BASIC Bank document with

Updated upto 12.06.
2011
1.
2.
3.
4.
5.
Personal Question
Self Introduction
Do you deserve promotion? Why?
Some questions form academic background.
DAIBB-full form: Diplomaed Associates of Institute of Bankers Bangladesh
Your duty
Know BASIC Bank

1. Name of MD:Kazi Fakrul Islam (Incoming, previously MD of HBFC)
2. Name of AMD:Mr. Sk. MonzurMorshed (CC)
3. Name of DMDs :
Name
Division
Human Resources Division
Mr. FazlusSobhan
Mr.
Abdul
HadiGholamSanjari
Mr.
Kanak
Purkayastha
Kumar
Mr. Md. Shahabad Doza
Micro Credit & Special Finance Division

Recovery Division
Small Enterprise Davison
Treasury Division
Trade Finance Division
Finance & Accounts Division
Legal Division
Research & Development Division
Consumer Finance Division
Commercial Credit Division
ICT Division
Back Office Division
Card Division
Industrial Credit Division
MIS Division
Branch Control & Marketing Division
Credit Administration Division
Capital Market Services Division
4. Name of Chairman :Mr. Sheikh Abdul HyeBacchu, Chairman, BASIC

Bank Limited.
5. Name of Directors :
i.
ii.
iii.
iv.
v.
vi.
vii.
Mr. Jahangir AkhandSalim, Founder President Chandpur Chamber

of Commerce and Industries
Mr. Shubhashish Bose, Joint Secretary, Finance Division, Ministry of
Finance
Ms. Neelufar Ahmed, DG, Prime Minister's Office, Dhaka
Mr. ShakhawatHossain, Former Commissioner of Customs
Prof. Dr. KaziAkhtarHussain, Chairman Department of Accounting
and Information Systems Islami University, Kushtia
Mr. Fakhrul Islam, Chairman, BSCIC, Dhaka
Mr. Md. Anwarul Islam, FCMA, Managing Director, ARS Lube
Bangladesh Ltd.
6. Name of Company Secretary : Mr. Md. Shah AlamBhuiyan

7. Name of GMs:
Name
Division
Mr. Abdul Qayum Mohammad Micro Credit & Special Finance Division
MIS Division
Kibriya
Establishment Division
Mr. ShahadatHossain
Mr. Mohammad WahidulAlam

Mr. KhandakarShamim Hasan
Research & Development Division

Small Enterprise Finance Division
Trade Finance Division
Legal Division
Finance & Accounts Division
ICT Division
Treasury Division
Audit & Inspection Division
Audit Findings Monitoring Division
Compliance Division
Industrial Credit Division
Br. Control and Marketing Division
Recovery Division
Consumer Finance Division
Page 1 of 119
Updated upto 12.06.2011
Mr.
Md.
ZainulAbedinChoudhury
Mr. Md. MozammelHossain
Mr. A. Monaem Khan
Credit Administration Division

In Charge, Main Branch
In Charge, Agrabad Branch
Human Resource Division
Commercial Credit Division
Card Division
8. Why BASIC Bank is unique (Mandate).

BASIC Bank Ltd is unique in its objectives. It is a blend of development and
commercial banking functions. The Memorandum and Articles of Association
of the bank stipulate that 50 percent of loanable funds shall be invested in
small and cottage industries sector. Thus the banks priority remains with
promoting and financing development of small-scale industries in the country.
9. Date of Incorporation : August 2, 1988
10.Date of Commercial operation : January 21, 1989
11.Formation of BASIC Bank
The BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank
Limited) established as a banking company under the Companies Act 1913
launched its operation in 1989. It is governed by the Banking Companies Act
1991. The Bank started as a joint venture enterprise of the BCC Foundation
with 70 percent shares and the Government of Bangladesh with 30 percent
shares. The BCC Foundation being nonfunctional following the closure of the
BCCI, the Government of Bangladesh took over 100 percent ownership of the
Bank on 4th June 1992.
12.No. of employee :
13.External Ratings of Bank By CRISL (Short term & Long term)
Rating year-2009
Long term-AA (in the long term are adjudged to be of high quality, offer
higher safety and have high credit quality. This level of rating indicates a
corporate entity with a sound credit profile and without significant problems.
Risks are modest and may vary slightly from time to time because of
economic conditions.)
Short Term-ST-1 (in the short term are considered as the highest certainty of
timely payment. Short-term liquidity including internal fund generation is
very strong and access to alternative sources of funds is outstanding. Safety
is almost like risk free Government short-term obligations.)
14.CAMELS Rating by Bangladesh Bank : A8 as on 30/06/2006
Financial Info of BASIC Bank
15.Authorized Capital :Tk 200.00 crore as on 31.12.2010
16.Paid up Capital :Tk196.00crore as on 31.12.2010
17.Total Capital : Tk.507.00 crore as on 31.12.2010
18.Capital Adequacy Ratio :9.41% as on 31.12.2010
19.Credit Deposit Ratio: 94.08%
20.Classified Loan: 4.83% as on 31.12.2010
21.Cost of Deposit:
22.Cost of Fund:8.13% as on 31.12.2010
23.Interest Spread:
24.CRR : 6.07% as on 31.12.2010 (required 6% & 5% of Average Demand &
Time Liabilities)
25.SLR : 15.21% as on 31.12.2010 (required 13% of Average Demand & Time
Liabilities)
26.Total CRR & SLR : 21.28% as on 31.12.2010 (required 19% of Average
Demand & Time Liabilities)
27.No. of Branches : 34
Page 2 of 119
28.Target vis--vis Actual (Amount in crore Taka)
Deposi
t
Advanc
e
Import
Export
Profit
29.Dividend for 2010 :
Target
2010
4500
Achieved
2010
4881
Target
2011
6500
4000
4634
5500
4000
3000
200
4221
2400
215
5200
3500
265
20% Stock
GENERAL BANKING
1. Difference between Pvt. Ltd. and Public Ltd.
Private Ltd. Co.
Public Ltd. Co.
Incase of Public Limited Co.
Incase of Private Limited Co.
minimum shareholder will be
minimum shareholder will be
01
01 7(seven) and maximum will be
2(two)
and
maximum
unlimited or limited by share of
shareholder will be 50(fifty).
the company.
Certificate
of
the
Certificate of the commencement
02 commencement of business is 02 of business is must to starting
not required.
business.
Prospectus
can
not
be
Prospectus must be published the
published to the public for
Daily Newspaper to the public for
03
03
share sales and share cannot
share sales and share must be
be transferred to the public.
transferred.
Annual General Meeting is a must
Annual General Meeting is not
04
04 on or before 15 months of the last
required.
AGM.
Audit Report not to submit to
Audit Report must be submitted to
05
05
the Register of the Company.
the Register of the company.
2. Can minor open any account (rights and reservation)
Yes minor can open account but as per contract act 1872, a minor enjoys some
privileges such as he/she cannot be liable for any wrong doings. So, banker
should take extra care in opening and operating of minor accounts,
i.
Natural guardian or Guardian appointed by the court should operate the
account. In this manner joint account can also be opened.
ii.
The account can be opened and operated by them where the minor has
attained the age of 12 years.
iii.
Current account should not be opened in the name of minors.
iv.
Cheques/bills should not be collected
v.
Bank should keep the recode of minors birth date and after attaining
majority guardian should not be allowed to operate the account and bank
Page 3 of 119
vi.
vii.
viii.
should request the minor to open a fresh account before a third party
witness.
If guardian dies before attaining majority then bank should give the
money to court appointed guardian or to him after attaining majority.
Minor can draw endorse or negotiate any chq but there will be no liability
of minor.
No OD facility is allowed to these accounts
3. Difference between DD & PO

DD and PO both is remittance instrument issued by bank. The main difference is,
in case of PO, it is issued to remit money within the station and payment is made
by the issuing branch. On the other hand DD issued by one branch of the bank
with a advice issued on other branch to pay the money and it is issued when
outstation remittance is required.
4. Difference between Bankers Chq & Customer Chq.
Bankers cheques are those cheques issued by bank like DD, PO and customer
chq are chqs issued against their account maintained with the Bank. If all other
things are ok then main difference is that, a customer chq can be dishonored for
insufficient of fund which is not possible for Bankers chq.
5. Garnishee Order
Its an order by the court of law to suspend the transaction in any customer
account or to disclose the information to the court or to any particular authority
of any customer account. The Garnishee Order has two forms: 1. Order Nisi (Ask
for freeze the account, ii. Ask explanation why funds not for payment of
judgment creditor), 2. Order Absolute: Court directs to pay either whole or part
of deposit against which Order Nisi issued.
6. Negotiable Instrument & Its Characteristics
Negotiable Instrument are those instrument which is declared negotiable as per
Negotiable Instrument act-1881, as per the act Bill of Exchange, Promissory
Note and Chqs are negotiable instrument.
Characteristics:
i.
Must be written and signed
ii.
Easy to transfer
iii.
Transfer free from defects: transferor with bad title can pass good title
iv.
Right to sue
v.
No notice to transfer
vi.
Delivery Essential
vii.
Credit of the Party
7. Difference between Bearer, Order & Not Negotiable
Bearer chq can be paid to anybody. In case of order chq it should be paid to a
certain person and it can be negotiated by endorsement. Not Negotiable chq is
negotiable but it will not give better title to the ultimate holder and Banker
should take extra care for these types of chqs.
8. Procedure of filing suit and punishment on dishonor of chq
DISHONOUR CHEQUES FOR INSUFFICIENCY OF FUND
(Provisions Relating cheque dishonour described in the sections 138, 138A,
139A, 140 and 141 of The Negotiable Instruments Act 1881)
Sec:- 138) Dishonor of cheque for insufficiency , etc. of funds in the account:Where any cheque drawn by a person on an account mentioned by him with a
banker for payment of any amount of money to another person from out that
Page 4 of 119
account ** is returned by the bank un paid , either because of the amount of

money standing to the credit of that account is insufficient to honour the cheque
or that it exceed the amount arranged to be paid from that account by an
agreement made with that bank , such person shall be deemed to have
committed an offense and shall without prejudice to any other provision of this
act , be punished with imprisonment for term which may extend to one year or
with fine which may extend to trice the amount of the cheque or with both.
Provided that nothing contend in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months
from the date on which it is drawn or within the period of its validity,
whichever is earlier.
(b) The payee or the holder in due course of the cheque as the case may be
makes demand for the payment of the said amount of money by giving a
notice in writing to the drawer of the cheque, within thirty days of the receipt
of information by him from the bank regarding the return of the cheque as
unpaid and
(c) The drawer of such cheque fails to make the payment of the said amount of
money to the payee of as the case may be to the holder in due course of the
cheque within thirty days of the receipt of the said notice.
1A) The notice required to be served under clause (b) of sub-section (1) shall
be serve in the following manner,
a) By delivering it to the person on whom it is to be served or
b) By sending it by registered post with acknowledgement due to that person
at his usual or last known place of above business of Bangladesh.
c) By application in a daily bangle national news paper having wide
circulation.
2) Where any fine is realized under sub-section (1) any amount up to the
face value of the cheque as far as is covered by the fine realized shall be
paid to the holder.
3) Not withstanding anything contained in sub-section (1) and (2) the
holder of the cheque shall retain his right to establish his claim through
civil court if whole or any part of the value of the cheque remains
unrealized.
138A) Restriction in respect of appeal:-Not withstanding any thing
contained in the code of criminal procedure 1989 , no appeal against any
order of sentence under sub-section -1 of section 138 shall lie unless an
amount of not less then fifty percent of the dishonored cheque is
deposited before filling the Court which awarded the sentence.
Sec 140:- Offence of companies:- If the person committing an offence
under section 138 is a company every person who at the time the offence
is committed was in charge of and was responsible to the company shall
be deemed to be guilty of the offence and shall be liable to be proceeded
against and punished accordingly.
Page 5 of 119
Provided that nothing contained in this sub-section shall render any

person liable to punishment if he proves that the offence was committed
without his knowledge or that he had exercised all due delegate to
prevent the commission of such offense.
(2) Notwithstanding anything contained in sub-section (1) where any
offence under this act has been committed by a company and it is proved
that the offence has been committed with the consent or connivance of or
is attributable to any neglect on the part of any director, manager,
secretary or other officer of the company such director manager,
secretary or other officer shall also be deemed to be guilty of that offence
and shall be liable to be proceeded against and punished accordingly.
EXPLANATION :- For the purpose of this section
(a) Company means any body corporate and includes a firm or other
association of individuals a firm or other association of individuals, and
(b) Director in relation to a firm, means a partner in the firm.
141. Cognizance of offence:- Notwithstanding anything contained in the
code of criminal procedure 1898
(a) No court shall take cognizance of any offence punishable under section
138 except upon a complaint in writing, made by the payee or as the case
may be the holder in due course of the cheque.
(b) Such complaint is made within one month of the date on which the
cause of action arises under clause (c) of the proviso to section 138.
(c) No court inferior to that of a Court of Session shall try any offence
punishable under section 138.
9. Bill of Exchange
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
payable on demand, or fixed, or future determinable time, only to , or to the
order of a certain person or to the bearer of the instrument.
10.
Rates of interest of different accounts
SBSNDFD11.
Different Status of Accounts:

Dormant-6 Months, Inoperative-2 Years, Unclaimed-10 Years
12.
Different Acts related to GB

a.
The Companies Act-1994
b.
The Bank Companies Act-1991
c.
The Contract Act-1872
d.
The Financial Institution Act-1993
e.
The Partnership Act-1932
f.
The Transfer of Property Act-1882
Page 6 of 119
g.
h.
i.
The Money Loan Court Act-2003

The Money Laundering Prevention act-2002
The Negotiable Instrument Act-1881
13.
What is Estoppel:
An estoppel is a defense against a party reneging on a previous statement
assumed to be a legal truth. Once a statement of fact is entered into a court
case, the person who made that statement must stand by its truthfulness. He or
she cannot claim a new position in a future business or private dealing. If the
other party makes a decision based on the untruthful second statement and a
lawsuit ensues, they can claim an estoppel in court against the plaintiff. In order
for the estoppel to be considered valid, however, the defendant needs to
demonstrate damages stemming from the untruthful statement.
Estoppel is a legal doctrine recognised both at common law and in equity in
various forms. It is meant to complement the requirement of consideration in
contract law. In general it protects a party who would suffer detriment if:
The defendant has done or said something to induce an expectation
The plaintiff relied (reasonably) on the expectation...
...and would suffer detriment if that expectation were false.
Unconscionability by the defendant has been accepted as another element by
courts, in an attempt to unify the many individual rules of estoppel.
14.
Characteristics of SND:
7 days prior notice to be given in case of withdrawal of amount otherwise
interest will not be accrued for that month
Cheque will be issued
Interest to be calculated on the basis of Day-end balance and accrued

interest will be credit as Half-yearly or during account closing
Interest rate may be fixed according to ceiling of amount not customer-wise

or amount-wise and will not exceed the rate of interest of general savings
account.
Minimum balance may be fixed but No minimum balance fee/incidental

charge/ledger fee/service charge. But Account Maintenance Fee Tk.500/=
half yearly, account closing fee Tk.300/=
Page 7 of 119
1.
Credit
Project appraisal aspects, KYC, KYP, PP etc.
Project appraisal means pre-investment analysis of an investment project to
determine its commercial and socio-economic feasibilities while project
evaluation shows the post investment achievement.
Aspects :
1) Technical 2) Marketing 2) Financial 4) Economic 5) Social&
environmental 6) Management competence
2.
Principle of sound lending

Safety, Liquidity, Purpose, Profitability, Security, Spread, National interest and
sustainability.
3.
Loan policy
A policy gives loan officers and banks management specific guidelines in
making individual loan decisions and in shaping the banks loan portfolio.
(contains Lending authority, lines of responsibility, operating procedure,
required documentation, loan pricing, credit limit, etc.)
4.
Equitable & Registered Mortgage

In registered mortgage, the mortgagor transfers to the mortgagee the legal title
to the property. On repayment of the loan the mortgagee transfers the title to
the mortgagor. In case of an equitable mortgage, the mortgagor deposits the
title deeds with the mortgagee with the intention of giving the mortgagee an
equitable interest in the property. It does not require registration.
5.
SME
Enterprises shall be categorized using the following definition (fixed investment
implies exclusion of land and building, and valuation on the basis of current
replacement cost only):
Small enterprise: an enterprise should be treated as small if, in todays market
prices, the replacement cost of plant, machinery and other parts/components,
fixtures, support utility, and associated technical services by way of capitalized
costs (of turn-key consultancy services, for example), etc, excluding land and
building, were to be up to Tk. 15 million;
Medium enterprise: an enterprise would be treated as medium if, in todays
market prices, the replacement cost of plant, machinery, and other
parts/components, fixtures, support utility, and associated technical services
(such as turn-key consultancy), etc, excluding land and building, were to be up
to Tk. 100 million;
Page 8 of 119
For non-manufacturing activities (such as trading or other services), the

Taskforce defines:
Small enterprise: an enterprise should be treated as small if it has less than 25
workers, in full-time equivalents;
Medium enterprise: an enterprise would be treated as medium if it has between
25 and 100 employees;
SEDF:
Small: fixed capital investments > 100,000 Tk (1,750 USD) and < 100 mTk (USD
1.75 million)
Medium: fixed capital investments 100 to 300 million Tk (USD 1.75million - 5.25
million)
SEDF Target: Tk 10-300 million (USD 175,000 - 5.25 million) in fixedcapital
investments.
Proposed definition of the GoB
Small Enterprise has less than 50 employees and / or less than 15 mTk in Fixed
Capital Investment
Medium Enterprise has 51-99 employees and / or Fixed Capital Investments
between 1.5 and 100 m Taka
BB Regulations for Small Entreprises
Private entity with less than 60 employees for the Manufacturing Sector
30 employees for the Service Sector
20 employees for the Trade Sector
1)Service Sector : Total Assets (excluding lands and buildings) between50,000
and 3 million Tk (800-50,000 USD)
2)T rad e Sector : Total Assets (excluding lands and buildings) between50,000
and 5 million Tk (800-80,000 USD)
3) Manufuacturing Sector : Total Assets (excluding lands and buildings)between
50,000 and 10 million Tk (800-160,000 USD)
Banks:
HSBC Turnover < 2.5 mUSD
Citibank Nb employees < 60
BRAC Bank Loan size < 3 mTk
AB Bank Loan size < 100 mTk
Definition of SMEs in Bangladesh
Download this Document for FreePrintMobileCollectionsReport Document
SME Banking
Enterprises shall be categorized using the following definition (fixed investment
implies exclusion of land and building, and valuation on the basis of current
replacement cost only):
Small enterprise: an enterprise should be treated as small if, in todays market
prices, the replacement cost of plant, machinery and other parts/components,
fixtures, support utility, and associated technical services by way of capitalized
costs (of turn-key consultancy services, for example), etc, excluding land and
building, were to be up to Tk. 15 million;
Medium enterprise: an enterprise would be treated as medium if, in todays
market prices, the replacement cost of plant, machinery, and other
parts/components, fixtures, support utility, and associated technical services
(such as turn-key consultancy), etc, excluding land and building, were to be up
to Tk. 100 million;
For non-manufacturing activities (such as trading or other services), the
Taskforce defines:
Small enterprise: an enterprise should be treated as small if it has less than 25
workers, in full-time equivalents;
Medium enterprise: an enterprise would be treated as medium if it has
between 25 and 100 employees;
Page 9 of 119
6.
Large Enterprise
7.
Medium Enterprise
Service
Business
Manufacturing
8.
Asset (Except land &

building)
BDT50.00 lac-10.00 crore
BDT50.00 lac-10.00 crore
BDT1.50 crore-20.00
crore
Manpower
Asset (Except land &

building)
BDT50,000-50.00 lac
BDT50,000-50.00 lac
BDT50,000-1.50 crore
Manpower
50
50
150
Small Enterprise
Service
Business
Manufacturing
25
25
50
9.
Cottage industry
Cottage industry means an industry in which members of a family are engaged
part-time or full-time in production and service-oriented activities.
10.
SWOT Analysis
Internal : Strength, Weakness
External : Opportunity, Threats (Challenges)
Strengths
Good asset quality, Satisfactory business growth, Good profitability, Experienced
top management, Good operating efficiency, Equity base enhancement decision,
No short fall in Capital Adequacy, Satisfactory NPL coverage, Professional
management team, Satisfactory risk management structure, Multi product
financial institution, Strong distribution channel, Satisfactory IT soft and hard
infrastructure, Adequate capital base, Satisfactory liquidity position, Market
leader in Small & Medium scale industry banking among the local banks,
Government ownership
Weaknesses
Dependent on fixed deposits, Moderate risk management system, Limited
delegation of power, Limited branch network, Poor Corporate Governance,
Insignificant market share, Limited disclosure, Concentrated ownership, Low
non-funded business
Opportunities
Basel-II compliance for capital adequacy, Creation of brand image, Dual
currency credit card, SME and Agro based business, Real time online banking,
Scope of whole sale banking with NBFIs, Housing finance
Threats
Increased competition in the market, Market pressure for increasing the SLR,
Supply gap of foreign currency
11.
CRGM (With Risks)

The Credit Risk Grading (CRG) is a collective definition based on the prespecified scale and reflects the underlying credit-risk for a given exposure.
A Credit Risk Grading deploys a number/ alphabet/ symbol as a primary
summary indicator of risks associated with a credit exposure.
Credit Risk Grading is the basic module for developing a Credit Risk
Management system.
Page 10 of 119
Numb
er
1
Superior
Short
Name
SUP
2
3
Good
Acceptable
GD
ACCPT
Marginal/Watc
hlist
Special
Mention
Sub-standard
Doubtful
Bad & Loss
MG/WL
65-74
SM
55-64
SS
DF
BL
45-54
35-44
<35
5
6
7
8
Risk Grading
Principal Risk Components:
Financial Risk
Business/Industry Risk
Management Risk
Security Risk
Relationship Risk
Establish the Key Parameters
Principal Risk Components:
Financial Risk
Coverage ratio.
Business/Industry Risk
Outlook,
& Barriers to Business
Management Risk
Security Risk
Support.
Relationship Risk
of
Score
100% cash covered
Government guarantee
International Bank guarantees
85+
75-84
Weight:
50%
18%
12%
10%
10%
Key Parameters:
Leverage,
Liquidity,
Profitability
Size of Business, Age of Business, Business

Industry Growth, Competition
Experience, Succession & Team Work.
Security Coverage, Collateral Coverage and
Account Conduct ,Utilization of Limit, Compliance
covenants/conditions & Personal Deposit.
12.
01
02
03
04
&
Difference between CC(H) & CC(P)

CC (hypo)
The stocks of goods are under the
01
control of borrower.
For this letter of hypothecation is
02
obtained from the borrower.
Borrowers have to submit stock
report on monthly basis to the 03
lending Bank.
Incase of CC (hypo) Bank obtained
sufficient collateral security for 04
covering loan risk.
CC (Pledge)
control of lending Bank.
For this letter of pledge is obtained
form the borrower.
Bank maintains pledge register; stock
reports not require to submit.
Incase of CC(Pledge) Bank takes other
collateral security if available in the
hand of borrower.
13.
DP and Calculation
Margin is the borrowers contribution beside the borrowing contribution beside
the borrowing for procurement of any asset with business interest. Margin of
security is the difference between the written down value of the asset financed
and the outstandings in loan given for it. The DP of the client/ customer to be
Page 11 of 119
calculated after deducting the prescribed margin from the value of the securities
offered (pledged or hypothecated). Under no circumstances, advance shall be
allowed in excess of the DP of the customer. In case where the DP of the client
exceeds the limit sanctioned in its favor advances shall be allowed upto the
extent of sanctioned limit only.
14.
SMA
A Continuous credit, Demand loan or a Term Loan which will remain overdue for
a period of 90 days or more, will be put into the "Special Mention
Account(SMA)" and interest accrued on such loan will be credited to Interest
Suspense Account, instead of crediting the same to Income Account. This will
help banks to look at accounts with potential problems in a focused manner and
it will capture early warning signals for accounts showing first sign of weakness.
Loans in the "Special Mention Account (SMA)" will have to be reported to the
Credit Information Bureau (CIB) of Bangladesh Bank. However, it is reiterated
that loans in the "Special Mention Account" will not be treated as defaulted loan
for the purpose of section 27KaKa(3) of the Bank Company Act, 1991. Interest
accrued on "Special Mention Account (SMA)'' will be credited to Interest
Suspense Account, instead of crediting the same to Income Account.
15.
NPA
Against which income not generating basically those account which account has
been classified.
16.
Effect of NPA on Bank B/S
Asset quality gets reduced, decreases profit, high provision has to be made
17.
What is Loanable fund and how it is quantified
Paid
up
capital+Generalreserve+Otherreserve+Deposits+Borrowings+Undistributedpro
fit+Refinance loan (Bangladesh bank, ADB, Kfw, etc.)+Call loan-SLR-%Demand
deposit
18.
Large loan
Loan sanctioned to any individual or enterprise or any organization of a group
amounting to 10% or more of a bank's total capital shall be considered as large
loan.
Outstanding financing facilities by a bank to any single person or enterprise or
organization of a group shall not at any point of time exceed 35% (funded and
non-funded credit facilities) of the bank's total capital -- funded facilities do not
exceed 15%-- all non-funded credit facilities included in the loan shall be
considered as 50% credit equivalent. However, in case of export sector single
borrower exposure limit shall remain unchanged at 50% of the bank's total
capital. But funded facilities in case of export credit shall also not exceed 15% of
the total capital.
The banks will be able to sanction large loans as per the following limits set
against their respective classified loans :
Rate of net classified loans
The highest rate fixed for large
loan against bank's total loans &
advances
Upto 5%
56%
More than 5% but upto 10%
52%
48%
44%
More than 20%
40%
Page 12 of 119
19.
Rescheduling
Term Loan
first
rescheduling
second time
more than two
times
overdue
installments
at least 15%
the total outstanding

amount of loan
10%
minimum 30%
20%
minimum 50%
30%
whichever, is
less
whichever, is
less
whichever, is
less
Demand and Continuous Loan

Amount of Overdue Loan
Up to Tk.1.00 (one) crore
Tk. 1.00(one) crore to Tk. 5.00
(five) crore
Tk. 5.00(five) crore and above
Rates of Down payment

15%
10% (but not less than
Tk.15.00 lac)
5% (but not less than
Tk.50.00 lac)
If any Continuous or Demand Loan is rescheduled by restructuring/converting
partly or wholly into Term Loan and repayment installments have been fixed,
application for rescheduling such loans shall be considered on cash payment of
minimum 30% of the overdue installments or 20% of the total outstanding
amount of loan, whichever is less. For subsequent rescheduling minimum 50% of
the overdue installments or 30% of the total outstanding amount of loan amount
shall have to be deposited in cash.
20.
Write off
Banks may, at any time, write off loans classified as bad/loss. Those loans which
have been classified as bad/loss for the last five years and for which 100%
provisions have been kept should be written off without delay. After issuance of
this circular the process of writing off all other loans classified as bad/loss
should be started immediately. Under the process the oldest bad/loss classified
loans should be considered first for written off.
Banks may write off loans by debit to their current year's income account where
100% provision kept is not found adequate for writing off such loans.
21.
Money loan court Act, 2003 (12, 33, 46, 47, Mutual Settlement)
ArthaRinAdalatAin 2003 (8 chapters & 60 sections) promulgated in the year
2003 in place of the ArthaRinAdalat Act, 1990 which has came into effect on
01.05.2003. ***** from the previous such laws. This law, for the first time
empowered financial institutions with the right to sell the mortgaged properties
without / before going to the court, if Power of Attorney to sell the mortgaged
property obtained from the borrower at the time of execution of mortgage and
made it mandatory to sell out the securities over which the bank created charges
before filing of suits. ArthaRinAdalatAin 2003 has fixed time limit for filing of
suit for recovery of debt. Time limit for serving of summons, submission of
written statements, judgment, etc. and time limit for filing of execution suit has
been reduced substantially in this law which shall expedite disposal of suits.
ArthaRinAdalat Ain-2003 provided for Settlement of disputes through Settlement
Conference at the initiative of the court and in case of nonsettlement through
Settlement Conference, through Arbitration, keeping pending the normal
proceedings of the suit. ArthaRinAdalatAin 2003 imposed some obligations to
the bankers in respect of disposal /sale out of securities, filing of suits, follow- up
of suits etc., failure to perform some of which is punishable offence and may
Page 13 of 119
harm the interest of the bank to a great extent. So relative officers and
executives of the bank should read this law meticulously and must act
accordingly in timely manner to avoid legal complications.
22.
Difference between credit and investment
23.
Difference between guarantee and indemnity
Guarantee is a promise by a third person to the lender for the present or future
debt of the borrower. Bank guarantee is an irrevocable obligation in the form of
written undertaking of a Bank to pay an agreed sum, in case of default by a third
party in fulfilling their obligations under the terms of the Bank Guarantee. e.g.
Bid bond, Performance bond, Shipping guarantee, etc.
Contract of Indemnity is a contract by which one party promises to save the
other from loss caused to him by the conduct of the promissory himself, or
conduct of any other person.
Difference : Guarantee is an undertaking to pay the debts of the creditor
whereas Indemnity is an assurance to compensate for any loss.
24.
Charges
Fixed charge: A charge is said to be fixed is made specially definite and assets
of a permanent nature or assets capable of being ascertained and defined, e.g.
charge or land and building or heavy machinery. It prevents the loanee from
with the property charged without consent of the charge holders.
Floating charge: It is a charge on property, which is constantly charging e.g.
stock. A company can Deal with such properly in normal course of its business
until it become fixed on the hampering of an event. Thus, it is a charge on the
assets of a company in general.
Pari-passu charge:Pari-passu charge is crated in cases of consortium lending
where several banks on financial institution lend to a single borrowers ageist
some common securities in an agreed ratio. In such charges all the creditors
have equal priority, i.e. are entitled to have equal rights over the assets as per
the agreed share.
Second charge: A creditor holding a second charge by way of mortgage is
entitled to the proceeds after the first charge is met. The second charge holder
must inform the first mortgage about the second charge, so that he cannot part
of title of the property.
25.
Time limit for filing suit in ArthaRinAdalat Ain-2003.
ArthaRinAdalat Ain-2003 fixes time limit for filing of suit for recovery of debt and
stated that anything otherwise contained in the Limitation Act,1980, a financial
institution shall file suit as per provision of the ArthaRinAdalat Ain-2003 .The
provisions and time limit for filing suits for recovery of debt in ArthaRinAdalat
Ain-2003 are as under :1) Where repayment period is less than three years:
a) If the amount of recovery in the total loan period is less than 20%, the
financial institution shall file suit within the period of one year from the
date of expiry of the repayment schedule.
b) In cases of reschedule of loan by the financial institution within the
validity period of repayment, if repayment amount of loan is less then
20% in the period of reschedule, the financial institution shall file suit
within the period of one year from the date of expiry of reschedule
period.
2) Where repayment period is 3 years and above :
If a borrower fails to pay back the loan as under after starting of repayment schedule according to the terms of the loan agreement ,the
financial institution shall file suit within the period of next one year :-
Page 14 of 119
a) At least 10% of first one years repayable loan amount or

b) At least 15% of first two years repayable loan amount or
c) At least 25% of first three years repayable loan amount.
In cases of reschedule of loan by the financial institution within the
aforesaid time limit, the period of 1year or 2 years or 3 years shall be
reckoned from the date of the reschedule of the loan and one years time
limit for filing suit shall be effective anew as per above rules.
26.
Limitation in imposing claim :

ArthaRinAdalatAin 2003 provides that whatever may contain in the
agreement between the parties, the financial institution while instituting suit
shall not claim more than 200% of the capital ( original loan Tk. 100+
interest Tk. 200 = Tk.300 ). The court shall not entertain any such claim
which shall be more than 200% of the capital.
27.
Function of Relationship Manager

