Internship Report

Title: Foreign Trade Affairs of National Credit & Commerce Bank Limited

Report Submitted to: Dr. Shanti Ranjan Das Professor, Department of Accounting University of Chittagong Chittagong

Report Submitted by: Mohammod Mahidur Rahman. Exam. Roll # 30 Class Roll # 11619 MBA Session 1999-2000 Department Of Accounting University of Chittagong Chittagong

Acknowledgment
Its an important aspect of MBA course in Chittagong University that after the completion of final examination the students have to attend any type of business enterprise which is called Internship Programme, in order to achieve practical experience about business operation and management. So the students get a great chance to adjust the knowledge earned from the academic curriculum with the actual situation of the real business. The students are divided into various groups and a teacher is given authority to supervise and guide each group. The whole programme is planned and designed by the programme instructor. The group instructor can guide the students to accomplish the programme in a particular institution or the students can select their institution and get there to gain the permission to complete the programme with the recommendation letter issued by the programme instructor. The students have to continue this programme for more than fifteen days and collect actual data physically from the institution and prepare a report in order to submit to the group instructor. The group instructor checks the report and marks on it which is added with the total marks of the students obtained in the MBA examination. The programme helps the students many way to be acquainted with the real business world. This helps the students in the later life to perform the business operations and manage the business institutions efficiently and effectively. Thus the students can commence their career in the institution where he or she deserves the skills and interests. The students can perform this programme in a group or individually in any organization. And also there are many organizations that welcome the students as an internee. Some institutions also remunerate the students to bear the expenses during the time period of internship programme. And after completion of the programme the organization issues a certificate to the student with regard to his/ her behaviour and performance during the internship programme that is important for the students in building career in any progressive organization.

About This Report In order to present the Internship Report to the group instructor of our department I proceeded to the National Credit and Commerce Bank Limited with the recommendation letter from the department. Gradually I obtained the permission from the Banks authority and started the Internship Programme. During my internship programme I attended the Bank regularly in the office time in order to collect data and to observe the every day operating systems of the bank. I have attended all every sections and desks of the bank and collected information for preparing my report. The important thing is that all of the officers of the bank were very helpful to me and left no stones unturned to help me and to teach me the process and systems of performing the operations and about the treatment of the accounting transactions. The bank officers showed me all the important aspects of the bank and gave me the most apparent idea about the facts and facets. Though the officers always remain in busy they did not forget to give their valuable time for me. Though there are some limitations I faced during the programme like the inability to take part practically in the banks daily affairs, I gained an elaborate and apprehensive idea about the banks operations that will help me to the highest degree in working in any bank in my later life. So I can not but express my gratitude to the bank officers with whom I dealt during my Internship Programme. I also suggest to the Banks authority to make necessary arrangements so that the students can work practically during the internship programme.

Contents:
Chapter One: Introduction Chapter Two: Accounts Analysis Chapter Three: Advance Chapter Four: Foreign Remittance- Money Gram Chapter five: Foreign Exchange & Letter of Credit Chapter Six: Performance of the Bank

Legal status of and nature of the bank: National Credit and Commerce Bank Limited was incorporated in Bangladesh as a banking company on under the Companies Act 1994, the principal place of business is the registered office at 7-8 Motijheel commercial area. Dhaka 1000.It has 31 branches all over Bangladesh. It carries out all banking activities through its branches in Bangladesh. The Bank is listed in the Dhaka and Chittagong Stock Exchange as a publicly quoted company for its shares.

Significant Accounting Policies:

Basis of accounting:
The accompanying financial statement is prepared according to the Bank Companies act 1991 and Bangladesh Accounting standards on a going concern basis under historical cost convention. Consolidation: A separate set of records for consolidating the statement of affairs and income and expenditure statement of the branches were maintained at the head office of the bank based on which these financial statements have been prepared. Investment: a) Investment in treasury bills is shown at face value, prize bond at cost price and shares and debentures at cost or market price which ever is lower. Any shortfall in market price against the cost price at shares and debentures is fully provided of t in the accounts of the year of shortfall. b) Interest on investment on government and other trust securities, debentures and bonds, etc is accounted for as income on accrual basis. c) Dividend in shares in listed companies have been accounted for on receipt basis, tax deducted at source on adjusted as advance payment of tax with gross dividend income. Loans and advances: a) Interest is calculated on a daily product basis but charged and accounted for quarterly on accrual basis. b) Loans and advances are stated at gross value, provision for loans and advances is made on the basis of period end review by the management and of instructions contained in Bangladesh Bank BCD Circular No, 34 of 16 November1994, BCD Circular No 12 of 4 September 1995, BRPD Circular No16 of 6 December 1998, and BRPD Circular No 9 of 14 may 2001. Fixed assets and depreciation: a) Fixed assets are stated at cost less accumulated depreciation b) Depreciation is charged at the annual rates prescribed by Bangladesh Bank as noted below on reducing balance methods with the exception of motor vehicles on which straight line methods is applied: Furniture and fixtures 10%-20% Machinery and equipment 20% Vehicles 20%

c) Depreciation at applicable rates is charged on additions to fixed assets as well as on sale of any item on the basis of number of days in use of the concerned asset. Cash flow statement Cash flow statements prepared principally in accordance with IAS 7. Cash flow Statement and the cash flow from the operating activities have been presented under direct method as prescribed by the securities and Exchange Rules 1987. Exchange fluctuations and gains or losses thereon: In conformance with instructions of Bangladesh Bank all gains or losses arising on conversion of foreign currencies in hand into local currency due to re-fixation of rate(s) are kept in equivalent Taka in separate fund account called exchange equalization fund. Foreign currency transactions: Transactions in foreign currencies are converted into equivalents Taka currency using the ruling exchange rates on the dates of such transaction. Assets and liabilities as at year end in foreign currencies are translated into taka currency at the prevailing selling and buying rates of the concerned foreign currencies of that day, the differences arising from the conversion is charged / credited to the profit and loss Account. Off balance sheet item: Under general banking transactions liabilities against acceptance, endorsement and other obligation and bills against which acceptance has been given claim exists there against have been shown as off balance sheet item. General a) Figures in these financial statements have been expressed in Taka currency and rounded off to the nearest integer. b) The expenses, irrespective of capital or revenue nature, accrued but not paid have been provided for. c) Previous years figures have been rearranged wherever considered necessary to conform to current years presentation.

National Credit and Commerce bank Limited serves people with four types of Accounts. They are as follows: 1. Savings Account 2. Current Account 3. Short term deposit Account 4. Fixed Account Particulars of the above accounts are described in the following lines:

1. Savings Accounts:
Savings accounts are the accounts where the clients can deposit any amount of money any time in the office hours and can withdraw money twice in a week or more by conversation. Here it is noticeable that the client can not withdraw more than taka twenty thousand or 25% of the deposited money at a time without informing the bank earlier. The account holder is supplied a deposit book at the time of opening the account by which the client can deposit money in the bank. The client is also supplied a cheque book by which the client can withdraw money from the bank. A percentage of interest is given to the account as guided by Bangladesh Bank. But if the client withdraws more than taka twenty thousand at a time or more than 25% of the balance without informing the bank earlier no interest is given on the rest of the money.

2. Current Accounts:
Current Accounts are accounts where the account holder can deposit and withdraw any amount of money at any time. Also sometimes the client can overdraw money from the bank. No interest is given to the account. A charge is taken against the overdrawn money.

3. Short term deposit Accounts:

Short term deposit accounts are accounts opened to deposit money for short time particularly not more than three years time.

4. Fixed Accounts:
Fixed accounts are accounts with a deposit of fixed amount of money for a fixed life span particularly more than three years.

5. Special Savings Scheme:

Special Savings Scheme is another form of earlier Deposit Pension Scheme. Here a fixed amount of money is deposited each month for a specific number of years. After the predetermined life of the account the account holder takes of the money along with interest. And the lump sum of money to be paid to the client after the maturity is predetermined.

6. Secured Overdraft (SOD) Account:

This is actually a loan account similar to the current accounts. By these types of accounts the account holder is entitled to withdraw up to a limited amount of money as loan from the bank any time and can deposit the money according to the clients convenience. These accounts are to be renewed every year and interest to the withdrawn money is charged after every four months.

