Chapter: One

Introduction

29

1.1Origin of the Report:

TheTerm paperprogram is itself an attempt to provide graduates an orientation to a real life situation in which they
can observe and evaluate the use and applicability of theoretical concepts, which were taught in the classroom. The
BBA program of BUBT requires that each student must complete anTerm paperattachment period of at least 12
weeks with an organization to introduce the students with the real life business administration and submit a report
on the basis of it. As per norm, this report is the requirement of fulfillment of theTerm paperprogram as well as of
BBA program.
In this context, I have tried to work with Mutual Trust Bank Limited (MTBL), and the department of HRD of
MTBL gives me the chance to work in the Panthapath Branch of MTBL. Here I have free option to choose any topic
forTerm paperreport but after discussing with my supervisor I have chosen the topic Evaluating Foreign Exchange
Operation of MTBL- Panthapath Branch (Theory & Practice).
1.2 General Objective:
The objective of this report is to fulfill the requirement of theTerm paperprogram as a course requirement of BBA
program of AIUB. The general Objective of the study is to give realistic viewpoints of expediency and significant
function of overall departments of Mutual Trust Bank Limited and specially the Foreign Exchange activities of
MTBL.
1.3Objective of the Study:
The broad objective of the study is to obtain practical knowledge of foreign exchange activity at branch level of
Mutual Trust Bank Limited with special emphasis on import and export procedure and finance.
Specifically, the study seeks to achieve the followings:

To acquire knowledge of foreign exchange activities in bank.

To develop an idea of the mechanism of import and export finance of Mutual Trust Bank Limited.

29

To look at the problems in the processes of foreign exchange activity and provide possible solutions for
improvement.

1.4Scope of the report:

Now in this global arena the activities of banking sector are very much essential and also it is growing very fast.
During myTerm paperperiod, I have worked 3 months to gather all the relevant data and information required for the
successful completion of my study. This report is an attempt to evaluate foreign exchange activities and how they
serve the customers with their product and services as well as they exist with current rivals.
1.5 Readers Benefit:
This study or report will tend to describe in briefly the function of foreign exchange, international trade and finance,
which will provide an overall view of MTBLs foreign exchange departments activity. This report also provides
elaborate discussions about MTBLs goods & services, quality, forecasting, and reliability. The apparent benefits
that the readers will get are as follows:
Information: As a financial Institution, MTBLs operation is some different than some other financial
Institution in Bangladesh. So, I think that by letting readers know the aspects of MTBLs operations, I would be
able to provide sufficient information to satisfy our readers thirst about general banking activities.
Goods & Services: Because I have thoroughly analyzed MTBLs total area of products and services they
provide, this report will give the readers some extra information to know MTBL. Through this report they will
learn about the product and services of MTBL
International trade: people will know about the import and export procedure of Bangladesh. And how is
MTBL finance in that international trade.

1.6Sources of Information:
Both primary and secondary sources of information were pursued regarding to the presentation of this study. The
procedure and sources were:
Face to face interview with Branch Manager, officer of the panthapath branch and other officer of the
international division-MTBL.
A significant amount of information was gathered from secondary

sources such as the banks brochures,

relevant different printed formats, statements, etc.

Different types of relevant books and journals are used as secondary source.
Personal observation during the attachment period.
Prior Research report is also provided information on this topic.
Collect information from the official websites.
1.7 Limitations of the study:

29

I have tried my best to provide with all the necessary information about Mutual Trust Bank Limited (Panthapath Br.)
Supplied by the managers and employees best ability but due to the exhaustive nature of this study the most secret
& strategic ethics could not be brought into this report. As having the status of an empirical study, this research is
subject to following limitations:
To protect the organizational loss in regard of maintaining confidentiality, some parts of the report are not
in-depth like DD, SWIFT etc.
The duration of the intern period is not sufficient to learn all the foreign exchange activities.
A worthwhile study requires the analysis of as much data as possible covering various aspects of the
study. But I did not have easy access into various types of information about foreign exchange activities of the
whole Mutual Trust Bank limited rather than the respective branch only. So, I had to accomplish my thesis only
basing on the information of the Panthapath Branch of Mutual Trust Bank Limited. Some of the data required
for preparation the statement were not available in the computer-records of their standard practices.
Lake of experience has also acted as constrains for the exploration of the topic.
Some participants were unable to spare enough time because of their work schedule.
There are few new employees who do not know the exact work activity and they did not provide the
accurate information about the foreign exchange activity.
The findings of the study are based on the primary data provided by the participants, some time it could be
biased.

29

Chapter: Two
Overview of MTBL

29

2.1 Mutual Trust Bank Ltd:

Mutual Trust Bank Limited (MTBL) is one of the leading third generation private sector commercial banks that
started its banking operation in Dhaka on October 24, 1999. It has focused on the established and emerging markets
of Bangladesh. Concentrating hard on the activities of its area of specialization, MTBL has been able to achieve
excellent market standard with competent customer service. By means of such measures the bank intends to grow
and increase shareholders' value. Mutual Trust Bank pledges to maximize customer satisfaction through services
and build a trusting relationship with customers, which has stood in the test of time for the last nine years.
The emergence of Mutual Trust Bank Limited was at the juncture of liberalization of global economic activities. Not
only this, it comes forward at a crucial state of affairs when Bangladesh was undergoing through economic reforms
and trade liberalization according to the Uruguay Round Agreement, World Bank (WB) and International Monitory
Fund (IMF) recommendations. The experience of the prosperous economies of the Asian countries, in particular of
South Asia, has been the driving force and the strategic operational policy option of the bank. The company
philosophy - "Setting a new standard in banking" has been precisely an essence of the legend of its success in the
Asian countries.
2.2 Mutual Trust Bank at a glance:
Head Office
Corporation Set-up

:
:

Dilkusha Branch, 68 Dilkusha C/A, Dhaka.

Public Limited Company

Certificate of Incorporation : September 29, 1999

Certificate of Commencement of Business:

1999

Commercial operation

October 24, 1999

First Branch opened

October 24, 1999

29

Listing of Shares

DSE & CSE

Number of Branches
Main operational areas

:
:

31

Dhaka, Chittagong & Sylhet

2.3 Vision:
To be the bank of 1st choice by creating exceptional value for our clients, investors and employees alike
2.4Mission:
We aspire to be the most admired financial institution in the country, recognized as a dynamic, innovative and client
focused company that offers an array of products and services in the search for excellence and to create an
impressive economic value.
2.5 Objectives of the Bank:
Provide standard financial services and wealth maximization.
2.6 Banks Philosophy:
With the mission to become a dependable client focused financial institution in the country by proving service with
trust and integrity
2.7 Promoters of the Bank:
The promoters of the bank are renowned industrialists in the arena of Textiles, Pharmaceuticals, Tannery, IT,
Medicare and Real Estate sectors. There are 13 directors in this bank. The founder chairman of Mutual Trust Bank
(MTB) is Mr. Syed Manzur Elahi, the founder chairman of Apex Tannery Group and Pioneer Insurance Co. he is
also the chairman of the Bangladesh Association of Banks (BAB). The chairman of MTB is Mr. Samson H.
Chowdhury, he is also the chairman of the largest conglomerate of the country known as Square Group of
Industries. Other big names are such as Advanced Chemical Industries (ACI) ltd., East West Properties
Development ltd., SAHCO International ltd., associated builders Corporation Ltd. Have participated in the equity of
the bank.
2.8 Capital:
MTB started its operation on 24 October, 1999 as a private sector bank with an authorized capital of Tk 1000.00
million and paid up capital of Tk 200 million. The paid up capital of the bank amounted to Tk 950.40 million as on
December 31, 2006. Total capital of the bank as on December 31, 2006 stood at Tk 2114.52 million consisting of
shareholders equity of (Tier-1) of Tk 1904.8 million and supplementary capital (Tier-2) of Tk 209.73 million.
Supplementary capital includes general provision against loans and advances and exchange equalizations. Total
capital of the bank as on December 31, 2005 was Tk. 1692.52 million.

29

Source: Annual Report

2.9 Deposits:
Total deposit of the bank as on December 31, 2006 stood at Tk 22264.05 million as against Tk 16098.54 million in
2005. This deposit increased to Tk 27374.34 million in 2007. This growth is satisfactory considering the economic
scenario of the country and the stiff competition in this industry. However cost of the deposits has increased during
the year due to high interest rate allowed against fixed deposit. The bank has lend due stress on procurement of low
cost deposit including cost free float of funds to bring down the average cost of funds. It may be mentioned that
strict compliance of Central Bank regulations and adherence to Money Laundering Prevention Act 2002 were
ensured while procuring deposits. Deposits of the previous year are given below:

29

Source: Annual Report

2.10 Operating Profit:
MTBL earned an operating profit of Tk 763.85 million in 2007 compared to Tk 969.47 million in 2006. This growth
is a remarkable achievement considering the socio- political environment that prevailed in the country during 200607. After keeping provisions on loans and advances Profit before pre Tax stood at Tk 874.47 million in 2007. The
Net Profit for the year 2007 stood at Tk 478.28 million compared to the year 2006 Tk 336.17 million. Banks ROE
in 2007 was 1.82% as against 1.74% in 2006. Operating profit of the previous years is given below:
Source: Annual Report
2.11 Organizational Structure of MTBL:
2.12 Human Resources:
Junior

Executive ViceManaging
Assistant
Vice
Officer
Senior
principal
Assistant Officer
Vice
President
Deputy Managing
Principal
Officer
Senior
Assistant
President
President
Officer
Senior
Executive
There are more than 600 employees
are working
in the
31 branches of MTBL.
There are
2 SEVP
and 4 EVP in this
Director
Officer
Director
Vice President
Vice
President
bank who are the head of different division. 2 SVP are working also as head of different division. 8 VP are the
branch manager of the large branch. There are also 14 SAVP and 17 AVP at MTBL. Most of the senior executives
are experienced and qualified in their profession. Most of the senior executives come from Agrani Bank and other
commercial bank.
2.13 MTBL (Panthapath Branch):
Panthapath branch is the 2nd Branch of MTBL. It is a big and most profitable branch. More than 30 employees are
working in this branch. Panthapath Branch that in an Authorized Dealer Branch. This branch made Tk 15.23 crore
profit in 2007 where as the target was Tk 15 crore. This year target became Tk 22 crore and up to june closing
income was Tk 9.97 crore. It has a very good foreign exchange department, General banking & Advance
department. There are 1 SAVP and 2 AVP in this branch who are responsible for different department. This branch
started its operation in 1999.
Position

Number

Chief Manager, SAVP

AVP

Senior Principal Officer

Principal Officer

Senior Executive Officer

Senior Officer

Officer

Junior Officer

Assistant Officer

Total

32

29

2.15 Organogram of MTBL (Panthapath Branch):

.

Officer
2.16
SWOT Analysis of MTBL:
Sr. Officer
Officer
Assistant Officer
Manager
Principal
Officer
Officer
Foreign
General
Banking
Credit
Dept.
Senior
Officer
Assistant
Officer
Teller
Senior
Officer
Principal
Officer
Every organization has some internal strengths and weaknesses
and also has some external opportunities and
threats
Deputy
Exchange Dept
Dept. In-charge
In-charge
in its whole life cycle. This is called SWOT analysis.
Here briefly give an idea about the Mutual
Trust Banks
Manager
In-charge
internal strengths and weaknesses, and external opportunities and threats as I have explored in the past twelve
weeks.
2.16.1 Strength:
1.

Well-capitalized Bank with potential to increase capital base continuously.

2.

In the ranking of Bangladesh Bank, in 2005 MTBL was rewarded as a first group bank.

3.

The Board of Directors are very well repotted business personnel.

4.

Computerized banking and excellent customer services.

5.

Customers faith as a stable dependable Bank.

6.

MTB provides its customers excellent and consistent quality in every service. It is of highest priority
that customer is totally satisfied.

7.

MTBL classified loan is still nil, which is a very good sign for MTBL. Classified loan nil means there
is no loan defaulter of issued total loan and advance.

8.

Major commercial areas have one or more than branches in different locations.

9.

Most of the high officials or top executives are from Agrani Bank. And they are experienced and
efficient in their working areas.

