A special focus on foreign exchange of Bank Asia Ltd
CHAPTER-1 INTRODUCTION Introduction 1.1 Origin of the Report The global economy, in the 2002, had no respite from the repercussion of the economic slowdown that started in late 2000 with a growth of only 1.7%. The major reason for this has been the structural imbalances in the two leading economics, the US and Japan, with weak recovery in the former and stagnation in the latter. The USA and Japan together account for 4.7% of global GDP and 20% of export and 25% of import. Both the economics are now undergoing almost nil GDP growth, high unemployment and decline in their share of world trade. The situation is further exacerbated by the recession in the EU, another dominant player in the world economy. The Bangladesh economy marked a GDP growth of 4.8% in FY 2001-02 compared to 5.3% in the previous financial year. Agricultural sector contributed 25% of total GDP with a growth of 2.8% as against 3.1% in 2000-01. Industrial sector saw relatively higher growth in power, energy, water and small enterprise than in large and medium industries reflecting weakening exports. Services sector also registered as satisfactory considering an average global economic growth of 1.7% although upward inflationary pressure implies a lower real growth. In recent months Bangladesh receiving indication for substantial amount of Foreign Direct Investment, and the country received a net amount of US$ 505.45 million as foreign investment during the FY04 registering a 5% annual growth over the previous year. 1.2 Objective of the Study •
To know the financial performance of Bank Asia Limited.
To evaluate their strength and weaknesses regarding banking sector.
To justify their way of banking in our economy.
To overview the whole operation at a glance.
To compare the Bank Asia Limited with some private commercial banks.
To illustrate banks liquidity and capital reservation with special reference to the annual report.
To clarify the disbursement, advances and classified loans.
To know the contribution of GDP towards Bangladesh economy.
To state the major drawbacks and the way of improvement.
To know the proper utilization of resources those are available in our economy.
1.3 Scope of the Study: Worldwide economic situation continued to pose adverse impact on most developing countries including Bangladesh challenging the possibility of registering a positive growth in the year 2002. A wide variety of business, industries and sectors constitutes the advance portfolio, major sectors where the Bank Asia have entered in particular, Textile and ready made garments, Edible oil, telecom, media and technology, Shipping, ship breaking, steel and engineering etc. Bank Asia Limited it is a well known private commercial bank in the banking sector and doing formidable job. So far researcher has a very specific scope to overview the whole system. The banking sector continued to make remarkable profit in the 2002. Especially the 31 private banks recorded a profit before tax Tk. 1445.50 corer with a growth of 6.56% over the previous years Tk. 1356.38 corer. 1.4 Methodology of the Study Data Sources and referred are both primary and secondary in nature. The required primary data were collected by personal interviews. The sources of secondary data are published articles and periodical and annual report of Bank Asia, daily newspapers etc. 1.5 Data sources. Collections of facts (underdone facts) generally treated as data. There are two types of data viz. •
Primary Data The primary data are those which are collected a fresh and for the first time and thus happen to be original in character. Sources of primary data Conducting survey and personal interview method through questionnaire. Secondary Data The secondary data, on the other hand, are those which have already been collected by some one else and which have already been passed through the statistical process.
Sources of Secondary data Secondary data for this particular study was collected from the Administration Department of Bank Asia Limited, Annual report of Bank Asia Limited, Directories and Manuals, Magazines and Periodicals, Bankers Guide and From Web sites. 1.6 Limitations •
Researcher has time constrain to prepare an extensive report like financial evaluation of Bank Asia Limited.
It is very difficult to get the information from the branch office so the unavailability of data creates an enormous problem while constructing the report.
All the assumptions and analysis have been done with the data available to me so there may be some wrong findings.
There are some obligations to get the exact information.
There were some technical problems like data interpretation, transmission, and data reservation.
Restriction regarding information disclosing.
Data that has been preserved are not user friendly manner.
They cannot give foil authority to the in terms to get full information because they afraid of licking the information.
Arbitrary hypothesis formulate some sort of wrong interpretation.
CHAPTER-2 BANKING OVERVIEW OF BANGLADESH 2.1 What is Bank? A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers to borrow and lend. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as: •
conducting current accounts for his customers
paying cheques drawn on him, and
Collecting cheques for his customers.
In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques do not depend on how the bank is organized or regulated. The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in minds that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions: â€˘
"banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).
"banking business" means the business of either or both of the following:
1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period; 2. paying or collecting cheques drawn by or paid in by customers Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has lead legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques. 2.2 Origin of the Bank The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentines bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times.
In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Romethat of the Imperial Mint. 2.3 Objectives of Bank The broad objectives of the Bank are: a) To regulate the issue of the currency and the keeping of reserves; b) To manage the monetary and credit system of Bangladesh with a view to stabilizing domestic monetary value; c) To preserve the par value of the Bangladesh Taka; d) To promote and maintain a high level of production, employment and real income in Bangladesh; and to foster growth and development of the country's productive resources for the national interest.
2.4 Wider commercial role However the commercial role of banks is wider than banking, and includes: •
issue of banknotes (promissory notes issued by a banker and payable to bearer on demand)
processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means
issuing bank drafts and bank cheques
accepting money on term deposit
lending money by way of overdraft, installment loan or otherwise
providing documentary and standby letters of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures
safekeeping of documents and other items in safe deposit boxes
Sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a 'financial supermarket'.
2.5 Law of banking Banking law is based on a contractual analysis of the relationship between the bank and the customer. The definition of bank is given above, and the definition of customer is any person for whom the bank agrees to conduct an account. The law implies rights and obligations into this relationship as follows: 1. The bank account balance is the financial position between the bank and the customer, when the account is in credit, the bank owes the balance to the customer, when the account is overdrawn, and the customer owes the balance to the bank. 2. The bank engages to pay the customer's cheques up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit. 3. The bank may not pay from the customer's account without a mandate from the customer, e.g. a cheque drawn by the customer. 4. The bank engages to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account. 5. The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship. 6. The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebted to the bank. 7. The bank must not disclose the details of the transactions going through the customer's account unless the customer consents, there is a public duty to disclose, the bank's interests require it, or under compulsion of law. 8. The bank must not close a customer's account without reasonable notice to the customer, because cheques are outstanding in the ordinary course of business for several days. These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force in the jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship. 2.6 Types of banks Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to High Net Worth Individuals and families; and investment banking, relating to activities on the financial markets. Most
banks are profit-making, private enterprises. However, some are owned by government, or are nonprofits. Central banks are normally government owned banks, often charged with quasi-regulatory responsibilities, e.g. supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as Lender of last resort in event of a crisis. 2.7 Types of retail banks National Bank of the Republic, Salt Lake City 1908 National Copper Bank, Salt Lake City 1911 •
Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.
Community Banks: locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners
Community development banks: regulated banks that provide financial services and credit to under-served markets or populations.
Postal savings banks: savings banks associated with national postal systems.
Private Banks: manage the assets of high net worth individuals.
Offshore banks: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative, while in others socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralized distribution network, providing local and regional outreach and by their socially responsible approach to business and society.
Building societies and Landes banks: conduct retail banking.
Ethical banks: banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments.
Islamic banks: Banks that transact according to Islamic principle Types of investment banks.
Investment banks: "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital markets activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade financing. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike venture capital firms, they tend not to invest in new companies.
2.8 List of the Banks in Bangladesh Central Bank •
Nationalized Commercial Banks The banking system of Bangladesh is dominated by the 4 Nationalized Commercial Banks , which together controlled more than 54% of deposits and operated 3388 branches (54% of the total) as of December 31, 2004. The nationalized commercial banks are: •
Private Commercial Banks Private Banks are the highest growth sector due to the dismal performances of government banks (above). They tend to offer better service and products. •
AB Bank Limited
BRAC Bank Limited
Eastern Bank Limited
Dutch Bangla Bank Limited
Dhaka Bank Limited
Islami Bank Bangladesh Ltd
Pubali Bank Limited
Uttara Bank Limited
IFIC Bank Limited
National Bank Limited
The City Bank Limited
United Commercial Bank Limited
NCC Bank Limited
Prime Bank Limited
Southeast Bank Limited
Al-Arafah Islami Bank Limited
Social Investment Bank Limited
Standard Bank Limited
One Bank Limited
Exim Bank Limited
Mercantile Bank Limited
Bangladesh Commerce Bank Limited
Mutual Trust Bank Limited
First Security Bank Limited
The Premier Bank Limited
Bank Asia Limited
Trust Bank Limited
Shahjalal Bank Limited
Jamuna Bank Limited
Foreign Banks • Citigroup •
Standard Chartered Bank
Commercial Bank of Ceylon
State Bank of India
National Bank of Pakistan
ICB Islami Bank
Specialized Banks Out of the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agricultural sector while the other two ( Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangtha (BSRS) are for extending term loans to the industrial sector. The Specialized banks are: •
Bangladesh Krishi Bank
Bangladesh Shilpa Bank
Rajshahi Krishi Unnayan Bank
Bangladesh Shilpa Rin Sangstha
Basic Bank Ltd (Bank of Small Industries and Commerce)
Bangladesh Somobay Bank Limited(Cooperative Bank)
The Dhaka Mercantile Co-operative Bank Limited (DMCBL)
CHAPTER-3 ORGANIZATIONAL PROFILE 3.1 Overview of Bank Asia Limited The economy of Bangladesh has been experiencing a rapid growth since the 90’s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers’ remittance, local and foreign investments in construction, communication, power, food processing and service enterprise ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives. A group of highly acclaimed businessmen of the country grouped together to respond to this need and established Bank Asia Limited in the year 1999. The Bank Asia incorporated as a public limited company under the Companies Act. 1994. The bank started its commercial operation on November 1999 with an authorized capital of Tk.800 million and paid up capital of Tk.218 million. The paid up capital of the bank stood at Tk.1116 million as on 31 st December 2006. Within a short span of time Bank Asia has established itself as one of the fast growing local private banks. It has at present a network of 26 branches serving many of the leading corporate houses and is gradually moving towards retail banking. Its other significant delivery channel is the shared ATM Network. Bank Asia has 25 ATMs as a member of ETN along with eleven other banks. Since its humble beginning in 1999, it set milestone by acquiring the business operations of the Bank of Nova
Scotia in Dhaka, first in the banking history of Bangladesh. It again repeated the performance by acquiring the Bangladesh operations of Muslim Commercial Bank Ltd. (MCB), a Pakistani bank. Last year the Bank again came to the limelight with over subscription of the Initial Public Offering of the shares of the Bank, which was a record (55 times) in our capital market’s history and its shares commands respectable premium. The asset and liability growth has been remarkable. By December 2006 the total asset of the Bank grew to Tk. 30,478 million, increase of almost 30% comparing to 2005. As of December 2006 deposits increased to Tk. 25,289 million, an increase of 37% over that of 2005, and Loans & Advances reached Tk. 22,255 million, an increase of 25% over that of the year 2005. Bank Asia has been actively participating in the local money market as well as foreign currency market without exposing the Bank to vulnerable positions. The Bank’s investment in Treasury Bills and other securities went up noticeably opening up opportunities for enhancing income in the context of a regime of gradual interest rate decline. Bank Asia is maintaining its competitiveness by leveraging on its Online Banking Software and modern IT infrastructure. It is the pioneer amongst the local banks in introducing innovative products like SMS banking, and under the ATM Network the Stellar Online Banking software enables direct linking of a client’s account, without the requirement for a separate account. Bank Asia has successfully established a transparent process of recruitment seeking the best talent. In its efforts towards continuous development of the human resources of the Bank, it arranges training programs throughout the year. 3.2 Vision Bank Asia’s vision is to have a poverty free Bangladesh in course of a 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. 3.3 Mission
To assist in bringing high quality service 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 country, rendering technology driven innovative services by our dedicated team of professionals.
