Chapter - 1 To 8 (Report)

Chapter -01 Introduction
1.0 Introduction:
Internship report has been prepared for the fulfillment of the Degree as per curriculum structure of IIUC, Department of Business Administration. Internship program is the systematic process for gathering, recording and analyzing data about the subject that a student goes to learn on the program. The aim of this internship program is to connect practical knowledge with theoretical knowledge. Every one must be expert in both theoretical and practical knowledge for the competitive world. No knowledge is fully complete unless it is fully supported by evens on ground. Whatever may be the quality of theoretical knowledge, it is not complete without practical implications on ground. This realization is more pronounce in the study of Business Administration where experience on ground plays a dominant role. Bachelor of Business Administration (B.B.A.) is a program of all business students for gathering knowledge about business world. The Internship programmed is very important for B.B.A. students for gathering practical experience.
This internship report has been prepared best on information collected during internship in, Commercial Bank of Ceylon Limited. Agrabad Branch,
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SAIDA KHANAM [B041109] [BBA, IIUC]
Internship Report
Our Interest Is In You!
Chittagong. The internship report has best opportunity for earning knowledge on foreign exchange banking. After working and completing internship duration, this report is prepared on the basis of some findings and observation relating to the topic with some recommendations.
1.1 Objectives of the study:

The main objective of this studys to know about the Foreign Exchange Banking System of Commercial Bank of Ceylon Limited. The Specific objectives may be exposed as under: To know the historical background of CBCL. To know the management of CBCL. To observe the general activities of the bank; To know about different activities of the foreign exchange banking system; To know about the documentation of Later of Credit; To understand about measuring L/C; To focus on the overall performance of the bank and branch; To identify the problems of its financing; To identify the problems, if any faced by the officials dealing in foreign exchange business and to examine their views to solve them. To suggest necessary measures. and calculation of Interest against
1.2 Methodology of the study:

The present study is based on empirical as well as theoretical analysis. Collected data and information were tabulated, processed and analyzed critically in order to make the report informative.
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Data collection: - Data is collected from various sources though

formally or casually about banks activity and its foreign exchange transactions. The two ways of collecting data are shown bellow:
A. Primary Sources:Primary sources are data gathered and assembled specially for the report in hand and by following ways: Practical Deskwork: Report is prepared on the basis of three month practical desk work in various divisions. Opinion Survey: Data is collected though various opinion of the officers and clients of the Banks Observation in the organization: Data collected though observation of organizations various activity. In Depth Interview: A relatively unstructured, collective interview used in the primary stages of the internship period. Face to face contact with the officials: Some Data has been collected through face to face contact with officials. Face to face conversation with the clients: In three months duration of the internship data have been collected through contact with various clients of the bank and get informal information about the bank.
B. Secondary Sources:Secondary data have been collected inside the company, in the library, and on the internet, specialized in providing information. The following sources of secondary data are given bellow: Prospectus/ Annuals of CBCL. Different publications on banks. Annual Report of the bank. Past research books & journals.
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Documents of General banking & Foreign Exchange Department of the branch.
Data Analysis & Presentation:- Data Analysis with different statistical tools and presented though different graph, chart etc.
1.3 Scope of Study:

The Internship report is focused on Commercial Bank of Ceylon Limited. Although Foreign Exchange banking is similar in all branch of CBCL.This report will give a clear idea about the Foreign Exchange and quite a few concepts over general banking of the bank i.e. how the A/C is opened & how the deposit & credit operations are done. Areas & issues covered by this report include meaning of foreign exchange, functions of foreign exchange in CBCL documents required in later of credit, various stages in import and export, different types of L/C & different types of loans against L/C & understanding necessities of remittance in F. Ex., rules and regulation of Bangladesh Bank and Ministry of Govt. for Foreign Exchange and lastly performance of CBCL in general banking & import export business.
1.4 Limitations of the study:

During the internship program, numerous difficulties caused for the accomplishment of the study. This difficulty may be termed as limitations of the study, enumerated as follows: 1. Lake of depth of knowledge and analytical ability for writing such report.
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2. Inadequate time to make an in-depth and full fledged report on foreign exchange operation of CBCL. 3. Unavailability of sufficient written documents as required for making a comprehensive study. At least limitation in internship program will make disagree mind about making internship report.
Chapter -02 COMMERCIAL BANK AN OVERVIEW

2.0 About the CBCL:
A. Name of Company: Commercial Bank of Ceylon Limited. B. Legal Status: Commercial Bank Of Ceylon Limited is a public limited liability Company incorporated in Sri Lanka on June 25, 1969 under the Companies Ordinance and quoted in the Colombo Stock exchange in March 1970. A licensed Commercial Bank under the Banking Act No. 30 of 1988.
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C. Registered Office:
Commercial House No.21, Bristol Street P.O. Box 856 Colombo Sri Lanka.
D. Country Office:
47, Motijheel Commercial Area Dhaka, Bangladesh.
E. Brief History:
Though Commercial Bank was established in 1969, it traces its Origin back to 1920 to British owned Eastern Bank, which was subsequently acquired by Standard Chartered Bank. SCB had a 40% stake in Commercial Bank until its exit in 1997 due to change in Local regulatory requirements. Presently, DFFC Bank has a stake of 29.77% in Commercial Bank and the International Finance Corporation (the private sector investment arm of the World Bank) has a 15% stake, while the Srilanka Insurance Corporation (the premier insurance Company in Sri Lanka) holds a 9.91% stake. In 2003 CBC acquired the operations of Credit Agricole Indosuez (CAI) in Bangladesh. The acquisition consisted of the main office in Dhaka, its branch in Chittagong and two booths. CAI is now the largest bank in France. It was the second largest foreign bank in Bangladesh. When CAI decided to exit because of a shift in their global strategy. CBC Seized this opportunity to grave a slice of the rich Bengali market. Our acquisition
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of CAI gives us instant access to their large Corporate Client base and banking infrastructure.
F. Branch Network:
CBC provides a world class financial service through its well spread network of 130 branches and 187 ATMs network in SriLanka.In Bangladesh we already have two fully- fledged branches and two booths. We are planning to open two more branches in 2006.
2.1 Objective:
Building Customer Base. Giving satisfaction to the Client To give optimum value to our customers, employees, shareholders and the nation. We serve our customers with respect and provide the best solution for their needs.
2.2 Goal:
To be the Leader in the Financial Industry & having a visible presence in the region by the year 2010.
Emphasis on good corporate governance. The bank upholds and strictly abides by good corporate governance practices . Commercial Bank is over of its responsibility towards its employees, the Wider public and the physical environment.
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Our aim to generate profits for our shareholders and to constantly add Value to their share, we know that we must do this in a way that is socially Acceptable.
Sustainability as Solid as our history.
2.3 Achievement and Awards:

BANGLADESH :

AA rating from the Credit Rating Information Service Ltd. This is by far the highest rating to any bank by rating agency. Best Foreign Bank in Bangladesh---2004, rated by industry Magazine Arthakantha Business Award.
SRI LANKA :

Best Bank in Silence for the 7th Consecutive year by the Global Finance Magazine (U.S.A) Best Bank of the yearSrilanka (2001, 2002, 2003, 2004) by The Banker magazine based in UK. AA + Rating by Fitch Rating Sri Lanka. National HRM Award 2002, 2003, Best Presented Accounts 2001 (Financial Sector) Presented by south Asian Federation of Accountants (SAFA) Performance of CBC: Today Commercial Bank is undoubtedly regarded as the best bank as well as the best corporate in the country. Its cost efficient operation as evidenced by the low Cost/Income Ratio. Financial stability as measured by the highest capital Adequacy ratios and highest profitability as measured by the best return on assets and return on equity.
2.4 ORGANIZATIONAL STRUCTURE OF THE CBCLBANK LIMITED