2.16.2 Weakness:
1.

Limited workforce: Mutual Trust Bank has limited human resources compared to its financial activities.
As a result many of the employees are burdened with extra workloads and works late hours without any
overtime facilities. This might cause high employee turnover that will prove to be too costly to avoid.

29

2.

Limited Advertisement: Mutual Trust Bank has a lacking of advertisement both printed media and
Electronic media. Now in this global arena it is a great opportunity to reach their goal by using these
media. Unless it will be a great weakness for any profit oriented organization.

3.

Limitations on Software: This is the age of computer. But MTBL has some limitation on software. They
are still using the older version of software. So it is not only creating some problems for the official
personnel to work properly but also delaying to serve their customer.

4.

They can not provide fully automated services. They write the pay order manually and issue checkbooks
manually where as some other bank provide it through computer and it saves their time.

5.

They dont have so many ATM booth of there own around the country. They use DBBL ATM booth which
creates a bad impression on the customers mind, in the mean times it creates a good image about DBBL.

2.16.3 Opportunities:

Public confidence as a financially stable Bank.

Control and monitoring of the borrowers can be handled in a more consolidated manner. Less
opportunity of bad debts.

Secured market minimizing risk factors.

MTBL get extra Support from some organizations of the promoters and directors.

More commercial branches in the attractive places.

They can target the different segment and provide their service accordingly.

They recently planning to spread out their branches around the country.

Its became the first growing remittance earning bank in the country.

MTB increases the rate of interest on FDR and BRICK by BRICK to raise capital or deposit. By
which the customers would like to deposit more money in the bank.

2.16.4 Threat:

A numbers of private commercial bank has already introduced on line banking but The Mutual
trust Bank yet not introduce fully these modern facilities properly for its customer.

Some competitors are offering a high scale of salary than MTBL and it is a threat that some
officials are shifting to those Banks with confidential information and Technique of MTBL.

Frequent Currency Devaluation: Frequent Taka Devaluation and foreign exchange rate
fluctuations and particularly Southeast Asian currency crisis adversely affects the business
globally.

Emergence of competitors: Due to high customer demand, it is expected that more financial
institutions will be introduced in this industry very shortly. And we have already seen such cases

29

in our country that lots of new banks are coming in the scenario with new services. The MTBL
should always be prepared for the competition in the coming years.

Chapter: Three
Product & Services of MTBL

29

3.1 Different types of Account at MTBL:

MTBL have the following types of accounts:
3.1.1 Current Account
It is easy to manage every ones daily finances with an MTBL current account. Current Account is normally for
those who have business transaction or a huge amount of transactions in every month. A current account holder can
make several times of transaction in a day. Making payments has never been so simple. No one is needed to rush
around to pay his/her bills with a current account. Just he/she can simply write out a cheque and mail it at their
convenience. In case of current account bank do not pay any interest for any amount.
3.1.2 Savings account:
Savings Account is a secure, rewarding and accessible way to manage routine money matters effectively. Savings
account is for those who have limited transaction in every month. It is easier to open this account. Normally savings
account holders can not make more than two or three transaction in a week. There is also limitation of transaction
huge amount without proper declaration. In case of savings account bank will pay at a rate of interest for any
amount. Now the interest rate of this account is 6.25%. Bank has the rights to change this interest rate for changing
their business policy.
3.1.3 FDR:
It is one of the best accounts by where an investor can get best returns from his/her invested amount. Here the
investor invests their money for a certain period. And bank will pay a high interest rate for this account. MTBL have
three different periods with three different rates.
This rate chart is given here.
Duration

Interest Rate

3 months

11.25%

6 Months

12.25%

1 Year

12.00%

Bank has the rights to change this interest rate for changing their business policy.
3.2 Different Types of Loan:
MTBL do not provide very large loan. They provide the following loan to its clients:
3.2.1 Consumer Loan:

29

MTBL provide consumer loan to improve the life style of the clients. Only salary executives /professionals can avail
this type of loan. They give the loan on the basis of the clients salary. The age limit of the clients should be 25-60
years. MTBL give minimum Tk 30,000 and maximum Tk 300,000 as a loan. Clients can repay the loan from 12-48
installments. The interest of this loan is comparatively low that is 14%. By taking this loan any one can purchase
TV, Refrigerator, pc, furniture and other home appliance.
3.2.2 Car Loan:
MTBL allow car loan for their clients to make their dream true. Any professionals, government executives,
businessman can apply for this loan. MTBL gives loan for brand new/ reconditioned car. The loan amount is 70%
value of the car and that should not exceed maximum of Tk 20 lac. The interest rate is 16% and they also required
1% service charge. The clients can repay the loan within 5 years.
3.2.3 Home Loan:
MTBL provide home loan on easy terms and without hassle. Any businessman, professionals and government
service holder can apply for this loan. They provide maximum Tk 50 lac for house building or purchasing
apartments. The interest rate is 15% and they take 1% as service charge. Clients can repay the loan from 5 to 15
years on the basis of the loan.
3.2.4

Home Repair Loan:

MTBL provide this loan to the house owner for repairing or renovation purpose. They

provide loan only for

residential building not for commercial building. The maximum loan amount is Tk 5 lac and they also take 1%
service charge. Clients can repay the loan within 5 years.
3.2.5

Small Business Loan Scheme:

MTBL provide this loan for small business man who really want to expand their business
and honest to their business. They provide this loan on easy terms and without hassle.
The maximum loan amount is Tk 50 lac. They do not require any collateral security up to
loan amount of Tk 5 lac.
3.3 Different schemes at MTBL:
Mutual Trust banks aim to satisfy all clients, regardless of how big or small they may be. Individuals are counseled
on the best type of accounts suitable to them such as Current, Savings, Short Term Deposits, Fixed Deposits,
Consumer Asset and Liability Products, etc.
Apart from the conventional banking operations MTB strives to introduce an array of products and services and
already launched a number of consumer banking products with the aim of popularizing consumer banking
operations

and

offer

higher

return

to

its

clients.

Different types of schemes of MTBL are given below:

1. Brick by Brick Savings Scheme.
2. Millionaire Plan.
3. Double saver Plan.

29

4. Triple Saver Plan

5. Monthly Benefit Plan.

6. Save Everyday Plan.
7. Festival saving Plan.
8. Unique Savings Plan.

3.3.1 Brick by Brick:

This is the most popular consumer scheme at MTBL. Any one can open this type of account but clients have to open
a savings account. Clients can deposit Tk500, Tk1000, Tk2000, and multiples of Tk5000 every month for 5, 8 and
10 years. MTBL give 14% interest on Brick by Brick. The client can avail loan up to 90% of the deposited amount
but minimum loan amount against this plan will be Tk 25000. After the maturity of this DPS, MTBL will cut the
10% source tax on the interest amount and excise duty 230 taka.
Monthly Installment and Savings: (Brick by Brick)
Monthly Installment

5 years

8 years

10 years

Tk 500

41,500

81,500

1,17,500

Tk 1000

83,000

1,63,000

2,35,000

Tk 2000

1,66,000

3,26,000

4,70,000

Tk 5000

4,15,000

8,15,000

11,75,000

3.3.2 MTB Millionaire Plan:

Any individual, NGO, Educational Institution, Trust, Society may invest their savings in this scheme. The period of
deposit is for 6/8/10/12 years. Clients can open more than one account in the same branch. The customer can avail
loan up to 90% of the deposited amount but the facility will be allowed after 1 one year of opening the A/C. After
the maturity Tax/ Excise Duty will be deducted as per government rules.
Monthly Installment and Savings:
Monthly Installment

Year

Maturity Value

Tk 9865

Tk 10,00.000

Tk 6560

Tk 10,00.000

Tk 4380

10

Tk 10,00.000

Tk 3180

12

Tk 10,00.000

Tk 2050

15

Tk 10,00,000

Tk 1045

20

Tk 10,00,000

3.3 3 MTB Double Saver Plan:

MTBL offer double saver plan to its valuable clients. Any one can deposit money for 6 years and after 6 years they
can get the double amount. In this case the minimum amount should be al least Tk 50,000 and there is no maximum

29

limit. MTBL give 12.25% in this segment. If anybody withdraws money before the maturity, they will get only
6.25% interest on the deposit.
3.3.4 MTB Triple Saver Plan:
Under this scheme, clines money will be triple after 9 years. The minimum amount should be Tk10, 000 and there
is no limit for maximum amount. The clients can avail loan up to 90% of the deposited amount but minimum loan
amount against this plan will be Tk. 25,000/-.
3.3.5 MTB Monthly Benefit Plan:
Any Individual, NGO, Educational institution etc can invest their saving in this pan.

The clients may open more

than one account in the same branch. Minimum deposit is Tk 50000 and there is no upper limit. The maturity period
is 3 and 5 years. For premature encashment, interest will be paid as per savings rate but no interest will be paid if
en-cashed within one year.
Examples of Deposit & Monthly Income:
Deposit Amount

Monthly Income for 3 yrs

Monthly Income for 5 yrs

Tk 50000

Tk 487.50

Tk 500

Tk 100000

Tk 975

Tk 1000

3.3.6 Save Everyday Plan:

Saving money for the future is a common practice in any society. Savings help you to build a better tomorrow.
Regular saving makes a man become disciplined, self confident and successful. Mutual Trust Bank offers you "Save
Everyday" Plan. The primary advantage of this plan is that you are absolutely free to choose your own time for
depositing money into this account. You can deposit daily, weekly monthly. The choice is yours, but the transactions
will have to be within the Bank's transaction hour. This is a 5 year plan and you will be required to open the account
with an initial deposit of Tk. 2500/= only. They offer you very attractive interest rate, which is accrued in this
account on a daily basis.
3.3.7 Festival Savings Plan:
MTB festival savings plan has been designed to generate savings for religious festival. This pan includes: Eid-ulFitr, Eid-ul-Azha, Durga puja, Christmas Day and Budha Purnima. Any individual can open this account by
depositing Tk 500 only. This account must be opened at least three months prior to any festival. Clients may deposit
any amount of his/her choice. Minimum deposit is Tk 250. Interest would be calculated on a daily balance basis at
9%. Clients may en-cash the deposit with interest within 15 days prior to the desired festival. Tax/ Excise Duty will
be deducted as per government rules.
3.3.8 Unique Saving Plan:
The main advantage of this plan is client can deposit any day, any time and any amount. The plan will generate high
income with withdrawal facilities. Unique savings plan offers you to deposit any amount of your choice but not less
than Tk. 500/-. Customer can select a savings period of 3/4/5 years, depending on his/her convenience. Interest is

29

calculated on a daily product basis. Interest rate is 2% above the prevailing savings rate. Client can withdraw any
amount of his choice but it is restricted once a month up to 50% of the balance.
3.4 Other services:
MTBL provide different types of financial services to its clients. Some of their services are given below:
3.4.1 Pay Order:
MTBL provide this type of service. When clients want to give money to its clients or any other purpose they can
give pay order. It is safe because they should not carry the money and the receivers can en-cash the money. There is
no option for dishonor, the client have to deposit money before do PO. The commission of the PO is given below:
Amount

Commission

Up to 10,000

Tk 25+15% VAT

10,001-100,000

Tk 50+15% VAT

100,001-500,000

Tk 100+15% VAT

3.4.2 Telegraphic Transfer (TT):

It is an order from the issuing branch to the drawer bank / branch for payment of a certain sum of money to the
beneficiary. The payment instruction is sent by telephone and funds are paid to the beneficiary through his account
maintained with the drawer branch or through a pay order if no account is maintained with the drawer branch.
3.4.3 Demand Draft (DD) Issue:
Sometimes customers use demand draft for the transfer of money from one place to another. It is must need for
sending money out side Dhaka city. MTBL charges 15% commission on the face value of DD as service charge

3.4.4 Locker service:

MTBL provide locker service to their clients. Clients can rent a locker for one year. Every year they have to pay a
fee. They can keep any documents, ornaments and valuable thing in the locker. One key is given to the clients.
There are three types of locker at MTBL: small, medium and big. The fee of this locker is Taka 1500, 2000, and
2500.
3.4.5 ATM Card:
MTBL gives free ATM card to its savings account holder. Through this ATM card anyone can withdraw money from
the DBBL ATM booth with free of cost. After one year clients have to renew it and the fee is Tk 500 only. They also
can get very short statement form the ATM booth.
Chapter: Four
Clearing & Negotiable Instruments
4.0 Clearing House, Inward and Outward Clearing, Return Settlement:
4.1 Clearing:

29

The banking machinery set up for setting payment of cheques, drafts, bills etc. drawn on other bank is called
clearing. The bank who clears the instrument drawn on other banks through the central clearing house is called
clearing bank.
4.2 Clearing House:
A place provides an arrangement by which various representatives of each clearing bank assemble there each
business day to exchange local cheque, drafts, bill of exchange etc. which are received by them for collection from
their customers. Its object is to settle balances/drawing between the banks of a city, town, or a region with a
minimum of inconvenience and labor.
Inward Clearing:
a) The instruments drawn on our bank are received from other banks in the clearing house.
b) The amounts and numbers of instruments received are entered in the house book from the main schedules of
respective banks.
c) The amount of instruments delivered, received and the difference is written on a Figure Slip provided in the
clearing house and the slip is returned.
c) The instruments with schedules are arranged branch-wise.
e) A copy of each schedule is detached.
f) The amount of each schedule received is entered in the house pages of the respective branches.
g) The respective house pages are totaled, the total of each is noted on a slip and a grand total is taken out.
h) The grand total is agreed with the total of the house book.
i) The instruments are sent to respective branches with the slip showing total' amount and number of instruments.
4.3 Return of Clearing Instrument
Generally banks are make payment the instruments presented through clearing house. Under the following main
reasons a bank return the instrument through clearing house with mentioning the reason(s) of return (Memorandum /
Memo of return):

Insufficient Fund

Amount in figure & word differs

Cheque out of date / Post-dated

Drawer's Signature differs

Payment Stopped by drawer

Payee's endorsement required

Cheque not properly filled up or staled cheque

4.4 Settlement of Clearing

29

Settlement of clearing performs through Bangladesh Bank or Sonali Bank (in absence of Bangladesh Bank generally
in the district town clearing function performed by Sonali Bank) of our country. Every clearing member / bank or
financial institution has to maintain an account with the central Bank. Central Bank settles the transactions of the
member banks or financial institutions through the respective members account maintained with them. Inter branch
clearing transactions settled through central account.

4.5 Promissory Note, Bill of Exchange & Cheques and distinguishing feature

4.5.1 Negotiable Instrument:

A negotiable instrument is a method of transforming a debt from one person to another person. The term 'negotiable
instrument' is not defined in the Negotiable Instrument Act 1881 but according to section 13 of Negotiable
Instrument Act, it means a promissory note, bill of exchange or cheque payable either to order or bearer.
4.5.1.1 Important characteristics of negotiable instrument:
1) It must be in writing, unconditional and payable after a specific time or on demand.
2) It should be for a certain sum and payable to a certain person by another person or to the bearer on demand.
3)

The ownership passes from one person to another by delivery, in case of bearers instrument and by

endorsement and delivery in case of order instrument.

4)

A negotiable instrument can be transferred any number of times till its maturity. The holder of the instrument

needs not to give notice of its transfer to other liable parties.

4.5.2 Promissory Note:
As defined in Section-4 of the Negotiable Instrument Act 1881, a promissory not.; is an instrument in writing
containing an unconditional undertaking, signed by the maker to pay a certain sum of money only to or to the order
of a certain person or to the bearer of the instrument. In order to know whether a particular document is a
promissory note or an agreement one of the tests to be applied is:

To know the intention of the parties and the other test is,

Whether document drawn out can be said to be negotiable that is to say, could a third party file a suit on
the strength of the documents.

If the answer is in the negative then it is mere argument.

4.5.2.1 Essential characteristic of a Promissory Note:
a) In writing: A promissory note must be in writing.
b) Promise to pay: There

must

be

an

express

promise to pay

mere

acknowledgement of debt is not

enough.
c) Unconditional: The promise must be unconditional.

29

d) Signed by the maker: promissory note must be signed by the maker.

e) The maker must be certain: The promissory note must show clearly on its face the name of person who is
liable as a maker. A promissory note may be made by two or more makers and they may be liable thereon jointly
and severally.
f) Certain sum: The payable amount must be certain and must not be capable of
contingencies or subtractions.
g) Money: The promise should be to pay money only.
h) Payee must be certain: It is essential that the person who is to receive the money
Should be certain.

4.5.3 Bill of Exchange:

As defined in Section 5 of the Negotiable Instrument Act 1881, a bill of exchange is an instrument in writing
containing an unconditional order, signed by the maker, directing a certain person to pay a certain, sum of money
only to or to the order of a certain person or to the bearer of the instrument.
The maker of the bill is called the 'drawer' and one who is directed to be paid is called the 'drawee'.
4.5.3.1 Characteristics of bill of exchange:
a) It must be in writing, containing unconditional order to pay and must be signed by drawer.
b) The amount must be definite and specific.
c) It must have the required stamps.
d) Its acceptance is obligatory.
e) Its payment must be made in the currency notes of the country.
4.6 Endorsement - Meaning & Rules:
As per Section -- 15 of Negotiable Instrument Act 1881, when the maker or holder of a negotiable instrument signs
the same, otherwise than as such maker for the purpose of negotiation on the back or face thereof or on a slip of
paper annexed there to on so signed for the same purpose a stamped paper intended to be completed as a negotiable'
instrument he is said to have endorsed the same and is called the endorser.
4.6.1 The following arc the essential of a valid endorsement:
a) It must be signed by the endorser for the purpose of negotiation.
b) It made by the endorser either by signing or by specifying m addition to his signature the person to whom or to
whose order the instrument is payable.
c) It must be either on instrument or on a separate slip attached (if no space is left) to the instrument.
d) It must be completed by the delivery of the instrument.
e)

Endorsement means endorsement of the entire bill. A partial endorsement does not operate as a valid

endorsement.
4.6.2 Kinds of endorsement:

29

a) Blank or General Endorsement

b) Special or full endorsement
c) Restrictive Endorsement
d) Partial Endorsement
e)

Conditional on qualified Endorsement

f)

Sans Recourse Endorsement

4.7 Cheque:

As defined in Section - 6 of the Negotiable Instrument Act - 1881, a cheque is a Bill of exchange drawn on a
specified banker and not expressed to be payable otherwise than on demand.
A cheque is an unconditional order of the drawer to the banker for payment of a specific sum of money to his order
or bearer. According to Section - 73 of bill of exchange (England), a cheque is a bill of Exchange drawn on a banker
payable on demand.

4.7.1 Features of a cheque:

i.

It is an unconditional order to a bank to pay a specified sum of money.

ii.

Order must be in writing and properly signed by the maker.

iii. Date and amount of money must be clearly mentioned on the cheque.
iv. Payment should be made on demand and cheque must be presented to the bank in time.
v.

The cheque can be written only by the person who is maintaining his account with the bank.

vi. Parties (two/three) must be mentioned in the cheque (drawer/payee/drawee).

4.7.2 Types of a cheque;
1.

Bearer Cheque : Bearer means a person who by negotiation comes into possession of a negotiable instrument

which is payable to bearer. Here banker is discharged from liability by payment in due course to the bearer thereof.
It is always a bearer one and no endorsement is required for making it payable.
2.

Order Cheque: When a cheque payable to order purports to be endorsed by or on behalf of the payee, the

drawee is discharge) by payment in due course. Banker must be sure regarding identification of the payee before
making payment such type of cheque. As per Section - 14 of Negotiable Instrument Act such type of cheque can
only be transferred through (a) Endorsement and (b) Delivery.
3. Crossed Cheque: When a cheque bears across its face two parallel transverse lines, the
cheque is said to be crossed. The linear are usually drawn on the left hand top corner of the cheque. The crossing of
cheque is a material part of the cheque.

29

4.7.3 Kinds of Crossing:

(a) General Crossing
(b) Special crossing

4.7.3.1 Difference between General and Special Crossing:

(a)

When the lines of crossing may be blank or contain the words & Co., not negotiable, A/C payee etc. said to be

called General Crossing. Such type of cheque can be encashed through any bank branch where payee maintains a
bank account. For this reason this type of cheque is secured from open cheque.
(b)

A cheque is said to be crossed especially where the lines of crossing bear the name of a banker either with or

without any additional words and to be crossed to that banker. Its payment can be obtained only through the
particular banker whose name appears between the lines. It is very much secured & safe than general crossed
cheque.

4.8 Account Payee Cheque :

A cheque marked "Account Payee" or "Payees Account only" between the two parallel lines of general crossing is
said to be crossed "Account Payee" and ceases to be negotiable.
4.8.1 Features of A/C Payee Cheque :
When a cheque is crossed A/C payee:
(a)

It shall cease to be negotiable remains transferable and

(b)

It shall be the duty of the banker collecting payment of the cheque to credit the proceeds thereof only to the

account of the payee named in the cheque.

4.8.2 Role of banker for payment of a crossed A/C payee cheque :
When a cheque is crossed A/C payee:
(a)

If the banker receives payment of- such a cheque on behalf of any person other than the payee, the banker

will be guilty of negligence and will not get legal protection.

(b)

As a result no bank would like to collect it on behalf of any other person.

(c)

The duty of the paying banker is fulfilled by payment, of such cheque in good faith and without negligence.
o

Post Dated Cheque :

Bears a future date as its date of issue such cheque is valid, but the banker can not pay it earlier than its dale because
the drawers mandate is not to pay it earlier. If the banker pays it before the schedule date, the payment is not a
payment in due course and as such, he loses legal protection and is liable to his customer for any loss that may arise
out of his action.
o

Antedated Cheque :

29

Antedated cheque bears a date before the date of its issue. Cheque antedated for more than six months becomes stale
or out of date as per banking practice.

The points of difference among the negotiable instruments (Cheque, Bill of Exchange Promissory Note) may be
summarized as under:

Cheque

An order to pay money

Bill of Exchange

Promissory Note

(An order to pay money) Document of An undertaking to repay money.

claiming money.

Always drawn on specified banker

May be drawn on any one including a Written

banker.

promissory

note

by

the

debtor to the creditor for repayment of

debt.

Payable immediately on demand

(Entitled to days of grace) Presented for (May or may not be) Payable on demand.
making payment on maturity.

Intended for immediate payment

May or

may not be

intended for May or may not be intended for

immediate payment.

immediate payment.

Requires no acceptance, Drawer is Must be accepted (before), acceptor can Requires

no

acceptance,

maker

responsible.

be made liable.

should be liable.

Prepared in one set

Prepared in more than on set.

Prepared in one set.

Prepared in a printed form

Prepared in a printed or while sheet or Prepared in a printed or white sheet or

paper.

paper.

Generally there are three parties-drawer, May be four parties-drawer, drawee, Generally there are two parties
drawee and payee

acceptor and payee.

Promise and payee.

Valid within the country

Valid within and outside the country.

Valid within the country.

Requires no stamp duty

Stamp duty is required.

Requires stamp duty.

Cannot be paid by installment

Payment

can

be

installment.

made

by Payment

can

be

made

by

installment.

