Chapter I

1
Introduct
ion

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1.1 Introduction:
Banking is one of the most sensitive business all over the world. Banks play very important role
in the economy of a country and Bangladesh is no exemption. Banks are custodian to the assets
of the general masses. It influences and facilities many different but integrated economic
activities like resources mobilization, poverty elimination, production and distribution of public
finance.

Bangladesh has a well-developed banking system, which consists of a wide variety of institutions
ranging from a central bank to commercial banks and to specialized agencies to cater for special
requirements of specific sectors. The country started without any worthwhile banking network in
1971 but witnessed phenomenal growth in the first two decades. By 1990, it had acquired a
flourishing banking sector.

Dhaka Bank Ltd. is the preferred choice in banking for friendly and personalize services, cutting
edge technology, tailored solutions for business needs, global reach in trade and commerce and
high yield on investments.

1.2 Objective of The report:

 To understand the import export and foreign remittance procedures of Dhaka Bank Ltd.
 To analyze the overall foreign trade achievement with its budget for the month January,
February, Month, April, May and June.
 To analyze the foreign trade position of Dhaka Bank Ltd. by comparing with the other
four banks.
 To find out Dhaka Bank’s contribution in total import and export of Bangladesh.
 To find out the problems & prospects of foreign trade business under DBL.

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1.3 SCOPE
Dhaka Bank Ltd. is one of the leading banks in Bangladesh. The scope of the study is quite wide
as this report has covered the banking activities that Foreign Exchange Branch performs. In this
report I have mainly focused on foreign trade activities including export, import, remittance and
their related terms as well as their analysis and performance of DBL Foreign Exchange Branch.
These are consist of my observations and on the job experiences during the internship period in
the Foreign Exchange Department of SBC Tower branch.

1.4 Methodology
This report is based on the primary and secondary data. This report also bears the practical
knowledge of individual worked during the internship period. So the methodology is the mixing
of primary and secondary data with practical knowledge. Most of the necessary information has
been collected by face to face interview with the people working in different departments,
personal investigation, several documents, and files in which most of the activities of the bank
are recorded. Observational method and experience has been employed to complete this report.
Here I prepare the report as uunder:

• Financial ratio Analysis and the objective of this analysis is to measure the profitability of
Dhaka Bank Limited.
• Analysis the mechanism of Import, Export and Foreign Remittance.
• Comparative analysis of Import, Export and Foreign remittance of DBL Foreign
Exchange Branch according to their budget and achievements.
• Analyze the contribution in total Import and Export of Bangladesh and also compare the
import and export of Dhaka Bank limited with some other banks in Bangladesh, here
used the compounded annual growth rate for this analysis.

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1.5 Data Collection method

Sources of Primary Data

 Analyzing documents.
 Major source of information were discussed with the officers of Foreign exchange
Department.
 Practical work exposure from the different desk of Foreign Exchange Department of the
Branch.
 Face to face conversation with the bank officers
Sources of Secondary Data

 Annual report of Dhaka Bank Ltd.

 Printed forms and documents supplier by Dhaka Bank Ltd.
 Relevant books, journals, Booklets.
 Website of DBL
 Business Solution of DBL Foreifn Exchange Branch.
 Other manual information.
1.6 Limitations
There were certain limitations regarding the study that is summarized below:
 Sometimes I was assigned to do some jobs without explaining why this work was to be
done. This situation has created a lot of problems to understand why a specific function is
being performed.
 Difficulty in accessing data of its internal operations.
 Non availability of some preceding year’s statistiacal data.
 Large-scale research was not possible due to constraints and restrictions imposed by the
organization.
 In many cases, up to date information is not published.
 Large-scale research was not possible due to time constraints.
 The tenure of the Internship program is only three months. Since Foreign Exchange is a
vast area, after doing the regular office works from 10 AM to 6 PM it is not possible to
go through in depth within this short span of time.

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 The secondary source of information was not enough to complete the report.

n Profile
Organizatio
Chapter I 2

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2.1 An Overview of the Organization: Dhaka Bank Limited

Bangladesh economy has been experiencing a rapid growth since the '90s. Industrial and
agricultural development, international trade, inflow of expatriate Bangladeshi workers'
remittance, local and foreign investments in construction, communication, power, food
processing and service enterprises ushered in an era of economic activities. Urbanization and
lifestyle changes concurrent with the economic development created a demand for banking
products and services to support the new initiatives as well as to make channel consumer
investments in a profitable manner. A group of highly acclaimed businessmen of the country
grouped together to respond to this need and established Dhaka Bank Limited in the year 1995.

The Bank was incorporated as a public limited company under the Companies Act. 1994. The
Bank started its commercial operation on July 05, 1995 with an authorized capital of Tk. 1,000
million and paid up capital of Tk. 100 million. The paid up capital of the Bank stood at Tk. 1934
million as on 31 December 2008. The Shareholders’ Equity (capital and reserves) of the Bank as
on 31 December 2008 stood at Tk.4808 million, including the sponsor's capital of Tk. 338
million.

The Bank has 53 branches including two Shariah-based branches and an offshore Banking Outlet
across the country and a wide network of correspondents all over the world. The Bank has plans
to open more branches in the current fiscal year to expand the network. The Bank offers the full
range of banking and investment services for personal and corporate customers, backed by the
latest technology and a team of highly motivated officers and staff.

In its effort to provide “Excellence in Banking” services, the Bank has launched fully automated
Phone Banking service, joined a countrywide-shared ATM network and has introduced a co-
branded credit card. A process is also underway to provide e-business facility to the bank's
clientele through Online and Home Banking solutions.

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Dhaka Bank Ltd. is the preferred choice in banking for friendly and personalized services,
cutting edge technology, tailored solutions for business needs, global reach in trade and
commerce and high yield on investments.

2.2 Key Facts about Dhaka Bank Limited

The banks that were given license during the mid 90s are called the 2nd Generation private
Commercial Banks. Dhaka bank Limited (DBL) is one of them that incorporated as a public
limited company under the Companies Act in 1994 and is governed by banking Companies Act,
1991. The Bank started its commercial operation on July o5, 1995. Since its incorporation, DBL
has proved itself as a true development partner of the Government in developing the national
economy by providing efficient banking services to different sectors of the economy. Some
important facts about Dhaka Bank Limited are given below:

Name of the Company Dhaka bank Limited

Legal Form A public limited company incorporated in
Bangladesh on April 06, 1995
Under the Companies Act 1994 and listed
In Dhaka Stock Exchange Limited and
Chittagong Stock Exchange Limited
Date of Commencement July 05, 1995
Registered Office Biman Bhaban (1st Flor) 100 Motijheel
C/A Dhaka-1000, Bangladesh.
SWIFT Code DHBLBDDH
Web page www.dhakabankltd.com
Managing Director Mr. Khandaker Mohammad Fazle Rashid
Company Secretary Mr. Arham Masdul Huq
Auditors Aknabin
Capital Structure at Formation
Authorized capital : BDT 100 Crore
Paid up capital : BDT 10 Crore

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Capital Structure as on June, 2010
Authorized capital : BDT 600 Crore
Paid up Capital : BDT 266 Crore

2.3 Mission of DBL

To be the premier financial institution in the country providing high quality products and
services backed by latest technology and a team of highly motivated personnel to deliver
Excellence in Banking.

2.4 Vision of DBL

At Dhaka Bank we draw our inspiration from the distant. Our vision is to assure a standard that
makes every banking transaction a pleasurable experience. Our endeavor is to offer you supreme
service through accuracy, reliability, timely delivery, cutting edge technology, and tailored
solution for business needs, global reach in trade and commerce and high yield on your
investment.

2.5 Goal of DBL

Our people, products and processes are aligned to meet the demand of our discerning customers.
Our goal is to achieve a distinction foresight. Our prime objective is to deliver a quality that
demonstrates a true reflection of our vision- Excellence in Banking.

2.6 Values
 Customer Focus
 Integrity and Honesty
 Quality
 Teamwork
 Respect for the Individual
 Responsible Citizenship
 Transparency and Accountability
 Environmentally Conscious

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  High Morale

2.7 Logo of DBL

2.8 Strategic Objectives of DBL

 Dhaka Bank’s objectives are to conduct transparent and high quality business
operation based on market mechanism within the legal and social framework spelt in
their mission and reflected in their vision.
 Their greatest concerns are customers to provide them continually efficient,
innovative and high quality products with excellent delivery system.
 Motto is to generate profit with qualitative business as a sustainable ever growing
organization and enhance fair returns to their shareholders.
 They are committed to their community as a corporate citizen and contributing
towards the progress of the nation as their corporate social responsibility.
 Their employees are their backbone. DBL promote employees well being through
attractive compensation package, promoting staff morale through training,
development and career planning.
 DBL strive for fulfillment of their responsibility to the government through paying
entire range of taxes and duties and abiding the other rules.
 They are cautious about environment & climate change and dutiful to make their
homeland a green and clean soil.
2.9 Customer Charter
DBL seek to build long-term, sustainable beneficial relationship with all the customers based on
the service-commitments and on their underlying values of mutual respect, the pursuit of
excellence and integrity in all their dealings.
1. Primary concern is to understand and satisfy customers’ needs and expectations. Promise
to use all means open to establish and understand these needs which are both mutually
beneficial and respect the values and principles in all aspects.
2. Promise to deal quickly, courteously and accurately with all correspondence.

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 3. Should disagreement arise between customer and bank they undertake to seek a speedy
and equitable solution, which takes account of the rights and obligations, both parties and
is framed in the context of a long term and enduring relationship.
4. Believe in openness, integrity, transparency and accountability and provide high standard
of services to the valued customers.
5. Create customer value, loyalty and equity, which create customer delight over a lifetime
of patronage.

2.10 Recognition
Dhaka Bank Limited was rated by Credit Rating Agency of Bangladesh limited (CRAB) on the
basis of audited Financial Statements as on December 31, 2009. CRAB has assigned “A1”
(pronounced as single A One) rating in the Long Term and “ST-2” in the Short Term to Dhaka
bank limited. A1 level of rating indicates strong capacity for timely payment of financial
commitments, with low likeliness of being adversely affected by foreseeable events. Banks rated
as ST-2 category are characterized with commendable position in terms of liquidity, internal
fund generation and access to alternative sources of funds of outstanding.

