Foreign operation and performance of mutual trust bank limited by lawjuris

Foreign Operation and Performance of Mutual Trust Bank Limited

Executive Summary The internship is designed to bridge the gulf between the theoretical knowledge & real life experience. It designed to have a practical experience while passing though the theoretical understanding. Banks and other financial institutions play a vital role in forecasting the economic and social condition of a country. Baking system of Bangladesh has gone phases of development-Nationalization, Privatization, and Lastly Financial Sector Reform. Banks in Bangladesh now constitutes the core of the country’s organized financial system. They mobilize the savings of people and channel the resources toward different sectors of the economy. Customer satisfaction is one of the most vital reflections of the progression toward advancement and development for any service institution. As service providing organization, providing best service is one of the mottos of the commercial banks. With the customers’ perception as well as satisfaction, the mirror image of service quality in private commercial banks can be obtained. The achievement of the customers’ satisfaction is the key feedback to improve service quality. This study is mainly focused on Foreign Operation and Performance of The Mutual Trust Bank Limited (MTBL), Gulshan Branch. Like the other private commercial banks, MTBL also competing with others to flourish in this country. Providing quality service is only means flourish. Firstly, made a Foreign Operation and Performance of Mutual Trust Bank Limited, where had completed my internship program. Here tried to focus the bank’s history of origination, its mission and vision, major departments and business units and major products and services. Then said something about General Banking, Foreign Exchange Department, Loan and Advance and Accounts Department play a vital role to increase the bank’s income and assets. Both divisions are bringing more profit than another division by their activities. So they are important for the Development of Mutual Trust Bank Ltd. Lastly, the got some findings from the analysis of the remittance behavior of Mutual Trust Bank Limited. Then, conclude report saying some recommendations.

INTRODUCTION Now a day, it has become essential for almost every person to deal with banks somehow in their bred and better life. As a result it has become essential for every person to have some idea of the bank and banking procedure. At present time, the banking procedure is becoming faster, easier and the banking arena is becoming wider. As the comparative field of the banking sector, the banking organizations are coming with innovative ideas. This report has been developed concentrating on the topic “Foreign Operation and Performance of Mutual Trust Bank Ltd (MTBL), Gulshan Branch, Dhaka.” This Mutual Trust Bank with its 36 branches in manipulate locations of the country is providing the best quality services to the clients and customers. Gulshan Branch is the Twenty Second branch of the Mutual Trust Bank. For the durations of my Three Months internship period 05 th July to 05th October 2009 in the Gulshan Branch of Mutual Trust Bank. Those types of experiences have acquired these are bring together to formulate this report.

Origin of the Report: The report titled “Foreign Operation and Performance of Mutual Trust Bank Limited” has been prepared as a partial fulfillment of BBA program authorized by the supervisor Mr. Md. Abdul Mannan, Assistant Professor, Department Of Business Administration, Stamford University Bangladesh. After completing my Bachelor of Business Administration (BBA) as a student of Stamford University Bangladesh, I wanted to complete Internship program from a reputed Bank which would be helpful for my future professional career. To got the opportunity to perform my internship in the MTB.The sent to Gulshan Branch. It was two months practical orientation program. This report is originated as the requirement of MTB.

Background of the study: This report has been prepared based on the information of this bank. All information is secondary and collected from Internet, Brochures, annual report etc. Based on this

information ratio has been calculated. For the calculation of ratio has been calculated to measure the current position of the Bank. At the same time compare with the market performance. This report has been prepared based on one selected listed Bank in Bangladesh.

Purpose of the study: The Purpose of the internship program is to familiarize myself with the real market situation, to compare them with the business’ theories & at the last stage make a report on assigned task. The main objective of the study is to have an assessment on Foreign Operation and Performance of Mutual Trust Bank Limited, through different aspects of the banking sector and its effectiveness in this regard. Besides the primary objective of this report is to achieve practical knowledge about banking to observe what the basic bank services, But the Broad and Specific Objective of the study are given below

Broad Objective •

To review the present position of MTBL.

•

To find out some problems which are faced by MTBL in customer recovery.

•

To determine the qualitative change of customer recovery position.

•

To determine the sectors that is responsible for increasing the better service.

•

To familiarize with practical Job Environment.

•

To have an exposure on the financial institution, especially on banking environment of Bangladesh.

•

To have some practical exposures that will be helpful for my future career.

•

To make a bridge between the theories and practical procedures of banking day-to-day operations.

•

To gain practical knowledge by working in different desks of Gulshan branch of MTBL.

•

To observe the working environment in Commercial Banks.

•

To study existing Banker-Customer Relationship.

•

To know the overall functioning of MTB Limited.

•

To make myself more confident and active in future to handle my job.

•

To know the financial strength and future threats of the bank.

•

Finding out the risk and profitability of different modes theoretically.

• 

To measure the efficiency of the bank.

Specific Objective •

To gather comprehensive knowledge on overall banking functions and foreign exchange of the Mutual Trust Bank Ltd.

•

To know the performance of the bank through mathematical analysis.

•

To visualize the performance of MTB Gulshan Branch.

•

To know the work process and monitoring system of MTB Gulshan Branch.

•

To access the key performance indicator of the Gulshan Branch.

Capacity of the study: This report has been prepared through extensive discussion with bank employees and with the clients. It covers the Mutual Trust Bank Ltd organizational overview, Management and organizational Structure, Functions performed by Mutual Trust Bank Ltd. Scope of this report is very confined concentrate only on the generalization banking system of Mutual Trust Bank Ltd in development of capital market of Bangladesh. Moreover this far evaluating the performance, I kept my thinking on accounts, General Banking, Credit and Advances, identification of problems regarding credit Management, types of Credit Extended, Sector of Credit Allocation and Foreign Exchange only for this reasons my capacity is very little area.

Methodology of the report: The study involves various types of information past and present policies, procedures and tactic of credit management. There are various tactic have been used in preparing this report.

Testing Procedures of The Report: During my internship period, my testing procedure is biased, because here testing size is too little. Here is my taste is bankers of any department of this branch. Asking them question and collect data for my research. Sometimes he bankers were so busy for their daily activities and then failed to get necessary information. In this situation have used different procedure for my essential element to prepare this report and think that can collect the necessary information.

Data Design: The report was fully investigative in nature. Data have been collected from both Primary and Secondary Sources.

Data Collection: This study is mainly based on secondary data available from the various divisions and departments of Mutual Trust Bank, in addition to these other necessary information have been collected from the daily News Papers, Relevant Journals, and Annuals Reports of Mutual Trust Bank, Bangladesh Bank, Ministry of Finance and Planning and Publications of other relevant institutions have also been taken into considerations.

Source of information: In order to make the report more meaningful and presentable, two sources of data and information have been used widely. They are: •

Primary data

•

Secondary data

•

The “Primary Sources” are as follows: 

Face-to-face conversation with the respective officers and staffs of the Branch.



Informal conversation with the clients.



Practical work exposures from the different desks of the departments of the Branch covered.

 •

Relevant file study as provided by the officers concerned.

The “Secondary Sources” of data and information are: 

Annual Report of MTB



Various books, articles, compilations etc. regarding general banking functions, foreign exchange operations and credit policies.



Different ‘Procedure Manual’, published by MTB.



Different circular sent by Head Office of MTB and Bangladesh Bank.



Limitations of the Study: The got enthusiastic collaboration from employee of the Mutual Trust Bank Ltd, Gulshan Branch. Every day, they were tremendously busy, but they gave me much time to learn over all banking activities and prepared this report. The present study was not out of limitations. But as an internee it was a great opportunity for me to know the banking activities of Bangladesh especially Mutual Trust Bank Ltd. Some restraints are disclosed bellow:

Limitation of the Time: The initial obstruct is time itself. Because of the time limit, the scope and measurement of the study has been reduced. Designed for an analytical purpose enough time is required. But Was no has given adequate time to prepare such as in intensity study.

Non Availability Sufficient Data: To recognize the facts about the study in a practical way and more clearly quantitative appearance of information it’s represented by data. It was very difficult to collect data, which is very essential, because the branch of any new bank that is newly established therefore could not afford required secondary data in all area of the study. 

Every organization has their own secrecy that is not revealed to others. While collecting data i.e. interviewing the employees, they did not disclose much information for the sake of the confidentiality of the organization.



The main constraints of the study are insufficiency of Information, which was required for the study. There are various information the bank employee can’t provide due to security and other corporate obligations.



Another significant problem faced during the preparation of this report was the contradictory explanation of a single subject by different employee.



Other limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful.



Te clients were very busy to provide me much time for interview.



The carried out such a study for the first time, so inexperience is one of the main constraints of the study.

Banking Overview of Bangladesh Bank is that kind of organization, which function is lending and borrowing and performed the different types of financial activities with good trust and security. There are two kinds of Banks: •

Central Bank.

•

Commercial Bank.

Central Bank: Bangladesh shares a common past with India and Pakistan in respect of development of banking business. Bangladesh Bank Order, 1972 was promulgated to create the country’s central bank- Bangladesh Bank- to take over the assets, liabilities and responsibilities of the erstwhile State Bank of Pakistan. At the same time Bangladesh government nationalized 6 (six) large Commercial banks in 1972, most of which were owned by the people of the then West Pakistan, through Bangladesh Bank Nationalization Order 1972. As like other self-governing country of the world, Bangladesh also has a Central Bank named Bangladesh Bank. It was established with a view to performing those works usually done by the Central Banks spreading across the world. One of the major functions the Bangladesh is to maintain the international monetary relations in the form of receiving foreign aid, grants, donations and management and invests of Foreign Exchange Reserve in the foreign countries. The appearance of Bangladesh Bank in 1971 after a bloody independence that claimed millions of peoples required the birth of Bangladesh Bank as the representation of economic freedom and sovereignty. As a result in the 31st October 1972, a Bank rule was introduced by dint of “President Order 27”. Under this ordinance the government acquired all assets and liabilities of the former Dhaka Regional Office the “State Bank of Pakistan” and declared the government and implements the governments’ financial policies. The main function of the Bangladesh Bank is: i.

Money Exchange

ii.

Banking Function

Further functions of Central Bank is to manage financial organization like Commercial Banks, Insurance company etc. Controlling Loan, Clearing House Control the Value of money bank of the commercial banks collecting Income Tax, Representing of the Governments work observe the Development of Banking System etc.

Commercial Bank: Which Bank borrowing from people and invests for many businesses that are called Commercial Bank. Their main functions is borrowing and lending. Commercial Banks some specific functions; these are Medium of Exchange, Build up of Capital, Creating Bill of Exchange, and Helping International Business etc. There are 52 Commercial Banks are survive in Bangladesh, Just now. There are some local Commercial Banks and some are Foreign Commercial Banks. The Local Commercial Banks are given below:

The Mutual Trust Bank Limited Mutual Trust Bank Ltd (MTBL) is sponsored by a group of dynamic Bangladeshi Entrepreneurs, Industrialists, Educations and Professionals. Mutual Trust Bank Ltd is one of the renowned and scheduled private commercial bank of Bangladesh. The company was incorporated on September 29, 1999 under the Companies Act 1994 as a public company limited by shares for carrying out all kinds of banking activities with Authorized Capital of Tk. 38,00,000,000 divided into 38,000,000 ordinary shares of Tk.100 each. The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999. As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business: 1.

All types of commercial banking activities including Money Market operations.

Investment in Merchant Banking activities.

Investment in Company activities.

Financiers, Promoters, Capitalists etc.

Financial Intermediary Services.

Any related Financial Services.

Services of the Mutual Trust Bank Ltd: Mutual Trust Bank provides various services. Different types of services are given below•

Institutional Bank

•

Corporate Banking

•

Consumer Banking

•

Commercial Banking

•

Lease Finance Banking

The Company (Bank) operates through its Head Office at Dhaka Motijheel Dilkusha and 36 branches and 5 SME Service Centers. The Company/Bank carries out international business through a Global Network of Foreign Correspondent Banks.

MTB Mission: We aspire to be the most admired financial institution in the country, recognized as a dynamic, innovative and client focused company that offers an array of products and services in the search for excellence and to create an impressive economic value.

MTB Vision: To be the bank of 1st choice by creating exceptional value for our clients, investors and employees.

Board of Directors: Chirman Mr. Samson H. Chowdhury Vice Chirman Dr. Arif-ud- Dowla Directors Mr. Syed Manzur Elahi Mr. Md. Hedayetullah Mr. Kh. Rashiduzzaman Al- Haj Syed Abul Hossain Mr. Mohammed Abdur Rouf Mr. Md. Abdul Malek Mr. Rashed Ahmed Chowdhury Mrs. Yasmeen Haque Mr. A.F.M. Mahfuzul Hassan Mr. Md. Wakiluddin Mr. Saidur Rahman Ratan Managing Director Mr. Anis A. Khan Company Secretary Quamrul Islam Chowdury

Management of Mutual Trust Bank Ltd Managing Director M.A.Anis Khan Deputy Managing Director Mr. Quamrul Islam Chowdhury Mr. Md. Hashem Chowdhury Mr. Md. Ahsan-uz Zaman Senior Vice President Quamrul Islam Chowdury Executive Vice President A.K.M. Shameen Dr.Muhammad Asaduzzaman Senior Vice President Md. Hasem Chowdury Md. Abdul Halim Md. Omar Faruque Salahuddin Mahmud Md. Nurul Islam Vice President Kh. Motaher Uddin Chowdury A.B.M. Shamsur Rahman Khurshedul Alam Senior Vice President Md. Shamsul Islam Md. Mahmudul Hasan Md. Mamunur Rashid Molla A.K.M. Jashim Uddin A.B.M. Mofazzal Hossain Md. Shawquat Ali Noor Assistant Vice President Syed Ansur Rahman Md. Monowar Hossain Md. Jahangir Alam

Md. Zahidul Kabir Salek Sabbir Ahamed Khondoker Rahimuzzaman Zahidur Rahim Md. Zulfiquar Nandan Kumer Saha Touhid Ahmed Syed Nurul Kabir Md. Bakhtyeer Hossain Md. Khalid Mahmood Khan Md. Sharif Uddin Khan

Management Structure of Mutual Trust Bank Ltd. In 2001 Mutual Trust Bank Limited made commendable progress in all business, like deposit, credit, fund management, investment, foreign remittance, credit card & foreign exchange related business. Bank has expended business activities as holding previously & parallel by diversification its investment to a new product. As a major financial remarkable portion of total exports of the country. This is the sign of good management. The management processes are as follows:

Department in Head Office of the Mutual Trust Bank Limited

Audit & Inspection Division

Audit & Budget & Monitoring Division

Computer Division

Credit Division

Credit Card Division

Dispatch Division

Financial Administration Division

International Division

Merchant Banking Division

Share Division

Marketing Division

System & Operation Division

Organ gram of MTBL:

Chairman Managing Director (MD) Deputy Managing Director (DMD) Senior Executive Vice President (SEVP) Executive Vice President (EVP) Senior Vice President (SVP) Vice President (VP) Senior Assistant Vice President (SAVP) Assistant Vice President (AVP) First Assistant Vice President (FAVP) Senior Executive Officer (SEO) Executive Officer (EO) Principal Officer (PO) Senior Officer (SO) Officer Junior Officer (JO) Assistant Officer (AO)

The above mentioned organ gram is for Mutual Trust Bank Ltd. All operational activities are done by the chain of command which is flows from the top level to lower level. All the employees follow their seniorâ&#x20AC;&#x2122;s instructions. All the commands are made by the Motijheel Dilkusha head office of the bank.

