City bank

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General Banking and Foreign Exchange Process of The City Bank Ltd 1.1 Introduction As a strongest Bank, The City Bank Ltd is doing potential accomplishment in our country where more than thousand employees working whole around the Bangladesh.

We have divided my objectives in on 3(three) major parts.  General Banking of the City Bank Limited.  Foreign exchange mechanism of the City Bank Ltd.  To describe the customer service process of The City Bank Limited.

History of the Bank 2.1 History of the City Bank LTD

The city bank ltd. was incorporated as a public limited company with limited liability on the 14th march 1983 (formal inauguration march 27,1983) under companies act 1913 in Bangladesh with the primary objective to carry on all kinds of banking business. The bank is listed with Dhaka Stock Exchange and Chittagong Stock Exchange Limited. Functioning as a conventional bank in the country since 1983, it has been able to consolidate its position in the banking sector. The bank has been able to establish a solid presence with the customers and general public, through its improved services, value addition in the economy and increasing shareholders value. At present it is also operating Islamic banking facilities.

It started its operation in 1983 with the authorized capital Tk. 200 million and paid up capital was Tk. 34 million. Up to December 31,2005 Authorized capital Tk. 1,750,000,000, Paid-up Capital of the Bank stands at Tk. 720,000,000.

At present the bank is operating through 77 Branches at most key points of the country. It carries out all banking activities through its branches in Bangladesh. The principal place of business is the registered office at the registered office of the bank is at 3iban Bima Tower, 10, Dilkusha Commercial area, Dhaka-1000. The bank is listed in the Dhaka and Chittagong

Stock Exchanges as a publicly quoted company for its shares. A professional team of Bankers is running the day-to-day operation of the bank.

2.2 Company Philosophy Despite stiff competition among banks operation in Bangladesh, both local and international, The City Bank Ltd. has made a remarkable progress practically in every sphere of its activities. The activities of The City Bank Ltd. are very implicit and vast comparing to that of other bank in the country today. The slogan of the bank is “For Relationship Banking “. The mission of The City Bank Ltd. is to serve the nation through excellent customer services.

The prime objective of The City Bank Ltd. is to create a strong capital base, to earn good profit and pay satisfactory dividend to honorable Shareholders, to achieve the objectives, the bank works for improving the quality of bank’s assets by identifying potential good borrowers. And persuade the clients to open an account in the bank through their wit and intelligence as well as is to maintain the reputation through their customer services oriented facilities. To achieve this desired goal it has intention to pursuit of excellence in the climate of continuous improvement. Because it believes the line of excellence is never ending, it also believes that its strategic plans and business will its strength in competitive environment. Its motto is to provide every single customer services available in today’s banking procedure for their clients.

2.3 The vision of The City Bank Ltd. To be the leading bank in the country with best practices and highest social commitment.

2.4 The mission of the City Bank Ltd. 1. To contribute to the socio economic development of the country.

2. To attain highest level of customer satisfaction through extension of services by dedicated and motivated team of professionals.

3. To maintain continuous growth of market share ensuring its steady growth.

4. To maximize bank’s profits by ensuring its steady growth.

5. To maintain the high moral and ethical standards.

6. To ensure participative management system and empowerment of human resources.

2.5 Company Services The City Bank Ltd. also concentrates the following categories of banking services.  General Banking.  Loan and Advance.  International Trade and Foreign Exchange.

2.6 Customer Services The City Bank Ltd. is committed to serve the clients in a better way and for this it has been introduced some new innovative things.

2.6 .1 Small & Medium Enterprise (SME) Banking Considering the growths potentially and demand situation he bank extended credit facilities to small and medium enterprises through SME banking in larger volume in the year 2005 in collaboration with South Asia enterprise development facility (SEDF) and partner banks, the bank took active participation in three daylong road show on SME banking in the city. A separate division was established in the head office to process and handle loans under SME for attaining a respectable market share and successful operation of the scheme. The bank organized several training programs for development of adequate human resources.

2.6 .2 Social Commitments The city bank Ltd. had demonstrated its social responsibility by taking part in various activities. Significant among them is: donation to  Daridra Durikoron Sangshtha,  Financial assistance to center for rehabilitation of Paralyzed(CRP)  Ozne time financial assistance to Dhaka University Alumni Association.  Continuous financial assistance to special education for intellectually disabled Trust (SEID) etc.  For the environmental and ecological sustainability, the bank implemented beautification project at different places in Dhaka City during 2005.  For the developments of sports ad games, the bank has been supporting a various tournaments with financial assistance. During the year under review the bank patronize

the one-day international (ODI) and test matches between Bangladesh and other test playing countries.

2.7 Online In order to increase faster services in all 77 branches of the bank computerization was completed in 2007. Side by side online facility is gradually being available across the branch of Dhaka, Chittagong, Sylhet, Bogra and Khulna. During the year 2009, eight new branches have been brought under “Finacle” Software to facilitate online banking service. This process will continue and ‘Any Branch Banking’ through ‘Online’ will be introduced within very short time. The number of branch under online banking increased to 17 by the year 2010.The bank had implemented new ABABIL software in its Islamic Banking branch. These developments will certainly increase the standard of customer services within the bank.

As a service center, bank is always under demand from its customer for better service atmosphere at the branch level. Keeping in view the requirement of customer, bank has renovated seven branches including relocation of two branches in 2009.

Online bill collection Online bill collection service with Grameen Phone.

2.8 Financing Services provided in different Business sectors 1. Hospital project at Kustia.

2. Pharmaceutical project.

3. Re-rolling mill.

4. Garment industry.

5. Poultry project.

6. Hotel project at Bogra.

2.9 Modern technology for services Demand for modern services in the banking sector is growing faster. The services are now technology based and this bank is not for from competition. The City Bank already implemented world class Fianacle banking software as one of the major technological

initiatives in the IT infrastructure development. Ups to now, 33 branches are under this software. Another factor needs to be under consideration that City Bank is the first among domestic banks to introduce Dual Currency City Card.

2.10 Corporate social responsibility As one of the leading bank, the City Bank plays its responsibility towards the society and contributed donation to various educational instates, Trustee organizations. The “City Bank Foundation � has been established for same intention. The foundations aim at gearing up its on ongoing and new initiatives the cause of humanity through viable social welfare.

2.11 Good corporate governance In the absence of any code of conduct and business principles, it is difficult to have a Self-assessment of the status of the governance. Bank has developed and adopted various operating instruction and manuals for best practices. Key Performance Indicator (KPI) has been adopted to assess the employee performance.

Bank gas adopted a unique code of conduct and ethical guidelines for the employees. Bank has given stress to the compliance of the rules, regulations and guidelines of Securities and Exchange Commission and Bangladesh Bank. The external auditors were given absolute freedom in the process of audit and to verify the compliance, risk management and preparation of accounts as per IAS and BAS norms. Credit rating agency was engaged for rating the bank every year in order to give a fair view of the investors.

