View with images and charts Over view of BASIC Bank Limited (Uttara Branch)
1.1# Background Of The BASIC Bank: The BASIC Bank Limited (Bangladesh Small Industries & Commerce Limited) registered under the Companies Act 1913 on the 2nd of August 1988, started its operations from the 21 st of January 1989. It is governed by the Banking Companies Act 1991. In 2001 the bank has changed its earlier name Bank of Small Industries and Commerce Bangladesh Limited and the changed name has been registered with the Register of Joint Stock Companies. At the outset, the Bank started as a joint venture enterprise of the Bangladesh Credit Commerce (BCC) foundation with 70 percent shares and Government of Bangladesh (GOB) with the remaining 30 percent shares. The BCC Foundation being non functional following the closure of the BCCI, the Government of Bangladesh took over 100 percent ownership of the Bank on 4th June 1992. Thus the bank is state-owned. However, the Bank is not nationalized; it operates like a private bank as before. The bank was established as the policy makers of the country felt the urgency for a bank in the private sector for financing Small scale Industries (SSI). BASIC is unique in its objectives. It is a blend of development and Commercial Banks. The memorandum and Articles of Association of the Band stipulate that 50% of Loan able funds shall be invested in Small and Cottage industries Sector. 1.2 # CAPITAL POSITION: Authorized capital : Tk. 2,000 million Paid up capital : Tk. 945 million Total Reserve and Surplus: Tk. 1,294.00 million Up to 31.12.2006 The Bank is requested to transfer 20 percent of its net profit before tax to Capital Fund as per the Banking Companies Act 1991. 1.3 # Functions: The Bank offers: a. Term loans to industries especially to small-scale enterprise. b. Full-fledged commercial banking services including collection of deposit, short-term trade finance, working capital finance in processing and manufacturing units and financing and facilitating international trade. c. Technical support to Small Scale Industries (SSIs) order to enable them to run their enterprise successfully. d. Micro-credit to the urban poor linkage with Non-Government Organizations (NGOs) with view facilitating their access to the formal financial market for mobilization of funds.
In order to perform the above tasks, BASIC works closely with the clients, the regularly authorities the shareholders (GOB), banks and other financial institution. 1.4 # Organizational Structure: To achieve its organizational goals, the Bank conducts its operations in accordance with the major policy guidelines laid down by the Board of Directors, the highest policy making body. The management looks after the day-to-day operation of the Bank. A. BOARD OF DIRECTORS: As stated earlier the government holds 100 percent ownership of the Bank. The Government of Bangladesh appoints all the Directors of the Board. The secretary of the Ministry of Industries is the Chairman of the Bank. Other Directors of the Bank are high Government and central Bank executives. The Managing Director is an ex-officio member of the Board of Directors. There are at present 7 Directors including the Managing Director. B. MANAGEMENT: The management is headed by the Managing Director. He is assisted by the Deputy Managing Director, General Managers and Departmental Heads in the Head office. BASIC is different in respect of hierarchical structure from other banks in that it is much more vertically integrated as far as reporting to the Chief executive is concerned. The Branch Managers of the Bank report direct to the Managing Director and, for functional purpose, to the Heads of Departments. Consequently, quick decision making in disposal of assess is ensured. At a Glance of BASIC Bank Limited NAME Date of incorporation Date of inauguration of operation Registered office Head Office Logo Name of the chairman of the Board Name of Managing Director Number of Branches Services provided Paid up capital Profit after tax and provision Ownership Banking software used Technology used Earnings per share E-Mail
BASIC BANK LIMITED August 2, 1988 January 21, 1989 Bana Shilpa Bhaban 73, Motijeel Commercial Area Dhaka-1000, Bangladesh. Sena Kalyan Bhaban(6th floor) 195, , Motijeel Commercial Area Dhaka-1000, Bangladesh. Mr.Dewan Zakir Hussain Mr. AKM. Sajedur Rahman 015 Deposit scheme, Credit facility and Foreign exchange services Taka 1247.40 million Taka 282.96 million Government of Bangladesh CASTLETM Member of SWIFT 22.68(2007) basicho@citechco.net
Website www.basicbanklimited.com SWIFT BKSIBDDHA015 Number of Authorized Dealer 15 Table: 1 At a Glance of BASIC Bank Limited 1.5 # ORGANOGRAM: CHAIRMAN
BOARD OF DIRECTORS MANAGING DIRECTOR
GM
International Division
GM
GM
Credit Division
DEVELOPMENT
(Audit & Inspection)
Establishment
Central Accounts
&
Industrial Credit Division
Deputy General Manager Assistant General Manager. Manager Deputy Manager Assistant Manager Senior Officer Officer Assistant Officer Figure:1 Clerical Staff:
Banking Staff Go-down Staff
Non-Clerical Staff: Messenger Staff Security Staff
Personal Division
1.6 # Activities: a. Industrial Credit: The industrial loan reflected a significant growth of 13.54 percent in the year 2007 over 2006. Total outstanding industrial loans including term and working capital stood at Taka 13,901.40 million at the end of 2007 compared to Taka 12,243.56 million of 2006. Total outstanding term loan stood at Taka 5,055.58 million as on December 31, 2007 compared to Taka 3,897.12 million in 2006 reflecting a growth of 29.72 percent. The outstanding working capital finance extended to industrial units stood at Taka 9,525.98 million at the end of the reporting period compared to Taka 8,346.44 million in 2006. Growth rate here was 14.13 percent. BASIC Bank’s exposure to small and medium industries sector accounted for 56.73 percent of the total loans and advances. During the year, a total of 187 projects were sanctioned term loan out of which 69 were new. As on 31 December 2007, 712 projects were in the portfolio of the bank. The textile sector including garments being one of the major contributors to national economy dominated the loan portfolio of the Bank. Other sectors financed include engineering; food and allied industries; chemicals, pharmaceuticals and allied industries; paper, board, printing and packaging; and other non-metallic goods, leather and jute products. Recovery rate of project loan was 89 percent. (source: Annual Report 2007, BASIC Bank Ltd.)
Figure 2: Trend of Industrial Credit b. Commercial Credit: The bank also supports development of trade, business and other commercial activities in the country. It covers the full range of services to the exporters and importers extending various facilities such as cash credit, export cash credit, packing credit, short term loans, local and foreign bills purchase facilities. As on December 31, 2007 total outstanding commercial loans stood at Taka 7,681.74 million compared to Taka 6,397.21 million in 2006.
(Source: Annual Report 2007, BASIC Bank Ltd.)