In Mutual Trust Bank Limited Gulshan Branch the Manager Mr. Habibur Rahman, Senior Vice President who is the senior vice president give the instructions to junior employees. The assistant vice president Mr. Anisur Rahman monitors all the employees work and give reports to the branch manager. All operational departments have an in charge that solves the divisional activities. This is the management process of the branch. JOB AS AN INTERNEE IN MTBL: JOB DESCRIPTION: As per my appointment letter my job description mentioned that an intern will working under the direct supervision of MTBL Gulshan Branch and in the special project assigned by supervisor. Apart from project work intern are required to assist supervisor by doing the job assigned from time to time. Interns working hours will be: Sunday to Thursday 9:00 am to 5:00 pm intern should conduct themselves in a manner, which is not prejudicial to the Bank’s interest. On the completion of the program intern is required to submit a report on the project within the agreed time. SPECIFIC RESPONSIBILITIES OF THE JOB: I have worked in General banking, Foreign Exchange Department, Accounts & IT department, clearing department and in Credit Department of the MTB Gulshan Branch. My daily responsibilities were: • • • • • • • • • • • • • • •

All functions of Debit Card. Prepare L/C advice through inward register. Forwarding L/C advice. Maintain IDBC register of L/C’s. Maintain also IBDA register of L/C purchase. Deal with customers Works with different types of account opening Pay order issue and Check issues OBC prepare and maintain OBC register Checking clearing supplies end of the day. Clients account balance check and provide bank account statements Check and sorting documents of accounts Responsible for the processing of clearing cheque for clearing house Tracking all returned cheque Prepare customer’s CIB report to the Bangladesh Bank.

DIFFERENT ASPECTS OF JOB PERFORMANCE:

Working in a bank is so much challenging. Bank’s has so many rules, regulations and confidentiality in working process. People who work in bank have to be alert and conscious all time. Not only alert and consciousness but also bankers have to do work faster with 100% accuracy. There is no chance to do mistake. So as an intern in the bank also had to go through the process. There was lot of pressure of work. In my working period, MTB managing director has changed. So their management has also changed largely. Interest rate is revised. And head office has audits the branch whole documents. For these reasons, every paper documents and processes was revised and checked to resolve error and update with new systems. The checked the most of the documents accurately. It was a great opportunity for me that the could learn about the process and how to work accurately and faster under so much pressure.

Overview of MTB Gulshan Branch The worked in MTB Gulshan branch’s Foreign Exchange Department, General Banking department ,Clearing Department, Card Department and Credit and Advance Department as an internee. Let’s see the overview of MTB Gulshan branch. It is one of the profitable branches of Mutual Trust Bank. Any bank’s branch has actually 4 operational departments. They are: I) General Banking department II) Accounts department (Cash, clearing & transfer) III) credit & advance department & IV) Foreign exchange department. But in MTB Gulshan Branch, the actual situation is a little bit different. In this branch there are actually 6 operational departments and 1 separate Merchant Banking Department. The 6 operational departments are •

General Banking and Accounts Department

•

Cash Department

•

Clearing Department

•

Credit & Advance Department

•

Foreign Exchange Department

•

Card Department

General Banking & Accounts Department:

A bank is a financial institution whose primary activity is to act as a payment negotiator for customers and to borrow and lend money. They deposits money from investors and lend that money in different sectors. General Banking is the primary activities of banking. General banking activities which is done by the accounts department has some sections in the branch according to activities. The sections are: •

New account opening/ account closing and account maintenance section (including check book issue, check book closing, charge cutting, deposit slip provide, give bank statement, account balance check etc.)

•

Customer service section

•

Remittance section (Payment Order issue/ Collection, Demand draft issue/ collection, T.T issue/collection, OBC/IBC collection, Endorsement etc)

•

Locker service

Mutual Trust Gulshan branch have 3 employees in General Banking & Accounts department. They have friendly trained me on the GB works.

Credit & Advance Department: In Credit & Advance department; Lending money is the main activities of a bank and which department operates for lending money in different sectors called Credit & Advance department. This department has lots of activities, such as borrower selection; approve loan/credit proposal, credit risk management, loan recovery etc.

Foreign Exchange Department: For settlement of debts of international transactions in between nations there has evolved a economic science which deals with the means and methods by which rights to wealth in one country’s current are converted into rights to wealth in terms of another county’s currency, known as Foreign Exchange. In the bank department serves for these activities called Foreign Exchange Department.

Cash Department: In Cash department deals with liquid money or receive money and pay to the drawer. They receive cash money from clients and also provide cash money according to clients demand.

In MTB Gulshan branch has a separate cash departments. Here they operate with the cash money such as cash receive, cash payment, cash count etc.

Clearing department: The department which performs Collection of Cheques, drafts etc. on behalf of its customers in one of the basic function of a commercial bank function is known as clearing department. Clearing house is the assembly of locally operating banks under the supervision of Bangladesh Bank for exchanging cheque, draft, pay order, warrant and other demand instruments. From clearing house all these will draw and received payment from their customers for payment collection. The bank operates for certain hours on the working day under the supervision of Bangladesh bank. In clearing house there is Sonali Bank acts as an agent of Bangladesh Bank. Mutual Trust Bank is also a recognized member of clearing house. MTB clearing house code is 65. In Gulshan Branch have a separate department for clearing Cheques/Warrant. Shahnaz Parveen is an officer who is the in charge of clearing department.

Card Department: Debit and credit card issue and maintenance is the main activities of this department. In MTBL there has a separate card department. MTBL issues Credit Card, Visa Card, and Master Card as ATM card.

Profit Position: Profit position in Gulshan Branch is given below: Profit upto June’09

Tk. 11.27 mln

Target upto June’09

Tk. 25.30 mln

Achievement upto June’09 (In percentage)

44.55%

Target upto Dec’ 09

Tk. 70.00 mln

Growth (Point to Point Basis over June 30,2008)

57.42 %

Per Employee Profit

Tk. 0.75 mln

Export Position: Description

Contribution

1. Export upto June’09 2. Target upto June’09 3. Achievement upto June’09( In percentage) 4. Target upto Dec,09 5. Growth (Point to Point Basis over June 30, 2008)

Tk. 193.29 mln Tk. 250.00 mln 77.32% Tk. 500.00 mln 56.16 %

Import Position Description

Contribution

1. Import upto June’09 2. Target upto June’09 3. Achievement upto June’09(In Percentage) 4. Target upto Dec’09 5. Growth (Point to Point Basis over June 30,2008)

Tk. 114.88 mln Tk. 500.00 mln 22.98% Tk. 1000.00 mln 143.24 %

Financial Performance of Mutual Trust Bank Limited The overall performance of MTB is in line with the first generation banks. Besides, the bank has been facing decline trend in some of the performance parameters compared to its previous performance up to 30th June 2008.However, some of the parameters has again shown upward trend in 31st August 2007 performance. The Performance of the bank is analyzed below:

OPERATING PROFIT: Mutual Trust Bank earned an operating profit of Tk. 1,195.09 million in 2008 compared to Tk. 763.85 million in 2007. 1200 1000 800

Profit Before Tax

600

Profit After Tax

400

Taka in Million

200 0

2004

2005

2006

2007

2008

The performance may not be termed unsatisfactory considering the socio-political environment that prevailed in the country during 20008. Profit before tax stood at Tk. 558.53 million after keeping provision on loans and advances. The Net profit for the year stood at Tk. 305.03 million compared to the previous year’s Tk. 210.80 million. Earnings per Share

(EPS) in 2008 increased to Tk. 21.07 registering an increase by 42.36% as against Tk. 14.80 of the preceding year. Bankâ&#x20AC;&#x2122;s Return on Asset in 2008 was 0.78% as against in 2007.

CAPITAL: Mutual Trust Bank started its operation on October 24, 1999 as a private sector bank with an authorized capital of Tk. 1,000.00 million and paid up capital of Tk. 200.00 million. The authorized capital increased to Tk. 3,800.00 million in 2007. 2500 2000 1500

Shareholder's Equity Paid Up Capital

1000

Taka in Million

500 0

2004

2005

2006

2007

2008

The paid up capital of the bank stood at Tk. 1496.88 million as on December 31, 20008 registering an increase of Tk. 498.96 million from that of previous year. Total capital of the bank as on December 31, 20008 increased by Tk. 517.38 million and stood at Tk. 2888.33 million consisting of shareholderâ&#x20AC;&#x2122;s equity s( Tier-1) of Tk. 2480.03 million and supplementary capital ( Tier-2) of Tk. 408.30 million. Shareholders equity consists of paid up capital, reserve and retained earning whereas Supplementary capital includes general provision against loans and advances and exchange equalization.

CAPITAL ADEQUACY RATIO: Capital Adequacy Ratio (CAR) of the bank was 10.39% as on December 31, 2008 as against the minimum requirement of 10% indicating a sound capital base of the bank.

CREDIT RATING: Mutual Trust Bank was rated as A1 (pronounced single A one) in the Long Term and ST3 (pronounced ST three) in the Short term by Credit Rating Agency of Bangladesh CRAB) on 29 May 2008. A1 rating in the long term is adjudged to be strong banks, characterized by good financials, healthy and sustainable franchises, and a first rate-operating environment. This level of rating indicates strong capacity for timely payment of financial commitment, with low likeliness to be adversely affected by foreseeable events. ST3 ratings in the short

term are characterized with satisfactory level liquidity, internal fund generation and access to alternative sources of funds.

DEPOSITS: Total deposits of the bank as on December 31, 2008 stood at Tk. 33,820.41 million as against Tk. 24,776.92 million of the previous year registering a 36.50% growth. 35,000.00 30,000.00 25,000.00 20,000.00

Year

15,000.00

Taka in Million

10,000.00 5,000.00 0.00

2004

2005

2006

2007

2008

The bank has given due stress on procurement of low cost deposit including cost free float of funds. As part of Banks strategy some products such as Brick By Brick, Double Saver, Monthly Benefit Plan, and Triple Saver etc. have been introduced in our deposit product line to attract retail customers.

LOANS & ADVANCES: The Credit portfolio of the bank comprises diversified areas of business and industry sectors. The sectors include textiles, edible oil, ready-made garments, chemicals, cement, telecom, steel, real estate and service industries. 30,000.00 25,000.00 20,000.00 Year

15,000.00

Taka in Million

10,000.00 5,000.00 0.00

2004

2005

2006

2007

2008

The bankâ&#x20AC;&#x2122;s credit growth recorded at 25.77% with a total credit portfolio of Tk. 28,529.35

million at the end of December 2008 compared to Tk. 22,683.23 million at the end of December 2007. Total interest income of the bank from loans and advances stood at Tk. 3,529.72 million in 2008 registering a 23.98% growth over the preceding year. The bank has given utmost importance to acquire quality assets and is committed to retain good borrowers through customer relationship management and financial counseling. At the same time efforts have been made to do business with new clients having good potentials to have a diversified and well-structured advances portfolio and to reduce overall portfolio risk.

SME FINANCING: MTB has given special focus on SME’s & Consumer Banking (CNB) business. Year 2008 was the year of entire SME and CNB business unit like product policy, process, development, distribution channels and ultimately triggering the focus on the growth of the business. Numerical data indicating the performance in different area can give a gist of SME’s & CNB activities in 2008. Total loans and advances reported growth of 366% percent in 2008 compared to 2007. SME was not only growing in the book size but also maintained good health of the portfolio and significantly reduced the non performing asset burden. Our proper selection of borrowers, strong monitoring and business strategies were the main strength to reduce the overdue rate. Mutual Trust Bank (MTB) has participated in the SME’s business line for the last 2 years. Presently 38 branches and five SME’s Service Center of MTB are available over the country where dedicated team members are working to educate SME’s people for their development. MTB is providing working capital and fixed Asset financing facilities in service, trading & manufacturing sectors under SME’s.

INVESTMENTS: The total investment portfolio of the bank stood at Tk. 5,606.49 million in December 31, 2008 as compared to Tk. 3,956.53 million in December 31, 2007 recording a growth of 41.07%. The investment portfolio includes treasury bills, treasury bonds, zero coupon bonds, shares of different companies, bonds, prize bonds etc. the investment is made primarily to meet SLR requirement.

INTERNATIONAL TRADE: MTB has designed Trade Finance Products to gain the competitive edge in the changing foreign exchange market arena. The banks offers a broad spectrum of trade finance products

namely issuance of documentary credit, advising, confirmations, forward covers, preshipment and post-shipment finance, negotiation and purchase of export bills, discounting of bills, collections etc.

IMPORT: Import volume of Mutual Trust Bank in 2008 has increased to Tk. 30,381.62 million compared to Tk. 24,872.07 million of 2007 reflecting growth of 22.15%. 35,000.00 30,000.00 25,000.00 20,000.00

Year

15,000.00

Taka in Million

10,000.00 5,000.00 0.00

2004

2005

2006

2007

2008

The main import items were raw materials, fabrics and accessories, chemicals, electronics goods and other consumer products, capital machinery, medical equipments, food grains (vegetable oil, pulse, rice, sugar) etc.

EXPORT: In 2008 the export of Mutual Trust Bank has increased to Tk. 19,463.23 million compared to previous yearâ&#x20AC;&#x2122;s volume of Tk. 18,281.46 reflecting a growth of 6.46%. The export items were ready-made garments, jute, jute goods, leather etc. due to the global recession at the second half of the year it showed a download trend in the expected export growth. 20,000.00 15,000.00 Export

10,000.00

Taka in Million 5,000.00 0.00

2004

2005

2006

2007

2008

FOREIGN REMITTANCE: Foreign remittance is one of the major sources of the foreign currency reserve of our country and in order to encourage inflow of remittance through banking channel from the Non-

resident Bangladesh, mutual Trust Bank provides exclusives service for repatriation and collection of remittances with the help of its foreign correspondents. MTB has established remittance arrangement with a number of exchange houses abroad to facilitate wage earners to remit their money in Bangladesh. The Bank has already been in operation with 14 exchange houses 4 in UAE, in UK, 1 in Qatar and 4 in Global based. The extensive branch network of the existing exchange houses have been largely helping Bangladeshi expatriates working in more than 85 countries such as UAE, Oman, Qatar, Bahrain, KSA, Lebanon, Jordan, Cyprus, Greece, U.K., U.S.A.,Malaysia, Singapore, Australia, Sudan, Uganda, Italy, Canada, Spain, France etc to remit their funds speedily and efficiently through online network. Establishment of remittance arrangement with 4 Exchange Houses in UAE, 2 in UK, 2 in USA, 6 in Qatar, 6 in Oman, 8 in Bahrain, and 2 in Singapore are under process. MTB’s total remittance stood at Tk. 7242.51 million in 2008 compared to previous year’s volume of Tk. 5456.71 million recording a growth by 32.73%. MTB is exploring further avenues of remittance from other countries through direct arrangement with KSA, Malaysia, USA, Canada and Italy in near future.

