsement Seal.

Remittance Section
 
The word `Remittance’ means sending of money from one place to another place through post and telegraph. Commercial banks expose this facility to its customers by means of receiving money from one branch of the bank and making an easier arrangement for payment to another branch within the country. Considering this quick transaction, the modes of bank remittance are categorized as under:
 
 

 
 
 
 
 
 
 
 
1 Payment Order (P.O):
Payment Order is a process of money transfer from payer to payee within a certain clearing area through banking channel. It’s an order of local payment on behalf of the bank or its constitution. A customer can purchase different modes of payment Order such as pay order by cash and pay order by check.
 
EXIM Bank charges different amount of commission on the basis of payment order amount
 

 
 
2. Demand Draft (D.D):
Demand Draft is a most popular instrument of money transfer from one corner of the country to another. This can be issued by a customer from a particular bank’s branch of the same bank to pay a fixed sum of money to a certain person or order on demand.
 
Its may be paid in cash to the payee on proper identification or the amount may be credited to his account (in case of A/C holder of the bank). EXIM Bank charges commission for DD is 0.15% of the principal amount.
 
How DD works:
 
 
 

3. Telegraphic Transfer (TT):
 
Telegraphic Transfer is the most rapid and convenient but expensive method. There are different modes of telegraphic transfer such as Fax, Mobile, Telephone Telex, and Telegram.
 
If an applicant wants to transfer money quickly to the pay in another city or district he /she may request the banker to send it by TT.
 
Cash Section
 
Cash is the life of all financial activities. It plays a very vital role in the general banking procedure it is very sensitive part of the branch of the bank: it deals with most liquid assets. This section receives cash from depositors and pays cash against checks, drafts, pay order and pay in slip over the counter. This EXIM Bank facilitates electronic counting machine to the customers where a huge amount of cash money can be counted with in a few minutes.
 
 

Part – 3: Foreign Exchange Division

 
 
The general meaning Foreign exchange is, the methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks foreign exchange means,  the general mechanism by which a bank converts currency of one country into that of another.
 
Foreign Exchange Department (FED) is the international department Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers. If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign countries. EXIM Bank, Principal branch is an authorized dealer. Other branches also maintain foreign exchange division on behalf of main branch. There are three kinds of foreign exchange transaction:
 
A) Import
B) Export
C) Remittance.
 
 
IMPORT
 
According to Import and Export Control Act, 1950, the Office of Chief Controller of Import and Export provides the registration (IRC) to the importer. In an international business environment, buyers and sellers are generally unknown to each other. So seller of goods always seeks security for the payment of his exported goods. Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the buyer does not pay. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by ‘Letter of Credit’.
 
 
Letter of Credit (LC)
 
A letter of credit is a letter issued by a bank (know as the opening or the issuing bank) at the instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain conditions mentioned in the letter gave been complied with.
 
Parties to the L/C
 
Importer:                                 Who applies for LC.
 
Issuing Bank:                          It is the bank which opens/issues a L/C on behalf of the Importer.
 
Confirming Bank:                   It is the bank, which adds its confirmation to the credit and it is done at the request of issuing bank. Confirming bank may or may not be advising bank.
 
Advising or Notifying Bank:  It is the bank through which the L/C is advised to the exporters. This bank is actually situated in exporter’s country. It may also assume the role of confirming and /or negotiating bank depending upon the condition of the credit.
 
Negotiating Bank:                   It is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank.
 
Accepting Bank:                     It is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank
 
Reimbursing Bank:                 It is the bank, which would reimburse the negotiating bank after getting payment – instructions from issuing bank.
 
Steps for import L/C Operation
 
There are eight steps of L/C operation is given below-
 
Step 1 – Registration with CCI&E
 
For engaging in international trade, every trader must be first registered with the Chief Controller of Import and Export.
By paying specific registration fees to the CCI&E- the trader will get IRC/ERC (import/Export Registration Certificate) to open L/C with bank, this IRC is must.
 
Step 2 – Determination terms of credit
 
The terms “letter of credit” are depending upon the contract between the importer and exporter. The terms of the credit specify the amount of credit, name and address of the beneficiary and opener, tenor of the bill of exchange-period and mode of shipment and of destination, nature of credit, expiry date name and number of sets of shipping documents etc.
 