Procedures of Opining Accounts:

Almost all accounts belongbelongs to the same procedure of opening. Though the procedure of pointing bank accounts are discussed below differently: a) Individual Savings Account: the papers and formalities needed to open an individual savings account is as follows: i) The form as supplied by the bank is to be filled by the applicant. The signature and account number is to be included in the accounts opening application. An introducer is the person who has a account in the particular branch of the bank. iii) Nationality certificate is another important material needed at the time of opening an account. The applicant also can show the passport to verify his/ her nationality. iv) Finding all things favorable the bank officer gives a specimen signature card to be signed dully. This specimen signature is essential to operate bank transactions later. v) The transaction profile is a recent topic in the account opening. Here the applicant is to mention the probable amount of annual transactions with the particular branch. b) Joint Savings account: All other facts being the same in case of joint savings account the joint specimen signature card is to be filled by the persons who will jointly operate the account. c) Business Enterprise: when any account is to be opened in the name of any business enterprise the seal of the enterprise is added in the specimen signature card and all the account operations will require the seal along with the signature off the operators. d) Company account: When any account is to be opened in the name of any company the additional papers to be submitted are as fellows: i)Article of association ii) General Meeting agreement iii) Joint specimen signature along with the operating seals. e) Secured Overdraft Account: The opening procedure of secured overdraft account is same as the other account. The . the only exception is that here the obligation oblicgation is deposited in the bank. Such as in the case of SOD-FO ( Secured Overdraft on Financial Obligation) the financial papers for example fixedfixeds deposit slip, government security etc, are given as lien in the bank. And in the case of SOD- General the work order is givengiben in the bank as lien.

Advance is one of the income earning and profitable sections of the bank. In this section various product (services rendered to the client) are marketed. Some of the banks product is described in the following lies: 1. Long Term Loans: The bank renders loans in long term basis the various fields such as: i) Small cottage industry: the bank issues loans for the establishment of small cottage industries. These types of loans require no large amount of hypothesis. ii) Large and medium scale industry: large or medium scale industries are also financed by National Credit bank limited. These types of loans require a large amount of hypothecation. iii) Agriculture: National Credit and Commerce Bank Limited allow loans in the agriculture sector. Any farmer can proceed to the bank to buy agricultural machinery by taking loans from the National Credit And Commerce Bank Limited. Other advances: a. House building Loan b. Transport Loan c. Projects Loan d. Demand Loan e. Staff Loan f. Executive car Loan 2) Small Loans: Some of the small loans the bank issues are as follows: a. Small business Loan b. House Repairing/ Renovation Loan c. Personal Loan d. Consumer finance scheme e. Lease finance f. Import finance g. Export finance h. FDBP & Bills Discounted, etc. Criteria to sanction loans: There are specific criteria to sanction loans to the clients so that the loans are hundred percent recoverable along with interest and the money is utilized by the client in a profitable venture. The following reports are analyzed: Project feasibility report: Project feasibility report is an important tool for appraising any loan for its profitability. For example the officers cheqes the following facts: 1. Name Of The Project 2. Location Of The Proposal 3. Production Planning And Sales 4. Management

5. Management 6. Status Of The Company 7. Type Of The Project 8. Cost Of The Project 9. Means Of The Project 10.Means Of The Finance 11.Profitability Forecast 12.Debt Service Average Ratio 13.Employment Generation 14.Contribution To GDP 15.Break Even Point 16.Internal Rate Of Return 17.Benefit Cost Ratio 18.Conclusion And Recommendation 19. Management Aspect 20.Corporate Set Up 21. Management Of The Company 22.Organogram 23.Technical Aspects 24.Marketing Aspects 25.Utilities 26.Economic Aspect 27.Implementation Schedule 28.Financial Evaluation