CORRESPONDENT BANKING RELATIONSHIP: Mutual Trust bank has a very strong correspondent banking network with 225 banks around the globe. The bank has SWIFT Relationship Management Application (RMA) services with 353 renowned banks around the world, out of which 42 local banks and 311 foreign banks. The banks are also able to carry out their International Trade Business with most of the globe trading regions. We have total 32 Nostro Accounts with different correspondent banks abroad in GBP, USD, EURO, JPYen, and ACU. We earn interest and rebates on overseas banks and training/ seminars. We also enjoy credit lines of substantial banks, which help us to honors our L/C’s and fulfill our payment commitments abroad.

5 YEARS GLANCE of MUTUAL TRUST BANK Ltd. SL 1. 2. 3. 4. 5.

Figure in Million Taka Particulars 2008 2007 Authorized Capital 3,800.00 3,800.00 Paid-up Capital 1,496.88 997.92 Shareholder’s Equity 2,483.09 2,044.30 Total capital(Core+ 2,888.33 Supplementary) Total Assets 38,964.9 7

2006 1,000.00 950.40 1,904.80

2005 1,000.00 864.00 1,560.94

2004 1,000.00 720.00 1,217.55

2,370.95

2,114.53

1,705.97

1,335.08

32,181.9 0

25,983.9 2

19,306.99 15,931.03

6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Total Deposits

33,820.4 1 Total Loans & Advances 28,529.3 5 Total Investment 5,606.49 Export 19,463.2 4 Import 30,381.6 2 Total Contingent 11,467.7 Liabilities 1 Operating Income 1,843.90 Operating Expenditure 648.81 Profit before provision 1,195.09 and tax Profit after provision and 305.03 tax Total Provision 1,236.07 maintained Earning Assets 33,944.6 0 Non-interest earning 5,020.37 assets Earning per share(figure in 21.07 taka) Book value per share(figure in taka)

Dividend Cash -Bonus Share Return on Equity Return on Assets (ROA) Classified Loans as %of Total Loans and Advances Lending –Deposit Ratio Capital Adequacy Ratio Price-Earning Ratio(Times) No. of Branches No. of Employees

24,776.9 2 22,683.2 3 3,956.53 18,282.0 0 24,866.0 0 10,916.1 4 1,188.34 424.48 763.85

22,264.0 5 18,591.5 2 2,821.62 12,943.2 9 26,255.2 9 9,671.39

16,098.54 13,164.13

7,498.27

5,924.00

1,284.86 315.39 969.47

877.01 225.17 651.85

686.00 179.06 506.94

210.80

478.28

336.17

247.19

603.43

239.98

145.00

117.50

28,470.9 7 3,710.93

23,575.8 3 2,642.16

17,419.05 14,779.16 1,887.95

1,151.87

14.80

47.93

35.37

34.33

165.88

204.86

200.42

180.66

169.10

18% 12.28% 0.78% 4.92%

25% 10.31% 0.66% 2.39%

20% 5% 25.11% 1.82% 1.03%

14% 10% 22% 1.78% Nil

20% 20.30% 1.55% Nil

84.36% 10.39% 15.18

91.55% 10.19% 40.30

83.50% 11.83% 7.14

89.28% 12.55% 11.12

88.82% 11.87% 17.10

36 739

30 578

25 470

20 376

16 298

14,373.26 11,692.13 2,495.98 8,810.00

1,676.21 5,924.00

17,660.00 17,355.90

DEFINITION OF FOREIGN EXCHANGE: Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country onto that of another. Mutual Trust Bank Ltd provides a wide range of banking

services to all types of commercial concerns such as Import & Export Finance and Services, Investment Advice, Foreign Remittance and other specialized services as required. Although we are a private commercial Bank, we have a strong global network that helps us to undertake international trade smoothly and efficiently. In the course of the name sounds buying and selling and selling of foreign currencies, but actually it is the trade Foreign Exchange Department (FED) of the branch. This department provides services regarding financing of international trade to its customers. Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealer (AD). If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign countries. So Mutual Trust Bank, Gulshan Branch is an authorized dealer. Financing can be in terms of services including financing have Letter of credit (LC) and other services. This is another major department is headed by the Foreign Exchange In-charge. There are three kinds of foreign exchange transaction: •

Exports Business

•

Import Business

•

Remittance.

FOREIGN TRADE AND FOREIGN EXCHANGE: International trade refers to trade between the residents of two different countries. Each country functions as a sovereign State with its set of regulations and currency. The difference in the national of the exporter and the importer presents certain peculiar problems in the conduct of international trade and settlement of the transactions arising therefore. Important among such problems are: (a) Different (b) Restrictions

countries imposed

have by

countries

different on

import

monetary and

export

units; of

goods;

(c) Restrictions imposed by nations on payment from and into their countries; (d) Differences in legal practices in different countries.

FOREIGN EXCHANGE MEANS FOREIGN CURRENCY AND INCLUDES:-

(i) All deposits, credits and balances payable in any foreign currency and any drafts, travelers cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency; (ii) Any instrument payable, at the option of the drawee or holder thereof or any other party thereto. Either in Indian currency or in foreign currency or partly in one and partly in the other. Thus, foreign exchange includes foreign currency; balances kept abroad and instruments payable in foreign currency.

FUNCTION OF FOREIGN EXCHANGE: The Bank actions as a media for the system of foreign exchange policy. For this reason, the employee who is related of the bank to foreign exchange, specially foreign business should have knowledge of these following functions :i) Rate ii) How

of the

exchange.

rate

iii) Forward

exchange

and

iv) Methods

spot

quoting

v) Premium

rate.

exchange

and

vi) Risk

rate. discount.

vii) Causes

works.

exchange of

rate.

exchange

rate.

viii) Exchange

control.

ix) Convertibility. x) Exchange

position.

xi) Intervention

money.

xii) Foreign

exchange

xiii) Foreign

transaction.

exchange

xiv) Export

and

import

xv) Non-commercial xvi) Financing

letter

and

xviii) Rules

and

letter

xvii) Nature

trading.

function Regulation

trade.

foreign of

foreign used

xix) Exchange Arithmetic.

LIST OF MTBL AUTHORIZED DEALERS:

trade. exchange

credit.

foreign

market. trade.

SL. No. 1.

6. 7.

10.

BRANCH NAME

CONTACTS

7-8, Motijheel C/A, Dhaka. Principal Branch Tel : 711 3237-8, 7110930-1, Fax : 890-2-956 6181 Tlx : 642543 EMTEB BJ, E-mail: mtbpb@bangla.net Panthapath Branch Chandrashila Suvastu Tower ,69/1 Panthapath, Dhaka. Tel : 861 3907, 8629887, Fax : 862 4687 Tlx: 632129 MTB PP BJ E-mail: mtbpp@progetelbd.net Babu Bazar branch Aman Court, 15, Armenian Street, Babu Bazar, Dhaka. Tel :731 4821-2, Fax : 731 6393 Tlx : 632128 MTBBB BJ E-mail: mtblbb@bangla.net Agrabad branch Quaderi Chamber, 37, Agrabad C/A , Chittagong Tel : 031-716 487, 813 287 Fax : 031-721 091 Tlx : 633265 EMTEB BJ E-mail: mtbagbj@gononet.com Progati Sarani Branch 15/5, Progati Sarani, Dhaka Tel : 881 8804, 885 5863 Tlx: 642543 EMTEB BJ E-mail: mtbpsb@bangla.net Dilkusha branch 68 Dilkusha C/A, Dhaka 1000 Tel : 7171 301- 2 E-mail: mtbldil@bangla.net Khatunganj Branch 325 Asadganj Road, Chittagong Tel : 031-612254 , 626966 E-mail: mtblktg@gononet.com Uttara Model Town House#39, Road#07, Sector#04, Uttara Model Branch Town, Dhaka. Tel : 892 4379, 895 1474 E-mail: mtbumtb@bangla.net Dhanmondi Branch Green Taj Center, Plot # 81 New, Road # 8/A New 1st Floor, Dhanmondi, Dhaka. Tel : 815 5607, 8158334 E-mail: mtbldhan@bonline.org Gulshan Branch House # 50, Road # 03Plot- SWH-7, South Avenue, Gulshan, Dhaka

DEFINITION OF LETTER OF CREDIT (LC): On behalf of the importer if the Bank undertakes to make payment to the foreign bank is known as documentary credit or letter of credit.

A letter of credit is an instrument issued by a bank to a customer placing at the letters disposal such agreed sums in foreign currency as stipulated. An importer is a country requests his bank to open a credit in foreign currency in favor of his exporter at a bank in the letters country. The letter of credit is issued against payment of amount by the importer or against satisfactory security. The L/C authorizes the exporter to draw a draft under is terms and sell to a specified bank in his country. He has to hand over to the bank, will the Bill of exchange, shipping documents and such other papers as may be agree upon between the exporter and the importer. The exporter is assured of his payment because of the credit while the importer is protected because documents in respect of export of goods have to be delivered by the exporter to the paying bank before the payment is made.

From of Letter of Credit: A

letter

credit

(L/C)

i) Revocable

may

two

letter

forms. of

These

below: credit.

ii) Irrevocable letter of credit. (i) Revocable L/C: If any letter of credit can be amendment or change of any clause or canceled by consent of the exporter and importer is known as revocable letter of credit. A revocable letter of credit can be amended or canceled by the issuing bank at any time without prior notice to the beneficiary. It does not constitute a legally binding undertaking by the bank to make payment. Revocation is possible only until the documents have been honored by the issuing bank or its correspondent. Thus a revocable credit does not usually provide adequate security for the beneficiary. (ii) Irrevocable L/C: If any letter of credit can not be changed or amendment without the consent of the importer and exporter is known as irrevocable letter of credit. Irrevocable credit constitutions a firm undertaking by the issuing bank to make payment. It therefore, gives the beneficiary a high degree of assurance that he will paid to his goods or services provide he complies with terms of the credit.

TYPES OF LETTER OF CREDIT:

Letters of Credit are classified into various types according to the method of settlement employed. All credits must clearly indicate in major categories. i)

Sight payment credit.

ii)

Deferred payment credit.

iii)

Acceptance credit.

iv)

Negotiation credit.

Red close credit.

vi)

Revolving credit.

vii)

Stand by credit.

viii)

Transferable credit.

Sight Payment Credit: The most commonly used credits are sight payment credits. These provide for payment to be made to the beneficiary immodestly after presentation of the stipulated documents on the condition that the terms of the credit have been complied with. The banks are allowed reasonable time to examine the documents.

Deferred Payment Credit: Under a deferred payment credit the beneficiary does not receive payment when his presents the documents but at a later date specified in the credit. On presenting the required documents, he received the authorized banks written undertaking to make payment of maturity. In this way the importer gains possession of the documents before being debited for the amount involved. In terms of its economic effect a deterred payment credit is equivalent to an acceptance credit, except that there is no bill of exchange and therefore no possibility of obtaining money immediately through a descant transaction. In certain circumstances, how ever, the banks payment undertaking can be used as collateral for an advance, though such as advance will normally only be available form the issuing or confirming bank. A discountable bill offers wider scope.

Acceptance Credit: With an acceptance credit payment is made in the form of a tern bill of exchange drawn on the buyer, the issuing Bank or the pendent bank. Once he has fulfilled the credit requirements, the beneficiary can demand that the bill of exchange be accepted and returned to him. Thus the accepted bill takes the place of a cash payment.

The beneficiary can present then we accented bill to his own bank for payment at maturity or for discounting, depending on whether or not he wants cash immediately. For simplicities sake the beneficiary usually gives on instruction that the accepted bill should be left in the safekeeping of one of the banks involved until it matures. Bill of Exchange drawn under acceptances credit usually has a term of 60-180 days. The purpose of an acceptance is to give the importer time to make payment. It he sells the goods before payments fall due, he can use the proceeds to meet the bill of Exchange in this way, he does not have to borrow money to finance the transaction.

Negotiation Credit: Negotiation means the purchase and sale of bill of exchange or other marketable instruments. A negotiation credit is a commercial letter of credit opened by the issuing bank in the currency of its own country and addressed directly to the beneficiary. The letter is usually delivered to the addressee by a correspondent bank. This credit is sometimes also as Hand on credit. The letter of credit empowers the beneficiary to draw a bill of exchange on the using bank, on any other named drawer or on the applicant for the credit. The beneficiary can they present this bill to a bank for negotiation, together with the original letter of credit and the documents stipulated therein. Payment of the bill of exchange is guaranteed by the issuing bank on the condition that the documents presented by the beneficiary are in order. The most common form of negotiation credit permits negotiation by any bank. In rare case the choice is limited to specified banks.

Red Clause Credit: In the case of a red clauses credit, the seller can obtain an advance for an agreed amount from the correspondent bank, goods that are going to be delivered under the documentary credit. On receiving the advances, the beneficiary must give a receipt and provide a written undertaking to present the required documents before the credit expires. The advance is paid by the correspondent bank, but it is the using bank that assumes liability. If the sellers does not present the required documents in time and fails to refund the advance, the correspondent bank debits the issuing bank with the amount of the advance plus interest.

The issuing bank, in turn, has reveres to the applicant, who therefore bears the risk for the advance and the interest accursed. The clause permitting the correspondent bank to make an advance used to be written on red in home the name red clause credit.

Revolving Credit: Revolving credit can be used when goods are to be delivered in installment at specified intervals. The amount available at any one time is equivalent to the value of one partial delivery. A revolving credit can be cumulative or non-cumulative means that amount from unused or incompletely used portions can be carried forward to subsequent period. If a credit is non cumulative, portions not used in the prescribing period case to be available.

Stand By Credit: Stand by credit are encountered principally in the US. Under the laws of most US states, banks are prohibited from issuing regular quarantines, so credits are used instead. In Europe, too the use of this type of credit is increasing by virtue of their documentary credit, stand-by credit are governed by the UCP. However, their function is that of a grantee. The types of payment and performance that can be guaranteed by stand-by credits include the following: - Payment

thorium

- Repayment

- Payment - Delivery

bill

goods

exchange

bank

of of

advance

goods in

accordance

delivered. wets

contract

and

- Execution of construction contracts, supply and install contracts. In order to enforce payment by the bank, the beneficiary merely presents a declaration stating that the applicant for the credit has failed to meet his contractual obligation. This declaration may have to be accompanied by other documents.