Step 3 – Proposal for Opening of L/C
 
To have an import LC limit an importer submits an application to department to EXIM Bank. The proposal contains the following particulars:
 

• Full particulars of the bank account
• Nature of business
• Required amount of limit
• Payment terms and conditions
• Goods to be imported
• Offered security
• Repayment schedule

 
Step 4 – Application by importer to the banker to open letter of credit
 
For opening L/C, the importer is required to fill up a prescribed application provided by the banker along with the following documents:
 

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

• Taking filled up application form from the importer. Collects credit report of exporter from exporter’s country through its foreign correspondence there.

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

 
 
 
Step 6 – Shipment of goods and lodgment of documents by exporter:
Then exporters make shipment (the goods) to the destination of the importer country. Sends the documents to the L/C opening bank through his negotiating bank. Generally the following documents are sent to the Opening Ranker with L/C
 

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

 
Step 7 – Lodgment of Documents by the opening Bank from the negotiating bank:
 
After receiving the documents, the opening banker scrutinizes the documents. If any discrepancy found, it informs the importer. If importer accepts the fault, then opening bankers call importer retiring the document. At this time many thing can happen. These are indicated in the following:
 

• Discrepancy found but the importer accepts – No problem occurs in lodgment.
• Discrepancy found and importer not agreed to accept – In this case, importers complains and send back all the documents to the exporter and request them to make in the specified manner. Here banker is not bound to pay because the documents send by exporter is not in accordance with the terms of L/C.
• Documents are OK but importer is willing to retire the documents – In this case bank is obligated to pay the price of exported goods. (This payment is one kind of credit to the importer and this credit in banking is known as PAD).
• Everything is O.K. but importer fails to clear goods from the port and request hank to clear – In this case banks clear the goods and takes delivery of the same by paying customs duty and sales tax etc.

 
 
Step 8 – Retirement
 
The importer receives the intimation and gives necessary instruction to the bank for retirement of the import bills or for the disposal of the shipping document to clear the imported goods from the customs authority. The importer may instruct the bank to retire the documents by debiting his account with the bank or may ask for LTR (Loan against Trust Receipt).
 
Accounting Procedure in case of L/C Opening s
 
When the officer thinks the application is fit to open a L/C, giving the following entries ­creates the following charges­
 

 
 
 
 
Amendment of L/C:
 
After opening of L/C some time’s alteration to the original terms and conditions become necessary. These amendments involve changes in
a. Unit price
b. Extension of validity of the L/C.
c. Documentary requirements etc.
 
Such amendments can be affected only if all the concerned parties agree i.e. the beneficiary, the importer, the issuing bank and the advising bank. For any amendment the importer must request the issuing bank in writing duly supported by revised indent/ proforma invoice. The issuing bank then advises the required amendment to the advising bank L/C amendment commission including postage is charged to the clients A/C.
 
Payment Procedure of Import Documents
 
This is the most sensitive task of the Import Department. The officials have to be very much careful while making payment. This task constitutes the following:
 
Date of Payment: Usually payment is made within seven days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay.
Preparing Sale Memo: A sale memo is made at B.C rate to the customer. As the T.T & O.D rite is paid to the ID, the difference between these two rates is exchange trading. Finally, an inter Branch Exchange Trading Credit Advice is sent to ID.
Requisition for the Foreign Currency: For arranging necessary fund for payment, a requisition is sent to the International Department
Transmission of Message: Message is transmitted to the correspondent bank ensuring that payment is being made.
 
 
Export
 
Generally the goods and services sold by Bangladesh to foreign households, businessmen and Government are called export. The export trade of the country is regulated by the imports and Exports (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry Of Commerce through Chief Controller of Imports and Exports (CCI & E). No exporter is allowed to export any commodity permissible for export from Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC). The ERC is required to renew ever year. The ERC number is to be incorporated on EXP forms and other documents connected with exports. The formalities and procedure are as follows:
 

 
Export operation
 
Bangladesh exports a large quantity of goods and services to foreign households. Readymade garments (both knitted and woven), Jute, Jute-made products, frozen shrimps, tea, leather & Leather made products are the main goods that Bangladeshi exporters exports to foreign countries. Garments sector is the largest exports sector in our country. Bangladesh exports most of its readymade garments products to USA and European Community (EC) countries, Bangladesh exports about 40% of its readymade garments products to USA. Most of the exporters who export through EXIM BANK are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers.
Export L/C operation is just reverse of the import L/C operation. For exporting goods by the local exporter, bank may act as advising banks and collecting bank (negotiable bank) for the exporter.
 
