2. 5 Operation Abroad
Joint Venture
a. Bank of Maldives - In 1983, IFIC Bank set up a joint venture
bank names Bank of Maldives Limited (BML). It is the first
bank of Maldives. In 1992, as per contract, IFIC Bank handed
over the management of BML to Maldives.
b. Oman-Bangladesh Exchange - To facilitate remittance by
Bangladeshi in Oman, IFIC bank set up a money exchange
company as a joint venture, named Oman-Bangladesh
Exchange.
Branch abroad
a. Pakistan Branch - IFIC Bank opened its first overseas branch
in Karachi, Pakistan. It opened its second branch at Lahore in
Pakistan.
S e n i o r E x e c u t i v e V i c e - P r e s i d e n t
E x e c u t i v e V i c e - P r e s i d e n t
S e n i o r V i c e - P r e s i d e n t
F i r s t V i c e - P r e s i d e n t
V i c e - P r e s i d e n t
S e n i o r A s s t t . V i c e - P r e s i d e n t
F i r s t A s s t t . V i c e - P r e s i d e n t
A s s t t . V i c e P r e s i d e n t
S e n i o r S t a f f O f f i c e r
S t a f f O f f i c e r
O f f i c e r G r a d e - I
P r o b a t i o n a r y O f f i c e r
O f f i c e r G r a d e - I I
A s s i t a n t O f f i c e r
O f f i c e A s s i s t a n t
D r i v e r
S e c u r i t y S t a f f
O f f i c e A t t e n d a n t
3.1 Introduction
General Banking department performs the core functions of Bank
operates the day to day transactions. They take the deposit from
the customer and meet their demand for cash honoring their
cheeks. The department is very rush and the employee here are
too upgrade to their duty. They pass entry of every transaction
within the day. It opens new accounts, remit funds, issues bank
draft and pay order etc. Since Bank is confined to provide these
services everyday, general banking is knows as “Retail Banking”.
Account opened
Rate of commission:
Commission Up to Tk
Tk 15 Tk 1 to Tk 1000
Rate of commission:
Commission Up to Tk
Tk 15 Tk 1 to Tk 1000
Tk 25 Tk 1001 to Tk 100000
Tk 50 Tk 100001 to Tk 500000
Tk 100 Above Tk 1000
Against Cash – IFIC General A/C ----Cr. IFIC General A/C ---Cr.
Originating Commission A/C ----Cr. Commission A/C ----Cr.
Telex Charge A/C---Cr.
Inward
Cheques received from the Party’s A/C ------Dr.
Clearing
Clearing House, of our bank IFIC General Account -------Cr.
Cheque
Step 3 Gives pay cash seal and sends to the payment counter
Cash Receipt Register Cash receipt in whole of the day is recorded here.
3.13 FDR
This branch maintains a separate section for maintaining Fixed
Deposit. FDR is an important factor for the bank and volume of
FDR determines the investment base of the bank. FDR is found to
be 60% of the total deposit of this branch. Basically this is the
mobilization unit of the Bank. It is obvious to give due importance.
4.1 Introduction
This is the survival unit of the bank because until and unless the
success of this section the survival is a question to every bank. If
this section is not properly working the bank itself may become
bankrupt. This is important because this is the earning unit of the
bank. Banks are accepting deposits from the depositors in
condition of providing interest to them as well as safe keeping their
interest. Now the question may gradually arise how the bank will
provide interest to the clients and the simple answer is – advance.
Why the bank provides advances to the borrowers –
a. To earn interest from the borrowers and give the depositors
interest back
b. To accelerate economic development by providing different
industrial as well as agricultural advances
c. To create employment by providing industrial loans
d. To pay the employees as well as meeting the interest groups
Credit:
An important function of bank.
Credit is the finance made available by one party to another.
Credit is simply opposite of debt. Debt is the obligation to
make future payment.
Credit is the claim to receive this payment.