3.4 Objective of Bank Asia Limited Bank Asia Limited has objectives as like any other organization in order to run their services. These are as follow: •
To blend in its operations traditional banking with modern international services.
To facilitate its stakeholders with high standard and quality banking.
To conduct foreign exchange business such as international money remittance service and so on as well as in national.
To extent credit facility to the client.
To provide standard and quick services in to the client.
To extent custodial services such as locker.
To extent general banking services to the clients.
Buying and selling of foreign currencies.
3.5 Policy of Bank Asia Limited Bangladesh is trying hard and soul to make and give effort to be an efficient player in the global market in terms of business. Accordingly, Bank Asia Limited will as a matter of policy, mobilized its financial, non financial and human resource in conformity with international norms, standards and practices. In the domestic economic field Bank Asia Limited has set its sight on providing its clientele the edge of banking and finance which will enable then to run their enterprises profitability. Bank Asia Limited give a hand the customer with its technology, know how training and specialization, and will provide world class banking system. 3.6 Head office and Branch offices in Bangladesh The head office of Bank Asia Limited is situated in Tea Board Bhaban (Ground Floor) -111-113 Motijheel C/A, Dhaka-1000, Dhaka, Bangladesh. It is currently operating with its twelve branches in Dhaka City, three in Chittagong, one in Sylhet and one in Munshigonj and one in Tarail Kishorgonj. Very soon they are going to expand their branches in other parts of the districts in Bangladesh. In order to point international banking services to their valuable clients, it has established a wide correspondent relationship with a number of local and foreign banks. 3.7 Introduction of the Principal Office Branch: To cope the market with it’s quality service and to reach the doorstep of the people of the country, Bank Asia Ltd adds new branches in urban as well as rural areas in every year. And by this way, on 29th of April 2000 it opened Principal Office Branch in city’s commercial hub Motijheel, located in Tea Board building. From the instigation these branches focus on the corporate clients and performs very well. And from then it performs as the central clearing branch in Dhaka Zone and acts as the
feeding branch for other branch in Dhaka Zone. In the year 2004 it contributes BDT 98.73 million as profit to banks total earning. And in the year 2004 it earns highest of taka one core in the year June. But unfortunately in the recent months itâ€™s earning falls down sharply due to conservative attitude of the branch to extend new loan facilities to the business community. And the management emphasizes to improve profit-earning capacity with stability and sustainability. And also branch management focus on the minimization of cost to maximize the profit. In the month April 2005 the branch earned BDT 3.42 million and total deposit as on 30 th of April 2005 is BDT 2037 million where as total advances is BDT 2411 million. Although the branch is facing negative growth in its profit performance, the initiatives of branch management will improve the state of affairs in a little while. 82 percent of total deposit is high cost deposit. Hence the branch management drives to channel more cost free and low cost deposit that will perk up the profit scenario of the branch. Usually a bank tries to lock up its fund for short term and cut more gain. And at present 41percent of the total advances of this branch is in term loan and remaining as continuous and demand loan. The branch tries to trade off between term loan and revolving loan to maximize its earning. At present this branch is comprises with twenty-two officials and headed by branch manger Mr. M.A.M. Moquit, a prominent banker in the industry. Definitely with in a short time the branch will able to regain its status as one of the highest earning branches of Bank Asia Ltd with its well-satisfied customer group.
3.8 Management & Organizational Structure
S V P a n d B ra n c h M a n a g e r
V P & B ra n c h S u b M a n a g e r
F A V P In c h a rg e F o r e ig h T r a d e
S r . E x . O ffic e E x p o rt A s s . O ffic e r E x p o rt & F D B P J u n io r O ffic e r L D B P J u n io r O ffic e r E x p o rt
F A V P In c h a rg e C r e d it
S r . O ffic e r C r e d it S r . O ffic e r C r e d it S r . O ffic e r C r e d it S r . O ffic e r C r e d it
J r . O ffic e E x p o rt S r . O ffic e r Im p o rt O ffic e r Im p o rt S r . O ffic e r Im p o rt
E x . O ffic e r In c h a rg e G e n e r a l B a n k in g
B a n k in g O ffic e r C le a r in g H o u s e J r . O ffic e r C le a r in g H o u s e E x . O ffic e r C a s h In -C h a rg e A s s . O ffic e r T e lle r 1 B a n k ig O ffic e r T e lle r 2 J r . O ffic e r C ash O ffic e r C ash B a n k in g O ffic e r C u s t o m e r S e r v ic e T r a in e e O ffic e r C u s t o m e r S e r v ic e T r a in e e o ffic e r C u s t o m e r S e r v ic e E x . O ffic e r A c c o u n t s & A d m in .
3.9 Division of Bank Asia Limited-Head Office
Operations, Credit & IT: The main purpose of the operation department is to maintain and ensure free flow the overall activities HR & Company Secretary: In the evolving banking arena innovation and specialization will be the key to maintaining competitive edge. A transparent process to recruit the best talent is successfully established through the Human Resource Department. The human resource department conveys a number of training and development programs throughout in an effort towards continuous development of the Human product of the bank. Both internal and external trainers conduct in-house training programs and these programs are continuously updated to reflect the latest development in the banking as well as information technology sector. By the end of 2005 increases the manpower strength increased to 397 from 331 at the end of the previous year. Marketing The Marketing Department is responsible for the coordination of all marketing activities of the Bank; ensures marketing activities are in compliance with state and federal regulations; develops various marketing concepts, objectives, materials, advertisements, programs, press releases, and other special events approved by senior management and the Board of Directors. The department provides guidance and coordinates implementation efforts with respect to the installation of new or existing products and services. The Marketing Department is also responsible for being the primary contact of public relations and media contacts, advertising, and certain business development activities that promote the spirit, philosophy, dedication, and general direction of the Bank. International Division International Division develops and service comprehensive personal financial relationships within affluent International target market through a professional sales effort and identifies qualified International potential clients. The department initiate contacts assess need; present an array of products and services, and close sales. This department is responsible for the management and total servicing of the international client relationship, and for the growth and profitability of the largest, most complex and profitable relationships in the unit.
Credit The Credit Division is responsible for gathering and analyzing credit information on current and potential borrowers; determines the advisability of granting credit for diversified types of loans Duties
also include assisting loan officers in writing loan requests; promoting business for the Bank by maintaining good customer relations and referring customers to appropriate staff for new services. Audit & Internal Control The Audit & Internal Control Department is responsible for developing, implementing and communicating Treasury Bank Audit's vision, mission, goals and strategies. To ensure that critical business and regulatory processes are in place and working, this department develops and maintains an effective relationship with business partner management, helps business partners balance their business strategy with appropriate risk management controls and encourages business unit management to self-assess its business environment and develop action plans around 'gaps' that could impact sound risk management or success in meeting business plans. The division also ensures that staff understands and is appropriately aligned to the company's objectives/values, and stay abreast to tactics employed by Audit and the business units they review. Other duties include assuring that adequate resources and training are provided to staff, sufficient to ensure full compliance with all regulatory requirements. Financial Control This department of BAL is responsible for the all of the Bank's fiscal operating results, such as cost accounting, budgets, regulatory agency and government reports ensuring the safeguard of Bank assets. The Financial Control Department also counsels senior management on fiscal control and profitability; prepares, presents and interprets financial reports to senior management; adheres to tax laws and regulatory compliance to properly reflect the financial position of the Bank. Information & Communication Tech The Information & Communication Department is responsible for the Bank's electronic and cash management-based products and services, including the development, deployment and maintenance of Bank's Internet web site; assists account and business development officers in the sales of related products and services. The department also performs direct supervisory duties of department staff; coordinates staff for coverage in all related areas of the department; ensures various department activities or projects run smoothly and efficiently.