Foreign remittance money gram: Money Gram is the latest means of transferring money from one country to other country. This money transfer service is provided by Money Gram Payment System, Inc. through its network of Representatives. Customers may call the consumer toll free number for he address and hours of Service Rep. locations in their area. Procedure of money gram: 1. Send limits: Maximum permissible amounts for single transfers and daily retransfer totals apply. When required by law, transfers sent or received will be reported in accordance with applicable laws and regulations. 2. Receive Information: The client has to collect information about the currency transferred, amount and other information. The information is transferred to the paying countrys client by the sending countrys client. 3. Identification: The bank officer checks the information given by the receiving client with the original information in the network. If the officer finds all the information correct, the officer take steps to pay the currency. 4. Currency Exchange: After checking the information the bank pays the client the amount transferred in cash or in pay order. 5. Refund Information: The sender can refund the amount by writing to MonyGram International Ltd. or by visiting the service Rep. location where the transfer originated within thirty days of the transfer request. 6. Validity Period: The receive amount is valid up to forty five days of the initiation of the money. 7. Redirected Transfers: If a transfer is received in a country and/or currency other than the one specified by the sender, any difference between the fee applied to the transfer and the fee for a transfer to the country in which the transfer is actually received will be deducted from or added to the receive amount. The exchange rate applicable to a redirected transfer will by the exchange rate set by Money Gram or its service Reps at the time of receipt of the redirected transfer. 8. Liability: In no event shall Money Gram be liable for damages for delay, non delivery, nonpayment or underpayment of this money transfer, whether due to the fault, error, or omission of Money Gram 9. Data Protection

Foreign exchange division is a separate part of the bank. This section is very important for its role in the foreign trade and commerce. The tasks of this section are described below: Letter of credit (LC): Every person who wants to import any sort of goods from foreign country needs a Letter Of Credit. Any person having a current account in the bank can open an L.C. by depositing the amount as needed for the import purpose. Types of Letter of Credit: LCs are of three types as described in the following lines: 1. Cash L.C: 2. Deferred L.C. 3. Sight L.C. Procedures of opening an L.C. account: The importer has to fill up the Letter of Credit Application Form appending the following papers along with this: 1. Pro forma invoice 2. Insurance papers 3. VAT Registration Certificate 4. Tax Identification Certificate 5. Certificate of Origin 6. Shipping advice After scrutinizing the above papers and if every papers is found okay, then an L.C. account is opened.

Back to Back L.C.: Back to Back L.C. are issued who imports goods for the purpose of exporting the reprocessed products. All the procedure of opening LC account is the same with the exception that here the LC from the second importer (master LC) is to be submitted. Also no margin is maintained for opening back to back LC though this is issued for the 75% amount of the master LC.

The documentation of L.C. is described in the following diagram: Issuing Bank

Exporter Or Seller

Sales Contract

Importer Or Buyer

Shipment Presentation Collection Negotiation Advising Bank Figure: Process of import and role of Banks. Import Procedures: 1. Registration with CCI & E: i. for engaging in international trade , every trader must be first registered with the chief Controller of Import and Export, ii. By paying specified registration fees and submitting necessary paper to the CCI&E the trader will get IRC (import Registration Certificate) . after obtaining IRC, the person is eligible to import, 2. Purchase contract between imnporters and exporters: i. Now the importer has to contact with the seller outsider the country to obtain the pro forma invoice or indent which describes goods. ii. Indent is got through indenters (a local agent of the sellers) iii. After the importer accept the preformed invoice, he makes a purchase contract with the exporter declaring the terms and conditions of the import, iv. Imports procedure differs with different means of payment. In most cases import payment is made by the documentary letter of credit (L.C.) in our country. 3. Collection of LCA form: Then the importer collects a Letter of credit Authorization (LCA) form from NCCBL, Main Branch. Re-imbursement Bank

4. Opening a Letter of Credit (LC): In international environment, buyers and sellers are often unknown to each other. So lesser always seek guarantee for the payment for his goods exported. Here is the roe of bank. Bank gives the export guarantee that it will pay for the goods on behalf of the buyer, this guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by its Letter of Credit. i. Parties of L/C: a) Importer seller who applies for opening an L/C b) Issuing bank it is the bank which opens / Issues an L/C on behalf of the importer. c) Confirming bank- it is the bank, which adds its confirmation to the credit and it, is done at the request of issuing bank. Confirming bank may or may nit be advising bank. d) Advising /Notifying bank: it is the bank through which the L/C is advised to the exporter. This bank is actually situated in exporters country; it may also assume the role of confirming and / or negotiating bank depending upon the condition of the credit. e) Negotiating Bank- it is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may nit be the same. Sometimes it can also be confirming bank. f) Paying / Accepting Bank-it is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank. g) Reimbursing bank- it is the bank which would reimburse the negotiating bank after getting payment instructions from issuing bank.

