On
ASA University Bangladesh Prepared ByBRANDEN GOMES ID: 081-12-0327 Major in MIS Bachelor of Business Administration ASA University Bangladesh
LETTER OF TRANSMITTAL
December 28, 2011 To, Vhokto Kumar Biswas Supervisor, Internship Program, Department of Business Administration, ASA University Bangladesh Subject: Submission of Internship Report. Sir, As the Internship Program is an inseparable part of our BBA Program, I was placed at the Southeast Bank Ltd, Shyamoli Branch to work in the Foreign exchange section to be acquainted with its details. I am supposed to prepare a report from my findings in the bank. I have prepared this report on the Foreign Exchange Operations of Southeast Bank Ltd and hereby I submit the report for your kind evaluation. I shall try to answer any query. Thanking you. Sincerely yours,
Branden Gomes ID: 081-12-0327 Batch: (BBA) 3rd ASA University Bangladesh
STUDENTS DECLARATION
I hereby declare that the Internship Report titled Foreign exchange operation Southeast Bank Ltd, Shyamoli branch Dhaka, Bangladesh. Submitted to ASA University Bangladesh in partial fulfillment of the requirement for the degree of Bachelor of Business Administration (B.B.A) This study is original in nature. I have tried my level best to make this report as informative as possible. I also assure that, this report has not been submitted to any other person earlier and will not be submitted to anybody in the future.
Branden Gomes ID: 081-12-0327 Batch: 3rd Major: Management Information System ASA University Bangladesh
CERTIFICATE OF SUPERVISOR
This is to certify that the Internship Report on Foreign exchange operations of Southeast Bank Ltd in the bona fide record at the report is done by Branden Gomes as a partial fulfillment of the requirement of BBA degree from the Department of Business Administration, Faculty of Business, ASA University Bangladesh. The report has been prepared under my guidance and is a record of the bona fide work carried out successfully.
______________________ Vhokto Kumar Biswas Department of Business Administration ASA University Bangladesh
ACKNOWLEDGEMENT
First of all, I am grateful to an almighty GOD and express my gratitude to Him for enabling me the strength and opportunity to complete the report successfully in time. I am deeply indebted to my internship Supervisor, honorable Sir Vhokto Kumar Biswas Department of Business Administration, ASA University Bangladesh. For his continued help and co-operation. I am also grateful to Mr. Mojammel khan, Senior Officer, Southeast Bank Limited, Shyamoli Branch, who provided me the supreme support for preparing the report as my supervisor at host organization. I would also like to take this opportunity to thank Mr. Ferdous hossain, junior officer of GB. Mr. Md. Masum miah principal officer of FE, Manager Operations Mrs. Mahmuda, and all others executives and officers of Southeast Bank Limited, Shyamoli Branch for lending their helping hands whenever required. Without their valuable advice and guidance my internship program would not have come to successful fruition. I am also grateful to my parents who inspired me all along. Finally, I would like to convey my gratitude to all my teachers, classmates, and many others who co-operated me during the last three months of my internship Program.
List of Abbreviations
list GB CCI & E CIF FBP FCAP FCAD IRC LBP L/C LG LIM LTR FCAP PAD PSI PI No CIF FBP FE TT TC FE ERC Abbreviations General banking Chief Controller of Import and Export Cost, Insurance and freight Foreign Bill Purchase Foreign currency account pound Foreign currency account dollar Import Registration Certificate Number. Local Bill Purchase Latter of Credit Latter of Guarantee Loan Against Import Merchandise Loan Against Trust Receipt Foreign currency account pound Payment Against Documents Pre Shipment Inspection Pro-forma invoice number. Cost, Insurance and freight Foreign Bill Purchase Foreign exchange. Telegraphic Transfer. Travelers Cheque. Foreign exchange Export registration certificate number
Table of content
Title page Letter of Transmittal Students Declaration Internship Certificate Certificate of Supervisor Acknowledgement List of Abbreviations Chapter #01 1.1 Executive Summary 1.2 Rationality of the Study 1.3 Objective of the Study 1.4 Scope of the Study 1.5 Limitation of the Study 1.6 Methodology of the Study Chapter #02 Profile of the Bank 2.1 Historical Background 2.2 Southeast Banks Future Outlook in 2011 2.3 SEBLs Vision 2.4 SEBLs Mission 2.5 SEBLs Core Values 2.6 SEBLs Core Strength 2.7 SEBLs Client Commitment SEBLs Corporate Culture
Page no I II III IV V VI
1 3 3 3 4 4
5 7 8 8 8 9 9 9
2.8 Business Objective of Southeast Bank 2.9 Performance Analysis and Findings 2.10 Physical and Technological Resources 2.11 Ten years at a Glance 2.12 SWOT Analysis for SEBL Chapter #03 Foreign Exchange Operation 3.1 Activities of Foreign Exchange 3.2 Import 3.3 Export 3.4 Foreign Remittance 3.5 Export Finance 3.6 Import Finance 3.7 Remittance 3.8 Foreign Risk Management 3.9 Foreign Currencies Translator Chapter #04 Findings Chapter #05 Conclusion Chapter #06 Recommendation 43 41 32 33 29
10 11 13 21 28
29
34 36 38
Bibliography
Chapter #01
1.1 Executive Summary
Southeast bank limited, a second generation private bank, emerged in 1995 amid liberalization of global economies. Currently, its authorized capital is Tk.10, 000.00 million and its capital and reserve reached 17,095.90 million as of December 31, 2010. Its vision is to stand out as a premier banking institution in Bangladesh and contribute significantly to the national economy. The Bank, in the meantime, successfully completed 16th year of banking operations recording significant growth in all the performance indicators. In, 2010 the bank earned an after tax profit of Tk. 2,763.13 million. The deposit of the bank grew by 11 percent to Tk 107,0729.59 million and advance by 19 percent to Tk. 92,452.62 million compared to those of 2009.During the last five years (2006-2010), the bank achieved an average annual growth of 23 percent in deposit, 23 percent in advances,37 percent in export and 30 percent in import and 76 percent in remittance. During the last six years, the export volume increased by three times to Tk 58,158.06 million and foreign remittance increased by eight times to Tk. 28,082.25 million. Operational excellence coupled with qualitative improvements continued to be of paramount importance to the bank. At present, the bank has 76 branches and 2 OffShore units across the country. Plans have been drawn to raise another 10branches and at least 10 more SME / Krishi branches in 2011.Our journey towards greater operational success continues with increased energy and enthusiasm. As we face the stiff challenges ahead on the way to further improving the profitability of the bank, we rely on our skilled and experienced workforce. Our strengths are our close and cordial partnership with customers, our firmly anchored presence in the countrys strategic places of commercial and business importance and global reach through our correspondent banks for expansion of foreign trade, foreign exchange and remittance business. Our product-basket encompasses real time online branch banking, Islamic banking, Merchant banking, Dual currency visa credit card, Visa travel card, ATMs, Education loan scheme, Double benefit scheme, Consumer loan,