Figure 3: Trend of Commercial Credit a. Micro Credit: BASIC bank launched a Micro Credit Scheme in 1994. Micro Credit Scheme provides for the poor for generation of employment and income on a sustainable basis particularly in urban and suburban areas. The Bank follows three systems of credit delivery. These are: 1. Lending to the NGOs who lend to their members. At present there are 15 such NGOs. 2. Lending direct to the target groups or ultimate borrowers under the Bank’s own management. 3. Lending direct to the member-borrowers and NGOs providing non-financial services like group formation and monitoring and supervision on exchange for a supervision fee. At the end of 2007, total amount of Taka 680.13 million remained outstanding as against Taka 359.24 million in 2006. Recovery rate during this period remained at a satisfactory level of 100.00 percent. (Source: Annual Report 2007, BASIC Bank Ltd.)
Figure 4: Trend of Micro Credit d. Foreign Trade: The bank achieved substantial growth in both import and export in 2007. The bank handled total import business of Taka 21,266.53 million and export business of Taka 16,794.96 million in 2007. The import and export business grew by 19.45 percent and 8.61 percent respectively. Major items of exports were ready made knit & woven garments, sweater, jute & jute products, leather and leather goods, handicrafts etc. Items of import included mainly industrial raw materials, garments accessories, capital machinery, raw cotton, electronic consumer goods, chemicals, tires and tubes, reconditioned vehicles, bicycle spare parts, food items such as rice, wheat, garlic, onion, sugar, chilly and other essential commodities. (source: Annual Report 2007, BASIC Bank Ltd.)
Figure 5: Growth of Import & Export The Bank become a proud member of SWIFT (Society for Worldwide Interbank Financial Telecommunication) that would pave the way to achieving uninterrupted communication related to banking for international trade business and fund transfer.
e. Other Activities: The Bank provides services for remittance, underwriting, guarantee, public offering of shares etc. Then also provides funds to investment and leasing companies. Then Bank has recently created a venture capital fund for equity support to innovative but risky projects. 1.7# Performance at a Glance of UTTARA Branch: i)
Performance of UTTARA Branch at a glance as on January 31, 2000 Table: 2 Key Areas Total Asset Total Deposit
Amount in Lac Tk. 4891.00 4352.16 2716.36
Total Advance Import
85.32
Export Remittance inward
74.51 51.05
Remittance outward Total Income Total Expenditure Gross profit
45.59 35.67 35.06 0.61
Source: Uttara Branch, BASIC Bank Ltd. ii) Deposit of UTTARA Branch as on January 31, 2008
Table: 3
Type of Accounts Amount in LacTk. Current Deposit 174.95 Short Term Deposit 11.40 (STD) Sundry Deposit 37.80
% of Total Deposits 4.02% 0.26%
Term Deposit Savings Bank Deposits Total Deposits
0.87%
3927.72
90.25%
200.29 4352.16
4.60% 100.00%
Source: Uttara Branch, BASIC Bank Ltd.
ii)
Branch’s Foreign Exchange position as on January 31, 2008 Table: 4 Key Areas
Amount in Lac Tk.
% of total Business
Import Export Remittance Total
8885.32 D74.51 0.00 159.83
D
53.38% 46.62% 100.00%
Source: Uttara Branch, BASIC Bank Ltd. 1.8# SWOT Analysis : The SWOT analysis comprises of the organization’s internal strengths and weaknesses and external opportunities and threats. SWOT analysis helps to identify the current position of the organization. A SWOT analysis of BASIC Bank Ltd. has been done below: Strengths First-class management Initially being a specialized bank, it caters to the needs of an entire target market Low customer base ensures dedicated attention to each customer Low service charges with no hidden cost Opportunities Enlarging business by opening new branches in rural areas Innovation of new services Increasing demand for import, export and L/C through proper promotional activities Fully utilizing incentives provided to government banks Strong internal co-ordination Friendly environment
Weaknesses Heavily dependent on head office for decision making No foreign branches Most of the branches are situated in urban areas Low rate of interest on deposits Very few ATM Booths Small range of offerings Not enough promotional activities Threats Increased competition by foreign and local banks Political involvement in decision making Forecast of low growth in national economy due to adverse world economic situation and recession
Figure 6: SWOT Analysis of BASIC Bank Ltd.
Figure: 7
2.1 # Foreign Exchange : Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers cheque, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies. Bangladesh Bank issues Authorized Dealer (AD) license by observing the bank’s performance and also the customers associated with the bank for conducting foreign dealings.
Foreign Exchange
Export
Import
1. Export L/C Scrutiny 1. 2.L/CBTB advising &L/C Transfer opening 3. Acceptance of 2. Cash Incentive BTB LC 4. Payment of BTB LC 5. Export Bill Negotiation & Repatriation of Export proceed. 6. Statement, Returns & Correspondenc e related to Export.
1.
L/C Opening 2. Document 1. checking 3. L/C 2. Payment 3. (Lodgment and retirement) 4. Statement, Returns related to Import
Remittance 1.
Inward & Outward Remittanceof Local Overall supervision 2. Statement, bill negotiation Correspondence Purchase of Local Bill Returns Adjustment & of Local Bill related to Remittance
Figure: 8 Foreign Exchange Market Operation 2.2 # Export Section : Foreign Exchange Regulation Act, 1947 nobody can export by post and otherwise than by post any goods either directly or indirectly to any place outside Bangladesh, unless a declaration is furnished by the exporter to the collector of customs or to such other person as the Bangladesh Bank (BB) may specify in this behalf that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner and within a period specified by BB. 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 country's 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 BASIC Bank are readymade garment exporters. They open export L/Cs here to export their goods, which they open against the import L/Cs opened by their foreign importers. SCRUTINY AND NEGOTIATION OF EXPORT BILL Bank deals with documents not with goods. The bankers are to ascertain that the documents are strictly as per terms of L/C. Before negotiation of the export Bill the bankers are to scrutinize and examine each and every document’s with care. Negligence on that part of the bankers may result in non repatriation or delay in realization of export proceeds are incorrect documents may put the importers abroad into unnecessary troubles. The scrutiny of the Bill of Exchange (Draft) and other related documents should ensure that. The documents are presented for negotiation before the expiry of the relative credit. The amount does not exceed the amount available under the credit. All the documents stipulated in the L/C are submitted. The corrections and alteration are properly authenticated in all documents. Export documents checking: i.
General verification a) L/C restricted or not b) Exporter submitted documents before expiry date of the credit. c) Shortage of documents etc.
ii.
Particular verification: a) Each and every document should be verified with the L/C.
iii.