Reports to: Head of Corporate Banking
Purpose of Job:
The jobholder serves as the primary relationship contact with the Banks
corporate and commercial customers. To maximize relationship profitability
through cross selling. To minimize credit losses through thorough risk
assessment and timely identification of deteriorating credit risk of customers.
Responsibilities:
Provide good customer service while ensuring the Banks interest is

protected.
Grow the customer base through marketing and business development

efforts, including cross selling to existing customer base.
Ensure that credit quality is maintained and customer reviews are

completed in timely manner.
Maintain an in-depth knowledge of the customers business through

regular customer visits and industry research.
Ensure facility risk grades are accurate, and are changed in a timely
manner as soon as adverse information is known.
Seek assistance from CRM at the earliest if adverse trends in a

customers financial position are noted.
Follow up with customers to ensure the timely receipt of financial

statements, loan payments and all documentary requirements of the
Bank.
Ensure compliance with internal policies and procedures and external

regulatory requirements, and that all internal and external audit
recommendations are implemented.
Functions of Credit Administration Department
i.
Disbursement
ii.
Custodian
iii.
Compliance
iv.
Monitoring
Loan classification
28.
29.
continuous loan
Demand Loan
Sub-standard
past due/over due
for 6 months or
beyond but less
than 9 months.
past due/overdue
for 6 months or
Doubtful
past due/over due
for 9 months or
beyond but less
than 12 months
past due/overdue
for 9 months or
Page 15 of 119
Bad/Loss
past due/over due
for 12 months or
beyond.
past
due/overdue
for 12 months or
Fixed
Term
Loans, which are
repayable within
maximum
five
years of time
Fixed
Term
Loans, which are
repayable
in
more than five
years of time
Short-term
Agricultural
Micro-Credit
and
beyond but not

over
9
months
from the date of
claim by the bank
or from the date of
creation of forced
loan.
If the amount of
'defaulted
installment'
is
equal to or more
than the amount of
installment(s) due
within
6
(six)
months, the entire
loan
will
be
classified
If the amount of
'defaulted
installment'
is
equal to or more
than the amount of
installment(s) due
within 12 (twelve)
months, the entire
loan
will
be
classified
after a period of 12
months
beyond but not

over 12 months
from the date of
claim by the bank
or from the date of
creation of forced
loan
If the amount of
'defaulted
installment'
is
equal to or more
than the amount of
installment(s) due
within 12 (twelve)
months, the entire
loan
will
be
classified
If the amount of
'defaulted
installment'
is
equal to or more
than the amount of
installment(s) due
within
18
(eighteen) months,
the entire loan will
be classified
months
30.
Mode of charging security

a) Mortgage
b) Hypothecation
c) Pledge
d) Lien
e) Assignment
f) Set-off
31.
The provision rate of Loans and Advances
beyond from the

date of claim by the
bank or from the
date of creation of
forced loan.
If the amount of
'defaulted
installment'
is
equal to or more
than the amount of
installment(s) due
within
18
(eighteen) months,
the entire loan will
be classified
If the amount of
'defaulted
installment'
is
equal to or more
than the amount of
installment(s) due
within 24 (twenty
four) months, the
entire loan will be
classified
months
Particulars
General Provision on unclassified general loans & advances
General Provision on unclassified small enterprise financing
General Provision on unclassified housing finance, loans for
professional and loans to share business
General Provision on special mention account
General Provision on unclassified consumer financing other than
housing finance, loans for professional (?) and loans to share business
Specific Provision on Sub Standard
Specific Provision on Doubtful
Specific Provision on Bad & Loss
Page 16 of 119
Rate
1%
1%
2%
5%
5%
20%
50%
100%
Page 17 of 119
Trade Finance
1. NFCD : (TERM)
Who can open: A)All non-resident Bangladesh nationals and persons of
Bangladesh origin including those having dual nationality and ordinarily residing
abroad. B) Bangladesh nationals serving with Embassies/High Commissions of
Bangladesh in foreign countries as also the officers/staff of the
Government/semi-Government departments/nationalized banks and employees
of body corporate posted abroad or deputed with International and Regional
agencies like IMF, World Bank, IDB, ADB etc. during their assignments abroad
may open such accounts. C) Foreign nationals and companies/firms registered
and/or incorporated abroad, banks, other financial institutions including
institutional investors and 100% foreign owned (A-Type) industrial units in the
Export Processing Zones in Bangladesh, are also allowedto open and maintain
NFCD accounts with the ADs. The minimum amount of time deposits in such
cases should be US$ 25,000 or its equivalent in pound sterling, Euro or Japanese
yen. Other terms and conditions in respect of these account-holders will be the
same as those mentioned above for NFCD accounts of non-resident Bangladesh
nationals.
Who Can not open: Crew members of the Bangladeshi shipping companies are
not entitled to open such accounts.
Currencies:The accounts may be maintained in US dollar, pound sterling, Euro
or Japanese yen; initially with minimum amount of US$ 1000 or pound sterling
500 or equivalent. Accounts may be opened against remittances in other
convertible currencies after conversion of those into US Dollar, pound sterling,
Euro or Japanese yen
Period : The accounts are in the nature of term deposits maturing after one
month, three months, six months and one year.
Interest Rates:The ADs will pay interest on deposits into the accounts at
theeurocurrency deposit rates. In case of premature repayments, the interest
amount will be forfeited to the depositing AD.
Tax:The interest on deposits into this account is exempt from the tax payable
under Income Tax Act.
Withdrawl of Principal and Interest:The account holder can freely repatriate
the balance and the interest accrue & thereon in foreign exchange to the
country of his residence or anywhere he chooses and may at his option, convert
the balance into local Taka at the prevailing exchange rate.
2. RFCD:
Who can Open: Persons ordinarily resident in Bangladesh may open and
maintain Resident Foreign Currency Deposit (RFCD) accounts with foreign
exchange brought in at the time of their return from travel abroad. Any amount
brought in with declaration to Customs Authorities in form FMJ and upto US $
3000 brought in without any declaration, can be credited to such accounts.
Who can not: Any non residents and International firms operating in
Bangladesh will not be allowed to open such accounts. Proceeds of export of
goods or services from Bangladesh or commission arising from business deals in
Bangladesh shall not be credited to such accounts.
Currencies:The accounts may be maintained in US dollar, pound sterling, Euro
or Japanese yen.
Period : The accounts will be treated as term only when kept for a period of
minimum 1 month.
Interest Rates:Interest in foreign exchange shall be payable on balances insuch
accounts if the deposits are for a term of not less than one month and the
balance is not le ss than US $1000 or 500 or its equivalent. The rate of interest
shall be one quarter percent (0.25 percent) less than the rate at which interest is
Page 18 of 119
paid on balances of bank in their foreign currency clearing accounts maintained

with the Bangladesh Bank.
Tax: Nothing has been said about Tax. It is deemed that AIT will be applicable
for such accounts.
Withdrawl of Principal and Interest: Balances in these accounts shall be
freely transferable abroad. Fund from these accounts may also be issued to
account-holders for the purpose of their foreign travels in the usual manner (i.e.
with endorsement in passport and ticket, upto US $ 1500 in the from of cash
currency notes and the remainder in the form of TC).
3. Retention Quota Account:
Who can Open: A)Merchandise exporters are entitled to a foreign exchange
retention quota of 50% of repatriated f.o.b value of their exports. However, for
exports of goods having high import content (low domestic value-added) like
POL products including naphtha, furnace oil and bitumen. readymade garments
made of imported fabrics, electronic goods, etc. the retention quota is 10% of
the repatriated f.o.b value. B) Service exporters may retain 5% and Software and
Data entry/processing exporters may retain 40% of their repatriated income as
Retention Quota.
Currencies: The accounts may be maintained in US dollar, pound sterling, Euro
or Japanese yen
4. FC Account: Foreign Currency Account (FCA) is a transactional account denominated in
a currency other than the home currency and can be maintained by a bank in the home country
(onshore) or a bank in another country (offshore).
5. BOP:
What it is:
BOP is a summary of statement of all its economic transactions
with the rest of the world at a given year. Two components i) Current account, ii)
capital account. Current account includes trade in goods and services and
unilateral transfers. Capital account shows the change in the nations assets
abroad and the foreign asset in the nation.
Components of Current account and Capital Account:

Current account:
Exports of goods and services:
Export of goods
Export of services
(-) Import of goods and services:
Import of goods
Import of services
Balance of Trade
The net of Unilateral transfers:
Receipts
Grants
Gifts
Private Inward remittances
Payments
Grants
Gifts
Private Outward remittances
Balance of Current account
Capital Account:
Outflow: (Assets in abroad):
Govt. assets other than official reserve
Page 19 of 119
Private assets:
Direct investment in abroad
Foreign Securities
Nonbank Claims
Bank liabilities
Inflow: (Foreign Assets in the nation)
Foreign Direct investment
U.S.Treasury and other U.S. Securities
Nonbank liabilities
Bank liabilities
Balance of Capital account
6. SWAP:
In general SWAP is simultaneous sale and purchase of identical amounts of one
currency against another, for different maturities. A SWAP could be spot against
forward or forward against forward.
7. NITA:
Non-resident persons/institutions including non-resident Bangladesh nationals
may buy Bangladeshi shares and securities in Bangladesh against freely
convertible foreign currency remitted from abroad through the banking channel.
Transactions relating to such investments including repatriation of dividend/
interest earnings and sale proceeds shall be made through a Non-resident
Investor's Taka Account (NITA)
8. EDF :
This fund was created in 1988 with the fund provided by IDA to GOB vide BCD
circular 29 dated 07/12/1988 to assure continued availability of Foreign
Exchange to meet the import requirement for export of non traditional items
including RMG. This fund is basically used to provide funds to the exporters for
import of raw materials on sight basis to bring confidence of the foreign
suppliers. The total fund amount as of now is $150.00 million and the maximum
amount of credit can be given to a particular exporter is $1.50 million. The
interest will be deducted @ LIBOR + 1 from the date of utilization of the fund.
9. Bill of Exchange:
Bill of Exchange act 1882Bill of exchange is an unconditional order in writing
addressed by one person to another, signed by the person giving it requiring the
person to whom it is addressed to pay on demand or at fixed or determinable
future time at a certain sum of money to or to the order of a specified person or
to the bearer.
The main features are: a) It must be written unconditional order by a definite
drawer to pay a definite sum of money, b) The sum, as specified in it must be
payable by a definite drawee on demand or on a fixed date or on an
ascertainable date, c) It must be payable to a set person or to his order or to the
bearer, d) It must be duly referred, dated, stamped, endorsed (if required) and
signed by the drawer and also indicating the place of the drawing.
10. Nostro Account:
A banks account with a correspondent bank/branch abroad in the currency of
that country.
11. Vostro Account:
A local currency account of a foreign bank/branch. Thus the nostro account of
the account holder is a vostro account for the bank where it is maintained.
Page 20 of 119
12. Loro Account:

The foreign banks maintaining accounts with each other in the separate territory
other than host nation is known as Loro account. Simply their account with them.
13. Different types of Intl Trade Payment:
Cash in advance: Buyer places the funds at the disposal of the seller prior
shipment of the goods or services.
Open account: An arrangement between the buyer and the seller whereby the
goods or services delivered to the buyer before any payment received by the
seller.
Collection:An arrangement between the buyer and the seller where the seller
ship the goods and relevant bi log exchange is drawn by the seller on the buyer
and document(s) sent to the bank with clear instruction for collection through
one of its correspondent bank located in the domicile of the buyer.
Type of collection: URC 522, 1996
Documentary collection: After shipment, the seller submits drafts and
other documents to the remitting bank which sends the documents to the
collecting bank for payment. Article 2C, URC 522, 1996.
Clean Collection: An arrangement whereby the seller draws only a draft on
the buyer for the value of the goods and submits the same to the remitting
bank for payment. Article 2C, URC 522, 1996.
Direct collection: A direct collection is an arrangement whereby the seller
obtains his banks pre-numbered direct collection letter, thus enabling him to
send his documents directly to his banks correspondent bank for collection.
This accelerates the paper work process.
Documentary Credit:The documentary credit is a definite undertaking issued
by a bank on behalf of the applicant or for its own use, to pay the beneficiary
the value of the draft or documents provided that the terms and conditions of
the credit complied with.
14. Parties involve in L/C:
a) Applicant, b) Issuing bank, c) Advising bank, d) Confirming bank, e)
Transferring bank, f) Beneficiary, g) Paying/Negotiating/Accepting bank, h)
Reimbursing bank.
15. Types of L/C:
Revocable Credit: A revocable credit is a credit which can be amended or
cancelled by the issuing bank at any time without prior approval/ notice to the
beneficiary.
Irrevocable Credit:Since an irrevocable credit is that which can not be
amended/cancelled without any prior approval/notice to the beneficiary.
Revolving Credit: The revolving credit is one which restoring the credit to the
original amount after it has been utilized. The revolving credit can be
Cumulative or Non-cumulative. A cumulative revolving credit is that which can
not exceed the total L/C value after revolving. A non-cumulative revolving L/C is
that which is established for a certain amount and can revolved with that
amount for a certain period of time.
Transferable Credit:The transferable credit is the one that can be transferred
by the original beneficiary in full or in part to one or more subsequent
beneficiaries. Such credit can be transferred one only. Article 38 UCP 600.
Red Clause Credit: A red clause credit is a credit with a special condition
incorporate into it that authorizes the confirming bank or any other nominated
bank to make advances to the beneficiary before presentation of the documents.
Page 21 of 119
Under this type of credit the opening bank is liable for such pre-shipment credit
made by the negotiating /nominated bank.
Stand by Credits:The stand by credit is a documentary credit or similar
arrangement however named or described which represents an obligation to the
beneficiary on the part of the issuing bank to:
a)
Repay money borrowed by the applicant or advanced to or for the
account of the applicant.
b)
Make payment on account of any indebtness undertaken by the
applicant or
c)
Make payment on account of any default by the applicant in the
performance of an obligation.
16. L/C settlement methods:
a)Settlement by Payment, b) Settlement by Acceptance, c) Settlement by
Negotiation.
17. INCOTERMS 2000 (EXW,CFR, CIF, CPT, CIP, DAF, FAS,FOB) :
EXW: EX Works means theseller delivers the goods at the disposal of the buyer
at his premises or at any named places not cleared for export and not loaded on
any vehicles.
CFR: Cost and Freight means the seller must pay the costs and freight
necessary to bring the goods to the named port or destination but the risk of
damage or loss after delivery are transferred from the seller to buyer. Used for
marine and inland waterway transport.
CIF: Cost Insurance and Freight means the seller must pay the costs and freight
necessary to bring the goods to the named port or destination but the risk of
damage or loss after delivery are transferred from the seller to buyer. Moreover
the seller has to procure marine insurance against the buyers risk of loss or
damage to the goods during the carriage. Used for marine and inland waterway
transport.
CPT: Carriage Paid To means the seller delivers the goods to the carrier
nominated by him and should pay the cost of the carriage to bring the goods to
the named destination but the risk of damage or loss after delivery are
transferred from the seller to buyer. Used for any mode of transportation
including multimodal.
CIP: Carriage and Insurance Paid to means the seller delivers the goods to the
carrier nominated by him and should pay the cost of the carriage to bring the
goods to the named destination but the risk of damage or loss after delivery are
transferred from the seller to buyer. Moreover the seller has to procure marine
insurance against the buyers risk of loss or damage to the goods during the
carriage. Used for any mode of transportation including multimodal.
DAF: Delivered At Frontier means that the seller delivers the goods at the
disposal of the buyer on the arriving means of transport not unloaded for export
but not cleared for import at the named point or place. Used mainly for land /
frontier trade.
FOB: free on Board means that the seller delivers when the goods pass the ships
rail at the named port of shipment. This means that the buyer has to bear all the
costs and risks of loss or damage to the goods from the point of delivery. Used
for marine and inland waterway transport.
18. Transshipment:
Transshipment generally means transfer and reloading from one mode of
transport to another mode of transport ( Incase of multimodal transport
document) or from one vessel to another vessel within the same mode of
transport ( incase of marine and air transport document). But in case of road,
Page 22 of 119
rail or inland waterway transport document, transshipment means conveyance

to another means of conveyance, such as road to rail to waterway etc.
19. Types of B/L:
Article 20 UCP 600
Through B/L:When a B/L covers goods being transshipped en-route. It
covers the whole voyage from one point of shipment to final destination.
Simply one transport document is used.
Short From/Blank B/L: B/L in which the detailed conditions of
transportation are not listed in full on the back of the B/L.
Straight B/L: The B/L which is issued to the name of a certain party or
directly in the name of the consignee and which can not be transferred by
endorsement.
Port or Custody B/L: B/L issued by the port officer or ware house supervisor
stating that the goods have been received for shipment.
Mates receipt: When the goods are handed over to the agent of the
shipping company for shipment and the agents contracts to do so and issues
a receipt which is known as Mates Receipt. When the goods are actually
shipped the Mates receipt is exchanged with the regular B/L.
On Board B/L: It is issued after the goods have been received on board of
the ship.
Charter Party B/L: A charter party is a contract under which a ship owner
agrees to place his ship, at the disposal of a merchant or other person
(Charterer) for the carriage of goods from one port to another (voyage
charter) or to let his ship for a specified period (time charter). Two types :
Demise ( when the ship owner only provides vessel and Non demise (when
the ship owner provides both vessel and crew). Article 22,, UCP 600.
Forwarders Certificate of Receipt: It is issued by a freight forwarder as a
carrier or multimodal transport operator or as an agent of a carrier or
multimodal transport operator for the goods received from shippers.
Clean B/L: A B/L or transport document is one which bears no clause or
notation which expressly declares a defective condition of the goods and/or
packaging. Article 27, UCP 600.
20. Documents of L/C (Types & Name):
a) Bill of exchange, b) Invoices and other documents, c) Transport documents, d)
Insurance documents. Totally these all are called shipping documents.
21. Convertibility of currency:
A currency is said to be convertible when it may be fully exchanged for another
currency. Convertibility of currency is not meant for domestic transaction
purposes. It is only required for international transactions. In Bangladesh Current
account has made convertible on October 20, 1993. The capital account has been
made partially convertible with the Foreign Direct Investment and for Securities
investment through NITA.
22. Over invoicing & Under invoicing and its effect:
Over Invoicing excess value than the actual value effect - Foreign Currency
Drain, Under Invoicing less value than the actual value effect - Duty Loss.
23. Effect on import & export when taka gets stronger than F.C.:
When BDT gets stronger than the vale of the FC gets down, means the more FC is
available with the same amount of BDT. Usually it is done when the countrys FX
reserve remains more than required level and when the export + remittance
earnings are much higher than the import + FC payments. At this situation import
Page 23 of 119
is encouraged since more FC can be obtained against BDT and the export is
discouraged since the exporters will receive less BDT against FC earnings.
24. Accommodation bill:
An accommodation bill is prepared by the drawer/seller on the drawee/buyer
without any supply of any goods and services. This is done to provide some
financial help to the drawer/seller. In our country this is possible for inland
transactions and for international transactions this type of accommodation is not
possible.
25. Export financing Pre-shipment, Post-shipment:
Pre-shipment export financings are BBLC, Packing Credit, ECC (Hypo), ECC
(Pledge), Post Shipment export financings are Negotiation of export bill, Bill
purchase, Advance against Export bill, Short Tem advances against export etc.
26. UCP 600: Effective from July 01, 2007. 39 articles
27. URC 522: Effective from January 01, 1996. 25 articles.
28. Difference between LBP/LADB:
LBP is Local Bill Purchased which means the bank shall purchase the clean
inland export documents on presentation and shall give the value to the
exporters without charging any interest on the face value of the bill. On the
other hand the LADB is Loan against Documentary Bill means providing an
exporter a post shipment loan against an export document, whether clean or not,
without purchase of the same and shall charge interest on the face value of the
bill.
29. Foreign exchange position:
Foreign exchange positions are represented by the balance of foreign exchange
operations (purchase and sale of foreign currency, securities and documents that
represent them, and gold exchange instrument) recorded in a bank at a certain
day.
Open position: Each open position has four major characteristics: You're
trading a particular currency pair, you're either long or short the market
(you've bought or sold, respectively), the size of the position in increments of
100,000 of the base currency, and an exchange rate at which the position was
opened. For example a "EUR/USD, 500, S, 0.9220", means the trader Sold
500,000 Euros for U.S. Dollars at an exchange rate of 0.9220.
Short Position: Short positions are taken when a trader sells currency in
anticipation of a downturn in price. Making this move allows the investor to
benefit from a decline.
Long Position:Long positions are taken when a trader buys a currency at a
low price in anticipation of selling it later for more.
Interday and Overnight Position:Intraday positions are all positions opened
anytime during the 24 hour period AFTER the close of Forex Capitals normal
trading hours. Overnight positions are positions that are still on at the end of
normal trading hours which are automatically rolled by Forex Capital
Management.
30. Dealing room:A dealing room is a place where shares, currencies, or commodities are
bought and sold.
31. Difference between entre-pot and re-export:
Entrepot Export: Entrepot trade may be carried out in compliance with the
Export Policy and Import Policy Order in force subject to the following
conditions:
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a)
The value of export is at least 5% more than the import value
b)
No change can be made in respect of quantity, quality, shape or any other
attribute of the goods intended to be imported for entrepot;
c)
Goods imported to Bangladesh may be taken outside the port area only
with the special approval of the concerned authority;
d)
AD will not provide any foreign currency from local source; import cost
(on back to back basis) may be met from realized proceeds through entrepot
trade; that is, AD will not bear any liability on behalf of its customers for import
payment in entrepot trade;
Re-Export: Re-export (import for export) may be carried out in compliance
with the Export Policy & Import Policy Order in force subject to the following
conditions wherein import, processing and subsequent re-export shall be
conducted under the authorization and supervision of Customs Authorities:
a)
Goods (including goods under control list) may be imported for reexport under bonded warehouse/ 100% bank guarantee/ provision of
duty draw back for 100% export within stipulated time;
b)
Minimum value addition shall be 10%; wherein re-export consignment
is brought in Bangladesh for subsequent re-shipment in favor of
foreign buyer, import cost alongwith freight will not exceed 90% of the
FOB value of re-export.
c)
Quality, quantity and shape of the goods are required to be changed;
32. Procedure for issuance of Industrial IRC:
At first an industrial IRC is issued on adhoc basis for an year with the amount to
be imported for the 1st year. After completion of the first year the concerned
authority of CCI&E shall check the % of the amount authorized at the time of
1strenewal. If the industrial concern was able to utilize at least 80% of their limit
then CCI&E issues the regular IRC. If the amount is less than 80% then the
concern will be given as 2ndadhoc.
33. BBLC % as per Import Policy Order:
a. For Knit garments minimum value addition should be 20%
b. For all non-quota category oven items minimum value addition should be
20%
c. If the price of the quota category oven item is FOB USD40.00 the3n
minimum value addition should be 20%
d. For all type of quota category if FOB value more than USD40.00 minimum
value addition should be 20% but minimum price per dzn should be not
less than USD12.00
e. For high value added quota and non quota RMG, minimum value addition
should be 20% and 15% respectively.
f. For all type of sweater export minimum value addition should be at least
20%
g. For kids wear the minimum value addition should be 15%
34. Cash FC and TC sell limitation:
For any Resident Bangladeshi the maximum amount of FC can be taken under
travel quota is USD3000.00 of Which maximum USD1500.00 can be taken as cah
and other in the form of TC. But if the Resident Bangladeshi maintains RFCD
account, he will be allowed take FC upto the account balance with the
endorsement in the passport and with the cash limitation of USD1500.00.
35. Rules related to EPZ concerns:
FC Accounts of EPZ concerns: The following procedure shall apply to release
of foreign exchange to the enterprises against exports made from EPZs:
100% of repatriated export proceeds of a Type A industrial unit in
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EPZ may be retained in FC account in the name of the unit with an AD in

Bangladesh. Balances in the FC account may freely be used to meet all
foreign payment obligations including import payment obligations of the unit
and payment obligations in foreign exchange to BEPZA. Balances from the
FC account will also be freely encashable for local disbursements or for
crediting Taka account maintained with an AD for meeting Taka payment
obligations like wages, rents, rates, taxes etc. Taka account maintained with
ADs by Type A units in EPZ may be credited only with encashments of funds
from FC accounts or of other inward remittances from abroad. However,
receipts from Taka sales of factory refuses and of unusable portion of raw
materials of Type A industries may be credited to the Taka accounts provided
the permission letter of BEPZA for the sale and evidence of payment of
duties/ taxes on sale proceeds are produced to the AD. Balances in the Taka
accounts cannot be converted to foreign exchange and may only be used for
meeting local expenses
Upto 80% of the repatriated export proceeds of Type B and Type C units other
than those in the garments sector may be retained in FC Accounts
maintained in the names of the units with their ADs; for a Type B or Type C
unit in the garments sector, upto 75% of the repatriated export proceeds may
be credited to FC account maintained in the name of the unit with an AD.
The remainder of the export proceeds should be encashed to taka at the
prevailing exchange rate. All foreign payments obligations of Type B and
Type C units including import payments and repayments of foreign loans may
be met out of the balances in their FC accounts; payment obligations in
foreign exchange of a type B unit to the BEPZA may also be settled from
balances in its FC account. Balances in the FC accounts of the Type B and
Type C units are freely encashable to Taka for local disbursements
Credit facilities to EPZ concerns: (A) 100% foreign owned enterprises in the
EPZs known as type A industries may obtain short term foreign currency loans
from overseas banks and financial institutions subject to the following
conditions:
(i) The loan shall be received through an AD in Bangladesh; and the loan
proceeds will be credited to the FC account maintained by the AD in the
name of the Type A unit, to be used for financing import of capital machinery
and raw materials, payment of interest /service charges, repayment of loans
and for crediting Taka account for meeting local expenses;
(ii) Only assets fully owned by the Type-A industry may be lodged as collaterals
for such loans;
(iii)
Repayment of principal and interest on the loan shall be remitted out
of the balances available in the FC account without prior Bangladesh Bank
approval. No fund may be provided from the ADs own resources for such
repayment except with prior approval of Bangladesh Bank;
(iv)
In case the loan is called up by the creditor, the asssets charged to
foreign lender will be allowed to be sold only in foreign exchange and
proceeds, after paying off all local liabilities in Bangladesh, may be remitted
abroad with Bangladesh Banks approval;
(vi)
No Taka loan against repatriable short term foreign currency loan will
be allowed to a Type A industry.
(B) Type B industries (joint venture projects) may also obtain such loans subject to
conditions applicable to Type A industries as indicated above, except that Type B
industries will not be permitted to mortgage/ hypothecate their fixed assets, raw
materials in favour of any non-resident. The ADs may, however, issue guarantee to
overseas banks/ financial institutions for short term foreign currency loans brought
into Bangladesh by Type B industries, subject to prior approval of the Bangladesh
Bank.
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Taka loan maybe granted to a joint venture (Type B) industrial unit in EPZ upto
100% of short term foreign currency loan brought in and encashed to Taka. Loan in
Taka for procurement of capital machineries for setting up a Type B industry, not
exceeding the local partners share of ownership of the unit, may be extended on
normal Taka loans to Type B units banker-customer relationship. Prior Bangladesh
Bank approval should be obtained by the AD while providing foreign exchange for
import of the machineries out of the Taka loan. Repayments of the Taka loans
alongwith interests should be received out of the foreign exchange earnings of the
unit.
ADs may extend credit facilities to Type C industries (100% locally owned) as
admissible to
such industries outside EP Z.
In establishing import LCs on account of Type A, B and C units in the EPZs ADs
shall bear in mind the position that the import payments may be made only out of
the foreign exchange earnings of the concerned units or out of their borrowings
abroad credited in their FC accounts, and that no funds from the ADs own foreign
exchange resources can be used for this purpose. Before opening inputs import LC
against an export LC or export order received by an EPZ unit the AD should satisfy
itself completely about the clarity of the conditions in the export order/ LC, the
standing and credit of the foreign buyer and the ability of the exporting unit for
timely execution of the export order. In opening inputs import LCs on account of
Type B and Type units, domestic value addition requirements prescribed for the
respective items by the Ministry of Commerce should also be abided by. Import
payments against the LCs should be scheduled in a manner that payment
obligations do not fall due before receipt of export proceeds. In all cases of opening
input import LCs on accounts of units in the EPZ, ADs should satisfy themselves
that necessary arrangements have been made by the opener that in case of shortfall
or delay in export receipts, foreign exchange would be made available from external
sources.
36. Quota :
Application of a reduced or zero duty rate for a specified quantity of imported
goods, or for goods imported during a given period.
37. GSP:
GSP (General System of Preferences) Under which goods from certain countries
are given preferential rates of import duty.
38. Changes in UCP 600:
a. The term parties has been replaced by banks.
b. Important definitions of the UCP have been accumulated into a single
article
c. All interpretive issues of UCP have been placed into a single article
d. Revocable letter of credit has been kept out of the scope of the UCP 600.
e. In general, articles stated in future form in UCP 500 are restructured into
present form.
f. The phrase unless otherwise stipulated in the credit has been removed
from UCP 600.
g. The phrase on its face has been mostly taken out from the articles while
composing the texts of the UCP 600
h. The common starting of transport document if a credit calls for has been
dropped, and in all other respects meets the stipulations of the credit of
UCP 500 has been removed form UCP600.
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i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
s.
t.
u.
v.
w.
x.
y.
z.
Article 5 and 12 of UCP 500 regarding incomplete and unclear

instructions, Article 8 in regard to Revocation of a Credit, and article 30
connected with Transport documents issued by freight forwarders of
UCP 500 have found no place in the UCP 600.
In the article 1 of UCP 500, the phrase shall apply to all documentary
credit is replaced by are rules that apply to any documentary credit.
Some of the definitions of article 2 [line 9] appears to have new meaning.
Applicant has been termed as party. Credit has been defined only as
irrevocable undertaking.
Introducing the term Honour offers a new dimension. The definition of
Negotiation appears differently. And the UCP 600 has defined
presentation explicitly.
Interpretation of the term Bank rightly accommodates other entities to
demonstrate wider scope.
Addition of a sentence has made it is more distinct that credit is a
separate contract
All parties concerned has been replaced by banks of UCP 600.
UCP 600 has identified four terms of payment , no different from UCP
500.
The liabilities and responsibilities of issuing and confirming bank have
been split out in two articles.
UCP 600 brings in the concept of second advising bank.
Amendment issues along with advising banks responsibilities related to
amendment of UCP 500 have been placed in a new article.
Slightly modified text of the article 10 [c] of UCP 500 has been placed
under a new title Nomination.
Removal of as reflected in these articles at the end of international
standard banking practice;
Maximum period allowed to examine documents reduced to five banking
days from seven;
The term reasonable time has been removed in connection with time
required for examination of documents
The UCP 500 provision on submission of documents within 21 days after
the date of shipment has been accommodated under a new article;
The UCP 500 article 22 on Issuance Date of Documents V. Credit Date
retained in the UCP 600 with new wordings.
The presentation of documents by or on behalf of the second beneficiary
has been made to the transferring bank.
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Different type of Banking & Banking Products

1. Merchant banking: Merchant Banking encompasses two major businesses
Portfolio Management, and Issue Management and Underwriting which serve
both the demand and supply sides of the capital market.
2. Off shore Banking: Part of international banking business operates free of
various constraints and taxes. Off-shore banking transactions are carried out in
foreign currencies and transacted between foreigners.
3. Bridge Financing: Purely short-term credit/advance extended to a person or a
concern pending the receipt of fund from another source. It is nothing but a
stop-gap arrangement to avail a temporary credit line by a customer from his
banker. Very frequently this sort of finance is required by projects when actual
credit giving agency is unable to disburse the loan in time, the concern of the
project then moves to a bank to avail credit line to establish/commission the
project in time. It is also called Swing Loan, made in anticipation of long term
financing.
4. Syndication: A Syndicated facility is a lending facility, defined by a single loan
agreement, in which several or many banks participate.
5. Securitization: Securitisation is the process of pooling and repackaging of
homogenous illiquid financial assets into marketable securities that can be sold
to investors. The process leads to the creation of financial instruments that
represent ownership interest in, or are secured by a segregated income
producing asset or pool of assets. The pool of assets collateralises securities.
These assets are generally secured by personal or real property (e.g.
automobiles, real estate, or equipment loans), but in some cases are unsecured
(e.g. credit card debt, consumer loans).
6. Factoring: The factor, the banker, undertaking to collect, to account for and
manage clients debts and also finances the clients either by lending against
account receivables or purchasing/discounting them outright for a charge called
discount.
7. Bankers Account:
8. Retail Banking & Wholesale banking:Retail banking is typical mass-market
banking where individual customers use local branches of larger commercial
banks. Services offered include: savings and checking accounts, mortgages,
personal loans, debit cards, credit cards, and so forth. Retail banking "is typical
mass-market banking where individual customers use local branches of larger
commercial banks. Services offered include: savings and checking accounts,
mortgages, personal loans, debit cards, credit cards, and so forth."Whereas
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wholesale banking is Banking services between merchant banks and other

financial institutions.
9. Subordinate, subordinated, subordination:Debts or claims that have a lower
status or priority than other debts or claims are subordinate. For example,
creditor A may agree in a subordination agreement to have its claims on the
cash flow or on the assets of a borrower lower in priority than (i.e., subordinate
to) the claims to that cash flow or collateral by creditor B. In finance and
accounting, the term also refers to debts that include provisions making them
subordinate to other liabilities. For example, a bond issue may, by contractual
agreement, be subordinate to all other bonds issued by a company.
10.Zero coupon bond: A type of debt security that does not pay periodic interest.
Zero coupon securities are bought and sold at prices that are less than the par
value of the securities. The discount, or difference between the principal paid to
purchase the security and the principal returned at maturity, constitutes the
investor's return.
11.Venture capital:Capital provided by a bank or any other financial institutions to
a business enterprise to start a new business. This capital is often considered as
risk capital since new business or the project may collapse at the beginning of
its operation; but such venture may also bring high returns as well.
12.Green Banking:Americans are starting to turn to eco-friendly banking as a way
to help reduce the carbon footprint from their normal banking activities. This
movement away from branch and paper banking is being led by green banks that
believe in social responsibility.
The easiest way for you to bank green is to start using the online banking services
that are available. Benefits of online banking include less paperwork, less mail and
less driving to branch offices, which all have a positive impact on the environment.
Interestingly, online banking can also increase the efficiency and profitability of a
bank. A bank can lower their own costs that result from paper overload and bulk
mailing fees as more customers use online banking.
Green banking can also reduce the need for expensive branch banks and customer
service representatives. So if a bank is not yet utilizing green banking, shareholders
of the bank may start asking....why not?
Banks can do much more to help the environment than just promote online banking.
A truly green bank will reduce their carbon footprint by building more efficient
branches, implementing energy-efficient operational procedures, offering
transportation services for their employees, promoting sustainable banking and
increasing their lending in environment-sensitive industries. Banks can also support
eco-friendly groups and raise money for local environment initiatives.
Bank products and services can also reflect a green banking commitment.
Green Deposits: Banks can offer higher rates on CDs, money market accounts,
checking accounts and savings account if customers opt to conduct their banking
activities online.
Green Mortgages and Loans: A bank can offer green mortgage with better rates or
terms for energy efficient houses. Some green mortgages allow home buyers to add
as much as an additional 15 percent of the price of their house into loans for
upgrades including energy-efficient windows, solar panels, geo-thermal heating or
water heaters. The savings in monthly energy bills can offset the higher monthly
mortgage payments and save money in the long run.
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The Energy Efficient Mortgage (EEM) is a type of HUD-approved green mortgage

that will credit you for your homes energy efficiency in the mortgage itself. Many
home improvements also qualify for the energy tax credit. Anyone undertaking an
energy-saving house project, should shop around for a bank that offers a special
rate for a green mortgage or loan.
Green Credit Cards: A green credit card allows cardholders to earn rewards or
points which can be redeemed for contributions to eco-friendly charitable
organizations. These cards offer an excellent incentive for consumers to use their
green card for their expensive purchases. Imagine the millions of dollars that could
be raised for worthwhile environmental groups if green credit cards really took off.
Green Reward Checking Accounts: A bank product called a reward checking accounts
pays a bonus rate for customers who go green. Customers can earn higher checking
account rates if they meet monthly requirements that might include receiving
electronic statements, paying bills online or using a debit or check card. With this
banking product higher rates and eco-friendly living go hand-in-hand.
What can you do?
Converting to online banking and mobile banking are two ways that you can do your
part to bank green and help the environment. Green banking via your computer or
cell phone includes setting up direct deposit to receive your paychecks, receiving
electronic statements from your bank and paying bills online. All of these steps can
drastically reduce the amount of paper produced by your bank. Online banking and
mobile banking are also highly effective ways to keep track of your finances and to
avoid late payment fees.
Another green banking step you can take is to suggest that the company you work
for sign up for a product called "Remote Deposit". This service is offered by a
growing number of banks to their commercial customers. Remote deposit is the
digital scanning and processing of checks from your computer or smartphone. It is
a convenient service without the paperwork and environmental costs associated
with traditional branch deposits.
Many banks claim to be be eco-friendly, but in fact do little to support environment
initiatives with the money you deposit with them. Ask your local bank exactly how
they support the environment before assuming that their self-anointed "Green
Bank" label is deserved. Chances are good that there is a bank in your local area
that is more socially-conscious than their competitors. If you open an account with
that bank, then you are doing your part to support the environment.
Finally, the more people who actively search for and support eco-friendly banks, the
more competition for deposits will increase. This will help raise the awareness for
green banking. Keep track of the latest news on green banking on MoneyRates.
Policy Guidelines for Green Banking

Introduction:
We are aware that global warming is an issue that calls for a global response. The
rapid change in climate will be too great to allow many eco-systems to suitably
adapt, since the change have direct impact on biodiversity, agriculture, forestry, dry
land, water resources and human health. Due to unusual weather pattern, rising
greenhouse gas, declining air quality etc. society demands that business also take
responsibility in safeguarding the planet. Green finance as a part of Green Banking
makes great contribution to the transition to resource-efficient and low carbon
industries i.e. green industry and green economy in general. Green banking is a
Page 31 of 119
component of the global initiative by a group of stakeholders to save environment.