Millionaire deposit scheme, SME banking, Corporate banking, Syndicate loan, Monthly savings scheme, Monthly income scheme, Pension saving scheme, Wage earner pension scheme, SMS banking etc. in addition to our traditional credit and foreign trade related products and services. High quality customer service through the integration of the latest and state of the art banking technology and products is our tool to achieve success. Customers are our first priority. We are trying hard to provide a system of one-stop shopping for customers by providing a spectrum of services. Our employees have mastered new technology, enhanced their product knowledge and honed their skill to help customers meet their financial goals. We want to be the best at helping customers become financially better off by providing free advice, innovative leading-edge financial solutions, choice and convenience. Whether our customers are individuals, small businessmen, or commercial clients, we aim to deliver the best customer service by meeting their unique and different needs in a professional, ethical, friendly and knowledgeable manner. We are pledge-bound to turn southeast bank into a modern banking institution, dynamic in actions, progressive in programs, honest in dealing, just in judgment, futuristic in attitude, fair in approaches and devoted to high quality service to customers. Our charted plans are aimed at boosting modern management, advance technology, good profitability, sound financial strength and fair image of the bank. We are firmly committed to transparent, responsible and accountable corporate governance with the participation of our strong and most capable team of professionals and under the prized policy directives and guidance of the board of directors of the bank. Southeast bank limited carries out business activities with due respect to its values and norms and with an understanding of the importance a large financial institution has for the society and the environment. It is moving fast to green banking. The bank wants to ensure its shareholders a competitive return in line with the best among peer institutions.
How different kinds of projects are appraised and financed at Southeast Bank
Limited. Present scenario of recovery rate and classified transactions of Southeast Bank.
Both primary and secondary data sources were used to generate the report. 1.6.1 Primary Data sources: Practical banking work. Personal discussion with the officers and executives of Southeast Bank Limited. Personal interview with the customers.
1.6.2 Secondary Data sources: Annual Report, Publications, Training materials of Southeast Bank Limited. Periodical statements of the Beak, Brochures, Booklets etc. Office circular
The emergence of Southeast Bank Limited at the function of liberation of global economic activities, after URUGUAY ROUND has been an important event in the financial sector of Bangladesh. The experience of the prosperous economies of Asian Vision" has been preciously the essence of the legend of bank's success. Southeast Bank Limited has been awarded license by the Government of Bangladesh as a Scheduled Bank in the private sector in pursuance of the policy of liberalization of banking and financial services and facilities in Bangladesh. In view of the above, the up capital adequacy requirement of Bangladesh bank Commercial Banks are one of the key contributors to die economy of Bangladesh. The allocate die capital resources to the proper development agencies. People and the government itself are very much dependent on the services provided by these banks in the financial market for the process of economic development to function properly. Commercial banks act as financial intermediaries by performing the function of mobilization the funds from one group and lending the same to another while making a reasonable amount of profit after meeting the cost of funding. Lending is said to be the clients. There are various types of loans and advances through which the bank exercises the function of Lending. It is well recognized that there IB an urgent need for better-qualified management and better-trained staff in the dynamic global financial market Bangladesh is no excepting of this trend Banking sector in Bangladesh is facing challenges from different angles though its prospect is bright in the future Money and Banking is the center around which all-economic science clusters. So this report is carried on to find out the problems faced for by Southeast Bank and recommend some measures to overcome these problems for economic development of Bangladesh.
And carefully developed, disguised queries, trend and growth rate analysis, ratio analysis, graphical presentation such as pie chart, bar, graphs have been used. Raw data collected from various sources required to be processed, edited for the purpose of the study.
For this study mainly secondary source of data had been relied on, because secondary data can be an immediate and cost effective means to gaining valuable insight into research issues, provided that the information comes from reliable and timely sources. Its sample was small and no representative. The research has been started with secondary data and preceded to primary data only when the secondary data sources have been exhausted or yield marginal returns. An analytical approach has been followed to conclude the decisions.
2.4 SEBLs mission: High quality financial services with state of the art technology. Fast & accurate customer service. Sustainable growth strategy. Follow ethical standards in business.
Steady return on shareholders' equity. Innovative banking at a competitive price. Attract and retain quality human resource. Commitment to corporate social responsibility.