Moreover, Dhaka Bank won the prestigious “Certificate of Merit” of ICAB National awards-
2008 and Bangladesh Remittance Awards-2009 for the outstanding performance in the field of
remittance collection through banking channel. It also got Best Bank Award and CSR in 2009.

2.11 Future Plan

Dhaka Bank has celebrated its 15-year anniversary on 5th July 2010. In this 15 years of journey,
Dhaka Bank present itself as a modern and innovative Bank. The workforce is a brilliant one and
the work environment is very congenial. Though it has a strong brand image among the
corporate clients, retail division of the bank is not that strong as corporate division. One of the
problems in retail banking is dearth of ATM boths. To improve this situation, Dhaka bank plans
to have qwn ATM network. Furthermore, it signed a deal with OMNIBUS and Dutch-Bangla
Bank Ltd. to have withdrawal facility for the clients of Dhaka Bank in those networks. Dhaka
Bank is planning to modernize its IT infrastructure to provide the branch network a happy time
when serving the customers.

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2.12 Management
The Managing Director heads the management team of Dhaka Bank Limited. Several
management committees have been formed to handle the banking operation and identifying and
managing risk. The committees are MANCOM, ALCO. As per Bangladesh Bank’s instruction
“BASEL II Implementation Team” has been formed which will be responsible for proper
implementation of BASEL II capital adequacy guidelines in the Bank. The guidelines have been
issued by Bangladesh bank recently but the target date for the implementation was 31st December
2009.

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2.13 Organizational Structure of Dhaka Bank Limited

Organizational Hierarchy
Designations are in ascending order-

Top Management Chairman

Board of Directors
Executive Committee
Managing Director
Additional Managing Director

Executive Level Deputy Managing Director

Management Senior Executive Vice President
Executive Vice President
Senior Vice President
Vice President
Senior Assistant Vice President
First Assistant Vice President

Mid Level Assistant Vice President

Management Senior Principal Officer
Principal Officer

Junior Level Senior Officer

Management Officer
Probationary Officer

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 Junior Officer
Assistant Officer

Figure 1: Organizational Hierarchy of Dhaka Bank

2.14 Management Hierarchy of Dhaka Bank Ltd.

BOARD OF DIRECTORS

Managing
Director

Deputy Managing Director

Deputy Managing Deputy Managing (Credit Operation& Change
Director (Operations) Director (Business management)
Banking)

EVP, SVP, SVP, Financial VP, Personal VP, HRD

Operations institution Banking Division
F&AD
Division

Senior Vice Vice VP SVP, Audit & Senior

President President Change Assistant
Management Vice
President

Vice Ass. Vice FAVP First

President President Assistant

Assistant Vice
President

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 Figure 2: Management Hierarchy of Dhaka Bank

2.15 Economic value Added (EVA) statement for the year

ended 31 December 2009

Economic Value Added (EVA) indicates the true economic profit of the company. EVA is an
estimate of the amount by which earnings exceed or fall short of required minimum return for
shareholders at comparable risks. Shareholders/Equity providers are always conscious about
their return on capital invested. As a commercial banking company we are deeply concern for
delivery of value to all of our Shareholders/Equity providers.

BDT in Million
E co no m ic V a lue Ad de d-20 09
1%4%
6%

Economic Value Added (211.73)

C apital C h arge s(747.65)

50% C orporate T a x(1176.0 7 )

Expenses (7,505 .8 8)

39% T otal Income (9,641 .32 )

Figure: 3

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2.16 Sources of Fund

Sources of Funds

11% 3% 4%
4%

78%
Paid up Capital
Reserve & Surplus
Deposits
Borrowing from banks
Other Liabilities

Figure: 4

2.17 Uses of Fund

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 U ses of Fund

3%
17%
1%
0%

11%
68%

Loans & Advances

Investments
M onet at Call
Prem ises & b Fixed Assets
Other Assets
Cash & Balance with B ank

Figure: 5

2.18 Income & Revenue

 Interest income increased by 4% from Tk.7,171 million in 2008 to Tk.7,466 million

in 2009. The growth of advance resulted this growth of interest income. Average
yield on advance was 14.32% during 2009.
 Income from investments increased by 38% from Tk.664 million in 2008 to Tk.920
million in 2009 mainly due to the income from five and ten years Government Bonds
at higher rate of interest which was maintained of SLR purpose.
 Commission and Exchange earnings decreased by 1% from Tk.1,077 million in 2008
to Tk.1,061 million in 2009 due to decrease of import & export business which
ultimately cause the decrease of commission & fees income.
 The Net Interest Margin (NIM), which is derived by net interest income divided by
average assets, was 4.56% in 2009 as compared to 4.60% in 2008. The decrease of
Net interest margin was mainly because of increase of earning assets but lower rate of
return from advance which results the lower spread.

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  Net interest Income increased by 14% from Tk.2,622 million in 2008 to Tk.2,980
million in 2009 mainly due to increase of interest income from both advances and
investments.

2.19 Expenses

 Interest expense increased by 4% from Tk.5,214 million in 2008 to Tk.5,407 million

in 2009. This rise in interest expense is mainly attributable to the overall increase in
deposit base of the bank.
 Salary & Allowance increased by Tk.68 million as compared to 2008 mainly because
of increase of office Rent, Insurance of banks assets, printing stationery, legal
expenses, opening of some new branches, depreciation of assets, repair &
maintenance, direct sales agents remuneration, contractual agency charges etc.
 Earning base in Assets of the Bank remains unchanged in 2009, which was 8% in
2008. The ratio indicates efficient utilization of resources to earn revenues.

2.20 Comparison between operating profit and net profit

of DBL

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Dhaka Bank Limited registered an operation profit of Tk.2,810 million in 2009 compared to
Tk.2,533 million in 2008 making a growth of 11%. After all provisions including general
provisions on unclassified loans, profit before tax stood at Tk.2,135 million. Provision for tax for
the year 2009 amounted to Tk.1,176 million. The net profit of the Banks as of 31 December 2009
stood at Tk.959 million compared to previous year’s Tk.839 million making growth of 14%.
Earning per share (EPS) was Tk.45.09 in 2009 compared to Tk.39.42 in 2008.

Ope rating profit v s Ne t Profit

4000
959
3500 839
3000
2810
Taka in Million

704
2500 2533
2000 2010
580
1500 463
1000 1184
909
500
0
Year

Operating Profit Net Profit

Figure: 6
2.21 Functional Structure
 If the Jobs are not organized considering their interrelationship and are not allocated in a
Particular department it would be very difficult to control the system effectively. Dhaka
Bank Limited (DBL) has does this work very well. Different departments and divisions
of Dhaka Bank Limited (DBL) are as follows:

 Personal Banking Division: This department basically deals with the management of
products and services offered to the in individual consumers. Personal Banking program
offers a comprehensive range of products and services matching the need of every
discerning customer. Dhaka bank’s transactional accounts, savings schemes and loan
facilities provide a rare blend of convenience and unparalleled service quality.

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 Foreign Trade Division: International Trade is an important constituent of the Business
Portfolio of the Bank. Dhaka Bank Limited (DBL) offers a full array Trade Finance
Services, namely, issuing, advising and confirmation of Documentary Credit; arranging
Forward Exchange Cover; pre-shipment and post shipment Finance; negotiation and
purchase of Export Bills; discounting of Bills of Exchange, collection of Bills, etc.

 Syndication and Structured Finance Unit: In the current corporate finance

environment, the role of separate Syndication and Structured Finance Unit is undoubtedly
a major necessary. The unit wants to expand its business horizon through dealing with the
new structured finance products like asset-based securitization, bond, foreign currency
syndication etc. along with conventional financial products in financial sectors.

 Operations Division: The main function of this division is to monitor the overall
performance of the bank for daily and regular basis. It monitors the other divisions and
units also and makes important decisions.

 Computer and Information Technology Division: The information technology (IT)

division of Dhaka bank is run by a highly-motivated talent pool, enabling the bank to
deliver the benefits of truly real-time, on-line banking services to customers through all
its 51 branches and 6 SME service centers.

 Credit Risk Management: The primary objective of this division is to evaluate the
credit worthiness and debt payment capability of present loan customers and loan
applicants. The respective branches send all loans and advances proposals from the
prospective borrowers to the Head office Credit Risk Management for an approval. If this
department finds the loan proposal attractive, it either approves it or sends it for board
approval.

 Finance & Accounts Division: Financial Statements are the means of reporting
economic activities of an enterprise to the stakeholders. The economic activities are
logically presented in the financial statements so that the user can easily understand the

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 operating result of the economic activities undertaken and financial position of the entity.
In this case, some standard reporting formats are used and the formats are prescribed by
the local laws and by the local or international accounting standards.

 Treasury Division: Interest risk, equity position risk, foreign exchange risk and
commodity risk are monitored by the treasury division. The bank uses simulation-
modeling tools to periodically measure and monitor interest rate sensitively.

 Audit & Compliance: The main function of this division is to provide legal assistance to
the branches and to ensure strict adherence of rules and policies by all concerned officials
of the bank through routine and surprise inspection and audit.

 Retail Banking & Cards: In 2009, Dhaka bank further consolidated its position as a
leading bank in the country’s consumer banking arena. Emphasis on customer service,
product innovation, asset quality and brand building continued to be the corners of its
retail banking strategy. In 2010, Dhaka bank introduces its own ATM network and
introduces innovative, technology based products and services to further strengthen our
position in the retail banking sector.

 Human Resources Development: Dhaka bank’s employees work with competence,

dedication, reliability and strong focus on service to make the Dhaka Bank Limited a
successful institution. HR department emphasizes on training and development in order
to minimize the knowledge and skill gaps and enhance business awareness among the
bank employees. To this effect, this department arranges various training programs for
the bank employees both at the Bank’s own Training Institute at Motijheel Shara Tower.

 Investment Division: Dhaka Bank Limited is a member of the two leading bourses of the
country - Dhaka Stock Exchange and Chittagong Stock Exchange. The Bank actively
participates in the screen-based On-Line Trading of both the Stock Exchanges to
purchase and sell shares and debentures on behalf of its clients. Investment Division
offers clients the latest updates on the stock prices and trading of stocks. The facility may

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 be availed by maintaining an account with the Investment Division. A minimum balance
is required to be maintained in the account whilst a Commission is charged for
undertaking the trade deals.