Chapter: Five
Card Division
5.0 Mutual Trust Bank Card (Debit & Credit):

29

Mutual Trust Bank is always trying to reach the height satisfaction level of the customers. To meet up the goal they
have followed different successful strategy and newly launched credit card is one of that. They launched credit card
in 2008 in 30 may by inviting all the valuable clients. They launched some other cards as well and they are giving
some outstanding features to attract the customer as its a new product. The entire cards are the VISA card.
5.1 Classification of Cards of MTBL:

Debit Card:

Card

MTBL gives debit card to its customer when they open a savings account. At that time they have to apply for the
debit card by filling up a specific form. There is no limit for debit card. Client can able to withdraw the withdrawable money which is set by the Flora bank software. As it is a VISA card so client can able to withdraw money from
any booth which accepts the VISA logo. MTBL has an agreement with Dutch Bangla Bank Ltd. that if any Client of

Debit
Card
Credit Card
mutual trust bank withdraws money from the DBBL ATM booth then no charge will be charged. There is no binding
for transaction in a day but for security purpose there is a limitation. That is no one will able to withdraw more than
30,000 Taka In a single day.
MTBL is giving a opportunity of free debit card for the first year and from the second year there will be a charge of
Remittance
500 Card
taka.
International
Local
5.1.1 Remittance Card:
Remittance card is really a unique product for those clients who get remittance from the outside of the country. Now
a days receiving the remittance is became faster, quicker then previous with help of Express Money Service. And
Travelers
Card
MTBL again made it effortless as well for the clients.Classic
When remittance
comes by someones name then he or she
Card
needs to fill up a remittance card form for the first time to get the remittance card. Client does not need to open any
account in MTBL just need to fill up the form. After that MTBL will create an account against his or her card
number. From then whenever the remittance will come by his or her name the amount will be automatically debited

Gold Card

by MTBL. And beneficiary will able to withdraw money from the booth as like debit card. More amusingly Annual
charge for this card is zero.
.
5.1.2 Travelers Card:
Now a day people certainly go outside of the country for business purpose and other purpose as well. By thinking of
this MTBL has introduced a card for travelers. It is the travelers card which is a one time card. When a person goes
outside he/she needs foreign currency. So they endorsed their needed amount of currency from the bank. But if
someone takes the travelers card he/she does not need to take that currency on hand. After endorsement bank will
create an a/c against that card number. Travelers card is an international debit card. Its a debit card because traveler
must have to deposit the amount on the bank to get that card. Endorsement amount varies depend on how will he
travel (by road, by air or by sea). Again the endorsement amount (bank gives) varies country to country. A person
can able to use his or her travelers can until his endorsed foreign currency have been finished. But he can not use it

29

more that one year. There is no annual charge for this travelers card but there is a processing fee of $20. Processing
For every single travelers card is $20; it does not depend on the endorsement amount of foreign currency.
Limitation: A single person can not able to take more than $3000 within a year because of Bangladesh banks
restriction.
5.1.3 Credit card:
Credit always creates liability. Credit card is one kinds of loan which is given by the bank to its clients. But the main
difference here to give a loan bank wants equal amount of wealth to be mortgage or kept to bank until the loan
amount is repaid with interest. But here bank gives credit card only basis on some legal documents. If someone want
to take credit card he or she needs to fill up a form provided by the MTBL Card department and he has to submit the
necessary documents which is bank required to ensure his or her credit card. User gets benefit in two ways by using
these credit cards. One, they can withdraw cash from any booth which has VISA logo and second, they can able to
buy products from the shop. And more interestingly charge for any point of sale is completely free.
There are two types of credit card
1.

Local (Classic & gold)

2.

International

5.1.3.1 Local:
Local credit card is used locally that means within the country. There is limit of withdraw money through this credit
card which is set by the MTBL authority based on the documents he or she provided. After analyzing all those
documents MTBL approved his or her credit card (classic or gold). It might be happen that someone wants to take
the gold credit card but bank found that he is not applicable for gold credit card. Then bank should give him classic
one.
5.1.3.1.1 Classic Credit card:
1.

Annual service charge for classic credit card is Taka 500.

2.

Credit Limit is 10,000 to 65,000 taka.

5.1.3.1.2 Gold credit card:

1.

Annual service charge for gold credit card is Taka 1400.

2.

Credit Limit is 70,000 to 500,000 taka.

5.1.3.2International credit card:

International credit card can be used both in the local and abroad.
1.

Annual service charge for international credit card is Taka 2800.

2.

Credit Limit is $3000 out side the country.

5.2 Loss of card or disclosure of PIN:

a) The Card holder shall not disclose or cause to be disclosed to any person the PIN assigned to the Card.
Immediately upon learning that the Card is lost or stolen or the PIN is disclosed. The Card holder shall report it to

29

Mutual Trust Bank card Division by phone followed by written confirmation containing cardholder's signature of
the said loss.
b) Notwithstanding the loss or theft of any Card or discloser of the PIN in respect of any Card, Mutual Trust Bank
may charge and debit the Card Account the amount of each and every Card Transaction made or effected before
written confirmation by the Cardholder of such loss, theft or disclosure is received by Mutual Trust Bank
replacement Card may be made to the Cardholder on payment of required charges in this regard.
5.3 Re-payment systems of credit amount:
If anyone buys from the shop by using credit card then he or she must have to repayment that amount within 45
days from that day. In case of buying from the shop there is a charge of 2.5% on the buying amount. If he or she
able to repay that money within 45 days then there will not is any interest charged. But if some one fails to repay
that money within 45 days then there will be a charge. For classic it is 200 taka and for classic it is 300 taka.
In case of cash transaction through the booth there will be a charge of taka 130 for every transaction.
5.4 Required documents for different credit card:
Client needs to submit some document with application form. Documents are differs based on the product to
products. Here is the list
Local cards

Salaried group

Two copies color photograph (P.P. size) duly attested by the

applicant

Salary certificate

Photocopy of official ID card.

Current 6 months bank statement.(personal)

Photocopy of TIN certificate(only personal TIN)

Photocopy of passport ( 1st seven pages)

Photocopy of national ID

Proof of residence(photocopy of gas/wasa bill, if any)

Proof of car ownership( photocopy of blue book of the car, if

any)

Proof of T & T ownership( photocopy of T & T bill, if any)

Photocopy of club/professional membership, if any.

Photocopy of existing credit card and latest statement(if any)

29

Self employed group

Two copies Color Photograph (P.P. Size) duly attested by the

applicant.

Valid Trade License (if Proprietor), Partnership Deed (if

partnership).

Memorandum of Articles with Incorporation. Certificate (for

Ltd. Co.).

Current six months Bank Statement (personal & Co.).

TIN Certificate (only personal TIN) Latest (no more than

two years old).

Rent Agreement for office/company premises.

Photocopy of Passport (I" Seven pages & dollar

endorsement pages).

Proof of Residence (Electricity/WASA/ Gas Bill, if any).

Proof of Car ownership (Photocopy of Blue Book of the car,

if any).

Proof of T&T ownership (Photocopy of T&T Bill, if any).

Photocopy of Club/ Professional membership (lf any).

Photocopy of Existing Credit Card.

29

International

Unsecured

Cards

Two copies Color Photograph (P,P, Size) duly attested by the

applicant.

Salary Certificate (if Salaried).

Valid Trade License (if Proprietor) Partnership Deed (if

partnership

Current six months Bank Statement (personal).

Memorandum of Articles with Incorporation Certificate (for

Ltd. Co.).

Photocopy of Passport (I" Seven pages & dollar

endorsement pages).

Proof of Car ownership (Photocopy of Blue Book of the car,

if any).

Lien

Proof of Residence (Electricity/WASA/ Gas Bill, if any).

Photocopy of Club/ Professional membership(lf any)

Demand Promissory Note

Personal Guarantee from Spouse.

Undated Cheque.

Declaration on TM form.

Two copies Color Photograph (P, P, Size) duly attested by

the applicant.

Partnership Deed (if partnership).

Memorandum of Articles with Incorporation Certificate (for

Ltd. Co.).

Photocopy of Passport (I" Seven pages & dollar

endorsement pages).

TIN Certificate (only personal TIN) / latest (not more than

two years old).

Lien confirmation from the respective Branch Letter of Lien

for Advance against FDR.

Demand Promissory Note (PF-152).

Letter of Authority.

Declaration on TM form.

29

RFCD (Retention foreign

currency deposits)

Two copies Color Photograph (P.P. Size) duly attested by the

applicant

Salary Certificate (if Salaried) Valid Trade License (if

Proprietor)

Partnership Deed (if partnership)

Memorandum of Articles with Incorporation Certificate (for

Ltd, Co.)

Photocopy of Passport (I" Seven pages & dollar

endorsement pages)

TIN Certificate (only personal TIN) / Latest (no more than

two years old)

RFCD Declaration form.

Fund hold instruction

Lien confirmation from the respective Branch Letter of Lien

as per our format

ERQ (Exporters retention

Demand Promissory Note

Letter of Authority Declaration on TM form

Two copies Color Photograph (P.P. Size) duly attested by the

quote)

applicant

Photocopy of Passport (I" Seven pages & dollar

endorsement pages)

TIN Certificate (only personal TIN)

Photocopy of Memorandum & Articles of Association Board

resolution

Fund hold & replenish instruction

Letter of Authority

Demand Promissory Note

Lien confirmation from the respective Branch

Chapter: Six
Foreign Exchange Department

29

6.1Foreign Exchange Department:

Panthapath branch of Mutual Trust Bank is an AD branch and it has a very good foreign exchange department. More
than fifteen employees are working in this department. One assistant vice president is the head of this department.
They are linked to the international division of MTBL. It facilitates international trade through its various modes of
services. It makes relation between the importer and exporter in the case of international trade and payment.

29

To perform their activities FX department have to follow some national and international rules strictly. Among
these, Foreign Exchange Act.1947 is for dealing in foreign exchange business and Import and Export control Act,
1950 is for documentary credits. Government Import & Export policy is another important factors for import and
export operation for banks
6.2Functions of Foreign Exchange Department:

1.

Foreign remittance.

2.

Xpress money-send now receive now.

3.

TC issuing.

4.

Foreign currency remitting.

5.

FC A/C maintaining.

6.

Import finance.

7.

Export finance.

6.3Foreign Remittance:
MTBL has established remittance arrangement with a number of exchange houses like UAE Exchange center LLC,
Wall Street Exchange LLC, Trust Exchange etc. through this exchange house people can send remittance to their
relative s in Bangladesh. It has already got the permission from Bangladesh Bank to start operation with Al Saad
Exchange, First Solution Exchange and Al Ahalia Exchange Bureau and Federal Exchange. They are also trying to
make agreement with 16 more exchange house. MTBL has 29 NOSTRO account in different banks of various
country. Through this exchange house they operate their foreign exchange business.
We a lot people live in various countries for various reasons. Most of them are working in the Middle East. They
send money to their relatives through bank. MTBL get the remittance through the correspondent bank. They send it
to their relatives account. In this way they earn foreign exchange.
MTBL also have an active International Division. Their activity is to deal with other bank, correspondent banking,
buying and selling foreign exchange. When the remittance comes from abroad they give the Bangladeshi taka but
keep the dollar or other currency. This foreign currency they sell to the people who want to go abroad. This currency
is also used for import finance. Through the spread they make a profit. Like other large commercial bank MTBL
dont have any dealing room. They only buy foreign currency from other commercial bank. They have the limit for
currency, the excessive currency they sell to other bank, in this way they also make profit. Foreign Exchange
department is strongly related to the International Division. Foreign Exchange department also get the exchange rate
from the ID. Most of the decision about foreign currency is regulated through ID.
6.4 X press money- send now receive now:
MTBL signed an agreement with UAE exchange in 2004. They have NOSTRO account to that exchange. People
can send money from different country through this service. MTBL get the money through SWIFT and they give it

29

to the clients instantly. In this case the sender gives a pin code to the receiver. The receivers go to the bank with
passport or any identification certificate and tell the pin code then the bank give them amount. Through this
exchange house MTBL get remittance of $ 3.07 million in 2005.They also get the foreign remittance of Tk 2671.53
million in 2006.
6.5Endorsement of Cash:
Cash foreign currency can also be remitted through the endorsement in the passport. MTBL (Foreign exchange)
give endorsement service to its clients. In case of endorsing cash on passport, they require valid passport and the
ticket should be confirmed. Any traveler can take or endorse maximum $3000 for a year. The concerned officer
checks the last voyage of the purchaser. If he found that the purchaser has bought dollar less than $3000 in year then
he give the rest amount to the purchaser. For cash endorsement MTBL maintain separate register and they charges
Tk 200 as a service charge.
6.6 Issuance of Travelers Cheque (TC):
MTBL issues only American Express Travelers cheque. For TC customer has to fill up a TM form. The clients also
have to fill up a purchase form. It has four copies. One copy for MTBL, one copy for AMEX and two copy for the
customer. MTBL charges 1% commission for TC.
Requirement for purchasing TC:
There are some requirements that are to be fulfilled by the TC purchaser. The requirements are

Passport holder himself has to present while issuing TC.

The passport must be valid one.