Transferable Credit: Transferable credits are particularly well adapted to the requirements of international trade. A trader who receives payment from a buyer in the form of a transferable documentary credit can use that credit to pay his own supplier. This enables him to carry out the transaction with only a limited and lay of his own funds. The buyer supplies for an irrecoverable credit issued in the traders favor. The issuing bank must expressly designate the credit as transferable.

As soon as the trader receives the confirmation of credit he can request the bank to transfer the credit to his supplier. The bank is under no obligation to affect the transfer except in so far as it has expressly consented to do so. The costs of the transfer are usually charged to the trader and the transferring bank is entitled to delete them in advance.

PARTIES TO A LETTER OF CREDIT: A letter of credit is issued by a Bank at the request of an importer in favor of an exporter from whom he has contracted to purchases some commodity or commodities. The importer, the exporter and the issuing bank are parties to the letter of credit. There are however, one or more than one banks that are involved in various capacities and at various stages to play an important role in the total operation of the credit. i) The

opening

Bank.

ii) The

Advising

Bank.

iii) The

Buyer

and

the

Beneficiary.

iv) The

paying

Bank.

v) The

negotiating

Bank.

vi) The confirming Bank.

The Opening Bank: The opening Bank is one that issues the letter of credit at the request of the buyer. By issuing a letter of credit it takes upon itself the liability to pay the bills drawn under the credit. If the drafts are negotiated by another bank, the opening Bank reimburses that Bank. As soon as the opening Bank, issuing a letter of credit (L/C), it express its undertaking to pay the bill or bills as and when they are drawn by the beneficiary under the credit. When the bills are presented to or when antic is received that bills have been presented to a paying or negotiating Banks its liability matures.

The Advising Bank: The letter of credit is often transmitted to the beneficiary through a bank in the letters country. The bank may be a branch or a correspondent of the opening bank. The credit is some times advised to this bank by cable and is then transmitted by it to the beneficiary on its own special form. On the other occasions, the letter is sent to the bank by mail or telex and forwarded by it to the exporter. The bank providing these services is known as the advising bank. The advising bank undertakes the responsibility of prompt advice of credit to the beneficiary and has to be careful in communicating all its details.

The Buyer and the Beneficiary: The importer at whose request a letter of credit is issued is known as the buyer. On the strength of the contract that he makes with the exporter for the purchase of some goods that the letter of credit is opened by the opening bank. The exporter in whose favor the credit is opened and to whom the letter of credit is addressed is known as the beneficiary. As the seller of goods he is entitled to receive payment which he does by drawing bills under the letter of credit (L/C). As soon as he has shipped the goods and has collected the required documents, he draws a set of papers and presents it with the documents to the opening bank or some other bank mentioned in the L/C.

The Paying Bank: The paying bank only pays the drafts drawn under the credit but under takes no opening bank, by debating the letters accounts with it if there is such an account or by any other measured up, between the two bankers. As soon as the beneficiary has received payment for the draft, he is out of the picture and the rest of the operation concerns only the paying bank and the opening bank.

The Negotiating Bank: The negotiating bank has to be careful in scrutinize that the drafts and the documents attached there to are in conformity with the condition laid down in the L/C. Any discrepancy may result in refused on the part of the opening bank to honor the instruments is such an eventuality the negotiating bank has to look back to the beneficiary for refund of the amounts paid to him.

The Confirming Bank: Sometimes an exporter stipulates that a L/C issued in his favor be confirm by a bank in his own country. The opening this country to add its confirming to the credit the bank confirming the credit is known as the confirming bank and the credit is known as confirmed credit.

CONTENTS OF THE LETTER OF CREDIT: Banks normally issued letter of credit (L/C) on forms which clearly indicate the banks name and extent of the banks obligation under the credit. The contents of the L/C of different Banks may be different .In general L/C contains the following information:-

Name Of The Buyer: Who is also known as the accounted since it is for his account that the credit has been opened.

Name Of The Seller:

Who is also known as the beneficiary of the credit?

Moment of The Credit: Which should be the value of the merchandise plus any shipping charges

Trade

intent

Terms: Such

paid as

under F.O.B

the and

credit. CIF

Tenor: Tenor of the Draft which is normally dependent upon the requirements of the buyer. Expiration Date: Which is specified the latest date documents may be presented. In this manner or by including additionally a latest shipping date, the buyer may exercise control over

the

time

shipment.

Documents Required: Which will normally include commercial invoice consular or customers invoice, insurance policies as certificates, if the source is to be effected by the beneficiary

and

original

bills

lading.

General Description Of The Merchandise: Which briefly and in a general manner duly describes the merchandise covered by a letter of credit.

PROCEDURES OF OPENING THE L/C: The importer after receiving the pro-forma invoice from the exporter, by applying for the issue of a documentary credit, the importer request his Bank to make a promise of payment to the supplier. Obviously, the bank will only agree to this request if it can rely on reimbursement by the applicant. As a rule accepted as the sole security for the credit particularly if they are not the short of commodity that can be traded on an organized market, such an arrangement would involve the bank in excessive risk outside its specialist field. The applicant must therefore have adequate funds in the bank account or a credit line sufficient to cover the required amount. Banks deal in documents and not in goods. Once the bank has issued the credits its obligation to pay is conditional on the presentation of the stipulated documents with in the prescribed time limit. The applicant cannot prevent a bank from honoring the documents on the grounds that the beneficiary has not delivered goods on redder reissues as contracted. The importer submit the following documents before opening of the L/C: a. Tax

Identification

b. Valid

Number Trade

(TIN) License.

c. Import Registration Certificate (IRC) The Bank will supply the following documents before opening of the L/C: a. b. Application

LCA and

c. IMP

form. Agreement

form. form

d. Necessary charge documents for documentation. The above documents / papers must be completed duly signed and filled in by the party according to the instruction of the banker.

DOCUMENTARY LETTER OF CREDIT: IMPORT/EXPORT DCUMENTATION: Documentary letter of credit is such kinds of commercial letter which a Bank issue on behalf of foreign seller (exporter) according to the direction of the (importers) purchasers. The

documents shown under are known as export documents form the importer's side. These are:-

Bill of Exchange: The bill of exchange is that particular instrument through which payment is effected in trade deals internal and international. The payment for the goods is received by the seller through the medium of a bill of exchange drawn on the buyer for the amount depending on the contract. It is a negotiable instrument. There are five main parties involved in a bill of exchange. They are:(a) Drawer (b) Drawee (c) Payee (d) Endorser (e) Endorsee

Bill Of Lading: A bill lading is a document of title to goods entitling the holder to receive the goods as beneficiary or endorsee and it is with the help of this document on receipt from the exporter that the importer takes possession of the goods from the carrying vessel at the port of destination.

Airway Bill / Railway Receipt: When goods to be transported are small in bulk or requiring speedy delivery or those are perishable in nature on the deal is in between the neighboring countries then mode of transports other than shipping may be resorted to far the carriage of the goods Airways bill / Railway receipt take place of Bill of lading depending on the nature of the carrier.

Commercial Invoice: It is the seller's bill for the merchandise. It contains a description of goods, the price per unit at a particular location, total value of the goods, packing specifications, terms of sale, letter of credit, bill of lading number etc. There is no standard form far a commercial invoice. Each exporter designs his own commercial invoice form. The invoice is made out by the seller under his signature in the name of the buyer and must be submitted in a set of at least 3 copies. Its main purpose is to check whether the appropriate goods have been shipped and

also that their unit price, total value, marking on the package etc. are consistent with those given in other documents.

Insurance Policy: In the international trade insurance policy is a must to cover the risk of loss on consignments while they are on seas, roads, airways. The insurance is the responsibility of the buyers (consignee) under FAS, FOB and C&F contracts and of the seller (consignor) under CIF contract. The policy must be of the type as specified in the relative contract / credit. The policy would be for the value of CIF price plus 10 (ten) percent to cover the expenses and that is required to be obtained in the same currency as that of the credit and dated not later than the date of shipment with claims* being payable at the destination. It must be properly stamped. Like a bill lading it must be negotiable and be endorsed where it is payable to order.

Certificate Of Origin: This is a certificate issued by a recognized authority in exporting country certifying the country of origin of the goods. It is usually by the Chambers of commerce. Some times, it is certified by local consul or Trade Representative of the importing country as per terms of the credit.

Packing List: The exporter must prepare an accurate packing list showing item by item, the contents of the consignment to enable the receiver of the shipment to check the contents of the goods, number and marks of the package, quality, per package net weight, gross weight, measurement etc.

Wightman and Measurement List: Issued by recognized authority (like chambers of commerce and industry) in exporting country certifying correct weightment and measurement of the goods exported.

Bill Of Entry: A bill of entry is a document which contains the particulars of the imported goods as well as the amount of customs duty payable. The Exporter submits the following papers/documents to the Negotiating Bank: i) Bill

exchange

ii) Bill iii) Airway

of bill

Draft. lading.

Railway

receipt.

iv) Commercial

invoice.

v) Insurance

policy.

vi) Certificate

origin.

vii) Packing viii) Wightman

list. &

measurement

list.

ix) Other etc. The negotiating bank after received the above documents / papers then this bank scrutiny the documents. The negotiating bank sends the original shipping documents to the L/C opening bank and keeping the second copy with the negotiating bank.

Payment against Documents (PAD): Banks deal in documents and not in goods. If the shipping document against the L/C is in order then the L/C opening bank must have to payment to the foreign bank within 3 days or 72 hours according as Uniform Customs and Practice for Documentary Credit (UCPDC) 500 of revision of ICC. If the shipping documents have any discrepancy, then the L/C opening bank informed to the negotiating bank within 7 days. Otherwise, the shipping documents have not discrepancy. If the importer have not adequate founds in the bank account then the bank payment to the foreign bank against the shipping documents.

EXPORTS BUSINESS: The goods and services sold by Bangladesh to foreign households, business men and Government are called report. The export trade of the country is regulated by the Imports and Exports (control) Act, 1950. There are a number of formalities, which an exporter has to fulfill before and after shipment of goods. The ERC is required to be renewed every year.

The ERC number is to be incorporated on EXP forms and other documents connected with exports.

Mutual Trust Bank offers extra cover to its customers for the entire export process to speed up receipt of proceeds. The facilities are: a. Export Letters of Credit advising b. Pre-shipment Export Financing c. Export documents negotiation d. Letters of Credit confirmation

An Export requires financial accommodation at two stages, these are (1) Pre-shipment stage (2) Post-shipment stage

PRE-SHIPMENT STAGE: Pre-shipment credit normally takes the following form -

PACKING CREDIT: Packing credit is a short terms credit by a bank to an export to facilitate purchase of raw materials for the purpose manufacturing processing, packing and exporting and exporting the finished goods. Bank is granted the credit after getting the evidence of a letter of credit or a contract in favor of the borrower. Mutual Trust finance up to 80% of total L/C value.

POST-SHIPMENTS STAGE: Post-shipment credit is a financial accommodation extended to an exporter against export documents after shipment of the goods. When shipment of goods has already been made, the exporter may require waiting for sometime to receive payment from foreign buyer. But an exporter be a manufacturer or regular supplier, has to make immediate payment to the suppliers of raw materials, local seller of goods or to procure goods for further shipment. So an exporter always feels the necessity of post- shipment banks finance to overcome his revolving need of working capital in the process of export trade. Before extending port-shipment credit to the exporter, MTB Bank takes into consideration the following things. â&#x20AC;˘

Total Credit Value

â&#x20AC;˘

Performance of the Exporter.

The formalities and procedure are enumerated as follows: •

Obtaining Exports L/C: To get export L/C form exporter issued by the importer.

• Submission of Export Documents: Exporter has to submit all necessary documents to the collecting bank after shipping of goods.

• Checking of Exporter Documents: After getting the documents banker used to check the documents as per L/C terms.

• Negotiating of Export Documents: If the bank accept the document and pay the value draft to the exporter and forward the document to issuing bank that is called a negotiating bank.

• Realization of Proceeds: This is the period when the issuing bank has realized the payment.

• Reporting to the Bangladesh Bank: As per instruction by Bangladesh Bank the bank has to report to respective department of Bangladesh Bank by mentioning latest payment.

EXPORT OPERATION: Bangladesh exports a large quantity of goods and services to foreign households. Readymade Textile Garments (both knitted and woven) Jute, Jute-made products, frozen shrimps, Tea are the main goods that Bangladeshi Exporters Exports to foreign countries. Garments sector is the largest sector that exports the lion share & of the countries export. Bangladesh exports most of its readymade garments products to U.S.A and European Community (EC) countries. Bangladesh exports about 40% of its readymade garments products to U.S.A. Most of the exporters who export through MTBL are readymade garment exporters. They open export L/C here to export their goods, which they open against the import L/Cs opened by their foreign importers. Export L/C operation is just reverse of the import L/C operation.

As an Advising Bank: It receives documents from the foreign importer and hands it over to the exporter. Sometimes it adds confirmation in the L/C on request from the Opening Bank.

As Negotiating Bank:

It negotiates the bills and other shipping documents in favor of the exporter. That is it collects the proceeds of the export-bill from the drawee and credits the export’s account for the same. A collection proceeds from the export bill is deposited in the bank’s NOSTRO account in the importer’s country. In our country, Export and Import operation of bank is very much related with one another because, of use of Back to Back and maturity of payment for Back-to -Back L/C is set in such that it can be paid out of export proceeds.

Back-to-Back L/C: It is simply issued to the clients against an importer L/C. Back-to-Back mechanism involves two separates L/C. one is master L/C and another is Back-to-Back L/C. on the strength of Master Export L/C bank issues Back-to–Back L/C. Back-to–Back L/C is commonly known as Buying L/C.

Document Required for Opening a Back-to–Back L/C: In Mutual Trust Bank Gulshan Branch, following papers documents are required for opening a Back-To-Back L/C. i.

Master L/C.

ii.

Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC).

iii.

L/C Application and LCAF duly filled in and signed.

iv.

Pro-forma Invoice or Indent

Insurance Cover Note with money receipt

vi.

IMP Form duly signed.

In addition to the above documents, the followings are also required, to export oriented garments industries while requesting for opening a Back-To-Back L/C. i.

Textile Permission

ii.

Valid Bonded Warehouse License

iii.

Quota Allocation Letter issued by the Export Promotion Bureau (EPB) in favor of the application for quota items.

Check List of Export L/C: Following defective points are usually found in the Master L/C. So, these pints are so L/C carefully by the bank officials. These are: i.

Name of the Advising Bank.

ii.

Name of Transferring Bank.

iii.

Form of Doc. Credit: •

Name of Issuing Bank

•

Documentary Credit No. and Issuing Date

•

Date of Shipment

•

Expiry Date and Place

iv.