Before advising any L/C the following steps must be ensured (Checking of Export L/C):
 
Before advising the export L/C to the beneficiary advising bank should check the terms and conditions of export to ensure the following points:
 
1. The exportable commodity is not banded by our export policy.
2. The terms and conditions of the L/C are not differing to the exchange control regulations of the country.
3. The payment terms must be specified in the L/C.
4. The documents which mentioned in the L/C are easily available.
5. The settlement is not allowed in a banded country.
6. All the L/Cs are subject to Uniform Custom and practice for documentary credit ICC Publication No. 500, 1993 revision.
 
 
Some Bad Terms in Export L/C:
Generally the following bad terms are funded in the export L/C:
1.  Negotiation restricted: It should be freely negotiable.
2.  Document: It should be in presented for negotiation in Bangladesh, not outside Bangladesh.
3.  Bill of Lading: It should be to the opening order of negotiating Bank and endorsed favoring opening bank or named bank as per L/C Terms.
4.  Blank endorsement: In no circumstances  in B/L blank endorsement is acceptable in exchange control Bangladesh.
5.  Airway Bill to the order of applicant: It should be to the order of a bank.
6.  Payment will be made after realization of proceed from a name bank or buyer. Payment terms should be clear and specific.
 
Advising bank:
It receives documents from the foreign importer and hands it over to the exporter. Sometimes it adds confirmation on the L/C on request from the Opening Bank. By adding confirmation, it assumes the responsibility to make payment to the exporter.
Negotiating Bank:
It negotiates the bills and other shipping documents in favor of the exporter. That is, it collects the export-bill from the drawer and credits the exporter’s account for the same. Collection proceed from the export bill is deposited in the bank’s NOSTRO account in the importer’s country. Sometimes the bank purchases the bills at discount and waits till maturity of the bill. When the bill matures, bank presents it to the drawer to cash it.
 
Back-To-Back L/C
In our country, Export and import operation of bank is very much related with one another because of use of Back to Back and maturity of payment for Back ­to-Back L/C is set in such that it can be paid out of export proceeds.
It is simply issued to the clients against an import L/C. Back-to-Back mechanism involves two separate L/C. One is master Export L/C and another is Back-to-Back L/C. On the strength of Master Export L/C bank issues bank to back L/C. Back-to-Back L/C is commonly known as Buying L/C, on the contrary Master Export L/C is known as Selling L/C.
Features of Back-to-Back L/C:

• An Import L/C to procure goods /raw materials for further processing.
• It is opened based on Export L/C.
• It is a kind of Export Finance.
• No margin is required to open Back to back L/C
• Application is registered with CCI&E
• Applicant has bonded warehouse license.
• L/C value shall not exceed the admissible percentage of net Free on Board (FOB) value of relative Master L/C.
• Period will be up to 180 days.
• The import L/C is opened for 75% of the value of Export L/C.
• Here L/C issued against the lien of export L/C.
• Arrangements are such that export L/C matures first then out of this export profit, import L/C is paid out.

 
PROCESSING AND OPENING OF BB L/C:
An exporter desired to have an import LC limit under Back to Back arrangement. In that case the following papers & documents are required –­
 

1. Full particulars of Bank account.
2. Balance Sheet.
3. Statement of Assets & liabilities.
4. Trade License.
5. Valid Bonded Warehouse License.
6. Membership Certificate.
7. Income tax Declaration.
8. Memorandum of Articles.
9. Partnership Deed.
10. Resolution.
11. Photographs (all Directors).

 
On receipt of above documents and papers the Back to Back L/C Opening section will prepare a credit report. Branch must obtain sanction from Head Office for opening of BB L/C. Exporters prepare the documents and submit the same to the bank for negotiation.
 
Preparation of Export Documents:
 

 
­
EXIM Bank is highly helpful for the export oriented company. The documents for an export oriented garment industries while requesting for opening a back-to-back L/C
 
1. Master L/C
2. Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC)
3. L/C Application form duly filled in and signed
4. Performa Invoice
5. Insurance Cover Note with money receipt
6. IMP Form duly signed
In addition to the above documents, the followings are also required to export oriented garment industries while requesting for opening a back-to-back L/C –
1. Textile Permission
2. Valid Bonded Warehouse License
3. Quota Allocation Letter issued by the Export Promotion Bureau (EPB) in favor of the applicant for quota items.
 