Branches of Bank Asia Limited Branch
Address Tea Board Bhaban (1st Floor)
111-113, Motijheel C/A, Dhaka-1000
Tel: (02) 7160938, 7177031-2, 7177034, 7164311 Noor Tower (1st Floor)
110, Bir Uttam C.R. Datta Road Dhaka-1205, Bangladesh Tel: (02) 9674501, 9674502, 9677031 111-113, Motijheel C/A
3 Principle Branch
Tel: (02) 9563651-52, 9571450-51 Bayâ€™a Galleria (ground Floor)
4 Gulshan Branch
57, Gulshan Avenue, Gulshan Dhaka-1212, Bangladesh Tel: (02) 8828103,8828387, 9889268-9 69, Agrabad C/A
5 Agrabad Branch
Chittagong, Bangladesh Tel: (031) 714665, 714703, 724876 Taltola Bazar, Malkhanagar
6 Malkhanagar Branch
Munshigonj, Bangladesh Mobile: 01711-831040 32, Kazi Nazrul Islam Avenue
7 Scotia Branch
Karwan Bazar, Dhaka-1215 Tel: (02) 8110161, 8125011-2 60, Niloy Darge Gate
8 Sylhet Main Branch
Airport Road, Sylhet, Bangladesh Tel: (0821) 712256 4, Dilkusha C/A
9 MCB Dilkusha Branch
Dhaka-1000, Bangladesh Tel: (02) 9568871-3 Ayub Trade Center, 1269/B, Sk. Mujib Road
10 MCB Sk. Mujib Road Branch
Agrabad C/A, Chittagong, Bangladesh Tel: (031) 715125-7 Tarail Bazar, Tarail
11 Tarail Branch
Kishoreganj, Bangladesh Tel: (09434) 75099, 01711-403322 24, Kamal Ataturk Avenue, Banani
12 MCB Banani Branch
Dhaka-1213, Bangladesh Tel: (02)9885610, 9889104, 9894699, 9899833 Asia Center, 273/268, Khatungonj
Tel: (031) 610036, 638013-4 Bismillah Tower (1st & 2nd Floor) 147/148, Mitford Road Dhaka-1100, Bangladesh
Tel: (02) 7320620, 7320621 House-79/A, Road-7, Sector-4
15 Uttara Branch
Tel: (02) 8957427-9 Chowdhury Plaza (1st Floor)
16 Ashulia Branch
Zamgara Chourasta Ashulia, Savar, Dhaka, Bangladesh Tel: (02) 7790447-8 89, Shaheed Syed Nazrul Islam Shoroni
17 North South Road Branch
North South Road Dhaka-1100, Bangladesh Tel: (02) 9563768-69, 9563219 665, CDA Avenue, East Nasirabad
18 CDA Avenue Branch
Chittagong, Bangladesh Tel: (031) 843428, 843640, 2850091-2 Rahim Tower, Subhanighat
19 Sylhet Uposhohor Branch
Bishwa Road, Sylhet, Bangladesh Tel: (0821) 815844, 815866 Mostafa Center, Post & PS: Lohagara
20 Lohagara Branch
Chittagong, Bangladesh Tel: (03034) 56304 House-13/A, Road-5, Dhanmondi
21 Dhanmondi Branch
Dhaka-1205, Bangladesh Tel: (02) 8624874-5, 9675918 Mohiuddin Market (1st Floor)
22 Station road Branch
170, Station Road, Chittagong, Bangladesh Tel: (031) 2850934-5 House-25, Block-A, Avenue Road,
23 Bashundhara Branch
Bashundhara R/A, Dhaka, Bangladesh Tel: (02) 8835321-2 182, Alu Patti, Choramara
24 Rajshahi Branch
Rajshahi-6100, Bangladesh Tel: (0721) 812503-4 Al-Mashah Complex, 44 Mojib Sarani
25 Khulna Branch
KDA, Khulna-9100, Bangladesh Tel: (041) 2830134-7 Khilpara Road, 3147 Chatkhil Bazar
Uttara Model Town, Dhaka-1230, Bangladesh
Chatkhil, Noakhali, Bangladesh
Tel: (03222) 75179 Zone Services Complex (Ground Floor) CEPZ, Chittagong, Bangladesh
Tel: (031) 800406 82, Mohakhali C/A
28 Mohakhali Branch
Dhaka-1212, Bangladesh Tel: (02) 8857236, 8857420 NISHI Plaza, Plot#1, Avenue-4
29 Mirpur Branch
Block-C, Section-6, Pallabi Mirpur, Dhaka-1216 Tel: (02) 9013814, 9013841 184, J.M. Sen Avenue, Anderkilla
30 Anderkilla Branch
Chittagong, Bangladesh Tel: (031) 2854556-7, 2854882, 2854883 Sirajdikhan Bazar
31 Bank Asia KIOSK 32
33 Bogra Branch
Munshiganj, Bangladesh Tel: 04495010353, 01730024510 Rohitpur, Keranigonj, Dhaka Tel: (02) 7766677 Jamil Shopping Centre Borogola, Bogra Tel: (051) 51642-4 Jess Tower, 1st Floor
39,/MK Road, Jessor
Tel: 0421-67748, 0421-67783-4 Opening Soon
3.10 Product & Services in Bank Asia Limited Bank Asia is a new entrant in the private banking sector of Bangladesh. It is committed to provide flexible services to its customers for their maximum benefit & higher satisfaction. Gradually Bank Asia increases its product list for our valuable customers we are offering some products & schemes mentioned below
Foreign Currency account
DPS- Deposit Pension Scheme
STD- short term deposit
TRPLE Benefit PLUS
Since establish, its product list is healthy and includes most features. Whenever, the bank launches a product, it looks deeply in its technical issue & acceptance to the general public. Savings Account:
This is an interest bearing account and only individuals can open this type of accounts. Interest rate may differ from bank to bank. At present, Bank Asia is offering 6% interest on its SB accounts. This may be considered as low cost deposit for bank. Interest is charged to the account on quarterly basis. Features of Savings Account o
interest bearing account
Provide reasonable interest. Rate is now- 7 %
Customer can Deposit any amount & no. of deposit is not restricted
No. of withdrawal is restricted
Deposit below tk15000.00 charges tk100.00 on half yearly basis
Better for the small income group
Current Account: It is popular known as Current Account. Any individual, company, firm, may open this type of account in its own name. This is non-interest bearing account. So it is a cost free deposits for bank, On the other hand, customers enjoy the right to wiredraw money as many times as they wish. Features of Current Account: 1) Non interest bearing account 2) Running account 3) No. of withdrawal or deposit is not restricted 4) Operated any no. of times during a working day 5) Generally run by different business organization Short Term Deposit (STD) Account: This is opened and operated for short term and for specific purpose. It is also an interest bearing account and where rate of interest is generally below the savings rate. Normally, interest is paid on daily product basis. Individuals, Firms, Companies, Associations may open this account. Current Interest rate of Bank Asia for this deposit is 5%.
Fixed Deposit Receipt (FDR) Account: Individuals, Firms, Companies, Associations may open this account. The deposit is taken for a specific fixed period of time, such as 1 months, 2 months, 3 months, 6months, 1-year etc. Interest rate depends on amount and period and ranges from 8% to 10.70%. In case of premature encashment
generally no interest is awarded. In special consideration interest at saving rate or STD rate may be allowed. It is considered as high cost deposit for banks. Features of Fixed Deposit Receipt (FDR) Account: o
Provide high interest
Premature encashment provides only savings rate
It is renewable before the date of maturity
1 year (1 Crore & above)
Above 1 Year
Deposit Pension Scheme plus (DPS+) DPS Plus is a 3, 5,7,10 and 12 years term deposit scheme. Deposit monthly installment ranging from Tk. 500/- to Tk. 10,000/- and on maturity you receive a handsome amount as per table below. Monthly
Installment will be automatically deposited from your Savings Account.
Loan facility will be available up to 90% of the deposited amount.
Double Benefit plus (DB+) DB+ is a 6 years term deposit scheme. Deposit your money in this account and get DOUBLE money in 6 years.
Features of this product are: •
Only individuals can open this account.
Money deposited in this account will be doubled in 6 (six) years.
Deposit amount will be minimum Tk. 1, 00,000/- or it’s multiple, and maximum deposit will be Tk. 25, 00,000/- under single name and Tk. 40, 00,000/- under joint name.
Loan facility will be available up to 90% of the deposited amount.
Value at Maturity Tenure 6 years
Initial Deposit Tk. 1,00,000/-
Value at Maturity Tk. 2,00,000/-
Triple Benefit plus (Triple+) TRIPLE+ is a 9 years 6 months deposit scheme. Deposit your money in this account and get 3 times of deposit money in 9 years 6 months. Features of this product are: •
Only individuals can open this account.
Money deposited in this account will be Tripled in 9 (nine) years 6 (six) months.
Deposit amount will be Tk. 1,00,000/- or it’s multiple, and maximum will be Tk. 25,00,000/under single name and Tk. 40,00,000/- under joint name.
Loan facility will be available up to 90% of the deposited amount.
Value at Maturity Tenure 91/2 years
Initial Deposit Tk. 1,00,000/-
Value at Maturity Tk. 3,00,000/-
Monthly Benefit plus (MB+) MB+ is a 3 years and 5 years term scheme deposit that lets you earn monthly benefit of Tk. 975/- and Tk. 1,000/- respectively for deposit of Tk. 1,00,000/-. Features of this product are: •
Only individuals can open this account.
The individuals must have a savings account with the bank in which the monthly benefit will be credited automatically.
Deposit amount will be minimum Tk. 1, 00,000/- or it’s multiple, and maximum deposit will be Tk. 25, 00,000/- under single name and Tk. 40, 00,000/- under joint name.
Depositor will get monthly benefit of Tk. 975/- or it’s multiple for deposit amount of Tk. 1, 00,000/- or its multiple for 3 years term deposit.
Depositor will gt monthly benefit of Tk. 1,000/- or its multiple for deposit amount of Tk. 1, 00,000/- or it’s multiple for 5 years term deposit.
Loan facility is available against the deposited amount.