2.5 SEBLs Core Values: Integrity Respect Fairness Harmony Team spirit Courtesy Commitment Service Excellence Insight and Spirit Enthusiasm for Work Business Ethics
2.6 SEBL's Core Strengths: Transparent and quick decision making; Efficient team of performers Satisfied customers Internal control Skilled risk management Diversification
Provide service with high degree of professionalism and use of modern technology.
Create life-long relationship baaed on mutual trust and respect. Response to customer needs with quickness and accuracy. Sharing their values and beliefs Grow as our customers grow. Provide products and services at Competitive pricing Ensure Safety and security of customers' valuables in Crust with us. 2.8 SEBL's corporate culture:
Southeast Bank is one of the most disciplined Banks with a distinctive corporate culture. The people of bank can see and understand events, activities, objects and situation in a distinctive way They mould their manners and etiquette, character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to them The people in the Bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture they belong has not been imposed; it has rather been achieved through their corporate culture.
2.9 Business Objectives of Southeast Bank: Make sound investments. Meet capital adequacy requirement at all the time.
Ensure a satisfied work force. Ensure 100% recovery of all advances. Focus on fee-based income. Adopt an appropriate management technology
* Initial public offering of shares of Tk. 150.00 million was completed in 1999
Major features of these branches are: Fully computerized accounts maintenance. Well decorated air conditioned facilities. A fully operational computer network which is currently being implemented.
The work of Local Area Network (LAN) and Wide Area Network (WAN) installation having reliable and secured communication between the branches and the Head Office is in progress to facilitate any Branch Banking and ATM Services. Money counting machine for making cash transactions easy and prompt. Forty six out of sixty three branches are authorized dealers of foreign ex-
change. This facilitates speedy disposal of transaction of export and import trade.
2.12.2 Deposit:
Deposit is the mainstay of the Bank's sources of funds. Following usual practices, it collects deposit through: a. Current Deposit b. Savings Deposit c. Term Deposit
2.12.3Borrowing:
Apart from deposit, SOUTHEAST Bank Limited received funds from: Bangladesh Bank Asian Development Bank (ADB) A German development bank. All of these funding sources are for relatively
longer period. Receiving the credit lines from ADB has been a recognizing of the Bank's highly satisfactory performance.
Reserve Fund / Others 6,504.62 Deposit Advance Investment Import Business Export Business Guarantee Business Remittance Business Total Income Total Expenditure Operating Profit Net Profit after Tax and Provision Fixed Assets 96,669.05 77,497.57 21,350.23 69,582.92 46,724.47 11,916.74 23,800.00 13,702.25 9,087.79 4,614.66 1,870.19 4,338.35
68,714.67 55,474.05 46,056.18 107,729.58 60,281.26 48,164.60 41,147.28 32,551.09 12,299.61 8,462.86 6,265.55 18,327.65
58,019.77 38,470.34 35,125.12 103,726.70 42,178.60 28,771.36 25,874.61 58,158.06 15,078.99 9,008.32 8,656.80 22,781.19
15,221.87 11,040.17 13,479.83 28,082.25 10,250.13 8,670.47 7,237.55 3,012.58 887.24 2,685.56 5,754.27 2,916.20 1,222.97 1,708.11 6,766.11 4,703.45 2,062.66 909.88 1,300.39 16,071.33 9,316.39 6,754.94 2,763.13 4463.08
Total Assets
(million in taka)
Total Income:
Year
2006
2007
2008
2009
2010
Income
6766.11
8670.47
10250.13
13415.21
16071.33
Import business:
Year
2006
2007
2008
2009
2010
Import
35125.12
38470.34
58019.77
69582.92
103726.70
Export business:
Year
2006
2007
2008
2009
2010
Foreign Remittance:
Figure 4: Remittance: Amount Million in Taka Year 2006 2007 2008 2009 2010
Total Capital:
Year
2006
2007
2008
2009
2010
Operating Profit:
Year
2006
2007
2008
2009
2010
4614.66
6754.94
SWOT is a short form that is used to describe the particular strengths, weakness, opportunities and threats that are strategies factors for a specific company. For the Southeast Bank Limited I found it as follows:
Strengths:
Efficient management. Leading Retail loan providers Better employee relations. Better location of the branch. Better financial standing. Interesting consumer schemes. Quick delivery of foreign exchange. On line Banking ATM facility Simultaneously Islamic Banking
Opportunities:
Market leadership. Growth of the banking sector. Different consumer service scheme of the SEBL. Make the goodwill. Perform more quickly services. Go beyond the national boundaries. SMS banking.
Weakness:
Inadequate work force. Conservative loan facility. Profit rate is less than others. Lack of sufficient own ATM booths
Threats:
Political instability. Intense competition. Government rules and regulation. Economical variation. Policy of competitive banks.
CHAPTER # 03
3.1.1 Import
Under the import policy of Bangladesh the Importer has get the valid Import Registration Certificate (IRC) from the Chief Controller of Import & Export (CCI&E).
Recoverable credit:
This type of credit can be cancelled or amended at any time by the issuing Bank without prior notice to the seller. It is not in use.
Irrecoverable credit:
This type of credit cant be cancelled or amended by the issuing Bank without agreement of parties concerned thereto. All the credits issued in our country are of recoverable nature.
Import Financing:
The post import finance extends the import credit in the following forms: PAD (Payment against documents) LTR (Loan against trust receipt) LIM (Loan against imported merchandise
3.2 Export
Under the export policy of Bangladesh, the exporter has to get the valid export registration certificate (ERC) from chief controller of import & export (CCI&E). The ERC is required to renew every year. The ERC number is to be incorporated on export Form & other paper connected with exports.