Export Documents Checking
1. General verification:
a. L/C restricted or not.
b. Is the Exporter submits those documents before expiry date of the credit.
c. Shortage of documents etc.
2. Particular examination:
a. Each every document should be verified with the LC.
3. Cross examination.
a. Verified one document to another.
 
On receipt of documents its must be checked properly and then a proposal sheet would be prepared as per bank’s format indicating the full particulars of shipment and discrepancy under the signature of authorized person and should be placed to the manager for disposal instruction or sanction.
 
Checklist of exports L/C:
Following defective points are usually found in the Master L/C. So, the bank officials so much carefully check these points. These are:
1. Name of the Advising Bank.
2. Name of Transferring Bank
3. Form of Doc. credit:

•  Name of Issuing Bank
•  Documentary Credit No. and issuing date
•  Date of shipment
•  Expiry date and place

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

• Item
• Total Quantity
• Unit price

12. B/L Clause
13. Reimbursement clause.
14. UCPDC clause.
15. Net FOB Value.
 
Presentation of export documents for negotiation/Purchase:
In case back to back as 60-90-120-180 days of maturity period, deferred payment is made. Payment is given after realizing export proceeds from the L/C issuing bank. After shipment exporter submits the following documents to EXIM Bank for negotiation.

• Bill of exchange
• Bill of Lading
• Invoice
• Insurance Policy/Certificate
• Certificate of Origin
• Inspection Certificate
• Consular Invoice
• Packing List
• Quality Control Certificate
• G.S.P. certificate.

Foreign documentary bills for collection (FDBC):
EXIM Bank forwards the documents for collection due to the following reasons,

• If the documents have discrepancies.
• If the exporter is a new client.

FDBC signifies that the exporter will receive payment only when the issuing bank gives payment EXIM Bank make regular follow-up with the L/C opening Bank in case of any delay in getting payment.
Foreign Remittance
 
This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a bank must provide some services to the clients regarding foreign exchange and this department provides these services.
The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In this process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place an agreed rate of exchange, which the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like, other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender.Remittance procedures of foreign currency There are two types of remittance:
1.  Inward remittance
2. Outward remittance.
 
1. Inward Foreign Remittance: Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, and bills, T.C. etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C.
2. Outward Foreign Remittance: Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired.
Working of this department
1. Issuance of TC, Cash Dollar /Pound
2. Issuance of FDD, FIT & purchasing, Payment of the same.
3. Passport endorsement.
4. Encashment certificate­
5. F/C Account opening &fifing.
6. Opening of Export FC retention Quota A/C& maintain.
7. Maintenance of ledger of Cash Dollar, FC Deposit A/C & TC.
8.  Maintain FBC register &follow up FBC.
In these processes of remittance, bank must have to make profit as a business institution. Profit is made in two ways:
I.  Commission charged
2.  Difference in the buying and selling rate.
 
Rate of exchange
 
It means the price of one currency expressed in terms of another currency. Rate of exchange is the rate by which the relation among different foreign currencies is established in terms of local currency of that country. Value at which one country currency can be converts into another’s country. In exercise of the power conferred by section three of exchange regulation ACT 1947. Bangladesh has issued license to certain bank to deal in foreign exchange is called authorized dealer.
 
Spot rate: It is quoted for transaction where the foreign currency bought or sold is to be received or delivered immediately. The current rate of exchange quoted in the foreign exchange market.
Forward rate: When a rate is applied to a future date it is called forward rate at which foreign exchange can be sold or bought for delivery at a future time.
Cross rate: The rate of exchange quoted expressing the quotation for any two currencies in term of a third.
SWAO: Sport rate against forward purchased or a spot purchase against forward rate.
Direct quotation: Rates are quoted in tarm’s foreign currency per unit of foreign currency.
Indirect quotation: Rates are quoted in terms of foreign currency per one unit of home currency.
Buying rate: Authorized dealer applies this at the time of purchasing / negotiation of export document and payment against TT. MT, check and drafts required from abroad.
Selling rate: Authorized dealer applies this at the time of lodgment of import documents, realization of LC margin from importer and other foreign exchanges transaction on overseas bank.
Forward rate at a discount: when forward rate is higher than that of spot rate.
Forward rate at a premium: when for ward rate is lower than that of spot rate.
 