Application for order of an Account.

Beneficiary Favoring

vi.

Amount

vii.

Availability of Credit

viii.

Partial Shipment Transshipment

ix.

Payment condition Draft Sight

Category

xi.

Description of goods: •

Item

•

Total Quality

•

Unit Price

xii.

B/L Clause

xiii.

Reimbursement Clause

xiv.

L/C PADC Clause

xv.

Net FOB Value.

Payment of Back-To-Back L/C: In case Back-To-Back as 60/90/120/180 days maturity period deferred payment is made. Payment is given after realizing export proceeds from the L/C issuing bank.

Payment Procedure for FDBP: After purchasing the documents, Mutual Trust Bank gives the following entries: FDBP A/C ------------------------------Dr. (at OD sight rate) Customer A/C--------------------------Cr. (Before realization of proceeds) Bank would realize only postage charge from the exporter.

Subsequently Bank will send the document to the L/C opening Bank for payment with a forwarding letter detailing the enclosures up on realization of process the Negotiating Bank would pass the following vouchers. Head Office A/C ----------------------Dr. (at T.T clean rate) FDBP A/C------------------------------Cr. Income A/C profit on Exchange Trading----Cr. (Adjustment after realization of proceeds) A FDBP Register is maintained for recording all the particulars.

Mode of Payment of Export Bill under L/C: As per L/CPDC 500, 1993 revision there are four types of credit. These are as follows:

• Sight Payment Credit: In a sight payment credit, the bank pays the stipulated sum immediately against the exporter’s presentation of the documents.

• Deferred Payment Credit: In deferred payment, the bank agrees to pay on a specified future date or event, after presentation of the export documents.

• Acceptance Credit: In acceptance credit, the exporter presents a bill of exchange payable to himself and drawn at the agreed tenor (that is, on a specified future date or event) on the bank that is to accept it. The bank signs its acceptance on the bill and returns it to the exporter. The exporter can then represent it for payment on maturity.

• Negotiation Credit: In Negotiation Credit, the exporter has to present a bill of exchange payable to him in addition to other documents that the bank negotiates.

IMPORT BUSINESS: To import, a person should be competent to be an importer. According to Import and Export Control Act, 1950, the Office of Chief Controller of Import and Export provides the registration (IRC) to the importer. In an international business

environment, buyers and sellers are generally unknown to each other Bank gives export guarantee that it will pay for the goods on behalf of the buyer if the buyer does not pay. This guarantee is called Letter of Credit. Mutual Trust Bank supports its customers by providing facilities throughout the import process to ensure smooth running of their business. The facilities are: a. Import Letter of Credit. b. Post Import Financing (LIM, LTR etc). c. Import collection services & Shipping Guarantees.

LOADING OF DOCUMENTS: There are some requirements for loading the document by the bank. These are as follows •

After examining all the documents if bank funds it in order then bank will lodge the documents as bills under letter of credit (BLC).

•

If any discrepancy is noticed in the documents or if there is any deviations from the terms and conditions of L/C, bank will be immediately brought to the notice of the importer for his written instructions as to whether he will accept the documents.

The importer refuses to accept the documents with the discrepancies, issuing bank will intimate the negotiating bank immediately not to accept the documents. the importer accept the documents but if the documents does not fulfill the bank requirement or it is against the Bangladesh Banking law, then bank may not accept the documents.

Steps for Import L/C Operation: Step-1: Registration with CCI & E: •

For engaging in international trade, every trader must be first registered with the Chief Controller of Import and Export.

•

By paying specified registration fees to the CCI & E, the trader will get IRC/ERC (Import/export Registered Certificate), to open L/C with bank, this IRC is must.

Step-2: Determination Terms of Credit:

•

The terms of the letter of credit are depending upon the contract between the importer and exporter. The terms of the credit specify the amount of credit, name and address of the beneficiary and opener, tenor of the bill of exchange, period and mode shipment and of destination, nature of credit, Expiry date, name and number of sets of shiping document etc.

Step-3: Proposal for Opening of L/C: To have an import L/C limit an importer submits an application to department to MTB. The proposal contains the following particulars: •

Full particulars of the bank account nature of business.

•

Required amount of limit.

•

Payment terms and conditions.

Step-4: Application by Importer to the Banker to Open Letter of Credit: •

For opening L/C the importer is required to fill up a prescribed application from provided by the banker along with the following documents:

•

L/C Application From

•

Filled up LCA From

•

Demand Promissory Note

•

Pro-forma Invoice

•

Authority to Debit Account

•

Filled up amendment request From

•

IMP From

•

Insurance cover note and money Receipt

•

Tax Identification Number

•

Import Registration Certificate

•

Membership Certificate

•

Rate Fluctuation Undertaking.

Step-5:

Opening of L/C by the bank for the Opener: •

Taking filled up application from the importer.

•

Collects credit report of exporter from exporter’s country through his foreign correspondence there.

Step-6: Shipment of Goods and Lodgment of Documents By exporter: o Then exporter ships the goods to the destination of the importer country. o Sends the documents to the L/C opening bank through his negotiating bank. Generally the following documents are sent to the opening Banker with L/C; •

Bill of Exchange

•

Bill of Leading

•

Commercial Invoice

•

Packaging List

•

Advice Details of Shipment

•

Pre-shipment Inspection Certificate

•

Vessel Particular

•

Certificate of Origin.

Step-7: Lodgment of document by the Opening bank from the Negotiating Bank: After receiving the documents, the opening banker securing the documents. If any discrepancy found, it informs the importer. If any discrepancy found, it informs the importer. If importer accepts the fault, the opening bankers call importer retiring the document. At the time many thing can happen. These are indicated in the following: •

Discrepancy found but the importer accepts-no problem occurs in lodgment.

•

Documents are Ok but importer is willing to retire the documents. In this case bank is obligated to pay the price of exported goods. Since importer did not pay foe bill of exchange this payment by bank is one kind of credit to the importer and this credit in banking is known as PAD.

Step-8:

RETIREMENT: The importer receives the intimation the gives necessary instruction to the bank for retirement of the import bills or for the disposal of the shipping documents to clear the imported goods from the customs authority. The importer may instruct the bank to retire the documents by debiting his account with the bank or may ask for LTR (Loan against Trust Receipt).

ACCOUNTING PROCEDURE IN CASE OF L/C OPENING: When the officer thinks fit the application to open a L/C giving the following entries-creates the following charges: Particulars Customer’s A/C L/C Margin A/C Commission A/C on L/C VAT SWIFT Charge Datamax Stamp Postage DHL/Courier

Debit/ Credit Debit Credit Credit Credit Credit Credit Credit Credit Credit

Charges In Taka 50% 15% on commission 3000/1000/150/300/1500/-

AMENDMENT OF L/C: After opening of L/C some times alteration to the original terms and conditions become necessary. These amendments involves changes in •

Unit Price

•

Extension of Validity of the L/C

•

Documentary requirements etc.

Such amendments can be affected only if all the concerned parties agree the beneficiary, the importer, the issuing bank and the advising bank.

PAYMENTS PROCEDURE OF IMPORT DOCUMENTS: This is the most sensitive task of the Import Department. The officials have to be very much careful while making payment. This task constitutes the following:

Date of Payments: Usually payment is made within seven days after the documents have been received. If the payment is become deferred, the negotiating bank may claim interest for making delay.

Preparing Sale Memo: A sale memo is made at B.C rate to the customer. As the T.T & DD rate is paid to the ID the difference between these two rates is exchange trading.

Requisition for the Foreign Currency: For arranging necessary fund for payment, a requisition is sent to the International Department.

Transmission of Message: Message is transmitted to the correspondent bank ensuring that payment is being made.

GENERAL BANKING: Banks perform this function in two ways- taking deposits from various areas in different forms and lending that accumulated amount of money to the potential investors in other different forms. Financial institution/ intermediary that mediates or stands between ultimate borrowers and ultimate lenders is knows as banking financial institution. General Banking department aids in taking deposits and simultaneously provides some ancillaries services. It provides those customers who come frequently and those customers who come one time in banking for enjoying ancillary services. In some general banking activities, there is no relation between banker and customers who will take only one service form Bank. On the other hand, there are some customers with who bank are doing its business frequently. It is the department, which provides day-to-day services to the customers. Every day it receives deposits from the customers and meets their demand for cash by honoring cheques. It opens new accounts, demit funds, issue bank drafts and pay orders etc. since bank in confined to provide the service everyday general banking is also known as retail banking. General Banking consists of the many sections in the branch. These are: •

Customer Service

•

Account Opening/Closing

•

Remittance ▫ Payment ▫ Demand

Order Draft

▫ T.T.

Issue Issue/Collection Issue/Collection

▫ Endorsements ▫ IBC/OBC Collection. •

Deposit Department

•

Locker Service

•

Account’s

Department ▫ Clearing. ▫ Transfer.

▫ Cash.

Customer Services of MUTUAL TRUST BANK LIMITED: Professional merit and Competency, Flexibility, Determination and Dedication are the core resources that MTBL consider to be of paramount importance for building a client oriented modern banking. Customer satisfaction is MTBL foremost professional undertaking. Therefore, a satisfied client is MTBL precious product and they consider them MTBL ambassador in the market.

CATEGORIES OF ACCOUNT: CURRENT DEPOSIT ACCOUNT: Current Deposit is that deposit from this deposit anyone can save or withdraw at any time in the working day. It has no constraint, such as services or interest payments. It is an account for organization or company. It is mainly transact with cash or transfer. Current deposit are opened for those customers who want to give authority to bank to transact, collect Cheques/bills etc on behalf of them and those who want to get credit for bank. MTB Gulshan branch have 351 Current Deposit Account.The worked to open 7 CD account on them.

Types of Current Deposit Account: •

Individual / Joint

•

Proprietorship

•

Partnership

•

Association/Trust/society

•

Limited Liability Company

Terms and Conditions: •

Cash deposits and withdrawals shall be subject to the minimum and maximum limits set by the bank from time to time.

•

A minimum initial deposit of Tk. 1500/- shall be required for opening a Current Deposit Account.

•

Interest rate will be 0.00%.

SAVINGS BANK ACCOUNT: Savings Bank Account (SB account) which pays interest and deposit money. Clients can withdrawal money by giving cheque books or by ATM/VISA card. It promotes the habit to save money. MTB offers 7.50% interest rate on savings account. MTB Gulshan branch have 1184 SB account.

Terms and Conditions: 1. Every Savings Bank Account shall have a separate account number. 2. A minimum initial deposit of TK. 1000/- shall be required for opening Saving Bank Account. 3. No one shall be allowed to open more than one Savings Bank Account in the same name into a particular branch. 4. Withdrawal of cash shall be allowed only through the leaves of the cheque book supplied by the Bank or by the ATM card issued by the bank. 5. 10% government tax cut on client’s interest income according to government regulation. 6. Interest rate will be 7.50%

Types of Savings Deposit Account: •

Individual/Joint account

•

Proprietorship Account

•

Club/Trust/Association account.

SHORT TERM DEPOSIT: Short term deposit is the net flow of current transactions. Customers can deposit money or withdraw money any time but difference is that services and interest payments are allocable here. This is special type of term deposit. Here STD stands for Short Term Deposit. This is sometimes known as Special Notes Time Deposit.

Special Features of STD Account: •

This type of account provides interest on Daily Product.

•

MTB offers 6.50% interest on this account.

•

A seven-day notice should be given before seven days of withdrawal.

•

Withdrawal of money without notice will provide on interest of that month.

•

The Total Balance cannot decrease below 1000/-.

•

The closing and transfer of STD account is all the same as current account.

•

Interest is applied once a year.

•

They offer 6.50% interest against STD.10% government tax cut on interest income.

The producer of opening a STD account is almost same as Current Account. The difference and similarities between them are as follows•

The forms that are used for CD account are also used for STD Account.

•

No interest is given in case of CD account whereas about 6.5% interests are given I case of STD account.

•

In case of CD account holder can draw money without any restriction and drew any time. But of dew money from STD.

•

Account at least one-week intimation is necessary i.e. frequent withdrawal is restricted.

FIXED DEPOSIT: If an investor wants to deposit a lump sum of money for a fixed period of time then he will open a fixed deposit account. .Also when customers deposit some amount in bank and it gives them regular fixed profit then it would be called as fixed deposit in the bank.

Terms and Condition of FDR Account: •

The period of time will be minimum 30 days and maximum 20 years.

•

MTB offers 11.5% on FDR .Interest rate varies on the period of time.

•

If it is for 3 months then interest will be 11%.

•

If it is for 1 year then interest will be 11.5%.

•

For some special cases, such as big amount and period is more than 1 years then interest can be more than 11.5%.

•

The FDR becomes renewed if the client doesn’t withdraw money within 7 days of maturity.

â&#x20AC;˘

If clients want to withdraw interest before maturity in that case they will get interest of opening day to that day s interest amount.

CONSUMER BANKING OF MUTUAL TRUST BANK: We aim to satisfy all clients, regardless of how big or small they may be. Individuals are counseled on the best type of accounts suitable to them such as Current, Savings, Short Term Deposits, Fixed Deposits, Consumer Asset and Liability Products, etc. Apart from the conventional banking operations MTB strives to introduce an array of products and services and already launched a number of consumer banking products with the aim of popularizing consumer banking operations and offer higher return to its clients. Our 1.

Consumer Brick

Banking by

Brick Monthly

Products Savings

are: Scheme.

Benefit

Plan.

Everyday

Plan.

Save

Childrenâ&#x20AC;&#x2122;s

Education

Consumer

Credit

Plan. Scheme.

6. Best Invest Plan. 7. Double Saver Plan. 8. Triple Saver Plan. 9. Millionaires plan. 10. Unique Savings Plan.

Brick by Brick Savings Scheme: Drops of water make an ocean. Your habit of regular savings will provide you comfort in the future. Brick by Brick is a unique monthly savings plan which builds up over the years and provides a lump sum amount at maturity. The savings periods are 5, 8 and 10 years. Monthly installments are Tk. 500/=, 1,000/=, 2,000/=, 5,000/=and thereafter in multiples of Tk. 500.You will have to open an account in the bank from which a standing instruction will be given to transfer the monthly deposit in the scheme's account and you must ensure that your account has sufficient balance within the 10th of each month. This plan is so flexible that at maturity you can earn a handsome amount depending on the size of installment amount of savings and tenure.

The Terms and Conditions: The terms and conditions of Brick By Brick are as follows•

Brick By Brick monthly installment are TK. 500/-, 1,000/-, 2,000/-, 5,000/, and multiplies of TK. 5,000/- thereof.

•

Consumer can select a period of 5/8/10 years depending on his or her convenience.

•

Consumer is eligible to open more than one account in the same branch.

•

Monthly installments of the plan will be debited from customer’s current or saving account.

•

1% bonus amount will be awarded on your total deposit if the plan is continued up to matured.