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Country Manager Chief Operating Officer Senior General Manager General Manager Deputy General Manager Assistant General Manager Manager Deputy Manager Assistant Manager Senior Officer Officer Grade-1 Officer Grade-1 Graduate Trainee Executive
Banking Trainee
2.5 Brief View of Commercial Bank Limited:

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Particulars
2006 223,974.25
2007 267939.63 23936.03
Change % 19.63 51.08
Total Assets (RS Mn) Shareholders Mn) Funds (US$
15842.84
Turnover (US$ Mn) Profit After Tax (US$ Mn) Return on Assets (%) Return on Equity (%) Cost / Income Ratio (%) Capital Adequacy Ratio (%) Non-Performing Ration (%) Market Mn) Capitalization Assets (US$
Figure (in Million)
2012.628 1.00 12.73 51.99
4103565 1.67 20.63 43.95
103.89 67.00
(Source: Annual Report)
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Chapter -03 Foreign Exchange Operations

3.0 Introduction:
Foreign Exchange may be defined as the system of process of converting one national currency with another and by transferring money from one country to another country through International Business Transactions. A business transaction that includes two or more parties from at least two different countries can be terms as Foreign Trade. Through there is a general concept of foreign exchange which means the exchange of currencies but the term foreign exchange has various meanings Something or it in a more access abstract sense as process of setting obligation between individuals and firms residing in different countries. Other things of it comprising the facilities available for the settlement of such obligation and still others regard it as a synonym for transaction in Foreign Money.
3.1 Foreign Exchange Regulation Act:Foreign the Exchange Regulation Act 1947 was adopted 1947. in Bangladesh this Act immediately after independence. A few provisions have been added under foreign exchange regulation ordinance, Actually empowered Bangladesh Bank to regulate certain payments, dealing in foreign exchange and securities and the import and export of currency and bullion. After 1947, the Act was adopted by Pakistan and after 1971 by Bangladesh. The Act has 27 section and a number of sub sections. The main objective of the Act are to conserve the limited foreign exchange resources and to ensure that the available foreign exchange is utilized only for priority requirements in the economy and financial interest of Bangladesh and the maintenance of
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the proper accounting of foreign exchange receipts and payments. Bangladesh Bank issues license to deal in foreign exchange empowered by the Foreign Exchange Regulation Act 1947. Central Bank may issue general license or license with authority to perform limited functions only.
3.2 REGULATIONS FOR FOREIGN EXCHANGE:

A. LOCAL REGULATIONS:
Foreign exchange transactions are being controlled by the following rules & regulation. Foreign Exchange Regulation Act 1947. Bangladesh Bank issues foreign exchange circular from time to time to control the export, import & remittance business. Ministries of commerce issues export & import policy giving basic formalities for import & export business. Sometime CCI&E issues public notice for any kind of change in foreign exchange transaction. Bangladesh bank published two volumes in 1996. This is compilation of the instructions to be followed by the authorized dealers in transitions relation to foreign exchange.
B. INTERNATIONAL REGULATIONS OF FOREIGN EXCHANGE:

There are also some international organizations, influencing our foreign exchange transactions. Few of them are discussed bellow:
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International Chamber of Commerce (ICC) is a world wide non-governmental organization of thousands of companies. It was founded in 1919. ICC has issued some publications like UCPDC, URC, & URR etc, which are being followed by all the member countries. There is also an international court of arbitration to solve the international business disputes. World Trade Organization (W.T.O) is another international trade
organization established in 1995. General agreement on Tariff & Trade (GATT) was established in 1948, after completion of its 8 th round; the organization has been abolished & replaced by W.T.O. This organization has vital role in international trade, through its 124 member countries.
3.3 Importance of Foreign Exchange Business in Economy:

International trade helps to produce domestic production as well as global production. International trade gives exchange opportunity of goods Natural assets of countries are to be utilizing property Consumers get privilege through international trade.
Authorized Dealers
The bank which has License by Bangladesh Bank for dealing foreign exchange business or transaction under the FER Act, 1947; is called Authorized Dealership. The dealer must have adequate manpower trained in foreign exchange. The authorized dealers must maintain adequate and proper records of all Foreign Exchange transactions and furnished such particular in the prescribed returns of submission to the Bangladesh Bank. CBCL Agrabad Branch is one of the Authorized dealer Branch of CBCL Foreign
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Trade operation play a vital role in the over all business development of the Bank. For expansion and smooth functioning of foreign trade the bank has already established a large network of foreign communication companion covering most of the important business centers in 100 countries around the world.
3.4 Types of Foreign Exchange Business:

There are some types of foreign exchange business in this bank
Import Business. Export Business. Remittances. Import Business:
Opening letter of credit. Collection of Bills. Import loan and guarantees. Advance bills.
Export Business:
Advance for different payment. Negotiating of foreign bills. Advance against bills or collection. Purchase of foreign Bills. Export guaranties. Advising / confirming letter of credit. Pre shipment Advantage.
Remittances:
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Issuance and enhancement of credit cards. Issuance and enhancement of travelers Cheques. Sales and enhancement of foreign currency notes. Payment of DD, Money Gram, Fardin Express, Express Money Etc.
Issuance of DD, Money Gram, Fardin Express, Express Money Etc. Maintains of non relevant accounts.
Chapter -04 Import Procedures and Financing

4.0. Import Policy:
Under the Import & Export Control Act, 1950 the Government of Bangladesh formulates the Import Policy through Ministry of Commerce. The existing Import Policy (2003-2005) as come into effect from March 13, 2004 to June 30, 2006. It can review every year if needed.
Who Can Import:

The person or the institution that have got valid import registration certificate issued by the Chief Controller of Imports and Exports can Import and they are known as Importer. In terms of the imports, export and indenters order 1981 no person can import in Bangladesh unless he registered with the Chief Controller of import and export and exempted from the provision of the same order. The L/C Issuing Bank (AD) must ensure that they deal only with Known customer having a place of Business and can be traced easily should any occasion arise for this purpose.
Category Of Importers:
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There are two categories of Importers now existing in our country:
A) Commercial Importers: The importers are imports are commercial

items are called commercial Importers.
B) Industrial Importers: The imports that import Industrial items

that are raw materials of the industrial capital machine and spare parts for setting up industry etc are called industrial importers. C) Personal importer: If an importer intends to import goods from abroad to meet his personal needs, the importer is called a personal importer. Excepting the above three categories there may be some other importers such as import by actual users, public sector corporation, Govt. and semi Govt. organization and Govt. department. They need not to process IRC from CCIE but they require specific recommendation from the concern Ministry/Authority before opening of L/C that is Directorate of food, TCB, Wapda and other may be cited as example.
Import Operation:
Import is foreign goods and utilities purchased by customers, firms and Governments in Bangladesh. The Importer must have Import Registration Certificate (IRC) issued by Chief Controller of Import and Export (CCI & E) to import goods from other countries.
Import Procedure:
As per Import Export control Act, 1950 no person can indent or export any goods in to Bangladesh to be incase of exemption issued by the government of the People Republic Of Bangladesh. So for doing import business at first every importer must obtain Import Registration Certificate (IRC)
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Foundation of Import:
Performa invoice Indent TIN &VAT Certificate Special trade agreement Sales Contract Barter System Clean Report Finding (CRF)
Process of Acquiring IRC:

The chief controller of the Import invites application usually for registration of import to importer by public notice or import policy. For the registration importers need some paper to submit. The following papers/ documents are requires for submission to C.C.I.E. for Import Registration Certificate. Application Form Nationality certificate Income tax registration certificate with GIR Trade license Membership Certificate Partnership Deed (if necessary for Partnership business) Certificate Of Registration with the Register of joint Co. and Articles and memorandum of Association (in Limited Company) Bank Certificate The nominated of the applicant will examine the papers/ documents and verify the signature of the applicant and forward the same of the concerned office of the C.C.I.E. with a forwarding schedule
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in duplicate through bank representative. The duplicate copy of the same acknowledgement of CCI&E office of the receipt of the document is received by the bank and is preserved.
4.1. What is Letter of Credit?