 SME Banking: Dhaka bank limited has started its journey for SME operation since 2003
to extend to small and medium sector who has difficulty in credit access from formal
financial system. For this program U.S. agency for international development is
associated with Dhaka bank limited. They have also have a partnership with south Asia
enterprise development facility foe capacity building of the employees of Dhaka bank
limited for doing SME banking. Presently we are doing SME banking through six
branches and planning to expand the business through more rural branches with a target
of substantial loan disbursement.

2.22 Corporate Social Responsibility

In the era of Societal Marketing Concept, each organization has to pay attention to customers and
society. Because customers are very well known about substitute and they do prefer to build
relation with such organization, which really thinks about CSR.

Dhaka Bank is committed to their corporate responsibility toward the community. They allocate
2% of their tax profit for CSR practices each year. They have also taken numerous initiatives
towards social welfare and community development. They also donated-

 Bangladesh Institute of Research and Rehabilitation in Diabetes, Endocrine & Metabolic

Disorders (BIRDEM).

 Center for Women and Child Health (CWCH)

 Bangladesh Eye Foundation

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  SEID Trust

 Motijheel Govt. Boys High School

 Ideal School and College

 BADC High School

 Bangladesh under-19 Cricket team

 20th Bangladesh International Junior Tennis

 Dhaka Bank Independence Day Inter Club Tennis and Squash Tournament 2006

 Pacific Hospital Limited for treatment of poor patients

 Chhayanaut

 Anti-Drug Campaign in Chittagong

 Shahid Ziaur Rahman Shishu Hospital

 Individual assistance for treatment.

2.23 Profitability Measures

Dhaka bank limited is high performing private commercial bank, which further consolidated its
position in the market in terms of quality services to the customers and value addition for the
shareholders.

Ratio Analysis

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Financial ratio analysis is the calculation of ratios that are derived from the information in a
company's financial statements. The level and historical trends of these ratios can be used to
make inferences about a company's financial condition, its operations and attractiveness as an
investment. Financial ratios are calculated from one or more pieces of information from a
company's financial statements. In context, a financial ratio can give a financial analyst an
excellent picture of a company's situation and the trends that are developing. Here, three years of
past financial data are used to calculate the ratios to measure the financial performance and
ability of Dhaka Bank Ltd.

a. Net profit margin

2007 2008 2009

Net profit Net Income After Taxes/ Total
22.20% 21.58% 22.65%
margin= Operating Revenue

Table: 1. Net Profit Margin

A low profit margin indicates a low margin of safety: higher risk that a decline in sales will erase
profits and result in a net loss. Profit margin is an indicator of a company's pricing policies and
its ability to control costs. Dhaka bank’s Net Profit Margin has been steadily increasing over the
past years. The management has also been very successful in rightly designing and implementing
the service pricing policies and controlling the cost.

b. Net bank operating margin

2007 2008 2009

Net bank operating margin= (Total Operating Revenue-Total 3.50 3.56 3.61
Operating Expenses)
/Total Assets

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 Table: 2 Net Bank Operating Margin
This ratio measures the management efficiency, it show how efficiently the management has
been able to use the assets of the bank in order to generate operating income. Dhaka bank has
had a steady growth in its Net Bank Operating Margin over the last few years indicating that the
management was competent in fully utilization the assets and generating revenue from it.

c. Asset utilization ratio

2007 2008 2009

Asset utilization (Interest Income + Non Interest 12.57 12.79 12.40
ratio= Income)/Total Asset

Table: 3 Asset Utilization Ratio

Interpretation: The asset utilization ratio reflects the portfolio management policies, especially
the mix and yield on the bank’s assets. Dhaka bank’s assets utilization ratio has decreased from
2007 to 2009. That means the portfolio management policy should be more efficient.

d. Equity multiplier

2007 2008 2009

Equity multiplier= Total Assets/Total Equity 18.38 17.79 15.66

Table: 4 Equity Multiplier

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The Equity Multiplier (EM) reflects what percentage of the banks asset has been funded by
equity. Too high of an EM indicates that the bank is heavily funded by liability and hence could
be more risky. Dhaka Bank’s EM has declined very slowly over the past years.

e. Net interest margin

2007 2008 2009

Net interest (Interest Income - Interest 2.76 2.75 2.65
margin= Expense)/Total Assets

Table: 5 Net Interest Margin

It is a performance metric that examines how successful a firm's investment decisions are
compared to its debt situations. A negative value denotes that the firm did not make an optimal
decision, because interest expenses were greater than the amount of returns generated by
investments. That means the interest expense went up and the spread between interest income
and expense narrowed.

f. Earning spread

2007 2008 2009

Earning (Non Interest Income -Non Interest 0.74 0.81 0.97
spread= Expense)/Total Assets

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 Table: 6 Earning Spread

The Earning Spread measures the banks effectiveness in intermediation in borrowing and lending
and also the intensity of competition in the industry. The overall earning spread rate has
increased in last past years. Though there is increase in the level of competition in the industry
but Dhaka bank has played satisfactory role.

g. Expense efficiency control

2007 2008 2009

Expense (Total Interest Income/Total Earnings Assets)
efficiency -(Total Interest Expense/Total Interest 2.75 2.85 2.57
control= Bearing Liabilities)

Table: 7 Expense Control Efficiency

This is a measure of the operating efficiency of the bank i.e. how the bank has managed its
operating cost. The ratio has decreased in past years. That means Dhaka Bank was not good at
maintaining and cutting down its costs.

h. Tax management efficiency

2007 2008 2009

Tax management Net Income After Taxes/Net Income 45.97 45.00 44.93
efficiency= Before Taxes

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 Table: 8 Tax Management Efficiency

The ratio measures how efficient the management has been in controlling the tax effect on net
income. The tax management efficiency seems in steady growth. Dhaka bank has efficiently
control the tax management.

i. Return on asset

2007 2008 2009

Return on asset= Net Income After Taxes/ Total Assets 1.23 1.18 1.23

Table: 9 Return on Asset

The Return on Asset is an indirect measure of management efficiency, it show how efficiently
the management has been able to use the assets of the bank in order to generate income. Dhaka
bank’s ROA has increased in past years.

j. Return on equity

2007 2008 2009

Net Income After
Return on equity= 22.52% 20.97% 19.32%
Taxes/Stockholders Equity

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 Table: 10 Return on Equity

The amount of net income returned as a percentage of shareholders equity. Return on

equity measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested. It shows the rate of return flowing to the
banks shareholders. Dhaka bank has been showing a steady slow down decreasing growth in it
ROE over the last few years. This was mainly because of its decrease in net income over this
period of time.

k. Average asset yield

2007 2008 2009

Average asset yield= Total Interest Income/Total Earnings
Assets 10.97 11.45 10.96

Table: 11 Average Assets Yield

This ratio measures how efficient a firm is able to utilize its income earning assets to generate
income. The ratio has increased in 2008 from 2007. That indicates it was efficient in generating
revenue from loans and advances. But again it decreases in 2009.

l. Average liability cost

2007 2008 2009

Average liability cost= Total Interest Expenses/Total
Interest Bearing Liabilities 8.22 8.60 8.39

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 Table: 12 Average Liability Cost
This ratio showed that Dhaka Bank was incurring a very high amount of average liability cost.
This was because due to increased borrowing rate, a higher amount of interest has to be paid
which increased the cost of borrowing for Prime Bank. So, Dhaka Bank has to reduce its
borrowing.

m. Equity capital to total asset

2007 2008 2009

Equity capital to total asset= Total Equity Capital /Total Assets 5.44 5.62 6.39

Table: 13 Equity Capital to Total Assets

Such a ratio of equity capital to total asset shows how much cushion the depositors have against
the assets of a bank. If the equity funding relative to the total asset goes down then it may
indicate that the risk exposure for the bank’s investors and debtors has increased. Dhaka Bank’s
ratio has been steadily increasing over the past few years. This shows that the risk exposure for
the bank’s debtors and investors has gone up. So, the bank has to be more efficient in managing
its erosion of capital it may not fail due to negative profitability and erosion of its capital.

n. Equity capital to risk asset

2007 2008 2009

Equity capital to risk asset= Total Equity/Risky Assets
8.80 9.85 9.97

29 | P a g e
 Table: 14 Equity Capital to Risk Assets

This ratio reflects how well current bank capital covers potential losses from those assets most
likely to decline in value. Here the total equity has increased relative to the risky assets
decreasing the risk of the assets to improvement in value.

o. Debt equity ratio

2007 2008 2009

Debt equity ratio= Total Debt/Total Equity 0.1 0.1
74 0.168 47

Table: 15 Debt Equity Ratio

It is the measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is
using to finance its assets. The use of equity is slowly decreasing though the ratio is increasing.

p. Total debt ratio

2007 2008 2009

Total debt ratio= (Total Assets - Total Equity)/ Total Assets 94.5 94.3 93.61
6 8

Table: 16 Total Debt Ratio

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The total debt ratio takes into account all debts of all maturities to all creditors. Dhaka bank has
93% debt or tk. 93 in debt for every tk. 1 in asset in 2009. It seems that total debt ratio remain
steady in last 3 years.

The overall ratio analysis shows that in 2009 Dhaka bank’s performance is not satisfactory in
generating profit. Moreover its debt has increased drastically. So, the borrowings need to
reduce. It has to be more efficient in managing capital structure and fund management.

31 | P a g e
 Learning Points
Duties &
Position,
Internship
Chapter I 3

3.1 Department of Internship

I was assigned to perform my internship in Foreign Trade Department at Foreign Exchange

Branch of Dhaka Bank Ltd for a total duration of 03 (three) months (15 th August – 15th
November). I have performed different task in this Department as an intern. Besides I have also
worked in General banking Department.

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After 45 days in General Banking, I was posted on the foreign Trade division at the same
Branch in Dhaka Bank Ltd.