•

If a customer fails to pay 3 consecutive installments then the plan will cease to function and payment will be made as per following clause.

•

For premature encashment, interest will be paid as prevailing saving rate but no interest will be paid if enchased within one year.

•

In case of death, deposit will be enchased with applicable interest and paid to the nominee.

•

The account shall be governed by the terms and conditions as continued here in and shall be subject to the laws of Bangladesh as applicable from time to time. The Bank reserves the right to change rules as and when deemed necessary.

Loan Advantage: The customer can avail loan up to 90% of the deposited amount but minimum loan amount against this plan will be TK. 25,000/-

Monthly Benefit Plan: This plan offers you to generate monthly income out of your deposit. It has been designed to help and assist conscious savers from all strata of the society. Highlight of the Month Benefit Plan: The Highlight of the Monthly Benefit Plan an as follows•

The minimum deposit is Tk. 50,000/= or in multiples thereof.

•

There is no upper limit and this plan is for a 3 (three) & 5 (five) years term that cannot be changed subsequently.

•

The Depositors will require opening a savings/current account. Monthly income will be credited to your account.

Withdrawal: Generally withdrawal is not allowed before maturity, but if it is withdrawn before the agreed term, then interest will be calculated at prevailing paid will be adjusted from the principal amount. However no interest will be allowed if the deposit is withdrawn within 1 year or opening the account. In this case, the full interest already paid will be deducted from the principal amount.

Loan Advantage: The depositor can avail loan up to 90% of the deposited amount lien of this plan.

Save Everyday Plan: Saving money for the future is a common practice in any society. Savings help you to build a better tomorrow. Regular saving makes a man become disciplined, self confident and successful. Mutual Trust Bank offers you "Save Everyday" Plan. The primary advantage of this plan is that you are absolutely free to choose your own time for depositing money into this account. You can deposit daily, weekly or monthly. The choice is yours, but the transactions will have to be within the Bank's transaction hour. This is a 5 year plan and you will be required to open the account with an initial deposit of Tk. 2500/= only. We offer you very attractive interest rate which is accrued in this account on a daily basis.

Terms and Conditions: The terms and conditions of Save Everyday plan are given below•

MTBL supplied account opening from and two recent passport size photographs of the account holder to be used for opening of account. No introduction is required.

•

An initial deposit of Tk. 2,500 as cash to be required for opening of account.

•

No cheque book to be issued as withdrawal facility by nature of this account is ceased before completion of 5 years tenure.

•

Any amount at any time can be deposited during the transaction hour.

•

Interest to be applied at 1% higher than normal SB rate on half yearly basis.

•

No interest to pay in the event of closing of the account within 6 months from account opening. In the event of closing of the account before maturity but after 6 months from account opening date interest to be applied at normal SB rate.

•

Depositors may be allowed credit facility up to 80% of deposit amount on completion of 3 years. Minimum loan amount to be Tk. 1, 00,000.00 or above. Lending rate will commensurate with normal commercial lending rate.

•

In the event of death of the depositor account to be closed. Depositors may nominate others to receive the amount deposited in their account in the event of death of account holders.

•

Depositors considering their continence may request to transfer their deposit accounts to another MTBL Branch.

•

Depositors will notify the bank immediately their new address in case change.

Children’s Education Plan: Education is the backbone of any nation and one of the primary factors of prosperity. An educated nation stands tall in the committee of nations and deserves respect. A child's education is of prime importance and every parent should ensure and make every effort to get their child educated. To admit a child in a good institution parents require adequate amount of savings for the cost of admission into a school. This plan allows new parents to save for 4/7/9/12 years. The parent can deposit any amount of money at any day of the month. The interest rate is very lucrative and we offer substantially more than the prevailing savings rate. This plan will generate saving for your children’s education. It has design to help and assist the people who are concerned about the cost of their children’s education. Your habit of regular savings will provide you relief in future.

Terms and Conditions: The terms and conditions of Children’s Education plan are as follows•

Initial deposit of Mutual Education plan is Tk. 5000/- and subsequently monthly installments are Tk. 1000/- and multiple thereof up to a maximum Tk. 2000/-.

•

Customer can select a period of 4/7/9 years, depending on his/ her convenience.

•

Customer is eligible to open more than one account in the same branch.

•

Monthly installment of the plan will be debited from customer’s current or saving account as auto transfer arrangement.

•

If customer fails to pay will three consecutive installments then the loan will cease to function and payment will be made as per following clause.

•

Foe premature encashment, interest will be paid as per prevailing saving rate but no interest will be paid if enchase within one year.

•

Increase of death, deposit will be enchased with applicable interest and paid to the nominee (’s).

•

The accounts shall be governed by the terms and conditions as contained herein and shall be subject the laws of Bangladesh as applicable from time to time. The bank reserves the right to change rules as and when deemed necessary.

Loan Advantage: The customer can avail loan up to 90% of the deposited amount but minimum loan amount against this plan will be TK. 25,000/-.

Consumer Credit Scheme: In order to make a significant contribution in the living standards of the people of medium and low income category, Mutual Trust Bank has introduced a scheme called "Consumer Credit Scheme". With a view to materialize the dreams of those who are unable to make one time investment from their own savings, one can now afford to buy necessary household equipments and thus improve the standard of living. All sorts of household durables e.g. Television, Refrigerators, Computers, Air Conditioners, Video Cameras, Washing/ Drying Machines and Furniture’s are allowed under this scheme. One can buy Motorcycle too under this program me. The collateral security is minimum and the interest rates are one of the lowest in the market. Please contact the nearest branch for details.

Best Invest Plan: Best Invest offers you efficient high return investment plan. This plan helps you to build up a sizeable income in easy and affordable installments. This plan allows you to own 5 times the

initial invested amount. Best Invest offers two separate and convenient term deposit periods for 4 years and 6 years respectively. Best Invest is available in units worth Tk.50,000/- each. You will invest Tk.10, 000/- as down payment for purchasing 1(one) unit and the Bank will provide loan for Tk.40, 000/-. The customer also has the option to buy units in multiples of Tk. 50,000/- but maximum up to Tk.

00,

00,000/-

(one

core).

This is a unique high return plan catering to all income groups. So do not miss the opportunity.

Double Saver Plan: MTB Double Saver Plan offers you a one time savings scheme, which will provide you double the amount of your deposit after eight (8) years. You will receive a handsome amount at maturity. If you are an individual or if your institution is an NGO or an Educational institution or a Trust or Society or any other institution, you may invest your savings in this scheme with a minimum deposit of Tk. 10,000/- for eight (8) years with no limit for maximum amount. At maturity you will get double of your deposited amount along with a gift item.

Terms and Conditions: The terms and conditions of Double Saver Plan of Mutual Trust Bank are as follows•

Any individual NGO, Educational Institution, Trust, Society etc. May invest their saving in this scheme.

•

Minimum deposit would be 10,000/- taka and there is no limit for maximum amount.

•

The period of deposit for Seven Years.

•

After maturity will get Double of your deposited amount along with a gift item.

•

Customer is eligible to open more than once account in the same branch.

•

For premature encashment, interest will be paid as per prevailing savings rate but no interest will be paid if enchased within one year.

•

In case of death, deposit will be enchased with applicable interest and paid to the nominees.

•

The account shall be governed by the terms and conditions as contained herein and shall be subject to the laws of Bangladesh as applicable from time to time the bank reserves the right to change rules as and when deemed necessary.

Loan

Advantage:

You can even avail loan up to 90% of the deposited amount.

Triple Saver Plan: MTB Triple Saver Plan offers you an one time savings scheme, which will provide you three times of your deposit after twelve and a half (12.5) years. You will receive a big amount at maturity. If you are an individual or if your institution is an NGO or an Educational institution or a Trust or Society or any other institution, you may invest your savings in this scheme with a minimum deposit of Tk. 10,000/- for twelve and a half (12.5) years with no limit for maximum amount. At maturity you will get three times of your deposited amount along with a gift item.

Terms and Conditions: The terms and conditions of Triple Saver Plan of Mutual Trust Bank are as follows•

Any individual NGO, Educational Institution, Trust, Society etc. May invest their saving in this scheme.

•

Minimum deposit would be 10,000/- taka and there is no limit for maximum amount.

•

The period of deposit for Eleven Years.

•

After maturity will get Three times of your deposited amount along with a gift item.

•

Customer is eligible to open more than once account in the same branch.

•

For premature encashment, interest will be paid as per prevailing savings rate but no interest will be paid if enchased within one year.

•

In case of death, deposit will be enchased with applicable interest and paid to the nominees.

•

The account shall be governed by the terms and conditions as contained herein and shall be subject to the laws of Bangladesh as applicable from time to time. The bank reserves the right to change rules as and when deemed necessary.

Loan Advantage:

The customer can avail loan up to 90% of the deposited amount but minimum amount loan amount against this plan will be Tk. 25,000/-.

Millionaires Plan: Millionaire Plan is a monthly savings plan, which is designed to make you a millionaire in a few years. If you are an individual or if your institution is an NGO or an Educational institution or a Trust or Society or any other institution, you may invest your savings in this scheme for 6/8/10/12/15/20 years with different installment sizes.

maturity

you

will

get

Tk.

10,

00,000/-.

Savings period can be 8/10/12/15/20.

Monthly installment should be paid within first 10 days of the month.

Terms and Conditions: The terms and conditions of Millionaires Plan of Mutual Trust Bank are as follows•

Any individual NGO, Educational Institution, Trust, Society etc. May invest their saving in this scheme.

•

Maximum deposit amount would be 10, 00,000/- taka and there is no limit for Minimum amount.

•

Before 20 date every month installment amount will be deducted customer saving account as per consultation.

•

The period of deposit for 8/10/12/15/20 Years.

•

After maturity will get Three times of your deposited amount along with a gift item.

•

Customer is eligible to open more than once account in the same branch.

•

For premature encashment, interest will be paid as per prevailing savings rate but no interest will be paid if enchased within one year.

•

In case of death, deposit will be enchased with applicable interest and paid to the nominees.

•

Loan and Advantage:

You can even avail loan up to 90% of the deposited amount after 1(one year).

Unique Savings Plan: Unique Savings Plan is any day, any amount savings plan. The beauty of this plan is that a customer can deposit any day, any time and any amount. Unique Savings Plan offers you to deposit any amount of your choice but not less than Tk. 500/- for 3/4/5 years. This is a high income plan with withdrawal facilities. The withdrawal facility will help you at the time of any emergency. You can withdraw 50% of the deposited balance for once a month. At maturity you will get a handsome amount.

Terms and Conditions: The terms and conditions of Millionaires Plan of Mutual Trust Bank are as follows•

Minimum deposit would be 500/- taka and there is no limit for maximum amount.

•

Customer can deposited to his account any days at any amount taka.

•

The period of deposit for 3/4/5Years.

•

The customer get interest on daily of his deposited amount and interest rate will be higher than saving rate above 2%.

•

Customer can withdraw any amount taka from this account (maximum deposited amount 50%). But only one time in a month.

•

For premature encashment, interest will be paid as per prevailing savings rate.

•

In case of death, deposit will be enchased with applicable interest and paid to the nominees.

•

OBC Collection: Actually OBC comes from the outside bank's branch, or Inter branches. Suppose Sonali Bank, Comilla Branch sent a cheque, no-0134000358, Tk.700000/ to Mutual Trust Bank, against Sonali Bank, Dhanmondi Branch. So, this cheque could be an OBC. Now what Mutual Trust Bank has to do? Mutual Trust bank tries to collect this cheque through

Bangladesh Bank Clearing House, and credited clients account. OBC means Outward Bill Collection.

REMITTANCE: Pay Order: The Pay Order is an instrument used as an alternative of physical cash. It has some especial features. Those are – •

It's an order to pay the account mention on the pay order block.

•

The issuing branch with make the payment.

•

Pay order must be account pay.

Issuing A Pay Order: The issuance of a pay order follows the following steps The party will fill up the pay order form containing the favoring name, amount in words and in figure, applicants name, address and signature, date. •

An authorized officer will fill up the commission voucher attached to the pay order form.

•

The party will deposit the amount of the pay order along with the commission.

•

An officer will prepare a pay order block then. The block has three parts. On for the bank and the remaining parts belong to the applicant. The beneficiaries name, amount, applicants name will be written on the smaller two parts. The main block will contain death. Beneficiaries’ name, amount in words and in figure.

•

Signature of two P.A holders will be given on the pay order bloc.

•

Not over Tk. - will be written on the main block.

•

The applicant will receive the signing on the back side of the office portion.

Payment of Pay Order: The payment of pay order is happened through clearing or transfer.

Pay Slip:

A pay slip is known as bankers' cheque. It is used only for bank purpose. It has some special features also. Those are •

Revenue stamp worth Tk. 4/- is required in case of payment.

•

There is no commission for issuing a pay slip.

•

Bank is the maker of the pay slip.

•

It is issuing and payment process is all the same as pay order.

•

It has two parts; one part belongs to the payee and the other to the bank.

Pay Order Form collects from the customer service desk or from the front desk, after that the valued client's fill up the form and pay the money in the cash with pay order commission.

CHEQUEBOOK ISSUE: The steps of issuing a new cheque book for both savings account and current account has given below •

An account holder will Till the cheque requisition slip and will submit.

•

An authorized officer will match the specimen signature on the requisition slip to the signature on the S. S. Card.

•

The computer operator will cheque whether all the leaves of the previous cheque book has been used or not.

•

If in both cases the answer is positive then the officer can issue a cheque book.

•

The officer will take a new cheque book; seal the account number on every page, a round seal of the branch will be given on the requisition slip of the new cheque book.

•

The issuing date and name of the account holder will also be retaining on the requisition slip of the new cheque book.

•

Entry will be given in a cheque book issuing register. The register contains the information as issuing date, range of serial of the cheques leaves, account number, name of the account, signature of the account holder or authorized person attested by the account holder and a P.A. holder’s signature.

•

The range of new cheque book serial will also be written on the submitting requisition slip.

•

Three initials will be given on the leaves of the new cheque books by three authorized officer.

•

The holder of the requisition slip will sign on the register and received the new cheque book.

•

The new series will be posted on the computer against that account.

Shutting of Account: Account will be closed on the parties' advice, if they want to close any one of the account clients must have to submit an account closing letter through des pass. Then the Sr.Principal Officer checks it out and closes the account. Brick By Brick account is very easily closing if one of the client's did not pay his/her monthly installment at the bank three one after one, in this way three months later brick by brick account will be closed automatically.

CLEARING DEPARTMENT: CLEARING-OUTWARD AND INWARD: There are two models of transaction in a bank. Clearing is one of them. Other model of transactions is transfer.

Clearing House: In Bangladesh bank, there is a very large room, which contains fifty (50) or more tables for each bank that is called the clearing house. All the scheduled banks are the members of clearing house of Bangladesh bank.