2.12 Challenges and prospect City Bank is a string and effective player in the financial system. Banks exposure in core business of corporate and retail sectors with wide range of products is expanding. Its strategy will remain to grow in areas of core competence and expand activities in SME and Micro Finance to the development of national economy. Further to enhance foreign exchange reserve Bank will continue their efforts in mobilization of wage earners remittances with a meaningful presence in the overseas. Side by side, the Bank remains focused on quality business and exercise best practices to achieve satisfactory growth on the upcoming years.

Quick glance at the activities of The City Bank Ltd. Particulars

2010

2009

Paid up capital Total capital Capital surplus/ (deficit) Total asset Total deposit Total loan and advance Total contingent liabilities Total loan deposit ratio Profit after tax Interest earning asset Return on investment Return on asset Income from investment Earning per share (tk) Net income per share (tk) Price earning ratio (times)

1080000000 2601000000 59500000 47445751884 39571945519 30789021982 13623395805 77.81 240021913 40820243647 8.58% 0.58% 431448405 22.22 22.22 17.55

720000000 2080700000 135300000 35303744444 30647833255 23326338550 9040114395 76.11 540924588 31913926565 8.38% 1.75% 285323890 75.13 75.13 10.24

2.13 Products of The City Bank Limited: 2.13 .1 City Credit Card This is one kind of credit card, which is totally different from service of the bank. This is the only dwell card in credit card service that is we can use it at home and abroad.

Kinds of city card  Dual City card  Local City card  International City card  Co brand city card Type of city card    

Gold City card Silver City card City card connect (Debit card) The American Express (Credit Card)

Characteristics of city card  Yearly fee and renew fees are least

 It is free of cost for the local part of Dual City card.  Advantage of large POS (Point of Sell) and ATM Network  Community preference for 1st class government officer, businessmen, etc  Monthly fee is only 5% of total cost Sources of city card After collecting the form, party will fill up the form properly and forms are available at card division or any branch of city bank. Those who have account in any branch can collect the form & deposit these forms to front desk and later the front desk officer will send the forms to the card division at the principal office.

Cash transaction 50000tk are drawnable within a day but highest tk20000 is possible in one (1) transaction and ATM Transaction is possible not more than 4 times. In case of city gold card highest $1000 could be drawn & $500 through silver card. Maximum 80% of credit limit is drawnable in case of gold card 70% for silver. In international case, this limit is 60% and 50% respectively.

Payment against monthly statement Payment of Local City card or local part of Dual City card is possible in any branch through the payment slip in cash counter. In case of cheque, it must be deliver to the officer 3 days before the payment due date. In case of international part of Dual City card, payment is possible through the foreign exchange department of authorized dealer branches like corporate office, Gulshan branch, Kawran Bazar branch, and new market branch, etc.

Monthly statement & original passport is necessary in payment time.

If the credit limit is not endorse in original passport through card division, then branch officer of foreign exchange will endorse the credit limit & this may not necessary if the card division provide endorsement. In that case, customer copy could be provided through the payment slip.

2.13 2. VISA Electron Debit card Unique features With this card a customer can withdraw cash from more than 300 ATM’s in the country. All ATM’s displaying VISA logo will accept this card 24 hours a day and 365 days a year. With

this card a customer can shop and dine at hundreds of outlets across the country displaying VISA logo. It allows the right kind of financial planning and budgeting. This card prompts self-discipline to the customers, that is spending money when needed only. No cash and cheque, it is hassle free and safer than carrying cash. Statement will show if money has been withdrawn at ATMs or spent at restaurant /shops. So, record of expenditure is readily available.

There is no extra expense, no interest, no late payment charges, and only a small annual fee.

2.14 Some service products 2.14.1 Lakhpati savings scheme Any person of Bangladeshi who is 18 or over 18 has eligibility to open the account Monthly installment for the scheme is 1000 tk and this is fixed term deposit Total duration is 6 years and total installment no is 72

Time

Monthly installment

Maturity

6 year (72month)

1000.00

100000.00

After the death of the accountholder the nominee will get the amount.

After two years completion of regular installment payment the accountholder might borrow 80% of deposited amount. Any benefit from Lakhpati Savings scheme may come under preview of Income tax, excise duty, source tax, etc will be borne by the customer.

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

2.14.2 Three stage savings scheme Monthly installment of this scheme is 500 to 5000 tk. This is also fixed and customer can open any no of TSSS (Three-Stage Savings Scheme).

The scheme is for 2/4/6 years and total no of monthly installment is 72.

Maturity payment: Period

Interest

1 year 2 year 3 year 4 year 5 year

8% 9% 10% 11% 12%

Maturity payment 13093.00 tk.(1st stage) 28955.00 tk.(2nd stage) 48548.00 tk.(3rd stage)

6 year

13%

2.14.3 Junior savers scheme Initial deposit for this scheme is 5000 tk., which will be followed by monthly installment of 1000 tk. till maturity. The scheme is for 10 years and 120 equal monthly installment The scheme is covered by insurance. In case of death of account holder, nominee will get the amount covered by insurance and maximum insurance coverage by an initial deposit is 600000-tk. Insurance premium will be borne by the bank except premature encashment.

Matured value

Period

Initial deposit

Monthly installment

Matured value

10 years (120 months)

5000.00 tk

1000.00 tk.

200000.00 tk

2.14.4 Islamic Banking The City Bank Ltd. is operating now Islamic banking through some branches in the city.

Their preceding years profit is well. The top management always follows up rules and regulations of the Islamic banking and Bangladesh Bank.

2.14.5 Achievements award The bank has been awarded the Manobadikar Podak 2006 by the Bangladesh society for the enforcement of human rights (BSEHR) for its achievements in beautification, preservation and nurturing of various projects in the city.

2.15 Ethical Bank Environment The word “Environment� is a generic concept, which embraces the totality of external environmental forces, which may influence any aspect of organizational activity. It also in simple terms means the ability of a corporation to relate its operation and policies to the social environment in ways that are mutually beneficial to the company and to society.

Sustainable economical, ecological and social development of own surroundings is key element of all business decision. The City Bank Ltd. promotes sustainable development to

meet the needs of the present without compromising the ability of the future generations to meet their own needs. The bank always analyzes its Strength, Weakness, Opportunity, and Threats (SWOT).

The bank also maintain the responsibilities for the society in which it securers. The prime concern of the bank is to influence and to take part in different social and cultural activities.

By consulting the activities of the previous years many examples of such activities can be bought into being.

2.16 SWOT Analysis 2.16.1 Strength Financial strength The City Bank took a strategy of quality growth by adhering to compliance in all areas of operation. Bank consolidated its position as one of the successful financial institution and maintained satisfactory growth across many of its business lines.

Bank remained focused in all key areas covering capital adequacy, meeting provision for loans and advances, good asset quality, sound management, satisfactory earning and strong liquidity.

Recognizes credit rating agency CRISL on the basis of Banks performance for the year 2006 assign Bank “A” in the long term category and “ST-3” in the short term category. Bank was able to make a net profit before tax of tk. 653 million. Deposit of the bank increased by tk. 8924 million indicating a growth of 29%. Loans and advances, which are well diversified, have growth by 32% last year.