3.2 Nature of the Job

As a part of internship program, I was required to learn various types of banking tasks which
were assigned by the officers of different departments and the branch manager. In this period, I
have worked with 2 departments. These two departments are General Banking Department and
Foreign Trade department. My different types of task in these two departments are described
below:

3.2.1 General banking:

General Banking department consists of various sub departments. It is one of the most important
department and large department of the bank.

Duties and responsibilities at Account opening Department:

33 | P a g e
This is an important section of bank. It deals with the different products. These products are the
core sources of deposit. Here I have acquainted with different products that the bank offers to
acquire deposit. I also have acquainted with the checklist of account opening. Based on the
account mode the bank sets various requirements for its client. I have also learned the important
steps regarding account opening and account closing. Following are the list of my observation
 Opening Current Account.
 Opening Saving Account
 Opening DPS (Deposit Pension Scheme)
 Issuing Cheque Book
 Pay-order issuing and entry in register book.

Duties and responsibilities of Clearing Section:

I have worked total more than 15 days in this section. The main responsibility was receiving
several cheques from clients and give seal in the front side of the cheque and at the back side
endorsement seal. My responsibility was to ensure account number, account holder name, bank
name etc. And also I also kept records of several cheques.

3.2.2 Duties and responsibilities of Foreign Trade Department:

Foreign Trade is all about imports and exports. The backbones of any foreign trades between
nations are those products and services which are being traded to some other location outside a
particular country’s borders. From the foreign trade department I have learnt a lot. As it was my

34 | P a g e
report related functions I tried to learn more and more about the foreign trade. But as there were
huge pressures in this department I cannot gather a lot from them.

The foreign trade in Dhaka bank Ltd. is a prolonged process. It involves intense file work. The
foreign trade department of Dhaka Bank Foreign Exchange Branch consists of two bank
officials, including department Head. As an intern I assisted each of them in their work. Being an
intern I had limited authority regarding financing and other delicate activities, for example,
 Preparing and updating files against each L/C
 Update L/C register, LCAF register, Bill of Entry register.
 Preparing Non - nego letter.
 Issuing Export form.
 Updating Export Registrar.
 Filing huge number of L/C related document.
 Date entry of each bill of entry.
 Preparing and sending letters to the customers.
Most of my knowledge was gathered through observing activities of officers, face to face
conversation with the bank officers and other secondary sources.

35 | P a g e
 Dhaka Bank Ltd.
Activities of
Foreign Trade

Chapter I 4

4.1 About Foreign Trade

The continuing global tendency towards the free flow of business and monetary infusions across
nations describes globalization which helps in the formation of international financial system. It
provides economic independence and triggers competition stimulating globalization to elevate
the living standard of people in the nations that offer themselves to the world trade.

36 | P a g e
The banking scenario in Bangladesh has already gained all the momentum, with the domestic
and international banks gathering peace. The focus of all banks in Bangladesh has shifted their
approach to ‘cost’, determined by revenue minus profit. This means that all the resources should
be used efficiently to better the productivity and ensure a win-win situation. To survive in the
long run, it is essential to focus on cost saving. Previously, banks focused on the ‘revenue’ model
which is equal to cost plus profit. Post the banking reforms, banks shifted their approach to the
‘profit’ model, which meant that banks aimed at higher profit maximization.

Foreign Trade Department is a very imperative one that deals with import, export and foreign
remittance and post import financing.

Foreign Trade can be considered a number of different things, depending on the type of trade one
is talking about. Generally speaking, foreign trade means trading goods and services that are
detained for a country other than their country of origin. Foreign trade can also be investing in
foreign securities, though this is a less common use of them.

Foreign Trade is all about import and export. The backbone of any foreign trade between nations
is those products and services which are being traded to some other location outside a particular
country’s borders. Some nations are adept at producing certain products at a cost-effective price.
Perhaps it is because they have the labor supply or abundant natural resources which make up the
raw materials needed. No matter what the reason, the ability of some nations to produce what
other nations want is what makes foreign trade work.

4.2 Foreign Trade Department Goals and Functions

Foreign exchange department is international department of the bank. It deals with globally and
facilitates international trade through its various modes of services. It bridges between importers
and exporters. These banks are known as authorized Dealers. If the branch is authorized dealer
in foreign exchange market, it can remit foreign exchange from local country to foreign country.

37 | P a g e
This department mainly deals with foreign currency. This is why this department is called
foreign exchange department. Some national and international laws regulate functions of this
department. Among these, Foreign exchange Act, 1947 is for dealing in foreign exchange
business, and import and export control Act, 1950 is for documentary credits. Governments’
import & export policy is another important factor for import and export operation of banks.

4.3 Foreign Trade Activities of Dhaka Bank Limited

Foreign Exchange Branch:

Foreign trade can be considered a number of different things, depending on the type of trade one
is talking about.

The Foreign Trade Department of Dhaka Bank Ltd. Foreign Exchange branch operates following
types of activities:

38 | P a g e
The Foreign Trade Department of Dhaka Bank Limited Foreign Exchange Branch normally does
three types of activity. These are mentioned above in the chart.

In the foreign trade department of DBL FEX they usually do the above three functions on their
day to day business. Import, Export, Remittance these are common for all the branches of DBL.
This branch is one of the largest branches of DBL. It gives most of the export import service as
the instruction of its head office. Recently Dhaka Bank Ltd. established th e central processing
Center for Trade & Credit Operations. The center maintains its accounting records in the general
ledger of the respective branches. The import/export related processing and credit operations are
centrally controlled and monitored by the CPC for efficient and effective decision- making and
reduction of cost as well.

4.4 Import

4.4.1. Introduction

Import is the flow of goods and services purchased by economic agent staying in the country from
economic agent staying abroad. Normally consumers, firms and Government organizations import
foreign goods or services to meet their various necessities. The person or organizations who
import goods & services from foreign countries is known as importer. One of the important

39 | P a g e
functions of the commercial banks in the world is to undertake import of merchandise into the
country and payment of foreign exchange towards the cost of the merchandise to foreign
suppliers.

Import Trade of Bangladesh is controlled under the Import & Export Control Act (IEC), 1950.
Authorized Dealer Banks will import the goods into Bangladesh following import policy, public
notice, F.E. circular & other instructions from competent authorities from time to time.

4.4.2. General provision for import:

Regulation of import - Import of goods under this order shall be regulated as under:

• Banned list: Banned goods are not allowed to import through the foreign exchange
transaction. Such as Live swine, eggs of shrimps and prawns etc.

• Restricted list: Any item, which is restricted by the "Import Policy Order 2006 -2009"
in Annexure i(b) shall be importable only on fulfillment of the conditions (b) specified therein
against the item.

• Free importable items: The items, which are not, included either in the Banned list or
restricted list shall be freely importable.

In addition to the conditions mentioned in the Restricted and Banned lists, the conditions
restrictions and procedures for import of various items mentioned in the test portion of this
order, shall as usual apply in case of import of those items.

4.4.3. Import Position of DBL

Imports are foreign goods and services purchased by consumers, firms and Governments in
Bangladesh. In the year 2008, Dhaka Bank Limited was active in extending services to their
valued clients related with import business. As of 31st December 2008 their import volume was
Tk. 65,737 million compared to the volume of 2007 for Tk. 49,496 million marking an increase
of 33% from the year. The major import items of the year were:

• Capital Machinery scrap vessel

40 | P a g e
 • Hot rolled non alloy steel
• HDPE
• Raw cotton
• Fabrics & Accessories
• Fertilizers and edible oil
• Oil seeds.

Figure: 7 Import of Dhaka Bank Limited

4.4.4. Import Procedure followed by DBL

As an Authorized Dealer, Dhaka Bank Limited, Imamgonj Branch is always committed to

facilitate import of different goods into Bangladesh from the foreign countries. Import Section of
the branch is assigned to perform this job. And to serve its client's demand to import goods, it
always maintains required formalities that are collectively termed as The Import Procedure.
Procedure of import from importers side:

41 | P a g e
 a) To open an account with a Bank.

b) To get IRC (Import Registration Certificate) from CCI & E.

c) To get TIN and VAT no.

d) To procure Pro-forma Invoice / Indent (In case of some selective items, approval
from concerned authority to be needed)

e) To formal request place to the Bank to open L/C.

f) To fill up the L/C Application Form mentioning required various clauses.

g) To sign LCAF (It may be registered or not).

h) To get Insurance Cover Note with money receipt.

i) To sign IMP (this part is not mandatory as it is now computer generated form).

Submitting all the papers to the bank, the importer can apply for opening L/C. After taken
delivery of imported goods from the Custom Authority the importer deposit the B/E (Bill of
Entry) to the Bank, which ensure that Goods have entered in the country.

4.4.5. Import Mechanism

To import, a person should be competent to be an ‘IMPORTER’. According to Import and Export Control
Act, 1950, the Office of Chief Controller Import and Export provides the registration (IRC) to the

42 | P a g e
importer. After obtaining this the person has to secure a letter of credit authorization (LCA) from
Bangladesh Bank. And then a person becomes a qualified importer. He is the person who requests or
instructs the opening bank to open an L/C. He is also called opener or applicant of the credit.

4.4.6. Functions of Import Section

The functions of this section are mainly to deal with various components such as:

• Letter of Credit (LC)

• Payment against Document (PAD)

• Payment against Trust Receipt (PTR)

• Loan against Imported Merchandise (LIM)

4.4.7. Things Done Here

The following things are done in this department:

• Total supervision of Import Department (Back to Back/Cash).

• Foreign Correspondence related to above.

• Payment of Back-to-Back L/C and endorsement of Export L/c against payment.

• Follow-up of Back-to-Back overdue bill.

• Correspondence Regarding, Back-to-Back L/C and Cash L/C.

• Maintenance of Due Date Diary.

• Maintenance and record of related L/C Documents.

• Audit Compliances.

• Matching of Bill of Entry with IMP, Follow-up of pending Bill of Entry Quarterly
Statement.

43 | P a g e
• Batch Checking.

• L/C opening / Amendment (Back to Back L/C)

• Endorsement of Export L/C when opening.

• Batch checking.

• Balancing of L/C Contingent Liability Back to Back L/C

• Follow-up of Sub-Judaic bills and maintaining liaison with Head Office and Foreign
Correspondent.

• Supervision of checking, Lodgment and retirement of Import documents under Back-to-

Back L/C.