Back-to-Back L/C:
Back-to-Back L/C is one type of L/C, which is opened against lien on a valid export L/C. It is opened for inland & abroad as well. Bank will supply the following papers/documents for opening a Back-to-Back L/C. L/C application form LCA form IMP form Charge document papers
The above papers must be completed, filled & signed by the party there to. The party will submit the entire filled document along with application in printed form of the designated Bank which is also an agreement between application & the Bank.
Export Financing:
An export is who exports the goods to another customer whether in domestic country or in abroad. In exporting the stipulated goods he may require financing. So export financing may be required at two stages. Pre shipment credit Post shipment credit
Foreign remittance means remittance of foreign currencies from one place/person to another place/person. In broad sense, foreign remittance includes all sale and purchase of foreign currencies on account of Import Export, Travel and other purposes. However, especially foreign remittance means sale & purpose of foreign currencies for the purposes other than export and import. SOUTHEAST Bank Limited performs the remittance function with different countries. It maintains the foreign remittance in the following form: Foreign Demand Draft Inward Remittance Outward Remittance
Inward Remittance:
Inward remittance refers to the extent where the bank makes payment to the client against foreign demand draft. Bank will make payment to the client by verifying the, test number, and signature of the authorized officer.
Outward Remittance:
It refers to the extent where by the bank issues foreign demand draft. The bank charges TK.300 per Demand Draft. Two forms are used for Outward Remittance of foreign currency such as: IMP Form: All outward remittance on account of Imports is done by from IMP. TM Form: For all other outward remittance from TM is used.
From the above discussion we can detail the term foreign exchange operations: Foreign trade finance:
So far the bank has established correspondence relationships with as many as 22 foreign banks in order to facilitate foreign trade. The Bank handled total export business of Taka 46,724.47 million and import business of Taka 69582.92 million in 2009. The Banks export and import business grew by 8.61 percent and 19.45 percent respectively. Major items of exports were ready made knit & woven garments, sweater, jute products, leather and leather goods, handicrafts etc. Items of import included mainly industrial raw materials, garments accessories, and capital machinery, raw cotton, electronic consumer goods, chemicals, tires and tubes, reconditioned vehicles, bicycle spare parts, food items such as rice, wheat, garlic, onion, sugar, chilly and other essential commodities.
In case of export business finance is perceived as one of the important elements. It is linked to nearly all the stages of conversion cycle- procurement of raw materials, processing of goods, packing storage, transportation to the port, shipment to the buyer, assembling of shipping documents & finally, collection of payments. The term Export Finance should therefore mean moneys needed by an exporting farm at each stage of the conversion cycles.
Export financing can play a vital role in the development process of Bangladesh. With earning on export we can meet our import bills. The export trade is always encouraged because the major portion of foreign exchange earnings is derived from export. Because of shortage of adequate capital exporters have to come in contact with commercial bank and financial institution to get finance from them. SOUTHEAST bank Limited as a state-owned scheduled bank provides certain facilities to the exporters to boost up export earnings. The traditional & non-traditional sectors in which SOUTHEAST Bank Limited provides export-financing facilities are as follows:
Ready Made Garments in all sorts. Jute manufactures Jute - raw Fish & Prawns. Hides, Skins & Leather. Tea Fertilizer etc.
Export Financing Development Financing Export Credit Guarantee Scheme Export performance benefits Duty draw back
Rebate on duty & tax Income tax rebate Insurance premium rebate Conditional cash subsidy to Garments Industry , vegetables, handicrafts etc
Export Form:
The customer, now issued by the authorized dealers, must declare all export of which the requirement of declaration of exchange control manual of Bangladesh Bank applies on the Export Forms. Disposal of Export Forms:
Original:From custom authority to Bangladesh Bank (ECD) after shipment goods. DuplicateFrom negotiating bank to Bangladesh Bank after negotiation. T rip lic a teFrom negotiating bank to Bangladesh Bank after realization of the proceeds of the export bill. Quadruplicate Retained by the negotiating bank as office copy.
One must be an exporter of non-traditional manufacturing items. The loan should be utilized in the case of importing raw materials for manu-
facturing the exportable products. The exporter must have an export letter of credit. One must create a back-to-back for importing raw
every document with great care. Negligence in the part of the bankers may result in non-repatriation or delay in realization of proceeds as incorrect documents may put the importers abroad into unnecessary troubles. The scrutiny procedure is as follows: I. Scrutiny of Draft or Draft of Exchange:
The draft should be drawn by the party indicated as the beneficiary of the
credit i.e. the exporter; drawer must be in accordance with the terms of the credit. The tenor and amount of the draft be in conformity with the credit terms. The bill of exchange should be properly stamped if necessary with the req-
uisite value and the cost must be recovered from the drawers unless it is provided otherwise in the letter of credit.
The draft or bill must bear the correct date and must be drawn or endorsed
II.
Scrutiny of invoice:
The physical description of the goods i.e. price, quantity, quality, markings
etc. in the invoice must correspond with the specifications in the credit. If the credit stipulates a consular invoice, the requisite invoice should be
furnished. All copies must be signed and certified as correct shipper. If the credit stipulate for any other particulars to be stated in the invoice
these must complied with. It should not include charges such as postage; cable etc. unless specifically authorized under the credit. III. Scrutiny of shipping bill:
The bill of lading should be a full set clean on board ocean bill of lading, un-
less the credit stipulates otherwise. 'Received for shipment' bills of lading must not be accepted unless permitted by the credit.
The bill of lading must also indicate where it is 'freight paid' (C & F, GIF)
or freight payable at destination (FOB transaction). Transshipment and port shipment clauses in the shipping bill should
be in accordance with credit terms and the provisions of the uniform custom and practice.