Deposit and Monthly Payment Matrix Deposit amount
(In Taka) 1,00,000/-
(In Taka) 3 years 975/-
5 years 1,000/-
Non Resident Foreign Currency Deposit (NFCD) Account: This account is opened by the Non Residents. Generally NRB’s or foreign citizen can open this type of accounts. And this account is opened and governed by the foreign remittance related rules and regulations. Here the deposit is held in foreign currency in denominated currency for say FC dollar a/c or FC Euro A/c etc. Resident Foreign Currency Deposit (RFCD) Account: This account is opened by the residents who require depositing foreign currency in it’s own account to pay some specific future expenditure proceeds upon proper permission from the government on amount and purpose. Steps of Account Opening Procedure Account-opening procedure goes with the following steps: a) At first customer service desk want to know whether the customer has introducer to open the account or not? If yes then give him a printed Account opening Form along with Specimen Signature Card, Customer Transaction Profile Form, Info form on Money Laundering. And request customer to fill up the form duly and submit the form with required documents. b) In the form we extract information on:
Account Name or Tittle
Type of account he wants to maintain
Currency in which he wants to operate the account
Detail Personal information of the Applicant
Signature instruction to operate the account
Declaration by the applicant clarifying the gennunity of the information provided by him
Detail of Introducer
Amount of Initial Deposit
Period of Deposit
Interest Payment Instruction
Signature of the applicant to operate the account
Specimen Signature in the signature card
c) Then the customer return the Form duly filled in with the following Documents:
Two Copies of Passport size photographs of the applicant attested by the Introducer and one copy passport size photograph of the Nominee attested by the applicant.
Copy of passport/National Identity Card/ Voter ID Card/ Certification from Word Commissioner or Union Perished Certificate.
Signature Card duly signed.
Transaction Profile Form duly filled in and signed.
Info form on Money Laundering duly signed.
Card for ATM and SMS service duly signed.
Any other Documents required by the Bank from time to time.
Additional documentation and formalities to be observed before opening the account for the following entities: For Limited Companies:
Certified true copy of memorandum and Article of Association
Certified true copy of certificate of Incorporation
Certified copy of Certificate of Commencement of Business
Copy of the Resolution of the Board of Directors authorizing for opening account and specimen Signatures for operation of the Account duly attested by the Chairman.
Latest audited Balance Sheet
For Partner Ship Enterprise:
Certified copy of the constitution of the firm.
Registered Partnership Deed/duly Notarized Partnership deed at will (incase of unregistered firm)
Minutes of the Committee meeting authorizing the opening of an account with the Bank duly certified by the Secretary and the Chairperson.
A copy of Laws and Bye-Laws/Constitution duly attested by proper authority.
A Copy of the resolution of the Committee authorizing Signatories to operate the account
Certificate of Registration; where applicable.
Issuance of Check Book: Customer service desk issues checkbook on request of the customer. Usually the client by himself or by his authorized person send the check requisition slip duly signed and sealed to the bank and then the officer in Customer Service, receive the requisition request and request the client to come on specific time to receive the check book. In this time the officer issues the checkbook and enters leaf no. in STELER and perform other sealing formalities in the checkbook as, Branch Seal, A/c type seal (Savings, STD, Terms), A/c No. Seal and also give authorized signature on the requisition slip. And then note down the Check issue registration no in the top left corner of the checkbook and note the A/c tittle and No. on the top right corner of the check book. And have the checkbook in the envelope addressed to the client. Then delivery the checkbooks to the client or his authorized persons when he comes to customer desk to receive checkbook and have his signature in the Check issue register. Issuance and Renewal of ATM Card:
For new account holders customer service desk issues new ATM card and activate card accordingly. And usually bank charges Tk. 300 per year for New ATM card. And renewal charge is Tk. 250 per year. Issuance of Demand Draft (DD), Telegraphic Transfer (TT) & Pay Order (PO): For transferring fund from one location to another in safe and secured way banks provide the above services to its customer. The sequential illustration of each transfer is give below: Issue of DD/TT/PO:
Receive duly filled up DD/TT/PO prescribed form by the applicant.
Ensure that require amount is deposited or debited from account along with applicable charges.
Prepare leaf for DD and PO
Prepare vouchers for charges.
Obtain signature of authorized persons.
Give posting in the register
Deliver the documents to the customer
Give posting in the STELAR and send advice to the Drawn on Branch
Demand Draft (DD): It is drawn on other branch of our bank outside clearing region. It is safe, secured & popular method of sending money from one place to another for a long time. Usually the beneficiary deposit the DD in his Bank where he has account may be our bank or other bank and then the bank collect the remittance by placing the order in his clearinghouse. And also note that DD is issued by issuing branch but payment is made by Drawn on Branch. Bank charge DD commission as 0.15% on the total amount plus 15% VAT on commission earning and also Tk. 100 as postage charge. Pay Order (PO): Pay order is encashed in the same counter where from it was issued. PO is drawn in favor of an Organization/Party known as beneficiary. Usually PO is issued with in the clearing region. Bank charge PO commission of Tk. 50 for amount not more than BDT 200,000 and Tk 75 for amount above BDT 200,000 plus 15% VAT on commission earning. Telegraphic Transfer (TT):
TT is used as the method of fast fund transfer from one location to another for a long time. Here fund is transferred through the aid of Test Key Materials and SWIFT. TT can be both foreign and local. Bank charge TT commission as 0.15% on the total amount plus 15% VAT on commission earning and also Tk. 100 as postage charge. Provide Account Statement to the customer: Customer service desk sends monthly, quarterly statement of Accounts to the customers. And also provide statement to the customer on request. Selling of Bank’s deposit products: Besides opening of various accounts, customer service sells bank’s own deposit schemes as Deposit Pension Scheme (DPs +), Monthly Benefit Plus (MB +), Double Benefit Plus (DB +). Encashment of Deposit Products: Customer Service Desk provides encashment service to the FDR and Deposit Schemes holder on maturity. Encash the instrument and transfer the money to the linked account of the customer or renew the FDR as per the choice of the customer. Closing Account: If any customer desires to close his/her account then the client apply to the branch manager and accordingly close the account upon proper authorization. Clearing of DD, TT & PO: Every day DD, TT & PO advice come form other branches via STELAR and then customer service desk takes action to release the amount of order if there is no reason of return of the instrument. If the bank is not satisfied then it may return the Order and held payment. Usually an Order may return due to wording mistake, over writhing cause or for any suspect of figure embezzlement. Attend customer query in desk as well as over phone: The customer service desk attends all queries form different clients and customers over desk or over phone like account’s balance enquiry, deposit slip issue etc. Other Services:
It provides other services as SMS banking, Internet banking facilities and related works regarding this. And overall marketing of Bank’s assets and liabilities. All the activities stated above are vital for the bank not only that those earn handsome share of Bank’s income but also for building relation with the public, business entity and the community as a whole. So we can define customer service as the window of the bank that aid to oversee the whole world. By ensuring prompt and flawless flow of all these services a bank can create a sound and strong base comprises with bulk of satisfied customers. And this ensures to achieve long time vision in brighter future. There fore, to ensure sustainable growth the bank management must give proper focus on the arrangement of Customer Service Desk and it’s service team. d) Then the responsible officer of Customer Service will scrutinized the form and attached documents accordingly. e) Then the officer will fill up the “For Bank’s Use Only” portion in the Account opening form and take proper approval accordingly. And upon approval he will open account in the name of the applicant by making posting in STELAR and proceed to the next step. f) Then with duly filled deposit slip he requests customer to deposit the Initial accountopening amount in the cash counter. And upon deposit the account will be eligible to operate. g) Then the responsible officer will issue checkbook to the new account holder and also give him deposit slip. h) Then the officer files the account opening form and other attached papers in appropriate file and preserve in file cabinet. i)
After opening of Account Bank send thanks letter to the new client expressing thanks and gratitude to make relation with us. Another objective of this letter is to verify correctness of the customer’s address
CHAPTER-4 GENERAL BANKING 4.1 Clearing House Section: In a broader sense we may define clearing house as facilitator to the member banks to settle down their inter bank transaction i.e. checks for collection from other banks. Practically clearing house is a house (Floor) of Bangladesh Bank (BB), central Bank of Bangladesh, where every bank has it’s own desk with own name plate and all the authorized official of all banks come here within working time to settle there inter bank transaction. At present there are 52 desks for 52 banks. Usually Bangladesh
Bank provides clearinghouse facilities to its member in different region and where BB branch is not available, Sonali Bank, on behalf of BB, arranges clearing house. Usually the authorized official of every bank attend clearing house floor in opening time with all collection checks in his hand drawn on other banks and settle down their transaction by the arrangement of clearing house. Usually two houses sit for settlement named as follows: I. First House: Usually all the collection checks are collected in this clearinghouse except those, who enjoys facility of same day house (described later on). Usually this house takes sit at around 9:00 A.M. and Return house sits at 5:00 P.M or as directed by the House Super. And then we place the checks, collected earlier day, in clearinghouse today for settlement. And at day end i.e. at 5 P.M. after coming back from return house we credit the collected amount to the customer account and the customer can withdraw money form his account on next transaction day or may draw by ATM or through evening banking facility if provided by the Bank. That means the customer gets money on next transaction day. II. Same day house or High Value house: There is a special arrangement in BB Dhaka clearinghouse for some preferential area and client, to settle down their transaction within same day of placing the check in clearinghouse. Usually only the branches of member banks located in Motijheel region enjoys this facility. The criteria to enjoy the facilities of “Same Day House” is that the check must be drawn on and placed by the banks where both of the banks are located in Motijheel area and the check values more that Tk 500,000. Usually same day house starts at around 11:00 A.M. and return house for this takes place at around 2 P.M or as per direction of House Super. And then we credit the money in customer account and then the customer can withdraw money from his checking account that means in Same Day House the customer can draw money on the same day of placing the check in the house. Where as in First house it is the next transaction day. And we usually provide this special facility only to the valued customers and that’s why another name of this house is High Value House. 4.2 Sequential arrangement of clearing Operation: 1. Collect all collection and clearing checks from cash counter and clearing desk. 2. Collect collection checks from other branches (9 branches are in Dhaka zone along with principal office branch, Central Clearing Branch of Bank Asia Limited) 3. Sorting the checks as in zonal checks and out zonal checks and classify them according to different Banks. 4. Give posting in NIKASH for In Zonal checks and for outside zone checks prepare OBC (Out ward Bill for Collection) vouchers and send those to respective Branches for collection. And
then the local office of that region, which is authorized for clearing, place theses checks in the clearinghouse that sits in its region, for instance, Agra bad Branch of Bank Asia Limited for Chittagong Zone and collects the checks accordingly and sends the money to the respective branch accordingly vide issuing an IBCA (Inter Branch Collection Advice). Some times it may happen that we received a check on a branch of a bank where we have no branch or there is no clearinghouse. Then we send the check to that branch of the Bank with OBC and request them to make the payment to us by DD (Demand Draft) drawn on any of its branch in our clearing region e.g. Dhaka city clearing house member branch. The bank then debits its customer account and issue DD to us drawn on any of its member branch in Dhaka city. And then we collect the DD by placing it in Dhaka clearinghouse.