• Issuance of Certificate and attestation of papers/ documents of garments clients as

required by BGME, EPB & other regulatory bodies.

• Checking, Lodgment, Retirement of Import documents under Back-to-Back L/C

• Issuance of Shipping Guarantee (Back-to-Back L/C)

• IMP Form Fill-up (Cash L/C)

• Inform negotiating Bank about maturity date of Back-to-Back L/C

• Quarterly statement for Bonded Ware House

• Balancing of Accepted Liability.

• Statement of Outstanding accepted import bills under Back-to-Back L/C.

• L/C Opening and Amendment of Cash/ Inland L/C.

• Maintenance and record of Pass Book and IRC.

• Maintenance and Record of related L/C (s) & documents.

44 | P a g e
• Credit Report.

• Statement of IRC Renewal fees to CCI &E>

• Preparation of monthly foreign exchange business position.

• L/C Lodgment (Cash).

• Checking of Cash L/C documents.

• L/C Retirement.

• LCA Issue.

• BLC Statement.

• Differed Payment (Cash).

• Follow-up of Outstanding BLC.

• Correspondent (Cash L/C).

• Proof Sheet of L/C Margin and Contingent Liability (Cash L/C).

• Issuance of shipping guarantees (cash) IMP forms fill-up (Cash).

45 | P a g e
4.5. Export

4.5.1. Introduction

The term “export” is derived from the conceptual meaning as to ship the goods and services out
of the port of a country. The seller of such goods and services is referred to as an “exporter” who
is based in the country of export whereas the overseas based buyer is referred to as an
“importer”. In International Trade, “exports” refers to selling goods and services produced in
home country to other markets.

4.5.2. Export department

The goods and services sold by Bangladesh to foreign households, businessmen and Government are
called export. The export trade of the country is regulated by the Imports and Exports (control) Act, 1950.
There are a number of formalities, which an exporter has to fulfill before and after shipment of goods.
The exports from Bangladesh are subject to export trade control exercised by the Ministry of Commerce
through Chief Controller of Imports and Exports (CCI & E). No exporter is allowed to export any
commodity permissible for export from Bangladesh unless he is registered with CCI & E and holds valid
Export Registration Certificate (ERC). The ERC is required to be renewed every year. The ERC number
is to be incorporated on EXP forms and other documents connected with exports.

Figure: 8 Export of Dhaka Bank Limited

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Dhaka Bank Limited experienced sound growth of export business in 2008 from 2007. The volume of
export business rose to Tk. 39,038 million from Tk. 31,081 million showing an increase of 26%. As
before, readymade garments still remained the major export item of 2008.The other export items are jute,
accessories (buttons, interlings, labels etc.) and footwear etc.

a) Highest Priority Sectors

1. Software and ICT services;

2. Agro-products & agro-processing products;
3. Light engineering products incl. auto-parts and by-cycles);
4. Leather products;
5. High-value ready-made garments.

b) Special Development Sectors

1. Pharmaceutical products;
2. Cosmetics and toiletries;
3. Luggage and fashion items;
4. Electronics items;
5. C.R. Coil;
6. Cards & calendars;
7. Stationery products;
8. Silk fabrics;
9. Handicrafts;
10. Herbal medicine and medicinal plants.

47 | P a g e
4.5.3. Export procedure

The following steps should be maintained at the time of exporting:

• Registration of exporters: First the exporter need to register with CCI&E and must holds
a valid certificate.

• Obtaining export certificate: After that an exporter need to apply and collect the export
registration.

• Securing the order: after getting a valid registration the exporter may proceed to secure
the export order.

• Signing the order: In this stage the exporter need to details about the commodity should
be described properly.

• Receiving the letterof Credit: Then the exporter receives the letter of credit.

• Procuring of materials: After having the deal and on having the letter of credit the
exporter will go for procuring.

• Shipment of Goods: The following are the documents normally involved at the time of
shipment-

- EXP form, photocopy of the registration certificate, photocopy of the contract,

photocopy of L/C, Transportation receipt, Shipping instruction, Insurance policy

• Preparation of procurement of export document.

• Submission of the document to the bank for negotiating.

48 | P a g e
4.5.4. Things Done Here

The following things are done in this department:

• Scrutiny of Export Shipping Documents.

• Follow-up for realization of Export Proceeds.

• All correspondence relating to Export Department.

• Compliance of Audit & Inspection.

• Advising of Export L/C to the beneficiary.

• Authentication of L/C and Amendments from other Correspondent Bank.

• Transfer of Export L/C to the 2nd Beneficiary & issuance of notice of transfer to L/C
issuing Bank.

• Recording of Export L/C particulars in Export L/C Transfer Register

• Realization of transfer changes.

• Issuance of provides realization certificates.

• And other works as & when directed by the manager and Sub-Manager.

• Certificate of EXP forms.

• Lodgment of Export Bills (FBP, FDBC,IBP & IBC)

• Preparation of tickets elating to negotiation of documents.

• Maintenance of all records related to FBP, FDBC and Inland Bills.

49 | P a g e
 • Balancing of FBP, FDBC, and IPB & A/R Export A/Cs.

• Preparation of Statement and all returns to Bangladesh Bank and Head Office
(Weekly/ Monthly/ Quarterly).

4.6 Letter of Credit (L/C)

The English name “Letter of Credit” derives from the French word “accreditation”, a power to
do something, which in turn is derivated of the latin word ‘accreditivus’, meaning trust. This
applies to any defense relating to the underlying contract of sale. This is as long as the seller
performs their duties to an extent that meets the requirements contained in the letter of credit.

4.6.1 Overview of Letter of Credit (L/C)

This is an undertaking by a bank to make payments on behalf of a specified party to a beneficiary

under specified conditions. The beneficiary (Exporter) is paid upon presentation of the required
documents incompliance with the terms of the L/C. The L/C process normally involves two
banks, the exporter's bank and the importer's bank. The issuing bank is substituting its credit for
that of the importer. It has essentially guaranteed payment to the exporter, provided the exporter
complies with the terms and conditions of the L/C.

In any international trade, the buyers and sellers are of different countries. None of them know
each other nor about their business integrity and creditworthiness. Various regulations prevailing
in their respective countries about foreign trade are also unknown to them. Thus, the buyer wants
to be assured of goods and the seller to be assured of payments. In such a situation commercial
banks assure these things simultaneously by opening letter of credit guaranteeing payment to
seller and goods to buyers.

By opening letter of credit on behalf of a buyer and in favor of a seller, commercial banks
undertake to make payment to a seller subject to submission of documents drawn in strict
compliance with the terms of the letter of credit giving title to goods to the buyer.

Letter of Credit is an arrangement whereby a bank acting at the request and in accordance with
the instructions of a customer is to make payment to or to the order of a beneficiary or is to pay

50 | P a g e
accept or negotiate Bill of Exchange drawn by the beneficiary against stipulated documents and
compliance with stipulated terms and conditions.

The form of the letter of credit varies from bank to bank (at present but not earlier). All the
parties to a letter of credit must have the same understanding about the terms and conditions used
in the credit. The International Chamber of Commerce has formulated the "Uniform Customs
and Practice for Documentary Credits" to avoid the scope for ambiguities and differences in
interpretation of terms of the credit.While opening letter of credit at the request of a
buyer/importer, we normally examine the following:

i) Buyer's Credit worthiness.

ii) Import Trade Regulations.

iii) Exchange Control Regulations.

iv) Supplier's creditworthiness report.

v) Marketability of goods.

vi) Whether the price of commodity is reasonable and competitive.

BENEFICIARY/ APPLICANT/ BUYER/

4. Goods
SELLER/ EXPORTER IMPORTER

3.Advice of LC 6. Money 3.Money

1.Application

for LC

5.Documents 9.Documents

6.Money
ISSUING/ OPENING
ADVISING/PAYING/
BANK
(CONFERMING)
BANK 51 | P a g e
7.Documents

2.LC

Figure: 9 The L/C

4.6.2 Parties involved to a Letter of Credit

A letter of credit is issued by a bank at the request of an importer in favor of an exporter from
whom the importer has contracted to purchases some commodity/commodities. The importer, the
exporter and the issuing bank are the parties to the letter of credit. There is however one or more
than one banks involved in various capacities and at various stages to play an important operation
of the credit.

i) The Buyer (Importer): Applicant is the party who applies to the issuing bank for the issue
of the credit, i.e. the buyer, and usually the importer of the goods.

ii) The Beneficiary (Exporter): The exporter in whose favor the credit is opened and too
whom the letter of credit is addressed is known as the beneficiary. Beneficiary is the seller
of the goods in whose favor the credit is issued.

iii) The Issuing Bank (Opening Bank): Issuing bank is the applicant's bank which, by
issuing the credit in favor of the beneficiary, gives its undertaking that the beneficiary's
drawings will be honored provided that all the terms of the credit are complied with.

iv) Advising bank: Advising bank is the agent bank of the issuing bank in the country of the
sellers, and is responsible for verifying the genuineness of the credit by checking of
signatures or telex test keys. Note that the rules say the advising bank must take "reasonable

52 | P a g e
 care" in such verification, and since reasonable care has yet to be defined that it may be the
more than that simple checking of signatures would be required in certain circumstances.

v) The Negotiating Bank: This the bank that honored the documents presented as per letter of
credit. The negotiating bank has to be careful in scrutinize that the draft and the documents
attached there to are in conformity with the condition laid down in the letter of credit.

vi) Confirming bank: Confirming bank is a bank who gives its own undertaking to the seller's
Bank i.e. beneficiary's Bank to make payment against the L/C documents on behalf of L/C
issuing Bank. When beneficiary of the credit wants such type of undertaking to the L/C issuing
Bank, then L/C issuing Bank requests to any reputed third Bank (with whom L/C opening
bank has credit line) to provide additional confirmation regarding payment against the
documents of the credit.

53 | P a g e
4.6.3 Steps in a L/C
There are four steps in a L/C process. The following figure shows L/C process in four separate
phases.