Cross verification: a) Verified one documents to another.
While checking the export documents following things must be taken in consideration. L/C terms:
Each and every clause in the L/C must be complied with meticulously and ensure the following: i. That the documents are not state. ii. That the documents are negotiated within the L/C validity, it a credit expire on a recognized bank holiday its life is automatically become valid up to the next works day. iii. That the documents value does not exceeds the L/C value. Draft/Bill of Exchange Draft is too examined as under. i. Draft must be dated ii. It must be made out in the name of the beneficiary’s bank or to be endorsed to the bank. iii. The negotiating bank must verity the signature of the drawer. iv. Amount must be tallied with the invoice amount. v. It must be marked as drawn under L/C No……. dated……. issued by…….Bank. Presentation of export documents for negotiation: After shipment, exporter submits the following documents to BASIC Bank for negotiation. a. b. c. d. e. f. g. h. i. j.
Bill of Exchange or Draft; Bill of Lading Invoice Insurance Policy/Certificate Certificate of origin Inspection Certificate Consular Invoice Packing List Quality Control Certificate G.S.P certificate
2.3 # Import Section : Imports are foreign goods and services purchased by consumers, firms & Governments in Bangladesh. To import, a person should be competent to be a ‘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. BASIC Bank checks the documents. The usual documents are,i. Invoice ii. Bill of lading iii. Certificate of origin iv. Packing list v. Weight list vi. Shipping advice vii. Non-negotiable copy of bill of lading viii. Bill of exchange ix. Pre-shipment inspection report x. Shipment certificate
Import Procedures: 1. Registration with CCI&E a. For engaging in international trade, every trader must be first registered with the Chief Controller of Import and Export. b. By paying specified registration fees and submitting necessary papers to the CCI&E. the trader will get IRC (Import Registration Certificate).After obtaining IRC, the person is eligible to import. 2. Purchase Contract between importers and exporter: a. Now the importer has to contact with the seller outside the country to obtain the proforma invoice / indent which describes goods. b. Indent is got through indenters a local agent of the sellers. c. After the importer accept the preformed invoice, he makes a purchase contract with the exporter declaring the terms and conditions of the import. d. Import procedure differs with different means of payment. In most cases import payment is made by the documentary letter of credit (L/C) in our country. 3. Collection of LCA form: Then the importer collects an Letter of Credit Authorization ( LCA) form BASIC Bank UTTARA Branch. 4. Opening a Letter of Credit (L/C) In international environment, buyers and sellers are often unknown to each other. So seller always seek guarantee for the payment for his goods exported. Here is the role of bank. Bank gives export guarantee that it will pay for the goods on behalf of the buyer. This guarantee is called Letter of Credit. Thus the contract between importer and exporter is given a legal shape by the banker by its ‘Letter of Credit’. a.
Parties of L/C i. Importer – Seller who applies for opening an L/C. ii. Issuing Bank – It is the bank which opens/issues a L/C on behalf of the importer. iii. Confirming Bank – It is the bank, which adds its confirmation to the credit and it, is done at the request of issuing bank. Confirming bank may or may not be advising bank. iv. Advising / Notifying Bank – is the bank through which the L/C is advised to the exporters. This bank is actually situated in exporter’s country. It may also assume the role of confirming and / or negotiating bank depending upon the condition of the credit. v. Negotiating Bank – is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank. vi. Paying / Accepting Bank – is the bank on which the bill will be drawn (as per condition of the credit). Usually it is the issuing bank. vii. Reimbursing bank – is the bank, which would reimburse the negotiating bank after getting payment – instructions from issuing bank.
b.
Application For L/C limit: Before opening L/C, importer applies for L/C limit. To have an import L/C limit, an importer submits an application to the Department of BASIC Bank Limited furnishing the following information, i. Full particulars of bank account maintained with BASIC Mirpur branch. ii. Nature of business iii. Required amount of limit iv. Payment terms and conditions v. Goods to be imported vi. Offered security vii. Repayment schedule A credit Officer scrutinizes this application and accordingly prepares a proposal (CLP) and forwards it to the Head Office Credit Committee (HOCC). The Committee, if satisfied, sanctions the limit and returns back to the branch. Thus the importer is entitled for the limit. c.
The L/C Application: After getting the importer applies to the bank to open a letter of credit on behalf of him with required papers.
i.
Documentary Credit Application Form: BASIC Bank provides a printed form for opening of L/C to the importer. This form is known as Credit Application form. A special adhesive stamp is affixed on the form. While opening, the stamp is cancelled. Usually the importer expresses his desire to open the L/C quoting the amount of margin in percentage.
ii.
Proforma Invoice: It states description of the goods including quantity, unit price etc.
iii.
The insurance cover note: The name of issuing company and the insurance number are to be mentioned on it.
iv.
The Letter of credit authorization (LCA) form: LCA form should be duly attested.
v.
The Form-IMP.
vi.
Tax Information Certificate
vii.
Forwarding for Pre-Shipment Inspection (PSI): Importer sends forwarding letter to exporter for Pre-Shipment Inspection. But all types of goods do not require PSI.
5. Securitization of L/C Application: The BASIC Bank Official scrutinizes the application in the following manner, a. The terms and conditions of the L/C must be complied with UCPDC 500 and Exchange Control & Import Trade Regulation. b. Eligibility of the goods to be imported. c. The L/C must not be opened in favor of the importer. d. Radioactivity report in case of food item. e. Survey report or certificate in case of old machinery f. Carrying vessel is not of Israel or of Serbia- Montenegro
g.
Certificate declaring that the item is in operation not more than 5 years in case of car.
Examination of shipping documents: One of the basic principles of documentary credit is that all parties deal with document and not with goods (Articles 6 of UCPDC-600). That is why the documents should be scrutinized properly. If any discrepancy in the documents is found, that is to be informed to the party. A checklist may be followed for examining the documents. 2.4# Major Discrepancies: GENERAL 1. 2. 3. 4. 5.
Late shipment Late presentation L/C expired L/C over-drawn Partial shipment or transshipment beyond L/C terms. BILL OF EXCHANGE (B/E)
1. 2. 3. 4. 5.
Amount of B/E differ with invoice. Not drawn on L/C issuing Bank. Not signed Tenor of B/E not identical with L/C. Full set not submitted. COMMERCIAL INVOICE (C/I)
1. 2. 3. 4. 5. 6.