Credit frequently stipulates for shipment not letter than a specified date.
Bill of lading must be examined to ensure that these are dated not later than the date mentioned.
stamped and must be endorsed, expect when the relative credit stipulate for bill of lading to order of a named firm.
IV.
Scrutiny of Insurance:
Where insurance is to be effected by the beneficiary for GIF consignment, the policy accompanying the documents should be examined to ensure:
That the insurance covers the merchandise for the value stipulated in the
credit. That the document is of the class stipulated in the credit. That the insurance documents describe the merchandise covered and men-
tion the name of the carrying steamer. In case where 'on board' bill of lading are not presented the following clause or words of similar indent must follow the name of the steamer' and / or 'following steamer'.
That all risk stipulate in the credit is properly covered in the insurance
documents. When the credit stipulates that 'all risk' are be covered, it is not sufficient that various risks are mentioned but a clause to the credit that 'all risk' are covered, is required.
That the policy is in the name of the bank and the importer. That the party designed in the documents to perform such act properly
countersigns the insurance document. That the insurance document complies with the conditions of the letter of
credit is in negotiable form that it is endorsed by the party to when the loss payable, unless the credit stipulates that the insurance must be issued 'loss payable to a specified party in the country of destination'.
That the date appearing on the insurance document is not later than the
date appearing on the bill of lading. That the insurance document covers transshipment when the bill of lad-
ing indicates that transshipment would take place. That the insurance claims are payable at the port of destination, that insur-
ance certificate / policy acknowledges the payment of the premium. V. Scrutiny of other documents:
The other documents i.e. certificate of origin, packing list, weight / measurement
certificate, inspection certificate, survey report, quality control certificate etc. should be issued or signed by the proper authorized and description of 'export - order' given in these documents not be in contradiction to the credit terms.
I. Commercial risk: II. Political risk: III. Informational risk: IV. Pre-shipment export credit risk:
All over the world there is no country, which can meet its requirements from its own sources. Some imports raw materials, some finished goods & some food products or other commodities. As it is in export & import are invariably conducted through commercial banks. BASIC Bank Limited is engaged to extend the facilities to the importers. After getting the completed registration, application for opening letter of credit is made through a bank where applicant has a current account. An importer is required to fill up import application form & letter of credit authorization form (LCAF) & importer has to deposit margin money to the bank from 5% to 40% of the import value, depending on the credibility of the importer. After the letter of credit is established the exporter after executing the export, submits the negotiable document through its bankers and in terms of exporters bank submit the documents to the corresponding bank of the importer's bank in the country. If the documents are found correctly fulfilling all the terms & conditions stipulated in the letter of credit the corresponding bank of import's bank will realize payment that will debited to the importer's account. In banking term this is known as PAD and the importer has to pay the PAD amount in 30 days with the bank interest rate.
After 30 days when importer is unable to pay the PAD amount, he can take documents but the PAD turns into Loan against Trust Receipts (LTR)
Machinery & transport equipment. Petroleum & petroleum products Textile, yarn, fabrics, article & related products Chemicals Bicycle parts Iron & steels Cereal & cereal preparations Dairy products & eggs Other including loans & grants.
Registration of import Income tax registration certificate Partnership deed in the cases of partnership concern Certificate of registration with the register of joint stock companies Articles & Memorandum of association in the case of limited companies. Nationality certificate & Bank certificate Ownership documents in place of business Trade license from the relevant authority.
Survey clearance from the relevant authority Other documents prescribed in the import policy.
Import Procedure:
Imports & Exports (control) Act 1950 regulates the import & export trade of the country. There are a number of formalities, which on 'importer has to fulfill before import goods. The importer follows the following steps:
them.
The buyer & the seller conclude a sales contract provided for payment
by documentary credit. The buyer instructs his / her bank i.e. issuing bank to issue a credit in favor of
the seller i.e. beneficiary. The issuing bank asks another bank usually in the country of the seller,
the advice or confirms the credit. The advising or confirming bank informs the seller that the credit has
been issued. As soon as the seller receives the credit and is satisfied that he / she can
meet its terms & conditions, he/she are in a position to load the goods & dispatch
The seller then sends the documents evidencing the shipment to the bank
where the credit is available i.e. the nominated bank. This may be the issuing
bank, or the confirming bank, bank named in the credit as the paying, accepting or negotiating bank.
bank,
The bank if other than the issuing bank, sends the documents to the issuing
The issuing bank checks the documents and if they meet the credit require-
ment either
the seller if s/he has sent the documents directly to the issuing bank or to the bank that has made funds available to him/her in anticipation. Or
The bank checks the documents against the credit. If the documents
meet the requirements of the credit, the bank then pay, accept or negotiate accordingly to terms of credit. In case of a credit available by negotiation, issuing bank or the confirming bank will negotiate with recourse; another bank including the advising bank has not confirmed the credit, which negotiates will with recourse.
When the documents have been checked by the issuing bank and found to
meet the credit requirements, they are released to the buyer upon payment of the amount due or upon other terms agreed between importer & the issuing bank.
The buyer sends transport documents to the carrier who will then pro-
IMPORT SCRUTINY:
The import bills consist of the following documents & the order of their scrutiny should be as below:
Forwarding schedule of negotiating bank. Bill of exchange. Commercial Invoice (Before shipment).
Bill of lading Insurance cover note Certificate of origin Packing List PSI Report (CRF- Clean Report of findings) Pro-forma Invoice (After shipment) Any other documents.