1 Seller Buyer
2 Seller’ Buyer
’s ’s s ’s
Bank Bank Bank Bank

Letter of Credit Bill of Lading

Se Bu
Bu
Sel lle ye
ye
ler r r
Contract
r

Consignment
Shipper Shipper

3 4
Seller Seller’ Buyer’
Buyer’ s s
’s
s Bank Bank Bank
Bank
Payment
Bill of Lading Bill of Lading
Se
Bu
Bu lle
Sel yer
yer r
ler

Consignment Shipper
Shipper

Figure: 10

The above figure provides the steps involved in a simple international transaction between a
seller and a buyer:

1. A buyer and a seller agree upon a transaction through a contract the specifies price,
quantity, time and place of delivery. Then the buyer will contract its bank to have a letter
of credit issued with the seller as beneficiary. This letter of credit can either be funded by
a loan or simply debited from the buyers account balance if sufficient funding is
54 | P a g e
 available. If a loan is used, it is subject to standard underwriting procedures involving a
down payment, a line of credit and interest rate based upon the buyer’s credit worthiness.
Insurance is commonly required as a condition to issue a letter of credit so that varios
risks, such as damage and delays, can be mitigated. The bank commonly levies a fee
ranging from 1 to 8% of the transaction, depending n its value and complexity.

2. With the letter of credit the seller now has a line of credit available at its bank and final
payment will be made once the delivery conditions of the contract are satisfied. The seller
can then provide the consignment to a shipper in exchange of a bill of lading promising
that the consignment will be delivered at the agreed destination. At this point the
consignment is handled by the transportation system and can involve the usage of port
facilities, warehouses, rail or trucks segments depending on the concerned transport
chain.

3. The seller can then present to bill of lading to its bank as an additional condition being
meet to secure final payment. It is important to underline that payment is not necessarily
provided to the seller immediately after the bill of lading is provided, but after the buyer
has taken ownership of the consignment and confirmed that it meets the specification
stated in the contract (quantity, quality and condition). The bill of lading is then
forwarded to the buyer’s bank in exchange of payment and afterwards to the buyers so
that the consignment can be claimed once delivered.

4. The buyer is finally able to provide the bill of lading to the shipper and claim the
consignment. After it has been confirmed, often by a neutral third party, that the
consignment meets the terms of the contract the seller can claim final payment from its
bank from the funds that were previously deposited.

It is estimated that large commercial bank finance about 90% of all global trade transactions. If
for any reason the letter of credit cannot be cleared and payment made the transaction cannot
take place.

55 | P a g e
4.6.4 Documents required for opening L/C
An importer or L/C opener has to submit the following documents:

• Application form (provided by the bank).

• Import registration certificate.

• Pro Forma invoice.

• Four sets of IMP form.

• Insurance cover note.

• VAT registration number.

• Tax registration number.

• Letter of Credit authorization form.

4.6.5 Regular L/C items for Dhaka Bank Ltd.

- Patent & Farinaceous Food - News print

- Wheat - News papers & magazines

- Books - Textiles

- Weaving Mills Accessories - Bus

- Garment Accessories - Industrial Chemicals

- Raw cottons - Machineries of radio channel

- Pace maker - Fabrics

- Surgical, Dental and Medical Equipments - Truck

- Rice - Yarn

- Poultry Feeds - Jewelry

56 | P a g e
4.7. Foreign Remittance
With the pace of growth in the volume in inward foreign remittance, Dhaka Bank Limited stands
among the top 10 private sector commercial banks in the Bangladesh remittance market within a
very short span of time.

Extensive use of the technology along with large delivery network has significantly fostered the
growth of DBL remittance business. As part of our strategic initiative, they have opened
branches in different locations and also established remittance arrangements with good number
of leading exchange Companies around the globe. This has significantly increased the flow of
foreign remittance through their bank sent by Non Resident Bangladeshis living in different parts
of the world. At present Dhaka Bank has arrangement with 20 Exchange Houses in North
America, Europe, And Middle East having a market share of 2% in remittance business in
Bangladesh. Shortly Dhaka Bank remittance wing will be spreader to Spain, Mauritius, and
South East Asia.

During the year 2009, Dhaka Bank has channeled tk.9,786 million of foreign remittance of
which 25% from North America, 32% from Europe and 50% from Middle-east countries. To
bolster their remittance business, recently they have tied up with Al Ahalia Exchange Company,
one of the major remittance exchange house in UAE and two Micro Finance Institutions (MGO)
in Bangladesh to use their 300 plus locations for disbursement of foreign remittance. Dhaka
Bank Limited has also taken the initiative to affiliate with a cellular operator to bring the latest
technology and vast distribution channels of serve the beneficiaries of inward foreign wage
remittance in new dimension.

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4.7.1 Activities of Foreign Remittance

The following activities are done:

• Overall supervision of Foreign Remittance Department

• Correspondence to Nostro Account.

• Foreign TT payment and Purchase of foreign Drafts, Cheque and

preparations of F.B.P.

• Checking of all Batches.

• Assist in preparation of IBCA/ IBDA etc.

• Trading Blotter.

• Compliance of Audit & Inspection.

• Issuance of outward TT & FDD.

• Issuance of PRC

• Statement & all related works regarding deposit of Bangladesh Bank.

• Foreign Collection, Bangladesh Bank Clearing Cheque Collection, which

comes from all branch of ABBL.

• Withdrawal from F.C. Account.

• Encashment of TCs & Cash Dllar and sterling Pound.

• Deduction of Tax and VAT.

• Preparation of related statements including convertible Taka Accounts

• Preparation of IBCA & IBDA and Balancing of Collection and other

special assignment as desired by department In charge.

• Issuance of TC and Cash Dollar, Correspondence with different Bank/

Institution related to TC / Dollar.

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 • Students Case handling & preparation of related statements ( Head Office
and Bangladesh Bank).

• Balancing of Account Statements.

• Batch posting and all related statements.

4.7.2 Types of Remittance

Remittance can be classified in two types. The two types of remittances are stated below:

Figure: 11 Types of Remittance

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4.7.3. Inward Remittance
The way of settlement that entrusted by the customers, the foreign correspondent banks or sister-
branches remits the fund into the domestic bank and instructs it to pay the fund to the payee. The
way of remittance includes telegraphic transfer (T/T), mail transfer (M/T), and banker’s demand
draft (D/D), among which T/T and D/D are used most commonly.

In DBL the main sources of inward remittances are mentioned in the figure:

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4.7.4. Procedures of Handling Inward Remittance

The operation flow telegraphic transfer is expressed in bold line and draft transfer in dotted line.

Importer / Remitter

1 Remitting Order

Remitting Bank

3 /4 2 Remittance 2 Deliver
Instructions the draft
Funds
Transf
er
Dhaka Bank
Ltd. (Paying
Bank)

4/5 Pay the 3 Present the

remittance draft

Exporter / Payee

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 Figure: 12 Procedures of Handling Inward Remittance

4.7.5 Last five years Inward remittance contribution of

DBL
Figure in Million

2005 2006 2007 2008 2009

3377 16764 10609 11834 9786
Table: 17 Inward Remittance Position of DBL

Figure: 13

From the above figure we find that the contribution of DBL in foreign remittance in the year
2006 is more that the other years. After that the contribution was decreasing. There was a huge
difference between 2006 and 2009.

The impact of financial recession is the main reason for decreasing the amount of inward
remittance in the year 2009.

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4.7.6. Outward Remittance

Outward remittance means the remitting bank, entrusted by the remitter, remit funds to his sister-
banks or his correspondent banks by the certain instrument and instruct them to pay the certain
amount to the nominated payee. The instruments of remittance includes telegraphic transfer
(TT), mail transfer (MT). and draft transfer (DD), among which telegraphic transfer and draft
transfer are used most commonly.

In Dhaka Bank Ltd. the outward remittance goes from mainly from the sources mentioned in the
figure:

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4.7.7. Procedures to Handle Outward Remittance
The Operational flow telegraphic transfer and mail transfer are expressed in bold line, and draft
transfer in dotted line.

The exporters /
Remitter

1 Submit 2 Drawing the

Application Draft

Dhaka Bank Ltd.

Issue the remittance instruction (SWIFT,

TALEX)

The Paying Bank

3 Surrender the
draft

3 / 5 pay the 6 Present the

remittance draft

The Exporter / the

Remitter
Figure: 14 Procedures of Handling Outward Remittance

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4.8. Instruments used in Remittance

Both the remittances inward and outward in favor of beneficiaries may be made in by any one of
the following manners:

• By issuing Demand Drafts

A method used by individuals to make transfer payments from one bank account to another.
Demand drafts are marketed as a relatively secure method for cashing checks. The major
difference between demand drafts and normal checks is that demand drafts do not require a
signature in order to be cashed. It is also known as: “Remotely created checks”.

• By issuing mail Transfer

• By issuing Telegraphic Transfer

A banking term commonly called “T/T”, meaning a cable message from one bank to another in
order to affect the transfer of money.

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66 | P a g e
Chapter I 5
Analysis &
Findings
5.1 Analysis

5.1.1 Comparative Analysis of Import Position of Dhaka Bank

Limited foreign Exchange Branch:
Amount in Lac Taka
January February March April May June
Budget 8 7 8 9 10 12
Achievement 31.65 26.57 10.84 5.82 17.73 12.68
Achievement(% 395.63% 379.57% 135.5% 64.67% 177.30% 105.67%
)

Table: 18

Figure: 15

From the above figure we see that through January to June the overall achievement was good
except April and moreover we see the achievement was highly satisfied in January (budget: 8

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lac; achievement 31.65 lac) and February (budget: 7 lac; achievement: 26.57 lac) Due to budget
declaration, expectation of the imports affects the growth in May and June.

5.1.2 Trend of growth of Import of DBL FEX

Figure: 16

From the figure we see that there is a downward trend in import achievement because of
exchange rate movement but the worst case was in February and March because there was a
drastic fall from February to March later it recovers in May and again it falls down in June for
the same reason.

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5.1.3 Analysis of Import Bills of DBL FEX
Amount in Lac Taka
Month January February March April May June
No 15 33 31 25 15 27
Amount 200.75 3189.29 2742.34 1045.62 270.49 233.97
Growth(%) 14.89 -14 -61.8 -74 7.62
Table: 19

Figure: 17

From the figure we see that DBL Foreign Exchange Branch starts with a low amount of import
bill collection later in February it reaches at peak with amount of 3189.29 then it starts falling up
to May and reaches at 270.49. Then there is again a rise in June by 7.26%.