Not issued by the Beneficiary. Not signed by the Beneficiary. Not made out in the name of the Applicant. Description, Price, quantity, seals terms of the goods not corresponds to the Credit. Not marked one fold as Original. Shipping Mark differs with B/L & Packing List. PACKING LIST
1. Gross Wt., Net Wt. & Measurement, Number of Cartoons/ Packages differs with B/L. 2. Not market one fold as Original. 3. Not signed by the Beneficiary. 4. Shipping marks differ with B/L. BILL OF LADING/ AIRWAY BILL ETC (TRANSPORT DOCUMENTS) 1. Full set of B/L not submitted. 2. B/L is not drawn or endorsed to the Order of BASIC BANK LTD. 3. “Shipped on Board”, “Freight Prepaid” or “Freight Collect” etc. notations are not marked on the B/L.
4. B/L not indicate the name and the capacity of the party i.e. carrier or master, on whose behalf the agent is signing the B/L. 5. Shipped on Board Notation not showing name of Pre-carriage vessel/intended vessel. 6. Shipped on Board Notation not showing port of loading and vessel name (In case B/L indicates a place of receipt or taking in charge different from the port of loading.) 7. Short Form B/L 8. Charter party B/L 9. Description of goods in B/L not agree with that of Invoice, B/E & P/L 10. Alterations in B/L not authenticated. 11. Loaded on Deck. 12. B/L bearing clauses or notations expressly declaring defective condition of the goods and / or the packages. OTHERS 1. N.N. Documents not forwarded to buyers or forwarded beyond L/C terms. 2. Inadequate number of Invoice, Packing List, B/L & Others submitted. 3. Short shipment Certificate not submitted. INVOICE It is to be scrutinized to ensure the following: 1. The Invoice is addressed to the Importer. 2. The full description of merchandise must be given in the invoice strictly as per L/C. 3. The price, quality, quantity, etc. must be as per L/C. 4. The Invoice must be language in the language of L/C. 5. No other charges are permissible in the Invoice beyond the stipulation on the L/C. 6. The amount of draft and Invoice must be same and within the L/C value. 7. If L/C calls for consular invoice, then the beneficiary’s invoice is not sufficient. 8. Number of Invoice will be submitted as per L/C. 9. The shipping mark and number of packing list shown in the B/L must be identical with those given in the Invoice and other documents. 10. The Invoice value must not be less than the value declared in EXP Forms. 11. Invoice amount must be correct on the basis of price, quantity as per L/C. 12. Invoice amount, indicate sale terms/ Income terms VIZ FOB, CFR, CIF etc. 13. Consular Invoice must be stamped by the local consulate/embassy of the country to which the goods are imported. OTHER DOCUMENTS Beneficiary statement, VISA/Export License issued by EPB, Certificate of Origin, Weight Certificate, Packing List, Inspection Certificate. Certificate of analysis, quality certificate, MCD duly signed and any other documents required 3….by L/C each of these certificates/documents conform to the goods invoice and are relevant to L/C.Negotiating Bank will check the above documents whether it is as per L/C
or not. If Negotiating Bank find everything in order or as per export L/C, bank will negotiate the document and will disburse the generated fund as per Banks norms. If the Negotiating Bank will find any discrepancies in the documents they will send the documents on collection or they can negotiate under reserve by the request of the exporter or they can seek permission/Negotiation authority from issuing Bank to allow Negotiating Bank to negotiate the documents despite the discrepancies. L/C issuing Bank will inform the matter to buyer, if the buyer accepts the discrepancies mentioned by Negotiating Bank, issuing bank will authorize the Negotiating bank to negotiate the discrepant documents. COLLECTION DOCUMENTS Normally negotiating Bank will send the documents on collection basis mainly for the following discrepancies: 1. L/C expired; 2. Late shipment; 3. Late presentation; 4. L/C overdrawn; 5. Unit price differ between L/C and Commercial Invoice; 6. Consignee Name and address differ between L/C and other documents; 7. Discrepancies in B/L; 8. Any other Major discrepancies. 2.5# Foreign Remittance Section: The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In the process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place at an agreed rate of exchange, in where the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like any other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender. Workings of this department: Overall supervision of Foreign Remit. Dept. Foreign TT payment & Purchase of F. Drafts, preparations of F.B.P. (Foreign Bill Purchased). Issuance of outward TT & FDR Issuance of proceed responding certificate (PRC). Foreign Collection, Bangladesh Bank Clearing Check Collection, which comes from all branch of BASIC Bank Limited. Withdrawal from F.C. A/C. Encashment of T.C. & Cash Dollar and Sterling Pound. Deduction of Tax and VAT. On behalf of Bangladesh Bank. Preparation of related statements including convertible Taka Accounts. Preparation of IBCA & IBDA and Balancing of Collection and other special assignment as desired by Department in charge. Balancing of Account Statements. Compliance of audit & inspection. Statement of all related works submitted to Bangladesh Bank.
Inward Foreign Remittance: Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, T.C. and bills etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C. Outward Foreign Remittance: Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired. Sale of foreign exchange is reported to Exchange control Department of Bangladesh Bank on form T/M. Foreign exchange means foreign currency and includes all deposits, credits and balances payable in foreign currency as well as foreign currency instruments such as Drafts, T.C.s, bill of exchange, and Letters of Credit Payable in any Foreign Currency. All foreign exchange transactions in Bangladesh are subject to exchange control regulation of Bangladesh Bank. Foreign Remittance Department deals with the following instruments: Cash Remittance (Dollar Pound)
Telex Transfer
Foreign Demand Draft
Foreign Demand
/ Sell
Bank sells Dollar/Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank publication of ‘Convertibility of Taka for Currency Transactions in Bangladesh.
Purchase
Bank can purchase dollar from resident and non – resident Bangladeshi and Foreigner. Most dollars purchased comes from realization of Export Bill of Exchange.
Outward TT
It remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account.
Incoming TT
It also makes payment according to telegraphic message of its foreign correspondence bank from the corresponding VOSTRO Account.
Bank issue Demand Draft in favor of purchaser or any other according to instruction of purchaser. The payee can collect it for the drawee bank in which the Issuing bank of Demand Draft holds its NOSTRO Account. Bank also makes payment on DD drawn on this bank by its foreign correspondence bank through the VOSTRO Account. The procedure concerning issue of FDD is same as issue of Travelers check except that the customer is not required to submit his passport. Following steps to be followed in payment of FDD: At first the FDD is to be crossed. Serial number is given. Forwarding letter to the bank with which the bank has agreement.
Party is given the cash or his account is credited.