Clearing Instruments: The following instruments are bringing brought to the clearing house. These are – (A) Cheques (B) Demand Draft (C) Pay Order (D) Pay Slip (E) Security Deposit Slip (F) Treasury Bill (G) Dividend Warrant (H) Debenture.

CLEARING ACTIVITIES AT BRANCHES: The clearing activities at branches are of two kinds: 1) Outward Clearing and 2) Inward Clearing. When parties of a branch place Cheque and other instruments of other banks, the collection of these Cheque and instruments through clearing process is known as Outward Clearing for that branch. When Cheque of a branch come for collection through clearing process is known as Inward Clearing.

NATURE OF CLEARING HOUSE: 1st Clearing House Return Clearing House

CLEARINGS HOUSE PROCESS: Each bank has an officer of clearing house, which work with Bangladesh bank clearing house. Actually most of major client deposit their account in different kinds of bank cheques. Clearing officer check all the cheques and deposit slip very ca re fully and then he received the cheque. After that the clearing officer deposits all the cheques in computer software, which is recognized through Bangladesh bank computer department. Then clearing officer seal all the cheques in advance date after that the officer endorsement all the cheques and sign all the cheques. All the cheques are posted in the computer by branch wise, then officer print the entire document and staple all the cheques by branch wise, this is called schedule of clearing house. It is a very difficult job to staple all the cheques, because sometimes the cheques are hung in quantity, it may be 250 to 400, this is very vital job because every cheque must have to be staple very carefully, it means cheque amount and the print sheet amount and cheque branch must have to be same. If the cheques staple in wrong direction, the cheque may be return from another bank, that's why MTBL not to be able to credited party account.

Then the clearing house officer copying the entire document in two floppy disk as per Bangladesh bank requirement. When the clearing officers enter the clearing house, his first job is that the floppy delivered to the Bangladesh bank computer department. All of the procedure the clearing in cheque / officer goes to the Bangladesh bank clearing house before 10 a.m in the morning. There the clearing officer check all the banks cheque and the he put all the cheques in bank wise, like as this another banks delivered there cheques in MTBL desk. Then the officers of MTBL have to calculate all the cheques by using calculator machine, staple pin remover, and then he delivered cheques as MTBL branch wise.

RETURN CLEARING HOUSE: Return clearinghouse is called the counter part of first clearing house. After first clearing house some of the inward cheques may be outward and some of the outward cheques may be inward. This type of exchange is called return cheque.

Transfer Delivery - Outward and Inward: Transfer is not a serious part in banking but it is very important Transfer plays a vital role in banking sector. So now we have to know what transfer is. â&#x20AC;˘

Mainly transfer is a type of register sustaining matter. In this register officer write down every day transaction in debit and credit side then the officer calculate both the side of the register if both side show same amount, It means that the total day's transaction is absolutely acceptable

â&#x20AC;˘

The process of collection of cheques and other instruments from branch to branch of a bank is known as transfer delivery.

PREPARING INSTRUEMENTS FOR TRANSFER DELIVERY: (1) The branch receives the instruments through deposit slip. (2) All the essentials of instruments are then checked. (3) Entry is given in outward register. (4) The cheque with a schedule is sent to the drawer branch by courier / attendant

RESPONDING THE INSTRUMENTS THROUGH TRANSFER DELIVERY: (1) The responding branch will collect the instrument from the messenger. (2) Entry in inward register. (3) If the instrument is honored then responding branch will send an IBCA.

CREDIT AND ADVANCE: The profit of a commercial Bank depends primarily on the utilization of its fund. But bank can not lend its fund fully. As per Banking Company Act 1991 every banking company has to maintain a specified minimum (presently 16%) of the total of its demand and time liabilities in the form of cash and approved securities with Bangladesh Bank. This percentage or ratio is termed Statutory Liquid Ratio. Farther every scheduled Bank has to maintain with Bangladesh Bank an average daily balance, the amount of which has not to be less than a particular percentage (presently 4%) of the total of its demand and time liabilities. As such Commercial Bank generally goes for short - term finance although small portions of its total deposit are invested as long term lending. Commercial banks allow different forms advance.

NATURE OF MTBL LOAN AND ADVANCE: There are various types of Loan and advance in Mutual Trust bank Ltd, These are as follows: •

Cash Credit

•

Cash Credit (Pledge)

•

Cash Credit (Hypo)

•

LTR

•

Term Loan

•

Lease Financing.

•

SOD

•

Others.

CASH CREDIT: Cash credits or continuing credits are those that form continuous debits and credits up to a limit and have an expiration date. A service charge that in effect an interest charge is normally made as a percentage of the value of purchases. These credits may be of the nature of pledged and / or hypothecated and banks should report these in separate heads incorporated under the main head cash credit. A detailed explanation of pledge and hypothecation is given below:

CASH CREDIT AGAINST PLEDGE: Under this arrangement a cash credit is sanctioned against pledge of goods or raw materials. By signing the letter of pledge, the borrower surrenders the physical possession of the goods under the Banks effective control as security for payment of Banks dues. The ownership of the goods, however, remains with the borrower. The pledge creates an implied lien in favor of the Bank on the underlying merchandise. In the event of failure of the borrower to honor his commitment the Bank can sell the goods for recovery of the advance. No collateral security is normally asked for grant of such credit.

CASH CREDIT AGAINST HYPOTHECATION: Under this arrangement a credit is sanctioned against hypothecation of the raw materials or finished goods. The letter of hypothecation creates a charge against the goods in favor of the Bank but neither the ownership nor its possession is passed on to it; only a write or interest in the goods is created in favor of the Bank and the borrower binds himself to give possession of the goods to the Bank when called upon to do so. When the possession is handed over, the charge is converted into pledge. This type of facility is generally given to the reputed borrowers of undoubted integrity.

LOANS AGAINST TRUST AND RECEIPTS (LTR): This is a loan facility up to a satisfactory limit to the traders / customers by a Bank against security of the value of the imported merchandise. This item also includes loan against Trust Receipts.

TERM LOAN: A Bank advance for a specific period repaid with interest under fixed schedules. The term loans may be as followsShore Term: Up to and including 12 months. Medium Term: More than 12 months up to and including 60 months. Long Term: More than 60 months. (This items includes lease financing)

LEASE FINANCING: An entrepreneur, under this Scheme, may avail of the lease facilities to procure industrial machinery (without having to purchase it by down payment) with easy repayment schedule. The clients also get special rebate in their income- tax payment under the scheme.

SECURED OF OVER DRAFTS (SOD): A loan facility on a customer's current account at a Bank permitting him to over draw up to a certain agreed limit for an agreed period. The terms of the loan are normally that it is repayable on demand or at the expiration date of the agreement.

OTHERS: Any loan that does not fall in any of the above facilities is considered as "other". Blocked / Segregated continuing credits (pledge, Hypothecation or Overdraft) when re - scheduled by the banks for payments over a number of periods should also be reported against the head "other".

SME FINANCE: SME means Small Medium Enterprise. Nature of SME’s are described below: •

Consumer Loan

•

Small Business Loan

•

Home Loan Scheme

•

Home Repair Loan

•

Auto Loan Scheme

CONSUMER LOAN: In order to make a significant contribution in the living standards of the people of medium and low income category, Mutual Trust Bank has introduced a scheme called "Consumer Loan Scheme". With a view to materialize the dreams of those who are unable to make one time investment from their own savings, one can now afford to buy necessary household equipments and thus improve the standard of living. All sorts of household durables e.g. Television, Refrigerators, Computers, Air Conditioners, Video Cameras, Washing/ Drying Machines and Furniture’s are allowed under this scheme. One can buy Motorcycle too under this programmed the collateral security is minimum and the interest rates are one of the lowest in the market.

SMALL BUSINESS LOAN: With the objective of extending financial support to small businessmen, this loan scheme has been introduced. It has been designed to get business loans on easy terms and without any hassle. Only the genuine businessmen having entrepreneurship quality and honesty to run and

expand their business smoothly. Maximum loan under the scheme will be up to Tk. 50 lac. No collateral security is required up to Tk. 5 lac. Collateral security is required for loan above 5 lac.

HOME LOAN SCHEME: Home Loan Scheme has been introduced to facilitate people to fulfill their dream of a home of their own. It has been designed o help people to get home loans on easy terms and without any hassle. Loan amount under this scheme is maximum Tk. 50 lac. Salaried executives, professionals, businessmen and govt. officials are eligible to avail this loan scheme. The loan is to be repaid by monthly equal installments including interest within the period ranging from 5 years to 15 years depending on the size of loan.

HOME REPAIR LOAN: Home Repair/ Renovation Loan Scheme has been designed with a view to help the owners of house/ building/ flat to mitigate their financial need for repair/ renovation of their house/ building/ flat. Only the genuine residential house owners will be eligible to avail the loan facilities to repair or renovate their own house/ building/ flats according to their needs. Maximum loan under the scheme will be up to Tk. 5.00 lac commensuration the monthly income. The loan is to be repaid by monthly equal installments including interest within maximum 60 months.

AUTO LOAN SCHEME: To own a car is everyone's dream as well as a part of today's living, which enhances standard and quality of life. Auto Loan scheme has been designed to help materialize your long cherished dream of a car of your own. Purchases of new/ reconditioned cars are allowed under this scheme. Salaried executives, professionals, businessmen, govt. officials or self employed persons are eligible to avail this loan. Loan amount under this scheme is 70% of car value but maximum of Tk. 20 lac.

CREDIT POLICY OF BANGLADESH BANK: Bangladesh Bank as the central bank of the country is entrusted with maintaining price stability of the country pursuing proper monitory policy. Monitory policy vis - a - vis

controlling money supply of the economy is pursued through open market operation viz. purchase and sale of Bills and Securities and movement of Bank rate of Bangladesh Bank. Money supply can be monitored through expansion and reduction of credit through commercial banking operation. Economic development of a country largely depends on expansion of industrial sector and growth of exports that in turn and depends mostly on credit expansion. Since expansion of credit increases money supply Bangladesh Bank has to pursue and optional credit flow in order to keep the inflation within desired range to ensure price stability Vis - a - Vis economic growth of the country. At present Bangladesh Bank is pursuing a policy of moderate credit expansion. Following this policy, emphasis is given to ensure flow of credit to private sector since GOB has adapted a policy of export led growth through private sector. With globalization, Bangladesh Bank has withdrawn all interest bands on deposit and has given complete freedom to banks to set their own interest on lending. To ensure smooth credit flow Bangladesh Bank puts emphasis on stability of financial sector. On the contrary, Bangladesh Banks monitors its credit policy through introduction of stringent rules and regulations etc. Enactment of Bank Company Act, phase - wise program for classification of loans and advances and provisioning thereof, exercising Lending Risk Analysis (LRA) large loan monitoring cell and Credit Information Bureau (CIB) are The tools to control credit policy. All these help Bangladesh Bank to supervise its credit policy, which in turn help them to strengthen financial sector discipline as a whole.

SUPERVISION, CONTROL OF ADVANCES: Branch Managers are expected to exercise common sense and proper care in a handling advance weather sanctioned by them or any other appropriate authority. Effective control of the advances depends upon their knowledge of the customer and proper handling of securities charged by the bank. The Branch Manager is the corner stone of the bank and the success of the banks depends to a large extent on him. His duty is two - fold. In th3e first place he represents his bank and its management to the local public, and of equal importance he represents his local public to the management. The way in which he discharges the two functions makes him either a successful or is unsuccessful Branch Manager. The best way in which the Branch Manager can discharge his obligation is to conduct its loaning policy in a safe and conservative way and to control advances judiciously to save the bank from falling into losses.

INSPECTION AND VERIFICATION: Inspection of the securities and verifications of the documents are to be done regularly. If any irregularity is found, immediate step is to be taken for regularization or rectification of the same with intimation to Head Office / Regional Office:

COMMON COMPULSORY DOCUMENTS: Latter of Acceptance about the terms and conditions laid down in sanction advice. D. P. note (depending on the types of borrowers). Latter of arrangement. There are other documents that are to be obtained depending on the types of advance. Such as: In case of loan: If the clients want to get loan then this types of documents will be required(a) Latter of Disbursement. (b) Latter of Authority (if required). (c) Latter of Hypothecation (when goods are hypothecated as security). (d) Insurance Policy (if required). (e) Any other documents as stated in sanction advice. In case of Overdraft: If the clients want to get Over Draft then this types of documents will be required(a) Latter of Continuity. (b) Latter of Authority (if required). ÂŠ Latter of Hypothecation (When goods are hypothecated). (d) Insurance Policy (if required). (e) Any other documents as stated in sanction advice. In case of cash credit: If the clients want to get Cash Credit then this types of documents will be required(a) Latter of Continuity. (b) Latter of Authority (if required). (c) Latter of Pledge / Hypothecation. (d) Insurance Policy under Bank's Mortgage clause. (e) Latter of Disbursement in case of renewed go down.

(f) Any other documents as started in sanction advice.

ADVANCE AGAINST LIEN OF ADR / INSURANCE POLICY etc: If the clients want to get Advance against lien of ADR, then these types of documents will be required(a) Latter of lien (1st party / 3rd party). (b) Latter of Authority (if required). (c) Any other documents as stated in sanction advice.

Legal Mortgage: (a) Mortgage deed (certified copy). (b) Registration received original. (c) Chain of documents for title (original if available). (d) C. S, S. A and R. S parcha. (e) Up to date Rent received. (f) Non - encumbrance certificate. (g) Power of Attorney (if asked for). (h) Legal opinion. (i) Valuation certificate. (j) Location plan etc. / site plan.

Equitable Mortgage: (a) Chain of original documents for title. (b) Original title deed. â&#x201A;Ź (c) C.S, S.A and RS parcha. (d) Up to date rent receipt. (e) Memorandum of deposit of title deed. (f) Registered power of Attorney. (g)Legal opinion. (h) Valuation certificate. (i) Location plan etc.

MISCELLANEOUS: It would be ensured that an advance does not contravene any provision of law, a directive of the Bangladesh Bank or the lending policy lay down by the Head Office.

STARTING CONVERSATIONS OF ACCOUNTS: Accounts department is play most vital role in everyday banking. Every bank has an accounts department in there banking sector. MTBL Gulshan branch accounts department in Charge:

Mr.Kamrul Hasan (Having 5 years of experience in banking sector). Others officers are Mr. Sulaiman Zahedi and Mr. Ariful Isam. These entire executives help me a lot in my internship program at Mutual Trust Bank Limited. They didn't guide me as an Internee; they guide me, as a training officer of MTBL to gather is practical knowledge about banking. They tried their best to inform me everything about accounts department. The hope knew everything that they gave me as a new comer in banking sector. A detail of some important statements / reports prepared by the accounts division are explained below:

TRANSACTION POSTING SUMMARY: The name itself says that this is the summarized posting of something. Actually, this statement represents the posting of all those accounts on a certain date, which are in transaction. That means those accounts in which no transaction occurs are not included here. In this statement all those particulars viz. account type, number of voucher (Dr. / Cr.) and amount (Dr. /Cr.) all these are included.