Air ticket has to be confirmed.

Steps involved in issue of TC:

After verifying all these documents the customer is asked to fill up prescribed application form.

In the application the customer states the amount he is wiling to endorse and it is to be verified that his
required amount is within the stipulated.

Then the customer pays cash or by debating his account the travelers cheque is issued.

Endorsement is given on the passport and on the ticket. Customer fills up the TM form.

Purchase application form has to be filled up by the purchaser.

Entry has to given in the foreign currency register and in the Travelers Cheque register.

6.7 Foreign Currency Account:

MTBL opens foreign currency account. It is used for receiving foreign currency from abroad and sends the currency
to the abroad. It can be used in favor of the person or in favor of the exporters.
Following papers are required to open a foreign currency account:

29

Exporters foreign currency account opening form(application form, two signature cards dully filed in and
signed with authorized seal and introduction)

Two copies of passport size photographs of each operator attested by chairman of the company.

Export registration certificate.

Attested photocopy of the membership certificate of the concerned association.

Export proceed realization certificatedeclaration/undertaking regarding the utilization of the foreign

currency.

In the case of limited company:

Memorandum and articles of association of the company.

Power of attorney.

Resolution of the Board of Directors.

Certificate of Incorporation

Certificate of Commencement of business.

Trade license.
Import Procedure

6.8 Import Mechanism:

Import finance is an important activity of the foreign exchange department of MTBL. Foreign Exchange department
of panthapath Branch (MTBL) is very active. To import, a person should be competent to be an importer. According
to Import and Export control Act 1950, the office of Chief Controller of Import and Export provides the registration
(IRC) to the importer. After obtaining this, the person has to secure a Letter of credit authorization (LCA) from
Bangladesh Bank and then the person becomes a qualified importer. He may request or instructs the opening bank to
open an L/C. he is also called an opener or applicant of the credit.
6.8.1 Importers application for L/C limit or Margin:
To have an import L/C limit, an importer submits an application to the FX department of MTBL furnishing the
following information:
1.

Full particulars of Bank account.

2.

Nature of business.

3.

Required amount of limit.

4.

Payment terms and conditions.

5.

Goods to be imported.

6.

Offered security.

7.

Repayment schedule.

29

A credit officer scrutinizes this application and accordingly prepares a proposal (CLP) and forwards it to the Head
Office Credit Committee (HOCC). The committee verified it and if they are satisfied then sanctions the limit and
returns back to the branch.
6.8.2 L/C Application:
MTBL provides a printed form for opening of L/C to the importer. This form is known as Letter of Credit
Application form. A special adhesive stamp is fixed on the form. While opening, the stamp is cancelled. Usually the
importer expresses his desire to open the L/C quoting amount of margin in percentage. The importer gives the
following information:
1.

Full name and Address of the Importer.

2.

Full name and address of the Beneficiary

3.

Draft amount.

4.

Availability of the credit by sight payment acceptance/negotiation/deferred payment.

5.

Time bar within witch document should be presented.

6.

Sales type.(CIF/FOB/C&F)

7.

Brief specification of commodities, price, and quantity indents no etc.

8.

country of origin

9.

Bangladesh Bank registration number

10. Import License/ LCF no

11. IRC no
12. account no
13. Documents required
14. Insurance cover note/policy no, date, amount
15. Name and address of Insurance Company.
16. Whether the partial shipment is allowed or not.
17. Last date of shipment.
18. Last date of negotiation.
19. Other terms and conditions if any.
The above information is given along with the following documents:
1.

Pro-forma Invoice stating description of the goods including quantity, unit price.

2.

Four set of IMP form.

6.8.3 LCA Authorization form:

The Letter of credit authorization form contains the followings:
1.

Name and address of the importer

2.

IRC no and year of renewal.

3.

Amount of L/C applied for.

29

4.

Descriptions of items to be imported.

5.

ITC numbers/ H code

6.

Stamp and signature of the importer with seal.

6.8.4 Form- IMP:

The Form IMP contains the following thing:
1.

Name and address of the authorized dealer.

2.

Amount of remittance to be permitted.

3.

LCA form number, date and value in taka

4.

Description of goods, quantity.

5.

Invoice value in foreign currency.

6.

country of origin

7.

Port of shipment.

8.

name of ship/ airline

6.9 Scrutinizes of L/C Application:

The officer of MTBL scrutinizes the application in the following manner:
1.

The terms and condition of the L/C must be complied with UCPDC-500.

2.

Eligibility of the goods to be imported.

3.

L/C should be opened in favor of importer.

4.

Radioactivity report in case of food item.

5.

Carrying vessel is not of Israel.

6.

5 years old reconditioned should not be imported.

6.10 Precautions taken by officer of MTBL before issuing L/C:

After submission of documentary L/C application form, the concerned officer checks the terms and conditions that
mentioned in application. They must check the following things:
1.

Whether the terms and conditions of L/C application are consistent with exchange control and import trade
regulation UCPDC-500.

2.

L/C must be signed by the importer agreeing all terms and conditions mentioned in the application.

3.

Indenting registration number.

4.

IMP form dully filled and signed.

5.

Validity of IRC.

6.

Insurance cover note with date of shipment.

7.

HS code of the goods.

8.

The goods are not form Israel.

6.11 Amendment of L/C:

29

parties involved in a L/C, particularly the seller and the buyer can not be always satisfy the terms and conditions in
full as expected due to some obvious and genuine reasons. In that situation, the credit should be amended. MTBL
transmits the amendment by tested telex to the advising bank. In case of revocable credit, it can be amended or
cancelled by the issuing bank at any moment and without prior notice to the beneficiary. But in case irrevocable
L/C, it cans neither be amended nor cancelled without the agreement the issuing bank, the confirming bank and the
beneficiary. If the L/C is amended, services, charge and telex charge is debited from the party account accordingly.
6.12 presentations of Documents:
The seller satisfied with the terms and conditions of the credit proceeds to dispatch the required goods to the buyer
and alter that has to present the documents evidencing dispatching of goods to the negotiating bank or before the
stipulated expiry date of credit after receiving all the documents, the negotiating bank then checks the documents
against the credit. If the documents are found in order, the bank will pay, accept or negotiate to MTBL. MTBL
checks the documents. The usual documents are the following:
1.

Invoice.

2.

Bill of Lading.

3.

Certificate of origin.

4.

Packing list.

5.

Shipping advice.

6.

Bill of exchange.

7.

Pre-shipment inspection report.

8.

Shipment certificate.

6.13 Examinations of Documents:

MTBL officials check whether these comments have any discrepancy or not, here discrepancy means the
dissimilarity of any of the documents in the terms and conditions of L/C.
6.14 Dispatching:
After opening of import L/C, MTBL-panthapath branch dispatches the L/C. they sends an original copy of the L/C
for negotiating and a copy to the advising bank for advising. It also sends imbursing bank for reimbursement
6.15 Receiving documents:
If the beneficiary is being satisfied with the terms and conditions of the L/C, then dispatch the goods to the buyer.
After the dispatch of the documents, they confirm dispatching goods to the negotiating bank. The documents
include:
1.

Invoice.

2.

Bill of Lading.

3.

Certificate of origin.

4.

Packing list.

5.

Shipping advice.

29

6.

Bill of exchange.

7.

Pre-shipment inspection report.

8.

Shipment certificate.

After receiving all the documents, the negotiating bank then checks the documents against the credit. If the
documents are found are in order, the bank will send it to the MTBL.
6.16Parties to L/C:
Importer

Applicant for L/C

Issuing Bank

It is the banks that open/issue a L/C on behalf of the importer.

Confirming bank

It is the bank, which adds its confirmation to the credit and it is done on the
request of issuing bank confirming bank may or may not be the advising bank.

Advising Bank

It is the bank through which the L/C is advised to the exporter. This bank is
actually situated in exporters country. It may also assume the role of confirming
and / or negotiating bank depending upon the condition of the credit.

Negotiating bank

This bank negotiates the bill and pays the amount of the beneficiary. The
advising bank and the negotiating bank may or may not be same. Sometimes it
can also be the issuing bank.

Paying bank

It is the bank on which the bill will be drawn.

Reimbursing bank

This bank reimburse the negotiating bank after getting payment instruction
from issuing bank

6.17Cash L/C: when cash foreign exchanges are used to meet obligation against import of goods and services to a
country under an L/C is called a cash L/C.
6.17.1Procedure: before opening of a a cash L/C, the seller concludes a sales contract with the buyer for shipment
of certain commodity providing for payment credit and accordingly instruct MTBL to open a letter of credit in favor
of seller. During open cash L/C the importer has to submit the following in MTBL foreign exchange department/
branch.
1.

prayer for opening L/C

2.

trade license

3.

IRC

4.

VAT registration with TIN.

5.

No objection certificate from the previous banker.

6.

indent/pro-forma invoice

7.

insurance cover note with cash money receipt

8.

IMP from one set

9.

LCA form 1 set

29

10. indemnity/undertaken
11. charge documents 1 set
12. Any other if necessary.
After receipt the L/C application form along with all necessary papers MTBL verify the following point:
1.

verify the signature

2.

Whether the value, quantity unit price and description of goods as mentioned in the L/C.

3.

whether IRC number, LCA number shipment date , expiry date , negotiation time mode of
shipment country of origin are properly mentioned in the L/C application form.

4.

Whether marine insurance cover note is relevant as to items of import, its port of shipment and
port destination, mode of shipment, risk it covers.

5.

Whether any clause or condition requested in the L/C application is in contravention of exchange
control regulation.

6.

The financial position of importer.

7.

Market demand of importer goods.

8.

CIB of the importer

9.

Credit report of the supplier.

After opening cash L/C the voucher are to be sent to the sent to the advising bank by SWIFT/TELEX/AIRMAIL for
advising the same to the beneficiary and following vouchers are to be passed:
1.

customers liability on L/C(contra liability voucher)

2.

Bankers liability on L/C(selling rate)

3.

party account rate(B.C selling rate)

4.

S/D A/C margin on L/C

5.

Income com. On L/C

6.

other liability, VAT on L/C com (15% on L/C commission)

7.

income account charge

8.

FCC

6.17.2 Lodgment of import bills:

On receipt of shipping documents, the MTBL examine them to verify that on their face they confirm to the terms
and condition of the credit. MTBL must check the following criteria:
1.

Full set of documents have been presented in conformity with the terms of the credit

2.

The documents are in consistence with each other

3.

The amount drawn doesnt exceed with the L/C value

4.

The documents have been negotiated with the credit validity and shipment made with in the shipment
period and the documents are in compliance with the UCPDC-500.

6.17.3 Retirement of import documents:

29

As soon as lodgment is completed, the importer is to be intimated for retirement of the documents against payment
as per arrangement within specific period. Moreover import is to be lodged within 72 hours of it receipt date.
6.17.4 Shipping guarantee:
Sometimes vessels carrying imported goods arrive at destination much earlier than the shipping documents received
by the L/C issuing bank. In that case in absence of original shipping documents goods may be cleared by non
negotiable copy of documents against shipping guarantee issued by MTBL. Actually the importer request to the
MTBL to issue shipping guarantee for clearance of goods against non-negotiable copies of documents received
directly from the exporter as per credit items.
6.17.5 LIM:
After lodgment of import documents, the importer may request to the MTBL for clearance of consignment from the
port keep the same to bank warehouse. Then MTBL clears the goods by creating loan on account of importer against
imported merchandise which is termed as LIM, after clearance from the port, goods are to be kept in bank
warehouse. Importer takes delivery of the goods against payment as per repayments schedule of the sanction advice.
To get the loan through LIM process customer should fill up the LIM registration form. Which are given below1.

Name and address of importer

2.

L/C and PAD number with date

3.

LIM number

4.

Name of Vessel

5.

B/L number and date.

6.

Detail description of goods and quantity.