Draft
From the above discussion we may conclude the Foreign Exchange Procedures as following:
Port (11) Document Placement Offers Proforma Invoice (1)
Importer
Request for L/C opening
Exporter
Offers Indent (1)
Forward Document (2) (8)
Issuing Bank/Opening Bank
Local Agent Present Documents After Shipment
Forward L/C (4) Present Document
Order Of (3) Payment
Inform about L/C (6) (5)
Advising Bank/Negotiating Bank
Claim for (9) Payment
(10) Payment
Foreign A/C maintaining Bank/ Reimbursement Bank
Figure: 9 Foreign Exchange Procedures 3.1 #GENERAL BANKING General banking is the starting point of all the banking operations. It is the department, which provides day-to-day services to the customers Main Functions of general banking department are the followings: 1. Accounts Opening Section 2. Accounts Section. 3. Local Remittance Section
4. Collection And Clearing 5. Cash Section 3.1.1
# ACCOUNTS OPENING SECTION
ACCEPTING DEPOSIT Bank is a financial intermediary, which mobilizes fund from surplus unit and allocates it to deficit unit. Surplus unit means the people who have surplus money and willingness to save. Deficit unit means the people who need money for industry, trade, business, or for personal use but don’t have sufficient money of their own for such purposes. Bank mobilizes the fund by accepting deposits from depositors and allocates the fund by providing loan to borrower. Banker-customer relationship begins with the opening of an account by the customer. Opening of an account binds the same into a contractual relationship. But the selection of customer is very crucial. In fact, fraud and forgery of all kinds start by opening of an account by the customer (s). So, the bank takes extra care in its selection. One of the basic functions of commercial banks is to accept deposits. For accepting deposits both demand and time, BASIC Bank Uttara branch offers the following types of accountsTYPES OF ACCOUNTS WITH TERMS AND CONDITIONS This part covers only following types of accounts1. Savings Bank Account 2. Current Account 3. Short Term Deposit (STD) Account SAVINGS BANK ACCOUNT This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a week. Heavy withdrawals are permitted only against prior notice. Some Important Points are as followsGENERAL CHARACTERISTICS As per BB instruction 90% of SB deposits are treated as time liability and 10% of it as demand liability a.
Minimum opening deposit of Tk.5000/= is required;
b.
Interest is paid on this account. BASIC offers a reasonable rate of interest for SB A/C.
c.
Generally, banks require a 7-day prior notice if the total amount of one or more withdrawals on any date exceeds 25% of the balance of the account unless is given.
d.
The number of withdrawals over period of time is limited. Only two withdrawals are permitted per week. If there are more than two withdrawals are made in a week, no interest will be paid on rest amount for that month.
e.
Generally householders, individuals and other small-scale savers are the clients of this account
CURRENT ACCOUNT
Current account is purely a demand deposit account. There is no restriction on withdrawing money from the account. It is basically justified when funds are to be collected and money is to be paid at frequent interval. It is most suitable for private individuals, traders, merchants, importers and exporters, mill and factory owners, limited company’s etc. Some Important Characteristics are as followsa.
A minimum balance of TK.5000 has to be maintained.
b.
CD accounts are unproductive in nature as banks loanable fund is concerned. Sufficient fund has to be kept in liquid form, as current deposits are demand liability.
c.
Thus huge portion of this fund become non-performing. For this reason banks do not pay any interest to CD Accountholders.
d.
There is no restriction on the number and the amount of withdrawals from a current account.
STD (SHORT TERM DEPOSIT) ACCOUNT Normally various big companies, organizations, Government Departments keep money in STD account. Frequent withdrawal is discouraged and requires prior notice. In BASIC, customers usually give an instruction that their current account will be debited whenever its deposited amount crosses a certain limit and this amount will be transferred to the STD account COMMON FORMALITIES REQUIRED FOR EVERY ACCOUNT Duly filled up Account Opening Form. Introducer’s signature on Account Opening Form to be verified by Manager under full signature. Two copies of passport size photograph of account opener(s) duly attested by the introducer. 3.1.2# ACCOUNTS SECTION Accounts department maintains all records of transactions and all types of statement. At the end of transaction hour all concerned section sends vouchers of transactions to this department. Accounts department compares all figures/ amount, contents of transactions with supplementary statement prepared by computer. If any discrepancy arises regarding any transaction then this department reports to the concerned department. Following are the activities of accounts department: To record all transaction in the cash book. To record all transaction in the cash book. To prepare daily, weekly, monthly, half-yearly and yearly fund position. To prepare all kinds of statements related to Bangladesh Bank, Head office and National Board of Revenue (NBR). To prepare monthly salary statement, provident fund statement and administrative expenditure statement. To make charges for different types of duty.
3.1.3# LOCAL REMITTANCE SECTION Cash remitting from one place to another is risky. So, Banks remit funds on behalf of the customer (s) to save them from any awkward happening through network of their branches. There are three modes of remitting funds. These are– Pay Order (PO) Demand draft (DD) Telegraphic Transfer (TT) Call Deposit Receipt (CDR). PAY ORDER (PO) Pay order is an instrument, used to remit fund within a clearing zone. Unlike cheque, there is no possibility of dishonoring PO. The PO can only be encashed through the branch that has issued the instrument. PAY ORDER ISSUING PROCESS For issuing a PO, following formalities are to be maintained. These are
Duly filled up the application form by the customer.
Deposit money either in cash or by cheque with necessary charges.
Prepare the instrument and make necessary entries in the Bills Payable Register where payee’s name, date, PO no. etc are noted.
Deliver the instrument to the customer after scrutinized and approved by authority by taking signature of the customer on the counterpart.