ii. Application for the L/C: Before opining L/C, importer applies for L/C. to have an import L/C limit, and importer submits an application to NCCBL furnishing the following information: a) Full Particulars of bank account maintained with NCCBL b) Nature of Business c) Required Amount d) Payment Terms and Conditions e) Goods to be imported f) Offered Security g) Repayment Schedule

A credit Officer scrutinizes this application and accordingly prepared a proposal (CLP) and forwards it to the Head Office Credit Committee (HOCC), the Committee, if satisfied, sanctions the limit and returns back to the branch. Thus the importer is entitled for the limit.

iii. The L/C Application: After getting the importer applies to the bank to open a letter of credit on behalf of him with required papers. a. Documentary Credit Application Form b. NCCBL provides a printed form for opening of L/C to the importer , this form is known as Credit Application form. A special adhesive stamp is affixed on the form. While opening , the stamp is cancelled. Usually the importer expresses his desire to open the L/C quoting the amount of margin in percentage. c. Pro forma invoice- it states description of the goods including quantity, unit price, etc. d. The insurance cover note- the name of issuing compan6 and the insurance number are to be mentioned on it. e. The Form- IMP f. Tax Information Certificate. g. Forqwa4ding fore Pre shipment Inspection (PSI) (Importer sends forwarding letter to exporter for pre-shipment inspection. But all types of goods do not require PSI) 5. Scrutinizing of the L/C Application: The NCCBL Official scrutinizes the application in the following manner: a. The terms and conditions of the L/C must be complied with UCPDC 500 and Exchange Control & Import Trade Regulation b. Eligibility of the goods to be imported c. The L/C is must not be issued in favor of the importer d. Radioactivity report in case of food item, e. Survey report of certificate in case of old machinery f. Carrying vessel is nit of Israel or of Serbia- Montenegro g. Certificates declaring that the item is in operation but more than 5 years in case of car. Accounting treatment of in case of L/C Opening: Now if the Officer thinks fit the application to open an L/C , the following entries are given to realize the L/C commission , charges, postage, L/C margin, etc. Clients Account Dr. Sundry deposit margin on L/C Account Cr. Income A/C Commission Cr. Sundry deposit margin foreign currency clearing (FCC) A/C Cr. VAT (15% on commission) on L/C A/C Cr. Income A/C (Postage/ Telex) Cr.

After that, L/C number and the above entries are given tin the L/C registers. The contra entries stating the liability of the bank and the client are as follows: Customers Liability Bankers Liability Dr. Cr.

6. Transmission of L/C to Beneficiary through Advising Bank: Then the transmission of L/C is done through tested telex or fax to advise the L/C to the advising bank. The advising bank verifies the authenticity of the L/C, NCCBL has corresponding relationship or arrangement throughout the world by which the L/C is advised. Actually the advising bank does nit take any liability if otherwise not requested. 7. Amendment of the Letter of Credit: When the parties involved in a L/C especially the seller want to change the terms and conditions due to some obvious and genuine reasons t he credit should be amended. NCCBL transmits the amendment by tested telex to the advising bank. Amended service charge and telex charge is debited from the party account accordingly. According to articles 5 of UCPDC 500 amendment must be complete and precise. 8. Presentation of the Documents: a. The seller being satisfied with the terms and the conditions of the credit makes shipment of the goods as per L/C terms. b. After making the shipment of the goods in favor of the goods in favor of the importer the exporter submits the documents to then negotiating bank. c. After receiving the entire documents .the negotiating bank then checks the documents against the credit. If the documents are found in order, the bank will pay, accept or negotiate to NCCBL. d. Branch &Bank received seal to be affixed on the forwarding schedule. e. The Bill of Exchange & Transport documents must immediately be crossed to protect loss or fraudulent. NCCBL checks the documents. Usually the documents are: a. Invoice b. Bill of lading c. Certificate of origin d. Packing list e. Weight list f. Shopping advice g. non negotiable copy of bill of lading h. bill of exchange i. pre-shipment inspection report j. shipment certificate