2.Outside source:
a) Deposit (up to 80%)
b) Borrowings from other banks
c) Refinance.
4.5.1 Pledge:
Pledge is the bailment of goods as security for payment of a debt
or performance of a promise. Bailment is the delivery of goods by
one person to another for some purpose under a contract.
Delivery of goods:
Actual delivery
Symbolic or constructive delivery
4.5.2 Hypothecation:
In this charge creation method, physically the goods remained in
the hand of debtor. But document of title of goods are handed over
to the banker .The method is also called equitable charge. Since
the goods are in the hand of the borrower, bank inspects the goods
regularly to judge its quality and quantity for the maximum safety
of loan.
Characteristics of hypothecation:
Only moveable assets and book debts can be hypothecated.
The charge is floating.
The stocks are constantly changing.
4.5.3 Mortgage:
When a customer as a security for loan offers immovable property,
like building and land, a charge there on is created by means of a
mortgage.
Characteristics of Mortgage:
1. It does not transfer the ownership of the property to the
Mortgagor.
2. It relates only immovable.
3. The object of a mortgage is to give security for the loan.
4. The mortgagor gets back all his rights after repayment of loan.
Types of Mortgage:
1. Legal/Registered Mortgage
2. Equitable Mortgage
3. Mortgage by conditional sale
4. English Mortgage
5. Usufructuary Mortgage
6. Anomalous Mortgage
Legal/Registered mortgage:
In this way the mortgagor transfers to the mortgage the legal title
and interest of the property.
About Project
Collection Information
About Party
Legal Assessment
Evaluating Collateral
Evaluation by Agent
Branch Level
Decision
Supervision of Loan
Legal Recovery
Recovery of Loan
Usual Recovery
4.15 Overdraft:
Overdraft are those advance which is allowed on current account
operated upon by cheques. The customer may be sanctioned a
certain limit within which .he can overdraw his current within a
certain period .The customer can withdrawals or deposits any
numbers of within his limit. Interest is calculated and charged only
on the actual debit balances on daily product basis. Overdraft
facility is generally given to businessman for expansion of their
business.
Bank gives overdraft in following three ways:
SOD (secured overdraft)
Cash credit
Export cash credit
Interest:
For CC facility interest is counted daily basis. That means customer
has to only that amount of interest which is outstanding in his CC
account. Interest is cut off from customer current in tram wise.
Mode of security:
For CC banks take two type of security. These are as following:
Pledge
Hypothecation
Pledge:
Pledge means the customer transfer his goods to the bank. But the
ownership ship of the goods is in his position. That means only
transfer the goods to the banks but not ownership.
Hypothecation:
It is a kind of security where neither the ownership nor the position
of the goods is transfer to the bank.
But nowadays banks do not give any CC facility without any
extra security like Land, Building etc .The security has been
taken by Bank as equitable mortgage.
If any person wants to get any CC facility from the Bank, he
has to submit an application to the Bank by giving details
condition of his business.
This has to done in a printed form of the bank.
In branch level bank cannot give more then 30lac taka to his customer.
But if bank want give more then 30 lacs. The branch has to get
approval from head office of the bank.
In CC facility bank only allow 50% credit facility of the stock that
the customer has been pledge or hypothecation. Bank gives CC
only for one year. After one year customer has to renewal it.
3. Charge Documents:
Obtain the following charge documents from the exporter:
a. Demand Promissory Note
b. Letter of Lien for ECC
c. Letter of Pledge/hypothecation
d. Letter of Arrangement
e. Letter of Disbursement
f. Letter of Partnership alongwith Registered Partnership
Deed in case of Partnership Accounts.
4.16 Loan:
In case of loan, the banker advances a lump sum for a certain
period at an agreed rate of interest. The entire amount is paid
an occasion either in cash or by credit in this current account,
which he can draw at any time. The interest is charged for the
full amount sanctioned whether he withdraws the money from
his account of not. The loan may be repaid in installments or
at expire of a certain period. Loan may be demand loan or a
term loan.