A letter of credit may be defined as an open letter of request where by one person (usually a merchant or a banker) request some other person or persons named therein, for a certain amount and promise that he will repay the same to the person advancing the same or accept bills of exchange drawn upon himself for the like amount.
Letters of credit are an outcome of great increase in world trade the more repaid means of communication and transport, the embarking upon commercial adventures by men of doubtful honesty and fluctuation in the foreign exchange rates etc. The documentary Credit is an undertaking issued by a Bank for the account of the buyer (the applicant) or for its own account, to pay the beneficiary the value of the Draft and or documentary Credit are complied with Letters of Credit are now being increasingly issued by commercial banks in favors of their constituents or persons named them to facilitate remittance of funds.
Classification of Letter Of Credit:

These letters can be divided into two categories 1. Travelers Letter of Credit. Or Non-Commercial Letter of Credit
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2. Commercial Letter of Credit.
1) Travelers Letter of Credit: Travelers Letter of Credit is being issued

by the banks for the convenience of the travelers. They are saved from the inconvenience and risk of traveling with the heavy cask balance. Ex: Credit card, Travelers Cheques, Circular Notes etc
2) Commercial Letter of Credit: Commercial letter of credit is the most

common method used for financing foreign trade. Its a sort guarantee to the exporter that his draft will be honored by as specified bank up to a certain amount as per the specified terms. The main element which as to be guarded against both A and B is the integrity and solvent of the other.
4.2 Mechanism of Letter of Credit:

The following diagram bring out clearly the operation of letter of Credit,
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Contract of Sale
Exporter {Beneficiary}
Shipment of Goods
Importer {Applicant of L/C}
Forwards L/C to
Presents Does and Obtain payment from Obtains Reimbursement From Opens L/C and Sends it to
Recovers amount from
Applies for opening of L/C
Advising, Negotiating Bank {Foreign Bank}
Issuing Bank {Country Bank}
The process of a letter of credit summarized in the above diagram is detailed below:
Definition Of Contract Sale:

The transaction originates when the exporter in foreign country and the importer in own country enter in to a contact sale. The contact covers all important particulars like the description, value and quantity
of goods, the due date for shipment; methods of payments etc. one of the stipulations may be that a letter of credit should be opened in favor of the exporter.
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Parties of Import Export Business:

A numbers of parties are involved in a Foreign Trade and the right and obligations of the different parties involved in the deal will also differ from each other. Usually the following parties are involved in the Letter of Credit. 1. Applicant or Buyer (Importer) 2. Opening/Issuing Bank 3. Exporter/Beneficiary/Seller 4. Nominated Bank (intermediary Bank) which may be: a) Advising Bank: b) Confirming Bank: c) Negotiating Bank: d) Accepting Bank: e) Paying Bank: f) Reimbursing Bank:
Importer/Buyer:Importer/Buyer is the party who opens L/C on behalf of exporter by issuing Bank.
Opening/Issuing Bank:The opening/issuing Bank is the bank which opens/issues a L/C on behalf of him importer. It is also called the Importers or Buyers Bank.
Exporter/Beneficiary:- Exporter/Beneficiary is the party in whose

favor the L/C is established.
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Advising/ Notifying Bank:

The advising/Notifying bank is the bank through which the L/C is advised to the exporting country & it may be a branch of the opening bank or a correspondent bank. It may also assume the role of confirming and negotiating bank depending upon the conditions of the credit.
Paying / Accepting Bank:

This is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank.
Negotiating Bank:
Negotiating bank is the bank that negotiates the bill and pays the amount to the beneficiary. It has to carefully scrutinize the documentary credit before negotiation in order to see whether the documents apparently are in order or not. They are the authorized to claim and get reimbursement of the amount paid by them on negotiation of documents.
Reimbursing/Confirming Bank:
The issuing bank may indicate in the credit the name of a bank from whom the paying/negotiating bank can obtain reimbursement. The documents are sent to the issuing bank; the negotiating/paying bank simultaneously makes a claim with the reimbursing bank for the paying affected. Normally the reimbursement bank would be the bank with which the issuing bank maintains an account. A copy of the letter
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of credit would also be sent to the reimbursing bank so that it may know the arrangement. Often the beneficiary of the credit stipulates that the credit must be confirmed by a bank in his own country; so that he is assured of payment as soon as the documents are presented to it at his own centre.
Issuing Bank (Bangladesh)
Advising Bank (India)
Reimbursing Bank (Japan)
Negotiating Bank (India)
4.3
Opening of a Import Letter of Credit:

For import transaction or trade the importer has to open a letter
of credit. The following steps involved in opening the letter of credit can be put in bellow:
Application for the L/C limit:
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An importer submits an application to CBCL for the getting an import L/C limits. The importer called as opener or applicant will approach his own bank or some other bank, who is engaged in financing of foreign trade transactions, with a request that it issues a letter of credit in favor of the exporter/beneficiary. At that application he/she gives full detail of the followings: Nature of Business. Details of the applicant account. Required amount of Limit. Payment terms and condition. Goods to be imported. Offered Security. Repayment schedule.
A credit scrutinizes that application & according prepares a proposal & forwards to the Head Office Credit Committee. The committee, if satisfied, sanctions the limit & returns back to the branch. In this manner the importer is entitled for the limit.
Particular For the L/C Application Form:

CBCL provides a printed form for opining of L/C to the importer. A special stamps is attached on the form. While opening the stamp is to be cancelled. The importer gives the following information is that form: Full name & address of importer. The mode of transmission of document (Courier/ mail/ Telex/ SWIFT) Name and address of the beneficiary.
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Details of the shipment- port of shipment, and destination, time and the last date of shipment etc. Date and place of expiry of the credit. Whether the confirmation of the credit is requested by the beneficiary or not. Whether the partial shipment is allowed or not. The type of loading (loading on boarding) Brief description of the goods to be imported. Performa Invoice. Availability of the credit by sight payment/ Acceptance/ Deferred payment. The time bar within which the document should be presented. Sales terms (FOB/CIF/C&F/CFR) Account number L/C Amount Shipping Mark. Type of delivery Sea/Air/Road. H.S. code number of the Goods imported. IRC number LCA number Insurance Company name Insurance Cover note Country of Origin
The above informations are given along with the following documents:
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Performa Invoice which gives all description of the goods including details of number Etc. quantity, unit price, beneficiary address, H.S. code
I.M.P. Form Insurance company name and cover notes of the insurance and insurance number. The date by which the document should be presented by the beneficiary for payment, acceptance or negotiation.
Scrutiny of the Application:

The application made shall be scrutinized by the bank in order to ascertain the following:
. The application is of good financial standing and high integrity. . The importer possesses the Import license granted by the Import
Control Authorities. The banker should verify from the import license the following: 1. The import license is in the name of the applicant. In case it is not in his name, he should have been duly authorized by the Import Control Authorities to use it; 2. 3. The amount or the balance available under the license The license is valid, the validity period of a license is covers the letter of credit applied for, one year. However 45 days of grace are allowed, 30 days for the dispatch of goods and 15 days for negotiation of documents,
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4.The details of goods given in the application conform to the goods mentioned in the import license.
5. 6.
The country of origin of the goods given in the license The goods to be imported are readily marketable and
is the same as given in the application. their value is not subject to violent fluctuation Margin: The importer should be asked to deposit with bank in the form of cash or securities proper margin depending upon his credit worthiness. The bank may allow him interest on such margin money. Insurance: The applicant should also be asked to take an insurance policy on the C.I.F. value of the goods plus certain percentage to cover profit. The policy should be in the joint name of the bank and the importer. The application form should be complete in all respects and duly stamped and signed by the applicant.
Securitization of L/C Application:

The officials of CBCL securitize the application for the following reasons: The terms and conditions of the L/C must be complied with Exchange Control & Import Regulation Indenting registration number. Officers examine whether the goods to be imported are legal.
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Certificate declaring that the items are in operation not more than four years in case of vehicles. Whether IRC updated or not. The L/C must not be opened in favor of the importer. Radioactivity report (in food items). Survey report or certificate (in old machinery items). Whether IMP from dully signed or not. Goods & carrying vessel from all the countries in the world except Israel. Insurance caver note with date of shipment. To see whether the application is signed by the importer.
Officers of Import must have to focus in the security of L/C by favoring Rules and terms of Ministry and Bangladesh bank are followed.
Bank will supply the following papers/documents for opening

a L/C L/C application form. LCA form. IMP form.
4.4 LCA Form:

There are six (5) copies of LCA form. i. ii. iii. iv. Original copy for exchange control purpose. Duplicate for custom purpose. Triplicate & Quadruplicate for licensing authority. Quintuplicate for the registration unit of Bangladesh Bank.
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v.
Remaining copy for the issuing bank.
The Clauses contained In A L/C:1. A clause authorizes the beneficiary to draw bills of Exchange up to a certain on the opener 2. Description of the goods to be shipped 3. An undertaking by the issuing bank that bills drawn in accordance with the condition will be duly honored. 4. Instructions to the negotiating bank for obtaining reimbursement of payments under the credit. 5. List of shipping document which are to accompany the bills.
4.5 Amendment of Letter of Credit:Parties involved in a L/C particularly the exporter cannot always satisfy the terms & condition in full as expected due to some unexpected reason. In such a situation the /C should need to be amended. CBCL transmit the amendment by SWIFT to the advising bank. Is case of revocable credit it can be amended or cancelled by the issuing bank at any moment & without prior notice to the beneficiary? But in case of irrevocable L/C it can neither be amended nor cancelled without the agreement of the issuing bank, the advising bank & the beneficiary. If the L/C is amended, service & SWIFT charge are debited from the parties account.
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Transmission of L/C:
The way of transmission of L/C is as follows: Though SWIFT. Though Mail. Though Couriers. Though Emergency Mail Service. Though Telex.
Some Task before Advising Amendments:

The issuing bank has to obtain written application from the application of the credit duly signed and verify by the bank. In case of increase of Value, application for amendment is to be supported by revised Indent/ Pro-forma Invoice evidencing consent of the beneficiary. Incase of extension of shipment period it should be ensured that relative LCA is valid/revalidated/increased up to the period of proposed extension. For amendment of an increase of credit amount and extension of shipment period, amendment of Insurance Cover Note has to be submitted in both the cases. Proper recording and filing of amendment is to be maintained. Amendment charge will be recovered and necessary voucher is to be passed.
Clauses if Generally Amended:
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Increase/Decrease in value of L/C and charge in quality of goods. Extension of shipment/Negotiated period. Terms of delivery i.e. FOB,CFR and CIF etc Mode of shipment. Inspection clause. Name and address of the supplier. Name of the reimbursing bank. Name of the shipping line etc.
4.6 Proposal of Processing L/C:

When branch gets the L/C application form clients then branch send a proposal to the Head Office or Area office of CBCL for getting permission to the L/C of the client. The proposal form is very important for the bank because H.O. or Area Office have no idea about the client to taking risks. In the proposal form the following information are given by the branch: Name & address of the party, Name and address of the Guarantor, TIN and IRC Number and its validity period, Date of opening of Account, Turnover in CD account, Amount of L/C applied, Commodity to be imported, Branchs total exposure (Total outstanding on account of the party)
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Name and address of the beneficiary, Status report on the beneficiary County of Origin, Mode of shipment Shipment validity Margin proposed by the party Margin recommended by the branch manager Past performance of the party (if hes earlier client) Present liability position of the party in its own name and on account of sister concerns: (1) L/C Liability (2) PAD Liability (3) LIM Liability (4) Limit Loan Facility,
Landed cost (Imported Items) & Landed Cost per Unit, Market price per Unit, Number of Retirement of documents and last date of shipment, Business worth/ability of the applicant Branch manager and Foreign Exchange In charges recommendation.
After opening of the L/C, issuing bank telex or transmits the L/C by mail/Swift, to the advising bank and request the advising bank located in the sellers/exporters country to advise the L/C to the beneficiary. The issuing bank may also request the advising bank to confirm the credit if necessary.
4.7 Approval/Sanction of L/C Proposal:

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The branch gets permission to open L/C when proposal can make satisfy to Head Office or Area Office as per requirement of Import Export Policy. If any information wants to know about Client, H.O. or A.O. asks to Foreign Exchange In charge or to Manager of Branch. In the approvals letter the following information are integrated: Name of Importer/Company & Address. Name of Guarantor & Address Amount of L/C approved Margin to be retained in cash Import Finance (Amount) Items to be importing Commission & Interest rate Some term and condition Security that is B/L & charge documents to be obtained Interest on PAD/LTR/LIM @ ________% per year. 15% VAT to be realized on L/C commission.
An approval of L/C opening is valid for one mounts.
Precaution of Proforma Invoice to Open L/C:

1. As certain genuineness of proforma invoice whether duly signed mentioning full addresses and name of their Banker. Term of shipment. Validity of L/C. Payment of instruction.
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2. Confidential opinion if the amount exceeds Tk. 5.00 lac.
Precaution while considering Indent to open a L/C:

1. Regarding genuineness of indent and issuing party must be valued before honoring an indent. 2. Indenters identification 3. Indenters registration certificate. Agency agreement but Exporter and Importer.
4. Submission of quarterly return to Bangladesh Bank. 5. Whether black listed or not. 6. Confidential opinion is the indents amount exceeds Tk. 2.00 lac or above.
L/C Opening Vouchers:

After scrutinized the application of the officers agrees to open a Letter of Credit and at the time of opening L/C, following entries are given to realize the Liability Voucher and Banks charge & Margin Voucher: (a) Liability Vouchers: Clients Liability ---------------------Dr. Cr. (Liability of Constituents for Acceptance) Bankers Liability ---------------------(Acceptance of Constituents A/C)
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This entry constitutes contra (assets and liability simultaneously) in the bank balance sheet. (b) Banks charger & margin voucher: Partys A/c ------------------------I/A commission on L/C -------------VAT on L/C Commission ----------I/A SWIFT Charge Postage Charge ------------------------------Cr. Cr. Cr. Dr. Cr. Cr. Cr. Cr. S/d A/c margin on L/C ---------------
Stumps in Hands ---------------I/A Miscellaneous ----------------
Pre Shipment Inspection:

The Pre-Shipment Inspection is conducting by the government-approved person or company (Cotecna, Vivak) who are inspecting the goods after shipment of goods and the goods are verified under the Regulation of PSI. The inspectors take 2% commission of total value of imported goods from the customer.
4.8 Presentation of the Documents:

The exporter being satisfied with the terms & condition with the export proceeds to dispatch the required goods to the importer, and after that, has to present the documents evidencing dispatching of goods to the negotiating bank on or before stipulated expiry date of the credit. After receiving all documents is found in order the bank will pay accept and negotiate with the issuing bank. Upon receipt of the import documents
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issuing bank will examine the documents carefully. If there is any discrepancy in the documents, Bank will decide within seven (7) banking days, following the day of receipt of the documents the issuing bank will also check the documents and they are found as per credit requirement. The usual documents in a letter of Credit are the following: Bill of Exchange Commercial Invoice Packing List Bill of lading Certificate of Origin Pre-shipment Inspection report Insurance Cover Note Shipment Certificate
Examination of Documents:
The Document generally includes the following and the main point of checking by CBCL is:
Letter of Credit: Whether the document have been negotiated or presented before expiry of the credit. Whether the amount drawn exceeded the amount the amount available under the credit. Bill of Exchange: Whether the draft dears the correct reference number or not. Whether the signature and the name of the Drawer corresponds with the name of the Drawer Corresponds with the name of Beneficiary. Whether it is drawn on the correct Drawer. Whether the amount in figure corresponded exactly with the amount in word. To see whether the Draft properly prepared
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according to the credit conditions (on a sight or time basis) and drawn on the specific bank. Whether it is properly dated or not. Whether the amount in the draft is same as that of the Invoice amount.
Commercial Invoice: Is the beneficiary of the credit assumed it. To ensure it is not titled proforma or provisional invoice. Whether it is made out in the name of the buyer with the same address specified in the credit or not. To see other information supplied in the invoice, such as marks, numbers, transportation information etc. is consistent with that of the other documents. Whether the currency of the invoice correspondent with that of the Draft. To see whether the value of the invoice has exceed that available balance of the L/C or not. Whether the invoice covers the complete shipment as required by the L/C. to ensure the accurate number of original & copy is presented. Certificate Of Origin: To ensure it is a unique document & not combined with any other document. To ensure whether it is signed and notarized as required by the L/C or not. To ensure the country of origin is specified and it meets the requirements of the Letter of Credit. Checking whether the data on its is consistent with of the other documents or not. Packing List: To ensure that it is a unique document and not combined with any other documents. Whether it corresponds with the requirements of the L/C. a detailed packing list required a listing of the contents of each package, carton etc. and other
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relevant information. To check whether the data on it is consistent with that of the other document.
Bill of Lading: Whether the provision of the UPCDC been observed. To ensure the Bill of Lading had been made out in the prescribed form. Whether it is endorsed. Whether the detail of the package units (B/L number, marks and weight) are consistent with the other documents. Whether the B/L is properly signed. To ensure there is no contradiction between the notation on freight payment and the payment terms (freight prepaid, CFR, CIF etc). To ensure the shipped on Board notation is present on the B/L.
Insurance Cover Note: Whether the insurance document specified in the credit submitted. Does the insurance cover the risk mentioned in the credit the currency of the credit & of the prescribed amount not less than CIF value. To ensure that the insurance documents dated not later than the shipping documents. To check whether the insurance policy agree with other document as regards description, weight and marks of the foods, mood of transport and the route.
4.9 Lodgment of Documents:

If import documents found in order, it to be made entry in the bill register and necessary voucher to be passed, putting bill number on the documents, these processes is called lodgment of the bill. Since the
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documents stay at this stage for a temporary period i.e. up to retirement of the documents, the process is called lodgment. Bank must lodge the documents immediate after receipt of the dame, not exceeding Banking seven (7) days, following the day of receipt of the documents. (Article fourteen (14) UCPDC-500)
Refusal Notice:
After examination, if the documents become discrepant, issuing bank will through the refusal notice to the negotiating bank with seven (7) banking days.
Lodgment of PAD:
Generally PAD is lodge by the issuing bank. When issuing bank gets the original shipping documents from negotiating bank against L/C then issuing bank goes through that shipping documents, if the issuing bank finds the shipping documents in order that is as per /C terms, then issuing bank open a loan account on account of Importer.
PAD Logement Voucher:

Contra Voucher: Bankers Liability on L/C ------------------ Dr. Customers Liability on L/C -----------------(When PAD is creating) Then following Voucher have to pass in for creating PAD: PAD A/C no --/-- Party Name -----------IBAT H.O. ID S/D A/C Discrepancy Charge
Cr.
Dr. Cr. Cr.
Beneficiary Bank -------------------
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(if any charge create at documents) Sundry Deposit Margin on L/C ------------------- Dr. PAD A/C no --/-- -----------------------------Cr.
Retirement of PAD:
When importer receives the original shipping documents from issuing bank after adjusting PAD A/C partially or fully as well as pay the total up to date interest for the PAD amount , this is called Retirement of PAD.
Retirement Vouchers:
PAD A/C ----------------Income A/C ------------Party A/C ---------------PAD A/C ----------------Dr. Cr. Dr. Cr.
4.10 Payment of Import Documents:

Payment procedures of CBCL involved the following tasks. Date of Payment: Payment is made within 7 days after the documents have been received. If the payment is on deferred L/C, then the negotiating bank may claim interest for making delay. Preparing Sale Memo: As sale memo is made at B.C. rate to the customer. As the TT and O.D. rate is paid to the ID, the difference between these two rates is known as Exchange Trading. Then an Inter Branch Exchange Trading Credit advice is sent to International Division.
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Requisition for the foreign currency: For arranging necessary fund for payment a requisition is sent to the ID. Transmission of Telex: A telex is transmitted to the correspondent bank ensuring that payment is being made.
4.11 Deferred L/C Payment:

CBCL follows the following measures in case of deferred L/C: Such L/C should only be entertained for trusted and tested party. Some cash margin must be taken at the opening stage and for balance amount payment schedule towards building up 100% margin. Constant supervision and monitoring. Collaterals including hypothecation/Mortgage of imported goods. Charge document including TR. Clearance of the Import Through own nominated CNF agencies.
Import Financing:
CBCL generally follows two types of Import Financing. The diagram shows the type of scheme: Pre-Import Finance
L/C on Cash
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Import Finance
Post-Import Finance LIM PAD LTR
LIM (Loan Against Imported Merchandize)

CBCL follows some requisites for LIM facility: 1. Margin on the landed cost to be ascertain After clearance the goods shall be kept in Goods are kept in go down item wise/price Goods are delivered against proportionate Validity far commercial items for 30-45 days first and then LIM facility will be allowed. 2. partys godown/Banks go down under banks effective control. 3. wise separately. 4. 5. payment and to be adjusted within validity. and for industrial items for 90 days. PROCIDURE: After arrival of consignment at the port importer may request the bank on Banks prescribed form for clearance of goods from the port. Upon satisfied with the request Bank gets the goods cleared and arranged for its warehousing. Bank pays the C&F agents bills on receipt of it after proper scrutiny. For all expenses incurred during clearance of the consignment. Bank opens a loan account in the name of the importer and also converts the liability under PAD into that account. This account is called loan against imported merchandize (LIM).
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Account Procedure: LIM on Party Name ------------PAD -------------------------------Interest, Commission (if any) --(For converting PAD into LIM) LIM -------------------------------Charges (other expense) -------Dr. Cr. Dr. Cr. Cr.
(For transferring incurred expenses into LIM) LTR (Loan Trust Received): 1. Generally this type of facility is allowed to the important, trust worth client. 2. LTR be allowed generally up to net document value(after deduction of margin), duty, VAT etc. be borne by the importer 3. LTR be allowed for 30-90 days. 4. LTR amount be covered by the post dated Cheques. 5. Banks want to cover the LTR facility by collateral security. Procedure: When a bill is received covering import of raw materials or other items, it is released by payment of the importer out of his own resources. If the importer has arrangement of cash credit facilities, it is essential that the goods are in the possession of ht bank and not
CBCL follows some requisites for LIM facility:
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delivered to the importer. The importer goods thus stand as security for the cash credit allowed. In the trust letter the importer acknowledges that the goods are held by him in trust for the bank and agrees to make over the sale proceeds to the bank. He further undertakes to keep the goods and transaction arise out of these goods separate from other transaction. In case of insolvency of the importer the bank can repossess the goods; the official receiver cannot claim this goods. The banker appropriates the sale proceeds, if the goods were already sold by the borrower.
Accounting Procedure: LTR Account -----------------PAD Account -----------------Interest Account --------------Dr. Cr. Cr.
PAD (Payment Against Documents): PAD loan is created upon lodgment of import documents. This loan is created for 21 days -the time being the tolerance for taking documents for the importer. After scrutiny of the shipping documents if the issuing bank find that the shipping documents are in order i.e. as per L/C terms then issuing bank open a loan account on account of importer. This total process may be defined as Payment against Document (PAD). In this branch total out standing of PAD is 9,13,85,787/- during OCT, 2007 from its clients.
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Chapter -05 Export Operation