5. Perform Sealing formalities:
Cross Seal: Affix cross seal on the left corner of checks that will be placed on clearinghouse for collection. Bankers imply two types of crossing, i.e. General Crossing and Special Crossing. Usually the crossing means two parallel lines on corner of the checks, given by the customer who is issuing the check; this general type is termed as general crossing. General crossing implies that this check is not
eligible for payment counterisand must made transaction or Payee’s A/C Credited Forover say Payee Mr.payment Rahim and Hebe is our A/cbyHolder For Bank Asiabasis. Ltd. And in Principal Office Branch, Bank Asia Limited. This clearing bank use special crossing, when it receives the check to clear, on Principal Office, endorsement means that we credited payee’s account by theDhaka top left corner bythis mentioning name and branch name. The purpose of special amount ofbank check. crossing check is that the specific bank’s branch marked as ‘crossed’ Received Payment Here Payee is that is Bank Asia is only For Bank Asia This endorsement means eligible to Ltd. clear this Limited/Cash/Self/Own. check. Principal Office, that Bank Asia A/c is credited for this check Dhaka
Payment Received Clearing Seal: AffixPayee: this seal on all checks to be Mr. placed on clearinghouse. Bank Asia Limited, Karim. In this check Payee’s A/C Credited we give this endorsement means that we received it as a For Bank Asia Ltd. payment to Bank Asia Limited and credited payees Office, Seal:account accordingly. Principal Endorsement Dhaka 1st Payee’s For 3rd Party Check: For say Payee is Mr. X and he Endorsement transferred this in check to Mr. Y by endorsement and Mr. Y This type of endorsement is stated the next page Confirmed deposited it in his Bank A/c in BA. For this check we use this 2nd Payee’s A/C endorsement means that 1st payee’s (Mr. X) endorsement is Credited confirmed by 2nd Payee (Mr. Y) and 2nd Payee is verified and For Bank Asia Ltd. confirmed by the bank it self and 2nd Payee A/C is credited by Principal Office, the check amount. Payee’sDhaka A/C will be For OBC: This endorsement is made when check is Credited after sent to other region for collection. And this realization endorsement means that payee’s A/c will be credited For Bank Asia Ltd. upon realization of the check amount. Here also we give Principal Office, OBC seal with OBC No. & Date on the check. Dhaka Our Branch For OBC: when we send check for clearing to another Endorsement Confirmed branch of our Bank in another region then that branch For Bank Asia Ltd. Principal Office, give this endorsement in check to place in clearing Dhaka
confirming that this amount will go to his branch clearing
with IBC No. & Date on the check.
6. Take print of NIKASH posting for In Zonal checks. And affix the print copy with the respective bank’s checks accordingly. And now checks are ready to be placed in clearing house. 7. Take copy of NIKASH posted entries in Floppy disk. 8. Then the authorized officer of Bank go to clearing house in Bangladesh Bank (BB) in early morning next day and give the disk to the computer division and then the officer exchange checks with other banks and receive checks drawn on his bank from other bank’s desk. Here the bank officers check errors with the check amount and NIKASH entry amount and other checks. And in case of any errors take initiatives to correct it with the respective bank’s officer. And then BB representative cross matches the checks by the aid of NIKASH software. And BB representative announces the printing of cross match posting and take print of NIKASH posting and after print no one is allowed to place new checks for clearing or make any correction or change. And then give all the banks representative copy of NIKASH printed statement. Here BB make the following posting to settle the transaction as follows: For checks placed to other Bank for collection (Outward): Respective Bank’s A/c Bank Asia Limited A/c
For checks placed by other Bank for collection (Inward):
Bank Asia Limited A/c Respective Bank’s A/c
9. Then the bank officer comes back to his office along with the checks drawn on his bank (Inward checks) and the printed statement. Then he checks manually all the checks and send all the checks drawn on other branches to have the confirmation on fund sufficiency in the respective customer account and to debit accordingly from customer account. 10. Then the responsible officer gives posting vide STELAR (the banking software of Bank Asia Limited) and credit each and every customer’s account for outward collection. But at this stage customer is not allowed to draw money form their account as the account in market by “Under Process” for this credited amount. And here the officer pass posting in his own system as follows: For checks placed to other Bank for collection (outward): Clearing Adjustment A/c
Respective Br./Customer’s A/c Cr. For checks placed by other Bank for collection (Inward): Respective Br./Customer’s A/C
Clearing Adjustment A/c
11. Then within 5 p.m. all the branches send bank the return checks with return memo. And in return memo specific mark is given to the reason for check return. Usually a bank return or dishonor checks for the following reasons:
Check out of date/post dated.
Amount in figure and word differs.
Drawer’s signature differs from the specimen recorded in our office.
Payment stopped by drawer.
Crossed check to be presented through a bank.
Payee’s endorsement required.
Or any other reason as written on the memo.
And then the respective bank officer will make posting of return checks in Nikash and take print and affix the copy with return checks bank wise and also take a copy of Nikash posting in Floppy disk. And then he attends return house and places the disk to computer section and again exchange the return checks and cross match the return checks with each other. And then BB representative upon making announcement take print of NIKASH posted cross match entries of return checks and give this print copy to each bank representative and then the bank officer come back to his office with the return checks of its customer. And he makes posting in STELAR for return checks and debit/bounce respective customer’s account and now clear the under process mark on the amount that was posted today’s morning. And now customers can withdraw money form his or her checking account. Here
BB makes the following posting for return checks: For Return checks placed to other Bank for collection (Outward): Bank Asia Limited A/c Respective Bank’s A/c
For Return checks placed by other Bank for collection (Inward): Respective Bank A/c Bank Asia Limited A/c
And the Bank officer when come back his office, pass the following posting in his system for return checks as follows: For Return checks placed to other Bank for collection (Outward): Respective Br./Customer A/c Clearing Adjustment A/c
For Return checks placed by other Bank for collection (Inward):
Clearing Adjustment A/c
Respective Br./Customer A/c
12. And then the clearing section of Bank collects checks for next day settlement and takes same arrangement as illustrated here. All the activities as illustrated above require proper care and concentration. And this will ensure the collection and payment of local remittance to the customer account with in least possible time, successfully and accurately.
4.3 Clearing Operation at a glance:
Clearing House (CH) Dr. Other NIKASH posting Bankâ€™s A/c & other arrangeOBC ment to place check to CH
Place check Directly to Drawn on Bank if we have no Br. or there is no clearinghouse
DD Cash Counter/ Clearing Desk: Receive checks form customers.
C r. C ustom er A /c
Principal Office Branch: clearinghouse member for Dhaka Zone
OBC Cr. P/O
Agrabadh Branch Clearing House for Chittagong Region
Cr. Br.A/c Collection ChecksA/c form Other Branches
Dr. Other Regional Clearing Bankâ€™s A/c House (CH)
Outward Collection Cr. Other Banks A/c
Other Banks Place checks Return Check
Dr. Bank Asia A/c
Dr. Cust. A/c
Principal Customer Office Account Return Check Return Check Branch Dr. Other Branches
4.4 Special Notes on Clearing House: Costs of Clearing House: Its important to note here that all costs incurred in clearing house are borne by the member banks equally and BB authority debit the respective bank’s account for it’s portion of costs and give advice accordingly. Minimum Balance of Account to be maintained with Bangladesh Bank: Each and ever bank has to maintain a minimum balance in it’s account with Bangladesh Bank (Cash Liquidity Reserve). At present minimum balance is 4% on total deposit. And this account is maintained by head office. And if the account face any shortage then Treasury Division channel sufficient fund to Bank’s account with BB and in case of any requirement Treasury may draw excess amount from Bank’s account with BB. A Typical example on clearing Operation: For Say Mr. X is an A/C holder in Bank Asia Limited, Ashulia Branch and this branch is not member of clearing house. And he deposited his account by an A/C Payee check amounting Tk. 100,000 drawn on Prime Bank Ltd., Mali Bagh Branch. Now describe how this check will be collected and transaction will be settled? Illustration: Here Ashulia Branch will receive the check and send it to Dhaka zone clearing house branch i.e. Principal Office Branch with OBC (Outward Bill for Collection) forwarding and proper endorsement i.e. “Payee’s A/c will be credited after realization”. Then Principal Office Branch clearing section will make proper arrangement to place the check in clearing house i.e. it will cross the check, give clearing seal and make endorsement as “Our Branch Endorsement confirmed” and then give posting in the IBC register and place this check in house. And then in the house via Bangladesh Bank this check will be given to Prime Bank Local Office (clearing Branch) and receive payment from Prime Bank vide BB. And then Prime Bank Local office will send this check to their Mali Bagh Brach and accordingly collect money of the check.