Modern technology for services Demand for modern services in the banking sector is growing faster. The services are now technology based and this bank is not for from competition. The City Bank already implemented world class Fianacle banking software as one of the major technological initiatives in the IT infrastructure development. Ups to now, 33 branches are under this software. Another factor needs to be under consideration that City Bank is the first among domestic banks to introduce Dual Currency City Card.

Corporate social responsibility As one of the leading bank, the City Bank plays its responsibility towards the society

and

contributed

donation

to

various

educational

instates,

Trustee

organizations. The “City Bank Foundation � has been established for same intention.

The foundations aim at gearing up its on ongoing and new initiatives the cause of humanity through viable social welfare.

Good corporate governance In the absence of any code of conduct and business principles, it is difficult to have a Self-assessment of the status of the governance. Bank has developed and adopted various operating instruction and manuals for best practices. Key Performance Indicator (KPI) has been adopted to assess the employee performance.

Bank gas adopted a unique code of conduct and ethical guidelines for the employees.

Bank has given stress to the compliance of the rules, regulations and guidelines of Securities and Exchange Commission and Bangladesh Bank. The external auditors were given absolute freedom in the process of audit and to verify the compliance, risk management and preparation of accounts as per IAS and BAS norms. Credit rating agency was engaged for rating the bank every year in order to give a fair view of the investors.

2.16.2 Weakness 1.

Lack of Adequate Employees: Number of employees is less than the volume

of works, which creates problem for prompt service.

2.

Lack of up to date equipment's: The City Bank Limited has lack of modern

technologies and equipment's like online facilities, fax, cash card and credit card system.

Challenges and prospect City Bank is a string and effective player in the financial system. Banks exposure in core business of corporate and retail sectors with wide range of products is

expanding. Its strategy will remain to grow in areas of core competence and expand activities in SME and Micro Finance to the development of national economy.

Further to enhance foreign exchange reserve Bank will continue their efforts in mobilization of wage earners remittances with a meaningful presence in the overseas. Side by side, the Bank remains focused on quality business and exercise best practices to achieve satisfactory growth on the upcoming years.

2.16.3 OPPORTUNITIES The City Bank Ltd. can pursue a diversification strategy in expanding its current line of business. The management can consider options of starting client service in its merchant banking division. There are several opportunities for The City Bank Ltd. to expand its product line. In this competitive environment The City Bank Ltd. must expand its product line to enhance its Sustainable Competitive Advantage (SCA). As a part of its product line proliferation, The City Bank Ltd. can concentrate more on SME & Agro based industrial loan because these two sectors have huge potential. If The City Bank Ltd. can grab this opportunity then it will be better for the bank.

The City Bank Ltd. should move towards the real time on line banking operations. It is high time that they should go for this because the foreign banks as well as some local banks are already in to the total on line banking operations.

2.16.4 Threats There are a lot of competitors in banking sector of Bangladesh. So it’s a great threat for them. There are not only the conventional banks but also some other Commercial & Islamic Banks in the market as their competitors. Conventional banks are always trying to understand people that interest and dividend are the same through various seminar, symposiums and publicity.

Despite of marvelous popular support, spectacular success in terms of mobilization of deposit and distribution of profit. Small Industries Bank in Bangladesh yet to achieve the designed level of success due to the absence of appropriate legal

framework. All the Government approved securities in Bangladesh are interest bearing.

General banking 3.1 General Banking General Banking department performs the core functions of a branch. General Banking department is that department which is mostly exposed to the maximum number customers.

It is the introductory department of the Bank to its customers. A bank does not produce any tangible product to sell but does offer a variety of financial services to its customers. The Kawran Bazar branch of The City Bank Limited has all the required sections of general banking and these sections are run by manpower with high quality banking knowledge.

Hence, a touch of rich customer service is prevailing in the branch. They take the deposit from the customer and pass entry of every transaction within the day. It opens new accounts remit funds, issue Bank drafts and pay order etc. Since Bank is confirmed to provide these services everyday, that’s why the General Banking is known as the ‘Retail Banking’.

3.2 Deposit conceptions of retail banking (a) Accepting Deposit Accepting deposit is one of the two classic functions of CBs. Deposit may be classified in to two parts: 1. Time Deposit.

2. Demand Deposit.

(1.0) Time Deposit A time deposit which is payable at the fixed date or after short notice is known as the Time Deposit. The City Bank Limited accepts time deposit through 

Fixed Deposit Receipt (FDR)



Short Term Deposit (STD)



Deposit Pension Scheme (DPS)



Monthly Fixed Deposit (MFD)

While accepting these deposits, a contract is done between the Bank and the customer. When a banker opens an a/c in the name of a customer then arises a contract between these two.

This contract will be a valid one only when the parties are competent to enter contracts. As a/c opening initiates the fundamental relationship and since the banker has to deal with

different kind of person with different legal status, The City Bank Ltd. official’s remain very much careful about the competency of the customer’s.

Fixed Deposit (FD) The depositor’s deposit a fixed amount for a fixed period of time. A FD receipt is issued to the depositor acknowledging receipt of sum money mentioned therein. IT also contains the rate of interest and the date on which the deposit fall due for payment.

STD Account In STD A/C the deposit should be kept for at least 7 days to get interest. The interest offered for STD is less than that of saving deposit. In The City Bank Ltd. various big company, organization, government departments keep many in STD a/c. Frequent withdrawal is discouraged and requires prior notice.

In The City Bank Ltd., usually customers give an instruction to the Bank that their CA will be debited whenever its deposited amount crosses a certain limit and this amount will be transferred to the STD a/c.

(2.0) Demand Deposit These deposits are withdrawn able about without notice, e.g. Current Account. The City Bank accepts demand deposit through the opening of  Current Account.  Savings a/c.

Current Account Current account is an account where numerous transactions can be possible by the account holder within the funds available in its credits. No interest is paid on those deposits. A current is a running and active a/c, which may be operated upon any no of times during a working day. There is no restriction on the amount of withdrawal from a Current Account.

The Primary objectives of CA are to save big customers such as- business men, Joint Stock Company, Public authorities etc. from risk of handling a lot of cash themselves. The cost providing CA facilities is considerable to the Bank since they undertake to make payments and collect bills drafts, cheque for any no. The Bank is therefore don’t pay interest on current deposit while on the other hand, some Banks charges on a/c’s.

The current account holders enjoy certain additional privileges in comparison to a saving deposit holder: a) The bank collects third party cheques with the endorsement for their current account holders. b) The bank gives overdrafts facilities a certain case. c) The banks grant the loans and advances though current accounts.

Saving’s Account To encourage savings habit amongst the general public, bank allows depositors to open savings account. As the name indicates, these accounts are opened for the purpose of savings.

Interest is awarded on the balance of the account. Only 13% of the saving deposits are demand deposit and rest of is time deposit. ♦ The Bank offers a reasonable rate of interest. ♦ The no of withdrawals over period of time is limited. Only two withdraws are allowed per week.If there are more than two withdrawals are made in a week no interest will be paid on rest of amount of that month. ♦ The total amount of withdrawals on any date should not exceed 25% of the balance in the a/c unless 7 days advance notice is given.