9. Examination of shipping documents: One of the basic principles of documentary credit is that all parties deal with documentary credit so that all parties deal with document and not with goods (Articles 6 of UCPDC-500). That is why the documents should be scrutinized properly. If any discrepancy in the documents is found .that is to be informed to the p[arty. A checklist must be followed for examining the documents. Then the following things can happen: a. Discrepancy found but the importer accepts then the bank will lodge the documents. b. Discrepancy found and importer nit agreed to accept- Issuing bank would intimate negotiating bank for revised document or return the documents to the negotiating bank for necessary action. Here issuing bank is not bound to pay because the documents send by exporter is not in accordance with the terms of L/C. c. documents are found exactly but importer is not willing to retire the documents- in this case bank is obligated to pay the price of exported goods. Since importer did not pay for bill of exchange, this payment by bank is one kind of credit to the importer and this credit in banking is known as FORCED PAD. d. everything is O.K. but importer fails to clear goods from the port and request bank to clear- in this case banks clear the goods and takes delivery of the same by paying customs duty and sales tax etc. so, this expenditure is debited to the importers account and in banking it is called LIM. 10. Lodgment of documents: Lodgment of document means retirement of funds. Usually payment is made within seven days after the documents have been recievb4ed. If the payment becomes deferred, the negotiating bank may claim interest for making delay. Lodgment constitutes the followings: a. Requisition for the foreign currency: For arranging necessary fund for payment, a requisition is sent to the International Department. b. Preparing sale memo: a sale memo is made at B.C. rate to the customer. As the T.T. & O.D. rate is paid to the ID, the difference between these toe rate is exchange trading. Finally, and inter Branch Exchange Trading Credit Advice is sent to ID. c. Creation of PAD liability: NCCBL lodges the converted the bill amount at BC (Bills of Collection) rate prevailing on the date of lodgment to PAD A/C and IBETCA prepared at the converted bill amount at T.T cleat rate is sent to ID. PAD A/C should be adjusted within 21 days.

Accounting procedure for Lodgment: PAD A/c Dr. (Converted the bill amount at BC Rate) Head Office A/c. (Converted bill amount at TT clear rate) Income A/C profit on exchange (Difference between B.C. & T.T. clear rate) Reversal entries: Bankers Liability Customers Liability (When lodgment is given) Dr. Cr.

Cr. Cr.

d. Payment instruction: Payment instruction is govern to the reimbursement bank

to debit the issuing banks. NOSTRO A/C to make payment to the negotiating bank. e. Payment Intimation to the Negotiating bank: An Intimation is sent to negotiating bank ensuing that payment has been made. Accounting treatment: Here the telex charge, service charge, and interest (if ant) is debited to the PAD A/C. PAD A/C Dr. Income A/C Cr. (Service charge & Telex charge) Shipping documents is then stamped with PAD Number & entered in the PAD Register f. Intimation to the applicant: As soon as above formalities are completed the importers are served with PAD bill intimations for retirement of concerned import document. A letter of intimation regarding receipt of the documents should be sent to the applicant with a request to fake delivery of the documents on settlement of all dues against it. 11. Retirement of documents: On intimation the importer approaches with a letter for retirement of the document against full payment with up to dater interest and charges payable. Bank prepares cots memo in pointed form on account of the concerned party giving details head of charges payable. Accounting treatment: Sundry deposit L/C Margin A/C Dr. PAD A/C Cr. (Margin amount transferred to PAD A/C)

Customer A/C PAD A/C Income A/C- Interest on PAD

Dr. Cr. Cr.