And upon receipt from Prime Bank via BB, Bank Asia Limited, Principal Office Branch will credit the amount in Ashulia Br. A/c and send an IBCA (Inter Branch Collection Advice) to Ashulia Branch and then Ashulia Branch will cr. Customer A/C by the Amount. And also note here that if the check is returned from Prime Bank, Mali Bagh Branch then it will send the check with return memo to it’s local office. And then local office will back us (Bank Asia Limited, Principal Office Branch) the return check with return memo and debit the amount from our BB A/C vide BB. Then we will return the check to our Ashulia Branch with the return memo and a forwarding letter and debit the check amount in Ashulia Branch Account and then Ashulia Branch will return the check with return memo to it’s respective customer. 4.5 Cash Section: Cash section of a bank deals with all cash transaction of the bank. As a part of my job rotation in the Principal Office Branch as a management trainee, I joined in Cash Department of this branch. This was my first experience to enter in the Teller section of a bank. As a banker I realized that it is a place of huge responsibility and definitely the first assignment is to satisfy the client over counter. Cash is the most important department that is contributing to the earning of the bank in terms of Goodwill and customer satisfaction with their quality and prompt services. Usually the cash section performs the following activities as described chronologically: 1. Receive Counter (Teller 1): The receive counter performs the following jobs: a) Cash Receive over counter: This counter receive cash deposit from the customer and a cash receive transaction is performed by the following formalities: 1. Count Notes and check fake notes by fake note detector. 2. Check Deposit Slip whether it’s wording is correct. Here usually we check Account no belongs to which branch. For this branch account we can deposit any amount of money and for other bank account we receive maximum BDT 20,000 under any branch transition facility. Here also we check Account No., Name, Date, Depositor sign etc. 3. Give Cash Receive Seal on the deposit slip and signed by the teller. 4. Cross check the contents of Counter Part with the Banks part of Deposit slip. 5. Take authorization sign form authorized officer. 6. Give the counter part (customer copy) of deposit slip to the customer.
7. Credit the amount to customer account by proper posting in STELAR and write the transaction No. on the Deposit slip. 8. Give Posting in Cash Register usually maintained in XL Sheet by mentioning denomination notes. 9. Place the cash notes in the respective drawer of teller desk. b) Check received over counter: Customer usually deposit account payee checks by deposit slip. And here the teller perform his job as follows: 1. Check Deposit slip and Check leaf whether the A/c belongs to this branch. And also we check here the wording of the deposit slip and check, Account Name, No, Date, Depositor Signature etc. 2. Give Receive seal on Deposit slip and give proper mark on the check. 3. Give the counter part (customer copy) of deposit slip to the customer. 4. Give Cross seal on the check. 5. Send all the clearing and collection checks to the clearing section. 6. If the check is for inter branch fund transfer then pass transfer entry in STELAR to transfer the fund. And at day end, this counter produces report to the Cash In-charge. The report furnishes data on Cash Received from customer over counter (usually cash received for DG+, ATM, GP/IUB bill, cash from account holder and other transfer payment i.e. Cash DD, TT & Pay Order receipt), received form vault, Payment to teller 2 and Balance in hand at the end of the day. 2. Payment Counter (Teller 2): At this counter cash is paid to the customer on demand by placing a check over counter. Payment counter performs its job as follows: a) Check the check leaf whether it is worded properly. Usually this checking is termed as Four-corner check. This check covers Branch seal, Date (Date must be current date or 180 days earlier), amount in figure and word, and finally signature of the Drawer. We also check here whether the word “Bearer” is crossed away or the check is in the name of any company or firm. b) Verify the signature with the specimen signature and give verification seal and signature of the verifier. c) Also check here, this A/c belongs to which branch? For other branch’s check more than BDT 20,000 is not to be paid over counter.
d) Check proper endorsement is given behind the check leaf in case of Check Drawn on Payees in the name of any Firm. For checks in the name of Firm Attestation is required along with Firm’s common seal to be paid over the cash counter. e) Put ‘paid’ seal on the check. f) Take receiver signature on backside and verify it with earlier one given on backside when placing the check in the counter and make payment to the client. And also write down the denomination of notes behind the check. g) Give posting in Stelar and debit Drawer account and note the transaction no. on the top of the check. h) Return check is refused for refusal reason. At the end of the day, this teller also reports to the cash In-charge providing data on Receipt form vault, Receipt from Teller 1, Payment to the customer, and Balance in hand at the end of the day.
3. Cash Management: Cash management deals with the management of inflow and out flow of cash of the Branch. It forecast cash inflows and outflows and accordingly arranges sufficient cash to meet client’s cash withdrawal demand. But excessive cash holding force a negative impact on the earning potentials of the branch. So that one important task of it is to trade off between this two i.e. cash sufficiency and earning potentialities. Usually this job is assigned to Cash In-charge of the Branch. The Cash In-charge’s responsibilities are stated below sequentially:
a) This Principal Office Branch works as feeding branch for other branches in Dhaka Zone. That means, it channels cash in and out to each branch of this zone. If any branch requires cash or deposit surplus cash then the respective branch has to give one-day prior requisition. And then Cash In-charge of Principal Office Branch channel fund accordingly. b) Maintain vault register for in and out flow of cash in the vault by amount and by denomination. Vault is a strong room under joint custodian where all the cash are stored of a Branch. In cash register the Cash In-Charge records each and every transaction of cash and confirms the balance after each transaction. So any one can know the current cash status of the Branch at any time. And here in PO
Branch the Vault limit is Max. BDT 25 million that means the cash In-Charge al ways try to maintain cash balance below this limit. But if sometime, cash receive overweighs cash payment heavily then the vault balance exceed this limit and then cash in-charge deposit excess amount to our account in Uttora Bank or in Bangladesh Bank as per the instruction from treasury. And when vault suffers from cash shortage then Cash In-charge as per direction of Treasury, draws cash from Bangladesh Bank A/c or Uttora Bank A/c. c) And at the end of the day Cash In-Charge along with joint custodian will check the vault cash balance with the balance in the Vault register. d) Also Cash In-Charge give opening cash at the beginning of the day to the teller and collect the day end cash in the hand of teller and keep it in vault. e) This section also provides foreign remittance service to its customers. Usually it collects foreign remittance through ITT (International Telegraphic Transfer), and FDD (Foreign Demand Draft). In case of ITT if the amount is below USD 2000 then the bank charges no commission. It just debits Corporate Office Account at Mid Rate and Credit Customer A/c at TT clean Rate. This difference is Bankâ€™s earning under the head of Exchange Gain. And for amount above USD 2000 bank charges commission based on purpose of the remittance received. This section also renders TC Dollar Endorsement for the visitors to abroad. And as per rules one individual can endorse $ 3000 per annum. And out of this $1500 can carry as cash and remaining by TC (Travelerâ€™s Check) from 3 rd party as EURO, AMEX etc as Bank Asia Limited has no TC of its own. Here for endorsement of dollar bank requires necessary papers as Original Passport, Visa duly stamped, Air Ticket, duly filled up T/M Form.
Beside this we purchase cash dollar from foreign visitors with in one month of his/her entry. And we purchase the cash dollar @ cash purchase rate and keep passport copy of the customer at the time of payment. For this remittance transaction this section prepares various regulatory report daily as well as monthly bases and send those to Corporate Office and Bangladesh Bank through Corporate Office.
Due care and concentration is required to perform all these activities successfully and flawlessly and this is very crucial for smooth continuation of Bank business as cash is treaded the most sensitive asset of any organization. And for bank it is the lifeblood proper circulation of which result on the good health of the bank.
CHAPTER-5 FOREIGN EXCHANGE OF BANK ASIA Entered in Trade Finance Division and introduced me in details with Division In-Charge Mr. Ibne MD. Shamsuzzaman and he in brief gave me a snap shot of activities of his division and assigned Mr. Subrata Kumar Paul to give me an overall ideal of this division’s activities. And from then started to enroll in Trade Finance Division and tried to learn the activities of each desk and got an overall image as described here on. This division is comprised with three sections termed as import, export and bill purchase or discounting section. Now we would cast a look into the functions of these sections. This division is more frequently known as “Trade Finance Division”. Earlier “Foreign Exchange Division” used to conduct import and export related all foreign trade related activities. And then the name has been exalted as “Foreign Trade Division” as it has been actually serving the foreign trade. The modern banking system adopted the dimension of “Trade Finance Division” upon the diversity of functional exposure. Basically this division facilitates both the importer and exporter to settle down their transaction and in this process, provides finance to them. In this current days close exposure of globally integrated market, most of the business transactions have been ‘cross border transaction’. The term ‘foreign trade’ can be well defined through the elaboration of the activities of its various sections. In a global market, a country or economy having surplus production preserves positive index or specifically, upward trend in export and the states import those goods, which they are at the end of deficit. And bank as a ubiquitous financial institution has been rendering financial backup for this foreign business by its foreign trade products. This division comprises with the following three sections: 5.1 Import Section: This section provides services in import business. At this point, we must know how an import transaction takes place and what role a bank plays in this regard. A country with deficit production usually imports goods from a country with surplus production of any specific item of product. And the importing country gives permission to its business community to import goods from global market. This import business is governed by the country’s import policies under the practice of general business rules and regulations. These rules and regulations actually ensure an open playing ground for all the importers, in a broader aspect, for the whole business community. Usually, import business takes place in the form of government, commercial and industrial import.
Now an importer always intends to build up a business relation with the best-suited suppliers for him for the goods he wants to procure from global market. Upon selecting the right one sales agreement takes place between these two parties. And in sales contract two parties come in agreement on the payment of the transaction. As importer and exporter are from different global location, they want to secure their transaction. And at this point both parties rely on 3 rd party institution to secure the transaction and this institution is Bank. The importer may make payment to the exporter in Advance i.e. in Advance TT or in L/C form that is upon shipment of the goods. And generally L/C settles a cross border transaction. Now the question is what is L/C and how it operates. 5.2 Letter of Credit (L/C): L/C is an irrevocable documentary credit, which is an undertaking by the issuing bank on behalf of the applicant – generally importer, to pay a certain sum of money to the beneficiary – generally exporter, if certain terms and conditions are fulfilled as stated in the L/C.