5.0 Export Operation
Export Policy:
Export Policy, formulated by the Ministry of Commerce, GGOB provides the overall guideline & incentives for promotion of export in Bangladesh. Export Policy also set out commodity wise annual target. It has been decided to formulate these policies to cover a five year period to make them contemporaneous wit the five year plans & to provide continuity to provide the policy regime. Effective period of Export Policy (1997020020; from July1, 1998 to June 30, 2002.)
Meanings of Export:
Practically by the term Export we mean carrying anything from one country to another. Banker defines Export as sending of visible things outside the country for sale. Export Trade plays a vital role in the development process of an economy. With the earning economy meet out import bills.
5.1 Export Procedure of CBCL:

An Exporter is one who exports the goods to another customer whether in domestic country or in abroad. Export is one of the most
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important activities that can increase economic and social well being through transaction of goods an services from domestic economic agent to foreign economic agent for which domestic economic agents receive payments, profitability in valuable foreign currency. The important an export trade in our country is regulated by the Imports & Exports (control) Act, 1950. There are some formalities, which an exporter has to fulfill before & after shipment of goods.
Registration from Chief Controller of Import & Export (CCI &

E): The persons without registration granted by the chief controller of imports and exports shall anything into or out of Bangladesh except in case of exemption issued by the government. Under the export policy of Bangladesh the exporter has to get the valid Export registration Certificate (ERC) from Chief Controller of Import and Export (CCI & E). The ERC is required to renew every year. The ERC number is to be incorporated in EXP forms and other papers connected with exports.
Documents required to obtaining ERC:

For obtaining export Registration Certificate Bangladesh exporters are required to apply to the controller of Important & Export in prescribe from along with the following documents: Nationality and assets Certificates.
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Memorandum and Articles of Associated and Certificate of incorporation in case of limited company.
Bank Certificate. Trade license etc.
Securing the Order:

After getting the ERC the exporter may proceed to secure the export order. He can do this by contracting the buyers directly through correspondence. In this purpose exporter can get help from: Liaison Offices. Buyers Local Agent. Export Promoting Organization. Bangladesh Mission Abroad. Chamber of Commerce (Local & Foreign) Trade fair etc.
Signing the Contract:

While making a contract. The following points are to be motioned: Price of the goods. Describe of the goods. Quantity of the goods.
Receiving the Letter of Credit:
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After getting contract for sale, exporter should ask the buyer for the letter of credit (L/C) clearly stating terms and conditions of export
and payment. The following are the main points to be looked into for receiving/ collecting export proceeds by means of Documentary Credit: The terms of the L/C are in conformity with those of the contract. The L/C is an irrevocable one, preferable confirmed by the bank. The L/C allows sufficient time.
EXP (Export Permission):

EXP means Export Permission. Authorized Dealer give the EXP from to exporter at the time of the Foreign Export. And attach with L/C (Letter of Credit). Commercial invoice & packing list to get permission from customs Authority.
Obtaining EXP:
After getting ERC the exporter applies to CBCL (or any other commercial bank) with trade license & if the bank is satisfied, an EXP issued the exporter. Certified of EXP by Customs Authorized: At the time of shipment, disposal of EXP from is essential. The EXP forms are to be in quadruplicate. In all cases the forms will be
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completed and signed by exporter or his authorized agent. After completing the EXP forms, the exporter should submit to the Authorized Dealer, these should be submitted to the Customs Authorities along with shipping bill at the time of shipment. The
Customs authorities after filling in the portion relating to them and affixing their seal and signature their on will return the duplicate. Triplicate and quadruplicate copies with commercial invoice & packing list to the exporter / his authorized agent. The original copy will be forwarded by the Customs to the Bangladesh Bank in the 7 days. The exporter must submit all the remaining copies of the EXP Forms along with the invoice & packing list etc. to the Authorized Dealers through whom payments for the foods exported is to be received. And duplicate copy will be forwarded by the Exporters Bank to the Bangladesh Bank. An extra copy of the shippers invoice must be attached to the duplicate copy of the EXP Form for submission to the Bangladesh Bank. All shipping documents covering goods exported from Bangladesh and declared on EXP Form must be passed through the medium of an Authorized Dealer within 14 days from the date of shipment of the goods covered by the form. Procuring or Manufacturing the materials / Goods: After making the deal and on having the L/C opened in his favor. The nest stop for the exporters is to ser about the task of procuring or manufacturing the contracted merchandise.
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Shipment of Goods:
The following documents are normally involved at the stage of shipment: EXP Form. ERC (valid). L/C copy. Customs duty certificate. Shipping instruction. Transport Documents. Insurance Documents. Invoice. Bill of exchange (if required). Certificate of origin. Inspection Certificate. Quality Control Certificate.
5.2 Important Documents Associates with Export:

While negotiating export bills under the letter credit, the officials of National Credit & Commerce Bank check the following documents to ensure. A. Letter of Credit: If it is revocable or irrevocable and, if necessary, amendment to the clauses difficult to fulfill have obtained. If it has been authenticated and if it is valid (not expired).
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If
it
is
subject
to
uniform of the
customs
and
practices Chamber
for of
Documentary Commerce.
credit
International
If the opening bank is of good means and standing. If not, confirmation from a third bank should be obtained.
B. Bill of Exchange: The draft has been drawn to the order of the ban If the date, amount in words and figures, drawers name, drawers signature, endorsement, tenor etc. are strictly in terms of the credit. If stamp of requisite value has been properly affixed. If so it should be recovered from the shipper. C. Invoice: The invoice contains quality, unit price and total value with deduction, if any as stipulated in the relative credit. The number of copies meets the requirement of the credit. Charges such as postage-telex etc. should be included unless specifically authorized under the credit. The description of the foods should be in conformity with the description in the bill of leading and should relate to the vessel and voyage mentioned therein.
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Marks on the packages and the quantity of the goods must agree with those mentioned in the invoice and the bill of leading.
D. Bill of leading: The bill of leading must state the number of originals and all the negotiable copies as stated in the bill of leading must be presented. The bill of lading must state that the goods have been Shipped in Board. The port of loading, the port of destination and name of the carrying vessel must appear on the bill lading. It must be duly signed and endorsed. It must state payment of freight.
E. Certificate of Origin: It should provided evidence of the origin of the goods as specified in the credit. It is usually issued by and independent office or organization e.g., a Chamber of Commerce.
5.3 Common Discrepancies:

CBCL officials usually find the following discrepancies while checking the above-mentioned documents: On board nation of Bill of Leading undated/ unauthenticated.
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Shipment effected from port other than that stipulated in the credit. Full set of bill of lading not presented. Certificate of country of origin not presented. Wightman certificate not presented. Cuttings / alternations in documents not authenticated. Documents inconsistent with each other. Description of goods on invoice differs from that in the credit. Credit (L/C) amount exceeded. Credit (L/C) expired. Documents not presented in timed / State bill if lading. Late shipment. Absence of signature, where required, on documents presented.
Bill of Lading does not evidence whether freight is paid or not. Packing list not submitted. Notify party differs / not as per L/C stipulation. Inspection certificates not submitted. Unit price not mentioned in invoice. Health certificate (fit for human consumption) not submitted.
5.4 Negotiation of Documents:

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Soon after the shipment, the exporter should make arrangement for early submission of the documents to the bank, correctly prepared in conformity with the terms of the credit; exporter should remain in constant touch with the negotiating bank early negotiation of export bills. If any minor mistake is detected or any document is found missing, the same should immediately be corrected or supplied for early settlement of the matter.
5.5 Foreign Documents Bill Purchase:

After submission of all required documents to the bank for negotiation and officer scrutinizes all documents. If the documents are satisfactory, bank purchase the documents on the basis of the bank
customer relationship. This is known as foreign documentary bill purchase (FDBP). Now total outstanding o FDBP is $18,20,000/- . After purchasing the documents, National Credit & Commerce Bank Limited gives the following entries: FDBP A/c---------------------------Dr. Customer A/c---------------------------Cr. (Before realization of proceeds) Head Office A/c---------------------------Dr. FDBP A/c--------------------------------------Cr. (Adjustment after realization of proceeds) A FDBP Registered is maintained for recording all the particulars.
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5.6 Foreign Documentary Bills for Collection:

When bank feels any doubt regarding the documents, the bank sends documents to the L/C issuing bank for collection instead of purchasing those bills. This process is an Foreign Documentary Bills for Collection (FDBC). Commercial Bank Of Ceylon Ltd. forward documents for collection due to the following reasons If the documents have discrepancies. If the exporter is a client. The banker is in doubt. Foreign documentary bills for collection signify that the exporter will receive payment only when the issuing bank gives payment. The exporter submits duplicate EXP Form & Commercial Invoice & Packing List. Subsequently, the value of the bill is calculated and the following accounting entries are given Head Office A/C -----------------------Dr. Clients A/C ---------------------------------Cr. Govt. Tax A/C ------------------------------Cr. Postage A/C ---------------------------------Cr. Income A/C profit on Exchange ----------Cr. After passing the above vouchers, an Inter Branch exchange Trading Debit Advice is sent for debiting the NOSTRO account. Commercial Bank Of Ceylon Ltd. has NOSTRO account with its reimbursing bank. An FDBP
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register is maintained, where first entry is given when the documents are forwarded to the issuing bank for collection and the second one is done after realization of the proceeds. Receiving of Export Proceeds: After getting the shipping document from negotiating bank the L/C issuing bank scrutiny the documents. If the documents are as per L/C terms the opining bank inform to the L/C opener and after getting acceptance / fund the bank will make payment to the negotiating bank.
5.7 Export Financing :Meanings of Export Financing: There are two types of export financing. These are:Export Financing
Pre-shipment Financing
Post-shipment Financing
Pre-shipment Finance:
Pre-shipment Finance covers the credits extended by banks to exporter prior to the shipment of the goods. Such credit is granted to the
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exporter for procurement and processing of raw materials, manufacture of finished products, packing and transporting goods for export. The exporters may avail of facility during pre-shipment stage in the following ways: 1. Back to Back Credit 2. Packing Credit 1. Back to Back Credit:
Under this agreement the bank finances exporters by opening a letter of credit on behalf of the exporters who has received a letter of credit from the overseas buyer but is not the actual manufacturers or producers of the exportable goods. The letter of credit is opened in favor of the actual producer or supplier within or outside the country. Since the second letter of credit is opened on the strength of and backed by another letter of credit it is called Back to Back L/C. The need for a back to back credit arises because the beneficiary of the master (export) letter of credit may have to procure the goods from the actual producer who may not supply the goods unless its payment is guaranteed by the bank in the form of a letter of credit. On the strength of this letter of credit, the actual supplier of the goods submits the documents of titles to the goods and other documents for payment to the bank which has established the inland letter of credit. The supplier is generally paid after negotiation of the documents. Since this type of financing is somewhat risky, the bank may ask for collateral security before opening the letter of credit.
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2. Packing Credit: The credit extended by banks to the exporters prior to the shipment of the goods. Such credit is granted to the exporter for procurement and processing of raw materials, manufacture of finished products, packing and transporting goods meant for export. In other word, it is facility extended to the exporter before and till the goods are shipped for export to foreign countries. When the order is executed the packing credit gets paid out of the proceeds of the bill drawn on the foreign buyer. The packing credit facility may be extended in the form of A. Hypothecation of goods B. Pledge or C. Export Trust Receipt The salient points of different methods of advance are discussed below. A. Hypothecation of goods: When credit is intended for procuring and processing of raw materials into finished product for export, hypothecation facility is extended. In this case neither the ownership nor possession is passed on to the bank, only equitable charge is created in favor of the bank through execution of a deed of hypothecation agreement in favor of the bank.
B. Pledge: Under this form of credit, the goods to be exported remain in the possession of bank or its approved clearing agents. In other
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Words, the exporter surrenders the physical possession of the goods under Banks effective control as security for payment of banks dues. The pledge of goods creates an implied lien in favor of the bank and bank can sell the goods for adjustment of the advance by giving notice to the exporter on his failure to honor commitment. Normally, the exporter will arrange for shipment of goods under the control of the bank and will cover transit as well as marine insurance. After shipment, the exporter will prepare shipping documents and deliver them to the bank. The bank will either negotiate the export documentary bill drawn under the letter of credit already lodged with it or purchase the bill as the case may be and the advance against pledge will be liquidated.
C. Export Trust Receipt: Under the arrangement, credit is allowed against trust receipt and the exportable goods remain in the custody of the exporter but he is required to execute a stamped trust receipt in favor of the bank, where a declaration is made that goods purchased with financial assistance of the bank are held; by him in order to utilized the credit for processing, packing and rendering the goods in expectable condition. The advance is liquidated by the negotiation or purchase of export bills covering shipment of the goods.
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Procedure of Sanction of Pre-shipment Finance:

For sanction and management of all types of pre-shipment credit, certain measures and procedures to be taken. The following are some of the point that must be borne in mind for this purpose:(i) The experience of the customers in the line of export. The credit worthiness of the exporters or his export performance is to be ascertained after verification of financial statement. Similarly the credit worthiness and solvency of the buyer also to be enquired through foreign correspondent. (ii) credit The export letter of credit should be from a reputable bank abroad whose status has to be ascertained. The letter of should be irrevocable, unrestricted, valid and preferably confirmed. Expiry date of letter of credit should be allowed against an expiry letter of credit. (iv) The period for which the credit is sanctioned should be clearly mentioned. It should normally cover only the period for procuring, processing and sipping the goods. (v) The bank officers should periodically inspect the goods and verify that they conform to the quantity and quality as mentioned in the particular letter of credit. (vi) The export documents should be carefully scrutinized at the time of negotiation to ensure that they are in accordance with the terms of the letter of credit.
(iii)
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(vii)
It is desirable that the exporter should be asked to
obtain cover of export credit guarantee scheme launched.
Post-shipment Finance:
Post shipment credit is given to the exporters by the banks after the actual shipment of the goods. The need for post-shipment finance arise because exporters who sell goods abroad have to wait for a long time before payment is received from overseas buyers. The actual period of waiting depends on the payment terms. In the meantime, the exporter needs funds to carry on his normal export activities. Banks are the main source for the exporters to seek the finance. Banks generally finance the exporters at post-shipment stage on verification of the credit-worthiness and financial soundness of both the buyers and sellers. Post-shipment credit ordinary takes the following shape. I. Negotiation of documents under L/Cs. II. Purchase of Foreign Bill under D.P and D.P Bills. III. Advance against Foreign Bill under collection.
Chapter -06 Foreign Exchange Remittance