DEMAND DRAFT (DD) DD is called ‘Banker’s Draft’. It is an instrument, issued by a particular branch, drawn on another branch of the same bank, instructing to pay a certain sum of money. It is very popular instrument for remitting fund from one corner of a country to another. . If DD amount is more than Tk.50000/=, a test code is given on IBCA. The a/c treatments will beWhen DD is issued: Cash/Customer A/C……………………Debit H/O A/C ‘X’ branch…………………………Credit Income A/c commission………………..……Credit. TELEGRAPHIC TRANSFER (TT) Sometimes the remitter of the funds requires fund immediately. In that case, the banker is requested to remit the funds telegraphically. Different modes are Telegram, Telephone, Telex, Fax. Telegraphic Transfer is the most rapid and convenient but expensive method. The drawer and the payee should have accounts with BASIC bank. TT is issued against cash, cheque, and letter of instruction 3.1.4# COLLECTION AND CLEARING SECTION
Customers do pay and receives bill from their counter party as a result of transaction. BASIC Bank Limited collects the bills on behalf of their customers.Collection mechanisms in BASIC Bank are clearing, Outward Bill For Collection, Inward Bills for Collection. CLEARING When the bill is within the range of the clearinghouse it is sent for collection through clearing section. As far as safety is concerned customers get crossed cheque for the transaction Crossed check can’t be encashed from the counter; rather it has to be collected through banking channel i.e., clearing. If a client of BASIC Bank received a check of another bank which is located within the clearing range and deposit the instrument in his account at BASIC Bank. Then BASIC Bank will collect the money through clearing house. After received the check BASIC Bank will credit client account. However, the amount is credited in the customer a/c but he will not get the money until the check is honored. 3.1.5 # CASH SECTION Cash is the lifeblood of all financial activities. Cash section is a very sensitive point of the branch. This section deals with all types of negotiable instruments and it includes vault, used as the store of cash, instruments. The vault is insured up to Tk.20 lac. Insured amount yet to be enhanced to Tk. 40 lac. Operation of this section begins when the banking hour starts. Cash officer begins his/her transaction with taking money from the vault, known as the opening cash balance. Vault is kept in a more secured place. The amount of opening cash balance is entered into a register. After whole days’ transaction, the surplus money remains in the cash counter is put back in the vault and known as the closing balance. If the cash stock goes beyond this limit, the excess cash is then transferred to BASIC bank main branch. The main functions of this section are1.
Cash Receipt
2.
Cash Payment
CASH RECEIPT Cash receipt procedure is given belowi.
The depositor first fills up the Deposit-in-Slip.
ii.
Depositor deposits the money.
iii. Officer receives the money, counts and then enters in the Cash Receipt Register, and finally signs with seal and dates the deposit-in-slip. CASH PAYMENT Some important check points for making the payment are as follows1.
Endorsement
Endorsement is done by putting signature of the drawer on the back of the negotiable instrument for the purpose of negotiation. By ‘blank endorsement’, an order instrument is made as ‘bearer’ 2.
Crossing Generally two types of crossing are practiced, namely- General Crossing and Special Crossing. Basically it gives a direction to the paying bank not to pay the check amount over the counter. General crossing includes ‘A/C payee’ crossing only. Drawing two parallel and transverse lines do it. On the other hand, special crossing is like general
crossing but in addition bank name is also mentioned. This gives the direction to the same to pay the check only to the banker, whose name appears in the crossing or to his agent. 3.2# Foreign Exchange- its meaning and definition: Foreign exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country. 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 into that of another. Foreign trade gives rise to foreign exchange. Modern banks facilitate trade and commerce by rendering valuable services to the business community. Apart from providing appropriate mechanism for making payments arising out of trade transactions, the banks gear the machinery of commerce, specially in case of international commerce, by acting as a useful link between the buyer and the seller, who are often too far away from and too unfamiliar with each other. According to foreign exchange regulation act 1947, “Any thing that conveys the right to wealth in another country is foreign exchange”. Foreign exchange department plays significant roles through providing different services for the customers. Opening or issuing letters of credit is one or the important services provided by the banks. 4.1 # Corporate Social responsibility (CSR) Today, Corporate Social Responsibility (CSR) is a fundamental part of business. The notion of CSR is gaining fast acceptance globally as every business should have its contribution voluntarily to the society, to its customers, to employee, to the communities and to the environment. CSR is an obligation beyond statutory obligation and BASIC Bank Ltd. Believes that such obligation paves the opportunity to build better relationship with all stakeholders. BASIC Bank Limited a state owned scheduled bank, adjudged as one of the soundest banks in Bangladesh is running on slogan “Serving People for Progress”. The slogan manifests the commitment of the bank to comply its social responsibility. Recognizing the importance of CSR and being a socially responsible organization BASIC Ban took some initiatives stated below: 4.1.1 # FINANCING SMI The bank is unique in its object. It is statutorily obligated towards the promotion and development of small and medium industrial sector. As per mandate of memorandam.50% of loan able fund of the bank also put emphasis on the interests of stakeholders, give due consideration to sustainable development of communities and environment issues in all aspect of its operation. 4.1.2# SPORTS AND CULTURE As part of corporate social responsibility the bank engage itself in sponsoring sports. The bank sponsored “26th and 27th National Junior Chess Championship” and “ Inter-district National Women Handball Tournament-2007”. 4.1.3# DISASTER RELIEF BASIC Bank provide donation to people affected by natural calamities. In 2007 the bank contributed Tk.25.00 lac as donation to the Chief Adviser’s Relief & welfare fund for the
flood affected people. Another Tk.25.00 lac of donation was made to the Chief Adviser’s relief & welfare fund for SIDR affected people. 4.1.4# EDUCATION BASIC Bank patronizes meritorious students. “BASIC Bank gold Medal” was introduced by the bank for the meritorious students of the department of banking, University of Dhaka. Besides BASIC Bank has been accommodating internship facility for the fresh and meritorious graduates from public and private universities and different business school to give them on job and practical experience about banking. Such program helps the participants to choice and plan their carried more confidently. In 2008 a total of 144 students were given same facility. 4.1.5# ENVIRONMENT PROTECTION As a part of CSR contribution BASIC Bank is adopting environmentally responsible practice in its operation. In its business operation BASIC Bank always consider the effects of bank’s financed projects on environment. This issue is included as a part project appraisal. Fuel driven vehicles are a major cause of air pollution and fuel procurement is a major source of expenditure of foreign currencies. Keeping these dual issues in mind we have been financing 23 CNG refueling projects of which 09 in 2008. These projects are environment friendly, pollution free and saving foreign currencies. 4.2# PROFESSIONAL SATISFACTION
DEVELOPMENT
AND
ACHIEVING
EMPLOYEE
Efficient human resources are real capital of an institution and professional development is a must for banking career. Banking environment is changing regularly, employees have to face new challenges and compliance issues are getting momentum. To attain sustaince issues are getting momentum. To attain sustainable growth employees must gain regular training and education. To strengthen the capacity and sharpen the skills and productivity of our employees to face these changing situation and new challenges, we regularly arrange training on professional and contemporary banking issue. The bank recognizes the valuable contribution of its employees made to the bank. BASIC Bank invests substantial amount in training and its training institute arrange regular training program and seminar to strengthen the knowledge, competence and expertise of the employee to face challenges in this steeply competitive market. Besides a good number of employees were also attended training, workshop and seminar organize by different organization at home and abroad on various issues. In 2008 we trained total 556 employees of our bank of which 11 was trained abroad. 4.2.1# STAFF WELFARE Staff welfare is an issue that receives topmost importance in BASIC Bank Ltd. Has a benevolent fund. Among with giving retirement benefit another objective of the fund is contributing for humanitarian works. The bank sanction grant from this fund for treatment of its employees and their dependents. BASIC Bank has introduced a Superannuation fund instead of attractive retirement benefit for the employees. Deserving candidates are also given promotion and increment regular. We are also contemplating to introduce performance awards. Employee satisfaction is a key indicator of the attitude of the employee towards their work environment. So the bank always tries to give its employees healthy, clean and congenial atmosphere in the work place.