5.3 L/C cycle:
Before going for L/C, relationship develops between importer and exporter. When they agree for a business then the import applies to bank for opening an L/C. Then after fulfillment of all formalities and on submission of necessary document the issuing bank issues the LC and sends it to the advising bank, through SWIFT, Telex or mail. Advising bank
then advises the exporter about the LC and
exporter then makes shipment of goods and submits the shipping documents to negotiating bank. It should be mentioned here that the advising bank and negotiating bank might be same or different. At this stage the negotiating bank scrutinizes the entire document and if there is no discrepancy then they send these shipping documents to the issuing bank and claim to the reimbursement bank. Reimbursement bank reimburse by dent of reimbursement authority given to them by issuing bank. The process closes with the exporter realizing payment from the reimbursing bank.
So from the above discussion we can identify the parties’ involved in an LC process as follows: •
Importer: Importer requests the opening bank to open an L/C. He is also called applicant of the credit.
Exporter: L/C is established by favoring to exporter.
Issuing Bank or LC opening Bank: It is the bank which opens/issues L/C on behalf of the importer after importer file an LC opening application.
Advising Bank: The bank through which the L/C is advised to the exporter. It is a bank situated in the exporting county and it may be a branch of the opening bank or a correspondent bank. It may also assume the role of confirming and/or a
Correspondent bank. It may also assume the role of confirming and /or negotiating bank depending upon the conditions of the credit.
Negotiating Bank: The bank, which 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
Reimbursement Bank: The bank or to whom the bill will be drawn. It is mentioned in the credit to make payments against stipulated documents complying with the terms of the credit. It may or may not be the issuing bank.
Confirming Bank: The bank that adds its confirmation to the credit and it is done at request of the issuing bank. The confirming bank may or may not be the advising bank.
5.4 L/C Types General LC can be divided into two broad heads:
Revocable LC: In case of these types of LC, it can be cancelled without prior discussion or consent of the exporter/beneficiary.
Irrevocable LC: Here for any alteration of LC the applicant must consult with beneficiary. Any change or cancellation here is done unanimously rather by one party.
Required document for opening an LC:
The applicant must have a CD account with the bank.
Formal LC opining application.
Must have the import Registration Certificate (IRC), TIN and VAT certificate.
Credit Information Bureau (CIB) report of the client.
Charge Documents such as DP note, GLCA, Letter of hypothecation, Counter guarantee etc.
Duly filled up and signed LC application from, IMP (Important Form), LACF (L/C authorization form)
Indent/ Proforma Invoice/ Contracts applicant *1
Credit Report of the supplier * 2
Insurance cover note with money receipt
Registration from CCI & E (Chief Controller of Import & Export)
Proforma Invoice: Of the beneficiary company/ exporter do not have any agent in our country then they themselves send quotation en their company pad. This is called proforma invoice.
Indent: If the beneficiary has agents in Bangladesh then the agent send quotation on behalf of the company then it is called indent.
Credit Report of Supplier: if pro forma invoice is submitted with LC opening application then credit report is mandatory is applied LC amount is TK 2 lac or above it. In case indent credit report of supplier is mandatory if it is equal to taka 5 lac or above. 5.5 Amendment of L/C: In some cases the importer and exporter both or any of then may be unable to satisfy the requirements mentioned in LC within the stipulated time. Then for alteration of actual terms and conditions amendment is required. In a revocable LC it can be cone without any prior to the beneficiary. But in an irrevocable LC it must be done with prior consent of beneficiary, confirming bank and the importer. A Typical Example on Import L/C: Mr. ‘X’ from Bangladesh wants to purchase 2000 mobile sets from china. And he selected Xiangu Corporation of China as the best suppliers of his required mobile sets. Now the transaction between the two would be as follows. Illustration:
Now assume that we Bank Asia Limited, is the Bank of Importer, i.e. we are the L/C issuing Bank. So how we will extend our service to Mr. ‘X’, when the request comes from him for opening an L/C. Here Mr. ‘X’ may be one of the existing customers or a new one. Usually banks or financial institutions provide trade services to the client’s familiar in terms of reference or account relationship. But off course, we consider the special consequences. Now we would illustrate the proceedings of ‘Bank Asia’ regarding the opening of the L/C in case of Mr. ‘X’ under the consequences of whether the client is known or known. In case of new client: For the establishment of a new banking relation with a new client, both the bank and the client must know the details of each other. A very elementary process of knowing about a customer is to open an account and serving him through the transactions of that very account. Then upon receipt of any L/C request, the following steps are initiated: I. Opening a Current Account. II. L/C opening form is duly filled up and submitted along with the following papers:
Import registration certificate
Tax identification certificate
Vat registration certificate
Association’s membership certificate
L/C and LCA form
The submission of all these papers gets the proposal to the next step. III. The bank would ask for CIB report. At this step a formatted CIB inquiry form is dully filled and sent to Bangladesh Bank. The term ‘CIB’ refers to Credit Information Bureau. This is the specialized department of Bangladesh bank preserving all the data and credit status of all the customers of all Banks related to ‘advance’. Here we must remember that without having CIB clearance about the credit worthiness of our client, we are not supposed to issue L/C or render any other credit facility to any of our clients. Upon receipt of a clean report from CIB, we proceed to the next step. IV. Then the Bank collects the supplier’s credit report to know the credit worthiness of the supplier. Usually supplier’s credit report is asked for in case of indent and if the total L/C value is more than BDT. 5, 00,000.00 and in case of Performa Invoice of BDT. 2, 00,000.00, then more than SCR is required. Usually, beneficiaries Bank
provides this report or it may be furnished by any third party institution Named D & B. V. Arrangement of margin and settlement mode. Here we usually negotiate with client for L/C margin and accordingly the client’s deposits the margin amount of money. Another issue at this stage is to negotiate with the customer on the retirement of the L/C, i.e. how the customer will reimburse the L/C amount due. The customer may reimburse the payment in cash or this can be managed by any loan facility to the favor of the client agreed by the bank. Usually the following loan arrangement is made by the commercial banks to facilitate the import trade.
LTR (Loan against Trust Received): This is a special type of loan arrangement by the commercial banks to facilitate its clients to retire L/C and clean goods. Here the client takes the loan by execution of trust receipt and make the payment on maturity usually from sales proceeds of the imported goods. In this process the goods remain under the possession of the client.
LIM (Loan against Imported Merchandise): In this process the possession as well as the ownership of the goods belongs to the bank. The client cleans a portion of goods upon the agreement with the bank, sales them and proceeds the payment to the bank for the retirement of the goods and it continues. This process results to less risk exposure for the bank as compared to LTR.
VI. Upon the settlement of the margin as well as the mode of retirement, the L/C moves to the next step, i.e. the preparation and the submission of the proposal to the head office: Based on all the information collected from the client, the import division prepares a formal L/C proposal and send it to the Head office with all the supporting documents. Usually a proposal contains the details of the applicant, the nature & the strength of the business of the client, capital structure, particulars of the proprietor or the directors etc. alongside the following documents in particular:
Business relation with the bank and the current liability position, if any.
Liabilities with other banks or financial institutions.
Particulars of L/C, i.e. purpose, quality, name of the item, value, country of origin, suppliers credit report, port of shipment, L/C expiry date, landed cost, market price etc..
Present working capital structure
Particulars of proposed credit facility.
Security collateral and control over security.
Now the proposal is supposed to be considered to be ready. Then it must be duly signed and sealed by the respective authorized person of the Branch and submitted for the approval of the Head office and the process concurs with approved proposal gets beck to the branch with proper instruction. VII. Open the L/C and transmit the L/C to the advising Bank or ad confirming bank (if ad confirmation is required) to advice the seller and its bank regarding the issuance of this L/C. At the same time the importer receives the copy of L/C. Usually this transmission procedure takes place by SWIFT or TELEX or EMAIL format. VIII. Then upon receipt of the L/C, the supplier, first, put his vow on all the terms and conditions and if required, undertakes necessary steps to put in the amendments and upon satisfaction, arrange for the necessary shipment as per the agreed conditions of the L/C. IX. Upon shipment of the goods, the supplier prepares the L/C documents properly as mentioned in L/C and asks his bank to negotiate the documents for payment. These documents are as follows:
Shipping documents like commercial invoice, bill of lading/AWB/TCR, packing list etc.
Bill of exchange,
Certificate of origin,
Suppliers compliance certificate,
Other certificates as per the L/C terms and conditions.
Then the supplier’s Bank, negotiate the documents to the ad confirming Bank to proceed the payment. The ad-confirming bank makes the payment of the document (off course, devoid off any discrepancy) to the negotiating bank and sends the documents to the issuing bank for reimbursement. In case of noninvolvement of any a confirming bank, the negotiating Bank negotiates the documents to the issuing bank for further procedure. The issuing bank must inquire off any discrepancy of the documents. Upon satisfaction, the issuing Bank asks its client to make necessary payments and upon receipt of the due amount, the issuing bank reimburse the proceeds to the ad confirming bank as negotiating bank under the concurrent consequences. Here the significant feature is that in case of
right L/C, payment may be made by 100% cash or by the arrangement of LTR or LIM. But in case of deferred L/C, acceptance is given duly on maturity and payment is made accordingly. X. PAD (Payment against Documents): At this step, the issuing bank makes payment to the negotiating bank by creating a temporary loan A/C termed as ‘PAD’. When it collects payment from the customer, PAD is washed out. Usually the bank is to wash out PAD within 21 days of its opening. Generally, within 5 to 10 days of negotiation, the client makes the payment and clear documents from the bank and goods from warehouse storage. In case of any discrepancy, the bank asks his client whether it is acceptable or not. The client may ask the supplier to come up with necessary amendment or alternatives. XI. Upon the clearance of goods, the client gives a copy of the bill of entry and reports Bangladesh Bank regarding this L/C and closes this file. The bill of entry is mandatory for closing the file. 5.6 Export Section: This section ensures the proper export proceeds to the exporter. Usually the exporter may ask his importer or buyer to make payment by advance TT or L/C. Generally proceeds come by L/C form. Now we would discuss the export activities of a bank under a real life example. Instance: Assume that Mr. ‘X’ is our client and his business is RMG manufacturing & export. Recently he has received a buying order from one of his foreign buyer of USD 100000 and a purchase agreement took place between those two. We would now illustrate our role as a bank in this dealing. Illustration: The total procedure of this export can be sequentially discussed as follows, 1. Let us assume that Mr. ‘X’ has agreed to accept the payment for export via L/C. Then he would ask his buyer to open L/C for aforesaid amount. Then the buyer would request his bank issue accordingly. 2. The buyer’s bank will open L/C upon the purchase agreement and send the L/C copy to advising bank to advise our bank on this L/C. 3. The advising bank will advise on this L/C to our bank and also to us. We may also derive a copy of the L/C directly from the buyer.