The state of environment in Bangladesh is rapidly deteriorating. The key areas of
environmental degradation cover air pollution, water pollution and scarcity,
encroachment of rivers, improper disposal of industrial medical and house-hold
waste, deforestation, loss of open space and loss of biodiversity. In addition,
Bangladesh is one of the most climate change vulnerable countries. In line with
global development and response to the environmental degradation, financial sector
in Bangladesh should play important roles as one of the key stake holders. In
response to the above, urgent measures are required by stake holders for
sustainable development and thereby save the planet. Banks hold a unique position
in an economicsystem that can affect production, business and other economic
activities through theirfinancing activities and thus may contribute to pollute
environment. Moreover, energyand water efficiency and waste reduction are of high
concern for many big banks. Greenbacks or environmentally responsible banks do
not only improve their own standards butalso affect socially responsible behavior of
other business.
Bangladesh Bank's Earlier Initiatives:
BB is well aware of the environmental degradation situation as mentioned above
and hasalready given time to time directions to all scheduled banks. Commercial
Banks are nowrequired to ensure necessary measures to protect environmental
pollution while financinga new project or providing working capital to the existing
enterprises. Banks have beenadvised to facilitate their clients with utmost care in
opening Letter of Credit (L/C) forinstallation of Effluent Treatment Plant(ETP) in the
industrial units. Banks have beenadvised to finance in Solar Energy, Bio-gas, ETP
and Hybrid Hoffman Kiln (HHK) inbrick field under refinance programme of BB. A
comprehensive guidelines on CorporateSocial Responsibility (CSR) has been issued
where banks have been asked to concentratehard on linking CSR at their highest
corporate level for ingraining environmentally andsocially responsible practices and
engaging with borrowers in scrutiny of theenvironmental and social impacts. Banks
have been brought under the purview ofE-commerce with a view to providing the
customers with online-banking facilitiescovering payments of utility bills, money
transfer and transactions in local currencythrough internet as well. Considering the
adverse effects of Climate Change, banks havebeen advised to be cautious about
the adverse impact of natural calamities and encouragethe farmers to cultivate
salinity resistant crops in the salty areas, water resistant crops inthe water locked
and flood prone areas, drought resistant crops in the drought proneareas, using
surface water instead of underground water for irrigation and also usingorganic
fertilizer, insecticides by natural means instead of using chemical fertilizer
andpesticides.
Adopting Green Banking Policy:
Now it is the high time for the banks to adopt a comprehensive Green Banking
Policy ina formal and structured manner in line with global norms so as to protect
environmentaldegradation and ensure sustainable banking practices.With a view to
developing green banking practices in the country, an indicative GreenBanking
Policy and Strategy framework has been developed for the banks in thefollowing
manner:
Green Banking Policy needs to be covered through time frame work which will
besegregated into 3 phases.
1. Phase-I
Banks are to develop green banking policies and show general commitment
onenvironment through in-house performance. The time lining for the actions to be
takenunder Phase-I should not exceed December 31, 2011.
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1.1 Policy Formulation and Governance

Bank shall formulate and adopt broad environmental or Green Banking policy
andstrategy approved by their Board of Directors. A high powered Committee
comprises ofdirectors from the Board in case of scheduled Bangladeshi Banks and a
high poweredcommittee comprises Regional Chief of Global Office and members
from the topmanagement including CEO in case of Foreign Banks should be
responsible forreviewing the banks environmental policies, strategies and program.
Bank shall approve aconsiderable fund in their annual budget allocation for green
banking.Banks are required to establish a separate Green Banking Unit or Cell
having theresponsibility of designing, evaluating and administering related green
banking issues ofthe bank. A senior executive should be assigned with the
responsibility of heading theunit. The unit will report to the high powered
committee time to time.
1.2 Incorporation of Environmental Risk in CRM
Banks shall comply with the instructions stipulated in the detailed guidelines
onEnvironmental Risk Management (ERM) in consideration of a part of the Green
BankingPolicy. Bank shall incorporate Environmental and Climate Change Risk as
part of theexisting credit risk methodology prescribed to assess a prospective
borrower. This willinclude integrating environmental risks in the checklists, audit
guidelines and reportingformats. All of this will help mainstream Environmental
Risk that cover possible sourcesof Environmental Risk such as Land use, Climate
change related events (cyclone,drought), animal diseases/pathogens such as avian
influenza, solid waste including wastefeed, animal waste, carcasses, sediments,
wastewater discharges, hazardous materials, etcwill be reviewed under
Environmental Due Diligence (EDD) checklists.
1.3 Initiating In-house Environment Management
Banks shall prepare an inventory of the consumption of water, paper, electricity,
energyetc. by its offices and branches in different places. Then it should take
measures to saveelectricity, water and paper consumption. A 'Green Office Guide' or
at least a set ofgeneral instructions should be circulated to the employees for
efficient use of electricity,water, paper and reuse of equipments. In place of relying
on printed documents, onlinecommunication should be extensively used (where
possible) for office management andmake sure that the printers are defaulted to
duplex for double-side printing to save papers.Banks may apply Ecofont in printing
to reduce use of ink, use scrap paper as notepadsand avoid disposable cups/glasses
to become more eco- friendly. Installation of energyefficient electronic equipments
and automatic shutdown of computers, fans, lights, aircoolers etc. will help
reducing electricity consumption. Energy saving bulbs shouldreplace normal bulbs
in branches/offices of the banks. Banks should make plan to usesolar energy at their
premises to save electricity. Bank should take steps to save energyfrom corporate
business travel and encourage employees to purchase energy efficient cars(that
consume less fuel) can reduce gas and petroleum consumption.
1.4 Introducing Green finance
Eco friendly business activities and energy efficient industries will be given
preference infinancing by bank. Environmental infrastructure such as renewable
energy project, cleanwater supply project, wastewater treatment plant, solid &
hazardous waste disposal plant,bio-gas plant, bio-fertilizer plant should be
encouraged and financed by bank. Consumerloan programs may be applied for
promoting environmental practices among clients.
1.5 Creation of Climate Risk Fund
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Bank should finance the economic activities of the flood, cyclone and drought
proneareas at the regular interest rate without charging additional risk premium.
However,banks should assess their environmental risks for financing the sectors in
different areasfor creating a Climate Change Risk Fund. This will be used in case of
emergency. Thebank would ensure regular financing flows in these vulnerable areas
and sectors. Thefund could be created as part of banks CSR expenses.
1.6 Introducing Green Marketing
Green marketing is the marketing of products that are presumed to be
environmentallysafe. Green marketing incorporates a broad range of activities,
including productmodification, changes to the production process, packaging
changes, as well asmodifying advertising. It refers to the process of selling products
and/or services based ontheir environmental benefits. Such a product or service
may be environmentally friendlyin itself or produced and/or packaged in an
environmentally friendly way.Banks should use environmental causes for marketing
their services to consumer. Greenmarketing is expected to help awareness
development among common people.
1.7 Online Banking
Online banking is the practice of making bank transactions or paying bills via the
Interneton a secure website of the respective bank that allows the customers to
make deposits,withdrawals and pay bills.Banks should give more emphasis to make
the easiest way to help environment byeliminating paper waste, saving gas and
carbon emission, reducing printing costs andpostage expenses.
1.8 Supporting Employee Training, Consumer Awareness and Green Event
Employee awareness development and training on environmental and social risk
and therelevant issues should be a continuous process as part of the bank's Human
RecourseDevelopment. Awareness development among consumers and clients
would be acontinuous job of a bank under its public relation department.
1.9 Disclosure and Reporting of Green Banking Activities
Banks shall report on the initiatives/practices to BB and disclose in their
respectivewebsites.
2. Phase-II
The time lining for the actions to be taken under Phase-II should not exceed
December31, 2012.
2.1 Sector Specific Environmental Policies
Banks need to formulate strategies to design specific policies for different
environmentalsensitive sectors such as Agriculture, Agri-business (Poultry & Dairy),
Agro farming,Leather(Tannery), Fisheries, Textile and Apparels, Renewable Energy,
Pulp and Paper,Sugar and distilleries, Construction and Housing, Engineering and
Basic Metal,Chemicals (Fertilizers, Pesticides and Pharmaceuticals), Rubber and
Plastic Industry,Hospital/Clinic, Chemical Trading, Brick Manufacturing, Ship
breaking etc.
2.2 Green Strategic Planning
A bank should determine green targets to be attained through strategic planning.
Bankshould determine a set of achievable targets and strategies, and disclose these
in theirannual reports and websites for green financing and in-house environment
managementas well. For in-house environment management, the target areas
should cover attainingenergy efficiency in the form of the use of renewable energy,
reduction of electricity,gas, and petrol consumption, reduction of Green House
Gas(GHG) emissions, issuanceof e-statements, electronic bill pay, saving papers,
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environment friendly office buildingsetc. For Green Financing, the target areas
should cover reducing loans for certainenvironmentally harmful activities, attaining
a particular percentage of environmentalloans as percentage of total, introducing
eco-friendly financial products etc.
2.3 Setting up Green Branches
A Green Branch should be featured by the provision of the maximum use of natural
light,use of renewable energy, use of energy saving bulbs and other equipments,
reduced waterand electricity use, use of recycled water etc. Such a branch of a
bank would bespecifically designated as a Green Branch. A Green Branch will be
entitled to display aspecial logo approved by Bangladesh Bank. The criteria for
certification of a GreenBranch will be circulated by Bangladesh Bank in due
course of time.
2.4 Improved In-house Environment Management
Strategy of reuse, recycling of materials and equipments, and source reduction and
wasteminimization strategy should be part of in-house environmental management
in Phase-II.Banks should increasingly rely on virtual meeting through the use of
video conferencingin lieu of physical travel which would help saving cost and
energy.
2.5 Formulation of Bank Specific Environmental Risk Management Plan
andGuidelines
A bank should develop and follow an environmental risk management manual
orguidelines in their assessment and monitoring of project and working capital
loans. Inaddition to the compliance of national regulation the bank may set
internationallyaccepted higher environmental standards. In this connection, Green
initiatives by a groupof banks will not only be effective but will also offer
competitive advantage. Bankalliances may prepare standard and guidelines for
themselves for improving GreenBanking practices.
2.6 Rigorous Programs to Educate Clients
Clients and business houses should be encouraged and influenced to comply with
theenvironmental regulations and undertake resource efficient and environmental
activities.Banks should introduce rigorous programs to educate clients.
2.7 Disclosure and Reporting of Green Banking Activities
Banks should start publishing independent Green Banking and Sustainability
reportsshowing past performances, current activities, and future initiatives.
Updated and detailedinformation about banks environmental activities and
performances of major clientsshould be disclosed.
3. Phase-III:
A system of Environmental Management should be in place in a bank before
theinitiation of the activities of Phase-III. Banks are expected to address the
wholeeco-system through environment friendly initiatives and introducing
innovative products.Standard environmental reporting with external verification
should be part of the phase.The time lining for the actions to be taken under PhaseIII should not exceed December31, 2013.
3.1 Designing and Introducing Innovative Products
Alongside avoiding negative impacts on environment through banking activities,
banksare expected to introduce environment friendly innovative green products to
address thecore environmental challenges of the country.
3.2 Reporting in Standard Format with External Verification
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Banks
should
publish
independent
Green
Annual
Report
following
internationallyaccepted format like Global Reporting Initiatives (GRI) targeting
their stakeholders.There should be arrangement for verification of these
publications by an independentagency or acceptable third party.
4. Reporting Green Banking Practices on Quarterly Basis
Banks shall report their initiatives/activities under the said program to the
Department ofOff-site Supervision of Bangladesh Bank on quarterly basis. Banks
shall submit their firstquarterly report on June 30, 2011 basis within July 15, 2011
and similarly they will berequired to continue to submit reports on the subsequent
quarters within the next 15 daysof the respective quarter end.Banks shall keep
their annual report and websites updated with the disclosures on greenbanking
initiatives/activities.
5. The compliant banks practicing
followingpreferential treatments:
Green
Banking
will
have
the
(i) BB will award points to banks on Management component while

computingCAMELS rating where there will ultimately be a positive impact on
overall ratingof a bank.
(ii) BB will declare the names of the Top Ten Banks for their overall performancein
green banking activities in the BB websites.
(iii) BB will actively consider green banking activities/practices of a bank
whileaccording permission for opening new bank branch.
13.Ethical Banking: An ethical bank, also known as a social, alternative, civic, or
sustainable bank, is a bank concerned with the social and environmental impacts
of its investments and loans. Ethical banks are part of a larger societal
movement toward more social and environmental responsibility in the financial
sector. This movement includes: ethical investment, socially responsible
investment, corporate social responsibility, and is also related to such
movements as the fair trade movement, ethical consumerism, boycotting,
etc. Ethical banking is a juvenile sector within this movement. Other areas, such
as fair trade, have comprehensive codes and regulations to which all industries
that wish to be certified as fair trade must adhere. Ethical banking has not
developed to this point; because of this it is difficult to create a concrete
definition distinguishing exactly what it is that sets an ethical bank apart from
conventional banks. Ethical banks are regulated by the same authorities as
traditional banks and have to abide by the same rules. While there are
differences between ethical banks, they do share a common set of principles, the
most prominent being transparency and social and/or environmental aim of the
projects they finance. Ethical banks sometimes work with narrower profit
margins than traditional ones, and therefore they may have few offices and
operate mostly by phone, Internet, or mail.
Banking Terminology
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1. Shadow price: In a business application, a shadow price is the maximum price

that management is willing to pay for an extra unit of a given limited resource.
[1] For example, what is the price of keeping a production line operational for an
additional hour if the production line is already operated at its maximum 40 hour
limit? That price is the shadow price. The true economic PRICE of an activity:
the OPPORTUNITY COST. Shadow prices can be calculated for those goods and
SERVICES that do not have a market price, perhaps because they are set by
GOVERNMENT. Shadow pricing is often used in COST-BENEFIT ANALYSIS,
where the whole purpose of the analysis is to capture all the variables involved
in a decision, not merely those for which market prices exist.
2. CRR n SLR:CRR- The reserve requirement (or cash reserve ratio) is a central
bank regulation that sets the minimum reserves each commercial bank must
hold (rather than lend out) of customer deposits and notes. It is normally in the
form of cash stored physically in a bank vault (vault cash) or deposits made
with a central bank.
The reserve ratio is sometimes used as a tool in the monetary policy,
influencing the country's borrowing and interest rates by changing the amount
of loans available.-5%
SLR- Statutory Liquidity Ratio is the amount of liquid assets, such as cash,
precious metals or other approved securities, that a financial institution must
maintain as reserves other than the Cash with the Central Bank. The statutory
liquidity ratio is a term most commonly used in Bangladesh. The objectives of
SLR are:
To restrict the expansion of bank credit.
To augment the investment of the banks in Government securities.
To ensure solvency of banks. A reduction of SLR rates looks eminent to
support the credit growth in India.
The SLR is commonly used to contain inflation and fuel growth, by increasing or
decreasing it respectively. This counter acts by decreasing or increasing the
money supply in the system respectively. The quantum is specified as some
percentage of the total demand and time liabilities ( i.e. the liabilities of the bank
which are payable on demand anytime, and those liabilities which are accruing
in one months time due to maturity) of a bank.- 18%
SLR Rate = Total Demand/Time Liabilities x 100%
SLR restricts the banks leverage in pumping more money into the economy. On
the other hand, CRR, or Cash Reserve Ratio, is the portion of deposits that the
banks have to maintain with the Central Bank.
The other difference is that to meet SLR, banks can use cash, gold or approved
securities whereas with CRR it has to be only cash. CRR is maintained in cash
form with central bank, whereas SLR is maintained in liquid form with banks
themselves.
3. CAMELS
Capital adequacy
Asset quality
Management quality
Earning capacity
Liquidity
Sensitivity to the risk
4. Core Risk Management
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5 (five) core risk areas of banking are;

1) Credit Risk : It arises mainly from lending, trade finance, leasing and
treasury businesses. This can be described as potential loss arising
from the failure of a counter party to perform as per contractual
agreement with the Bank. The failure may result from unwillingness of
the counter party or decline in his/her financial condition.
2) Liquidity Risk: The objective of liquidity risk management is to
ensure that all foreseeable funding commitments and deposit
withdrawals can be made when due.
3) Market Risk:
i. Foreign exchange risk:Foreign exchange risk is defined as the
potential change in earnings due to change in market prices.
ii. Interest rate risk: Interest rate risk may arise either from
trading portfolio or non-trading portfolio.
iii. Equity risk:Equity risk arises from movement in market value
of equities held.
4) Reputation risk arising from money laundering incidences:
Money laundering risk is defined as the loss of reputation and
expenses incurred as penalty for being negligent in prevention of
money laundering.
5) Operational Risk:Operational risk may arise from error and fraud due
to lack of internal control and compliance.
The principal objective of risk management is to safeguard the banks capital,
financial resources, profitability and market reputation. To this effect, the bank
took the following steps under the guidelines of Bangladesh Bank.
ICT Risk Management
ICT risk refers to the potential of ensuring harmful effects that an organization
might suffer from intentional or unintentional threats to information and
information technology systems.
5
REPO & Reverse REPO: Repo is a money market instrument, which enables
collateralised short term borrowing and lending through sale/purchase
operations in debt instruments. Under a repo transaction, a holder of securities
sells them to an investor with an agreement to repurchase at a predetermined
date and rate.
A reverse repo is the mirror image of a repo. For, in a reverse repo, securities
are acquired with a simultaneous commitment to resell . Hence whether a
transaction is a repo or a reverse repo is determined only in terms of who
initiated the first leg of the transaction. When the reverse repurchase
transaction matures, the counterparty returns the security to the entity
concerned and receives its cash along with a profit spread. One factor which
encourages an organisation to enter into reverse repo is that it earns some extra
income on its otherwise idle cash.
Bond: A debt investment in which an investor loans money to an entity

(corporate or governmental) that borrows the funds for a defined period of time
at a fixed interest rate. Bonds are commonly referred to as fixed-income
securities.
The indebted entity (issuer) issues a bond that states the interest rate (coupon)
that will be paid and when the loaned funds (bond principal) are to be returned
(maturity date). Interest on bonds is usually paid every six months (semiannually).
Ex. Zero coupon bond, Convertible bond, Redeemable bond, etc.
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DSCR: In corporate finance, it is the amount of cash flow available to meet

annual interest and principal payments on debt, including sinking fund
payments. In government finance, it is the amount of export earnings needed to
meet annual interest and principal payments on a country's external debts. In
personal finance, it is a ratio used by bank loan officers in determining income
property loans. This ratio should ideally be over 1. That would mean the
property is generating enough income to pay its debt obligations.
In general, it is calculated by:
A DSCR of less than 1 would mean a negative cash flow. A DSCR of less than 1,
say .95, would mean that there is only enough net operating income to cover
95% of annual debt payments. For example, in the context of personal finance,
this would mean that the borrower would have to delve into his or her personal
funds every month to keep the project afloat. Generally, lenders frown on a
negative cash flow, but some allow it if the borrower has strong outside income.
(After Tax Profit + Depreciation + Interest paid) / (Interest paid + 12 months
principal i.e. Loan + LT Debt maturing under 1 year)
8 BASEL-1 & BASEL-II
Why adequacy of Capital is important For Banks
1) Capital adequacy is to ensure rule is to ensure that institution has enough
capital in relation to risk (credit risk, market risk, operational risk) involve
with their activity
2) Enough capital means the amount of capital sufficient to meet any
unforeseen loss.
Present Capital Adequacy Requirement for Banks as per BASEL-1
Current Capital Regulation in Bangladesh
Capital /RWA >=10% or TK.200.00 crorewhich ever is higher
Assets are all of on and off balance sheet assets
Risk weghts are 0%, 20%, 50% and 100%
Composition of Capital
Tier 1 or core Capital: 1) paid up capital 2) statutory reserve 3) general
reserve 4) retained earnings 5) Dividend equalization account 6) non
repayable share premium
Tier2 or supplementary capital: 1) General provision on PA loans (1% of UC
loans) 2) Asset Revaluation Reserve 3) Exchange Equalization account
About BASEL Committee
BASEL Committee is established by central bank governors of G-10 countries
at the end of 1974.
G-10 Countries are Belgium, Canada, France, Germany, Italy, Japan,
Luxemborg, The Netherlands, Spain, Sweden, Switzerland,UK, USA
Weak Points of BASEL-1
1) All risks are not included
2) All private borrowers dont carry 100% risk
3) Not enough differentiation on counterparties
Capital Ratio according to BASEL-II
Capital Base/RWA>=8%
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(Credit Risk +12.5X (Market Risk+ Operational Risk)

Three Pillars of BASEL-II
1) Minimum Capital Requirement
2) Credit Risk (Risk measurement approach: Standardized, Foundation IRB,
Advanced IRB)
a) Market Risk (Risk measurement approach: Standardized, Internal Model)
b) Operational Risk (Risk measurement approach: Basic indicator,
Standardized, Advance Measurement)
c) Supervisory Review
3) Market Discipline
The global financial system created a vacuum of financial regulatory reform and
transformation. With the growth in housing defaults and the impact of sub-prime
loans and collateralised debt obligations (CDOs) on the economy, the
international community focused on forming a united banking front / regulation.
As per definition of Basel III accord, the system was first devised in 1988 by
leading central bankers in the top 10 nations. The first step in the Basel Accord,
this laid the groundwork and liquidity requirement for banking institutions in the
largest nations. Sprung from the liquidation of a leading German Bank, the
system was built to alleviate the pressures of one banking weakness on the
entire system. Stipulating that international banking organisations were
required to hold 8.o per cent liquidity with respect to the total assets on balance
sheet, the reform brought about significant change in the 13 member states who
adopted it.
Basel II was the second round of regulatory reform on the banking industry.
Designed in 2004, the accord focused on three main pillars of risk, which
included credit, operational, and market/liquidity. Banks were categorised based
on both Tier 1 and Tier 2 capital ratios and their propensity to possible liquidity
crunches. Tier 1 capital is sometimes viewed as the key measure of a banks
health, defining the overall degree of assets it has on the balance sheet (i.e.
cash/ assets from earnings, common and preferential stock). Tier 2 capital on the
other hand focuses on the other assets which could include hybrid investments,
subordinate debt, and overall general provisioning.
The Basel III Accord has recently become a topic of hot debate as it provides a
new bar for banking regulation and reform. Spurn from the recent credit crunch,
the Basel III will look at a number of key measures to ensure the sustainability of
the banking industry. These include:
l Installation of a new measure of leverage control, which will set the maximum
limit of the risk both a bank or hedge fund will be able to take
l Credit risk limitations. Organisations are limited to amount of credit they can
borrow based on their assets. It will ensure that Banks and other financials do
not take on too much risk.
l Liquidity Ratio changes. To alleviate the possibility of a credit crunch, firms will
now need to pledge a section of movable cash or credit to ensure borrowing or
lending is not hindered.
l Banks will be required to have a 4.5 per centage of common equity by 2015.
This level will be extended to 7.0 per cent past this date.
The new Basel III accord has come under scrutiny by leading economists, and
industry analysts as being too restrictive. Economically, the debate over how
much of an impact the new Basel reform will have on both developed and
emerging markets is leading to a significant divide between both corporations
and regulators. The updated rules will affect the capital requirements directive
that banks use to determine the minimum capital they should hold to adequately
fund them through periods of financial stress. Basel III is currently in the
consultation phase and there are numerous changes to the framework that are
being considered.
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Money Laundering: A definition of what constitutes the offence of money

laundering under Bangladesh law is set out in Section 2 (Tha) of the Prevention
of Money Laundering Act 2002 (Act No. 7 of 2002) which is reads as follows:
Money Laundering means (Au) Properties acquired or earned directly or indirectly through illegal
means;
(Aa) Illegal transfer, conversion, concealment of location or assistance in the
above act of the properties acquired or earned directly of indirectly through
legal or illegal means;
A concise working definition was adopted by Interpol General Secretariat
Assembly in 1995, which defines money laundering as: "Any act or attempted
act to conceal or disguise the identity of illegally obtained proceeds so that
they appear to have originated from legitimate sources".
9
Why we resist money laundering

1) It provides the fuel for drug dealers, smugglers, terrorists, illegal arms
dealers, corrupt public officials, and others to operate and expand their
criminal enterprises. This drives up the cost of government due to the need
for increased law enforcement and health care expenditures (for example, for
treatment of drug addicts) to combat the serious consequences that result.
2) Money laundering diminishes government tax revenue and therefore
indirectly harms honest taxpayers.
3) Money laundering distorts asset and commodity prices and leads to
misallocation of resources.
4) Among its other negative socioeconomic effects, money laundering transfers
economic power from the market, government, and citizens to criminals.
5) One of the most serious microeconomic effects of money laundering is felt in
the private sector. Money launderers often use front companies, which comingle the proceeds of illicit activity with legitimate funds, to hide the illgotten gains. These front companies have access to substantial illicit funds,
allowing them to subsidize front company products and services at levels well
below market rates. This makes it difficult, if not impossible, for legitimate
business to compete against front companies with subsidized funding, a
situation that can result in the crowding out of private sector business by
criminal organizations.
Stages of Money Laundering
It is a process accomplished in 3 basic stages which may comprise numerous
transactions by the launderers that could alert a financial institution to criminal
activity Placement - the physical disposal of the initial proceeds derived from illegal
activity.
Layering- separating illicit proceeds from their source by creating complex
layers of financial transactions designed to disguise the audit trail and provide
anonymity.
Integration- the provision of apparent legitimacy to wealth derived criminally.
If the layering process has succeeded, integration schemes place the laundered
proceeds back into the economy in such a way that they re-enter the financial
system appearing as normal business funds.
10 Know Your Customer Procedures: KYC procedure starts from opening
account in the name of different clients irrespective of borrowers and depositors.
Each officer involved in account opening will be required to perform due
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diligence on all prospective clients prior to opening an account. This process will
be completed by fulfilling the documentation requirements e.g., Account
Application, Bank References, Source of funds and Identification for example
and also a Know Your Customer profile which will be used to record a clients
source of wealth, expected transaction activity at its most basic level. When
opening accounts, the concerned officer will assess the risk that the accounts
could be used for money laundering, and will classify the accounts as either
High Risk or Low Risk. The risk assessment may be made using the KYC Profile
Form given in Annexure D in which following seven risk categories are scored
using a scale of 1 to 5 where scale 4-5 denotes High Risk, 3- Medium Risk and
1-2 Low Risk:
11 Reporting of Cash Transaction Report (CTR):The Anti-Money Laundering
Compliance Officer (AMLCO) will monitor and analyze the daily cash transaction
and prepare daily Cash Transaction Report (CTR) as per format given in
appendix Ka of AML circular 10 in case of cash deposit, cash withdrawal and
cash remittance/online deposit of Tk.7.00 lac or above in a single transaction or
multiple transactions in any account in a single day. He or she will send CTRs to
the CCU by the 1st week of subsequent month for onward submission of the same
to Bangladesh Bank. Separate CTR report will be needed to prepare for cash
deposit, withdrawal and remittance/online deposit.
12 Suspicious Activity Reporting Process: All employees of the bank are to
remain conscious and alert to identify unusual/suspicious transactions and just
after detection of unusual/suspicious transactions which may have connections
with money laundering as per article 19(1) (Ga) of Money Laundering Prevention
Act, 2002 will be reported in writing as per proforma at Appendix-Ga of AML
Circular02 and AppendixKha of AML Circular10 to the nominated compliance
officer of the of the branch.
13 Supervisory Review Process (SRP)
Supervisory Review Process (SRP) includes regulations of banks own supervisory
review of capital positions, aiming to reveal whether a bank has prudent risk
management and sufficient capital to cover the risk profile. The elements of the
Supervisory Review Evaluation Process (SREP) include the evaluation of the banks
SRP by Bangladesh Bank (BB) along with dialogue between Bangladesh Bank(BB)
and banks exclusive SRP team.
SREP are based on four (4) internationally accepted principles:
1.
Measurement of own Risk Management and Capital
Adequacy of Banks:
2.
BBs review:
3.
Capital above the regulatory minimum:
4.
Supervisory action:
Terms of reference of the SREP team will be arranging such dialogue and
evaluation of the following components of the banks:
1) Minimum Capital Requirement (MCR) against Credit, Market & Operational risks
2) Risks not fully covered under MCR (e.g. residual risk of credit risk deriving from
risk mitigation techniques, securitization risk, model risk)
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3) Risks to be covered under SRP (Credit concentration risk, Country risk, Interest
rate risk in the banking book, Liquidity risk, Settlement risk, Other material risks,
Reputation risk, Strategic risk, etc.)
4) External factors (risks deriving from the economic and regulatory environment,
risks resulting from the business performance of the institution)
5) Adequate capital against comprehensive risks.
The SRP needs to be checked for the five following areas:
A valid capital analysis processes to establish correlation between risk
management and required capital
Comprehensive risk analysis identification and assessment of relevant risks and
their management
Adequate oversight and governance by the board of directors and top
management
Monitoring and reporting establishment of a structure of regular reporting on
the banks risk profile and capital position along with stress test findings.
Internal audit mechanisms independent review under the framework of the
internal control system (Internal governance)
Risks not covered under MCR
II. Risks not covered under MCR
Residual risks
As institutions mitigate risks by way of collaterals, the collaterals can pose
additional risks (legal anddocumentation risks), which may deteriorate the impact
of risk mitigation. For example The liquidation procedure of the collateral is difficult and time consuming,
The valuation of the collateral is inappropriate (e.g. overvaluation).
Banks must be able to prove that they have proper risk management procedures in
place to control the risks that result from the use of credit risk mitigating
techniques, including residual operational and legal risks. The banks should have
appropriate governing and control systems, valuation procedures, internal
regulations and responsible individuals assigned for the prudent handling of risks. A
regular review must be conducted to ensure the reliability, accuracy, authenticity of
data, and check effectiveness and integrity of the procedures. If BB finds theses
procedures and methodologies employed by the bank not appropriate and
comprehensive, it may require the banks to take specific action or raise additional
capital determined through the SRP-SREP dialogue.
Securitization risk
Risks deriving from securitization deals should be evaluated and managed through
appropriate procedures to ensure in particular that the actual economic content of
the transaction is fully reflected in risk evaluation and management decisions. If
there is a securitization of revolving exposures subject to an early amortization
provision, the originating bank will have liquidity plans that manage the impact of
both scheduled and early amortization.
Model risk
This risk comes out of under-estimation of credit risk under the IRB approaches
(e.g. assessment procedure, valuation, strategic plan, introducing system etc.) and
leads to the banks financial losses. Model risk may be caused by the negligence,
knowledge limits, insufficient data or changes which make approaches imperfect. It
is rather difficult to quantify model risks. The bank should assess the potential
deficiencies of the applied methods and take them into consideration during the
SRP. If BB finds the capital requirement of the bank calculated with the applied
methods insufficient to cover its risks at the time of its review, it may require the
banks to take specific action or raise additional capital determined through the
SRP-SREP dialogue.
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III. Risks to be covered under SRP