3.3 Composition of deposit Banks deposit grew by 29% in 2006. Total deposit stood at tk 39572 million with an increase of tk 8924 million. The deposit position in the year 2005 was tk 30648 million. The growth was supported by branch network and high standard service provided to customers. Fixed deposit remained the main component of deposit contributing about 46% of total deposit.

90000 80000 70000 60000 50000 40000 30000 20000 10000 5000

50700

30648 [[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[

22236 20046 19683

06

07

08

09

10

3.4 Deposit composition of bank

No.

Type of deposit

Amount in million

% of share

01 02 03 04 05

Current + others Savings Short term Fixed deposit Scheme Total deposit

5815.47 7167.83 2829.34 18324.06 5435.24 39571.94

14.70% 18.11% 7.15% 46.31% 13.73% 100.00%

3.5 Different types of customer / Account Holder Any one can open an account in Bank if he or she is capable of entering in valid contract and a banker’s are willing to enter into the necessary business relation with him. So any of the following can open an Account 

Individual (personal) account.



Joint account.



Partnership firm (Sole traders/ registered or unregistered)



Joint stock company (Private/Public LTD company.)



Public Sector Corporation.



Municipalities/ Local bodies.



Clubs/Associations/ Schools/ colleges/ Universities.

ď ą

Executors/ Administrator.

ď ą

Trustee.

3.6 Account Opening Section The relationship between the customer and the banker begin with the opening of an account by the customer. Opening of an account binds the banker and the customer into contractual relationship. But selection of customer for opening an account is very crucial for a bank. In fact all kinds of ford and forgery start by opening an account. So the banker should take extreme caution in its selection.

3.6.1 Account Opening Procedure A. Below the process 1. An existing CA holder of the Bank.

2. Officials of the Bank not below the rank of an Assistant officer.

3. A respectable person of the location well known to the Manager/Sub-Manager of the Branch concerned.

B. The type of account, the prospective Customer wishes to open should be ascertain.

Highlight the main features of the account obtained necessary papers prescribed for opening of the particular type of account including two copies passport size photo of the account holder duly attested by the Introducer and verified by the Authorized officer of the Bank.

C. Supply a set of printed forms required for opening the account, which will normally include: 1. Advise of new account.

2. Specimen Signature Cards (SS Card).

3. Account Agreement.

4. Deposit Slip Book.

5. Check Book Requisition Slips.

D. Request the customer to carefully read and fill up the printed forms supplied to him.

E. Signature of the customer on the reserves of the signature card. Any special instructions with regard to operation of the account should be noted on the relevant signature card boldly duly authenticated by the account holder should be obtained.

F. The required account no. For the new account from the account opening register should be obtained.

G. Obtain the signature and account no. Of the Introduces on the advice of new account the place meant for the purpose and gets the signature properly verified by an Authorized official of the Bank.

H. The Deposit slip properly filled in and signed by the customer in duplicate should be collected. Then the new account no. Should be written at the appropriate place of the deposit slip and request the customer to deposit the money at the Teller’s counter.

I. Get each signature of the Customer) introduces on the Advice of New A/c and on the signature cards admitted by the authorized official of the Bank using a small rubber Stamp. The Authorized officer on the advice of new A/c and on the spice men signature cards should also attest the signature of new a/c hold.

J. After approval of the opening the a/c, get the Chequebook requisition slip signed by the Customer’s a/c of the amount of Exercise duty payable for the checkbook.

K. Deliver the checkbook to the customer after properly marking the a/c no. Name and place of the branch on each leaf of the checkbook.

L. On completion of a/c opening opens a file for the new a/c holder and files all relevant papers forms etc. Signature card copies of advice, Deposit slip Debit ticket etc. is distributed to concerned departments.

3.6.2 Cheque Book Issue To facilitate the withdrawals and payments to third parties by the customer, the bank contains ten leaves book to the customer. A savings account chequebook contains ten leaves and a chequebook of current account may be 20 pages or 50 pages. The account number is affixed

on corner of each page. The withdrawal pages book contains one extra page called cheque requisition slip, which is signed by the account holder and verified by the authorized officer at the time of issuing a chequebook. The cheque serial is entered both in the chequebook issue register and in computer to the corresponding account.

3.6.3 Transfer of an account When an account is transferred from one officer to another, the account opening form etc. signed at the time of opening account and any forms or documents which are necessary for its proper conduct at the time of transfer, must be forwarded under cover of form, to the office to which the account is transferred together with the relative mail transfer, specimen signature cards) and standing instruction if any, no exchange should be charged on such transfer. Attention is also invited in this connection.

3.6.4 Closing the account A banker can close the account of his customer or justifies the stoppage of the operation of the account under considerable circumstances:  Notice given by the customer himself.  Death of customer.  Customer’s insanity and insolvency.  Order of the court.  An application to close the account from customer is received.  Chequebook is destroyed.

3.7 Telegraphic Transfer (TT) TT is “Account payee only instrument. The customer can enjoy this facilities only A/C in the down on branch. Telegram, telephone, telex, or fax as desired by the remitter effects TT. Transfer of the funds by telegraph is most repaid and convenient but expensive method. The drawer and payee should have a/c with the bank. TT is issued against cash, cheque and later of instrument.

3.7.1 Procedure for out going TT  Deposits of money by the customer along with filled application form.  A cash memo is given to the customer containing TT serial no…

 Tested telex message is prepared, when TT serial no. Notifying party name, a/c no is mentioned.  Telex section officer confirms transaction of message.

3.7.2 Procedure or incoming TT After receiving the telex message, it is authenticated by verify cod no Serial no. Etc. It is called the test for TT. For example:  There is the TT serial no.  Payment serial no.  Branch serial no. (It is written on ABC book, which will not to another branch.)  Date code no  Amount code no.  Managers code no.  Officer codes no.

3.8 Pay order (PO) This is an instrument issued by the branch of a bank for enabling the customer/ purchaser to pay certain amount of money to the order of a certain person/ firm/ organization/ department/office in the same clearinghouse area of the pay order-issuing branch. (a) Pay order has different characteristics  The issuing branch and the paying branch are same.  Application for payment with in the clearinghouse area of the issuing branch.  This may be open or can be crossed. (b) Procedure of P.O. issue  Obtain PO application form duly filled in and signed by the applicant.  Receive the amount in cash/transfer with commission amount.  Issues pay order.  Enter in pay order register.

(c) Procedures of pay order payments  Examine genuinely of the pay order.  Enter in to pay order register and give contra entry.  Debit if fund ok for payment. (d) Canceling a pay order The party will submit the pay order along with an application mentioning the reason of cancellation. If the pay order is submitted to the favoring party endorsement will be given on the pay order.

Party will be charged an amount of TK.60/- as per cancellation charge. No cancellation charge will be charged if the favoring party will released the pay order. For every commission government charges 15% VAT of the commission.

3.9 Opening FDR account The necessary steps for opening of an FDR account are 1. Filling up the prescribed FDR account opening application form.

2. Signing on the SS card.

3. Depositing the FDR amount.

4. Accepting the FDR Receipt.

3.9.1 The FDR Block The FDR block has different parts. The smaller one remains in the bank along with FDR block and the other one is received by the account holder as FDR receipt. The account holder as FDR receipt receives both of the other. Both of the FDR pages contain the same information.