Others Loan – Actually Agricultural loan is not given from this branch of
Including IFIC Bank but the all other items excluding the mentioned
agricultural Loan above will go under this head of term loans.
Grace period – period require to earn visible return
Security:
Legal mortgage of that land or flat.
Documents to be obtained:
1. DP note
2. Letter of disbursement
3. Letter of installment
4. Letter of authority for deducting salary
5. Interim guarantee
6. Deed of legal mortgage
7. An undertaking on non-judicial stamp shall be obtained from
the borrower authorizing the bank to realize loan installments
from monthly salary.
8. An undertaking on non-judicial stamp that the bank will have
the right to adjust liability from the service benefits.
Repayment of HSBL loan will start after one year from
disbursement date. The loan has to cut off with in twenty year
from his salary.
Item Financed:
Domestic Appliances, Office Equipment & Entertainment Equipment
Penal Interest:
Penal Interest for delay payment will be charged @ Tk. 50/- if the
installment is not paid within 15 days from the 7th of each month.
Thereafter, penal interest for delayed payment will be charged @
Tk. 75/- for subsequent delay of each 15 days.
A A A A
B B B B
Criteria
C C C C
D D D D
A B C D
Security Risk
-20 ~ -15 -14 ~ 0 0 ~ 10 10 ++
F. Formalities:
While deciding the issue a guarantee, the following should obtained
prior to issuance.
a) Cash margin as may be determined.
b) Counter guarantee signed by the client.
c) Specimen of guarantee duly approved by the customer.
In case the guarantee is covered by any other security other than cash
margin which may generally be following types:
a. Fixed Deposit Receipt.
b. Sanchaya Patras or any other financial obligation.
H. Records To Be Maintained:
The particulars of the guarantee issued should be recorded in the Letter
of Guarantee Register and Letter of Guarantee margin ledger. Safe-in-
safe-out register should be used for entering the counter guarantee
(indemnity), other charge documents/mortgage documents if any.
5.1 Introduction:
Foreign Exchange Department is international department of Bank.
It deals globally. It facilitates international trade through its
various modes of services. It bridges between importers and
exporters. If the branch is authorized dealer in foreign exchange
market, it can remit foreign exchange from local country to foreign
country. This department mainly deals in foreign currency. This is
why this department is called foreign exchange department.
Some national and international laws regulate functions of this
department. Among these, Foreign Exchange Act, 1947 is for
dealing in foreign exchange business, and Import and Export
Control Act, 1950 is for Documentary Credits (UCPDC – 1993
revision & International Chamber of Commerce Publication no –
500) is also an important law for settlement of terms and
conditions between exporter and importer in international trade.
Governments’ Import &Export policy is another important factors
for import and export operation for banks.
d) The Issuing bank after checking that the documents meet the
credit requirement makes reimbursement in the pre-agreed
manner
sale(1) Contract of
Exporter
London Importer
(Beneficiary) Dhaka
Ships goods to (5) (Applicant)
Following document
Documents Banker examines the
duly signed:
submitted by the liability position of
L/C application form importer. the importer form
LCA form Indent/ Proforma different department
IMP form invoice insurance
Authority to debit
account D.P Note
Send documents
Accounting Treatment:
Dr. Party A/C/LIM/T.R. Loan/Other Loan
(PAD created amt. + Intt. on PAD lodgment date to retirement
date- Margin on L/C cash- Intt. Payable on Margin)
Dr. Sundry deposit margin on L/C Cash + Intt. Payable on margin
(if applicable).
Cr. PAD Cash
CR: Income A/C Intt. Received on PAD (From lodgment date to
retirement date)
After retirement the following particulars to be noted in the PAD
retirement register: Date, PAD no. L/C No., Name of the Party, PAD
Amt. Interest, Others, Total amt., L/C margin, Net amt.