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5.1.4 Comparative Analysis of Export Position of Dhaka Bank
Limited foreign Exchange Branch:
Amount in Lac Taka
January February March April May June
Budget 8 7 9 9 10 10
Achievement 3.72 6.35 10.09 8.77 19.68 19.61
Achievement(% 46.50% 90.71% 112.11% 97.44% 196.80% 196.10%
)
Table: 20

Figure: 18

From the above figure we can see that in case of export DBL FEX’s achievement is greater than
its budget except the month January, February and April and the highest achievements are in
May and June which are almost doubled of its budgeted amount.

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5.1.5 Trend of Growth of Export Position of DBL FEX

Figure: 19

This figure shows that the growth of export achievement is increasing except for the month of
April (when it down to 97.44%) and there is a rise in May and after that the growth is Flat until
June.

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5.1.6 Analysis of Export Bills of DBL FEX
Amount in Lac Taka
January February March April May June
No. 22 32 52 41 67 74
Amount 372.71 635.40 1009.57 876.87 1958.18 1961.24
Growth 70 58.9 -13 123.3 15.6
Table: 21

Figure: 20

This figure shows that except a slight fall from March to April export bill amount is increasing
and remains flat in May and June.

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5.1.7 L/C Position of DBL FEX

No. of L/C’s opened during the period January 2010 – June 2010

January February March April May June

Foreign 27 21 15 17 22 17
Local 3 2 4 2 2 2
Table: 22

Figure: 21

From the above chart we see that in the month of January the highest no. of L/Cs are opened as
foreign L/C it is a total of 30.
January DBL FEX opened the highest no. of L/C as foreign L/C and the no is 27. Analyzing the
6 months L/Cs January is the highest to open the L/C.
And the trend shows that Foreign L/C is opened more than the local L/C.

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Amount of L/C’s opened in January 2010- June 2010
Amount in Lac Taka
January February March April May June
Foreign 3075.91 2569.69 1023.40 428.87 1716.26 1162.35
Growth(%) -16.45 -60.17 -58.09 300 -32.27
Local 89.82 87.30 61.51 100 56.60 105.51
Growth(% -2.8 -29.54 62.57 -43.4 86.41
)
Table: 23

Figure: 22

From this figure we can see that in the month of January it achieves the highest amount of L/C
which is Tk. 3075.91 lac. The amount is 3075.91 lac Taka as forerign L/c. Except the month of
march and April it is more or less in good position comparing the other months.
On the other hand the local L/C was highest in the month of June (Tk. 105.51 Lac) and lowest in
the Month of May ( Tk. 56.6 lac) due to increased competition, bank is getting fewer contracts.

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5.1.8 Inward Remittance Position of DBL FEX
Amount in Lac Taka
January February March April May June
No. 9 7 9 5 10 3
Amount 139.25 37.55 46.46 18.80 109.90 11.96
Growth(% -73 -98.76 -59.53 484.57 -89.11
)
Table: 24

Figure: 23

This figure shows the Inward Remittance position of DBL FEX in last six months is not in a
good situation they in the ups and downs position. As it is highest in January and May but in the
other months are decreasing. The main reason is identified as the global financial recession.

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5.1.9 Outward Remittance Position of DBL FEX
Amount in Lac Taka
January February March April May June
No. 14 8 11 11 14 18
Amount 108.75 100.98 541.03 75.86 154.75 195.40
Growth(% -7.14 435.77 -85.9 103.94 26.26
)
Table: 25

Figure: 24

From the above figure we can see that outward remittance position was good in the month of
March. Comparing this month the other months are not so good and 3 to 5 times less than the
month of March.

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5.1.10 Comparison between Inward and Outward Remittance
position of DBL FEX of the month January 2010 – June 2010

Figure: 25

The above figure shows the comparison between inward and outward remittance for the month
January 2010 – June 2010.
The inward remittance position of DBL FEX in last six months is in the ups and downs position.
As it is highest n January (Tk. 139.25 Lac) and May (Tk. 109.9 Lac) but in the other months are
decreasing. The main reason of decreasing is the financial recession in the abroad countries.
From the above figure we can see that outward remittance position was good in the month of
March. Comparing this month the other months are not so good and 3 to 5 times less than the
month of March.

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5.1.11 Comparative Analysis of Remittance for the period of
January 2010- June 2010
Amount in Lac Taka
January February March April May June
Budget 0.80 0.80 0.80 0.80 0.80 0.80
Achievement 1.39 0.38 0.46 0.19 1.09 0.12
Achievement(% 173.75% 47.50% 57.50% 23.50% 136.25% 15.00%
)
Table: 26

Figure: 26

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As the entire six months budget for remittance was 0.8 Lac the achievement was only
satisfactory for the month of January (173.75%) and May (13.25%). Rest of the months the
branch couldn’t achieve the budgeted amount.

5.2 Import-Export Scenario

Although Bangladesh’s import position is behind that of the Asian developing countries, the average
annual import growth rates of Bangladesh are much higher than those of the world during 1980-90, 1990-
2003 and 2003-2008. This situation also continues after 2003. The performance of Bangladesh’s export
sector in recent years is quite impressive especially in the 1990s when we compare it with that of world
and SAARC countries.

5.2.1 DHAKA BANK’S CONTRIBUTION IN TOTAL IMPORT OF BANGLADESH

This section shows different analysis of import section for recent five years 2009, 2008, 2007,
2006 and 2005. In the Import section, DBL is doing a good business up to 2008 as its import
volume increases but in 2009 its import is decreased so much. And comparing to other banks its
import business is not satisfactory. The table below is shown the five years data of total import in
Bangladesh & total imports in Dhaka Bank and its other three competitors’ Prime bank Ltd,
Dutch Bangla Bank Ltd. and Southeast Bank Ltd.

Year Total Import of Dhaka bank Prime Bank DBBL South east
Bangladesh Bank

2009 1548215 46160 96452 53088.66 69582.92

2008 1483720 65737 91424 43999.44 58019.77
2007 1192212 49496 70617 35667.74 38470.34
2006 1133070 46277 52639 32067.74 35125.12
2005 1105054 30213 40303 26029.01 29079.3

CAGR 6.98% 8.85% 19.07% 15.32% 19.06%

Table: 27

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Interpretation:
Here we can see that though Dhaka Bank’s import volume was increasing from 2005 to 2008 but
it decreased in 2009. Dhaka Bank’s import volume decreased in 2009 into 46160 and it has to
face 30% negative growth within one year. On the other hand among the four banks Prime Bank
Ltd. is leading the import business. In total import of Bangladesh Prime Bank’s contribution is
more than the other three banks. But Dhaka Bank’s contribution in total import of Bangladesh is
lower than the other three banks.

Compound Annual Growth Rate (CAGR):

From the above table we can see that the compound annual growth rate (CAGR) of total import
in Bangladesh is 6.98% which is impressive regarding our recent economic condition. The
CAGR of the banks are upward and very fast in recent years but the CAGR of Dhaka Bank ltd. is
downward. The banks’ performance and the contribution in total import are not so good
comparing to other banks. Among the four banks Prime Bank is growing very fast in the import
business as its compound annual growth rate is 19.07%. Dhaka Bank is in the last position.
Dhaka Bank’s import volume was increasing from 2005 to 2008, but it decreased in 2009. As
well as its compounded annual growth rate is also lower than the other three competitors which
is only 8.85%. DBBL and Southeast Bank’s rate is 15.32% & 19.06% respectively. So, Dhaka
bank has to boost up its import business to lead the market position. Prime Bank is able to attract
more clients than its competitors.
Following table shows the each bank’s contribution in the total
import of Bangladesh:

Year 2009 2008 2007 2006 2005

Dhaka Bank 2.98% 4.43% 4.15% 4.08% 2.73%
Prime Bank 6.23% 6.16% 5.92% 4.65% 3.65%
DBBL 3.43% 2.97% 2.99% 2.83% 2.36%
South East 4.49% 3.91% 3.23% 3.10% 2.63%
Bank
Table: 28

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 Comparison of Contribution in Total Import

7.00%

6.00%

5.00%
Dhaka Bank
4.00% Prime Bank
3.00% DBBL
South East Bank
2.00%

1.00%

0.00%
2009 2008 2007 2006 2005

Figure: 27
Interpretation:

From the above graph and the table we can see the contribution of each of the five banks in total
import in Bangladesh. It is few percentage compared to the whole import amount. In Bangladesh
there many scheduled bank and they are involved in import L/C. Dhaka Bank is also involved in
it. In 2009 Dhaka bank’s contribution was 2.98%, in 2008 it was 4.43%, in 2007 it was 4.15%, in
2006 it 4.08% and in 2005 it 2.73%. In the graph it is clearly seen that the blue shaded area shown
the contribution of Dhaka Bank, from where we can see that up to 2008 its position was
increasing but in 2009 Dhaka Bank’s import business is so depressing. And for this reason its
compounded annual growth rate is diminished into 2.98%. Total import in Bangladesh is
growing as well as the import of the other banks L/C is growing year by year. But other banks
contribution is more than Dhaka bank. As Prime Bank’s contribution is 6.23% in 2009 and
where Dhaka Bank contributed 3.25% less. In other years the scenario is also same. Though
Dhaka Bank’s contribution is less than prime Bank but it is doing well than the Dutch banal bank
and Southeast Bank up to 2008 but in 2009 its position is decreasing than the other three banks.
The position of Dhaka Bank Ltd may increase the later years than the other banks.