A FDR slip contains the following information: 1. Serial number of the FDR. 2. Issuing data.

3. Received form (name of the account holder).

4. Sum of the TK. 5. The rate interest and period.

6. Date of maturity.

7. Two authorized officer’s sign.

3.9.2 FDR account opening In Fixed Deposit receipt party could deposit for 1 month, 3 month, 6 month or 1 year and time block offers different interest rate. Below is the table describing this: FDR

Rate (%)

For 1 month For 3 month: Up to tk. 1 crore Tk. 1 crore to 5 crore Above tk. 5.00 crore

8

Remarks Eligibility: Interest accrued Less than tk. 2000 will not be

10.25 10.50 10.75

For 6 month: Up to tk. 1 crore Tk. 1 crore to 5 crore Above tk.5.00 crore

10.50 10.75 11.00

For 1 year: Up to tk. 1 crore Tk. 1 crore to 5 crore Above tk. 5.00 crore

10.75 11.00 11.25

These interest rates is calculated and revised by finance division located at the corporate office of The City Bank Ltd. And forwarded to all the branches.

3.9.3 Payment of matured FDR In case of matured FDR interest is paid with the principle amount but pre maturated FDR does produce minimal interest. Suppose party opens an FDR for 1 year and after 8 FDR A/C

Debit.

(Auto) Source tax A/C Excise Duty Pay slip/ (SB/CD) A/C Interest Credit

Months he /she want to withdraw, then interest will be given for 6 months, not for 1 year.

Pay slip Stamp is mandatory, when closes the FDR account, this is needed. It contains the signature of the accountholder, which is verified later.

Auto renewal of FDR If the account holder allows the provision of auto renewal then the FDR account will be auto renewed after the maturity. The renewal will be for another three month.

Preparing bill, statements Accounts section makes the salary statement for the employee at the end of the month and also some bills like  Conveyance: Going outside in office time for official purpose.  Entertainment: Supplying tea  Table stationary  Office stationary  Beautification  Electricity fitting and replacement  Furniture  Magazine: Pay the bill of newspaper and magazine.

3.10 Clearing house According to the article 37(2) of Bangladesh Bank Order.1972 the banks, which are the member of the clearinghouse are called as Schedule banks. The scheduled bank clear the house drawn upon one another through the clearinghouse. This is an arrangement by the central bank where everyday the respective member banks gathers. Banks for credit of the proceed s to the customers’ accounts accept cheque and other similar instruments. The bank receives many such instruments during the day from account holders. City Bank Kawran Bazar branch receives different types of instruments, such as check, pay order, demand draft (DD), from its customers for collection. It also pays on behalf of its customers for those instruments that come to it through clearinghouse. When instruments of City Bank are sent

for collection or received for payment through clearinghouse it is called Inter Branch Collection or IBC. The whole process of collection and payment would involve considerable labor, delay, risk and expenditure, all the labor. Risk delay and expenditure are substantially reduced, by the representatives of all the banks meeting at a specified time, for exchanging the instruments and arriving at the net position regarding receipt.

3.10.1 Transfer delivery The process of collection of cheque's and other instruments from branch to branch of a bank is known as transfer delivery.

Preparing instrument for transfer delivery  The branch received the instruments through deposit slip.  All the essential of an instrument is then checked.  Entry is given in outward register.  Courier/ attendant sends the check with a schedule to the drawer branch.

Responding the instruments through transfer delivery  The responding branch will collect the instrument from the messenger.  Entry is given in inward register.  If the instrument is honored then responding branch will send an IBCA. Accounting entries for main Branch: Party a/c

Dr.

H.O a/c (responding branch)

Accounting entries for main branch: H.0 a/c Party a/c

Cr.

Dr. Cr.

3.10.2 Out ward Bill Collection (OBC) Collection of check of a bank outside the clearing zone is known as OBC. It refers the instruments drawn on the other Banks received by the City Bank Ltd.

System of OBC Lodgment  Accepting the instrument with deposit receipt from the client.  Investing the instrument and deposit receipt carefully, specially date of check, amount, and account number, name, and sign of depositor.  The following seals are applied on the instruments; like OBC seal with OBC number, Endorsement seal.  Entry in the OBC registers.  Making two copies of schedule. One is enclosed with the instrument for collecting and the other one ID used as office copy.  A contra voucher will be written. The entries: Customer Liability

Dr.

Banker's Liabilities

Cr.

 Instrument attached with forwarding schedule is send to the bank on which the check has been drawn.

Kawran Bazar branch

IBCA along with bills

Collects check.

Are sent to Principle Branch

If drawers bank honors the bill then

These bills are sent to clearing house from principle branch.

Depositor’s acct is credited with City Bank, Kawran Bazar Branch.

3.10.3 Inward bills Collection (IBC) When a check comes to the bank from another branch outside the clearing area, the process is called IBC. After collection of check an IBCA is send to the OBC sending branch.

Sending the OBC is not enough for marking payment. We send the remained on instrument drawee bank to send back the instrument may be placed more than one time for payment.

Bills collected from other banks

Bank debits the A/C of principle Branch

Through clearing house by principle branch Drawn on Kawran Bazar branch

City Bank, Kawran Bazar debits customers

Principle Branch sends the bills To Kawran Bazar Branch with an IBCA.

Respective account.

3.11 Cash section Cash:

Receive and payments in cash are the prime task of the cash section. Everyday cash balancing is done at the end of the transaction. There are three limits in cash section; they are the 1. Counter limit, 2. Volt limit 3. Transit limit.

How many accounts have to be kept in the counter, volt and transit decided by the size and mode of transaction of the branch.

Functions of f the department a) Shall be responsible for all cash and cash items related matters including record keeping of the information are received regarding cash remittances. b) Shall supervise the cash remittance under direct guidance of Sub-Manager. c) Shall be responsible for any receipts and payments as per circular issued from time to time. d) Keeping liaison with the Bangladesh Bank, Cash department.

3.11.1 RECEIPT The account holders are prescribed deposit slips supplies to depositing cash in their respective account. So a cashier carefully scrutinizes the deposit slips. If any information is missing it is failed by the depositor. The cash receiving process is process is as follows:  Count the notes and list the amount on the back of deposit slip in order to denomination starting from the highest.  Compare listing with the cash amount shown on the face of the deposit slip.  Place the cash drawn duly stored according to the denomination.  Enter the particulars such as serial no, account no, title of account received in the cash receive register.  Put cashier's signatures on the deposit slip and simultaneously get the same countersigned and the entry in the cash received register duly authenticated by the head cashier/officer.  Validate the deposit slip on the face with the validating rubber stamp and return to the depositor, retaining officer copy for bookkeeping purpose.

3.11.2 Cash Payment

The token Clark issues a token to the presenter against of cash check after scrutinizing the material part of the check, the no of the entries with his initials on the back of the check under a rubber stamp. The check is also scrutinizing by the computer operation/officer who must satisfy himself that it is the order in every respect that it is from drawer's S/B. a check book and that the amount does not exceed the credit balance of the amount. He will then the post the amount in the ledger, entry the folio no in the left corner of the check.