Chapter-4
Findings
Problems Identified on the survey
 
General Banking Division:
General Banking Division they follow the traditional banking system. The entire general banking procedure is not fully computerized.
According to some clients opinion introducer is one of the problems to open an account. If a person who is new as a client wants to open account, it is a problem for him/her to arrange an introducer of SB or CD Account holder.
They are not using Data Base Networking in Information Technology (IT) Department. So they have to transfer data from branch to branch and branch to head office by using floppy disk, or mail and surely it is not a good system.
 
Foreign Exchange Division:
In Foreign Exchange Division it is required to communicate with foreign banks frequently and quick. Besides, this branch is not an AD Branch, so while opening a L/C it’s required to contact with the Nawabpur Branch or to the Mainbranch.
 
Reasons of choosing EXIM Bank
Mirpur Branch is now operating with all most 6,500 account holder. During my internship program I tried to find out why people chose EXIM Bank as their partner. EXIM Bank is a Shariah based corporate bank. Those who have small or large business, and want to do business according to Shariah, choose EXIM Bank as their business partner. During my Internship program I asked the clients the reason behind choosing this bank. 18% of the clients said that they choose EXIM Bank because this is a Shariah based bank. 41% said that this is a Shariah based bank and among Shariah based banks EXIM bank offers a favorable rate. More than 50% people choose EXIM based because it is Shariah based. Moreover 18% of the clients selected EXIM Bank just because of attractive rate and the service of the bank. 15% of the clients choose EXIM Bank because of the brand image. A portion of them specially choose the Mirpur Branch. Only 8% of the clients choose it because it is near to the office. The chart has been given below.
 
SWOT Analysis:
 
The Bank’s strength and competitive capabilities can be shown by the SWOT analysis. The SWOT analysis is grounded in the basic principle that strategy-making efforts must aim at producing a good fit between a company’s resource capability and its external situation. The SWOT analysis of Dhaka Bank Limited is as follows:
 
Strength
i) Reputation of the Bank: The banks have provided services successfully and have achieved goodwill among the Shariah Based Banks.
ii) Sponsor: EXIM bank has sponsors from various sectors of Bangladesh. The most successful entrepreneurs from various sectors started this company. As a result there was a combination of different thoughts and skills in the management of the bank, which is very much essential for success in today’s competitive market.
iii) Top Management: EXIM bank has a very competent and experienced top Management. The current Managing Director Mr. Mohammed Lakiotullah has banking experience for a long time period.
iv) Shariah Based Banking: EXIM bank is operating based on Islamic Shariah. As Bangladesh is a Muslim country, the Shariah banking has been able to attract customers.
v) Branches: EXIM bank is operating their business all over the country with 31 branches and still planning to expand their business by opening new branches in the country. It has strengthened the distribution of the bank’s services.
 
Weakness:
i) Promotion: The bank does not have any formal promotional activity. They do not give any sort of advertisement or do not have any marketing activity. They do not even too many bill boards. This is why they are far behind the competitive in the private banking. Even some people do not know that EXIM Bank is operated according to Shariah. Some people think EXIM Bank is responsible for Import and Export only.
ii) Remuneration: The remuneration of the officers of EXIM bank is lower compared to other private banks. Even the internship students are paid nothing. This is why high skilled human resources are discouraged to join here.
iii) Internee: EXIM do not control the Internees. As intern want to adjust the official rules & regulations, but EXIM bank have not control on the INTERN. When an Intern comes in the bank, outside the bank, are they learning from the bank? .
iv) Online Banking: Though EXIM bank has introduced Automation in banking service, but the network is not strong.
v) Centralization Decision Making: The decision making of the bank is too many centralized. No decision is made without the authorization of the head office.
 