Credit concentration risk
Credit concentration risk may arise from exposure to a single entity / group and/or
exposures in the same economic or geographic sector and/or credit concentration in
dependent industries. Downturn in concentrated activities and/or areas may cause
huge losses to a bank relative to its capital and can threaten the banks health or
ability to maintain its core operations. Concentration will be used in abrader sense
and also include the following criteria:
Concentration by economic sector or geographical location,
Concentration in a specific foreign currency and
Concentration of credit-risk mitigating techniques (concentration of collaterals or
the type orissuer of such assets).
All above cases may require additional capital charge against credit concentration
risk under SRP. Thelevel of additional capital will be determined through the SRPSREP dialogue with the bank and itsinternal procedure of risk measurement and
risk management.
BBs outlook concerning risk measurement and risk management: As credit
concentration risk has thepotential to be a source of extensive losses, the policy to
handle this risk should always be an integralpart of risk management system of
banks. Banks should clearly document the processes and proceduresfor addressing
credit concentration risk. These documents should address at least the following:
Each bank should have policies and procedures for managing credit concentration
risk approvedby top management for both types of concentration risks (single name
and sensitivity to acommon underlying risk factor). The policies should be reviewed
regularly and the reviewshould always observe changes in the banks risk appetite
and in the external businessenvironment.
Banks should apply internal methods/systems commensurate with their specific
activities, sizeand complexity to identify and measure concentration risks.
Banks should operate limit mechanisms for concentration risks and these
mechanisms shouldmatch the banks risk appetite and profile.
Banks should have adequate action schemes which would enable them to monitor,
assess andhandle the policies, procedures and limits for mitigating the credit
concentration risks.
Banks should be in a position to evaluate the adequacy of assumptions which they
use in theirinternal capital allocation processes employed to cover concentration
risks.
Quantitative criteria for managing credit concentration riskAs regards the
quantitative criteria to be used to ensure that credit concentration risk is being
adequatelyaddressed, the credit concentration risk calculations shall be performed
at the counterparty level (i.e., large exposures),
portfolio level (i.e., sectoral and geographical concentrations) and
asset class level (i.e., liability and assets concentrations).
For performing credit concentration risk calculations, the following information is
to be outlined at theeach of the above stated level:
To sort top 20 large exposures by size,
To sort top 10 connected exposures by size,
To calculate portfolio concentration ratios,
To measure portfolio correlations and variance/covariance,
To reveal concentration vulnerability with stress tests.
To use of limits based on concentration metrics.
To allocate capital against the concentration risks.
Country risk
Country risk refers to potential losses that may be generated by an (economic,
political, etc.) event thatoccurs in a specific country, where the event can be
controlled by that country (government) but not bythe bank. The issue of capital
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coverage for country risks has been a fully integrated element of SRP.
Thecomponents of country risks are as follows:
Transfer risk,
Sovereign risk derives from the insolvency of the country,
Collective debtor risk- a significant number of debtors in a single country being
unable to meettheir obligations owing to a specific cause Examples of such a cause
are war, political or socialunrest, natural disasters and national policy failures in
achieving macro-economic and/orfinancial stability
Interest rate risk in the banking book
Interest rate risk in the banking book has to be taken into account as a potential
risk. Sources and typesof interest rate risks in banking book are:
Gap or mismatch risk
Basis risk
Net Interest position risk
Embedded option risk etc.
Liquidity risk
Liquidity risk occurs when a bank is unable to fulfill its commitments in time when
payment falls due.Banks should come up with estimates on their liquidity risk,
comparing their liquid assets to short-termliabilities. The purpose of daily liquidity
measurements is to ensure that the institution remains solventin its day-to-day
operations at all times. In order to maintain immediate liquidity, analyses are to
becarried out concerning future liquidity as well. Regulations and procedures are to
be implemented whichserve the ongoing and forward-looking measurement and
management of the institutions financingposition. Alternative scenarios are to be
developed and decisions on net financing positions should bereviewed on a regular
basis. Contingency plans should be available for handling a potential liquiditycrisis.
Liquidity risks can be classified into four categories:
Term liquidity risk (due to discrepancies between maturities),
Withdrawal/call risk (mass disinvestment before maturity),
Structural liquidity risk when the necessary funding transactions cannot be
carried out or onlyon less favorable terms,
Market liquidity risk
A bank can analyze the expected changes of its liquidity by comparing the maturity
of its receivablesand payables.
Settlement risk
Settlement risk arises when an executed transaction is not settled as the standard
settlement system.Settlement risk addresses to the credit risk and liquidity risk
elements. Treasury transactions, tradingbook items (deals) and capital market
dealings concluded as part of investment services convey asettlement risk that is a
specific mix of credit and liquidity risk. The banks pose to the risk when itfulfills its
contractual obligations (payment or delivery), but the counterparty fails or defaults
to do thesame.
Other material risks
SRP requires that the banks internal capital allocation process should cover all
risks which have notbeen identified earlier but are material for the institution. Such
risks may include e.g. strategic risk orreputation risk, but the institution needs to
consider all risks not specified in case it can be captured inthe institutions
operation and can be regarded as material. Risks may appear which are specific to
theinstitution and derive from its non-standard activities or clientele but fall outside
the scope of usual riskdefinitions. The institution is free to use its own terminology
and definitions for other material risks,although it should be able to explain these to
BB in detail, along with the related risk measurement andmanagement procedures.
BB is not providing a detailed list and definitions of other risks. It is the
banksresponsibility to map out other relevant risks for which it has to elaborate an
adequate risk identificationmechanism. The institution needs to examine the
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materiality of the identified risk and the result of theassessment. Furthermore, it

has to be able to explain these satisfactorily to the BB.
Materiality: In the context of an institutions activities, all risks which affect the
achievement of businessobjectives should be considered material. Other risks are
usually difficult or impossible to quantify, thustheir measurement and management
typically call for qualitative methods. Therefore, institutions areadvised to elaborate
detailed methodologies for their evaluation and management which enable
therevealing of risks and help to keep them under control. There might be a strong
link between these risksand other risks, either because the former may amplify the
latter (e.g. strategic risk can increase creditrisk) or because they stem from the
escalation of basic risks (e.g. IT problems carrying a highoperational risk may also
result in the fast increase of reputation risk if they impact customer systems).
Thus the assessment of the materiality of other risks is a highly subjective exercise.
BB would take astand on this matter in the course of the SREP process, during the
dialogue with the institution and onthe basis of submitted documentation.
Reputation risk
Reputation risk is the current or prospective indirect risk to earnings and capital
arising from adverseperception of the image of the financial institution on the part
of customers, counterparties, shareholders,investors or regulators. Reputation risk
may originate from the lack of compliance with industry servicestandards, failure to
deliver on commitments, lack of customer-friendly service and fair marketpractices,
low or inferior service quality, unreasonably high costs, a service style that does
notharmonize with market benchmarks or customer expectations, inappropriate
business conduct orunfavorable authority opinion and actions. Signs of significant
reputation risk include the extensive andrepeated voicing of a negative opinion on
the institutions performance and overall quality by externalpersons or
organizations, especially if such negative opinion receives broad publicity along
with poorperformance by the institution which may lay the grounds for such
opinions.
Strategic risk
Strategic risk means the current or prospective risk to earnings and capital arising
from changes in thebusiness environment and from adverse business decisions, or
from the overlooking of changes in thebusiness environment. Typical sources of
strategic risk are e.g. endeavors to achieve a growth rate ormarket share that does
not synchronize with the market environment, lack of timely and properadherence
to environmental changes, assignment of inappropriate means to correctly chosen
objectives,poorly timed alignment to changes in the business environment, or
specific actions that do not complywith strategic objectives. It may be a strong
indication of strategic risk if the institution persistentlyproceeds against the clearly
articulated requirements and trends of the economic environment in matterswhich
exercise a substantial influence on its services and business performance, or if the
institution failsto revise its strategy despite clearly identifiable and substantial
changes in the environment.
Consideration of external factors in Capital planning
The capital requirement of assumed risks that have been examined in a static
manner so far is now put ina dynamic context through the observation of external
factors. The level of capital has to be adequate onan ongoing basis, not only at
specific times, so that sound operations can be sustained even underpotentially
adverse turns in the economic or business environment. The capital requirement is
affectedby the economic environment (e.g. recessions), the regulatory environment
and by risks arising from theinstitutions activities (profitability, business
performance). These factors are taken into considerationthrough capital planning
which ensures that the institution calculates its adequate capital with asufficiently
forward-looking outlook. Stress tests enable the identification of necessary capital
for timesof economic recession. The adequate capital should be corrected with a
view to additional capitalrequirements based on this outlook.
Page 46 of 119
Capital planning
The purpose of capital planning is to enable the institution to ensure capital
adequacy under changingeconomic conditions, even at times of economic recession.
In the capital planning process, the followingitems should be reviewed:
current capital requirement of the institution,
planned capital consumption,
the targeted and sustainable capital level (with a view to the institutions strategy
and riskappetite),
the means of capital management: internal and external resources that can be
employed toincrease capital (profit-generating capability),
other employable means of ensuring capital adequacy (e.g. budgeting of dividend
payments andbalance sheet items, etc.),
The assessment of the internal sources of capital planning calls for the review of
risk arising from thebanks financial management (actual performance versus
business plans, profitability and profitgenerating capability). Concerning the
timeline of the capital plan, BB expects a 3 to 5 year outlook,depending on the
complexity of the institution. For smaller institutions, a three-year outlook
issufficient, but large institutions are required to work with a 5-year outlook. The
capital plan should berevised on an as-needed basis but at least once in every three
years and it should also be aligned tocircumstances. In the capital planning process,
it is advised to use stress test to reveal the impacts ofunfavorable changes in
circumstances.
IV. Stress Testing
Impact on Capital will be detected through stress testing, would be included in risk
profile of a bank andneeds maintaining shock absorbent fund in the form of
regulatory capital. Stress test is a general termcovering the techniques and
methodologies which financial institutions can employ to measure theirvulnerability
or exposure to the impacts of exceptional, rare but potentially occurring events.
Suchevents can be e.g. the following: interest rate changes, exchange rate
fluctuations, changes in creditrating, events which influence liquidity, etc. There are
various methods for measuring the impact of theabove factors. In an SRP context,
they are as follows:
Simple sensitivity tests determine the short-term sensitivity to a single risk factor,
Scenario analyses involve risk parameters (with low but positive probability)
which changealong a pre-defined scenario and examine the impact of these
parameters.Out of these methods, the sensitivity test is the simpler one and
institutions with a simple portfolio canuse it best. A scenario analysis is somewhat
more complicated and requires more resources. Still,institutions with a complex
portfolio use this approach to assess risk factors which they considermaterial after
the proper calibration of scenario parameters. The time horizon of the analysis
should beset in accordance with the composition of the portfolio. The institution
should verify regularly that theassumed risk profile used during the stress test is in
harmony with the external factors.
As a starting point the scope of the stress test may be limited to simple sensitivity
analysis. Fivedifferent risk factors namely:
interest rate,
forced sale value of collateral,
non-performing loans (NPLs),
stock prices and
foreign exchange rate
can be identified and used for the stress testing. Moreover, the liquidity position of
the institutions has tobe stressed separately. Though the decision of creating
different scenarios for stress testing is a difficultone, however, to start with, certain
levels of shocks to the individual risk components to be specifiedconsidering the
historical as well as hypothetical movement in the risk factors.
Stress test shall be carried out assuming three different hypothetical scenarios:
Page 47 of 119
Minor Level Shocks: These represent small shocks to the risk factors. The level
for different riskfactors can, however, vary.
Moderate Level Shocks: It envisages medium level of shocks and the level is
defined in each riskfactor separately.
Major Level Shocks: It involves big shocks to all the risk factors and is also
defined separatelyfor each risk factor.
Risk Weighted Capital Adequacy Ratio

Definition of Capital
For the purpose of supervision, capital will be categorized into two tiers: Tier
1 i.e. Core Capital comprising the highest quality capital elements and Tier 2
i.e. Supplementary Capital represents other elements, which fall short of
some of the characteristics of the core capital but contribute to the overall
strength of a bank. The constituents of core capital and supplementary
capital are enclosed at Annexure-I.
Minimum Capital Standards
Each bank will maintain a ratio of capital to risk weighted assets of not less
than 9% (At present 10%) with at least 4.5% (at present 5%) in core capital
and this requirement will have to be achieved by 30 June 2003 (within 2009).
However, the minimum capital requirements of Tk. 40 crore for locally
incorporated banks and an amount equivalent to USD 10 million for banks
incorporated outside Bangladesh will remain unchanged until further
instructions.
Risk-weighted Assets
Both balance sheet assets and off-balance sheet exposures are to be weighted
according to their relative risk. Presently, there are 4(four) categories of risk
weights - 0, 20, 50 and 100 percent. For the purpose of assessing capital
adequacy, weights for particular items are given in Annexure-II.
Off-balance sheet transactions are to be converted into balance sheet
equivalents for the purpose of assessing the capital adequacy before
assigning a risk weight as shown in section 10(a) of Annexure-II. Four
categories of credit equivalents of 0, 20, 50 & 100 percent will apply. Details
are shown in Annexure-III.
CONSTITUENTS OF CAPITAL
CORE CAPITAL (TIER-1)
A. Paid up Capital
B. Non-repayable Share premium account
C. Statutory Reserve
D. General Reserve
E. Retained Earnings
F. Minority interest in Subsidiaries
G. Non-Cumulative irredeemable Preference Shares.
H. Dividend Equalization Account
SUPPLEMENTARY CAPITAL (TIER-2)
A. General provision (1% of Unclassified loans)
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B. Assets Revaluation Reserves

C. All other Preference Shares
D. Perpetual Subordinated debt
E. Exchange Equalization Account
F. General Provision for off balance sheet exposures
G. Revaluation on investment (HFT)
H. Revaluation on investment (HTM)(Upto 50% of the revaluation reserves)
I. Revaluation reserve for equity instruments upto 10%
Note 1: Core Capital must be equal to or more than 4.5% (at present 5%) of
the risk-weighted assets.
Note 2: Reserves created by periodic revaluation of banks' assets can be
included as a Component of Tier-2 capital only if the revaluation is formally
conducted by professionally qualified valuation firm. Such reserves will be
eligible up to 50% for the treatment as Supplementary Capital provided that
the rationale of the re-valued amount is duly certified by the external auditors
of the bank. Such revaluation may be done once in a year.
Statutory Reserve
Bank Companies Act, 1991 requires the bank to transfer 20% of its current years
profit before tax to reserve until such reserve equals to its paid up capital.
Bangladesh Bank
GovernorsDr. Atiur Rahman
Deputy Governors- 1.)
2.)
3.)
Md. Nazrul Huda

Ziaul Hasan Siddiqui
Murshid Kuli Khan
Country
Afghanistan
Australia
Bangladesh
Bhutan
Canada
China(Mainland)
European Union / European System of
Central Banks Eurosystem
France
Germany
United Kingdom
India
Indonesia
Japan
Maldives
Myanmar
Nepal
Netherlands
Central Bank
Da Afghanistan Bank
Reserve Bank of Australia
Bangladesh Bank
Royal Monetary Authority of Bhutan
Bank of Canada (Banque du Canada)
People's Bank of China
European Central Bank
Bank of France (Banque de France)
Federal Bank of Germany (Deutsche
Bundesbank)
Bank of England
Reserve Bank of India
Bank of Indonesia (Bank Indonesia)
Bank of Japan
Maldives Monetary Authority
Central Bank of Myanmar
Central Bank of Nepal (Nepal Rastra
Bank)
De Nederlandsche Bank
Page 49 of 119
New Zealand
Pakistan
Russia
Saudi Arabia
Singapore
South Africa
Sri Lanka
Switzerland
Thailand
United Arab Emirates
United States of America
Reserve Bank of New Zealand

State Bank of Pakistan
Central Bank of the Russian Federation
Saudi Arabian Monetary Agency
Monetary Authority of Singapore
South African Reserve Bank
Central Bank of Sri Lanka
Swiss National Bank
Bank of Thailand
Central Bank of the United Arab
Emirates
Federal Reserve System
Recent Measures to liberalize and strengthen Financial Sectors

Interest rates were liberalized;
Open market operation was activated by introducing new bills.
Attempts were made to improve governance in the financial sector.
Reform initiatives attempted to improve legal aspects, corporate governance,
loan recovery, exchange and interest rates management, NCB's functions,
risk management and efficiency of the Bangladesh Bank.
5) Better disclosure and transparency standards have been introduced;
6) fit and proper tests prescribed for bank directors, chief executives and
advisors;
7) Restriction imposed on the composition of the membership of the board of
directors; the roles and functions of the board and management were
clarified and redefined.
8) Audit Committees were mandated for all banks with clear guidelines and
TORs and Early Warning System (EWS) was introduced.
9) To strengthen the banking operation, minimum capital requirement was
raised from Tk. 400 million to Tk. 1000 million and the requirement on riskweighted basis was also increased. Now it is raised to TK.2000 million.
10)
Stringent loan rescheduling conditions were introduced to stop ever
greening of loans.
11)
An upper limit on a bank's exposure to a particular customer or group
was introduced.
12)
Strict measures have been laid and enforced on loan loss provisioning.
1)
2)
3)
4)
Page 50 of 119
13)
Loan write off guidelines were issued by the Bangladesh Bank,
allowing the banks for the first time, to write off 'bad' debts against full
provisioning.
14)
Large loan limit has been linked to bank's NPL ratio.
15)
BB is encouraging syndication of several banks for large loans and has
issued guidelines for restructuring such loans.
16)
The Core Risk Management Guidelines on five major risks has been
introduced by BB (credit, foreign
exchange, and assets-liabilities risk management, internal control and
compliance and anti-money laundering) laying down policies, processes,
procedures and structures that will lead to better governance and improved
services. Credit Risk Grading Manual is prepared so that bank can follow
uniform procedure for taking decision to sanction loan and to judge the
quality of loans. Prudential guidelines for SME and consumer finance loan
are introduced.
17)
In the monetary and foreign exchange front we have an exchange rate
regime, which is now market determined. Floating of taka since June 2003
was achieved without encountering undue volatility.
18)
Further reform in simplifying and streamlining forex operations and
payment system is underway.
19)
New financial instruments of varying tenure such as repo and reverse
repo and government investment bonds of longer tenor have been
introduced. Efforts are underway to develop the government and corporate
bond market. BB and the Securities and Exchange Commission (SEC) agreed
to allow the government bonds to be traded in the stock exchange.
20)
Securitization of receivables of private financial institutions has
started.
21)
Initiation of capacity building program in the Bangladesh Bank.
Service standards have been introduced for work in different departments.
Workflow analysis has been initiated to bring in greater speed and ensure
quality. The Central Bank Strengthening Project (CBSP) includes (a)
computerization of the operations of the Bangladesh Bank, (b) human
resource development through reforms of recruitment, promotion and
compensation policies, (c) restructuring of the different departments, (d)
reengineering the business processes, (e) automation of the Clearing House,
(f) capacity building in the core activities i.e. monetary policy, regulation of
the financial sector, and research and policy analysis. The goal is to transform
the decades-old traditional and manual system to a modern, automated
system.
22)
BB has got a Policy Analysis Unit (PAU) which produces various
analytical policy briefs and
publishes Monetary Policy Review,
Financial Sector Review and Bangladesh Bank Quarterly.
Page 51 of 119
Bangladesh Economy
Budget at a Glance
Budget:
Tk.1,63,589 crore
Deficit:
Tk.45,204 crore
Main Source of Tax:
NBR Tax-56.2%
Expenditure:
Education & Information Technology-11.8%, Interest-11.0%,
Public administration-10.2%
Tax-free
Individual income: Tk.1.80 lac
Woman & age over 65:
Tk.2.00 lac
Physically challenged:
Tk.2.50 lac
If net asset more than Tk.2.00 creore: 10% surcharge
GDP (allocation)
Agriculture: 19.95%
Industry:
29.93%
Service:
49.72%
1.
2.
3.
4.
5.
6.
7.
GDP
-GNP
-Per Capita Income
-US$818
GDP per Capita
-US$755
Growth rate -6.66% (2010-11)
Foreign Exchange Reserve
-US$1045.99 crore(06.06.2011)
Inflation
-10.67% point to point 8.54%
We can see from inflation data that the average inflation in FY 2009-10 was
7.3 percent. On a point to point basis, it went up to 10.7 percent in April
2011. On the basis of ten months average, it was 8.5 percent in FY 2010-11.
8. Liquidity position
-27087.77 crore As on end March, 2011
Export Items: Raw Jute and jute Goods, Tea, Leather, Frozen Food, Woven
Garments, Knitwear, Chemical Products, Agricultural products (Includes Vegetable,
Fruit, Tobacco), Engineering and Electronic goods
Import Items: Industrial RM, Capital Machinery, Intermediate Goods, Consumer
Goods, Petroleum and petroleum Product, Machinery for misc. ind., Others. Most
importing coutry: China, India
Remittance:
Bangladesh received remittance from more than 6 million expatriate
Bangladeshis 1060.62 crore US$ July-May 2010-11
Bangladesh set a unique example in terms of remittance inflow amid the global
recession. Among the highest remittance recipients of the world, Bangladesh
ranked 12th in 2008, 8th in 2009 and 7th in 2010. During the first ten months of the
current fiscal, the remittance flow stood at US$ 10.6 billion which is 5.1 percent
higher than that of the corresponding period of the last fiscal.
The impact of global recession and recent North African and Middle East political
crisis, is having a negative effect on manpower exports
To overcome this situation, the Government has taken various steps to explore
potential labour markets and train its manpower in line with the demand of the host
countries.
Efforts are continuing to fully resume manpower exports to Africa, East Europe
and Latin America along with diplomatic initiatives for increasing manpower export
to these countries
Page 52 of 119
Even though the remittance growth in the current fiscal will be only 5.0 percent,
it is likely to accelerate and is estimated to reach US$ 12.7 billion in FY 2011-12.
Country Report
Moody's Investors Service, a US-based credit rating agency, has rated Bangladesh
Ba3, the third non-investment grade rating, for the second consecutive year and
termed the country's outlook stable. Bangladesh reflects the country's dynamic
efforts to maintain macroeconomic stability. Bangladesh's rating is slightly lower
than India, but above Pakistan and equivalent to the Philippines. Sovereign credit
rating is supposed to create confidence and help a country get access to low-cost
capital for development. It is a vital international benchmark, which should have
favorable impacts on foreign direct investment (FDI) and portfolio flows. A good
rating can help a country's businesses and have a positive impact on business costs.
But there are debates about the benefits Bangladesh got from the last year's good
ratings by both the S&P and Moody's. Neither the government nor the central bank
tried for any low-cost funds from external sources to strengthen its BOP. Besides,
FDI Inflow did not increase. This year, Moody's assessment was based on four key
factors -- economic strength, institutional strength, government financial strength
and susceptibility to event risk. 2nd in South Asia , 1st is India.
Stable monetary and fiscal management of Bangladesh earns Ba3 (Moody's) and
BB-(S&P) sovereign rating with stable outlook for two consecutive years 2010,
2011.
Financial System
The financial system of Bangladesh consists of Bangladesh Bank (BB) as the central
bank, 4 State Owned Commercial Banks (SCB), 5 government owned specialized
banks (BSB & BSRS to BDB, latest ParabashiKalyan Bank), 30 domestic private
banks, 9 foreign banks and 29 non-bank financial institutions. Moreover, MRA has
given license to 298 Micro-credit Organizations. The financial system also embraces
insurance companies, stock exchanges and co-operative banks.
Major Trade Deficit
: China, India
Agri/Rural loan: Crop, Fshery & Livestock

Public-Private Partnership (PPP)
PPP is a contractual agreement formed between a public agency and private
sector entity
PPP allows greater private sector participation in the delivery of services
PPP allows the public agencies to tap private sector technical, management and
financial resources to achieve certain public agency objectives such as greater cost
and schedule certainty, supplementing in-house staff, innovative technology
applications, specialized expertise or access to private capital.
Reasons for Public-Private Partnership
Accelerating the implementation of high priority projects by packaging and
procuring services in new ways
Turning to the private sector to provide specialized management capacity for
large and complex programs;
Key Benefits of Public-Private Partnership
PPP provides benefits by allocating the responsibilities to the party ? either public
or private ? that is best positioned to control the activity that will produce the
desired result
The primary benefits of using PPP to deliver services include:
Expedited completion compared to conventional delivery methods
Page 53 of 119
Cost savings
Improved quality and system performance from the use of innovative
materials and management techniques
Substitution of private resources and personnel for constrained public
resources and Access to new sources of private capital.
How are risks and rewards allocated in public-private partnership Risks are
allocated to the party that is the best equipped to manage them
PPP contracts often include incentives that reward private partners for
mitigating risk factors Promoting Public-Private Partnership in Bangladesh
Fast changing policy situation with globalization and deregulation recognizes
increasingly important role of private sector in Bangladesh
Bangladesh has a very rich experience on PPP, especially in respect of the
scope and diversity of Non-Government Organization (NGO) activities in
social services
Sectors of PPP in Bangladesh
Health Sector
Education Sector
Infrastructure Development
Tourism Sector
ICT Sector
Industries
Ratio
A ratio can be computed from any pair of numbers. Given the large quantity of
variables included in financial statements, a very long list of meaningful ratios can
be derived. A standard list of ratios or standard computation of them does not exist.
The following ratio presentation includes ratios that are most often used when
evaluating the credit worthiness of a customer. Ratio analysis becomes a very
personal or company driven procedure. Analysts are drawn to and use the ones they
are comfortable with and understand.
A financial ratio (or accounting ratio) is a relative magnitude of two selected
numerical values taken from an enterprise's financial statements.
Financial ratios quantify many aspects of a business and are an integral part of the
financial statement analysis. Financial ratios are categorized according to the
financial aspect of the business which the ratio measures. Liquidity ratios
measure the availability of cash to pay debt.Activity ratios measure how quickly a
firm converts non-cash assets to cash assets.Debt ratios measure the firm's ability
to repay long-term debt.Profitability ratios measure the firm's use of its assets
and control of its expenses to generate an acceptable rate of return.Market ratios
measure investor response to owning a company's stock and also the cost of issuing
stock. These are concerned with the return on investment for shareholders, and
with the relationship between return and the risk.
1) Liquidity Measurement Ratios
- Current Ratio
- Quick Ratio
- Cash Ratio
- Cash Conversion Cycle
2) Profitability Indicator Ratios
- Profit Margin Analysis
- Effective Tax Rate
- Return On Assets
- Return On Equity
- Return On Capital Employed
3) Debt Ratios
- Overview Of Debt
- Debt Ratio
- Debt-Equity Ratio
- Capitalization Ratio
- Interest Coverage Ratio
- Cash Flow To Debt Ratio
4) Operating Performance Ratios
- Fixed-Asset Turnover
- Sales/Revenue Per Employee
- Operating Cycle
5) Cash Flow Indicator Ratios
Page 54 of 119
- Operating Cash Flow/Sales Ratio

- Free Cash Flow/Operating Cash
Ratio
- Cash Flow Coverage Ratio
- Dividend Payout Ratio
6) Investment Valuation Ratios
- Per Share Data
Liquidity Ratios
Working Capital
Acid Test or Quick

Ratio
Current Ratio
Cash Ratio
Current Assets
- Current
Liabilities
Cash +
Marketable
Securities +
Accounts
Receivable
Current
Liabilities
Current Assets
Current
Liabilities
Cash Equivalents
+ Marketable
Securities
Current
Liabilities
Price/Book Value Ratio

Price/Cash Flow Ratio
Price/Earnings Ratio
Price/Earnings To Growth Ratio
Price/Sales Ratio
Dividend Yield
Enterprise Value Multiple
Working capital compares current assets to

current liabilities, and serves as the liquid
reserve available to satisfy contingencies
and uncertainties. A high working capital
balance is mandated if the entity is unable
to borrow on short notice. The ratio
indicates the short-term solvency of a
business and in determining if a firm can
pay its current liabilities when due.
A measurement of the liquidity position of
the business. The quick ratio compares the
cash plus cash equivalents and accounts
receivable to the current liabilities. The
primary difference between the current
ratio and the quick ratio is the quick ratio
does not include inventory and prepaid
expenses in the calculation. Consequently,
a business's quick ratio will be lower than
its current ratio. It is a stringent test of
liquidity.
Provides an indication of the liquidity of the
business by comparing the amount of
current assets to current liabilities. A
business's current assets generally consist
of cash, marketable securities, accounts
receivable,
and
inventories.
Current
liabilities include accounts payable, current
maturities of long-term debt, accrued
income taxes, and other accrued expenses
that are due within one year. In general,
businesses prefer to have at least one
dollar of current assets for every dollar of
current liabilities. However, the normal
current ratio fluctuates from industry to
industry. A current ratio significantly
higher than the industry average could
indicate the existence of redundant assets.
Conversely, a current ratio significantly
lower than the industry average could
indicate a lack of liquidity.
Indicates a conservative view of liquidity
such as when a company has pledged its
receivables and its inventory, or the analyst
suspects severe liquidity problems with
inventory and receivables.
Page 55 of 119
Operation cash
flow ratio
Profitability Ratios
Net Profit Margin
(Return on Sales)
Return on Assets
Operating Income
Margin
Return on
Investment
Return on Equity
Operation Cash
Flow
Total Debts
Net Income *
Net Sales
Net Income *
(Beginning + Ending Total
Assets) / 2
Operating Income
Net Sales
Net Income *
Long-term Liabilities +
Equity
Net Income *
Equity
Du Pont Return on
Assets
Net
Income *
Sales
x
Sales
Assets
Du Pont Return on
Equity
Net
Income *
Sales
x
Sales
Assets
x
Assets
Equity
Gross Profit Margin
A measure of net income

dollars generated by each
dollar of sales.
* Refinements to the net
income figure can make it
more accurate than this ratio
computation.
They
could
include removal of equity
earnings from investments,
"other income" and "other
expense" items as well as
minority share of earnings and
nonrecuring items.
Measures the company's
ability to utilize its assets to
create profits.
A measure of the operating
income generated by each
dollar of sales.
Measures the income earned
on the invested capital.
Measures the income earned
on the shareholder's
investment in the business.
A combination of financial
ratios in a series to evaluate
investment return. The benefit
of the method is that it
provides an understanding of
how the company generates
its return.
Gross Profit
Net Sales
Page 56 of 119
Indicates the relationship

between net sales revenue
and the cost of goods sold.
This ratio should be compared
with industry data as it may
indicate insufficient volume
and excessive purchasing or

labor costs.
Return on net
assets (RONA)
Return on capital
(ROC)
Risk adjusted
return on capital
(RAROC)
Return on capital
employed (ROCE)
Cash flow return on
investment (CFROI)
Efficiency ratio
Net gearing
Basic Earnings
Power Ratio
Net Income
Fixed Assets + Working
Capital
EBIT(1 Tax Rate)
Invested Capital
Expected Return
Economic Capital
or
Expected Return
Value at Risk
EBIT
Capital Employed
Cash Flow
Market Recapitalisation
Non-Interest expense
Revenue
Net debt
Equity
EBIT
Total Assets
Financial Leverage Ratio