Then the check is sent to the authorized official who offer satisfying him that in every respect inclusive of verification signature will pass it for payment and recording the entries in cash payment register. Both the cashier and head cashier will put their initials against the entries in the cash payment register.

After payment of cheque/instrument the cashier affixes the PAID seal on the instrument. The documentation of the currency notes paid is also recorded on the back of the instrument.

Foreign Exchange 4.1 Foreign Exchange Foreign Exchange Department is international department of any Bank. It deals globally. It facilitates international trade through its various modes of services. It bridges between importers and exporters. If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign country. This department is called foreign currency department.

Some national and international laws regulate functions of this department. Among these, Foreign Exchange Act. 1997 is for dealing in foreign exchange business, and Import and Export Control Act, 1950 is for Documentary Credits (UCPDC) 1993 revision & International Chamber of Commerce Publication no-500 is also an important law for settlement of terms and conditions between exporter and importer in international trade.

Government’s Import & Export policy is another important factor for import and export operation for banks.

In banking arena the term foreign exchange originated from the exchange. Exchange has several meanings. One term commonly used in banking is the "clearing house exchange".

Banks in a community, who have formed a clearing House Association exchange the items in their possession but draw on other banks in the community and with these other banks at the daily meeting of the clearing Housing Association. Settlement to all items exchanged is simplified because the exchanged is settled on a "net basis" wherein the "losing banks" pay the "winning banks" the net difference in the exchange of items.

The term is also used to denote a service charge, or exchange fee, made by banks for cashing checks, usually items drawn on distant point "Exchange" in financial circles also describes meeting place where stocks, bonds and commodities are bought and sold or traded in.

Example: stock exchange curb exchange, grain exchange and cotton exchange.

Foreign Exchange refers to trading that involves foreign currencies. The principal foreign exchange markets are in New York City where many banks have private wires to all foreign countries. By this communication service, these banks are able to buy and sell for immediate or even future delivery funds of foreign countries, these funds to be used to pay for imports or exports in the currency describe by the seller of the goods.

38

4.1.1 Import: The import business including local L/Cs of the bank increased to tk 32096 million in the year under review from tk 21363 million of the previous years. Increase in the in the import business is 50% compare to the previous year.

30000 25000 20000 15000 1000 5000

Dec 02

03

04

05

06

4.1.2 Export The volume of export business including local bills rose to tk 28211 million from tk 18219 million in 2009 showing a growth of 55%. Ready Made Garments, frozen food and leather add this growth in 2010.

4.2 Function of Foreign Exchange Department 1.

L/C Opening.

2.

L/C Amendment.

3.

Foreign Bill Purchase.

4.

Local Bill Purchase.

5.

Foreign Remittance.

6.

FC (Foreign Currency). A/C Maintaining.

7.

Foreign Currency Remitting.

8.

TC

(Traveler Check).

4.3 Foreign Exchange Mechanism 1.

L/C Opening.

2.

Issue the L/C by issuing bank and send to advising bank.

3.

Advised and confirm the L/C by advising and Confirmation bank.

4.

Submit the Documents to negotiating bank by export.

5.

The negotiating bank makes payment.

6.

The Negotiating bank forward/sends documents to issuing bank.

7.

Issuing bank makes payment to negotiating bank.

8.

An issuing bank instructs to pay or reimburse the paying bank makes payment or reimburse the negotiating bank.

9.

Issuing bank sends documents to the importer. 10. The importer makes payment.

4.4 Documents of International Trade Documents are important in international trade because they control the international movement of goods; in some cases, they are legal title of the goods. It is important that the

correct documents should be in the right place at the right time and in order to speed delivery of the goods and subsequent payment that they should correctly completed. A seemingly minor discrepancy in the documentation will almost certainly lead to a delay in receiving payment.

In the rest of this chapter we shall learn the information to be found on the basic documents of international trade and list the documents that are required when a contract is established between two parties.

4.5 Invoices An invoice is prepared by the seller of the goods and contains the following details: 1.

Name and address of the seller.

2.

Name and address of the buyer.

3.

Date of the invoice.

4.

A description of the goods together with the price.

5.

Details of the way in which the goods are in create cases or drums-and shipping marks on the packages.

6.

The terms of sale (CIF, C & F, FOB and so forth); the charges for insurance and freight, if applicable, may also be detailed on the invoices;

7.

If applicable, details of import licenses and exchange permits required by the importing country.

8.

The total amount payable.

An invoice is the list of items along with the prices of products produced by a certain organization. If such an invoice is sent from an exporter towards an importer for the purpose of trade, then it is called Proforma Invoice. Now, if a trade agreement is signed between the exporter and the importer on the basis of the profroma invoice, upon their unanimous consent, from that moment the invoice is termed as commercial invoice.

The details of the invoice should tie up with the contract of sale; if a documentary letter of credit has been opened, the invoice should conform exactly to its terms. Several copies of invoice are normally required for the use of the buyer, customs and the import authorities abroad. Some countries may require a certified invoice or certificate of origin to confirm that

the goods come from a particular country; Britain certain chambers of Commerce authorized by the Department of trade to make declarations of origin.

4.6 Method of Payment in International Trade The terms of payment and the method by which settlement is to be effected are agreed between the exporter and his customer in their contract. The terms and method of payment required by exporter will depend very much on the previous experience, if and, that he has in the particular market, on his knowledge of the overseas customer and on the tatter's financial standing.

The main methods of securing payment starting with the safest are: (a) Payment in Advance. (b) Payment under a Documentary letter of Credit. (c) Documents against payment or acceptance of the exporter's bill of exchange and (d) Open Account.

Payment in of advance This is undoubtedly the safest way to receive payment for exports but buyer is seldom prepared to pay for goods in advance of shipment, other than for small consignments. The buyer through his bank by means of a bank draft or generally makes any such payment by mail or telegraphic transfer in favor of the exporter.

Documentary Letter of Credit After payment in advance this represents the safest and faster way of obtaining payments for exports as the exporters can personally retain control of the documents of title to the goods until the moment of payments or acceptance of a bill of exchange the parties to a credit are: 1.

The applicant (usually the buyer), who arranges to open a credit in accordance with the terms of the contract he made with the beneficiary (usually the seller).

2.

The beneficiary in whose favor the credit is issued.

3. The issuing bank which commits itself in accordance with the applicant's instructions.

4. The advising bank, which is located in the country of the beneficiary and is usually the issuing bank's correspondent.

Letter of credit is an instrument or document issued by a bank or another bank or banks, foreign or domestic, or upon itse lf. The letter of credit gives the buyer (probably unknown to the seller) the prestige and financial backing of the bank who issues the letter of credit on his behalf. The acceptance by the bank of draft drawn under the letter of credit satisfies the seller and his bank in the handing of the transaction. The buyer and the accepting bank also have an arrangement as to payment for the drafts as they are presented.

Documentary letter of credit refers to the letter of credit along with the papers relevant to it. Mathematically we can say: DLC=LC+RNP Where, DLC = Documentary Letter of Credit.