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5.2.2 CONTRIBUTION IN TOTAL EXPORT OF BANGLADESH

Year Total Export of Dhaka Prime DBBL South east

Bangladesh bank Bank Bank

2009 974457 33305 76097 41162.51 46724.47

2008 974981 39038 68550 40083.14 42178.6
2007 870222 31081 51316 34060.27 28771.36
2006 789306 23268 41801 33344.69 25874.61
2005 707003 13505 28882 22144.17 13511.1

CAGR 6.63% 19.79% 21.38% 13.20% 28.17%

Table: 29

Interpretation:
The above table shows five years of total export in Bangladesh & total exports in Dhaka Bank,
Prime bank Ltd, Dutch Bangla Bank Ltd. and Southeast Bank Ltd. Total export of Bangladesh
had decreased in 2009. The annual compound growth rate is 6.63% which is quite impressive.
The garments sector of Bangladesh has played a vital role in this growth. Dhaka Bank’s export
volume also increases in 2005 to 2008, but in 2009 the export is decreasing. Its CAGR is
19.79%. Though the growth is quite impressive but incase of the export volume South East Bank
and Prime bank are the leader. The Export volume of South East Bank is higher than Dhaka

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Bank, but the CAGR of Dhaka Bank is highest because Dhaka Bank’s export volume has
increased in a huge amount in 2008 than 2005 but it is lower in 2009. So, Dhaka Bank has to
enhance its facilities and amend its policies to attract more clients to improve its export position
and compete with other banks.

Following table shows the each bank’s contribution in the total export of Bangladesh:

Year 2009 2008 2007 2006 2005

Dhaka Bank 3.42% 4.00% 3.57% 2.95% 1.91%
Prime Bank 7.81% 7.03% 5.90% 5.30% 4.09%
DBBL 4.22% 4.11% 3.91% 4.22% 3.13%
South East 4.79% 4.33% 3.31% 3.28% 1.91%
Bank
Table: 30

Comparison of Contribution in Total Export

9.00%
8.00%
7.00%
6.00% Dhaka Bank
5.00% Prime Bank
4.00% DBBL
3.00% South East Bank
2.00%
1.00%
0.00%
2009 2008 2007 2006 2005

Figure: 28
Interpretation

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From the above graph and the table we can see the contribution of each of the five banks in total
export in Bangladesh. In 2009 Dhaka bank’s contribution was 3.42%, in 2008 4.0%, in 2007 it
was 3.57%, in 2006 it 2.95% and in 2005 1.91%. In the graph it is clearly seen that the blue shaded
area shown the contribution of Dhaka Bank, from where we can see that up to 2008 its position
was increasing but in 2009 Dhaka Bank’s export business is so depressing. And for this reason
its compounded annual growth rate is diminished into 3.42%. It is also seen that total export in
Bangladesh is growing as well as the other banks export is growing year by year. But other banks
contribution is more than Dhaka bank in last five years. Again Prime Bank is the leader in export
business. In this case Dhaka Bank’s contribution is very poor comparing to its competitors.

5.3 Findings

Foreign Trade Department is a very important department of any bank. It is the international
department and it deals mostly with foreign affairs. I have discovered some problems regarding
the analysis of foreign trade business and activities of Dhaka Bank Ltd. The problems are as
follows.

• Loosing old clients of foreign trade is one of the main reasons for less export and import
volume in 2009.
• In DBL Foreign Exchange Branch, the overall import achievement was good in January
to June except April. In April it decreased by 64.67%.
• In DBL Foreign Exchange Branch, the collections of import bills are both in downward
and upward trend. In January it starts with low amount of import bill collection later in
February it reaches at peak with amount of 3189.29 then it starts falling up to May and
reaches at 270.49. Then there is again a rise in June by 7.26%.
• In DBL Foreign Exchange Branch the export achievement is greater than its budget
except for the month of January, February and April and the highest achievements are in
May and June which are almost doubled of its budgeted amount. Mainly because of
 Globally demands of Bangladeshi goods are increasing.
 Garments Industry has absorbed the shock and
 Overall branch effort on export.

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• In DBL Foreign Exchange Branch export bills amount are increasing except a slight fall
from March to April and remains flat in May and June.
• In DBL Foreign Exchange Branch the inward remittance was highest in the month of
January and it decreases in the following months, in June it decreased by 89.6%.
• In the month of March the highest outward remittance was happened and the amount was
Tk. Lac 541.03.
• Ups and downs were made in export, import and on other foreign trade activities
occurred due to
 Change in policies, due to change in the foreign trade policy as well as
monetary and fiscal long term financing suffer a lot.
 Budget declarations, expectation of the importers affect the growth.
 Effect of economic downturn is slowly taken place in Bangladesh.
• Exchange rate movements.
• Unattractive packages and high charge in foreign transaction than other competitors.
• The employees are still struggling to conduct foreign exchange services through the new
software and system because of its complexity. Some further simplification and
modification of this software might actually help the bankers to work more efficiently in
providing international trade services.
• Marketing Policy of the Bank is not strong enough to attract Potential Customers. Lack of
promotional initiatives to expand the Foreign Exchange business specially the import L/C
services.
• Lack of employee performance appraisal, proper rewards, timely promotion and
motivation among the employees.
• Lack of proper training about the installed software and the newly introduced Central
processing center (CPC).
• Government rules and regulations often make problem for import and export market in
Bangladesh.

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86 | P a g e
Chapter I 6
Conclusions
&
Recommenda
tion
6.1 Conclusions

Dhaka Bank Limited has started their journey as a full-fledged commercial bank in 1995.
They have already celebrated their fifteen birthday and thus have passed a long way in their
banking life. It is showing remarkable progress of its financial position with the mission of being
countries leading bank providing world class services in a cost effective manner. This bank
constantly looks for ways and means to improve productivity world class services in a cost
effective manner. This bank constantly looks for ways and means to improve productivity by
rendering to its customers in order to remain competitive in the market.
In the year 2009, Dhaka Bank Ltd. was active in extending services to their valued clients related
with import business. As of 31st December 2009 their import volume was Tk.89.70 million
compared to the volume of 2008 for Tk, 102.37 million showing a decrease of 12.37% from the
last year. The major import items of the year were, Capital machinery scrap vessels, hoot rolled
non alloy steel, HDPE, raw cotton, fabrics and accessories, fertilizers and edible ell/oil seeds.

DBL Foreign exchange Branch experienced a negative growth of export business in 2009 from
2008. The volume of export business decrease to Tk. 87.75 million from Tk. 91.68 million in
2009 showing a decrease of 4.28%. as before, readymade garments still remained the major
export item of 2009. The other export items were jute, accessories (buttons, interlinings, labels
etc.) and footwear etc. Contribution in total import and export of DBL is quite shorter among the
other banks.

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Besides the above activities DBL is showing its interest in foreign operation. DBL has enhanced
its reach to the NRBs for safer transfer of money. It works with the western union money transfer
network along with its own 13 exchange house network.
DBL has the reputation of being the provider of good quality services to its potential customers.
DBL has a bulk of qualified, experienced and dedicated human resources.
With such acumen and execution DBL is hopeful to continue the successful trend of remittance
and foreign trade operations in upcoming years.

6.2 Recommendations

 In the last six months of 2010, import has decreased by 64.67% (in May), so they should
take proper steps in this sector to increase the import business.
 As L/C amount is in ups and downs trend so the branch need to take steps to find out the
specific reason to make it up warding or to make it stable at least.
 The branch should focus on inward remittance because it is downward in nature and
decreased by -98.76% in the month of April.
 To run the business efficiently they should focus on endorsement, because they only
endorse for the corporate clients.
 Need to extend Branch Network and more New Branch to be opened in other Cities and
Towns of Bangladesh to reach out the Potential Customers.
 Proper training needed for ensuring efficient performance of the employees.
 The Foreign Exchange Department is dealing with a narrowed group of clients. It is good
to have trustworthy clients even if their number is limited, however it increases client
bargaining power over the bank and there is always a risk that if a major client leaves the
branch, the base of business would become weaker. To widen the range of foreign
exchange business and to reduce the risk, the branch can think about being diversified its
import portfolio.

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 Letter of Credit opening procedure and Margin requirement may be relaxed for prime
customers, otherwise new and competitive banks will take the clients away by giving
special facilities.
 Periodical performance appraisal and giving recognition and rewards to the qualified
employees to keep motivating them.
 Dhaka Bank Limited (DBL) needs to advertise through various Media about Credit
Cards, ATM Cards, Tele Banking and its other Products and Services.
 Apart from Advertising in Media, the Bank can take some steps for Personal Selling.
Staffs/Officers can be hired or Internees can be used for this purpose.
 The Brochures of the Products and Services of the Bank can be mailed or Circulated by
the Internees to the Potential Customers and Internees can give brief Idea to the
Customers about the Products and Services of Dhaka Bank Limited (DBL).
 The Brochures of the Products and Services of the Bank can be mailed with the welcome
letters along with the Statements of the Customers via courier. No extra cost will be
incurred in this.
 The promotional activity the bank is engaged in seems not enough. The kind of exposure
the other private banks have around the whole city is missing in DBL’s promotional
activity. To attract customers and to be visible among the competitors, DBL should
strengthen its promotional activity immediately.
 For Cash Withdrawals and Deposits more ATM can be installed in major cities and towns
across the Country through which Customers can easily get access to their Accounts.
 As the Competitors offering a Higher Interest Rate on Deposits and Lower Charges in
Loans, Dhaka Bank Limited (DBL) should think about it and if possible then maintain
the Interest Rate and Bank Charges as similar as to its Competitors.
 Dhaka Bank Limited (DBL) should practice a Participant Marginal Process because in
this all the Employees get chance for Participating in Problem Recognition and Problem
Solving and this will make the Employees feel better which will work as a Motivation
Weapon. Also Award System should be activated depending on the Performance
Appraisal of the Employees.

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90 | P a g e
Chapter I 6
References
References_________________________________________________
Books & Reports:

• Timothy Martin Weithers, (2009) “Foreign Exchange: A practical guide to the FX

markets.” P-17-24.

• Baillie McMahon, (2007), “The Foreign Exchange Market:, 10th edition. Person
Education (Singapore) Pte. Ltd. P-18,35 & 89

• Peter S. Rose, Commercial Bank Management, 1999, Irwin/McGraw-Hill, Inc., 4th

Edition.

• DBL: Annual Report 2005, 2006, 2007. 2008, 2009

• DBL Business Solution 2005, 2006, 2007. 2008, 2009

Websites:

• http://www.investorwords.com/4238/retention_rate.html

• http://www.bbs.gov.bd/Home.aspx

• www.nbr-bd.org

• http://www.dhakabankltd.com/

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• http://www.foreign-trade.com/search

• Wikipediea.org/wiki/letter_of_credit

• http://www.yahoo.com/finance

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