Total Debts to Assets
Capitalization Ratio
Debt to Equity
Total Liabilities
Total Assets
Long-Term Debt
Long-Term Debt + Owners'
Equity
Total Debt
Total Equity
Interest Coverage
Ratio (Times Interest
Earned)
EBIT
Interest Expense
Long-term Debt to
Net Working Capital
Long-term Debt
Current Assets - Current
Liabilities
Long-term Debt to
equity
Debt service coverage
ratio
Note: this is somewhat similar

to (ROI), which calculates Net
Income per Owner's Equity
Long-term Debt/Total Assets

Net Operating Income/Total
Debt Service
Page 57 of 119
Provides information
about the company's
ability to absorb asset
reductions arising from
losses without
jeopardizing the interest of
creditors.
Indicates long-term debt
usage.
Indicates how well
creditors are protected in
case of the company's
insolvency.
Indicates a company's
capacity to meet interest
payments. Uses EBIT
(Earnings Before Interest
and Taxes)
Provides insight into the
ability to pay long term
debt from current assets
after paying current
liabilities.
Efficiency Ratios
Cash Turnover
Sales to Working
Capital (Net Working
Capital Turnover)
Net Sales
Cash
Net Sales
Average Working Capital
Total Asset Turnover
Net Sales
Average Total Assets
Fixed Asset Turnover
Net Sales
Net Fixed Assets
Days' Sales in
Receivables
Accounts Receivable
Turnover
Accounts Receivable
Turnover in Days
Days' Sales in
Inventory
Inventory Turnover
Inventory Turnover in
Days
Operating Cycle
Days' Payables
Gross Receivables
Annual Net Sales / 365
Net Sales
Average Gross Receivables
Average Gross Receivables
Annual Net Sales / 365
Ending Inventory
Cost of Goods Sold / 365
Cost of Goods Sold
Average Inventory
Average Inventory
Cost of Goods Sold / 365
Accounts Receivable
Turnover in Days
+ Inventory Turnover in Day
Ending Accounts Payable
Page 58 of 119
Measures how effective a

company is utilizing its cash.
Indicates the turnover in
working capital per year. A
low ratio indicates
inefficiency, while a high
level implies that the
company's working capital is
working too hard.
Measures the activity of the
assets and the ability of the
business to generate sales
through the use of the
assets.
Measures the capacity
utilization and the quality of
fixed assets.
Indicates the average time in
days, that receivables are
outstanding (DSO). It helps
determine if a change in
receivables is due to a
change in sales, or to
another factor such as a
change in selling terms. An
analyst might compare the
days' sales in receivables
with the company's credit
terms as an indication of
how efficiently the company
manages its receivables.
Indicates the liquidity of the
company's receivables.
company's receivables in
days.
Indicates the length of time
that it will take to use up the
inventory through sales.
inventory.
inventory in days.
Indicates the time between
the acquisition of inventory
and the realization of cash
from sales of inventory. For
most companies the
operating cycle is less than
one year, but in some
industries it is longer.
Indicates how the firm
Outstanding
Payables Turnover
Payables Turnover in
Days
Degree of Operating
Leverage (DOL)
Inventory conversion
ratio
Inventory conversion
period
Receivables
conversion period
Payables conversion
period
Cash Conversion
Cycle
Purchases / 365
Purchases
Average Accounts Payable
Average Accounts Payable
Purchases / 365
%Change in Net Operating
Income/%Change in Sales
365/Inventory Turnover
handles obligations of its

suppliers.
firm's payables.
firm's payables in days.
(Inventory/Cost of Goods
Sold) 365days
(Receivable/Net Sales) 365
days
(Accounts
Payables/Purchases) 365
days
Inventory Conversion
Period + Receivables
Conversion Period Payables Conversion Period
Additional Ratios
Altman Z-Score
The Z-score model is a quantitative model developed in 1968 by Edward Altman to
predict bankruptcy (financial distress) of a business, using a blend of the traditional
financial ratios and a statistical method known as multiple discriminant analysis.
The Z-score is known to be about 90% accurate in forecasting business failure one
year into the future and about 80% accurate in forecasting it two years into the
future.
Formula
Z 1.2 x (Working Capital / Total Assets)
= +1.4 x (Retained Earnings / Total Assets)
+0.6 x (Market Value of Equity / Book Value
+0.9 x of Debt)
99
x (Sales / Total Assets)
+3.3 (EBIT / Total Assets)
Z-score
Probability of
Failure
less than 1.8

Very High
greater than 1.81 but less
Not Sure
than 2.99
Unlikely
greater than 3.0
Bad-Debt to Accounts Receivable Ratio
Bad-debt to Accounts Receivable ratio measures expected uncollectibility on credit
sales. An increase in bad debts is a negative sign, since it indicates greater
realization risk in accounts receivable and possible future write-offs.
Formula
Bad Debts
Accounts Receivable
Bad-Debt to Sales Ratio
Bad-debt ratios measure expected uncollectibility on credit sales. An increase in
bad debts is a negative sign, since it indicates greater realization risk in accounts
receivable and possible future write-offs.
Page 59 of 119
Formula
Bad Debts
Sales
Book Value per Common Share
Book value per common share is the net assets available to common stockholders
divided by the shares outstanding, where net assets represent stockholders' equity
less preferred stock. Book value per share tells what each share is worth per the
books based on historical cost.
Formula
(Total Stockholders' Equity - Liquidation Value of Preferred Stocks - Preferred
Dividends in Arrears)
Common Shares Outstanding
Common Size Analysis
In vertical analysis of financial statements, an item is used as a base value and all
other accounts in the financial statement are compared to this base value.
On the balance sheet, total assets equal 100% and each asset is stated as a
percentage of total assets. Similarly, total liabilities and stockholder's equity are
assigned 100%, with a given liability or equity account stated as a percentage of
total liabilities and stockholder's equity.
On the income statement, 100% is assigned to net sales, with all revenue and
expense accounts then related to it.
Cost of Credit
The cost of credit is the cost of not taking credit terms extended for a business
transaction. Credit terms usually express the amount of the cash discount, the date
of its expiration, and the due date. A typical credit term is 2 / 10, net / 30. If
payment is made within 10 days, a 2 percent cash discount is allowed: otherwise,
the entire amount is due in 30 days. The cost of not taking the cash discount can be
substantial.
Formula
% Discount
360
100 - %
x Credit Period - Discount
Discount
Period
Example
On a $1,000 invoice with terms of 2 /10 net 30, the customer can either pay at the
end of the 10 day discount period or wait for the full 30 days and pay the full
amount. By waiting the full 30 days, the customer effectively borrows the
discounted amount for 20 days.
$1,000 x (1 - .02) = $980
This gives the amount paid in interest as:
$1,000 - 980 = $20
This information can be used to compute the credit cost of borrowing this money.
% Discount
360
100 - %
x
Credit Period - Discount
Discount
Period
36
= 2
x 0 = .3673
98
20
As this example illustrates, the annual percentage cost of offering a 2/10, net/30
trade discount is almost 37%.
Current-Liability Ratios
Current-liability ratios indicate the degree to which current debt payments will be
required within the year. Understanding a company's liability is critical, since if it is
unable to meet current debt, a liquidity crisis looms. The following ratios are
compared to industry norms.
Formulas
Page 60 of 119
Current to Non- =
current
Current
Liabilities
Non-current
Liabilities
Current to Total =
Current
Liabilities
Total Liabilities
Rule of 72
A rule of thumb method used to calculate the number of years it takes to double an
investment.
Formula
72
Rate of Return
Example
Paul bought securities yielding an annual return of 9.25%. This investment will
double in less than eight years because,
72
= 7.78
9.2
years
5
Market ratios
Market ratios measure investor response to owning a company's stock and also the
cost of issuing stock. These are concerned with the return on investment for
shareholders, and with the relationship between return and the value of an
investment in companys shares.
Earnings per share (EPS) Net Earnings/Number of Shares
Dividends/Earnings Or Dividends/EPs
Payout ratio
Earnings per Share/Dividend per Share
Dividend cover (the
inverse of Payout Ratio)
Market Price per Share/Diluted EPS
P/E ratio
Dividend/Current Market Price
Dividend yield
Cash flow ratio or
Market Price per Share/Present Value of Cash Flow
per Share
Price/cash flow ratio
Price to book value ratio Market Price per Share/Balance Sheet Price per
Share
(P/B or PBV)
Market Price per Share/Gross Sales
Price/sales ratio
Price per Earnings/Annual EPS Growth
PEG ratio
Enterprise Value/EBITDA
EV/EBITDA
Enterprise Value/Nwet Sales
EV/Sales
Capital Budgeting Ratios
In addition to assisting management and owners in diagnosing the financial health
of their company, ratios can also help managers make decisions about investments
or projects that the company is considering to take, such as acquisitions, or
expansion.
Many formal methods are used in capital budgeting, including the techniques such
as
Net present value
Profitability index
Internal rate of return
Modified Internal Rate of Return
Equivalent annuity
Page 61 of 119
Key banking ratios

Net interest margins (NIMs): The difference between interest income and
interest expense is known as net interest income. It is the income, which the bank
earns from its core business of lending. As such, NIM is the net margin earned by
the bank on its average earning assets. These assets comprises of advances,
investments, balance with the RBI and money at call.
Cost to income ratio: This ratio is calculated by dividing the operating expenses
by the total income generated i.e.net interest income plus the other income. The
lower the ratio, the better it is for a bank as it would help prop up its profit and
return ratios.
Other income to total income ratio: Other income largely constitutes of fee
income such as commission, exchanges and brokerage fees. Banks in developed
countries derive nearly 50% of revenues from this stream. For Indian banks, such
fees contribute only about 15% -25% of the overall revenues.
Key Financial Indicators - Profitability Ratios
S.No.
Particulars (In Percentage)
Interest Income / Average Working Funds (AWF)
Interest expenses / AWF
Net Interest Margin (NIM)
Interest spread / AWF
Non-Interest Income / AWF
Operating expenses / AWF
Cost Income Ratio
Gross (Operating) profit / AWF
Net profit / AWF
10
Return on Net Worth
11
Return on Assets
12
Return on Average Assets
13
Yield on Advances
14
Cost of Deposits
15
Dividend payout Ratio (including Corporate Dividend Tax)
16
Credit -- Deposit Ratio
17
Credit + Non SLR Investment (excluding Investments in Subsidiaries) -- Deposit

Ratio
18
Capital Adequacy Ratio (BASEL I)

Tier - I
Tier - II
19
Capital Adequacy Ratio (BASEL II)

Tier - I
Tier - II
Key Financial Indicators - Efficiency Ratios

S.No..
Particulars (In Percentage)
Employees (number)
Branches (number)
Business per employee (Rs. in crore)
Average Business per employee (Rs in crore)
Gross Profit per employee (Rs. in lakhs)
Net Profit per employee (Rs. in lakhs)
Business per branch (Rs. in crore)
Gross Profit per branch (Rs. in crore)
Net Profit per branch (Rs. in crore)
10
Earnings per share (Rupees)
11
Book Value per share (Rupees)
Tier 1 capital ratio = Tier 1 capital / Risk-adjusted assets >=6%

Total capital (Tier 1 and Tier 2) ratio = Total capital (Tier 1 and Tier 2) / Riskadjusted assets >=10%
Leverage ratio = Tier 1 capital / Average total consolidated assets >=5%
Common stockholders equity ratio = Common stockholders equity / Balance
sheet assets
Economy Glossary
Gross domestic product (GDP): The value of the total final output produced
inside a country during a given year.It equals GNP (gross national product) less
overseas remittances.
Real GDP:GDP(gross domestic product) adjusted for inflation. Real GDP provides
the value of GDP in constant dollars, which is used as an indicator of the volume of
the nation's output.
Gross national product (GNP): The value of all final goods and services produced
during a year by the factors of production in a country. It is the sum of expenditures
by consumers and governments, gross investment spending, and total merchandise
exports less imports. It is a measure of the gross value added by all of the economic
agents in the economy. A related concept is net national product, which subtracts
out depreciation of investment and thus is equal to net value added of all
consumption, government spending, net investment, and exports minus imports.
Gross national income (GNI): GNI is equal to gross national product, but
measures the income produced by the gross national product rather than the value
of the product itself. Thus GNI is equal to wages and salaries, rents, and profits
from all economic entities in an economy.
Dumping: When exports are sold at prices below marginal cost often as a result
of government subsidy.
Balance of Payment: A record of the countrys transactions with the rest of the
world over a given period.
Balance of Trade: A record of a country's exports and imports of goods and
services
Broad Money: Items in narrow definitions plus other items that can be readily
converted into cash.
Narrow Money: Items of money that can be spent directly (cash and money in
cheque-book/debit-card accounts).
Exchange rate: The rate at which one national currency exchanges for another.
The rate is expressed as the amount of one currency that is necessary to purchase
one unit of another currency (e.g. $1.60 = 1).
Floating exchange rate system: The flexible exchange rate system in which the
exchange rate is determined by the market forces of supply and demand without
intervention.
Depreciation: A drop in the free-market exchange rate of the domestic currency
with foreign currencies.
Appreciation: A rise in the free-market exchange rate of the domestic currency
with foreign currencies.
Inflation: A general rise in the average level of all prices.
Demand-pull inflation: Inflation caused by persistent rises in aggregate demand.
Internal rate of return (IRR): The rate of return of an investment: the discount
rate that makes the net present value of an investment equal to zero.
Equi-marginal principle: Consumers will maximize total utility from their incomes
by consuming that combination of goods where MUa/Pa = MUb/Pb = MUc/Pc =
MUn/Pn.
Special Drawing Rights (SDRs): Additional liquidity created by the IMF. SDRs
give countries the right to borrow a certain amount of additional funds from the
IMF, with no requirement for extra deposits (quotas).
Value added tax (VAT) A tax on goods and services, charged at each stage of
production as a percentage of the value added at that stage.
Economic growth: An increase in the nation's capacity to produce goods and

services.
Economic Development: Economic development is the increase in the standard
of living in a nation's population with sustained growth from a simple, low-income
economy to a modern, high-income economy.[
Economies of scale: If all the inputs in a production process are increased and the
output increases by proportionately more than the inputs were increased,
economies of scale are being realized. There may also be diseconomies of scale
which occur when an increase in all inputs brings about a less than proportionate
increase in output.
High-powered money: The monetary base, or the total of currency in circulation
and commercial bank deposits with the central bank.
Consumer price index (CPI): A price index that measures the cost of a fixed
basket of consumer goods with weights based on consumption shares of urban
consumers.
Budget: A government budget is a legal document that is often passed by the
legislature, and approved by the chief executive-or president. The two basic
elements of any budget are the revenues and expenses. In the case of the
government, revenues are derived primarily from taxes. Government expenses
include spending on current goods and services, which economists call
government consumption; government investment expenditures such as
infrastructure investment or research expenditure; and transfer payments like
unemployment or retirement benefits.
Sustainable Development: Sustainable development (SD) is a pattern of
resource use, that aims to meet human needs while preserving the environment so
that these needs can be met not only in the present, but also for generations to
come (sometimes taught as ELF-Environment, Local people, Future). The most
often-quoted definition of sustainable development as development that "meets the
needs of the present without compromising the ability of future generations to meet
their own needs."
Net Present Value: the net present value (NPV) or net present worth (NPW) [1] of
a time series of cash flows, both incoming and outgoing, is defined as the sum of
the present values (PVs) of the individual cash flows. In the case when all future
cash flows are incoming (such as coupons and principal of a bond) and the only
outflow of cash is the purchase price, the NPV is simply the PV of future cash flows
minus the purchase price (which is its own PV).
Backward Linkage: Channels through which information, material, and money
flow between a company and its suppliers and create a network of economic
interdependence.
Forward Linkage: Distribution chain connecting a producer or supplier with the
customers.
Absolute advantage: A country has an absolute advantage over another in the
production of a good if it can produce it with less resource than the other country
can.
Aggregate demand: Total spending on goods and services made in the economy. It
consists of four elements, consumer spending (C), investment (I), government
spending (G) and the expenditure on exports (X), less any expenditure on imports of
goods and services (M): AD = C + I + G + X M.
Aggregate supply: The total amount of output in the economy.
Assets: Possessions or claims held on others
Barter economy: An economy where people exchange goods and services directly
with one another without any payment of money. Workers would be paid with
bundles of goods.
Budget: A statement outlining the spending plans of a government or an individual
usually for the coming year.
Budget deficit: The excess of central governments spending over its tax receipts.
Budget line: A graph showing all the possible combinations of two goods that can
be purchased at given prices and for a given budget.
Budget surplus: The excess of central governments tax receipts over its
spending.
Business cycle or Trade cycle: The periodic fluctuations of national output round
its long-term trend.
Capital: All inputs into production that have themselves been produced: e.g.
factories, machines and tools
Consumer surplus: The excess of what a person would have been prepared to pay
for a good (i.e. the utility) over what that person actually pays.
Producer surplus: The difference between revenue received and the variable costs
of production for each unit of a commodity sold. Represents a contribution to fixed
costs and producer profits.
Crawling peg: A system whereby the government allows a gradual adjustment of
the exchange rate.
Crowding out: Where increased public expenditure diverts money or resources
away from the private sector.
Deadweight loss of an indirect tax: The loss of consumer plus producer surplus
from the imposition of an indirect tax.
Dualism: The division of an economy into a modern (usually urban) sector and a
poor traditional (usually rural) sector.
ECU (European Currency Unit): The predecessor to the euro: a weighted
average of EU currencies. It was used as a reserve currency and for the operation
of the exchange rate mechanism (ERM).
Elasticity: A measure of the responsiveness of a variable (e.g. quantity demanded
or quantity supplied) to a change in one of its determinants (e.g. price or income).
Endogenous variable: A variable whose value is determined by the model of which
it is part.
Exogenous variable: A variable whose value is determined independently of the
model of which it is part.
Engel curve: A line showing how much of a good people will demand at different
levels of income.
Forward exchange market: Where contracts are made today for the price at
which currency will be exchanged at some specified future date.
Game theory (or the theory of games): The study of alternative strategies
oligopolists may choose to adopt, depending on their assumptions about their rivals
behaviour.
Giffen good: An inferior good whose demand increases as its price increases as a
result of a positive income effect larger than the normal negative substitution effect.
Gini coefficient: The area between the Lorenz curve and the 45 line divided by
the total area under the 45 line.
Inferior good: A good whose demand decreases as peoples incomes rise.
Human Development Index (HDI): A composite index made up of three

elements: an index for life expectancy, an index for school enrolment and adult
literacy, and an index for GDP per capita (in PPP$).
Incidence of tax: The distribution of the burden of tax between sellers and buyers.
Indirect taxes: Taxes on expenditure (e.g. VAT). Paid to the tax authorities, not by
the consumer, but indirectly by the suppliers of the goods or services.
Inflationary gap: The excess of national expenditure over income (and injections
over withdrawals) at the full-employment level of national income.
Injections (J): Expenditure on the production of domestic firms coming from
outside the inner flow of the circular flow of income. Injections equal investment (I)
plus government expenditure (G) plus expenditure on exports (X).
Inputoutput analysis: This involves dividing the economy into sectors where
each sector is a user of inputs from and a supplier of outputs to other sectors. The
technique examines how these inputs and outputs can be matched to the total
resources available in the economy.
Law of demand: The quantity of a good demanded per period of time will fall as
price rises and will rise as price falls, other things being equal (ceteris paribus).
Law of diminishing (marginal) returns: When one or more factors are held
fixed, there will come a point beyond which the extra output from additional units of
the variable factor will diminish.
Liquidity ratio: The proportion of a banks total assets held in liquid form.
Liquidity trap: The absorption of any additional money supply into idle balances at
very low rates of interest, leaving aggregate demand unchanged.
Lorenz curve: A curve showing the proportion of national income earned by any
given percentage of the population (measured from the poorest upwards).
Marginal cost (of production): The cost of producing one more unit of output:
.
Marginal propensity to consume: The proportion of a rise in national income
that goes on consumption:
.
Microeconomics: The branch of economics that studies individual units: e.g.
households, firms and industries. It studies the interrelationships between these
units in determining the pattern of production and distribution of goods and
services.
Macroeconomics: The branch of economics that studies economic aggregates
(grand totals): e.g. the overall level of prices, output and employment in the
economy.
Mixed economy: An economy where economic decisions are made partly by the
government and partly through the market.
Econometrics: The science of applying statistical techniques to economic data in
order to identify and test economic relationships.
Money multiplier: The number of times greater the expansion of money supply is
than the expansion of the monetary base that caused it:
.
Market: A place or institution where buyers and sellers come together and
exchange factor inputs or final goods and services. A market is one particular type
of economic rationing system.
Perfect competition: A market structure where there are many firms; where there
is freedom of entry into the industry; where all firms produce an identical product;
and where all firms are price takers.
Monopoly: A market structures where there is only one firm in the industry.
Monopolistic Competition: A market structure similar to perfect competition in
that there are a large number of firms competing in a given industry. However, each
firm is selling a differentiated product and may exploit brand preferences such that
is may act as a monopolist with respect to its own customers.
Monophony: A market with a single buyer or employer.
Oligopoly: A market structures where there are few enough firms to enable barriers
to be erected against the entry of new firms.
Oligopoly: A market with just a few buyers or employers.
Open economy: One that trades with and has financial dealings with other
countries.
Open-market operations: The sale (or purchase) by the authorities of government
securities in the open market in order to reduce (or increase) money supply or
influence interest rates.
Opportunity cost: Cost measured in terms of the next best alternative forgone.
Pareto optimality: Where all possible Pareto improvements have been made: where,
therefore, it is impossible to make anyone better off without making someone else
worse off.
Free-market economy: An economy where all economic decisions are taken by
individual households and firms and with no government intervention.
Imperfect competition: The collective name for monopolistic competition and
oligopoly.
Phillips curve: A curve showing the relationship between (price) inflation and
unemployment. The original Phillips curve plotted wage inflation against
unemployment for the years 18611957.
Quantity theory of money: The price level (P) is directly related to the quantity of
money in the economy (M).
Rate of economic growth: The percentage increase in output over a 12-month
period.
Rate of Inflation: The percentage increase in the level of prices over a 12-month
period.
Seasonal unemployment: Unemployment associated with industries or regions
where the demand for labour is lower at certain times of the year.
Stagflation: A term used in the 1970s to refer to the combination of stagnation
(low growth and high unemployment) and high inflation.
Variable factor: An input that can be increased in supply within a given time
period.
Velocity of circulation: The number of times annually that money on average is
spent on goods and services that make up GDP.
Purchasing power parity: A concept in which the dollar equivalent will purchase
the same bundle of goods in all economies. In calculating purchasing power parity,
adjustments are made to exchange rates to raise or lower the relative value of
currencies to equilibrate purchasing power. The basis for the calculation is the
dollar. The end result is to raise currency values of low-income countries while
maintaining currency values of high-income countries.
Monetary policy: The set of policies determined by the Board of Governors of the
Federal Reserve System involving influence over the money supply, short-term
interest rates, and credit market conditions. During periods of recession, lower
interest rates and higher money growth can help stimulate the economy. During
periods of declining unemployment and increasing inflation, monetary restraint by
raising interest rates and slowing the growth of money is usually indicated.
Fiscal policy: The government's program determining the amount of taxes and
government expenditures to be made in a year. When an economy is moving into
recession, an expansionary economic policy would dictate that the government
should provide an economic stimulus by increasing expenditures or reducing taxes.
This is referred to as a simulative fiscal policy. During periods with low
unemployment and rising inflation, constraining fiscal policy is often suggested,
involving increased taxes or reduced government expenditures.
Classical economics: School of thought developed by Adam Smith. This theory holds that
there is no need for government regulation of the economy since the invisible hand of
the market will lead to the best possible results.
Neo-classical economics: A theory that calls for the deregulation of the economy
in order to allow markets to set prices for all commodities, including labor.
Keynesian macroeconomics: The theory that shows how a market-based
capitalist economy may reach equilibrium with large scale unemployment and how
government spending may be used to raise it out of this to a new equilibrium at the
full-employment level of output.
International Monetary Fund IMF: An international organization with 146
members, including the United States. The main functions of the IMF are to lend
funds to member nations to finance temporary balance of payments problems, to
facilitate the expansion and balanced growth of international trade, and to promote
international monetary cooperation among nations. The IMF also creates special
drawing rights (SDR's), which provide member nations with a source of additional
reserves. Member nations are required to subscribe to a Fund quota, paid mainly in
their own currency. The IMF grew out of the Bretton Woods Conference of 1944.
Measure of the U.S. money stock that consists of currency held by the public,
travelers checks, demand deposits, and other checkable deposits including NOW
(negotiable order of withdrawal) and ATS (automatic transfer service) account
balances and share draft account balances at credit unions.
Substitute goods: Goods which may be used in place of other goods.
Complementary Goods:A pair of goods where the quantity demanded of one

increases when the price of a related good decreases.
Diminishing Marginal Utility (DMU): An economic concept that refers to the

notion that additional units consumed of a particular commodity provide less and
less additional satisfaction relative to previous units consumed.
Marginal Rate of Substitution:The rate by which a consumer may substitute a

quantity of one good for another holding his/her level of utility constant.
Production Possibilities Frontier:A relationship between two types of output

defining the tradeoff that exists in allocating resources from production of one good
to the other
Pareto optimality: The condition which exists when it is impossible to make any
individual better off without making any other individual worse off.
Says law: Supply creates its own demand. In other words, the production of goods
will generate sufficient demand to ensure that they are sold.
Game Theory:A modeling technique that accounts for strategic behavior of

economic agents reacting to the actions of others
Malthas Theory of Population: Malthusianism refers primarily to ideas derived
from the political/economic thought of Reverend Thomas Robert Malthus, as laid
out initially in his 1798 writings, An Essay on the Principle of Population , which
describes how unchecked population growth is exponential (1248) while
the growth of the food supply was expected to be arithmetical (1234).
Rosto Theory:
Purchasing power parity :The Economist defines purchasing-power parity theory

as follows: Purchasing-power parity theory. A theory which states that the exchange
rate between one currency and another is in equilibrium when their domestic
purchasing powers at that rate of exchange are equivalent.
The theory that, in the long run, identical products and services in different
countries should cost the same in different countries. This is based on the belief
that exchange rates will adjust to eliminate the arbitrage opportunity of buying a
product or service in one country and selling it in another. For example, consider a
laptop computer that costs 1,500 Euros in Germany and an exchange rate of 2
Euros to 1 U.S. Dollar. If the same laptop cost 1,000 dollars in the United States,
U.S. consumers would buy the laptop in Germany. If done on a large scale, the influx
of U.S. dollars would drive up the price of the Euro, until it equalized at 1.5 Euros to
1 U.S. Dollar - the same ratio of the price of the laptop in Germany to the price of
the laptop in the U.S. The theory only applies to tradable goods, not to immobile
goods or local services. The theory also discounts several real world factors, such as
transportation costs, tarrifs and transaction costs. It also assumes there are
competitive markets for the goods and services in both countries.
Govt. Borrowings & its implication:In economics, crowding out theoretically
occurs when the government expands its borrowing to finance increased
expenditure, or cuts taxes (i.e. is engaged in deficit spending), crowding out private
sector investment by way of higher interest rates. To the extent that there is
controversy in modern Macroeconomics on the subject, it is because of
disagreements about how financial markets would react to more government
borrowing. If increased borrowing leads to higher interest rates by creating a
greater demand for money and loanable funds and hence a higher "price" (ceteris
paribus), the private sector, which is sensitive to interest rates will likely reduce
investment due to a lower rate of return. More importantly, a fall in fixed
investment by business can hurt long-term economic growth of the supply side, i.e.,
the growth of potential output. Crowding out can, in principle, be avoided if the
deficit is financed by simply printing money, but this carries concerns of
accelerating inflation. Crowding out of another sort may occur due to the
prevalence of floating exchange rates, Government borrowing leads to higher
interest rates, which attract inflows of money on the capital account from foreign
financial markets into the domestic currency (i.e., into assets denominated in that
currency). Under floating exchange rates, that leads to appreciation of the
exchange rate and thus the "crowding out" of domestic exports (which become
more expensive to those using foreign currency).
Narrow money , broad money
M1 : Measures of money supply of a country, including all coins and notes plus
personal money in current accounts.
M2 : Measures of money supply, including all coins and notes plus personal money
in current and in all deposit accounts.
M3 : Broadest measure of money supply, including coins and notes, personal money
in current and deposit accounts, government deposits and deposits in currencies
other than local/national currency.
United States they are defined by the Federal Reserve
M0: The total of all physical currency, plus accounts at the central bank that can be
exchanged for physical currency.
M1: M0 - those portions of M0 held as reserves or vault cash + the amount in
demand accounts ("checking" or "current" accounts).
M2: M1 + most savings accounts, money market accounts, and small denomination
time deposits (certificates of deposit of under $100,000).
M3: M2 + all other CDs, deposits of eurodollars and repurchase agreements.
There are just two official UK measures. M0 is referred to as the "wide monetary
base" or "narrow money" and M4 is referred to as "broad money" or simply "the
money supply".
M0: Cash outside Bank of England + Banks' operational deposits with Bank of
England.
M4: Cash outside banks (ie. in circulation with the public and non-bank firms) +
private-sector retail bank and building society deposits + Private-sector wholesale
bank and building society deposits and Certificate of Deposit.
PSI: Policy Support Instrument: Countries those are not in need of loan from IMF
can enter in this agreement. Through this IMF can control the Economic Policy of
that country. Only 4 African countries signed this agreement [Nigeria, Uganda,
Cape Verde and Tanzania]
Poverty Reduction Strategy Papers (PRSP): Poverty Reduction Strategy Papers
(PRSP) are prepared by the member countries through a participatory process
involving domestic stakeholders as well as external development partners, including
the World Bank and International Monetary Fund. Updated every three years with
annual progress reports, PRSPs describe the country's macroeconomic, structural
and social policies and programs over a three year or longer horizon to promote
broad-based growth and reduce poverty, as well as associated external financing
needs and major sources of financing. Interim PRSPs (I-PRSPs) summarize the
current knowledge and analysis of a country's poverty situation, describe the
existing poverty reduction strategy, and lay out the process for producing a fully
developed PRSP in a participatory fashion. The country documents, along with the
accompanying IMF/World Bank Joint Staff Assessments (JSAs), are being made
available on the World Bank and IMF websites by agreement with the member
country as a service to users of the World Bank and IMF websites.
Least Developed Countries:(LDCs or Fourth World countries) are countries

which according to the United Nations exhibit the lowest indicators of
socioeconomicdevelopment, with the lowest Human Development Index
ratings of all countries in the world. A country is classified as a Least Developed
Country if it meets three criteria based on:
low-income (three-year average GNI per capita of less than US $905, which
human resource weakness (based on indicators of nutrition, health,

education and adult literacy) and
economic vulnerability (based on instability of agricultural production,
must exceed $1,086 to leave the list)
instability of exports of goods and services, economic importance of nontraditional activities, merchandise export concentration, handicap of
economic smallness, and the percentage of population displaced by natural

disasters)
The classification currently (as of 1 January 2011) applies to 48 countries.
Developing country : Developing countries are in general countries which have

not achieved a significant degree of industrialization relative to their populations,
and which have, in most cases a medium to low standard of living. There is a
strong correlation between low income and high population growth. Bangladesh
is under this category.
Less Developed Countries: "LDC"s are those countries that are not as rich as the
industrialised countries of western Europe and North America.
These are often countries which have a lot of natural resources but not the industry
to use them so the resources are sold to the countries which can use them.
Developed country : The term developed country is used to describe countries
that have a high level of development according to some criteria. Which criteria,
and which countries are classified as being developed, is a contentious issue and is
surrounded by fierce debate. Economic criteria have tended to dominate
discussions. One such criterion is income per capita; countries with high gross
domestic product (GDP) per capita would thus be described as developed countries.
Another economic criterion is industrialization; countries in which the tertiary and
quaternary sectors of industry dominate would thus be described as developed. More
recently another measure, the Human Development Index (HDI), which combines an
economic measure, national income, with other measures, indices for life
expectancy and education has become prominent. This criterion would define
developed countries as those with a very high (HDI) rating. However, many
anomalies exist when determining "developed" status by whichever measure is
used. Terms similar to developed country include advanced country, industrialized
country, more developed country (MDC), more economically developed country
(MEDC), Global North country, first world country, and post-industrial country.
First World: the United States and its allies.