A. Commercial risk:
I. Violation of the requirement of letter of credit authorization or letter of
credit: Shipment effected before authentication of the letter of credit authorization from by the nominated bank and registration with the Bangladesh bank, whenever necessary and before opening of letter of credit or after expiry of the validity of the letter of credit authorization or letter of credit shall be treated as import in contravention of this order. Letter of credit authorization obtained in the basis of false or incorrect particulars or by adopting any fraudulent means shall be treated as invalid and void.
II. Import against indent and Performa invoice: Letter of credit may be
opened against and indent issued by a local registered indenter or against a Performa invoice issued by a foreign manufacturer or seller or supplier.
B.
Political risk:
In addition to the credit and commercial risk we have outlined, international transaction such as import financing take on the whole new dimensions of political risk. They are as follows: Sudden outbreak of war, revolution, coups or civil disobedience in the Imposition of restriction on remittance. Imposition of trade embargo or blockade. New import restriction on the buyer or cancellation of the license. Additional handing transport or issuance charges due to interruption or diseller's country.
C. Informational risk:
There may be informational risk inherent in import financing on the importer because of shortage of required information. So it is much harder to judge the financial strength, reputation and integrity of a seller or buyer who is thousands of miles away and belongs to a different culture.
by the maker, directing a certain person to pay on demand or on fixed or determinable future time a certain sum of money only to or to the order of a certain person or to the bearer of the instrument. From the definition - we get the features of bill of exchange. In generally there are three parties like- Drawer: The person who prepare the bill; Drawer: The person who is ordered for the payment in future specified time; Payee: The person who is the amount of bill receiver as per the order of the drawer to the drawer. c) Bill of Lading: A bill of lading is a document that is usually stipulated in a credit when the goods are dispatched by sea. It is evidence of a contract of carriage, is a receipt for the goods, and is a document of title to the goods. It also constitutes a document that is, or may be, needed to support an insurance claim. The detail on the bill of lading should include: A description of the goods in general terms not inconsistent with that in the Identifying marks & numbersf any). (i The name of the carrying vessel. Evidence that the goods have been loaded on broad. The ports of shipment & dis The names of shipper, consignee and name & address of notifying party. The number of original bills of lading issued. The date of issuance.
credit. charge.
A b ill of lading specifically stating that goods are loaded for ultimate destination specifically mentioned in the credit. d) Commercial invoice:
A commercial invoice is the accounting document by which the seller charges the goods to the buyer. A commercial invoice normally including the following information: Date Name & address of buyer & seller. Order or contract number, quantity & description of the goods, unit price and Weight of the goods, number of packages and shipping marks & number.
e) Certificate of origin of goods: A certificate of origin is a signed statement providing evidence of the origin of the goods. f) Inspection certificate: This is usually issued by an independent inspection company located in the exporting country certifying or describing the quality, specification or other aspects of the goods, as called for in the contract and / or the letter of credit. The buyer who also indicates the type of inspection usually nominates the inspection company he /she wish the company to undertake. g) Insurance policy or Certificate: The insurance certificate document must: specified in the credit the risks specified in the credit. tion of the goods. otherwise specified in the credit: a) Be a document issued and / or signed by an insurance company or its agent, or by underwriters. b) Be dated on or before the date of shipment as evidenced by the shipping documents or establish that cover is effective at the latest from such date of shipment. c) Be for an amount at least equal to the GIF value of the goods and in the currency of the credit. Unless Be consistent with the other documents in its identification of the voyage and descripCover Be
h)
Simply speaking, it is a Seller's quotation or agreement between seller & buyer. In thisthe seller declared the rate, quantity, quality, manufacturing & other information about goods and that accepted by buyer. Other Documents are: Packing list; Master's receipt.
of the applicant and issues its letter of credit in terms of the instructions of the applicant. Advising Bank: It is the seller's or beneficiary's Bank. The bank usually situated in the seller's or beneficiary's country (most of the time with which there exists corresponding relationship with the buyer or issuing bank), request to advice the credit to the beneficiary. Confirming Bank: Sometimes issuing bank request advising bank or another bank to add confirmation to the letter of credit. When that bank do this then such bank is called confirming bank. So advising bank can be act as confirming bank. Reimbursing Bank: This is the bank that is nominated by the issuing bank to pay (it is also known as paying bank) or to accept drafts. It can be situated in another country. In this connection it is to say that American Express Bank & HSBC act as reimbursing bank in case of Southeast Bank Ltd. The account, which maintains Southeast Bank Ltd with HSBC & American Express Bank, is called "Nostro Account" and in rivers the account, which is maintained by HSBC &
American Express Bank with Southeast Bank Ltd, is called "Vostro Account" Negotiating Bank: The bank, which makes payment to the exporter after scrutiny, the documents submitted by the exporter with the original letter of credit then it is called Negotiating Bank. Nominated Bank: The bank that is nominated by the issuing bank to pay (nominated bank is known as paying bank) or to accept drafts (nominated bank is known as accepting bank) or to negotiate (nominated bank is known as negotiating bank). Usually the advising bank is request & authorized to be the nominated bank unless the credit allows negotiation by any bank. Seller: Beneficiary of the letter of credit is seller.
amended or cancelled by the issuing bank. At any moment without "prior notice" to the beneficiary. So this is clear that revocable credit can be revoked any time without prior notice. Irrevocable letter of credit: An irrevocable credit is one, which cannot be cancelled or amendment able any time without the consent of each party. Through this letter of credit the issuing bank gives a definite, absolute and irrevocable undertaking to honor its obligations, provided the beneficiary complies with all the terms & conditions of the credit. Government letter of credit: That letter of credits, which are done by the Master or mother letter of credit: The L.C. which come from out side the Other classes of letter of credit: Revolving letter of credit: When the L.C. is used again & again in same amount for a specific period of time that is called revolving letter of Defense Ministry and other Ministries of the government. country to the exporter from importer that is mother or master letter of credit.