5.0 Foreign Exchange Remittance:
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Remittance means sending of fund one place to another place, When fund in transferred to or received from foreign country it is called remittance. The word Foreign Remittance means that sending/ transferring of fund through a bank from one place to another place which may be within the country or between two countries, one in abroad is called Foreign Remittance. Foreign Remittance means purchase and sale of freely convertible foreign currencies as admissible Foreign Exchange Regulations Act1947 and Guidelines for Foreign Exchange Transaction VOL. 1&2 of the country. Purchase of foreign currencies constitutes inward foreign remittance and sale of foreign currencies constitutes out ward foreign remittance.
5.1 There are two types of Foreign Remittance:

Foreign Inward remittance. Foreign Outward remittance.
1. Inward Remittance: The remittances which are received from abroad are called inward remittance. A. Purpose of inward remittance:
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Family maintenance. Indenting commission. Donation. Gift. Foreign investment. Export proceeds. Others.
B. Mode of Inward Remittance: Telegraphic Transfer (TT) Mail transfer (MT) Foreign Demand Draft (FDD) Payment order (PO) Travelers cheque (TC) Foreign Currency Notes.
2. Outward Remittance: Remittances which are made from our country to abroad are called outward remittance.
Mode of outward remittance: Foreign Telegraphic Transfer (FTT) Foreign Mail Transfer (FMT)
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Foreign Demand Draft (FDD) Travelers Cheque (TC) Foreign Currency Notes.
Chapter -7 Findings
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Total Income Total Expenditure Net Profit/Loss
2005 6877053 5 5334762 2 1542291 3
2006
2007
Total Deposit:Current Deposit Sundry Deposit Savings Bank Deposit Fixed Deposit Short Terms Deposit Special Saving Scheme Special Deposit Scheme Deposit Tk Total Loans & Advances Cash In Hand Bills Payable Interest In Deposits Interest Suspense Total 3150002 8 4906746 5 5569977 3 3910977 79 1926446 1 6093594 2 3294229 0 6405077 40 5623007 79 3540677 3570354 1933192 3 1341367
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A. The office space of CBCL, Agrabad branch is not sufficient enough. B. Foreign Exchange Section is one of the busiest sections in Bank.
Sometimes it is found all works are not performed efficiently due to lack of sufficient officials.
C. Training facility isnt sufficient especially of the lower officers. The

advertisement of CBCL in TV, Newspaper or in any mass media is not available.
D. Application of modern technology such as computerization is not

sufficient.
E. It is uncomfortable weather when electricity has not here, and Air

conditions are off.
F. CBL, Agrabad branch has no reception section and desk. G. In this branch there is lack of sufficient equipment. H. Since has two floor, overseeing the job of others is very difficult.
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Chapter -8 Recommendation & Conclusion

8.0 Recommendations:
On the basis of the problems the followings suggestion are given bellow: A. CBCL has to pursue a new marketing strategy which will attract more clients and thereby increase the Deposit. B. CBCL should provide an effective training program for the junior level officer as though they can perform their task efficiently. C. CBCL should use modern banking system ie, designing a good physical lay out of the branch so that they can improve their customer satisfaction. D. Sometimes General banking department is found so busy that they cant perform the entire task more efficiently (preparing voucher, various entry in registration book etc.) due to lacking of officers/staff. CBCL should recruit more people for his section. E. A portion of customers suggested that at least in the busy branches there should be a separate counter for woman. F. The reduced lending interest rate and long term tenure policy might attract more customers to expand the business of consumer banking.
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G. Proper marketing policy is essential for establishing the idea of CBCL & tries to develop projects, which ensure the increase of public relation.
8.1 Conclusion:
The banking sector plays an important role in modern society and Foreign banks have made more competitive, diversified and dynamic compare to traditional banking system. Every day new competitors appear into the industry with better innovative ideas, products and services. In banking sector Commercial Bank of Ceylon Limited is a name of trust, now it is an icon of best services. Despite stiff competition among banks operating in Bangladesh, both foreign and local and CBCL has achieved satisfactory progress in areas of its operations and earned an impressive operating over the previous years. The bank hopes to achieve a satisfactory level of progress in all areas of its operations including target of profitability during the year 2005. Certainly CBCL is mobilizing its all resources on this same track to achieve maximum possible contribution to the nation. During the three month internship program at CBCL, Agrabad branch in first, has been arranged for gaining knowledge of practical banking and to compare this practical knowledge with theoretical knowledge. Comparing practical knowledge with theoretical involves identification of weakness in the branch activities and making recommendations for solving the weakness identified. However, highest effort has been given to achieve the objectives the internship program.
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Day by day its idea of serving is increased all over the country through setting up new branches at new places. Wishing total success of Commercial Bank of Ceylon Limited, Agrabad Branch, Chittagong.
Appendix
Bibliography
A Text Book on Foreign Exchange Chowdhury L. R. Annual Report- 2005, 2006 of CBCL. ICC Guide to Documentary Credit Operation for the UCP 500 CBCL, Training Book on Foreign Exchange Statement of Affairs of CBCL, Agrabad Branch, Ctg-2005. Internet searching on CBCL official web page.
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Chapter -01 Introduction

SAIDA KHANAM [B041109] [BBA, IIUC]

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1.1 Objectives of the study:

1.2 Methodology of the study:

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Data collection: - Data is collected from various sources though

SAIDA KHANAM [B041109] [BBA, IIUC]

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Documents of General banking & Foreign Exchange Department of the branch.

1.3 Scope of Study:

1.4 Limitations of the study:

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Chapter -02 COMMERCIAL BANK AN OVERVIEW

SAIDA KHANAM [B041109] [BBA, IIUC]

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Sustainability as Solid as our history.

2.3 Achievement and Awards:

2.4 ORGANIZATIONAL STRUCTURE OF THE CBCLBANK LIMITED

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2.5 Brief View of Commercial Bank Limited:

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2007 267939.63 23936.03

Change % 19.63 51.08

Total Assets (RS Mn) Shareholders Mn) Funds (US$

2012.628 1.00 12.73 51.99

4103565 1.67 20.63 43.95

(Source: Annual Report)

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Chapter -03 Foreign Exchange Operations

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3.2 REGULATIONS FOR FOREIGN EXCHANGE:

B. INTERNATIONAL REGULATIONS OF FOREIGN EXCHANGE:

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3.3 Importance of Foreign Exchange Business in Economy:

SAIDA KHANAM [B041109] [BBA, IIUC]

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3.4 Types of Foreign Exchange Business:

Import Business. Export Business. Remittances. Import Business:

SAIDA KHANAM [B041109] [BBA, IIUC]

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Chapter -04 Import Procedures and Financing

Who Can Import:

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There are two categories of Importers now existing in our country:

A) Commercial Importers: The importers are imports are commercial

B) Industrial Importers: The imports that import Industrial items

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Process of Acquiring IRC:

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4.1. What is Letter of Credit?

Classification of Letter Of Credit:

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2. Commercial Letter of Credit.

1) Travelers Letter of Credit: Travelers Letter of Credit is being issued

2) Commercial Letter of Credit: Commercial letter of credit is the most

4.2 Mechanism of Letter of Credit:

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Importer {Applicant of L/C}

Recovers amount from