Second World: the Soviet Union, China and their allies.
Third World: neutral and non-aligned countries.
Fourth World refers to-1. sub-populations socially excluded from global society;
2. nomadic, pastoral, and hunter-gatherer peoples living beyond the modern
industrial norm.
International Institutions
International Monetary Fund (IMF)

Chief:John Lipsky (acting)Nationality: USA
Member Countries:187 countries
HQ:WashingtonDC,
Date of Establishment: July 1944
Functions:
i.
The IMF works to promote global growth and economic stabilityand
thereby prevent economic crisisby encouraging countries to adopt
sound economic policies. Surveillance is the regular dialogue and policy
advice that the IMF offers to each of its members.
ii.
Financial assistance is available to give member countries the breathing
room they need to correct balance of payments problems.
iii.
The IMF is also actively working to reduce povertyin countries around
the globe, independently and in collaboration with the World Bank and
other organizations. The IMF provides financial support through its
concessional lending facilitythe Poverty Reduction and Growth Facility
(PRGF) and the Exogenous Shocks Facility (ESF)and through debt relief
under the Heavily Indebted Poor Countries (HIPC) Initiative and the
Multilateral Debt Relief Initiative (MDRI).In most low-income countries,
this support is underpinned by Poverty Reduction Strategy Papers (PRSP).
iv.
Technical assistance and training are offeredmostly free of chargeto
help member countries strengthen their capacity to design and implement
effective policies.
Dominique Strauss-Kahn, Designation: Managing Director, Nationality: French
Dismissed
World Bank and World Bank Group
Chief: Robert B. Zoellick, Designation: President
Member Countries:187 countries
HQ:Washington, DC,
Date of Establishment:July 1, 1944
Composition of World Bank: We are made up of two unique development
institutions owned by 185 member countriesthe International Bank for
Reconstruction and Development (IBRD) and the International Development
Association (IDA). The term "World Bank" refers specifically to two of the five,
IBRD and IDA.
Composition of World Bank Group: The term "World Bank Group" encompasses
all five institutions as described below.
Functions:
The International Bank for Reconstruction and Development (IBRD)
Established 1945
Members of the IBRD are 186 of the UN members and Kosovo. The latest
member is Tuvalu, which joined in 2010.
IBRD aims to reduce poverty in middle-income and creditworthy poorer countries
by promoting sustainable development through loans, guarantees, and (nonlending) analytical and advisory services. The income that IBRD has generated over
the years has allowed it to fund several developmental activities and to ensure its
financial strength, which enables it to borrow in capital markets at low cost and
offer clients good borrowing terms. IBRDs 24-member Board is made up of 5
appointed and 19 elected Executive Directors, who represent its 184 member
countries.
The International Development Association (IDA)
Established 1960
Members of the IDA are 169 of the UN members and Kosovo.
Contributions to IDA enable the World Bank to provide approximately $6 billion to
$9 billion a year in highly concessional financing to the worlds 81 poorest countries
(home to 2.5 billion people). IDAs interest-free credits and grants are vital because
these countries have little or no capacity to borrow on market terms. In most of
these countries, the great majority of people live on less than $2 a day. IDAs
resources help support country-led poverty reduction strategies in key policy areas,
including raising productivity, providing accountable governance, improving the
private investment climate, and improving access to education and health care for
poor people.
The International Finance Corporation (IFC)
Established 1956
Members of the IFC are 181 of the UN members and Kosovo
IFC promotes economic development through the private sector. Working with
business partners, it invests in sustainable private enterprises in developing
countries without accepting government guarantees. It provides equity, long-term
loans, structured finance and risk management products, and advisory services to
its clients. IFC seeks to reach businesses in regions and countries that have limited
access to capital. It provides finance in markets deemed too risky by commercial
investors in the absence of IFC participation and adds value to the projects it
finances through its corporate governance, environmental, and social expertise.
The Multilateral Investment Guarantee Agency (MIGA)
Established 1988
Members of the MIGA include 174 members of the United Nations and the
Republic of Kosovo.
MIGA helps promote foreign direct investment in developing countries by providing
guarantees to investors against noncommercial risks, such as expropriation,
currency inconvertibility and transfer restrictions, war and civil disturbance, and
breach of contract. MIGAs capacity to serve as an objective intermediary and to
influence the resolution of potential disputes enhances investors confidence that
they will be protected against these risks. In addition, MIGA provides technical
assistance and advisory services to help countries attract and retain foreign
investment and to disseminate information on investment opportunities to the
international business community.
The International Centre for Settlement of Investment Disputes (ICSID)
Established 1966
Members of the ICSID are 143 of the UN members and Kosovo.Signed, but not
yet ratified are: Canada, Belize, Dominican Republic, Guinea-Bissau, Sao Tome
and Principe, Ethiopia, Kyrgyzstan, Namibia, Russia, Moldova, Thailand
Total cases registered: 348
Total cases solved: 221
Total pending cases: 127
ICSID helps encourage foreign investment by providing international facilities for
conciliation and arbitration of investment disputes, thereby helping foster an
atmosphere of mutual confidence between states and foreign investors. Many
international agreements concerning investment refer to ICSIDs arbitration
facilities. ICSID also issues publications on dispute settlement and foreign

investment law.
Difference between IBRD & IDA:
The IBRD focuses on middle income and creditworthy poor countries, while
IDA focuses on the poorest countries in the world
What is the difference between the World Bank and a Commercial Bank?
While it lends and even manages funds much like a regular bank, the World
Bank is different in many important ways. It is owned by 184 countries. The
financial support and advice the World Bank provides its member countries is
designed to help them fight poverty. And unlike commercial banks, the World
Bank often lends at little or no interest to countries that are unable to raise
money for development anywhere else.Countries that borrow from the World
Bank also have a much longer period to repay their loans than commercial
banks allow. In some cases, they dont have to start repaying for ten
years.Basically, the World Bank borrows the money it lends. It has good
credit because if has large, well-manages financial reserves. This means it
can borrow money at low interest rates from capital markets all over the
world and channel it to developing countries, often at much lower rates of
interest than what markets would charge these countries.
What if the difference between the World Bank and the IMF?
People sometimes confuse the World Bank with the International Monetary
Fund (IMF), which was also set up at the Bretton Woods conference in 1944.
Although the IMFs functions complement those of the World Bank, it is a
totally separate organization. While the World Bank provides support to
developing countries, the IMF aims to stabilize the international monetary
system and monitors the worlds currencies.
About the Millennium Developments Goals (MDGs)

The MDG goals and targets are based on the UN Millennium Declaration, and
the UN General Assembly has approved them as part of the Secretary General's
road map towards implementing the Declaration. For each MDG, one or more
targets have been set, using 1990 as a benchmark and 2015 as the target date.
Since the launch of the Millennium Development Goals (MDGs) at the
Millennium Summit in New York in September 2000, the MDGs have become the
most widely-accepted yardstick of development efforts by governments, donors
and NGOs.
Goal 1: Eradicate extreme poverty and hunger
Goal 2: Achieve universal primary education
Goal 3: Promote gender equality and empower women
Goal 4: Reduce child mortality
Goal 5: Improve maternal health
Goal 6: Combat HIV/AIDS, malaria and other diseases
Goal 7: Ensure environmental sustainability
Goal 8: Develop a Global Partnership for Development
ACU
Asian Clearing Union (ACU) is the simplest form of payment arrangements whereby
the members settle payments for intra-regional transactions among the
participating central banks on a multilateral basis.
Chairman: Bhutan
HQ ( Secretariat Office): Tehran, Islamic Republic of Iran
Date of Establishment: December 1974

OBJECTIVES
a) To provide a facility to settle on a multilateral basis, payments for current
international transactions among the territories of participants;
b) To promote the use of participants currencies in current transactions between
their respective territories and thereby effect economies in the use of the
participant's exchange reserves;
c) To promote monetary co-operation among the participants and closer relations
among the banking systems in their territories and thereby contribute to the
expansion of trade and economic activity among the countries of the ESCAP region;
and
d) To provide for currency SWAP arrangement among the participants so as to make
Asian Monetary Unit available to them temporarily.
Members: 1) Bangladesh Bank 2) Royal Monetary Authority of Bhutan 3) Reserve
Bank of India 4) Central Bank of the Islamic Republic of Iran 5) Central Bank of
Myanmar 6) Nepal Rastra Bank 7) State Bank of Pakistan8) Central Bank of Sri
Lanka 9) Maldives Monetary Authority
ACU SWAP FACILITY: The main objective of the SWAP arrangement is to extend
short term foreign exchange support by providing participants access to the
international reserves of other participants in times of temporary liquidity
problems.
The potential benefits of the SWAP facility are:
a) Easy access by participants to international reserves of other participants at a
time when foreign exchange support is needed ;
b) Availability of the facility on a multilateral basis rather than on a bilateral basis;
and
c) The opportunity for further monetary cooperation among the participant's central
banks.
World Trade Organization (WTO)
Chief: Pascal Lamy (Director-General)
HQ: Geneva,Switzerland
Membership: 153 member states
Establishment: 1January1995 Created by: Uruguay Round negotiations (1986-94)
Functions:
1) Administering WTO trade agreements
2) Forum for trade negotiations
3) Handling trade disputes
4) Monitoring national trade policies
5) Technical assistance and training for developing countries
6) Cooperation with other international organizations
Asian Development Bank (ADB)
Chief:Haruhiko Kuroda, President and Chairperson, Board of Directors Asian
Development Bank, Nationality: Japan
HQ: MandaluyongCity, Metro Manila, Philippines
Membership: 67 members, 48 from the region and 19 from other parts of the
globe.
Establishment: 1966
Function: The Asian Development Bank

extends loans and equity investments to its developing member countries
(DMCs) for their economic and social development
provides technical assistance for the planning and execution of
development projects and programs and for advisory services
promotes and facilitates investment of public and private capital for
development, and responds to requests for assistance in coordinating
development policies and plans of its developing member countries
Motto: Fighting poverty in Asia and the Pacific
ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN)
Chief:H.E. SurinPitsuwan, ASEAN SECRETARY GENERAL, Nationality: Thailand
HQ: Jakarta, Indonesia
Established:8 August 1967
Member Countries: 1) Brunei Darussalam 2) Cambodia 3) Indonesia 4) LAOS 5)
Malaysia 6) Myanmar 7) Philippines 8) Singapore 9) Thailand 10) Vietnam
Function:
(1) to accelerate economic growth, social progress and cultural development in the
region and
(2) to promote regional peace and stability through abiding respect for justice and
the rule of law in the relationship among countries in the region and adherence to
the principles of the United Nations Charter.
The European Union (EU)
The European Union (EU) is a political and economic community of states with
supranational and intergovernmental features. The twenty-seven member states are
primarily located in Europe. It traces its origins to the European Economic
Community (EEC) formed in 1957 by the Treaty of Rome between six European
countries. Since then the EU has grown in size through the accession of new
member states and has increased its powers by the addition of new policy areas to
its remit. In 1993, the Maastricht Treaty established the current legal framework.
The EU creates a single market by a system of laws which apply in all member
states, guaranteeing the freedom of movement of people, goods, services and
capital. It maintains a common trade policy, agricultural and fisheries policies, and
a regional development policy.In 1999 the EU introduced a common currency, the
euro, which has been adopted by thirteen member states. It has also developed a
role in foreign policy, and in justice and home affairs. Passport control and customs
checks between many member states were abolished under the Schengen
Agreement.
EU President:
- European CouncilHerman Van RompuyNationality: Belgium
- European CommissionJos Manuel BarrosoNationality: Portugal
HQ: Brussels, Belgium
Member Countries: The European Union currently has 27 member states:
Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia,
Slovenia, Spain, Sweden, and the United Kingdom.
Further Enlargement: There are currently three official candidate countries,
Croatia, the Republic of Macedonia (FYROM) and Turkey. In addition the
western Balkan countries of Albania, Bosnia and Herzegovina, Montenegro and
Serbia are officially recognised as potential candidates
Mission:
Europes mission in the 21st century is to:
provide peace, prosperity and stability for its peoples;

overcome the divisions on the continent;
ensure that its people can live in safety;
promote balanced economic and social development;
meet the challenges of globalisation and preserve the diversity of the peoples
of Europe;
uphold the values that Europeans share, such as sustainable development
and a sound environment, respect for human rights and the social market
economy
G-8 Countries
Brief History: The concept of a forum for the world's major industrialised
democracies emerged following the 1973 oil crisis and subsequent global
recession. In 1974, the United States created the Library Group, an informal
gathering of senior financial officials from the United States, the United Kingdom,
West Germany, Japan and France, In 1975, French President Valry Giscard
d'Estaing invited the heads of government from West Germany, Italy, Japan, the
United Kingdom and the United States to a summit in Rambouillet. The six leaders
agreed to an annual meeting organised under a rotating presidency, forming the
Group of Six (G6). The following year, Canada joined the group at the behest of
U.S. PresidentGerald Ford, and the group became known as the Group of Seven
(G7). The European Union is represented by the President of the European
Commission and the leader of the country that holds the Presidency of the
Council of the European Union and has attended all meetings since it was first
invited by the United Kingdom in 1977.[3]
The Cold War ended with the dissolution of the Soviet Union in 1991, and Russia
became the successor state. Beginning with the 1994 Naples summit, Russian
officials held a separate meeting with leaders of the G7 after the main summit. This
group became known as the Political 8 (P8), or colloquially as the "G7 plus 1". At
the initiative of United States President Bill Clinton, Russia formally joined the
group in 1997, resulting in the Group of Eight (G8).
Members: Canada, France, Germany, Italy, Japan, Russia, UK, USA
Function: The G7/8 Summit has consistently dealt with macroeconomic
management, international trade, and relations with developing countries.
Questions of East-West economic relations, energy, and terrorism have also been of
recurrent concern. From this initial foundation the summit agenda has broadened
considerably to include microeconomic issues such as employment and the
information highway, transnational issues such as the environment, crime and
drugs, and a host of political-security issues ranging from human rights through
regional security to arms control.
G8+ 5 countries
G8+ 5 countries: G8 countries plus India, China, South Africa, Brazil, Mexico
Bay of Bengal Initiative for Multi Sectoral Technical and Economic
Cooperation (BIMSTEC)
BIMSTEC provides a unique link between South Asia and Southeast Asia bringing
together 1.3 billion people - 21 percent of the world population, a combined GDP of
US$750 billion, and a considerable amount of complementarity given geographical
contiguity, differing levels of development and resource endowments. A study
(2004) shows the potential of US$ 43 to 59 billion trade creation under BIMSTEC
FTA.
Establishment : June 6, 1997
Member Countries: Bangladesh, India, Myanmar, Sri Lanka, Thailand,

Bhutan and Nepal.
Function: The seven nation countries have endorsed a plan for a free trade pact
by 2017 -- while the three most advanced countries of the area (India, Sri Lanka,
and Thailand) are committed to trade liberalization by 2012. [1]
Trade in goods will be liberalized through progressive elimination of tariffs and nontariff barriers. This will be done in two phases. Products will be identified for (a)
Fast Track and (b) Normal Track.
For the Fast Track products the non-LDC parties will eliminate tariffs for LDC
parties by 30 June 2007; but among themselves by 30 June 2009. The LDC parties
will do so far non-LDC by 30 June 2011; but among themselves by 30 June 2009.
For the normal Track products the non-LDCs will eliminate tariffs for LDCs by 30
June 2010; but among themselves by 30 June 2012. The LDCs will eliminate tariffs
for non-LDCs by 2017; but among themselves by 30 June 2015.
Islamic Development Bank (IDB)
Chief: Dr. Ahmad Mohamed Ali Al-Madani, President, Nationality: KSA
Date of Establishment: 20 October 1975.
HQ: Jeddah in the Kingdom of Saudi Arabia
Member: 56 Countries
Function:
1) to participate in equity capital and grant loans for productive projects and
enterprises besides providing financial assistance to member countries in
other forms for economic and social development
2) assisting in the promotion of foreign trade especially in capital goods, among
member countries; providing technical assistance to member countries; and
extending training facilities for personnel engaged in development activities
in Muslim countries to conform to the Shari'ah.
Commonwealth
Chief: Queen Elizabeth II

Secretary-General : Kamalesh Sharma
Date of Establishment:.
HQ:Marlborough House, London, UK
Member: 54 sovereign states (thereof 1 suspended)
The Commonwealth is an international organisation through which countries with
diverse social, political, and economic backgrounds co-operate within a framework
of common values and goals, outlined in the Singapore Declaration.[1] These
include the promotion of democracy, human rights, good governance, the rule
of law, individual liberty, egalitarianism, free trade, multilateralism, and
world peace.[2]
Last summit : Trinidad and Tobago in 2009.
Non-Aligned Movement (NAM)
Secretary-General : Vacant
Chairman: Mohammed Hussein Tartayi
Date of Establishment:1961 in Belgrade as Conference of Heads of State or
Government of Non-Aligned Countries
Coordinating Bureau
New York City
Member: 118 countries, 20 observer countries
The Non-Aligned Movement (NAM) is an international organization of states
considering themselves not formally aligned with or against any major power bloc.
It was founded in 1950s; as of 2007, it has 118 members. The purpose of the
organization as stated in the Havana Declaration of 1979 is to ensure "the national
independence, sovereignty, territorial integrity and security of non-aligned

countries" in their "struggle against imperialism, colonialism, neo-colonialism,
racism, Zionism, and all forms of foreign aggression, occupation, domination,
interference or hegemony as well as against great power and bloc politics". [1]
They represent nearly two-thirds of the United Nations's members and comprise
55% of the world population.
Summit:
Sharm El Sheikh, July 1116, 2009 Egypt,
Isfahan, 2012[2]Iran
The Organization of the Petroleum Exporting Countries (OPEC)
- PresidentMasoud Mir Kazemi - Secretary GeneralAbdallah el-Badri
Date of Establishment:.1949
HQ:The Vienna-based organization has maintained its headquarters there since
1965
Member: 13 member states
Last summit : Third OPEC Summit, Riyadh, Saudi Arabia, 17 November 2007
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development (OECD, French:
Organisation de coopration et de dveloppement conomiques, OCDE) is an
international economic organisation of 34 countries founded in 1961 to stimulate
economic progress and world trade. It defines itself as a forum of countries
committed to democracy and the market economy, providing a platform to compare
policy experiences, seeking answers to common problems, identifying good
practices, and co-ordinating domestic and international policies of its members.
SecretariatParis, France
Membership 34 states,20 founder states (1961)
Leaders - Secretary General
Jos ngel Gurra (Mexico)
Current membership
Australia
Austria
Belgium
Canada
Chile
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Israel
Italy
Japan
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
SAFTA: South Asian Free Trade Area. 7 countries of old SAARC [Effective from1st
July 2006]
SAPTA: SAARC Preferential Trading Arrangement. 7 countries of old SAARC
[Effective from 8th December 1995]
NAFTA: North American Free Trade Area. [Effective from 1st January 1994]
BancoDel Sur: 7 South American Countries, as alternative of World Bank and IMF
[Hugo Shavez is the main thinker]
SDR: Special Drawing Right. Arrangement for withdrawing from IMF. Valuation
depends on [USD,GBP,FFr.,DM,JPY]
BRICS: Brazil, Russia, India, China and South Africa.:five emerging economies
3rd BRICS April 14, 2011 ChinaHu JintaoSanya
4th BRICS 2012 IndiaManmohan SinghNew Delhi

SAARC:Fatima DewanaSayeed (Maldives)
BURC:Belarus, Ukraine, Russia, Kazakhstan
AU:Tiyodor Obiyang Enguema, Gunie
LDC:48
Rome, Italy
Geneva, Switzerland
Zurich, Switzerland
Washington DC, USA
Paris, France
New York, USA
Jeddah, Saudi Arabia
Addis Ababa, Ethiopia
Dhaka, Bangladesh
Istambul, Turkey
Singapore
City,
Singapore
Vienna, Austria
London, UK
Manila, Philippines
Dubai, UAE
The
Hague,
Netherlands
Kathmandu, Nepal
Lion, France
FAO, IFAD, WFP

WTO, UNCTAD, WIPO, ITU, ILO, WHO, Red Cross, IPU, IAS,
ONHCR, UNITAR, UNRISD, UNHRC
FIFA
IMF, MIGA, IBRD, NASA, OAS, IDA
UNESCO, OECD, Latin Union
UN, UNICEF, UNDP, UNIFEM, UNFPA, ORBIS
OIC, IDB
AU
CIRDAP, IJSG
D-8
APEC
IAEA, OPEC, UNIDO, CTBTO
IMO, Oxfam, Amnesty International
ADB
ICC (Cricket)
ICJ, ICC (Criminal)
SAARC
General Knowledge
Nobel
The Nobel Prize in Physics
Andre Geim and Konstantin Novoselov "for groundbreaking experiments
regarding the two-dimensional material graphene"
Awarding institution: The Royal Swedish Academy of Sciences
The Nobel Prize in Chemistry
Richard F. Heck, Ei-ichiNegishi and Akira Suzuki "for palladium-catalyzed cross
couplings in organic synthesis"
The Nobel Prize in Physiology or Medicine
Robert G. Edwards "for the development of in vitro fertilization"
Awarding institution: The Nobel Assembly at the Karolinska Institute
The Nobel Prize in Literature
Mario Vargas Llosa "for his cartography of structures of power and his trenchant
images of the individual's resistance, revolt, and defeat"
Awarding institution: The Swedish Academy
The Nobel Peace Prize
Liu Xiaobo "for his long and non-violent struggle for fundamental human rights in
China"
Awarding institution: The Norwegian Nobel Institute
The Prize in Economic Sciences
Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides "for their
analysis of markets with search frictions"
The polymathRabindranath Tagore, a Bengali Indian poet, dramatist, and writer
from Santiniketan, now in West Bengal, India, became in 1913 the first Asian
Nobel laureate. He won his Nobel Prize in Literature for notable impact his
prose works and poetic thought had on English, French, and other national
literatures of Europe and the Americas. He is also the writer of the national
anthems of Bangladesh and India.
Tagore is said to have named another Bengali Indian Nobel prize winner, the 1998
laureate in Economics, Amartya Sen. Sen's work has centered on global issues
including famine, welfare, and third-world development. AmartyaSen was Master of
Trinity College, Cambridge University, UK, from 1998 to 2004, becoming the first
Asian to head an 'Oxbridge' College.
Other Asian writers who won Nobel Prizes include Yasunari Kawabata (Japan,
1966), Kenzabure (Japan, 1994), Gao Xingjian (People's Republic of China,
2000) and OrhanPamuk (Turkey, 2006).
Also, Mother Teresa of India and ShirinEbadi of Iran were awarded the Nobel
Peace Prize for their significant and pioneering efforts for democracy and human
rights, especially for the rights of women and children. Ebadi is the first Iranian and
the first Muslim woman to receive the prize. Another Nobel Peace Prize winner is
Aung San SuuKyi from Burma for her peaceful and non-violent struggle under a
military dictatorship in Burma. She is a nonviolent pro-democracy activist and
leader of the National League for Democracy in Burma(Myanmar) and a noted
prisoner of conscience. She is a Buddhist and was awarded the Nobel Peace Prize
in 1991. Most recently, Chinese dissident Liu Xiaobo was awarded the Nobel Peace
Prize for "his long and non-violent struggle for fundamental human rights in China."
He is the first Chinese citizen to be awarded a Nobel Prize of any kind while
residing in China.
Sir C.V.Raman is the first Asian to get a Nobel prize in Sciences. He won the Nobel
Prize in Physics "for his work on the scattering of light and for the discovery of the
effect named after him".
Other Asian Nobel Prize winners include Subrahmanyan Chandrasekhar, Abdus
Salam, ShmuelYosef Agnon, Robert Aumann, Menachem Begin, Aaron
Ciechanover, AvramHershko, Daniel Kahneman, Shimon Peres, Yitzhak
Rabin, Ada Yonath, Yaser Arafat, Jose Ramos Horta and Bishop Carlos Filipe
Ximenes Belo of Timor Leste, Kim Dae-jung, and 13 Japanese scientists. Most of
the said awardees are from Japan and Israel except for Chandrasekhar and Raman
(India), Salam (Pakistan), Arafat (Palestinian Territories) Kim (South Korea), Horta
and Belo (Timor Leste).
In 2006, Dr. Muhammad Yunus of Bangladesh was awarded the Nobel Peace Prize
for the establishment of Grameen Bank, a community development bank that lends
money to poor people, especially women in Bangladesh. Dr. Yunus received his
Ph.D. in economics from Vanderbilt University, United States. He is internationally
known for the concept of micro credit which allows poor and destitutes with little or
no collateral to borrow money. The borrowers typically pay back money within the
specified period and the incidence of default is very low.
The Dalai Lama has received approximately eighty-four awards over his spiritual
and political career.[59] On 22 June 2006, he became one of only four people ever
to be recognized with Honorary Citizenship by the Governor General of Canada. On
28 May 2005, he received the Christmas Humphreys Award from the Buddhist
Society in the United Kingdom. Most notable was the Nobel Peace Prize, presented
in Oslo, Norway on 10 December 1989.
New 7 wonders
1.
2.
3.
4.
5.
6.
7.
Taj Mahal, India

Chichen Itza, Mexico
Machu Picchu, Peru
Colosseum, Italy
Petra, Jordan
Great Wall, China
Christ Redeemer, Brazil
SPORTS
Cricket
1. 20-20-2010
a. Champion--England
b. VenueCaribbean
c. Bangladeshs performance
d. Player of the tournament
e. Next year venue2012--Srilanka
2. World cup--2011
a. Champion--India
b. VenueIndia, Bangladesh and Srilanka
c. Bangladeshs performanceWon against Ireland. England, The
Netherland; Lost to India, West Indies, South Africa
d. Player of the tournamentSachin Tendulkar(India)
e. Most RunsTilaratneDilshan (Sri Lanka)-500 runs
f. Most WicketsShahidAfridi (Pakistan) and Zahir Khan (India)-21
g. Next year venue2015Australia and New Zealand
3. Test
a. Most RunsS.R. Tendulkar 14692 runs
b. Most CenturiesS.R. Tendulkar51
c. Most wicketsM Muralitharan800 wickets
4. One day
a. Most RunsS.R. Tendulkar 18111 runs
b. Most CenturiesS.R. Tendulkar48
c. Most wicketsM Muralitharan534 wickets
Football
1. World cup--2006
a. Champion--Spain
b. VenueSouth Africa
c. Golden ballDiego FORLAN (URU)
d. Golden bootThomas MUELLER (GER)
e. Golden gloveIker CASILLAS (ESP).
f. Next year venue2014-Brazil
Olympic
Next : London (2012)
Last : China (2008)
Bangladesh Cricket Coach
Cricketer of the year (2010) according to Wisden: TamimIqbal (Bangladesh)

Bangladesh FIFA ranking :
Bangladesh Test ranking :
Bangladesh ODI ranking: 9th
163rd
9th
Others
1. India
a. P.M.Dr. Monmohan Singh
b. President-Smt. PrativaDevi SingPatil
c. Finance Minister-Mr. P. Chidambaram
d. Foreign Minister-Mr. PranabMukhrjee
e. Speaker of the House-Meira Kumar (INC)
f. Chief Minister of WB-Mamata Banerjee
2. Pakistan
a. President-AsifZardari (PPP)
b. Prime Minister-YousafGillani (PPP)
c. Chief Justice-IftikharChaudhry
d. Chair of Senate-FarooqNaek (PPP)
e. Foreign Minister-Hina Rabbani Khar
3. Bangladesh
a. President-ZillurRahman
b. Prime Minister-Sheikh Hasina
c. Speaker-Abdul Hamid
d. Finance Minister-AbulMaal Abdul Muhith
e. Secretary, Finance DivisionDr. Mohammed Tarique
f. Secretary, Bank and Financial InstitutionsDivision
ShafiqurRahmanPatwary
g. Secretary, Economic Relations Division (ERD)Mr. M Musharraf
HossainBhuiyan
h. Secretary-in-charge, Internal Resources Division (IRD) Dr.
Nasiruddin Ahmed, Chirman, National Board of Revenue
i. Foreign MinisterDr. Dipu Moni
j. Ministry of commerce: Colnel (Retd) Faruk Khan
k. Chairman of SECMd. Khairul Hossain
4. USA
a. PresidentBarackObama
b. Vice PresidentJoeBiden
c. U.S. Secretary of StateHillaryClinton
5. UK
a. MonarchElizabethII
b. Prime MinisterDavidCameron MP
6. Russia
c. PresidentDmitry Medvedev
d. Prime MinisterVladimirPutin (Independent, but leader of UR)
Differences
PC
1 PC means Packing Credit
It is a short-term pre-shipment credit
2 allowed to the exporter to process,
pack and shipped the goods.
TOD
1 TOD means Temporary Overdraft
It is allowed only for short time such
2
as one or two days.
It is allowed without security or
3
against collection of instrument.
4 It has not a sanction limit
Borrower
cannot
withdraw
any
5
amount as required by him.
TOD allowed for meet up temporary
6
crisis of the borrower.
1
2
3
4
Order Cheque
When a cheque is ordered to a
particular person for payment is
called order cheque.
Order cheque can negotiate by
endorsement and delivery.
It can be encashed and also collects
through Banks.
Order cheque is insecure for stolen
fraud and forgery.
LTR
1
2
1
2
3
4
5
6
1
2
3
4
ECC
ECC means Export Cash Credit
It is a form of advance allowed to the
exporter in cash for processing goods for
export. Such advance is adjusted from
export proceeds.
SOD
SOD means Secured Overdraft
It is sanctioned for a stipulated period such
as one year.
It is allowed against encashable securities
such as FDR, PSP etc.
It has a sanction limit
Borrower can withdraw any amount as
required up to the sanction limit.
It is allowed as working capital to meet run
the business smoothly.
Crossed Cheque
When we draw two transverse parallel lines
at the left corner of a cheque with or
without any word is called crossed cheque.
Crossed cheque cannot negotiate by
endorsement and delivery.
Crossed cheque cannot be encashed and
collects through Bank.
It is more secured then order cheque for
stolen fraud and forgery.
LIM
1
2
3
4
5
LTR means Loan against Trust

Receipt
It is an import connected loan
facilities.
LTR liability is adjusted within 3
(thirty) days.
For
this
LTR
Register
is
maintained.
Stock of goods kept under borrower
control.
LIM means
Marchandise
It is also an import connected loan facility.
LIM liability is adjusted within 45-6 days.
For this LIM register is maintained.
Stock goods kept under Banks control.
Simple Interest
1
Simple interests are those interests,

which calculate and charge the
account at yearly basis.
In BASIC charge at the Micro Credit

and Staff loan A/c at the simple rate
of interest.
1
2
3
LAN
LAN means Local Area Network.
It is a multi user computer
operation in a branch.
Usually this system being used
under UNIX, Windows etc. It is
required a server and some dump
terminal.
1
2
3
A Bank can run their computer

system by LAN.
It has short range.
Single Entry
1
2
3
4
5
In single entry system only cash and

personal accounts are maintained.
Incase of single entry Trail Balance
can be prepared.
It is not a golden rule of accounting
for recording transactions.
Interpretation is not possible in the
single entry system.
Comparison and future plan is not
possible properly in this system.
1
2
3
4
5
DOS
1
2
3
1
2
DOS means Disk Operating System.