credit. Transferable letter of credit: Exporter can transfer his / her right of letter of credit in full or partly to a third party. In generally, the exporter is not the supplier but act as a middleman with in the supplier & importer. Back-to-Back letter of credit: The letter of credit, which done by Clean or open letter of credit: The letter of credit, which prothe security of mother letter of credit. vides assurance of payment bill of exchange without submission, of any export documents that is called clean letter of credit. Confirmed letter of credit: When the Irrevocable letter of credit issued by issuing bank to the exporter as assurance of the L.C., then as per advice or documents the authorized representative or representative bank's provide assurance or payment guarantee that is confirmed letter of credit. At sight letter of credit: That letter of credit which expires ninety days i.e. within this period the documents must be sending to the negotiating bank. Deferred payment letter of credit: That letter of credit which expires one hundred & eighty days i.e. with in this period the documents must be send to the negotiating bank. Contract letter of credit. Refinance Letter of Marginal Letter of Credit. Credit. Traveler's Letter of Credit.
Remittance is the sending of money etc. to a distance. Foreign remittance is the sums of foreign currency to a distance from one place another place i.e. country to country. The person who is the receiver of the remittance is remitted. The person who is the sender of the remittance is remitter. There are two types of foreign remittance, which are as below:
TT: Telegraphic Transfer. MT.: Mail Transfer. FD: Foreign Drafts. TC:
Travelers Cheque.
For-
For family maintenance. Realization of exports proceeds. Gift. Donation. Export brokers commission.
About Form-C":
The authorized dealer should obtain 'Form - C' from the beneficiary to know the purpose of the remittances in all cases and they are to submit the "Form - C' to Bangladesh Bank along with the monthly returns where the proceeds of the remittances is TK. 5000/= & above. Form - C' is a prescribed declaration form & this 'Form -C' is to be filled up and signed by the beneficiary himself.
Payment procedures of FD. MT. & PO. Drawn on Southeast Bank Ltd:
The above investments that are drawn on Southeast Bank Ltd Foreign Exchange Corporate Branch may be paid on the spot before making payment the following procedures to be observed by the authorized dealer:
To obtain Form-C. To verify the signatures of the instrument. To convert the foreign currency into Bangladesh TK. with O.D. (On Demand
Transfer) Buying rate prevailing on the date. To make entry in TTs, drafts & Mails received register. To prepare FET schedule and to send first five copies of FET along with
Payment procedure of T.T.: To verify the 'test number'. To inform the beneficiary for submission of "Form - C". To confirm from issuing bank or reimbursing bank. To covert of foreign currency into Bangladesh currency with T.T. To make entry in T.T.s, drafts, M.T.s, received registration. To prepare vouchers. To prepare FET schedule.
Purchase of Drafts & Cheques: Authorized dealer may purchase drafts & cheques which are not drawing on SOUTHEAST Bank Ltd at the request of the beneficiary. Procedures of purchase are as below: convert foreign currency into Bangladesh currency. prepare voucher. To prepare FET schedule. To send the instrument for collection. To To obtain an application or undertaking from the beneficiary with 'Form C To verify the signature of the drafts (if possible). To make entry in the register for drafts & T.C. purchased. To
Collection procedure of drafts & cheques: To make entry in foreign Bills Collection Register. To prepare forwarding schedule in quadruplicate. To prepare vouchers on realization of proceeds i.e. on receipt of
To checkup the custom declaration (if any). To consult with purchase agreement (if
the beneficiary of the TC. any).
To obtain signature on TC and to verify the same with the previous signature of To make entry in register for TC & drafts purchased. To convert foreign currency into Bangladesh currency. To prepare FET schedule. To send the TC for collection. To prepare the vouchers.
Payment of foreign currency notes: To check the custom declaration (if any). To made entry in (kateha) raw register. To convert foreign currency into Bangladesh currency. To prepare vouchers. No FET schedule is required to be prepared & sent to head office because in this case there is no transaction with head office.
Reporting to Bangladesh Bank: On the last working day of each month the transaction during the month to be reported to Bangladesh Bank through the following schedule: Schedule -J-l / 0-3 for TK. 5000 & above. Inward remittance voucher-1/04 for below TK. 5000.
To prepare the instrument. To make entry in DD, MT, TT issued register. To prepare draft advice in duplicate one for
drawer bank & one for reimbursing bank. To make entry in draft advice dispatched register. To send reimbursement authority in case of MT & TT. T o prepare FET schedule.
To verify the approved T / M form or Bangladesh Bank permit. To issue TC by obtaining signature of the purchaser on the TC. To endorse in the passport. To prepare FET schedule. To make entry in the travelers cheque issue register. The TC issuing slip of the issued TC to be sent to that bank (whose TC issued) With reimbursement instruction.
posit.
Foreign Currency account (F.C. A/C) in US Dollar and Pound Sterling without initial de-
Nominee can operate the account Interest is paid on F.C. A/C Balance in F.C. A/C can be utilized for import of goods Balance available in the F.C. account may wholly or partially be sent abroad. Foreign currency brought in by Wage Earners can be deposited in the F.C. A/C Wage earners Development Bond in Taka can be purchased from the balance of
F.C. A/C
Non-Resident Foreign Currency A/C (NFCD A/C) can also be opened by Wage
Earners.