Joint seal/signature
Party’s signature & seal
and
For International Finance Investment
and commerce Bank Limited
Motijheel, Dhaka
Authorized Signature
Back side of L/G Form:
Please deliver to the order of
M/S ............................................................
For International Finance Investment
and commerce Bank Limited
Motijheel, Dhaka
Authorized Signature
Accounting Process:
DR: Party A/C
CR: Sundry deposit margin on L/C Cash
CR: Income A/C Commission on PAD Cash
When original documents come to out hand, then
DR: Sundry deposit margin on L/C Cash
CR: IFIC Bank General Account – H.O
5.9.3 Voucher:
Contra voucher
DR: Customer’s liability L/C BB
Students who are desirous to study abroad can open file in the
Student File bank. By opening this file, bank assures the remittance of funds
in abroad for study.
‘Non –resident Investors’ Taka Account is account
NRIT
Account Non-resident Bangladeshi can deposit foreign currency for
investment in security of stock exchanges.
Foreign Currency accounts opened in the names of Bangladeshi
F.C. nationals or persons of Bangladeshi origin working or self-
Account employed abroad can now are maintained as long as the
account holders desire.
Stands for Non-resident Foreign Currency Deposit
NFCD Eligible persons may open such accounts even after their return
to Bangladesh, within six months of their arrival.
Stands for Resident Foreign Currency Accounts
RFCD Persons ordinarily resident in Bangladesh may maintain foreign
Accounts currency accounts with foreign exchange brought in at the time
of their return to Bangladesh from visit abroad. Balance of such
accounts is freely remittable abroad.
For interest:
i) DR: F.C Fund A/C
CR: NFCD A/C
6.1 Conclusion:
During the three months internship program at Motijheel Branch,
almost all the desks have been observed more or loss. This internship
program, in fast, has been arranged for gaining knowledge of practical
banking and to compare this practical knowledge with theoretical
knowledge. Comparing practical knowledge with theoretical involves
identification of weakness in the branch activities and making
recommendations for solving the weakness identified. Though all
departments and sections are covered in the internship programme, it
is not possible to go to the depth of each activities of branch because of
time limitation. So, objectives of this internship programme have not
been fulfilled with complete satisfaction. However, highest effort has
been given to achieve the objectives the internship programme.
During the internship, it is found that the branch provides all the
conventional banking services as well as some specialized financing
activities to the economy. Foreign exchange services department the
largest department of the branch in terms of manpower and profit
earned. In this year, it earns more than 60% of branch’s total profit.
Thus by providing this various services, Motijheel Branch, IFIC Bank is
playing an important in the banking system and in the payment system
of Bangladesh.
6.2 Observation:
Though I am not in any position to provide any assistance for the
betterment of this branch, but I am expressing my taste from the three
months observation:
i. Bank can more flexible on customer service. It can introduce
credit card, increase consumer credit scheme etc. Actually
service diversification is mandatory to survive in the
competitive atmosphere.
ii. Lending processing is more or less cumber some and time
consuming. All the necessary steps are needed to be
processed through head office. If it is possible to minimize
consumer will be benefited.
iii. In the modern information era the branch badly needs the
interest facility for faster communication. By introduction this
ultimately branch and customer both will be benefited.
6.3 Recommendation:
Although this branch is making huge amount of profit and
generating large volume of deposit, a number of problems have
been detected while working this branch. These problems along
with the recommendations for solving them are stated here.
6.3.2 Bank should immediately enter into the credit card market:
This bank does not have any plan to enter into the Credit Card
Market. It is well versed that tomorrow’s payment will be consisted
of only plastic money (Credit Card). A large part of business
transaction will be done by credit card in near future. In western
world, more than 50% of transactions are in credit card. If this
bank does not prepare from now on, it cannot compete in the
future market. So, the branch should give special attention to the
introduction of Credit Card.