(Customers account debited for the remaining amount) As far the vouchers are passed and necessary entries are given in PAD Ledger endorsement are made under tow authorized signature of the bank officers (PAD Holder). Then the documents are delivered to the importers. The bank endorses the documents in following manner: Document Bill of Exchange Commercial Invoices Endorsement

Receives payment for NCC Bank Limited Invoice value certifies & remitted for NCC Bank Limited

Bill of Lading, Airway Bill, Truck, Chalan Deliver/ Pay to the order of M/S...., for NCC Bank Limited LCA For NCC Bank Limited

Then importer releases the importers goods from the port authority with the help of the clearing and forwarding agents C&F agent clears the ports and hands over the goods to the importers. After completion of all official requirements C&F agent submits the bill of entry of the banks. The bill of Entry is wanted from the party for maintaining the evidence as the goods has been arrived. 12. Shipping Guarantee: When goods arrive prior to arrival of documents- this happens mostly in cases of air shipment, shipment by truck from Land or shipment by post parcel. In such cases bank endorses non negotiable shopping documents for clearance of the goods submit to scrutiny and the documents being in order and settlement of the bank dues against the relative bills.

The bank could sustain its strong image in the mind of the customers and shareholders as a leading financial institution despite serious competition from both local and foreign Banks operating in the country. Its operating profit of Tk. 597.50 million is a clear evidence of the statement, which is 5.07% higher than that of previous year. The performance of the bank in various sectors is stated below: Reserve fund &other reserves: The Reserve fund of the bank increased to Tk, 388.01 million in 2002 as against Tk. 353.58 million of previous year, increase being 9.74%. This years figure excludes Tk. 65 million of Share Fluctuation Reserve. Deposit: Deposit of the bank at the end of the year was Tk. 16,062.35 million registering an increase of 25.25% over previous years figure, which was tk. 12,824.71 million. A number of welfare oriented deposit Schemes introduced by the Bank received tremendous response from the small depositors.
20000 15000 10000 5000 0 1998 1999 2000 2001 2002

Figure: Deposit Growth (1998-2002) Credit: In lime with the policy guidelines issued by the ventral bank from time to time, the bank formulates its own credit Policy keeping it flexible to accommodate changes that are taking place. The Bank has a diversified portfolio consisting of both traditional and non conventional ones. Several Small Credit Schemes are on the offer, which received remarkable response from the customers and also helped the Bank to expand its customer base. The Bank is also considering to engage in syndication with other Banks for allowing large loans covering Bangladesh Banks rules and regulations.
14000 12000 10000 8000 6000 4000 2000 0 1998 1999 2000 2001 2002

Figure: Advance growth (1998-2002)

During the year Banks total advance stood at Tk. 13147.42 million which was 21.87% higher than that of the pervious years figure of Tk. 10788.61 million, the ration of deposit and advances was 1:0.82 in 2002. Recovery of Non Performing Loans: Special stress has been given to realize/ regularize non-performing loans during the year 2002 and achievement in this regard is commendable. The ratio of classified loams reduced to 9.39% from precious years 9.89 owning to continuous moini8toring, follow up and negotiation. Recovery efforts have been intensified by reorganizing the concerned department at Head Office by increasing strength. Responsible officers at branch level were also assigned to monitor development closely in this regard.

Investments: The volume of investment as on 31st December 2002 stood at Tk. 2909.15 million against Tk. 1756.89 million of previous year registering an increase of 65.59%. Composition of investment was as under.
2000 1500 1000 500 0 1998 1999 2000 2001 2002

Figure: investments (1998-2002) i. ii. iii. iv. Treasury bills Debenture Ordinary shares Prize Bonds Tk. 2720.00 million Tk. 42.43 million Tk. 144.14 million Tk. 2.58 million

Foreign Exchange Business: The role of foreign exchange trade was vital as before during the year under review which contributed largely to the profitability of the Bank. The bank has already established as wide network of correspondents around the word.

The volume of import business handled by the bank during 2002 was tk.13579.50 million which was Tk. 13754.00 million in 2001. Total export business was 4559.00 million compared tit k. 4504.00 million of the preceding year.
14000 12000 10000 8000 6000 4000 2000 0 1998 1999 2000 2001 2002 Im port Export

Figure: Import/ Export (1998-2002) Foreign inward remittance channeled through Banks unique product Money Gram and arrangement made with Placids, New York increased to Tk. 1455.90 million from Tk. 318.00 million of the previous year, increase being 358%. Banks membership with SWIFT has also contributed in expediting foreign trade.