LC= Letter of Credit RNP= Relevant Necessary Papers.

Where the terms of the contract call for payment under a credit, The buyer (or applicant) applies to his bank (the issuing bank) to open a credit in favor of the exporter (the beneficiary). a bank in his own country (the advising bank). Under the terms of credit, the issuing bank undertakes that the seller will be paid for his goods provided he complies with certain stated conditions. This will for certain documents, such as invoices, bill of lading and insurance documents (depending on the precise responsibility of the exporter covering the quantity and quality of goods agreed in the contract between the exporter and the overseas buyer).

Before issuing a credit the bank must make certain of its customer's creditworthiness; if this is satisfactory, the credit is then advised to the exporter through Provided that the documents presented to the advising bank agree exactly with the requirements of the credit, the exporter receives the payment due to him in exchange for the documents. The advising bank sends to the issuing bank airmail, upon receipt, they are handed to the buyer, who then awaits the Arrival of the arrival of the carrying vessel.

43

When the ship docks, the buyer presents the bill of lading to the representatives of the shipping company and, in discharge of the shipping company's responsibilities under the contract of the carriage, receives the goods. Payment for the goods by the buyer to the issuing bank is a matter of agreement between them and of no concern for the exporter. The settlement between the banks for the amount paid by the issuing bank is carried out through their agency accounts. The issuing bank's account in the records of the advising bank is debited, and the account of the advising bank in the records of the issuing bank is credited.

Besides the Advising of credit to the exporter, who knows that he will receive payment provided he complies with its terms, there are benefits to the buyer. He knows that payment will be made by the advising bank when the exact documents specified have been received as these are the documents of title, then once they are in hands of the advising bank, it will only be a matter of time before they are sent to him. Allowing him to collect the goods.

There is however a risk to the issuing bank because the credit only deals in documents and not in goods, so that provided the exporter complies with the terms and conditions of the credit he will be paid even through the creates supposedly containing the goods have been packed with sawdust and old newspapers. A status inquiry by the bank on the exporter is therefore essential.

4.7 Characteristics of the importer who wants to open a L/C ďƒ˜ Must have an A/C in the branch. ďƒ˜ Member of the Chamber of Commerce. ďƒ˜ Must be a TIN Tax Identity Number) holder.

4.8 Import Mechanism To import, a person should be competent to be an importer. According to Importer and Exporter Control Act, 1950 the office of Chief Controller of Importer and Exporter provides the registration (IRC) to the importer. After obtaining this, the person has to secure a letter of credit authorization (LCA) from Bangladesh Bank. Then a person becomes a qualified importer. He is the person who requests or instructs the opening bank to open an L/C. He is also called opener or applicant of the credit.

4.9 Importers application for L/C Limit/ Margin To have an import L/C Limit, an importer submits an application to the Department of The City Bank Limited furnishing the following information:



Full particulars of bank account.



Nature of Business.



Required amount of limit.



Payment terms and conditions.



Goods to be imported.



Offered security.



Repayment schedule.

A credit officer scrutinizes this application and according prepares a proposal (CLP). The Committee v if satisfied, sanctions the limit and returns back to the branch. Thus the importer is entitled for the limit.

4.10 The L/C Application The City Bank Limited provides a printed from for opening of L/C to the importer. This from knows as Letter of 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. The importer gives the following information:  Full name and address of Importer.  Full name and address of Beneficiary.  Draft amount.  Availability of the credit by sight payment  Acceptance/negotiation/deferred payment.  Time bar within which the documents should be presented.  Sales type (CIF/FOB/C&F)  Brief Specification of commodities, price, quantity, indents no etc.  Country of origin.  Bangladesh Bank Registration no.  Import License/ LCF no.

 IRC no.  Account no.  Documents required.  Insurance cover note/ policy no. Date, amount.  Name and address of Insurance Company.  Whether the partial shipment is allowed or not.  Whether the Trans-shipment is allowed or not.  Last date of shipment.  Last date of negotiation.  Other terms and conditions if any.  Whether the confirmation of the credit is requires by the beneficiary.

4.10.1 The above information is given along with tie following documents 1.

Bill of Exchange.

2.

Proforma Invoice stating Description of the goods including quantity, unit prices.

3.

Bill of lading/ truck receipt/ airway bill.

4.

Commercial Invoice.

5.

Packing list.

6.

Insurance cover note, issuing company and the insurance number.

7.

Five set of IMP Form.

8.

Certificate of Origin.

9.

Credit

4.10.2 The latter of credit authorization form 1.

Name and address of Importer.

2.

IRC no. And year of renewal.

3.

Amount of L/C applied for (both in figure and in word).

4.

Description of item(s) to be imported. 5. ITC Numbers.

6.

H.C code.

7.

Stamp and signature of the Importer with seal.

4.10.3 Types of L/C At sight L/C.

Deferred L/C. Back to Back L/C

At sight L/C At Sight L/C, an exporter (Original exporter of Mother L/C) can get payment immediately against the exporter's presentation of the documents.

Deferred L/C For deferred L/C, an exporter (Original exporter of Mother L/C) can get payment after 60 or 90 or 120 or 180 days after negotiation.

Back to Back L/C In case of Back-to-Back Letter of Credit a new L/C (an Import L/C) is opened on the basis of an original export L/C or Mother L/C. Under the Back-to-Back concept, the seller is the beneficiary and the beneficiary/ Exporter of an original export L/C or Mother L/C is the importer/ buyer. The beneficiary of the Back-to-Back L/C may be located inside or outside of the original beneficiary's country. Normally, an applicant or the importer (beneficiary of original Export L/C or Mother L/C) will be able to open a Back to Back L/C maximum 75% value of original export L/C or Mother L/C. As security, original Export L/C or Mother L/C or Master L/C will be under lien on bank.

For Back to Back L/C, an Importer (Exporter or Beneficiary of the original Mother L/C or Master L/C) will have to import the goods or products within the validity of the original mother L/C. otherwise, importer and exporter will communicate for amendment.

4.10.4 Scrutinizing of L/C Application The City Bank official scrutinizes the application in the following 1.

The terms and conditions of the L/C must be complied with UCPDC 500.

2.

Exchange Control and Import Trade Regulation.

3.

Eligibility of the goods to be imported.

4.

The L/C must not be opened in favor of importer.

5.

Radioactive report or certificate in cases of old machinery.

6.

Survey report or certificate in case of old machinery.

7.

Carrying vessel is not Israel.

8.

Certificate declaring that the item is in operation not more than 5 year in case of car.

4.10.5 Precautions taken by officer before issuing L/C After submission of documentary letter of credit application form, the concerned officer scrutinizes the terms and conditions that mentioned in application. He must check the following things:  Whether the terms and conditions of L/C application are consistent with Exchange Control and Import Trade regulation UCPDC-55.  L/C must not be opened in favor of the importer or his agent.  The importer agreeing all conditions mentioned in the application must sign L/C.  Indenting registration number.  Whether IMP form dully filled and signed.  Validity of IRC.  Insurance cover note with date of shipment.  The HS code of the goods.  The balance of the goods.  The balance of the accounts of the importer.  The goods are not form Israel and vessel to the used are not of Israel.  The issuing officer will try to keep as much margin as possible.