4. Upon receipt of the L/C, we will clarify each and every point of L/C and advise our client regarding this L/C. Then our customer will go through the L/C and arrange for necessary amendment. 5. Upon receipt of L/C, Mr. ‘X’ will initiate to start production and for that purpose, definitely he would be in need of raw materials, accessories and other supplies that would put him in necessity of working capital and here comes the bank to facilitate the necessary finance. The bank allows the exporter to open BTB L/C by lien of the master L/C and supply required cash to the supplier. By this BTB L/C, Mr. ‘X’ will purchase required supplies and will start production and on completion of the production, will go for the shipment to the importer. 6. Upon shipment of the goods, Mr. ‘X’ will prepare all the L/C documents as per L/C and place all these L/C documents to us to negotiate with the issuing bank for export proceeds. Usually export L/C requires the following documents,
Forwarding letter by the exporter.
Bill of exchange.
Shipping documents (packing list, commercial invoice, weight list, bill of lading/AWB)
Certificate of origin from DCCI.
Export form duly filled up.
Purchase agreement or contract Then his bank will check all the papers and send the documents to ad confirming
bank and seek the proceeds accordingly. Otherwise the documents would go directly to the issuing bank for L/C proceeds. Then the ad confirming bank or the issuing bank will check all the documents and if there is no discrepancy, it would clear the payment. Otherwise the bank will negotiate with the client and undertake the necessary arrangements for the rectification and then the proceeds will take place. 8.
When exporter’s bank receives the proceeds, it would be immediately adjusted to the BTB L/C payment or other debit figure of this L/C and then credit the remaining amount to the client’s account.
5.7 Back to back L/C: This is a special L/C arrangement. Usually the RMG sector of our economy avails this facility. Upon receipt of any purchase order, a RMG starts production of that specific consignment. For raw materials and other necessity of production additional working capital is required. Then the exporter requests his bank to issue an L/C to procure all those necessities from home or abroad. Then BTB L/C is produced to the exporter in lien to the master L/C, received from the importer. Then he procures those supplies by giving this L/C to the local or foreign suppliers and go for the production. Then after production, shipment of the goods gets the exporter the proceeds of the master L/C and the bank adjusts the BTB L/C with that. Usually back-to-back L/C is issued to be retired by the proceeds of the master L/C that is in usance basis. But sometimes BTB L/C may be cash L/C if the exporter enjoys EPS facility provided by Bangladesh Bank. Usually bank permits to open BTB L/C amounting 75% of the master L/C invoice value at maximum. The issuing bank disburse the master L/C proceeds as follows,
Collection commission of master L/C 0.2% of the invoice value.
Acceptance commission of BTB l/C 0.2% on L/C value.
Handling charge of BDT 1000
Postage charges for BTB (maximum 2200).
BTB payment adjustment.
Buying house commission if any.
Remaining amount is credited to the customer account if any.
5.8 Bill purchase and discounting: This section basically deals with purchase of bills of usually two types – local bills (such as BTB L/C) and foreign bills are purchased or discounted. After shipment of goods exporter comes to the bank with shipments papers, then all these documents, are sent to the opening bank in prescribed form. If everything is in order then the opening bank send us an acceptance, for acceptance verification the acceptance documents are sent to the zonal office of the opening bank. If the exporter needs money immediately then he can offer the bank to purchase the bills. Then proposal of bill purchase goes to the zonal office is achieved then the bill may be purchased up to 90 % of the value @ OD sight rate. Later we get the payment from opening bank and can realize the total amount. By these bills purchased bank can add to its income and can increase it.
CHAPTER-6 FINDINGS OF THE STUDY 6. Findings of the Study 6.1 Strength of the Organization 1. A wide range of business, industries and sectors constitutes the bankâ€™s advance portfolio. Major sectors they have extended credit included textile and readymade garment, edible oil, telecom, media and technology shipping, steel and engineering, energy, chemicals etc. Bank Asia developed smooth relationship with their clients and corporate business holders. 2. In case of services offered by all private banks in our country, Bank Asia Limited has maintained high quality and their clients are very much satisfied while banking with the Bank Asia. 3. Well organized human resources and profit oriented mindset make them sharper than any other bank. 4. Since the govt. has imposed some new rules regarding private banking operation, Bank Asia Limited easily cope up the given rules. 5. Adopting Islamic banking concept gives a new dimension in their services. 6. Regarding contribution towards countryâ€™s GDP they have contributed a handsome amount per year. 7. The bankâ€™s correspondents banking business expanded quite well during the year with 406 correspondents across the world enabling easy reach for the bank cross border trade and payments businesses. 8. Bank Asia Limited has offered a full array trade finance services, namely, issuing, advising and confirmation of documentary credit. 9. All branches of Bank Asia Limited have been networked to provide customer any branch banking; 24 hours of banking services from selected branches have also been introduced for services convenience. 10. Experienced and competing workforce who have expertise and knowledge about the bank. 11. Some loyal customers who always bring in new customers. 12. Management consists of knowledgeable and authoritative personnel. 13. Reputation of the management. 14. Interaction of the employees with the top management. 15. The bank is making profit every year at a steady rate. Its index of earning per share, return on equity, and return on assets is increasing positively in every year. The rate
of deposit collection as well as the rate of giving advance every year is increasing a positive rate. 16. The corporate culture of Bank Asia Limited is very much interactive. The environment within the organization is very helpful, positive and informal. There are no barrier between superior and subordinates for their free interaction. As the environment is very informal and friendly, it encourages employees to put their best effort and show their best performance. 6.2 Weakness of the Organization 1. Problem with general banking: To open an account some times people have given incomplete information which will become a very acute when any dispute arises. Because of good relationship some time branch manager authenticated the account with introducer, sometimes it is very difficult for the employee to avoid such circumstances, which in turn brings questions. There have some error regarding advice. Sometimes title of the account holder differs. 2. Problems with cash: Because of unavailability of notes and coins they cannot give the proper services to the potential customers. Big parties or for big amount parties wonâ€™t take 100 taka notes but the Bangladesh Bank issues mix notes. In cash department because of in frequent promotion the out put decreases. In contrast of personal liaison and benefit most private banks getting desire note from the Bangladesh Bank where govt. bank wonâ€™t. 3. Problems with advances: In case of advance in different project, the interest rate is too high. Maximum parties have no financial strength. In terms of law and order situation sometimes it is very difficult for the bank to liquidate the collateral when the party is unable to pay the debt. Most of the time parties are creating some sort of pressure to get the loan. There are some mortgage problem such as acquisition and proprietorship, problem of asset. In the advance department they have the shortage of skilled manpower. 4. Sometimes the process of information transferring to the management in lengthy. 5. On the counter service is sometimes unsatisfactory because of not having enough employees for the counter sector. 6. No training program for the new employees.
7. Their ATM card division is not satisfactory to fulfill their commitment means insufficient to given that service. CHAPTER-7 CONCLUSION & RECOMMENDATION 7.1 Recommendations People have no way to get loans and advance for high financing, so the operation and way of getting loans and advance need to be very sharpened. The ways can be recommended as: Skilled human resource. Proper raining and technology minimized risk at the level. Minimize risk at the root level. Smooth service and less time consumption regarding advance. Avoid force loan as minimum as it can. It can be recommended that if all the branches of Bank Asia Limited maintain vivid account manual for the account holder, it will be better for the bank.\ A complaint book for the employees, because each and every complaint from the customer has been received and complaint from the employees overlooked. Interpersonal relationship needs to be built among the employees and superiors. Improved customer service and consequently get satisfactory operational result. Establish own ATM network. Incorporate more products for the customers. 7.2 Conclusion After the emergency of Bangladesh the branches that were abandoned by the Pakistanis were group into six Nation Commercial Banks (NCBs) to create the needs of reconstruction work after the liberation war. Like wise the abandoned branches of the agriculture bank, industrial bank and PICIC were grouped respectively into the Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Bank (BSB) and Bangladesh Shilpo Rin Sangstha (BSRS). Along with these banks, a number of foreign banks were also operating in this part of the world for a long time. The banking sector seems to be operating satisfactorily with the induction of an increasing number of banks into the economy. Apart for mobilizing untapped resources, the banks are also creating deposit in the economy. Depending on the value of money multiplier, the advance of one bank generally opens up the prospect of creating additional deposit basis in subsequent generations of bank with the intermediation of funds. We have seen in the part that authorities had to even make public declarations to the effect that they would not allow any bank to fail in the economy in the apprehension that any such action might have adverse effect on the banking system. Problem in the banking sector can be briefly summarized as directed loans in the case of NCBs ended up with a large volume on classified loans due to extension of loans without proper security and without following proper banking norms, reflecting largely the reform
measures and consequent improvement in the operation of the bank as a whole, classified loans came down to 32 percent recently. Moreover it is evident that private sector banks are involved with the more resilient portion of the economy while NCBs are primarily financial to sector corporations and other areas of social priority that are less profitable. CHAPTER-8 BIBLIOGRAPHY Reports: Bank Asia Limited, Annual report 2006-2007. Internet www.bangladeshbank.org www.bankasia-bd.com www.google.com Books International financial Management (7th edition) Jeff Madura (2003) Research Methodology (16th edition) Brigham F. Eugene (2001) Effective Business Communication (International edition) Murphy, Herta A (2001) Investment analysis & Portfolio Management (6th edition) Reilly K. Frank & Brown C.
The global economy, in the 2002, had no respite from the repercussion of the economic slowdown that started in late 2000 with a growth of on...