Under this system we can work
using only one computer
It is a normal operating system.
BASIC
BASIC means Bangladesh Small
Industries and Commerce Bank
Limited.
It is a specialized scheduled Bank of
1
2
3
Loan
against
Imported
Compound Interest
Compound interests are those interests,
which is calculating monthly basis but
charge the account at quarterly/half yearly
basis.
In BASIC charge all SOD and CC account at
the compound rate of interest.
WAN
WAN means Wide Area Network.
It is also a multi user computer operation
inside and outside.
This system is required, Host
Modem and X.28/X.25 T & T line.
server,
Under this modern technology a branch can

provide their sophisticated electronics
Banking service to their valued client.
It has broad range.
Double Entry
In double entry system every transactions
are recorded twice, one in the debit side of
an account and again in the credit side of
another account.
Incase of double entry Trial Balance can be
prepared.
In is a golden rule of accounting for
recording transaction.
Interpretation of a transaction is a must in
double entry system.
Comparison and future plan is made
possible in double entry system.
UNIX
UNIX is a multi user Computer Operating
System.
Under this system we can work using more
then one computer at a time.
It is a high security operating system.
BSCIC
BSCIC means Bangladesh Small

Cottage Industries Corporation.
It
is
an
autonomous
Corporation
and
of
1
2
3
4
5
the country.
BASIC is a Bank, registered under
the Companies Act. 1913 and
governed under the Bank Company
Act. 1991.
5% of its loanable fund should be
used in Small Scale Industries
Sector (SSI)
Schedule Bank
A Bank which name is enlisted in
the list of Central Bank/B Bank is
called Schedule Bank.
It must be maintained 2% Statutory
Reserve of total deposit.
Schedule Bank can take the
opportunity of Clearing House.
It can borrow from Central Bank at
their hard time.
Schedule Bank control by the
Central Bank.
Government of Bangladesh.
3
BSCIC is an autonomous body for

development
of
Small
and
Cottage
Industries.
The overview of corporation to increase of

production of Small Industries.
1
2
It does not maintain such reserve.
It cannot get this opportunity.
4
5
Bank
1
Bank approved by Bangladesh Bank.
Bank can do all types of Banking

activities.
Bank is governed under the Banking

Company Act, 1991.
4
5
3
4
1
2
3
4
5
Bank is enlisted in the list of

Schedule Bank.
All Banks are Financial institutions.
Partnership
Partnership firm is formed on the
basis of oral or written contract
among the partners.
Incase of partnership firm minimum
member
will
be
2(two)
and
maximum are 2 for normal business
and 1 for Banking business.
Incase of partnership liabilities are
unlimited of the partners.
It would be registered under the
Company Act, 1913.
CC(Pledge)
control of lending Branch/Bank.
It is sanctioned in the form of
Working Capital.
CC(Pledge) adjustable within 1(one)
year. Time to time is renewable.
For this maintaining register is
called Pledge Register.
CC(Pledge)
requires
letter
of
Pledge.
Non-Schedule Bank
A Bank which name is not enlisted in the
list of Central Bank/B Bank is called
Schedule Bank.
4
5
Non-schedule Bank cannot enjoy such

facility.
Central Bank cannot impose any controlling
power upon a non-schedule Bank.
Financial Institution
Financial Institutions approved by Ministry
of Finance.
It does not work any kind of Banking
activities.
Financial Institutions are governed under
the Non-Banking Financial institution Act,
1993.
Financial Institutions are enlisted in the list
of Non-Banking Financial Institutions.
All Financial Institutes are not Bank.
Limited Company
3
4
Limited Company is formed by registration

by the register of the companies.
Incase of Limited company minimum
member will be 2 for Private Ltd. Co. and 7
for Public Ltd. Co. and maximum are 5 for
Pvt. Co. Ltd. and unlimited or limited by
share for Public Co. Ltd.
Incase of Limited Co. liabilities of
shareholders are limited by the share value.
It also registered under the Company Act,
1913.
LIM
The stocks of goods are also under the
control of lending Branch/Bank.
It is an import connected loan facility.
LIM liability adjustable within 45-6 days.
For this maintaining register is called LIM

Register.
LIM requires letter of LIM.
1
2
3
4
5
1
2
1
2
1
2
Sight Bill
When a bill is payable at sight or on
demand is called sight bill or
demand bill.
Incase of sight bill no stamp duty is
necessary.
1
2
L/C
L/C is a credit contract where by the
buyers bank is committed (on behalf)
of the buyer to pay a certain sum of
money at the sellers disposal under
agreed conditions stipulated in L/C.
Back to Back L/C

1
L/C opens on cash reimbursement

basis.
L/C opens for importing machinery and

consumer goods from abroad by the
importer.
Retirements of documents by the
importer cash payment or extension of
loan facilities such as LIM, LTR etc.
L/Cs are two kinds i. Revocable L/C ii.
Irrevocable L/C
D/A
D/A
means
Document
against
Acceptance
Where the shipping document under
the term credit (Usance credit) is
deliverable against acceptance of
the bill is known as D/A bill.
Development Bank
A development bank is a Bank,
which
help
industrial
and
agricultural development activities
in the economy of the country.
Development bank provides long
terms loan.
ADB, SABINCO, BSRS, BSB are
development bank.
Money Market
Money market deals with short term
trade financing.
The functions of money market are
to deal with treasury bill, open
market debenture,
short term
debenture share etc.
The participants of money market
are commercial banks, insurance
company, stock exchange etc.
Stale Cheque
If a cheque is not presented for
payment within a reasonable period
Usance Bill
When a bill matures for payment after a
certain period of time after or after sight is
called Usance bills.
Incase of Usance bill proper stamped is
required.
Back to Back L/C means an import L/C

which is back by export L/C.
Back to back L/C opens against lien on
export L/C. Bank provide finance by
opening an inland L/C on behalf of the
exporter.
Back to back L/C opens for importing raw
materials
and
accessories
generally
garments industries opens a L/C.
Repayment is made from export proceeds.
B. to B L/C is two kinds i. Inland B to B L/C

ii. ...................... B to B L/C.
D/P
D/P means Document against Payment.
Where the shipping document (under a sight

credit/ without credit) is deliverable against
payment is known as D/P bill.
Commercial Bank
A commercial bank is a bank, which help to

extend commercial function.
Commercial bank provides short-term loan.
Sonali, Rupali, Pubali, Agrani, Janata, BASIC

are commercial bank.
1
2
Capital Market
Capital market deal with long terms
financing.
The functions of capital market are to
purchasing heavy machinery setup heavy
industry and to meet up fund of
development projects.
The participant of capital market is Shilpa
Bank, BSRS, special investments Bank,
SABINCO, RajshahiKrishiUnnoyon Bank etc.
Post datedCheque
If the drawer or holder mentions a date on
the cheque, which is, later/subsequent to the
1
2
3
(normal cheque 6 months & Govt.

Cheque 3 months) after the date of
issue is called Stale Cheque.
date on which it is drawn/presented for

payment is called post-dated cheque.
A state cheque is an invalid cheque.

Banker cannot make any payment
against stale cheque.
A post-dated cheque is not an invalid

cheque. Banker can make payment such
cheque and it becomes effective only on the
date mentioned therein.
CRR
CRR
means
Cash
Reserve
Requirements
As per Bangladesh Bank circular
schedule banks maintain 4% CRR
to Bangladesh Bank
CRR maintain in cash in CD A/c with
Bangladesh Bank a foreign currency
A/c with Bangladesh Bank.
1
2
3
Overdue Loan
1
2
3
4
2
3
When the sanctioned time limit is

expired to pay the loan then the
loan is called overdue loan.
It can be renewed to show regular
loan.
Incase of overdue loan this is a
primary stage of the party default to
pay the loan.
Banker issue reminder to the party
to pay the overdue loan.
Loan
Loan is allowed for a specific
purpose such as house building
loan, transport loan, industrial term
loan etc.
Loan is allowed for a definite period
one year or more against proper
security.
Loan allowed in the form of
industrial loan, house building in
staff loan, general etc.
The
installment
which
deposited cannot be advance
Separate loan A/c is created for

each loan
once
Cash Credit
When an advance limit is approved
to the businessman, traders and
industrialist for meeting working
capital
requirements
under
a
specific drawing power is called
cash credit.
Cash credit is allowed against hypo.
or pledge of goods.
SLR
SLR
means
Statutory
Liquidity
Requirements/ Ratio
As per Bangladesh Bank circular schedule
banks maintains 16% SLR in his till as liquid
money.
SLR maintains in the form of cash Prize
Bond, Govt. approved security and account
with other banks.
Classified Loan
After
a
certain
period
of
overdue
considering
Qualities
Judgment
and
objective criteria the said loan is classified
as substandard, doubtful and bad/loss,
which is called, classified loan.
It can be reschedule to recover the loan.
Incase of classified loan this is a final stage

of the party default to pay the loan.
Banker takes the help of the court to recover

classified loan.
Cash Credit
Cash credit is allowed for the purpose of

working capital to run the business
smoothly.
Cash credit is allowed normal one year or

shorter period against encashable securities.
Cash credit is allowed in the form of CC(H)

& CC(P).
4
5
Deposit and withdrawn can be made upto

the sanction limit as required by the
borrower.
Creation of separate loan A/c is not
necessary. Drawing allowed in the current
A/c of the borrower.
Overdraft
When a current account holder is permitted

by the banker to draw more than what
stands to his credit, such an advance is
called on overdraft.
Overdraft is allowed against stock in trade,

shares, and debenture, FDR et.
3
4
5
Borrower can draw money within

sanction limit or drawing power
whichever is lower.
As security basis cash credit are of
two types i.CC(Hypo) and ii.
CC(Pledge).
Separate loan account is created for
each loan.
Bank Solvency Certificate
Written certified by the Bank to the
party is financially solvent and
maintains
banking
transaction
regularly is called Bank solvency
certificate.
It
does
not
ensure
financial
guarantee by the bank to the party
if the party fails to pay any
contractual obligation to other.
Borrower can draw any amount from his

current account at any time within the
sanctioned limit.
O.D are of three-type i. TOD ii. COD and ii.

SOD (COD is normally un-used).
No separate account is created. Drawings

are allowed through current account of
borrower.
It ensures financial guarantee by the bank to

pay certain some of money if the party fails
to pay his contractual obligation.
Bank receives fee from the clients to

issue a bank solvency certificate.
It does not specified certain future

time and cannot be cancelled or
require to filling in any cancelled
file.
Cheque
1
It must be drawn only on a Banker.
The amount is always payable on

demand.
Acceptance is not necessary.
A cheque can be crossed.
Notice of dishonour is not necessary.
General Crossing
Drawing up of two transverse
parallel lines with or without any
words on the face of the cheque
constitutes general crossing.
Example of general crossing are :
2
3
4
1
2
3
It is done by drawer or holder of the

cheque
Drawer can cancel the general
crossing with the signature.
Computer
Any file can be saved in computer
for future need.
Any calculation, graphic, design
work can be done in computer.
Computer has a CPU (Central
Processing Unit).
Bank Guarantee
Written guarantee given by the bank in
behalf of the client to pay a certain some of
money if the clients fail to pay his
contractual obligation is called Bank
guarantee.
2
3
Bank receives commission at a fixed rate

from the guarantee holder for issuing of the
Bank guarantee.
It issued for a specified future time and must
be cancelled on retire after the time is
expired and maintains it in the cancelled
guarantee file.
Bill of Exchange
It must be drawn on any person including
Banker.
The amount may be payable on demand or
after a specific period.
A bill payable after sight must be accepted.
Crossing of a bill of exchange is not
possible.
Notice of dishonour is necessary to hold the
parties liable thereon.
Special Crossing
Drawing of two transverse parallel lines in
addition of the name of a Bank with branch
or only Bank across the face of a cheque
constitutes special crossing.
Example of general crossing are :
It is done by collective Bank of the cheque.
Special crossing
concerned Bank.
can
cancel
by
the
Type writer Machine

There is no scope in typewriter machine to
save any file.
There is no scope in typewriter machine.
Typewriter machine has no CPU.
4
5
1
2
1
2
3
1
2
3
4
1
2
3
4
5
Most important facility like LAN,

WAN, Internet connection can be
obtained in computer.
Previous any work, which saved can
recall from computer memory.
NOSTRO A/C
It means our account with you
Here an authorized dealer maintains
foreign currency A/c with its foreign
correspondent.
Equitable Mortgage
Equitable
mortgage
means
a
mortgage where mortgagor deposits
its title deeds to the mortgage
property.
In that case mortgagor holds only
the documents of the property.
Here registration is not required.
CC (hypo)
control of borrower.
For this letter of hypothecation is
obtained from the borrower.
Borrowers have to submit stock
report on monthly basis to the
lending Bank.
Incase of CC (hypo) Bank obtained
sufficient collateral security for
covering loan risk.
BCD
BCD means Bearer Certificate of
Deposit.
In BCD depositors name is not
mentioned.
Usually BCD interest is lower.
BCD encashed by any body.
In BCD interest rate is fixed-up by
negotiation between depositors and
Bankers.
There is no scope in typewriter machine.
There is no scope in typewriter machine to

recall any previous work.
1
2
VOSTRO A/C
It means your account with us.
Here a foreign correspondent maintains A/c
with an authorized dealer in local currency.
Legal Mortgage/Register Mortgage
1
2
3
1
2
Legal Mortgage is that mortgage where

mortgagor transfers its title of property to
the mortgage.
On repayment of the loans the mortgage is
transferred in also the mortgagor.
In this system registration is required.
CC (Pledge)
The stocks of goods are under the control of
lending Bank.
For this letter of pledge is obtained form
the borrower.
Bank maintains pledge register;

reports not require to submit.
stock
Incase of CC(Pledge) Bank takes other

collateral security if available in the hand of
borrower.
FDR
1
2
3
4
5
FDR means Fixed Deposit Receipt.

In FDR
depositors
name must be
mentioned.
Usually FDR interest is higher than BCD.
FDR encashed by holder / nominee.
In FDR interest rate is fixed-up by the
Banks time-to-time policy.
Finance& Banking
Break-even point
1) The price level at which income equals expense.
2) The expense level at which expense equals income.
3) The market price of a financial instrument that just equals the purchase price
plus cost of carry for an investor owning that instrument.
4) The price level of a call option that equals the sum of the exercise price plus
the premium paid to acquire the option, or the price level of a put option that
equals the exercise price minus the premium.
Break-even sales
The minimum sales level that a firm must achieve in order to generate enough
cash flow to make all required principal and interest payments.
Opportunity cost
The cost of pursuing one course of action measured in terms of the foregone
return that could have been earned on an alternative course of action that was
not undertaken.
Asset Liability Management
The control/management of a Banks deposit and lending policies to ensure
safety, liquidity and profitability.
Bonded Ware-house
A customs store or godown where bonded goods are stored and remains there
until customs dues are paid.
Correspondent Bank
A bank in one country acts as agent for a bank of another country by
signing/establishing agency agreement/arrangement.
Square position
When the total amount of purchase of foreign currency is equal to the amount of
total sales, the bank reaches a Square Position.
MICR
One of the important means of efficient funds movement through the organised
sector of an economy is the process of clearing of cheques. To facilitate quick
processing of cheques and prompt settlement thereof, mechanisedcheque
processing systems using Magnetic Ink Character Recognition (MICR)
technology for cheque clearing is going to be introduced in Bangladesh.
Quick Ratio
(Current asset- Inventories) or (Cash on hand + Cash in Bank + securities + net
receivables)/Total current liabilities
The quick ratio is a measure of a companys immediate short-term liquidity. An
asset is liquid if it can be converted into cash immediately or reasonable soon.
IRR what it is, implications borrowers perspective, lenders perspective,
limitations
The IRR is the interest rate (also known as the discount rate) that will bring a
series of cash flows (positive and negative) to a net present value (NPV) of zero
(or to the current value of cash invested).
Why is the IRR method still commonly used in capital budgeting? Its popularity
is probably a direct result of its reporting simplicity. The NPV method is
inherently complex and requires assumptions at each stage - discount rate,
likelihood of receiving the cash payment, etc. The IRR method simplifies projects
to a single number that management can use to determine whether or not a
project is economically viable. The result is simple, but for any project that is
long-term, that has multiple cash flows at different discount rates, or that has
uncertain cash flows - in fact, for almost any project at all - simple IRR isn't good
for much more than presentation value.
MIRR
While the internal rate of return (IRR) assumes the cash flows from a project are
reinvested at the IRR, the modified IRR assumes that all cash flows are
reinvested at the firm's cost of capital. Therefore, MIRR more accurately reflects
the profitability of a project.
Thus, using the IRR could result in a positive NPV (good project), but it could
turn out to be a bad project (NPV is negative) if the MIRR were used. As a result,
using MIRR versus IRR better reflects the value of a project.
Problems with IRR
There are a few misconceptions about the IRR calculation. The major one is that
IRR automatically assumes that all cash outflows from an investment are
reinvested at the IRR rate. IRR is the "internal rate of return" with "internal"
meaning each dollar in an investment. It makes no assumptions about what an
investor does with money coming out of an investment. Whether the investor
gives it away or puts it in a coffee can, the IRR stays the same.
It does however have a few drawbacks. First, IRR is not made to calculate
negative cash flows after the initial investment. If an investment has an outflow
of $1,000 in year three and an IRR of 30%, the $1,000 is discounted at 30% per
year back to a present value. You would have to put this PV amount in an
investment earning 30% per year for the IRR to reflect the true yield.
Also, IRR ignores the reinvestment potential of positive cash flows. Since most
capital investments have intermediate (non-terminal) positive cash flows, the
firm will reinvest these cash flows. Unless a better number is known, the firm's
cost of capital is a reasonable proxy for the return to be expected. Investments
with large or early positive cash flows will tend to look far better with IRR than
with MIRR for this reason.
To illustrate: a firm has investment options with returns that are generally
moderate. An unusually attractive investment opportunity comes up with much
higher return. The cash spun off from this latter investment will probably be
reinvested at the moderate rate of return rather than in another unusually highreturn investment. In this case, IRR will overstate the value of the investment,
while MIRR will not.
ERR
Profit generally is the making of gain in business activity for the benefit of the
owners of the business. The word comes from Latin meaning "to make progress",
is defined in two different ways, one for economics and one for accounting.
Pure economic profit is the increase in wealth that an investor has from making
an investment, taking into consideration all costs associated with that
investment including the opportunity cost of capital. Accounting profit is the
difference between retail sales price and the costs of acquisition (whether by
harvest, extraction, manufacture, or purchase). A key difficulty in measuring
either definition of profit is in defining costs. Accounting profit may be positive
even in competitive equilibrium when pure economic profits are zero.
Treasury bond and treasury bills are categorized into HTM and HFT as per
Bangladesh Bank circular.
HFT
Held for Trading securities are revalued weekly and gain on revaluation is
shown as Revaluation Reserve under capital account. Securities are shown at
revalued amount.
HTM
Held to Maturity securities are revalued at the end of the year and revaluation
Loss/gain is shown in capital accounts.
Management
Theory X
Management theory developed by Douglas McGregor, stating that managers
must supervise the subordinates closely in order to motivate them.
Theory Y
Under this theory some managers beliefs that given the right conditions and
reward, the average employee finds work to be a source of satisfaction, will
exercise self-direction towards goals he is committed to, seeks responsibility and
in creative and innovative.
Theory Z
Management theory given by William Ouchi, describing the Japanese system of
management characterized by the workers deep involvement in management,
higher productivity than the U.S. management model, and a highly developed
system of organizational and sociological rewards. Ouchi contends that this
management system can be used anywhere with equal success.
Qualities of a good manager:
a) Leadership skills
b) Team Objectives
c) Knowledge about the organizational goal.
d) Better communication
e) Motivating staff
f) Setting targets
g) Developing people
h) Proper delegation of work
Online banking& Computer

Online banking (or Internet banking) allows customers to conduct financial
transactions on a secure network operated by their retail bank with centralized
database. The performance of banking activities via secure network or internet. All
branches will be connected to centralized server through secured network.
Functions
The performance of banking activities via the Internet.
Internet access to your bank account allowing one to check balances,
transfer between accounts and launch international wires from anywhere in
the world.
Banking services that are processed electronically and offered to customers
via the Internet.
A system allowing individuals to perform banking activities at home, via the
internet. Some online banks are traditional banks which also offer online
banking, while others are online only and have no physical presence. ...
Allows the depositor to perform selected banking transactions through the
internet.
Online banking (or Internet banking) is a term used for performing
transactions, payments etc. over the Internet through a bank, credit union or
building society's secure website. ...
The access of banking information and accounts to complete transactions
using a personal computer or terminal through a financial institution's web
site on the Internet. Also known as Internet banking.
Advantages of online banking
Banks view online banking as a powerful "value added" tool to attract and retain
new customers while helping to eliminate costly paper handling and teller
interactions in an increasingly competitive banking environment.
Convenience: Unlike your corner bank, online banking sites never close;
they're available 24 hours a day, seven days a week, and they're only a mouse
click away.
Ubiquity: If you're out of state or even out of the country when a money
problem arises, you can log on instantly to your online bank and take care of
business, 24/7.
Transaction speed: Online bank sites generally execute and confirm
transactions at or quicker than ATM processing speeds.
Efficiency: You can access and manage all of your bank accounts, including
IRAs, CDs, even securities, from one secure site.
Effectiveness: Many online banking sites now offer sophisticated tools,
including account aggregation, stock quotes, rate alerts and portfolio
managing programs to help you manage all of your assets more effectively.
Most are also compatible with money managing programs such as Quicken
and Microsoft Money.
Disadvantages of online banking
Start-up may take time: In order to register for your bank's online
program, you will probably have to provide ID and sign a form at a bank
branch. If you and your spouse wish to view and manage your assets together
online, one of you may have to sign a durable power of attorney before the
bank will display all of your holdings together.
Learning curve: Banking sites can be difficult to navigate at first. Plan to
invest some time and/or read the tutorials in order to become comfortable in
your virtual lobby.
Bank site changes: Even the largest banks periodically upgrade their online
programs, adding new features in unfamiliar places. In some cases, you may
have to re-enter account information.
The trust thing: For many people, the biggest hurdle to online banking is
learning to trust it. Did my transaction go through? Did I push the transfer
button once or twice? Best bet: always print the transaction receipt and keep
it with your bank records until it shows up on your personal site and/or your
bank statement.
Features
Here are some of the features available through online banking:
View balances: Checking your balance doesn't require much work. You
simply select Account balances and take a look at your balance and past
transactions. If you have more than one account, you can also do transfers
between accounts.
Pay bills: To pay your bills online, you just need to add to your account the
names of the companies you wish to pay bills to. In the Pay Bills section,
select Add payees, search for the name of the company and fill in the account
number for each company. You can also sign up for the E-bills service that
sends you a bill by e-mail instead of a printed one by regular mail.
Transfer funds: When you select Transfer Funds, you'll be asked where to
transfer the money to and from, when, and the amount.
Set up recurring bill payments or transfers: If you make a regular payment
every month, it might be convenient to set up an automatic withdrawal from
your account.
Send and receive INTERAC Email Money Transfers: This could be the
end of the birthday cheque! You can receive transfers from other people's
accounts, or set up transfers from your account to someone else's. The
recipient will get an e-mail notifying them of the transaction.
Order cheques: We don't need them much anymore due to online banking
and debit purchases, but if you still use cheques, you can order them directly
from the CIBC website.
Name of BASICs online project
Centralised online banking implementation project.
Date of inauguration
Number of employee in ICT division
Name of softwares
1. KASTLE core banking (general banking & loan)
2. PSITF
3. KASTLE Treasury
4. Internet Banking
What precaution have been taken to prevent fraud in online banking
system?
What is Software?
Computer software is a general term used to describe a collection of
computer programs, procedures and documentation that perform some task
on a computer system. [1] The term includes application software such as
word processors which perform productive tasks for users, system
software such as operating systems, which interface with hardware to
provide the necessary services for application software, and middleware
which controls and co-ordinates distributed systems.
What is Hardware?
Computer hardware is the physical part of a computer, including the digital
circuitry, as distinguished from the computer software that executes within
the hardware. The hardware of a computer is infrequently changed, in
comparison with software and data, which are "soft" in the sense that they
are readily created, modified or erased on the computer. Firmware is a
special type of software that rarely, if ever, needs to be changed and so is
stored on hardware devices such as read-only memory (ROM) where it is
not readily changed (and is, therefore, "firm" rather than just "soft").
Difference between Software & Hardware?
A computer system comprises hardware and software.
Hardware is the physical medium, for example:
circuit boards
processors
keyboard
Software are computer programs, for example:
operating system
editor
compilers
a Fortran 90 program
What is program?
A program is a specific set of ordered instruction/operations for a computer
to perform
The terms computer program, software program, or just program are used to
refer to either an executable program (by both lay people and computer
programmers) or the collection of source code from which an executable
program is created.
What is Virus?
A computer virus is a computer program written to alter the way a computer

operates, that can copy itself and infect a computer without permission or
knowledge of the user
Why virus is harm to the computer?
Some viruses are programmed to damage the computer by damaging
programs, deleting files, or reformatting the hard disk. Others are not
designed to do any damage, but simply replicate themselves and perhaps
make their presence known by presenting text, video, or audio messages.
Even these benign viruses can create problems for the computer user. They
typically take up computer memory used by legitimate programs. As a
result, they often cause erratic behavior and can result in system crashes. In
addition, many viruses are bug-ridden, and these bugs may lead to system
crashes and data loss
What is Network?
A computer network is an interconnection of a group of computers.
What is VOIP?
VoIP (voice over Internet Protocol) is an IP telephony term for a set of
facilities used to manage the delivery of voice information over the Internet.
What type of network will be used in our online banking?
WAN and LAN
What is database?
A database is a collection of data that is organized so that its contents can
easily be accessed, managed, and updated.
Differentiate between database & RDBMS?
Relational Data Base Management Systems (RDBMS) are database
management systems that maintain data records and indices in tables.
Relationships may be created and maintained across and among the data and
tables.
DBMS includes the theoretical part that how datas are stored in a table. It
does not relate tables with another. While RDBMS is the procedural way that
includes SQL syntaxes for relating tables with another and handling datas
stored in tables. 1)rdbms is object based database management system while
dbms 2)rdbms can maintain at many users at same time while dbms not 2)in
rdbms is relation is more important than object itself while dbms entity is
more important The main advantage of an RDBMS is that it checks for
referential integrity (relationship between related records using Foreign
Keys).
In our country which banks are running online banking?
Describe the architecture of our online banking software.

1. Front-End: Delphi
2. Middle-ware: Tuxedo
3. Business Logic: COBOL
4. Database: Oracle
What is bandwidth? What are its determinants?
Bandwidth is a measure of the amount of data passing through a network at a

given time. In computer networks, bandwidth is often used as a synonym for
data transfer rate - the amount of data that can be carried from one point to
another in a given time period (usually a second). This kind of bandwidth is
usually expressed in bits (of data) per second ( bps). Occasionally, it's
expressed as bytes per second (Bps).
What is a Trojan horse?
Trojan horses are impostorsfiles that claim to be something desirable but,
in fact, are malicious. A very important distinction between Trojan horse
programs and true viruses is that they do not replicate themselves.
What is a worm?
Worms are programs that replicate themselves from system to system
without the use of a host file. This is in contrast to viruses, which requires the
spreading of an infected host file. Although worms generally exist inside of
other files, often Word or Excel documents, there is a difference between how
worms and viruses use the host file.
Computer software, or just software, is a collection of computer programs and

related data that provide the instructions for telling a computer what to do and how to do it.
Practical computer systems divide software systems into three major classes[citation needed]:
system software (Microsoft Windows, Mac OS X and Linux), programming software and
application software, although the distinction is arbitrary, and often blurred.
Software:
Hardware is a general term for the physicalartifacts of a technology. It may also

mean the physical components of a computer system, in the form of computer hardware.
Hardware:
Search engine
A web search engine is designed to search for information on the World Wide Web and FTP
servers. The search results are generally presented in a list of results and are often called hits. The
information may consist of web pages, images, information and other types of files. Some search
engines also mine data available in databases or open directories. Unlike web directories, which
are maintained by human editors, search engines operate algorithmically or are a mixture of
algorithmic and human input.
OS: An operating system (OS) is software, consisting of programs and data,

that runs on computers, manages computer hardware resources, and provides
common services for execution of various application software.Examples of
popular modern operating systems are: BSD, Linux, Mac OS X, Microsoft
Windows and UNIX, Ubuntu, Google Chrome
Accounting
Accountancy
Accountancy (profession)[1] or accounting (methodology) is the measurement,
statement or provision of assurance about financial information primarily used by
managers, investors, tax authorities and other decision makers to make resource
allocation decisions within companies, organisations, and public agencies. The
terms derive from the use of financial accounts.
Accounting
Accounting is the discipline of measuring, communicating and interpreting financial
activity. Accounting is also widely referred to as the "language of business".[2]
Financial accounting
Financial accounting is one branch of accounting and historically has involved
processes by which financial information about a business is recorded, classified,
summarised, interpreted, and communicated; for public companies, this information
is generally publicly-accessible. By contrast management accounting information
is used within an organisation and is usually confidential and accessible only to a
small group, mostly decision-makers. Tax Accounting is the accounting needed to
comply with jurisdictional tax regulations.
Auditing
Auditing is a related but separate discipline, with two sub-disciplines: internal
auditing and external auditing. External auditing is the process whereby an
independent auditor examines an organisation's financial statements and
accounting records in order to express an opinion as to the truth and fairness of the
statements and the accountant's adherence to Generally Accepted Accounting
Principles (GAAP), or International Financial Reporting Standards (IFRS), in all
material respects. Internal auditing aims at providing information for management
usage, and is typically carried out by auditors employed by the company, and
sometimes by external service providers.
Luca Pacioli
Luca Pacioli (1445 - 1517), also known as Friar Luca dal Borgo, is credited for the
"birth" of accounting. His Summa de arithmetica, geometrica, proportioni et

proportionalita (Summa on arithmetic, geometry, proportions and proportionality,
Venice1494).
Accounting Principles
Accounting principles, rules of conduct and action are described by various terms
such as concepts, conventions, tenets, assumption, axioms, postulates.
Accounting concepts
Entity concept
Dual aspect concept
Going concern concept
Accounting period concept
Money measurement concept
Historical Cost concept
Periodic matching of cost and revenue concept
Verifiable objective evidence concept
Realisation concept
Accounting methods (includes a discussion on the concept of accruals)
Understandability
Relevance
Reliability
Comparability
Accrual
Types of accountancy
The following list is intended to give some idea of the breadth and scope of the
accountancy profession:
lean accounting
auditing
bookkeeping
chartered accountant
cost accounting
management accounting
financial accounting
forensic accounting
taxation advice
public accountancy
private accountancy
internal accountancy
external accountancy
Generally Accepted Accounting Principles (GAAP)
Generally Accepted Accounting Principles (GAAP) is the standard framework of
guidelines for financial accounting, mainly used in the U.S.A.. It includes the
standards, conventions, and rules accountants follow in recording and summarizing
transactions, and in the preparation of financial statements.
Entity concept
In accounting the separate entity concept treats a business as
completely separate from the owners. It is necessary to record
transactions separately to distinguish it from the owner's personal
This concept is now extended to accounting for various divisions of a
to ascertain results for each division.
distinct and
the business
transactions.
firm in order
Dual aspect
Dual aspect is the very foundation of the universally applicable double entry
bookkeeping system and it stems from the fact that every transaction has a double
(or dual) effect on the position of a business as recorded in the accounts. For
example, when an asset is bought, another asset cash (or bank) is also and
simultaneously decreased OR a liability such as creditors is also and simultaneously
increased. Similarly, when a sale is made the asset of stock is reduced as goods
leave the business and the asset of cash is increased (or the asset of debtors is
increased) as cash comes into the business (or a promise to pay is made and
accepted). Every financial transaction behaves in this dual way.
Going concern
A going concern is a business that functions without the intention or threat of
liquidation for the foreseeable future, usually regarded as at least within 12
months.
In accounting, "going concern" refers to a company's ability to continue

functioning as a business entity. It is the responsibility of the directors to assess
whether the going concern assumption is appropriate when preparing the financial
statements. A company is required to disclose in the notes to the financial
statements whether there are any factors that may put the company's status as a
going concern in doubt.
Accounting period
An accounting period is a period with reference to which United Kingdom
corporation tax is charged.[1] It helps dictate when tax is paid on income and
gains. An accounting period begins whenever a company comes within the
corporation tax charge, and whenever an accounting period ends without the
company ceasing to be within the charge. There are a number of rules about when
an accounting period ends, and we look at each of these below.
Often an accounting period coincides with a companies period of account. This is
the period for which it draws up accounts, [2] except for a life assurance company,
where it is the period for which it draws up its periodical return. [3] However,
periods of account and accounting periods do not necessarily coincide.
Money measurement concept
The money measurement concept underlines the fact that in accounting, every
recorded event or transaction is measured in terms of money. Using this principle,
a fact or a happening which cannot be expressed in terms of money is not recorded
in the accounting books.
Historical cost
In historical cost accounting, historical cost is the original monetary value of an
economic item.
Depreciation effects the carrying value of an asset on the balance sheet. The
historical cost will equal the carrying value if there has been no change recorded in
the value of the asset since acquisition. Improvements may be added to the cost
basis of an asset.
Historical cost does not generally reflect current market valuation. Different
accounting standards may require that the carrying value of an asset (or liability)
be updated to the market price ( mark-to-market valuation) or some other estimate
of value that better approximates the real value. Accounting standards may also
have different methods required or allowed (even for different types of balance
sheet assets or liabilities) as to how the resultant change in value of an asset or
liability is recorded, as a part of income or as a direct change to shareholders'
equity.
Adjustment for inflation
Historical cost assumes a stable monetary unit only with regard to constant real
value non-monetary items in low inflationary economies. As PwC described it in a
paper on accounting in hyperinflationary environments:
Financial statements unadjusted for inflation in most countries are prepared on the
basis of historical cost without regard to changes in the general level of prices. The
individual assets, liabilities, shareholders equity, revenue, expenses and gains and
losses are therefore stated at cost at the time at which these items were originated.
The impact of inflation is ignored. This produces a meaningful result provided that
there are no dramatic changes in the purchasing power of money. Significant
changes in the purchasing power of money mean that financial statements
unadjusted for inflation are likely to be misleading. Amounts are not comparable
between periods, and the gain or loss in general purchasing power that arises in the
reporting period is not recorded. Financial statements unadjusted for inflation do