7.

landed cost

8.

date of storage of goods with expiry etc

To make this report concise and clear we used here real example and the source data we enclosed with this report.
From above flow chart we can see that here have four parties who are directly involve in L/C part and are
Provide LIM&L/C
Woori Bank
Export
Beneficiary:
Issuer: MTBL
to payment
imported Applicant:
receivable
Foil Co.ltd
1. Quasem drycell LTD(applicant of LIM)
Quasem Drycell
after
goods
amount which
2. MTBL (issuer of L/C and LIMgot
or consignee)
ltd
maturity
from
applicant
3. Shinwha foil co LTD(beneficiary
or export bank
the demandable goods)

Guarantee
facility
PaidParties
the a/c
responsible
to get loan on imported merchandise.
are

4.

Woori bank(exporter bank or who provide the payment of exporter)

5.

Vessel name: Hyundai marine co. LTD

Order for
import
goods

After the expected goods (base paper) reached to the proper destination (chittagong port) this is the time for quasem
dry cell to received the product by paying LIM amount with 14.5% interest rate. Importer should pay the money
after reached the product to bank ware house within 90 days. Before paid the loan amount the products are
maintained by the MTBL.
6.17.6 Trust Receipt (TR):

29

Trust receipt is the receipt when importer doesnt able to pay the loan amount to the bank. Importer request is to the
MTBL to open TR with a 14.5% interest rate so that importer can withdraw their products from MTBL warehouse
against trust receipt. But to open TR is not easy for importer. If the previous history of payment Lim is good and the
customer deal with the bank regularly then bank provide this facility.
6.18 Back to back L/C:
This is an irrevocable L/C. this L/C help exporter to facilitate production so that they can timely export the goods to
the importer. MTBL disburse B2B L/C under lean

of export L/C. To open B2B L/C customers are required to

submit several documents in the bank. To open B2B L/C bank provides a code of conduct to the customers (like as
cash L/C opening form). The necessary documents needed to open B2B L/C are given below which are get from
bank authority.
6.19 How B2B L/C work:
MTBL have client name JNG fashion fabrics ltd situated at east rampura who have already open export L/C in this
bank. After open export L/C, this company needs money to buy cloths for their production. They wanted to bye the
goods from Hamza textile ltd located at gazipur. Now they request to MTBL to give them B2b L/C facility. so that
they can timely finished their production. They need BDT 1 million. . For this reason they received this facility from
the bank under lean of their export L/C documents.
.
Need for raw material
Provide LIM & L/C
facility to facilitate JNG production
for
production
so that JG can complete
their
production their production
Exporter:
Another
exporter:until
FOB (Free on Board)
thea specific
exportertime.
quotes the price covering
all his expenses
JNG fashion fabrics ltda) Under FOB basis, at
Hamza
textile
ltd who
Exim
Bank:
(have received a cash L/C
Benefiary
Bank:
provide raw bank
materials
from a foreign
company the
to goods duly packed on board.
Beneficiary
of
MTBL
tohamza
JNG fashion
fabrics.
export RMG)
textile
ltd
b) The carrying vessel named and arranged by the buyer with the freight and

6.20Types of contracted price:

the insurance being paid by the buyer along with any cost and all risks from the
time the goods are placed on board inclusive of these arising out of the ships
failure on berth.
C&F/ CRF

a) In this case, the exporter quotes the FOB price plus freight and also makes all
arrangements for the shipment of goods.

b) Importer bears the insurance cost.

CIF

a) Under CIF, the exporter C&F price plus insurance cost. The responsibility of
carrying out all formalities for shipment of the goods develop upon the seller.

29

FAS (free Alongside Ship)

Under FAS, the seller quotes the price covering all his charges until such time as
goods are loaded on train at the specified railway station. The buyer is
responsible for all future necessary agreements and charges.

6.21Credits occurred in L/C operation:

During L/C operation some credit facilities evolved to the importer and exporter. These credit facilities are
mentioned below:

Export Cash Credit (ECC)

a) It is given to the exporter for processing of raw materials.

b) This is pre-shipment credit and short term in nature.

Payment

Against

Document (PAD)

a) This is related to the cash L/C

b) After opening L/C, foreign exporter sends goods to the importer and a bill of
exchange along with shipping documents to the L/C opening bank. Then bank
immediately make payment to the exporter if there is no discrepancies are found on
the shipping documents. Bank hand over the shipping document to the importer only
after his recovery of payment from the importer. Since the bank pay to the exporter
on the basis of the shipping documents, this is called Payment Against Documents

Loan Against Merchandise

a) LIM is occurred from PAD

(LIM)

b) After payment to the exporter on the basis of shipping documents, bank recovers
the amount from the importer. Sometimes for financial crisis, importer fails to pay the
amount. In this amount, importer request o the bank to treat PAD as credit and
handover the shipping documents to him. So that he can clear the imported goods
from the port. Then bank convert the PAD to regulate credit and handover the
documents to the importer and take the imported goods as security of loan. Since this
loan is given on the imported goods, this is called Loan Against Merchandise (LIM).
Duration of this loan is very limited like one month.

Foreign Bills Purchased

a) This loan is given to the exporter.

(FBP)

b) When local exporter gets a usence bill of exchange, he has to wait until the
maturity of the bill for receiving payment. Sometimes he can not wait until maturity
and request the bank to purchase it. If bank agree, then they give loan against the bill
of exchange. Upon maturity, bank presents it to the drawee of the bill for encashment.
Bank purchase it at discount rate.

29

IP Loan

a) When L/C opener has no sufficient fund to purchase Foreign exchange to open
L/C, then the bank provides him credit to purchase necessary foreign exchange under
the WES/ SEM. This loan is called IP Loan.
Export Procedure

6.22Export:
Export finance is another important task of Finance department of MTBL. Bangladesh exports few commodities to
foreign countries comparing to import. Bangladesh export RMG products, Jute, shrimps, tea and few handicrafts to
foreign countries. RMG sector export 70% of the total export. Among them 50% is exported to USA and European
countries. The general frame work for control of export is similar to that of imports but the objective of import and
export control is quite different. Export control mainly aims at regulating the flow of foreign exchange into the
country. Exporter has to open export L/C to export their product.
6.23Export procedure:
The export trade of the country is regulated by the Imports and Exports (control)
Act 1950. There are some formalities that an exporter has to fulfill to export their goods. These procedures are
descried below:
6.23.1 Registration:
An exporter or firm desirous of undertaking export trade is required to obtain Export Registration Certificate (ERC)
from the offices of the Chief Controller of imports and Exports (C.C.I & E). Without ERC no one can export their
products from Bangladesh and they have to renew it every year. The ERC number is to be incorporated on EXP
forms and other documents connected with exports. The following documents are needed to get ERC:

Nationality certificate from the local authority.

Trade license.

Bank certificate.

Income tax certificate.

Registered partnership deed in the case of partnership concerns, Memorandum & Articles of Association
and certificate of Incorporation in the case of Limited Company.

Copy of the recent receipt of the business premises.

6.23.2Export order:
After the registration the exporter contact with buyers directly. In Bangladesh TCB, BJMC, and other trade
corporations sometimes secure bulk contracts and assign or allocate the contracts to the actual exporters.
6.23.3 Signing the contracts:
When sale is agreed, a contract between buyer and seller is executed. the following things are to be mentioned:

Description and quantity of the goods.

29

Value of commodity quoting its FOB, CFR, CIF etc.

Insurance and marks.

Inspection.

Arbitration.

6.23.4Export L/C:
The export is normally executed against L/C opened by the overseas buyers. Sometimes shipments are made on
CAD, DP, or consignment basis without cover of L/C. when the export is made against L/C, the exporter should
examine the following thing to avoid future complicity:
1.

The terms and the conditions of L/C are definite, clear and explicit and also are in conformity with those
of the contract.

2.

The L/C should be an irrevocable one and be confirmed by the advising bank.

3.

The buyer holds a valid import license.

4.

If the L/C is transferable or otherwise, it should be clearly mentioned in the L/C.

5.

The L/C should provide sufficient time for shipment and a reasonable time for negotiation. If nothing is
mentioned the shipper would be allowed 21 days to negotiate the documents.

If any term of the L/C appears vague, ambiguous or too difficult for the banker to ensure compliance, the banker
should immediately refer to the concerned correspondent by letter and get the vagueness removed before advising
the L/C to the beneficiary (exporter).
On the other hand, if the exporter finds any provisions inconsistent with the underlying contract, he should
immediately ask the buyer to carry out necessary amendments through the L/C opening bank
6.23.5 Shipment:
After securing the sale order, the exporters duty is to deliver the goods on time. Buyer can claim on failure of
shipment or delay of shipment and he may also asked fine. There are various terms of delivery at international level
such as EXW, FAS, FOB, DDP etc but Bangladesh normally delivery on FOB, CFR or CIF.
Before exporting of goods, the exporter has to do different tasks. Usually Bangladeshi exporter exports their good
by sea. On dispatch of the goods to the docks, C&F agent should be given clear instructions to effect shipment as
per schedule and arrange to make necessary payments towards port charges. To complete the customs formalities,
the following documents should be sent to C&F agent by the exporter:
i.

Export Registration Form(ERC)

ii.

Commercial Invoice.

iii.

Packing list.

iv.

Copy of the sale contract/ Export L/C.

v.

Form VBF 9A prescribed by the customs authority for declaration of export goods.

vi.

Any other documents relevant to the specific cargo such as GSP certificate or export permit.

29

6.23.6 Obtaining EXP:

After having the registration, the exporter applies to MTBL with the trade license, ERC and the certificate from the
concerned Government organization to get EXP. If the bank is satisfied, an EXP is issued to the exporter. An EXP
form contains the following particulars:

Name and address of the Authorized Dealer.

Particulars of the commodity to the export with code.

Country of destination.

Port of destination.

Quantity.

L/C value in the foreign currency.

Terms of sale.

Name and address of the importer.

Bill of lading /Railway receipt/ airways bill/ post parcel receipt no, date.

Port of shipment.

Land custom port.

Shipment date.

Name of the exporter with address.

CCI&Es registration number etc.

6.23.7 Making out and delivery of shipping documents:

All carriers (Railway, Shipping) and their agent s will ensure that the railway receipt, Bills of lading and any other
documents of title to cargo are drawn only to the order of an Authorized Dealer designated for this purpose by the
respective exporters and delivered to the authorized representatives. In the case of export, the exporter get the
advance payment through AD bank (MTBL) but the Bill of Lading and other document may be endorsed by the
Authorized Dealer in favor of foreign importers and sent directly to the importers. If the goods reached earlier than
the documents to the foreign country, it causes inconvenience and involves payment of demurrage at the port of
destination due to delay in receipt of shipping documents. To avoid this type problem, shipping company request the
negotiation bank in Bangladesh to issue telegraphic delivery order to the importers bank.
6.23.8 Preparation of Export Documents:
The exporter should be very careful to prepare export documents. If there is any mistake then he will face difficulty
in the negotiation of the export documents and collection of the export proceeds from the buyer. The following
documents normally required for negotiation:
A) Bill of Exchange or Draft:

29

I. Exporter prepares 2 or 3 sets of Bills of Exchange or Draft. It must bear a date and he number and
date of L/C or export order under which it is drawn. The date must not be prior to the date of
shipment.
II. It must be in the name of the beneficiarys bank the draft is to be drawn to the issuing bank. If the
shipper is not the beneficiary of the foreign L/C, the draft is drawn on the beneficiary named in that
credit who, in turn, draws the draft on the buyer. This situation arises when shipment is made on
the strength of a local L/C which is opened on back-to-back basis against a foreign L/C.
III. The draft may be at Sight or Usance. Under the Foreign Exchange Regulation in Bangladesh,
export proceeds must invariably be repatriated into the country within 4 months from the date of
export. So, draft can not be longer than 120 days sight. Sight bill is to make payment immediately
on presentation of the bill. Usance bill is to be paid after the period say 30,60 90 or 120 days,
specified in the bill has expired. So such draft must bear the date of shipment with date of maturity
calculated from the date of shipment and to be marked on the draft.
IV. In the case of usance bill, the requisite foreign bill stamp must be affixed as per stamp ACT in
force in the country.
V. Amount of the draft must correspond to the value of the invoice and must not exceed the L/C
amount.
B)

Commercial Invoice:

A commercial invoice is a statement prepared by the exporter containing full details of the goods shipped. It gives
description and price of the merchandise, quantity, quality, packing details and marks, names and address of the
seller and buyer, L/C and contract no, terms of trade- FOB, CIF and CFR etc, details of freight charges, insurance
premium and other charges, name of the vessels, date of shipment, number of bills of lading etc.
MTBL check the following thing before sending it to the importer:
I. They check the name of the foreign buyer and signature of the exporter. They also check the invoice
number
II. They check very carefully the amount of the draft and invoice is same or not and is it within the L/C
value or not.
III. Required number of invoices as per L/C plus 2 copies duly signed by the beneficiary should be
submitted. MTBL submit one copy of commercial invoice with duplicate EXP form to the
Bangladesh Bank and keep one copy for their record.
IV. The mar and number on the packing shown in the B/L must be identical with those given in the
invoice and other documents.
C) Bill of Lading:
Bill of Lading is the evidence of carriage of goods by sea. it contains brief description of the goods accepted for
transport. Actually the shipping company issues the bill of lading but I is very important for he exporter to examine

29

that they are correctly issued to avoid delay in negotiation of documents. the following thing should be scrutinized
carefully:
I. It must be made out in the specific format of the shipping company according to the instruction of the
exporter and maintaining the L/C terms.
II. Bills of lading are issued in required sets and presented to the banks along with sufficient number of
non-negotiable copies.
III. It must be stamped while issued I Bangladesh.
IV. It must be signed by the authorized agent of the shipping company.
V. It must list the port of departure and the port of discharge and the name of carrying vessels, name of
the shipper and the buyer, notifying the party and their full address as per terms of the L/C.
VI. It must give evidence of payment of freight. If the contract is for delivery on FOB basis, the bill of
lading should bear notation like Freight payable. If the price is on CFR or CIF basis, it must be
marked Freight paid
VII. Description of goods, marks, numbers, gross and net weight, EXP numbers should correctly
mentioned in the bill of lading.
VIII. Bill of Lading should not be stale. If is stated in the L/C, the bill of lading presented to the bank for
negotiation beyond 2 days becomes stale and is not accepted for negotiation.
D) Packing List:
A packing list is prepared by the exporter to indicate or explain the exact nature, quantity, quality of the contents of
each package in the shipment. This lists help importer to identify the goods and check them against the order. Bank
also requires the packing list.
E) Consular Invoice:
It is a special kind of invoice required by some countries where consul or some other member of the consular
service office of the importing country signed. The main purpose is to enable the authorities of the importing
countries to collect the accurate information of the volume, values, quantity, grade, source etc. They also use it for
statistical purpose.
F) Certificate of Origin:
It is the document certifying the country of origin of the goods. It is very essential for export. Through this
certificate importer can understand where the goods actually produced or manufactured.
G) Other certificates:
Some other certificates are required during the shipment depending on the types of the products. A weight certificate
is required for grains, oil and for similar product. Certificate of Analysis is required for chemicals and drugs.
Phyto Control Certificate is required for the sale of plants, seeds, herbs, fresh fruits and vegetables.
6.23.9 Negotiation of Documents:

29

After the shipment the exporter should arrangement for early submission of the documents to the bank, correctly
prepared in conformity with the terms of the credit for negotiation. The exporter should remain in consistent touch
with the negotiating bank for early negotiation of export bills. If any minor mistake is detected or any document is
found missing, the same should immediately be corrected or supplied for early settlement of the matter.
6.24 Mode of payment:
There are wide ranges of choices to receive payment against the exports of goods. Under mutual understanding both
importer and exporter fixed the mode of payment. There are different types of payment methods commonly used in
the international trade as given below:
6.24.1 Advance Payment:
The exporter may require that the importer should make full payment for the goods to be exported in advance. If
exporter negotiation is strong then this procedure exists. When the relation between the exporter and importer is
very good then importer gives full payment advance. In that case the exporter sent all the documents directly to the
importer.
6.24.2 Open account:
This method of settlement is possible where the commodity commands buyers market. In this method the exporter
dispatch the goods to the importer and the importer give the payment in future date. When there is very good
relation between the buyer and seller then they do it.
6.24.3 Consignment sale: sometime the seller may have their own selling agent abroad. They send the goods to
their agent. The agent receives the goods and arrange store and sell it. Then they remit the money to the original
seller. The ownership of the goods throughout remains with the exporter. Consignment export is allowed only in
respect of selected commodities.
6.24.4 Bills for Collection: a documentary collection is an operation in which a bank collects payment on behalf of
seller by delivering documents to the buyer. Under this method, the goods are dispatched to the importers country
but the relative shipping documents, including the documents of title to the buyer and a bill of exchange are sent
through a bank for collection of payments. This method is sometimes designated as Cash against Payment (CAD)
or Documents against Payment (DP). This service is cheaper and more flexible than a documentary credit.
Another method is frequently used to receive payment is by sending the documents on what is known as Documents
against Acceptance (D/A). Under this method, the documents are delivered to the buyer on acceptance of the bill
signifying his acknowledgement of the debt as well as a commitment to pay on the maturity date of the bill.
6.24.5 Letter of Credit: This is the most important method used widely to make a bridge between importer and
exporter. In the international trade sometimes buyer and seller do not know each other. They open L/C and start
trade. In this case bank act as guarantee. The L/C is an undertaking by the importers bank if the exporter exports
goods and produces shipping documents and other papers, the bank would make payment to the exporter.
6.25 Discrepant Documents:

29

If major discrepancies are found in documents and the same are no0t possible to be rectified, the following ways are
open for disposal of documents:
i.

Bank should immediately advise the importer to seek his acceptance of documents despite the
discrepancies. If the importer refuses to accept the documents, the bank should the negotiating bank
by telex for instructions with regard to disposal of goods and documents.

ii.

Sometimes bank may b prepared to negotiate the documents in spite of discrepancies and the amount
for documents are negotiated is held under reserve

iii.

In some cases where documents submitted differ from the conditions of credit and which can no
longer be corrected, the banker opts to send such documents on collection basis, the payment of
which is disbursed after the proceed are received.

6.26 Exchange control Regulation for realization of proceeds:

Te exporter are required to repatriate the export proceeds within 4 months from the date of shipment, otherwise
penalty is imposed upon them. If the buyer refuses to accept such discrepancy in the documents, the bank would ask
the exporter to refund the money with interest. The exporter is liable to pay overdue interest for the delay in
payment of the export proceeds beyond 21 days from the date of shipment. So the exporter should keep close watch
with the bank and the importer for prompt realization of the bill to avoid paying such penalty.

Export Finance

6.27 Export Finance:

MTBL provide export finance facility to its clients. To export goods sometimes exporter need loan or money. In that
case MTBL provide loan to the exporter. There are two way for export financing. A) Pre-shipment Finance B) Postshipment Finance. MTBL normally provide 75 to 90 percent of export order as pre-shipment Finance an 100% as
post-shipment Finance
6.28 Pre-shipment Finance:
This finance occurs before the shipment of goods. Exporter needs money for procurement of goods, processing of
raw materials, packing and transportation from factory to the port of shipment inspection and other charges

29

including export duty. When the relation between the client and bank is good then they provide the maximum limit
of credit.
The exporter may borrow money from the MTBL in the following ways:
1.

Packing Credit.

2.

Advances under Red Clause Letter of Credit

3.

Back- to Back credit.

6.28.1

Packing Credit:

MTBL give short term loan with a fixed repayment date. Bank allows this credit for buying, processing,
manufacturing, packing and shipping of the goods meant for export. The bank gives this credit to exporter when he
gets the foreign order. The first step is to fix a packing credit limit based on the need of the borrower and the
exporter is permitted to draw a part or whole of the amount of limit according his requirements. It gets repaid with
the proceeds of the bill drawn on the foreign buyer. Packing credit advances does not normally extend beyond 180
days and has to be liquidated by negotiation / purchase of the export bills covering the particular shipment for which
the packing credit was granted. The packing credit facility may be extended in form of hypothecation of goods,
pledge, and export trust receipt.
6.28.1.1 Hypothecation of goods:
MTBL provide this facility when the company has good reputation and relation with the bank and when there is
good credit standing for procuring. The possession and ownership of the goods remain wit the exporter and the
exporter creates a charge in favor of the bank on the goods hypothecated by signing a duly stamped letter of
hypothecation. For this case MTBL usually ask for collateral or personal guarantee from the directors of the
company. Bank also asked to the company to give them periodic statement on the hypothecated goods and the
responsible officer conduct inspection to verify the stock.
6.28.1.2 Pledge:
In this case the exporter surrenders the physical possessions of the goods under the banks effective control. The
ownership of the bank remains with the exporter. The pledge creates an implied lien in favor of the bank and bank
can sell the goods for adjustments of the advance by giving notice to the exporter on his failure to honor
commitment. MTBL do not require any collateral security.
6.28.1.3 Export Trust Receipt:
This method is widely used in MTBL for pre-shipment finance. Under this arrangement, credit is allowed against
trust receipt and exportable goods remain in the custody of the exporter but he is required to execute a stamped trust
receipt in favor of MTBL. This facility is allowed only to the first class party and collateral security is required. It is
intended for procuring, processing, packing etc of exportable merchandise, which can not be conveniently taken into
the banks custody.
6.28.2 Advances under Red Clause Letter of Credit:

29

In this case, L/C opening bank of the importer authorizes MTBL to make advances to the exporter prior to shipment.
It is intended to enable the exporter to procure goods and execute the order of the foreign buyer. It generally
happens when there is a very theres a strong commercial relationship between the exporter and importer. The
advance is liquidated against the export bills negotiated under the L/C. this clause in the L/C authorizing the
negotiating bank to make advance to the beneficiary, is typed in red ink and thus the name Red clause L/C
6.28.3Back- to Back L/C:
MTBL open this type of secondary L/C for export financing. It is a secondary credit opened by a bank on behalf of
the beneficiary of the original credit, in favor of a supplier located inside or outside the original beneficiarys
country. The beneficiary in this case is a middleman who may not be the actual manufacturer of the exported goods.
A lien is created on the original export L/C as security. The two credits operate back to back, one being issued on
the security of other. The exporter gets the facility of purchasing goods without investing his own funds. In such
cases, the original credit should be an irrevocable credit. The terms and conditions of both th credits should be
substantially same except:

Suppliers name of the back to back credit will be different.

The invoice value of the good on the second credit is a little less than that of the first credit to give a
profit to the exporter

The validity of second credit should also be a little earlier than that of the first credit leaving
sufficient time for the exporter to ship the goods within the validity of the first credit.

The beneficiary (Supplier) of the second credit presents his bill together with necessary documents to the bank after
dispatch of the goods to the exporter to get payment. The exporter then arranges for the shipmen of goods, attaches
the necessary documents and presents his own bill with the documents to the negotiating bank. The supplier is
generally paid after negotiation of the documents submitted by the exporter. By opening a back-to-back L/C, the
exporter gets the facility of purchasing the relative goods without investing his own fund.
6.29Procedure for sanction of Pre-shipment Finance:
MTBL as well as other banks ensured the following thing for pre-shipment credits:
i.

MTBL must check the experience of the customer in the line of export. The credit worthiness of the
exporter or his export performance are to be verified from the financial statement.

ii.

The L/C should be from a reputable bank abroad whose status has to be ascertained. The L/C should
be irrevocable, unrestricted, valid, and preferably confirmed.

iii.

Expiry date of L/C should be properly recorded in the book and no drawing should be allowed against
an expired L/C.

iv.

The period for which the credit is sanctioned should be clearly mentioned.

v.

Both irrevocable L/C and the firm contract deposited with the bank must be carefully scrutinized to
ensure that there are no conditions. L/C or firm sale contracts not only serve as evidence of definite

29

arrangements for realization of the export proceeds but also indicate the quantum of finance required
by the exporter.
vi.

The bank officers should periodically inspect the goods and verify that they confirm the quantity and
quality.

vii.

In the case of goods pledged to the bank, guards and supervisors nominated or appointed by the bank
should be posted to the godown. Comprehensive insurance should also be taken against the goods.

viii.

Charge documents and other necessary documents as stipulated in the sanction letter should also be
properly obtained.

ix.