20000 15000 10000 5000 0 1998 1998 1999 2000 2001 2002

total assets

Figure: Total Assets Treasury: The bank is playing bath in local money market and foreign currency through its dealing room at Beak Office since 1999. The bank secured substantial amount of business during the year through treasury dealings.

Capital Market Operation: Being member of Dhaka Stock Exchange, the bank as usual participated in the day to day trading and earned a sizeable income. Activities the Stock Market will be invigorated to grab sizeable business in this field.

Operational result: The operational Profit of the bank during 2002 was Tk, 597.50 million against Tk. 568.65 million of 2001, growth being 5.07%, earning of such magnitude was possible due to good advance, efficient management of fund and effective supervision of loan and advances disbursed. Return on Assets (ROA) was 1.14%which may be considered satisfactory. Out of operational profit, provisions were made for Tk. 213.53 million and Tk. 1.86 million respectively against Bon-performing/ Bad Loans and others. Net Profit thus stood at Tk. 385.38 million. Dividend: The Board of detectors has been pleased to recommend 15% bonus Share for the shareholders for the year 2002. Administration of National Credit & Commerce Bank Human Resources Development: Acknowledging the importance of quality & efficient manpower, the bank has undertaken programme to train its employees of all strata at its own Training Institute. A highly experienced person was appointed as director (training) of the institute in the year 2001 with the task of formulating various training modules. Steps are being taken to shift the Institute to separate premises for facilitating training activities. Side by side, both inland and foreign training were also imparted during the year as usual. A highly experienced, well educated and motivate workforce is playing vital role towards growth of the bank who deserve appreciation. The number of Executives & Officers as on 31st December 2002 was 605 as against 545 as on 31st December 2001. Automation and IT: Computerization of the Branches and Head Office as well is underway with a view to providing quality and prompt service to the customers , the Bank is going to start online: Banking initially at Dhaka very soon and on the basis of its performance go for complete ON line operation. ATM Service and Credit Card: The bank is a member of ATM Network along with other Seven Banks which enabled the Bank to extend modern Banking facility to the customers allowing 24 hours access to any ATM dispenser situated at Dhaka, Sylhet and Chittagong.

The Network will be expanded phase by phase in other parts of the country. The Bank has already obtained principal membership of MasterCard & Visa credit card which will be introduced in its product line shortly. Network of Branches: The Bank opened two new branches during the year under preview raising the number or branches to 31; besides, one collection booth is also in operation at Uttara Model Town. Auditors: The Banks Books of Accounts as on 31st December 2002 were audited by M/S B. Alam & co., Chartered Accountants. As per norms of Bangladesh Bank, M/S b. Alam & Co. will not be eligible for reappointment as external Auditors because of their completion of three years term. Therefore, new external auditors have to be appointed for the year2003. Prospects: In the face of fierce competition from the other players of the market and strict policies being introduced by the Government and Bangladesh Bank, the bank is continuously looking for ways to enhance profitability Bank thereby ensuring continuous growth.

Letter of Guarantee LETER OF credit Total Advances

Figure: Funded and Contingent Assets-2002 With this end in view, introduction of some new Credit and Deposit products is under active consideration of the Management, we will soon see the result of in this regard. More branches will be opened, which will expand our network and increase volume of business. All possible steps will be taken to rationalize expenditures on vacuous heads.

Conclusion: I must appreciate the authority and the officers of the National Credit & Commerce Bank Limited for their helpful activities towards me during the internship Programme. All and every officers of the bank tried their best to satisfy my inquisitiveness about the functions and affairs of the bank and make me understand. So I am very obliged to the National Credit & Commerce Bank Limited and its employees with whom I dealt during my Internship Programme.

Bibliography: 1. Annual Report of the National Credit & Commerce Bank Limited- 2002. 2. Customer Credit Service Bulletin of National Credit & Commerce Bank Limited. 3. Bulletin about the Products of the Bank. 4. Banking Orders and regulations of Bangladesh Bank about various affairs of the Banks.