DAILY POSTING LISTING: These are the statement of balancing posting of all those account, which are in transaction like the transaction posting summary. The most vital point of this statement is the balance of the accounts. The difference daily posting listing and transaction posting summary is that in daily posting listing the details of the accounts are depicted but in the transaction posting summary only the number of transaction of different accounts are listed. For example, the type of account (viz. CD, SB, STD etc), account number, name of account holder, interest rate, balance (Dr./C'r.) of the account, last movement date, status of the accounts all these particulars are described in the daily posting listing.

TRANSACTION AUDIT TRIAL: Unlike the daily position listing in transaction audit trail the breakdown of the transaction balance are shown. For example, has a balance of Tk. 3,000/- in his account. In a certain day Mr. X has drawn Tk, 1,000/- from his account and deposited in his account Tk. 500/- in this case the daily position listing will show only the balance of Tk. 3,500/- but the transaction audit trial will show all the details of Dr. and Cr. of the account The particular of this

statement are account type, account number, name of the account holder, date, transaction type, reference, cheque number, amount (Dr. /Cr.) Tracer number and used ID number.

SUPPLEMENTARY CHEACKING: The most usual and frequent item of account division is these supplementary sheet In different head of accounts, all the vouchers of the branch are listed and the vouchers physically are attached with this statement After completing the transaction at the end of the day, this statement is prepared to verify the genuineness of computer posting. The computer tracer number of the voucher (Dr. /Cr.) Account number, name of the account holder, medium of transactions ( cash, clearing, transfer) and amount all these are included. Debit and Credit side must be same. Otherwise balance will not be accepted. In order to clear up the total balance bank follow this supplementary procedures.

EXTRACT: It is done for reconciliation purpose of the head office. It includes those transactions foe, which MTB General Accounts are maintained with head office. Generally, inter branch transactions are included here. These forms are sent to the head office for reconciliation. Extract bears the information regarding inter- branch transactions.

Extract is of Two Types: i) Extract of Originating Entries of MTB General Account. ii) Extract of Responding Entries of MTB General Account. •

In case of originating IBCA MTB General A/C is credited, and in cash of originating IBCA MTB general account is debited.

•

In case of no transaction a nil extract to be sent invariableDebit figure is written before writing CR figures.

•

Main copy of extract with statement of affairs is sent to HO and the carbon copy is kept as office copy.

•

The difference between opening and closing balance is the MTB General figures of Affairs. It is done daily.

WEEKLY POSITION STATEMENT: As the name implies, at the end of the week this statement is prepared. If Thursday is a public holiday under the Negotiable Instrument Act, 1881 the preceding working day shall be

treated as weekend. This statement shows the list of all assets and liabilities in the horizontal form. Even the cash denomination at the weekend is also included.

QUARTERLY POSITION STATEMENT: All the statements of Monthly Position are needed to send in the Position and the following are also required:

SBS: The mail copy of the statement with a forwarding letter and statement of affairs is sent to head office after talking the signatures of authorized officers; carbon copy is kept as office copy.

HALF YEARLY POSITION STATEMENT: Most of statements of Quarterly Position along with the following statement are sent to Head Office: •

Statement showing data on Deposits lending and Borrowing of the Half Year End.

•

Half Year statement of Furniture & Fixture, Machine & Equipment and Vehicles.

YEARLY CLOSING STATEMENT: Most of the statements of Half Year position along with the following statement have to prepare for Head Office: •

Statement of After Closing.

•

Statement of cash in Hand.

•

Statement of Reconciliation with Bank.

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Statement of Stock of Stationary.

•

Statement of Stamp in Hand.

•

Statement of Adj. A / C DR & CR.

•

Statement of Prize Bond.

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Statement of Suspense A/C clearing Adjustment

•

Statement of Exp. A/C Rents and Taxes for the Year Ended.

STATEMENT OF ACCOUNTS: This statement shows the total transactions that have been occurred in a particular account. The amount, which has been debited and credited, showed in detail in this statement.

SWOT ANALYSIS:

SWOT is an acronym for the interval strength and weakness of a firm and the environment opportunities and threats facing that firm. SWOT analysis is an easy technique through which managers create quite overview of companyâ&#x20AC;&#x2122;s strategic situation. It based on the assumption that an effective strategy drives from a sound fit between firmsâ&#x20AC;&#x2122; internal capabilities (strength and weakness) and its external situation (opportunities and threats). A good fit maximizes a firmâ&#x20AC;&#x2122;s strengths and opportunities and minimizes its weakness and threats.

STRENGTH: Strength is a resource skill or other advantage relative to competitors and the needs of the markets a firm serves or expects to serve.

Top management: The top management of the bank is also a major strength for the Mutual Trust Bank Ltd and contributed heavily towards the growth and development of the bank. The top management officials al have reputed of banking experience, skill and expertise.

Marketing Comparing: Mautual Trust Banl Ltd earned a reputation in the banking sector for establishing impressive branches the Gulshan Branch and Dhanmondi Branch are worth mentioning. This has created a positive image in the mind of the potential customers. This also an indirect marketing campaign for the bank attracts the customers. The Gulshan branch is comparable with foreign Banks. It is located at a Commercial area where business organizations are expected to come very rapidly.

Team Work: At Mutual Trust Bank Ltd (Gulshan Branch) mid level and lower level management there are often team work. Many jobs are performed in groups of two or three in order to reduce the workload and enhance the process of completion of the job.

Company Republication: Mutual Trust Bank Ltd has already earned reputation in banking industry of the country particularly among the new comers, within a period of four and half years. Mutual Trust Bank Ltd has already established affirm toting in the banking sector having tremendous growth in the profit and deposits. Al these have led to earn a reputation its banking field.

Sponsors:

Mutual Trust Bank Ltd has been founded firmed by eminent entrepreneurs of the country having adequate financial strength. The sponsors’ directors belongs large banker and industrial Conglomerate of the country. Mr. Samson H. Chowdhury , Chairman of the bank, is an eminent personality of the country who has earned an impeccable reputation for his integrity, business competency and unparallel leadership qualities. The founder Square Group, Mr. Samson H. Chowdhury has already created in edible impression in the banking sector as Director of Bangladesh Bank, krishi Bank and Sonali Bank.

WEAKNESS: Weakness is a limitation or deficiency in resource skill or capabilities that seriously impedes a firm’s effective performance. Mutual Trust Bank Ltd’s weaknesses are as follows:

Advertising and Promotion: This is major set bank for Mutual Trust Bank Ltd and one of its weakest points. Mutual Trust Bank Ltd does not pursue an aggressive marketing comparing. It is not in the limelight like other banks expecting the neon sign at formicate querbridge, Mutual Trust Bank Ltd does not have been seem to have display boards.

Limitation in Flora Bank: Flora Bank is not comprehensive banking software. It is desirable that a more comprehensive banking system should replace Flora Banking System.

Disguised Employment: Currently there are “Trombone heads but few hands”. And this is related to the problem of reference appointment. There are people who only drawing salaries at the end of the month but making at minimum contribution towards the organization. On the other hand there are who work hard but are not appreciated accordingly.

OPPORTUNITY: Credit Cards and Tele Banking: There is the new retail banking services provided by the foreign Banks. Mutual Trust Bank Ltd can evaluate the option of launching Credit Cards and Tele Banking System.

On-line Banking: Mutual Trust Bank Ltd should move towards the online banking operations. It is high time to go for them because some banks are already in to online banking operation.

Diversification: Mutual Trust Bank Ltd can pursue a diversification strategy in expanding its current line of business. The management considers options of starting merchant banking or diversifies into leasing and insurance business by expending business portfolio; Mutual Trust Bank Ltd can reduce business risk.

THREATS: Contemporary Banks: The Contemporary banks of Mutual Trust Bank Ltd like Dhaka Bank, Dutch Bangla Banks, Prime Bank, Southeast Banks are its major rivals. They are carrying out aggressive comparing to lucrative corporate clients as well as long time depositors. Mutual Trust Bank Ltd should require vigilant absence the step taken by these banks, as these will in turn affect Mutual Trust Bank Ltd Strategies.

Multinational Bank: The rapid expansion of multinational bank poses a poetical threat to the new private commercial Banks. Due to the booming energy sector, more foreign banks are expected to operate in Bangladesh. Since the foreign have tremendous financial strength, it will pose threat to local banks to certain extent in term of grabbing the lucrative clients.

Upcoming Bank: The upcoming private local banks can also pose a threat to the existing OPCBâ&#x20AC;&#x2122;s. It is the expected that in the net few year. Mare of the local private banks may emerge. If that happens the intensity of competition will rise further and banks will have to develop strategies to complete the fairing banks.

RECOMMENDATION The challenges I have faced: First of all, as did not have any working experience, so have face some challenges in this new corporate life. The did not intimate with the corporate environment. So at first, was so confused how to behave and how to work in the office and what is their rules and regulations. Secondly, banking job is very sensitive. All the bankers want to secret their information. So information collection was also a big challenge for me. In addition to that as do not have any working experience, so could not do any critical or sophisticated work. Identified problems in General Banking and Clearing departments Of MTB Gulshan Branch and my proposed solutions

Manpower: Due to insufficient manpower, customers wait long times in the front desk. It hampers on customer service. Insufficient and inexperienced manpower create an extra pressure in banking. MTB Gulshan Branch has very little workforce. If one goes to leave, then it crates pressure for others. MTB should recruit more experience employees and they should train up their employees.

Problems in Decision Making: Manager gives all the decision. Sometimes he goes outside for official reasons. In that situation banker cannot takes any quick action. They should give some authorities an advance instruction to the operation level employees as they can make decision quickly.

Account statement: Customers often complain about in the issue of bank statement. Sometimes they donâ&#x20AC;&#x2122;t receive statements. Bank should provide bank statement of every 3 months in free of cost. They have to send it to customers address.

Delay in Getting Thanks Letter: Sometimes customers can not get thanks letter or they donâ&#x20AC;&#x2122;t get it on time due to bad courier service. MTB need to use good courier service. They should collect the clients address information carefully.

Fees and Charges: Sometimes customers complain for high fees and charges. Banker sometimes mistakes in cutting charges. Bank should cut reasonable amount of fees and charges against their service.

Keeping Documents: In the rash hour of working day, bankers deal with different customers. Sometimes bankers lose many important documents as they cannot give more attention. In that situation documents keeping in safe position create a problem.

Manual Signature Process: Cheque books, Pay order all things issue becomes time consuming as banker needs to take signature in 3 or 4 place by the bankers and manager. Bank must be become more automated. Signature system should also be fast and automated like foreign banks.

Mismatch of Signature: Sometimes the signature of clients doesnâ&#x20AC;&#x2122;t match with the signature which is given to the check.The suggestion is to use finger print instead of signature.

CONCLUSION Mutual Trust Bank is one of the third generation Banking service providers, but their employees are needed to prompt service provider. Day by day Mutual Trust Bank is going upward. We strongly believe that Banking services, marketing are different from goods marketing in a significant way. It involves totally different strategy and tractics. The Mutual Trust Bank Ltd. has been trying to operate its business in Bangladesh since 24 th October 1999.) Mutual Trust Bank has given an opportunity to doing internship at Mutual Trust Bank Gulshan Branch for three months. In this three months internship period have gather all the practical knowledge about banking, actually had completed bachelor of business administration (major in Accounting) from Stamford University Bangladesh and wanted to do my internee at banking side. MTBL has given the opportunity to do this. Now can honestly saying that all of the respected senior executives and officers tried their best to inform everything about banking and hope knew that entire thing which is very much needed for any internee student. This practical knowledge helps me lot to know about banking. That's why interested to join in a bank, as a banker through Mutual Trust Bank Limited. In this practical period got all the necessary information from my senior executives and officers. hope able to join in banking

sector as a banker, because MTBL has given me all that knowledge which is very much important for a banker. In this three months internship period, The did work with the general banking, Foreign Exchange department, clearing department and loan and advance department, in four different areas of the banking .1 knew and informed all the important information about MTBL, actually here did not found any type of lack. But bank is completely depending on Bangladesh Bank, sometimes peoples are fall in too much trouble, but that was the Bangladesh Bank circulation, rules, regulation and obligations. Without this lack did not find any short of lack. Hope if will join any one of the banks of Bangladesh, the did not have to need the training for knowing what is banking? So now my personal realization is that the respected executives and the officers of Mutual Trust Bank Limited are very much qualified, having huge experience and helpful for all together. MTBL Management did not treat as an internee, always they teach me as a student, as a friend. Any ways MTBL really gave lot of knowledge about banking. So, my special thanks go to the entire respected senior executive and the officers of MTBL for co- operate in three months internship.

ACRONYMS A/C

Account

Authorized Dealer

B/L

Bill of Lading

Bangladesh Bank

BOE

Bill of exchange

Foreign Currency

FDD

Foreign Demand Draft

FOB

Free On Board

HS Code

Harmonized system of coding

IBC

Inward Bills for Collection

IBCA

Inter Branch Credit Advice

IBDA

Inter Branch Debit Advice

IMP

Import Form

IRC

Import Registration Certificate

L/C

Letter of Credit

LCAF

Letter of Credit Authorization Form

OBC

Outward Bills for Collection

CCI & E

Chief Controller of Import & Export

CFR

Cost & Freight

CIB

Credit Information Bureau

CIF

Cost Insurance & Freight

Demand Draft

DP Note

Demand Promissory Note

EPB

Export Promotion Bureau

EXP

Export Form

Payment Order

PSI

Pre Shipment Inspection

PAD

Payment against Document

SWIFT

Society for Worldwide Inter bank Financial TC

Travelers Cheque

TIN

Tax Identification Number

Truck Receipt

Telegraphic Transfer

STD

Short Term Deposit

FDR

Fixed deposit receipt

Cash Credit

SOD

Secured Of Over Drafts

C&F

Clearing & Forwarding

CRF

Clean Report Findings

General Banking

MTB

Mutual Trust Bank

Branch Manager

SVP

Senior Vice President

Junior Officer

BIBLIOGRAPHY Basically Bibliography means to write down some books, Web sites & other that help for doing this report but here I tried to write down my practical knowledge that I acquired from this bank during my three months internship program. Moreover, I took help from the following papers;  Bank and Financing position of Bangladesh for the year 2008-2009, published by Ministry of Finance, People Republic of Bangladesh.  Annual report of 2008 Mutual Trust Bank Ltd.  Scheduled Bank Statistics, Bangladesh Bank, Various issues.  Bangladesh Bank, Annual Report, various issues.  Different types of Internship Report and Thesis Papers.  Web site of Mutual Trust Bank ltd.  Practical Baking Advance, H.L.Bed & V.K.Hardicar, Latest edition.