F.C. A/C & NFCD A/C may be maintained as long as the account holder desires. These accounts can be opened from abroad on submission of required papers
Foreign exchange risk is defined as the potential change in earnings arising in market prices. The market directly affects each countrys bond, equities, private property, manufacturing, and all assets that are available to foreign investors. Foreign exchange rate also play a vital role in determining who finances government deficits, which buys equities in companies and literally affects and influences the economic scenario. Due to high risk market the role of treasury operations is crucial. As per Bangladesh Banks guidelines the bank has segregated the Front and back office of treasury operations. Front office independently conducts the transactions and the Back office is responsible for verification of the deals and passing of their entries in the books of accounts. All NOSTRO accounts are reconciled on monthly basis and all foreign exchange transactions are revalued at market to market rate as determined by Bangladesh Bank.
Foreign currencies translations are converted into equivalent taka using the ruling exchange rate on the date of transactions. Foreign currencies balances held in US dollar at the yearend are translated into taka currency at the weighted average rate of interbank market as determined by Bangladesh Bank. Balances held in foreign currencies other than US dollar are converted into mid value of the selling and buying rate of the last transaction date of the year of the bank.
CHAPTER # 04 Findings
4.0 Findings
While working at Southeast Bank. Shyamoli Branch, I have attained to the newer kind of experience. After the collecting and analyzing of data I have got some findings. These findings are completely from my personal point of view. Those are given below. Based on my experience, ii can be said that Southeast Bank should reconsider its services that better satisfy customer needs and requirements Bank should be more tactful in dealing with the customers and launch new products that fully meet customer expectations. Southeast Bank Limited has already established a favorable reputation in the banking industry of the country. It is one of the leading private sector commercial banks in Bangladesh. The bank has already shown a tremendous growth the profits and deposits sectors. The bank successfully stepped in to the 15th year of operations having enjoyed the complete confidence of the depositors and achieving significant growth in
the entire areas of banking operations The bank is following the online banking system to provide the customer better services; but all the branches of South East bank are not follow the online banking system The Bank has a deposit base of Tk.38, 258.00 million and loan portfolio of taka 32,551.00 million in the year 2005, which posted a growth of 37% and 48% respectively During the last 6 years (1999-2005) the average growth of deposits and advance were 33% and 37% respectively, which was 20% in the case of import business. 72% in export business and 36% in guarantee business during the period, shareholders equity grew at the rate of 40%. The bank always fulfills Die provisioning requirements as set by Bangladesh Bank reflecting sound financial health and discipline The consistent and increasing growth trend of the above mentioned performance indicators has increased depositors' confidence as well as good will/reputation of the bank to a great extent and these have contributed to increase the shareholders value. The bank focused on building high-quality human resources with expertise and professional skills adopting the Human Resources Re-engineering and Development Plan with a view to creating an excellent clientele service environment for ultimate achievement of sustained profit growth making no comprises with the quality asset creation The Banks Human resources Development strategy is to build up quality manpower with conceptual/managerial Knowledge, skills through designing/arranging of continuous in-house and outside training programs The bank focuses on customer-friendly marketing approaches by offering various efficient delivery of personalized banking services at the clients door steps and caters to the ever-growing financing needs of clientele at a competitive price The company philosophy to workout best solutions for customers and clients as a business and customer friendly Bank South East bank has an interactive corporate culture the working environment is very friendly, interactive and informal. And there are no hidden barriers or
boundaries while communication between die superior and the subordinate. This corporate culture provides as a great motivation factor to the employees.
CHAPTER #05
Conclusion
5.0 Conclusion:
In todays world of business without bank's co-operation, it is almost impossible to run any business or production unit of business. Exports and import need finance in various stages of their activities. Southeast Bank Limited is playing a vital role in financing import and exports of the country and helping the businesses by providing funds to run. There are lots of local and foreign banks competing in banking industry in Bangladesh and the Southeast Bank Limited is keeping its promises for about fifteen years among them very successfully. In this competitive market Southeast Bank has to compete
not only the others commercial banks but also the public banks and other financial institution also. In near future I think bank and mobile companies will come together to foster the banking service and make it available to peoples hand. To survive in this dynamic market and lead it from the front the bank must take every initiative very wisely and so far they have successfully utilized their human resource efficiently compare to other private and public banks. Before internship I had idea about banking but that was only bookish. Now after completing my internship period and preparing term paper on it I got practical aspect of banking. It will definitely help me to see the things from banking perspective also.
CHAPTER #06
Recommendation
6.0 Recommendation:
To take necessary steps to improve the quality of service. They should open the on-line banking system all the branches. The competition of banking sector is increasing day by day, so the bankers have to high ability to serve the client. Southeast bank uses ultimus software which is common and old. To sustain in the banking sector the bank should use new software which is related to the modern banking sector.
The bank sometimes uses manual system to prepare par order, which can be the cause of damage. To avoid this type of damage they should use digital system. Now forty countries can easily send remittance in this bank. This number is not enough to serve smoothly and need to increase this number. The bank uses software in opening letter of credit but other bank use manual system. Southeast Bank should try to build a strong corporate image and organization strength. The entire bank has to serve to their client with cordially to satisfy the client and to retain them. Have to increase the number of ATM booth. The bank should provide training to their staffs to serve the client successfully and quickly. Have to increase the branches not only in Dhaka city, but also in every district in Bangladesh. The entire banker has to serve to their client with cordially to satisfy the client and to retain them. Have to increase the number of staff in the foreign exchange department. Southeast bank should invest in the corporate social responsibility (CSR) sector because of their goodwill and good corporate image.
Bibliography
www.reportbd.com
o MD. MASUM BILLA (PRINCIPAL OFFICER) o MRS. MAHMUDA (MANAGER OPERATIONS) o MD. FERDOUS HASAN (JUNIOR OFFICER) o MD. ZAKARIA TASLIM (SENIOR OFFICER) o YUSUF HARUN NURI (SENIOR OFFICER)