 
Opportunity:
i) Consumer Banking: EXIM bank is operating corporate banking. In our country there is a huge opportunity of consumer banking. So EXIM bank can reposition their branding and introduce consumer banking with corporate banking.
ii) ATM: The banking sector of the country is becoming modernized in the country. People like to draw money any time from anywhere. So ATM card is getting popularized in the country. EXIM bank can introduce ATM system in their bank. More Over, Shariah Based banks are not providing ATM cards. So those who want ATM card but do not like interest, they can be attracted by ATM card issued by a Shariah Based Bank.
iii) More Branches: The economy of the country is expanding. The business outside Dhaka is also expanding. As a result, the demand for banking service is increasing day by day. So EXIM bank can open more banks in the country and can expand their business.
iv) Shariah Based Banking: In our country people are religious. Most of the people are Muslim. They are becoming educated and know the bad impact of interest. So they are moving towards Shariah based banking. EXIM bank takes this opportunity.
v) New Products: The intention of the people has been changing. They now want to save more. They also want some benefit on their saving. So EXIM bank can introduce more products and schemes.
 
Threat:
i) Competitions: In Bangladesh, after economic reform, more private bank has started their operation in the country. They are coming with different types of attracting products. This has increased the completion among the private banks.
ii) Devaluation of local Currency: The value of local currency is decreasing. So investment in local banking is decreasing. More over the inflation is increasing in the country. So people want to save money but in many cases they cannot. As a result, the banks are getting less deposit.
iii) Bank Default: There is a tendency of the people of the country to become bankrupt. Few days ago Oriental bank has a great suffering. In our country, the receivable from top 20 bankrupt companies stood 88.36 billion. This is discouraging banks to make new investment.
 

Chapter-5:Conclusion

EXIM Bank Ltd. is a Third generation Bank. It is committed to provide high quality financial services to contribute to the growth of GDP of the country through stimulating trade and commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated people, poverty alleviation, raising standard of living of limited income group and overall sustainable socio-economic development of the country. The is not so far when it will be in a position to overcome the existing constraints and it may be expected that by establishing a network over the country and by increasing resources this bank will be able to play a considerable role in the portfolio of development of financing.
 
The study focuses on overview of overall banking of EXIM Bank Ltd. Financial has been measured in terms of some selected criteria such as; Deposit accounts, Investment accounts, Authorized Capital, Paid capital, Reserve position, Scope of providing services, Work forces, Total income, Expenditure, EAT, Dividend per share, Total Asset and fixed asset. In terms this criteria it has been found that the EXIM Bank Ltd has in a very good touch in all these criteria except fixed asset and dividend per share which is not satisfactory. Success in the banking business largely depends on effective lending. The more the income from credit operations the more will be the profit of the EXIM Bank Ltd. and here lays the success of credit financing.
 
It (EXIM Bank) is in a superior position in comparison to those of its time and is growing so fast as well. It is playing a very significant role particularly in Export- Import business through its wide range of networks and a very easy and comprehensive service system.
 
From the discussion it can be concluded that EXIM Bank playing an important role in the economic development of the country and it has a prospect future to have a very good position in the banking sector. To do this it should increase promotional activities to reach to the people easily. From the learning and experience point of view I can say that I really enjoyed my internship at EXIM Bank Ltd. from the very first day. I am confident that this 03 (Three) months internship program at EXIM Bank Ltd. will definitely help me to realize my further carrier in the job market.
Recommendations
 
To increase the efficacy in customer service, EXIM Bank should try to develop the process of providing services. To get a perfect process of delivering services, the customers should be asked. The other suggestions are as follows:
 

• Check clearing section should be computerized to clear the check immediately after receiving.

• In order to transfer data in different branches on time networking system should be introduced; it will save time as well as will reduce error.

• Customers are satisfied with the price charged by EXIM Bank, but they are not too much aware about the pricing strategy. Customers awareness should be build over pricing strategy. Personal relationship should be strengthened with the customers.

• It should emphasize more on customer relationship management to retain the existing customers and attract the potential customers.

• Offices should be decorated with the help of interior design companies.

• Customers are the heart of the organization. They should provide more space in the office and if possible they should have some entertainment facility.

• The bank sanction loan to corporate client only but it should provide loan in SME sector in order to develop the socio- economic condition of the country.

• EXIM Bank should apply to transform the branch as an AD Branch to facilitate the foreign transactions or trade as the Foreign Exchange is the most profitable department of each branch.

 
Bibliography
 

1. Annual General Meeting (AGM) Report 2005.
2. Prospectus of EXIM Bank.
3. Several Booklets from EXIM Bank.
4. Several Reports from EXIM bank library.
5. Uniform Customs & Practice for Documentary Credit (UCPDA 500, 1993 revision).
6. www.eximbankbd.com (as on 22/03/2009)
7. www.investopadia.com  (as on 22/03/2009)