not properly reflect the companys position at the balance sheet date, the results of
its operations or cash flows. [2]
During periods of severe monetary inflation, such as during the 1970s in the United
States, accounting standard-setting bodies such as the Financial Accounting
Standards Board have considered various new ways to present financial
information. In the United States, as in all low inflationary economies, financial
information regarding historical cost items are not adjusted for inflation. [3]
It is accepted in low inflationary economies that the historical cost model will
undermine the accuracy of financial statements whenever inflation is non-zero,
which means always. When inflation is low or moderate however, the inaccuracy is
considered insufficiently important to warrant applying other methods. The IASB
requires that hyperinflation accounting methods be used whenever cumulative
inflation over a three-year period is greater than 100%. This limit has been
criticized as too high and arbitrary.[4],[5]
Accrual
The word accrual is used in accounting as an abbreviation of terms accrued
expense or accrued revenue. In accrual basis accounting, accrued expense is a
liability resulting from an expense for which no invoice or other official document
is available yet. Similarly, accrued revenue is an asset resulting from a revenue for
which no official document was issued yet. The other side of the entry will always
be a profit and loss account - expense in the first case and revenue in the latter
one.
In contrast to "Provision", the amount and occurrence for accruals is known.
Convention Of Disclosure
The Convention Of Disclosure means that all material facts must be disclosed in the
financial statements. For example, in case of sundry debtors not only the total
amount of sundry debtors should be disclosed, but also the amount of good and
secured debtors, the amount of good, but amount of unsecured debtors and amount
of doubtful debts should be stated. Full disclosure does not mean disclosure of each
and every item of information. It only means disclosure of such information which is
of significance to owners, investors & creditors.
Materiality
Materiality is a concept or convention within auditing and accounting relating to
the importance of an amount, transaction, or discrepancy. The objective of an audit
of financial statements is to enable the auditor to express an opinion whether
the financial statements are prepared, in all material respects, in conformity with
an identified financial reporting framework such as Generally Accepted
Accounting Principles (GAAP). The assessment of what is material is a matter of
professional judgment.
Materiality is defined in the International Accounting Standards Board s
"Framework for the Preparation and Presentation of Financial Statements" in the
following terms:
"Information is material if its omission or misstatement could influence the
economicdecision of users taken on the basis of the financial statements.
Materiality depends on the size of the item or error judged in the particular
circumstances of its omission or misstatement. Thus, materiality provides a
threshold or cut-off point rather than being a primary qualitative characteristic
which information must have if it is to be useful."
Convention of conservatism
In business, investment, and accounting, the principle or convention of
Conservatism has at least two meanings.
In investment and finance, it is a strategy which aims at long-term capital
appreciation with low risk. It can be characterized as moderate or cautious and is
the opposite of aggressive behavior.
In accounting, it states that when choosing between two solutions, the one that will
be least likely to overstate assets and income should be selected.
Management accounting
Management accounting is concerned with the provisions and use of accounting
information to managers within organizations, to provide them with the basis in
making informed business decisions that would allow them to be better equipped in
their management and control functions. Unlike financial accountancy
information (which, for public companies, is public information), management
accounting information is used within an organization (typically for decisionmaking) and is usually confidential and its access available only to a select few.
Management Accounting in Banking
Management accounting is an applied discipline used in various industries. The
specific functions and principles followed can vary based on the industry.
Management accounting principles in Banking are specialized but do have some
common fundamental concepts used whether the industry is manufacturing based
or service oriented. For example, transfer pricing is a concept used in
manufacturing but is also applied in banking. It is a fundamental principle used in
assigning value and revenue attribution to the various business units. Essentially,
transfer pricing in banking is the method of assigning the interest rate risk of the
bank to the various funding sources and uses of the enterprise. Thus, the bank's
corporate treasury department will assign funding charges to the business units for
their use of the bank's resources when they make loans to clients. The treasury
department will also assign funding credit or business units who bring in deposits
(resources) to the bank. Although the funds transfer pricing process is primarily
applicable to the loans and deposits of the various banking units, this proactive is
applied to all assets and liabilities of the business segment. Once transfer pricing is
applied and any other management accounting entries or adjustments are posted to
the ledger (which are usually memo accounts and are not included in the legal
entity results), the business units are able to produce segment financial results
which are used by both internal and external users to evaluate performance.
Cost accounting
Cost accounting is the process of tracking, recording and analyzing costs associated
with the products or activities of an organization. Cost accounting need not follow
generally accepted accounting principles , or GAAP, because its primary use is
for internal managers, rather than external auditors. Costs are measured in units of
currency by convention. Cost accounting could also be defined as a kind of
management accounting that translates the Supply Chain (the series of events in
the production process that, in concert, result in a product) into financial values.
Managers use cost accounting to support decision making to reduce a company's
costs and improve its profitability.
There are at least four approaches:
Standardized Cost Accounting
Activity-based Costing
Throughput Accounting
Marginal Costing
Cost Elements:
1) Raw Material
2) Manual Labor
3) Indirect Expenses
Financial Accounting Standards Board(FASB)
The Financial Accounting Standards Board (FASB) is a private, not-for-profit
organization whose primary purpose is to develop generally accepted
accounting principles (GAAP) within the United States in the public's interest.
The Securities and Exchange Commission (SEC) designated the FASB as the
organization responsible for setting accounting standards for public companies in
the U.S. It was created in 1973, replacing the Accounting Principles Board and
the Committee on Accounting Procedure of the American Institute of Certified
Public Accountants. The FASB's mission is "to establish and improve standards of
financial accounting and reporting for the guidance and education of the public,
including issuers, auditors, and users of financial information."
International Accounting Standards Board (IASB)
The International Accounting Standards Board (IASB) founded on April 1, 2001 is
the successor of the International Accounting Standards Committee (IASC)
founded in June 1973 in London. It is responsible for developing the International
Financial Reporting Standards (new name for the International Accounting
Standards issued after 2001), and promoting the use and application of these
standards.
The International Accounting Standards Board is an independent, privately-funded
accounting standard-setter based in London, UK.
Share Market
Agent: A securities firm is classified as an agent when it acts on behalf of its clients
as buyer or seller of a security. The agent does not own the security at any time
during the transaction.
Annual Report: A publication, including financial statements and a report on
operations, issued by a company to its shareholders at the company's fiscal yearend.
Arbitrage: The simultaneous purchase of a security on one stock market and the
sale of the same security on another stock market at prices which yield a profit.
Ask or Offer: The lowest price at which someone is willing to sell the security.
When combined with the bid price information, it forms the basis of a stock quote.
Assets: Everything a company or person owns, including money, securities,
equipment and real estate. Assets include everything that is owed to the company
or person. Assets are listed on a company's balance sheet or an individual's net
worth statement.
At-the-Money: When the price of the underlying equity, index or commodity equals
the strike price of the option.
Averages and Indices: Statistical tools that measure the state of the stock market
or the economy, based on the performance of stocks, bonds or other components.
Examples are the S&P/TSX Venture Composite Index, the S&P/TSX Composite
Index, the Dow Jones Industrial Average and the Consumer Price Index.
Basis Point: One-hundredth of a percentage point. For example, the difference
between 5.25% and 5.50% is 25 basis points.
Bear Market: A market in which stock prices are falling.
Beta: A measurement of the relationship between the price of a stock and the
movement of the whole market.
Bid: The highest price a buyer is willing to pay for a stock. When combined with the
ask price information, it forms the basis of a stock quote.
Black-Scholes Model: A mathematical model used to calculate the theoretical
price of an option.
Blue Chip Stocks: Stocks of leading and nationally known companies that offer a
record of continuous dividend payments and other strong investment qualities.
Bonds: Promissory notes issued by a corporation or government to its lenders,
usually with a specified amount of interest for a specified length of time.
Broker or Brokerage Firm: A securities firm or a registered investment advisor
affiliated with a firm. Brokers are the link between investors and the stock market.
When acting as a broker for the purchase or sale of listed stock, the investment
advisor does not own the securities but acts as an agent for the buyer and seller
and charges a commission for these services.
Bull Market: A market in which stock prices are rising.
Call Option: An option which gives the holder the right, but not the obligation, to
buy a fixed amount of a certain stock at a specified price within a specified time.
Calls are purchased by investors who expect a price increase.
Capital: To an economist, capital means machinery, factories and inventory
required to produce other products. To investors, capital means their cash plus the
financial assets they have invested in securities, their home and other fixed assets.
Capital Gain or Loss: Profit or loss resulting from the sale of certain assets
classified under the federal income tax legislation as capital assets. This includes
stocks and other investments such as investment property.
Capital Stock: All shares representing ownership of a company, including
preferred and common shares.
Capitalization or Capital Structure: Total dollar amount of all money invested in
a company, such as debt, preferred and common stock, contributed surplus and
retained earnings of a company.
Capped Indices: Indices for which there is a maximum relative weight by market
capitalization for any one constituent. Any individual constituent of the index can
represent no more than a specified percent of the index. The individual constituents
of the S&P/TSX Capped Composite and S&P/TSX Capped 60 indices are capped at
10%, while the individual constituents of the S&P/TSX Capped sector indices are
capped at 25%.
Cash: A special term attached to an equity order that requires the trade to be
settled either the same day or the following business day for cash.
Cash Dividend / Distribution: A dividend/distribution that is paid in cash.
Clearing Number: The trading number of the clearing Participating Organization
or Member.
Closed-End Investment Fund: An investment trust that issues a fixed number of
securities that trade on a stock exchange or in the over-the-counter market. Assets
of a closed-end fund are professionally managed in accordance with the fund's
investment objective and policies and may be invested in a wide range of financial
instruments/assets. Like other publicly traded securities, the market price of closedend fund securities fluctuates and is determined by supply and demand in the
marketplace.
Commission: The fee charged by an investment advisor or broker for buying or
selling securities as an agent on behalf of a client.
Commodities: Products used for commerce that are traded on a separate,
authorized commodities exchange. Commodities include agricultural products and
natural resources such as timber, oil and metals. Commodities are the basis for
futures contracts traded on these exchanges.
Common Shares or Common Stock: Securities that represent part ownership in
a company and generally carry voting privileges. Common shareholders may be
paid dividends, but only after preferred shareholders are paid. Common
shareholders are last in line after creditors, debt holders and preferred
shareholders to claim any of a company's assets in the event of liquidation.
Convertible Security: A security of an issuer (for example - bonds, debentures, or
preferred shares) that may be converted into other securities of that issuer, in
accordance with the terms of the conversion feature. The conversion usually occurs
at the option of the holder of the securities, but it may occur at the option of the
issuer.
Corporation or Company: A form of business organization created under
provincial or federal laws that has a legal identity separate from its owners. The
shareholders are the corporation's owners and are liable for the debts of the
corporation only up to the amount of their investment. This is known as limited

liability.
Debenture: A long-term debt instrument issued by corporations or governments
that is backed only by the integrity of the borrower, not by collateral. A debenture is
unsecured and subordinate to secured debt. A debenture is unsecured in that there
are no liens or pledges on specific assets.
Diversification: Limiting investment risk by purchasing different types of
securities from different companies representing different sectors of the economy.
Dividend: The portion of the issuer's equity paid directly to shareholders. It is
generally paid on common or preferred shares. The issuer or its representative
provides the amount, frequency (monthly, quarterly, semi-annually, or annually),
payable date, and record date. The exchange that the issue is listed on sets the exdividend/distribution (ex-d) date for entitlement. An issuer is under no legal
obligation to pay either preferred or common dividends.
Equities: Common and preferred stocks, which represent a share in the ownership
of a company.
Equity Financing: The dollar value of securities issued in accordance with a TSX
or TSX Venture Exchange approved transaction. The value equals the number of
securities multiplied by the offering price. The various forms of financial
instruments may have an effect on determining the price or the number of
securities.
Exchange-Traded Fund (ETF): A special type of financial trust that allows an
investor to buy an entire basket of stocks through a single security, which tracks
and matches the returns of a stock market index. ETFs are considered to be a
special type of index mutual fund, but they are listed on an exchange and trade like
a stock. Also known as an index participation unit (IPU).
Face Value: The cash denomination of the individual debt instrument. It is the
amount of money that the holder of a debt instrument receives back from the issuer
on the debt instrument's maturity date. Face value is also referred to as par value
or principal.
Futures: Contracts to buy or sell securities at a future date.
Growth Stock: The shares of companies that have enjoyed better-than-average
growth over recent years and are expected to continue their climb.
Hedge: A strategy used to limit investment loss by making a transaction that
offsets an existing position.
Index: A statistical measure of the state of the stock market, based on the
performance of stocks. Examples are the S&P/TSX Composite Index and the
S&P/TSX Venture Composite Index.
Inflation: An overall increase in prices for goods and services, usually measured by
the percentage change in the Consumer Price Index.
Initial Public Offering (IPO): A company's first issue of shares to the general
public.
Inside Information: Non-public information pertaining to the business affairs of a
corporation that could affect the company's share price should the information be
made public.
Insider: All directors and senior officers of a company, and those who are
presumed to have access to inside information concerning the company. An insider
is also anyone owning more than 10% of the voting shares of a company.
Insider Trading: There are two types of insider trading. The first type occurs when
insiders trade in the stock of their company. Insiders must report these transactions
to the appropriate securities commissions. The other type of insider trading is when
anyone trades securities based on material information that is not public

knowledge. This type of insider trading is illegal.
Intrinsic Value: The difference between the current market value of the
underlying interest and the strike price of an option. In-the-money is a term used
when the intrinsic value is positive.
Investment: The purchase or ownership of a security in order to earn income,
capital or both. Investments may also include artwork, antiques and real estate.
Investment Fund: A closed-end fund that offers investors the ability to buy a
security that represents a portfolio of investments with a specific investment
strategy. These products use funds raised through a public offering to invest in a
portfolio of securities, which are actively managed to create income streams for
investors, typically through a combination of dividends, capital gains, interest
payments, and in some cases, income from derivative investment strategies. These
funds are not directly related to an operating business. Some examples are: funds of
income funds, senior loan funds, mortgage-backed security funds, and commodity
funds.
IPO Financing: The dollar value of initial public offering (IPO) securities issued in
accordance with a TSX or TSX Venture Exchange approved transaction. It is the
stated prospectus price multiplied by "the number of securities issued under the
IPO plus the over allotment".
Issue: Any of a company's securities or the act of distributing the securities. Issued
shares refer to the portion of a company's shares that have been issued for sale. A
company does not have to issue the total number of its authorized shares.
Liabilities: The debts and obligations of a company or an individual. Current
liabilities are debts due and payable within one year. Long-term liabilities are those
payable after one year. Liabilities are found on a company's balance sheet or an
individual's net worth statement.
Liquidity: This refers to how easily securities can be bought or sold in the market.
A security is liquid when there are enough units outstanding for large transactions
to occur without a substantial change in price. Liquidity is one of the most
important characteristics of a good market. Liquidity also refers to how easily
investors can convert their securities into cash and to a corporation's cash position,
which is how much the value of the corporation's current assets exceeds current
liabilities.
Long: A term that refers to ownership of securities. For example, if you are long
100 shares of XYZ, this means that you own 100 shares of XYZ company.
Margin Account: A client account that uses credit from the investment dealer to
buy a security. A client needs to deposit a margin amount with the balance
advanced by the investment dealer against collateral such as investments. The
investment dealer can make a margin call, which means the client must deposit
more money or securities if the value of the account falls below a certain level. If
the client does not meet the margin call, the dealer can sell the securities in the
margin account at a possible loss to cover the balance owed. The investment dealer
also charges the client interest on the money borrowed to buy the securities.
Market: The place where buyers and sellers meet to exchange goods and services.
It also represents the actual or potential demand for a product or service.
Market Capitalization: The number of issued and outstanding securities listed for
trading for an individual issue multiplied by the board lot trading price. Should a
trading price not be available, a bid price, a price on another market, or if
applicable, the price for an issue of the same issuer which the first issue is
convertible into, may be used. Total market capitalization for a market is obtained
by adding together all individual issue market capitalizations (warrants and rights
excluded). Escrowed shares are excluded from TSX Venture market capitalization.
Market Maker: A trader employed by a securities firm who is required to maintain

reasonable liquidity in securities markets by making firm bids or offers for one or
more designated securities up to a specified minimum guaranteed fill. Market
makers for the stock of issuers listed on Toronto Stock Exchange are referred to as
Registered Traders.
Money Market: Part of the capital market established to buy and sell short-term
financial obligations. These include federal government treasury bills, short-term
Government of Canada bonds, commercial paper, bankers' acceptances and
guaranteed investment certificates. Longer-term securities are also traded in the
money market when their term shortens to three years.
Mutual Fund: A fund managed by an expert who invests in stocks, bonds, options,
money market instruments or other securities. Mutual fund units can be purchased
through brokers or, in some cases, directly from the mutual fund company.
Net Worth: The difference between a company's or individual's total assets and its
total liabilities. Also known as shareholders' equity for a company.
New Issue: A stock or bond issue sold by a company for the first time. Proceeds
may be used to retire the company's outstanding securities, or be used for a new
plant, equipment or additional working capital. New debt issues are also offered by
governments.
New Issuer Listing - IPO (Initial Public Offering): An IPO (initial public
offering) is an issuer's first offering of its securities made to the public in
accordance with a prospectus. The offering is often made in conjunction with an
issuer's initial application for listing on an exchange.
Odd Lot: A number of shares that are less than a board lot, which is the regular
trading unit decided upon by the particular stock exchange. An odd lot is also an
amount that is less than the par value of one trading unit on the over-the-counter
market. For example, if a board lot is 100 shares, an odd lot would be 99 or fewer
shares.
Open-End Investment Fund: An investment fund that continuously offers its
securities to investors and stands ready to redeem its securities at all times.
Transactions in shares/units of mutual funds are based on their net asset value
(NAV), determined at the close of each business day. Examples of an open-end fund
are traditional mutual funds and exchange-traded funds (ETFs).
Option: The right, but not the obligation, to buy or sell certain securities at a
specified price within a specified time. A put option gives the holder the right to sell
the security, and a call option gives the holder the right to buy the security.
Option Type: A call or put contract.
Option Writer: The seller of an option contract who may be required to deliver
(call option) or to purchase (put option) the underlying interest covered by the
option, before the contract expires.
Over-The-Counter (OTC) Market: The market maintained by securities dealers
for issues not listed on a stock exchange. Almost all bonds and debentures, as well
as some stocks, are traded over-the-counter in Canada. An OTC market is also
known as an unlisted market.
Par Value: A security's nominal face value.
Portfolio: Holdings of securities by an individual or institution. A portfolio may
include various types of securities representing different companies and industry
sectors.
Preferred Share: A class of share capital that entitles the owner to a fixed
dividend ahead of the issuer's common shares and to a stated dollar value per share
in the event of liquidation. It usually does not have voting rights, unless a stated
number of dividends have been omitted.
Premium: An option contract's price.

Price-Earnings (P/E) Ratio: A common stock's last closing market price per share
divided by the latest reported 12-month earnings per share. This ratio shows you
how many times the actual or anticipated annual earnings a stock is trading at.
Private Placement: The private offering of a security to a small group of buyers.
Resale of the security is limited. See Best Efforts and Bought Deal Underwriting.
Profit: What is left over for the owners of a business after all expenses have been
deducted from revenues. Gross profit is the profit before corporate income taxes.
Net profit is the final profit of the business after taxes have been paid.
Prospectus: A legal document describing securities being offered for sale to the
public. It must be prepared in accordance with provincial securities commission
regulations. Prospectus documents usually disclose pertinent information
concerning the company's operations, securities, management and purpose of the
offering.
Public Float: The number of issued and outstanding shares of a company,
excluding shares held by persons who, individually or in conjunction with other
persons, hold 20% or more of the issuer's voting securities.
Put Option: A put option is a contract that gives the holder the right to sell a
specified number of shares at a stated price within a fixed time period. Put options
are purchased by those who think a stock may decline in price.
Securities: Transferable certificates of ownership of investment products such as
notes, bonds, stocks, futures contracts and options.
Securities and Exchange Commission (SEC): The federal regulatory body for
interstate securities transactions in the United States.
Share Certificate: A paper certificate that represents the number of shares an
investor owns.
Short Selling: The selling of a security that the seller does not own (naked or
uncovered short) or has borrowed (covered short). Short selling is a trading
strategy. Short sellers assume the risk that they will be able to buy the stock at a
lower price, cover the outstanding short, and
Split Shares: Capital and preferred shares issued by a split-share corporation. A
split-share corporation holds common shares of one or more companies. The
corporation then issues two classes of shares - capital shares and preferred shares.
The objective is to generate fixed, cumulative, preferential dividends for the holders
of preferred shares and to enable the holders of the capital shares to participate in
any capital appreciation (or depreciation) in the underlying common shares.
Spread: The difference between the bid and the ask prices of a stock.
Stock Dividend/Distribution: A dividend/distribution paid in securities of the
same issue or a different issue of the same issuer or another issuer. A stock
dividend/distribution can be used as a means to list a new issuer. The issuer or its
representative provides the amount, payable date, and record date. The exchange
that the issue is listed on sets the ex-dividend/distribution (ex-d) date for
entitlement.
Stock Split: A corporate action that increases the number of securities issued and
outstanding, without the issuer receiving any consideration for the issue. Approval
by security holders is required in many jurisdictions. Each security holder gets
more securities, in direct proportion to the amount of securities they own on the
record date; thus, their percentage ownership of the issuer does not change. For
example, a two-for-one stock split involves the issuance of two new securities for
every old security.
Strike Price: The price the owner of an option can purchase or sell the underlying
security. The purchases and sales are also known as calls and puts.
Time Value: The difference between an option's premium and its intrinsic value.
Underwriting: The purchase for resale of a new issue of securities by an
investment dealer or group of dealers who are also known as underwriters. The
formal agreements for these transactions are called underwriting agreements.
Venture Capital: Money raised by companies to finance new ventures.
Warrant: A security giving the holder the right to purchase securities at a
stipulated price within a specified time limit. Exercise of the warrant is solely at the
discretion of the holder. Warrants are not exercisable after the expiry date. A
warrant is often issued in conjunction with another security as part of a financing. A
warrant may be traded as a listed security or it may be held privately.
Writer: The seller of an option. The writer has an obligation associated with the
contract to either purchase or sell a specified number of shares at the strike price
on or before expiry.
Yield: This is the measure of the return on an investment and is shown as a
percentage. A stock yield is calculated by dividing the annual dividend by the
stock's current market price. For example, a stock selling at $50 and with an annual
dividend of $5 per share yields 10%. A bond yield is a more complicated calculation,
involving annual interest payments, plus amortizing the difference between its
current market price and par value over the life of the bond.
Euro
Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. [2][3]
The currency is also used in a further 5 European countries (Montenegro, Andorra,
Monaco, San Marino and the Vatican) and the disputed territory of Kosovo.
The name euro was officially adopted on 16 December 1995. [8] The euro was
introduced to world financial markets as an accounting currency on 1 January 1999,
replacing the former European Currency Unit (ECU) at a ratio of 1:1. Euro coins
and banknotes entered circulation on 1 January 2002.[9]
List of circulating currencies by country
Afghanistan
Australia
Bhutan
Burma
Canada
China,
Czech
Republic
Denmark
Egypt
Finland
France
Germany
Greece
Hong Kong
India
Iran
Afghan Afghani
Australian dollar
Bhutanese
ngultrum
Myanmar kyat
Canadian dollar
Chinese Yuan
Iraq
Czech koruna
Danish krone
Egyptian pound
Euro
Euro
Euro
Euro
Hong Kong dollar
Indian rupee
Iranian rial
Korea, South
Kuwait
Libya
Malaysia
Maldives
Israel
Italy
Japan
Korea, North
Morocco
Nepal
Netherlands
New Zealand
Iraqi dinar
Israeli new
shekel
Euro
Japanese yen
North Korean
won
South Korean
won
Kuwaiti dinar
Libyan dinar
Malaysian ringgit
Maldivian rufiyaa
Moroccan
dirham
Nepalese rupee
Euro
New Zealand
dollar
Norway
Pakistan
Palestine
Qatar
Russia
Saudi Arabia
South Africa
Spain
Sri Lanka
Thailand
United Arab
Emirates
United
Kingdom
United States
Norwegian krone
Pakistani rupee
Israeli new
shekel
Qatari riyal
Russian ruble
Saudi riyal
South African
rand
Euro
Sri Lankan rupee
Thai baht
Dirham
British pound
United States
dollar
Current Affairs
Transit
1. The act of passing over, across, or through; passage.
2. a. Conveyance of people or goods from one place to another, especially on a local
public transportation systems. The system or vehicles used for such conveyance.
Transhipment
To transfer or be transferred from one conveyance to another for reshipment.
Mount Everest (Bangladeshi)
1. Musa Ibrahim
2. M A Muhit
Jute genome
A consortium of researchers in Bangladesh has successfully decoded the Jute Plant
Draft Genome Sequencing. The consortium consisted of Dhaka University,
Bangladesh Jute Research Institute and Software Company DataSoft Systems
Bangladesh Ltd. in collaboration with Centre for Chemical Biology, University of
Science Malaysia and University of Hawaii at Manoa, USA. On June 16, 2010
Bangladeshi Prime minister Sheikh Hasina has disclosed in the parliament that
Bangladeshi researchers have successfully done draft jute genome sequencing
which will contribute to improving jute fibre.
PrabashiKalyan Bank
20.04.2011, Paid up capital Tk.100 crore, The entire operational activities of the
bank can be divided in three steps.
i) Assistance to out bound workers under Migration loan.

ii) Rehabilitation of the retrenched workers under rehabilitation loan.
iii)Repatriation of remittance earned by wage earners.
Chairman: Dr. Jafar Ahmed Khan, Secretary minister for labour and employment
and expatriates welfare and overseas employment
Manpower business of Bangladesh
Bangladesh is an exporter of professional, skilled, semi-skilled and unskilled

workers to more than 22 countries. The number of Bangladeshi workers in 2010 is
4,75,300 with the highest being 8,75,000 in 2008.
Country
Saudi Arabia
UAE
Kuwait
UK
Rest of the world
%
40%
16%
10%
10%
24%
The amount of foreign remittance per year is more than 9 billion USD on average.
Country: Saudi Arabia, UAE, Malaysia, USA, UK, Australia, Canada. Germany,
France, Italy, Switzerland, New Zealand, Belgium, South Africa, Japan. Mauritius,
Jordan, Lebanon, etc.
1.
Ministry of Public Administration instead of Ministry of

Establishment
2.
Republic of the Union of Myanmar instead of Union of

Myanmar
3.
Father of e-Book:
4.
Father of CD:
5.
Father of Internet:
6.
WikiLeaks:
7.
Father of Computer:
Charles Babbage (UK)
8.
Father of Laptop:
Bill Mogridge (UK)
9.
Father of Desktop Printer:
10.
Father of Mouce:
11.
Father of Search Engine:
12.
Michel S Heart (USA)
Norio Ohoga (Japan)

Vinton Gray Karf (USA)
Julius Assange
Henry Edward Roberts (USA)
Douglas Anglebart (USA)

Elan Emtaz (
Father of Google:
Laurence Larry Page (Amercian),
Serge Mikalovichbrin (American , (Russia)), 1998
13.
Father of Wikipedia:
Jimmie Donald Wallace (American),
15.01.2001
14.
Father of Microprocessor:
(American), 1968, Intel-4004 (1971)
15.
Father of Java Programming Language:

(Canadian), 1995
16.
Father of Computer Programming: Rear Admiral Grace

Murray Hooper (USA),
Marsian Edward Hoff

James A Gosling
17.
Father of e-mail:
Raymond Samuel Tomlinson (USA)
18.
Father of Yahoo:
David Felow (USA), Jerry Young
(Taiwan)
19.
Facebook:
20.
Jumo:
Facebook co-founder Chris Hughes
21.
WWW:
Sir Tim Berners Lee (UK)
22.
Mark Jukerberg
HTTP:
The Hypertext Transfer Protocol (HTTP) is a
networking protocol for distributed, collaborative, hypermedia information
systems.[1] HTTP is the foundation of data communication for the World
Wide Web.
23.
Father of Laser Printer:
Garry K, Struck weather, (USA)
24.
First Mobile Banking in Bangladesh:

Limited (31.03.2011)
25.
Which country is developed by economically by using

Information & Technology System:
Sweden
26.
Most influential people of 2011:

WaelGhonim, Egypt, is
an Internet activist and computer engineer with an interest in social
entrepreneurship. (In 2011, he became an international figure and energized
pro-democracy demonstrations in Egypt after his emotional interview[3]
following 11 days of secret incarceration by Egyptian police--during which he
was interrogated regarding his work as the administrator of the Facebook
page, "We are all KhaledSaeed", which helped spark the revolution.
Dutch-Bangla Bank
27.
Everst:
28.
Rupashi Bangla is the latest name of Hotel Sheraton
29.
1) Musa Ibrahim 2)
Bangabandhu: Born 17 March 1920

Tungipara, British Raj(now Bangladesh) Died 15 August 1975 (aged 55)
Dhaka, Bangladesh
Sheikh Hasina: Sheikh Hasina (Bengali:
30.
ShekhHasina) (born September 28, 1947) is a Bangladeshi politician and

current Prime Minister of Bangladesh.[1] She has been the President of the
Awami League, a major political party, since 1981. She is the eldest of five
children of Sheikh MujiburRahman, the founding father (and first president)
of Bangladesh and widow of a reputed nuclear scientist, M. A. WazedMiah.
31.
Bangladesh is the 5th largest populated country
32.
Bangla is the 6th most used language
33.
Rabindranaths Kutibari:
DakkhinDihi
Silaidah, Shajadpur, Patisar,
34.
Nazrul:
35.
Most revenue earnings of Bangladesh:
36.
The name of first central bank of the world:
Trishal, daulatpur, Karpasdanga

VAT
Bank of
England
37.
Due to inflation purchasing power of money decrease.
38.
Per Capita IncomeUS$750
39.
The duration of a valid cheque is6 months
40.
MICR-Magnetic Ink Character Recognition
41.
BIOS-Basic Input Output Systme
42.
VGA-Video Graphis Array
43.
Border Guard Bangladesh (BGD) replaced by BDR

(Bangladesh Rifles)
44.
Which Ship Somalia JahanMoni
45.
BEFTN Bangladesh Electronic Funds Transfer Network,

28.02.2011
46.
Electronic funds transfer or EFT is the electronic

exchange or transfer of money from one account to another, either within a
single financial institution or across multiple institutions, through computerbased systems.
47.
Blasphemy: Blasphemy is irreverencetoward holy

personages, religious artifacts, customs, and beliefs. The Abrahamic religions
condemn blasphemy vehemently. Some countries have laws to punish
blasphemy,[2] while others have laws to give recourse to those who are
offended by blasphemy. Those laws may discourage blasphemy as a matter of
blasphemous libel,[3]vilification of religion,[4][5]religious insult,[6] or hate
speech.[7]
48.
Tahrir square: Kairo, egypt
49.
Lagest Econmy: USA, China, Japan
50.
Jahan Moni kidnapped by Somalia
51.
Name of General Secretary of Islamic Financial Services

Jasim Ahmed (Bangladesh)
Board:
52.
Name of 1st Bangladeshi of House of Commons : Rusnara Ali
53.
Democracy Index:
83rd
54.
Corrupted country:
134th
55.
Osama Bin Laden:
Died at Abbottabad, Islamabad,
Pakistan
Bangladesh
Monetary policy
Fiscal policy
Rabindranath
Nazrul
G-77: Argentina
LDC coordinator: Bangladesh
G-8: Nicholas Sarkozi, (France)
UN Security Council : Germany, Potugal, South Africa, India, Columbia
TIFA: Trade and Investment Framework Agreement
Female ED of Bangladesh Bank:
Nazneen Sultana

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Updated upto 12.06.

Know BASIC Bank

Mr. Md. Shahabad Doza

Micro Credit & Special Finance Division

4. Name of Chairman :Mr. Sheikh Abdul HyeBacchu, Chairman, BASIC

Mr. Jahangir AkhandSalim, Founder President Chandpur Chamber

6. Name of Company Secretary : Mr. Md. Shah AlamBhuiyan

Mr. Mohammad WahidulAlam

Research & Development Division

Updated upto 12.06.2011

Credit Administration Division

8. Why BASIC Bank is unique (Mandate).

Updated upto 12.06.2011

28.Target vis--vis Actual (Amount in crore Taka)

Updated upto 12.06.2011

3. Difference between DD & PO

Updated upto 12.06.2011

account ** is returned by the bank un paid , either because of the amount of

Updated upto 12.06.2011

Provided that nothing contained in this sub-section shall render any

Different Status of Accounts:

Different Acts related to GB

Updated upto 12.06.2011

The Money Loan Court Act-2003

Cheque will be issued

Interest to be calculated on the basis of Day-end balance and accrued

Interest rate may be fixed according to ceiling of amount not customer-wise

Minimum balance may be fixed but No minimum balance fee/incidental

Updated upto 12.06.2011

Principle of sound lending

Equitable & Registered Mortgage

Updated upto 12.06.2011

For non-manufacturing activities (such as trading or other services), the

Updated upto 12.06.2011

Asset (Except land &

Asset (Except land &

CRGM (With Risks)

Updated upto 12.06.2011

Principal Risk Components:

Size of Business, Age of Business, Business

Difference between CC(H) & CC(P)

Updated upto 12.06.2011

Updated upto 12.06.2011

the total outstanding

Demand and Continuous Loan

Rates of Down payment

Updated upto 12.06.2011

Updated upto 12.06.2011

a) At least 10% of first one years repayable loan amount or

Limitation in imposing claim :

Function of Relationship Manager

Provide good customer service while ensuring the Banks interest is

Grow the customer base through marketing and business development

Ensure that credit quality is maintained and customer reviews are

Maintain an in-depth knowledge of the customers business through

Seek assistance from CRM at the earliest if adverse trends in a

Follow up with customers to ensure the timely receipt of financial

Ensure compliance with internal policies and procedures and external

Updated upto 12.06.2011

beyond but not

beyond but not

Mode of charging security