The exporter could be asked to make a forward sale of the foreign exchange to the bank if the bills
have to be drawn in foreign currency

6.30Post-shipment Finance:
MTBL provide post-shipment facilities to their clients to continue their business process smoothly. This facility is
provided after the shipment of goods. When the exporter exports the goods abroad they have to wait long time for
getting their payment. In that time they need money to operate their business. And they asked for loan to the bank.
MTBL generally finance the exporters at post shipment stage on verification of the credit worthiness and financial
soundness of both buyers and sellers. Bank normally gives this finance facility in them following way:

Negotiation of documents under L/C.

Purchase of foreign bill under D.P and D.A Bills.

Advance against Foreign Bills under collection.

6.30.1Negotiation of documents under L/C:

After the shipment of the goods in terms of L/C, the exporter presents the relative documents to the negotiating
bank. The documents in the set generally include (a) bill of exchange (b) bill of lading (c) marine insurance policy
(d) commercial invoice (e) certificate of origin (f) inspection certificate (g) packing list or any other document
specified in the L/C.
When the documents are received under a L/C for negotiation, the negotiating bank act as an agent of the foreign
bank and verify the documents carefully. MTBL verified and checked the following documents for negotiation:

The documents should be presented for negotiation before the expiry date of credit.

The amount of the bill does not exceed the amount available under the L/C.

All the documents stipulated in the L/C are submitted and these are prima facie in order.

When the bank is satisfied with the documents and if the documents fulfill the requirements for credit, they may be
negotiated and amount is paid to the exporter. They apply the bill buying rate for this credit.
6.30.2Purchase of Foreign Bill under D.P and D.A Bills:
Sometimes exporter directly exports their goods without opening L/C. in this case they make a contract between the
exporter and importer. Documents are delivered to the buyer through intermediary of the foreign correspondent.

29

In that situation MTBL finance or give loan to the exporter against the D/P or D/A bills. The credit is given after the
careful scrutiny of the credit worthiness, business experience and integrity of the drawer and the drawee. Bank may
advances the taka equivalent of the foreign currency amount of the bill. In this case MTBL check the following
things:

Definite instructions must be given whether the documents are to be delivered against payment or
acceptance.

It should be clear by the exporter whether the sale contract stipulates that interest and collection charges
are to be paid by the overseas buyer or are to be observed by the exporter.

The exporter/drawer should give clear instructions whether the bank can protest if the bills are dishonored
by non payment.

The exporter also has to give clear instruction on the action to be taken regarding the Clarence, storage,
insurance etc.

The drawer must give instructions regarding the disposal of the proceeds. Specify the account to which it
must be credited or adjusted.

6.30.3Advance against Foreign Bills under collection:

Exporter gives bill to the bank for collection. In that time they may need fund or money to operate his business. The
bank grants a loan of certain percentage of the bill and already has been sent for collection. In addition of the export
bill as security MTBL usually ask collateral security.
When the bill is purchased the full value of the bill is paid to the exporter. If margin stipulated, the full value less the
margin is paid to him. After purchasing the bill, the bank becomes the holder of the bill. If the bill is dishonored the
bank usually recover the advance from the exporter.
6.30.4 Incentives to exporter in Bangladesh:
To promote the export Bangladesh government give incentives to the exporter. In this way the exporter can be
encouraged and they can compete in the international market. Government gives subsidy or incentives for the
following export:
a)

Cash subsidy:

Day by day the cost of domestic product is increasing for various reasons. To compete in the international market
govt give subsidy fro 10% to 25% on net FOB value of the goods exported. For jute products like CBC, Yarn, bag ,
carpet etc they give cash subsidy 10% on FOB value. For RMG and locally produced cloths (woven/ knit/ printed
cloths etc) they give 25% cash subsidy on net FOB value.
b) Leather and Leather goods:
To encourage increase in production of finished leather and export at competitive prices, custom duty and import
license fee is exempted.
c) VAT on packaging materials:

29

Government refunds the VAT, if the exporter uses jute clothes and bags on the exported goods as package.

Import Finance

6.31Documents used for foreign trade:

For the international trade exporter and importer used some documents. These documents are almost common in
every country. Foreign trade involves the movement of good from one country to other, passing of ownership of the
goods from the seller to the buyer. The payment for the goods and its remittance from the importers is to the
exporters country. These documents are by the negotiating bank for settlement of claims. These documents are
classified into five categories:

Commercial documents.

Official documents.

Insurance documents.

Transport documents.

Financial documents.

6.32Commercial Documents:
The following commercial documents are generally used in foreign trade. These are:

Invoices: this is the evidence the contract of sale and purchase between the buyer and seller. In the pro
forma invoice, the sellers give the quotation of the goods to their potential buyer. If they agree then they
come to the contract. Commercial invoice is the seller bill for merchandise. In the commercial invoice the
seller describe his business name, quality and quantity of goods, unit price etc.

Certificate of origin: it is the statement that specifies where the good were produced. Sometimes there is
restriction for foreign trade for the goods produced in certain country. It the part of shipping documents
when the importing country requires the production of the certificate for the clearance of the imported
goods. Such certificate is issued by chamber of commerce, trade associations or any other authority
authorized by the government

Weight notes: it is a certificate which indicates the weight of the goods to be carried to the destination by
the carrier and the weight should tally with that shown in all the other documents. It is issued by a public
agency. This is mainly required for transportation

29

Packing list: This list gives the description of the goods, net weight and gross weight, measurement etc. it
helps to identify the contents. Bank requires this packing list for their financial interest in the merchandise.

Quality or inspection certificates: this is the certificate declaring that the goods have been examined and
found to be in accordance with the contract of sale. This is signed by the supplier but the contract of sale
may require, it should be issued by recognized independent inspection body.

6.33 Official documents:

The official documents include the following things:

Consular Invoice: Mainly American continent requires this special type invoice for import. Any false
declaration in this involves heavy penalty.

Legalized Invoice: some countries require that commercial invoice should be countersigned and stamped
by the authorized officer in their embassy. Several middle-east countries required this type of invoice.

Black- listed certificate: some countries do not allow import from other countries for political reasons.
This countries and exporters are black-listed. In such case the seller has top provide this certificate as
evidence that all parties involved in the trade are not black-listed.

6.34 Insurance Document:

Trader requires insurance for the safety of their goods imported or exported. After the shipment the goods may be
damaged or lost for various reasons. To avoid this risk they need marine insurance. Marine insurance comprises the
following:

Marine cargo insurance.

Marine Hull insurance.

Freight.

There is various type of marine insurance policy who is differing in respect of the cover provided to the insured.
These are the followings:

Floating policy.

Time policy.

29

Voyage policy.

Mixed policy.

Open cover or bank policy.

Valued policy.

Unvalued policy.

Specific policy.

6.35 Transport Document:

These are the documents which evidence that the goods have been delivered to the name shippers, airlines or
transporter for carriage to a named port, air port or place of delivery. The following documents are used in the
international trade:

Air way Bill/ Air consignment note

Mates Receipt.

Bill of Lading.

Post parcel documents

Chapter: Seven

29

Job Responsibility

7.1 Job Responsibility:

29

In my three monthsTerm paperperiod I worked in different department of MTBL panthapath branch. Basically I
worked in the General Banking department and Foreign exchange department. In the General Banking and Loan &
Advance, I worked almost one and half months. Rest of the time I worked in the foreign exchange department.
In the general banking department I worked in the account opening section, and accounts and IT and Clearing
section. And in the foreign exchange department I worked in the import section and export section.
7.2 Specific responsibilities of the job:
In GB and foreign exchange department I worked in the following things:
7.2.1 Account opening:
At the initial stage I was sited to the front desk to provide information to the clients. I provide them account opening
form and told the necessary documents need to open the account. In that case they are required two copy passport
size photograph, the photo of the nominee, photocopy of a valid passport/ driving license/ certificate from the
chairman or the national ID card and the signature of the introducer. Then I give entry of that information which are
provided by the client to the computer and linked it with the flora bank software.
7.2.2 Cheque receives:
I received accounts payee cheque that was send to the clearing house for clearing. In this job I have to check
carefully the amount, the signature and the date of the cheque, bank name, branch name on the credit voucher and
most importantly I checked the payee name in both cheque and credit voucher. Because it is must have to be same.
Then I send it to the accounts department.
7.2.3 Pay order:
Few days I prepared the par order. When the customer wants to give money in the Dhaka city they can give pay
order to their party. In that case they have to fill up a form (credit voucher) and deposit the money to the cash
counter with commission. Then the authorized officer give received sill and signature. Then I write PO to the PO
form. Then I have to take signature form the authorized officer and give it to the clients after taking the signature in
the PO register and pay order block.
7.2.4 OBC (Outward Bill for Collection):
In the accounts section I did OBC. In that case bank sends the cheque outside the Dhaka city for collection. In that
case I have to write all the information in the OBC register and give OBC number to the cheque and send it to the
principal officer for checking and signature. If there is any branch of MTBL then we address to that branch, if not
we send it to the same bank for collection. During that time I have to write a voucher. After checking the entire thing
I send the cheque through courier. When the cheques came back after collection, I have realized it.
7.2.5 Remittance:
When remittance comes to our bank I wrote it down to the register and wrote a credit voucher and gave it to the
principal officer of account section.
7.2.6 Posting:

29

When clients give their non cash cheque for collection, I have given the posting to the computer. There is special
software which is used in this purpose named NIKASH. The debit side and credit side should be same.
7.2.7 Scanning:
In the accounts section I have done scanning. After opening an account the accounts opening section send the
signature card for scanning. After scanning the signature card I have linked it to the flora bank software.
7.2.8 L/C form
In the foreign exchange department I have provided L/C opening form to the clients. The number of the form should
be registered in the register book.
7.2.9 IMP:
Every month Bank has to send IMP to the Bangladesh Bank. They have to fill up an IMP form. Then stapled one
commercial invoice, one copy of pro-forma invoice and the form should be sent to the Bangladesh Bank. In that
form I have written the name of the importer and the exporter, quantity, HS code, amount in foreign currency,
country of origin , destination etc.
7.2.10 other work activities in the foreign exchange department:
In the foreign exchange department I have worked in different tables. In that time wrote some vouchers, and I also
did some pay order in that department. Sometimes I have to calculate the amount and check other forms. I observe
PAD, LTR etc. I have send payment invoice of Import L/C to the head office after disbursement of the document.
Most important other activity I have done at foreign exchange department is sending FDD to the Bangladesh bank
through head office. There were around 12000 FDD which have to send to the Bangladesh bank as an OFBC
(Outward Foreign Bills for Collection). I put OFBC seal, Signature verified seal special crossing in front and
endorsement at the back
Critical observation:
During myTerm paperperiod I found some problem in the bank. Every department is integrated with other
department. And they are related. Some times one department face problem for another department. My
observations are described below:

Foreign exchange department do not have their own pay order block. They are dependent to the GB. For
this reason they sometime fall in problem for payment. Sometimes there is very rush in the GB in that case
they can not do the pay order swiftly.

New employees are working in the foreign exchange department in that case they do not know the work
properly and they learn it from their senior employees. so takes more time for completing the task.

Every employee dont have computer in the foreign exchange department. So they face problem to work.
Only one photocopy machine is there.

Some employees dont have proper knowledge about foreign exchange. They dont know the real
procedure and they are working just as their regular work that may cause error in the work.

29

Some works of GB have to the accounts section that takes more time and it arise conflict.

Employees are not very efficient for solving clients problem.

Clients do not get proper information for foreign currency conversion.

Recommendation:
After thisTerm paperI can recommend the following thing in this branch of MTBL:

Foreign exchange department can use separate PO block. So that they can give payment swiftly.

New computer and other machine should be set up.

Employees should be sent more for training.

Random transfer of the employees should be stopped.

Employees should be more careful for their clients.

Electronic board for foreign exchange rate should start.

Accounts opening department should do their own scanning after opening the new account. It should
not send to the accounts department.

Conclusion:
After the completing ofTerm paperat MTBL I would like to say that the bank is very fast growing. They correct the
problem immediately. MTBL want to target the entire segment. Their service charge is lower than other private and
multinational bank. Their service charge is near to the nationalized commercial bank but they provide better service
than nationalized commercial bank. There foreign exchange department is very active and they are doing very well
in this sector. In near future they will expand their correspondent banking service.

29