4.11 In The City Bank Ltd., documents required for submission for opening of Back-to-Back L/C a)

Master L/C.

b)

Valid Import registration certificate (IRC) & Export Registration certificate (ERC).

c)

L/C application and Agreement for confirmed Irrevocable without recourse to drawer's letter of credit.

d)

LCA form duly filled in signed. e) Performs invoice.

f)

Insurance cover note with money receipt. g) IMP form duly signed.

In addition to the above following papers/documents are also required for Export oriented garments industries while requesting for opening of Back to Back L/C: a)

Textile permission

b)

Valid Bonded warehouse license.

c)

Quota allocation letter issued by Export promotion Bureau (EPB) in favor of the applicant in case of quota items.

Amendment of Letter of Credit Parties involved in a L/C, particularly the seller and the buyer cannot always satisfy the terms and conditions in full as expected due to some obvious and genuine reasons. In such a situation, the credit should be amended. The City Bank Limited transmits the amendment by tested telex to the advising bank. In case of revocable credit, it can be amended or cancelled by the irrevocable letter of credit, it can neither be amended nor cancelled without the agreement the issuing bank, the confirming bank (if any) and the beneficiary. If the L/C is amended, service charge and telex charge is debited from the party account accordingly.

Presentation of documents The seller satisfied with the terms and conditions of the credit proceeds to dispatching of goods to the negotiating bank on or before the stipulated expiry date of the credit. After receiving all the documents, the negotiating bank then checks the documents against the credit. If the documents are found in order, the bank will pay, accept or negotiates to The City Bank Limited.

The City Bank Limited checks the documents. The usual documents are Invoice.  Bill of leading.  Certificate of Origin.  Packing list.  Shipping advice.  Non-negotiable copy of bill of lading.  Bill of exchange.  Pre-shipment inspection report.  Shipment certificate.

Examination of Documents

The City Bank Officials checks whether these comments have any discrepancy or not. Here, Discrepancy means the dissimilarity of any of the documents with the terms and conditions of L/C.

Dispatching the Import L/C After opening of import L/C, The City Bank Limited Kawran Bazar Branch dispatches the L/C. Kawran Bazar Branch sends an original copy of the L/C for negotiating and a copy to the advising bank for advising. It also sends in imbursement.

Receiving Document If the beneficiary is being satisfied with the term and conditions of the L/C then dispatching the goods to the buyer. After that dispatch the documents evidencing dispatching of goods to the negotiating bank on or before the stipulated expiry date of L/C.

The Documents includes Commercial Invoice.

Bill of lading.

Bill of Exchanging.

Shipping Certificate.

Pre-shipment Inspection Certificate.

Certificate of origin.

Packing list.

Weight list.

Insurance Cover Note.

Radio Activity Report (applicable for import of foods only.)

After receiving all the documents, the negotiating Bank then checks the documents against the credit. If the documents are found in order, the bank will sends to The City Bank Limited

Lodgment & Retirement Section Lodgment means retirement of funds. If the documents receiving from the negotiating Bank (The City Bank) Kawran Bazar Branch also scrutinize the documents. The offer carefully examines the following points.

 Invoice The invoice should contain quality, quantity, unit price, and total value.

The number of copies should exactly meet the requirement of the credit.

The shipper must sign all the copies.  Bill of Lading It must be duly signed and endorsed.

It must state payment of freight. If the invoice price is on C&F basis the bill of lading must be marked "Freight of Pay" is marked on B/L.  Certificate of Origin It should provide evidence of the goods as specified in the bank. It is by the Chamber of Commerce of beneficiary's country.  Bill of Exchange Is the Bill of Exchange drawn in the language of the credit?

Is the bill of exchange properly prepared accordingly to the credit conditions (on a sight or time basis) and drawn on the specified bank?

Is properly dated and signed?

Is the amount in figure corresponded exactly with the amount in word?

Does it contain all the prescribed notations and clauses?

Any other documents such as Weight and Measurement Certificates, Insurance Certificates, packing list etc. as stipulated in the credit must be examined before negotiation.

After scrutiny of these documents, if there is any discrepancy in the document, the officer sill promptly advise the importer and the negotiating bank and asks them to rectify these discrepancies. But if there is no discrepancy, then he will prepare some voucher to adjust the payment.

Payment against Document

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 things:

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

Preparing Sale demo A sale memo is made at B.C rate to the customer. As the T.T & O.D rate is paid to the ID, the difference between these two rates is exchange trading. Finally, an Inter Branch Exchange Trading Credit Advice is sent to ID.

Loan against merchandise Loan against import merchandise through the bank may be allowed retaining Margin prescribed on their Landed Cost, depending on the categories and credit restrictions imposed by the Bangladesh Bank/ head office from time to time. Branches shall also obtain letter of undertaking and indemnity from the clients. Before getting goods cleared through LIM account. Clearance of the goods should be taken through Approved Clearing Agent of the Bank.

4.12 Remittance department Foreign Remittance business In the year 2009 City Bank Limited has established new inward foreign remittance relationship with 8 exchange house located in U.K, UAE, Oman and Qatar which helped the Bangladeshi expatriates to remit their foreign currency through proper banking channel. The bank handled foreign remittance business amounting tk 9780 million directly through 14exchange house in the year 2009. Total amount of foreign remittance received through exchange houses and banks was tk 12473 million. The amount in the same period of the last year was tk 7158 million. The growth of the foreign remittance business in 2010 was 104% compare to the previous year.

9000 8000 7000

6000 5000 4000 5000 4000 3000 0 Dec 06

07

08

09

10

Fig: growth of foreign remittance dramatically

Conclusion and Recommendation 5.1 Findings We have found the following things in my studyThe City Bank Ltd is very much expert in export import trade handling.

The City Bank Ltd is also cautious in export import trade financing to avoid any types of fraud.

The culture of Southeast Bank is very much suitable.

Clients are also very pleased on their services.

All documentary credit is following the UCPDC rules and regulations.

Most of the years, import and Export Both are positively increased.

As usually Bank’s branches, employee and also Correspondent’s growth rate is highly increased.

5.2 Conclusion The City Bank Limited is one of the fastest growing banks among all the private commercial banks in Bangladesh. This bank constantly looks for ways & means to improve productivity by rendering to its customers in order to remain competitive in the market.

The City Bank Limited plays a significant role in various fields in the economy such as industry, trade & commerce, transportation, deposit mobilization etc. It is playing a crucial role in human resource development and in creating new employment opportunities. It is also undertaking various welfare activities for the betterment of the society, in this context the bank has established The City Bank Foundation.

The reliability of the customers on The City Bank Limited is increasing promptly day by day.

The overall performance of The City Bank Limited solid revenue growth together with strict discipline on expenses. The bank constantly reviews its systems, policies, process and prices of its products and services with the changing marketing reality.

5.4 Reference 1.

Annual Reports.

2.

Web side of The City Bank www.thecitybank

4.

Search engine: Google, Wikipedia.