4.2.2# OTHER ACTIVITIES: Apart from above the bank sponsored Baishakhi Fair-1415 to encourage development of small and Cottage Industries by contributing Tk.3,00,000.00. The bank also sponsored th alumni get together of English department Alumni Association, University of Dhaka by contributing Tk.50, 000.00 only. The 10th anniversary program of American Alumni Association was also sponsored by the bank by contributing Tk.50, 000.00 only.ss . The bank is also committed to perform the following activities in the coming days as a part of its responsibility to the society. Important product and service that promote sustainability and reduce adverse environmental impact. Offer high value added products and service
Forest unrestricted work working atmosphere showing equal respect for all casts and creeds and irrespective of gender.
Arranging vocational training for the unemployed
Ensure that all of our projects have Effluent Treatment plant(ETP)
5.1# RESEARCH METHODOLOGY: 5.1.1#TYPE OF RESEARCH Data for this study collected using two pair of questionnaire instruments. One for bank officials, and other drawn on bank clients. Both set of questionnaires contained respectively the issues related bankers and customers concern with BASIC Bank to start Foreign Exchange banking. The bank official’s questionnaires equipped with their perception of strategic, operational, customer relationship, technology related, corporate, and service development issues, the literature was reviewed extensively. Other hand, questions designed for customers includes customers approach, customers expectations, performance of service dimensions, positioning strength and banks role in service delivery. 5.1.2# SCALING TECHNIQUE This study focuses on perception foreign exchange transaction both by bankers and customers, urgency of foreign exchange banking for BASIC bank, banks relation with customers, technology development, scope of service delivery, satisfaction with present service, and organizational weakness. 5.1.3# FIELD WORK Data for this research was gathered by approaching bank officials, and clients apparent at Uttara branch of BASIC Bank ltd. Among the respondents of bank included: Deputy General Manager (DGM), Assistant general manager (AGM), Manager, deputy manager, assistant manager, officer, and junior officers. Several of the customers were industrial and commercial clients including: commercials, entrepreneurs, and executives. A total number of 47 questionnaires provided to bank officials and 65 questionnaires to customers for participation as well. Eighty percent of the bankers participated in the research, and customers were more prompt to answer questions delivered to them, 75% customers returned question papers in response to 65 questionnaires.
5.2# Research Intend: Research designs are the determination and statement of the general research approach or strategy adopted for the particular project.A research design is purely and simply the framework or plan for a study the guides, the collection in completing a study. A central part of the research activity is to develop an effective research strategy as design. This will detail the most suitable method of investigation, the sampling plan and the types of data i.e. quantitative as well as qualitative. A research design forms the framework of the entire research process. 5.2.1#Research design at a glance: Keeping in the view the above stated design decisions; one may split the over all research design in to the following parts: The sampling design, which deals with the method of selecting items to be observed from the given study. The observation design, which concerns with the questions of how many items are to be observed and how the intermission and data are to be analyzed. The observation design, which relates to the three conditions under which the observation are to be made. The operational design, which with the techniques by which the procedures specified in the sampling statistical and observational design, can be carried out. 5.2.2# Different Research Design: We can categorize research design, in to three different dimensions: 1. Research design in case of exploratory research studies. 2. Research design in case of descriptive and diagnostic research studies. 3. Research design in case of hypothesis-testing studies. Research design in case of exploratory research studies: Exploratory research studies are also termed as formulates research studies. The main purpose of such studies is that of formulating a problem for more precise investigation or of developing the working hypothesis from an operational point of views. The major emphasis in such a studies is on the discovery of ideas and insights. As such the research the design appropriate for such studies must be flexible enough to provide opportunity for considering different aspects of a problem under study. Research design in case of descriptive and diagnostic research studies: Descriptive research studies are those studies that are concerned with describing the characteristic of a particular individual, or of a group., where as diagnostic research studies determine the frequency with which something occurs or its association with something also. Research design in case of hypothesis-testing studies: Hypothesis-testing studies are those studies where the researcher tests the hypothesis of casual relationship between variables. Such studies require procedures that will not only reduce bias and increase reliability, but will permit drawing inferences about causality.
The research design that is adopted for this particular study is descriptive research that includes survey and fact-finding enquiries of different kinds. The major purpose of descriptive research is the minimization of bias and maximization of reliability of the evidence collected. 6.1# Identification of Documents Used in Foreign Exchange Banking: The following Documents are used in Export: Bill of Exchange or Draft; Bill of Lading Invoice Insurance Policy/Certificate Certificate of origin Inspection Certificate Consular Invoice Packing List Quality Control Certificate G.S.P. certificates The following Documents are used in Import: Invoice Bill of lading Certificate of origin Packing list Weight list Shipping advice Non-negotiable copy of bill of lading Bill of lading Certificate of origin The following documents are used in Foreign Remittance: Certificate of origin Remittance application ID card 6.2# Appraisal of Export & import business of BASIC Bank Limited: BASIC Bank's expertise in International Banking has a record of in-house growth over more than one decade. With limited network of branches at home and also a few correspondent banks worldwide it is handling the export-import business including homebound remittances. The following graph shows year-wise export-import business of BASIC Bank Limited. Though both export and import are increasing day-by-day, imports exceed exports which ultimately drastically hit the country’s negative Balance of Trade.
Figure 10: Export & Import position 6.3# Performance of Foreign exchange business of BASIC Bank Limited The following table shows year-wise performance of foreign exchange operations consisting item-wised income generating avenues. All the figures show positive growth which generally signals foreign exchange business as a profitable business in Bangladesh. Within all the income avenues, income from exchange gain shows highest figure in taka value. Growth rate here was 48.92%. Income from Letter of Credit and Letter of Guarantee were the second and the third largest among the income avenues respectively. Table 5: Income from foreign exchange business of BASIC Bank limited Particulars Foreign bill Purchased Local bill Purchased Remittance Letter of Guarantee Letter of Credit Bills for Collection Acceptance Export bill
2004 460,581 3,833,860 7,730,748 14,160,897 66,555,289 2,846,448 5,195,369 442,527
2005 360,461 4,485,557 7,702,293 21,397,445 75,284,688 4,078,047 7,048,898 538,912
2006 654,329 8,646,784 7,968,002 23,360,370 96,433,989 8,747,327 8,747,327 599,694
Miscellaneous(includes commission on sale of PSP,TC (A) Total (B) Exchange gain (Profit on exchange trading) Total (A)+(B)
1,353,563
2,387,148
3,312,449
2007 628,965 9,041,451 8,280,081 39,869,621 106,869,561 10,792,897 10,792,897 570,41 5 6,491,052
102,579,282 129,977,023
123,283,450 114,610,826
157,649,764 149,640,436
191,235,959 222,845,221
232,556,305
237,894,276
307,290,200
414,081,179
Revenues earnings from foreign exchange section are now graphically presented.
Figure 11: Income from Foreign bill purchased shown
Figure 12: Income from Local bill purchased shown
Figure 13: Income from Remittance shown
Figure 14: Growth of income from remittance shown
Figure 15: Income from Letter of Guarantee
Figure16: Income from Letter of Credit
Figure 17: Income from Bills for collection
Figure 18: Income from acceptance shown
Figure 19: Income from Export bill
Figure 20: Income from Exchange gain (Profit on exchange trading) Figure 22 shows the growth of income from exchange gain consisting profit on exchange trading only. In 2005 growth was negative, but in 2006 & 2007, exchange gain shows positive trend.
Figure 21: Growth of Income from Exchange gain 7.4 ANALYSI BASIC Bank Ltd. Focuses its attention on Industrial sector for small and medium enterprise but recently its attention increases on commercial sector and foreign exchange business. In foreign exchange business BASIC Bank Ltd. used the procedures that are usually used by other banks. In addition they use some safety material such as; they do foreign business only for their valued clients. They give some special facilities to their valued clients such as, margin facilities on loan against documentary bill purchase and charge 14% interest. After shipment, every exporter submits the following documents to the BASIC Bank Ltd. for negotiation (Bill of Exchange or Draft; Bill of Lading, Invoice,
Insurance Policy/Certificate, Certificate of origin, Inspection Certificate, Consular Invoice, Packing List, Quality Control Certificate, G.S.P. certificate) BASIC Bank checks Invoice, Bill of lading, Certificate of origin, Packing list, Weight list, Shipping advice, Non-negotiable copy of bill of lading, Bill of exchange, Pre-shipment inspection report, Shipment certificate the usual documents for Import business. BASIC Bank deals telegraphic transfer, demand draft & money transfer for transfer of money. Though BASIC Bank Ltd. (Uttara Branch) is not an AD bank but they are doing foreign exchange frequently and earning almost a big portion of their total income. To attract foreign customers, BASIC Bank Ltd. always observes the market and always tries to realize what the market’s demand. For that they can fulfill the valued clients’ desires. They also buy the L/C on 10% reduced rate from their clients when their clients need money. By giving this facility to their clients they also earn for their banks and make a profit. BASIC Bank Ltd. also contributes in the country’s GDP by facilitating our small and medium industrialists to export and import their goods to abroad and trying to keep pace with the increasing GDP of Bangladesh. Economic progress is being maintained by them properly. CONCLUSION A very working environment was remaining in the BASIC Bank Ltd., it is found that the Branches provides all kinds of commercial banking services to its customers. Foreign Exchange department rendering all the services related to international trade and remittance. It is well established that theory without practice is blind. We have observed the function of General Banking, Foreign Exchange, and Credit department of BASIC Bank which will help me a lot to understand the overall banking. Out of the above discussion a conclusion can be drawn after saying that, the present customer dealing procedure is quite well at this moment. The computerized transaction makes the system efficient and effective. RECOMMENDATIONS We have observed some shortcomings regarding operational and other aspects of their banking. On the basis of my observation we would like to recommend the following recommendations1. Document discrepancy charge varies form customer to customer. They don’t charge to prime customer. We think that the bank should review the customers' behavior for a period of time and should develop a certain policy in this regard. 2. When they calculate loan against documentary bill, they provide dollar rate $65.Which is lower than other bank. We think they should increase the dollar rate. 3. In case of Export L/Cs, the Government encourages the exporters by giving different facilities like tax-cuts. We think the bank should also think about such type of facilities to be given to the Exporters because Bangladeshi Exporters like Readymae
garments Exporters are going to face a tuff situation in coming years from the exporters of other countries. 4. In case of Export L/Cs, sometimes customers insist to give their payments though their documents are found discrepant. In some cases, Bank has to give payment to these customers for different reasons. But it lessens the credibility of the Bank. We think the Bank should be as stricter as possible about giving payments against discrepant documents without hurting the customers. 5. Over burden of work and ill defined assignment unable the employee to discharge their duties in cool manner. It is also creates a hazardous situation in the work process. So all the employee should be assigned with proper and specific assignment. 6. They should expand their business more balancing way which means they should not focus on a particular industry like readymade garments industries. 7. To communicate with the Negotiating Bank, Advising Bank. Reimbursing Bank the branch uses SWIFT. As well as these media the Bank could use the E-mail, which is cheaper and faster than those media. 8. BASIC Bank Ltd. now using software and that is Kastle. It is very dedicated software. It has real time online banking, ATM facilities and E-banking and lot of more. So we think it will be a great progress for the bank. Bibliography Reading Materials for Foreign Exchange and Financing in International Trade Course --------------- BASIC Bank Limited. A Dictionary of Banking and Finance ---------- L. R. Chowdhury. Annual Report of BASIC Bank Limited. Foreign Trade and International Market --------- C. L. Gupta. Guidelines for foreign exchange transaction of Bangladesh Bank (Volume 1 & 2). Monthly Statement of BASIC Bank Limited, December, 2008 Various Official Records of BASIC Bank Limited. Foreign Exchange and Financing of Foreign Trade Ali Syed Ashraf,”Foreign Exchange & Risk Management”, First Mowla Brothers Edition, May 2005,Mowla Brothers,Dhaka. A Dictionary of Business (2003), 3nd edition, Oxford University Pre Hossain ,Dewan Mahboob & Khan ,Arifur Rahman (2006),” Disclosure on Corporate Governance Issues in Bangladesh: A survey of the Annual Reports” The Bangladesh Accountant,January-March,2006,pp 95-99 Marketing Research for Business Students by Mark Marketing Research by Naresh K. Malhotra http://www.basicbankbd.com http://www.bangladeshbank.com http://www.idlc.com