Chapter 1

Introduction

Introduction of the Study:

As I had appeared in MBA final semester I had to go through are three month long Dissertation program for the fulfillment of my MBA Program

requirement. Though I am an employee of Uttara Bank Ltd. that is why I had been assigned to complete my dissertation at Uttara Bank Ltd. Here I had communicated with Uttara Bank Ltd. accordingly. After a certain

correspondence I had been selected as an Internee of Uttara Bank Ltd. and had been deputed at General Banking, Local office , Dhaka. It was great opportunity for me to know about General Banking & foreign exchange activities of , Uttara Bank Ltd., Local office Dhaka.

In my whole MBA program I had a lot of courses like Banking Theory and Practice, Financial Management, Service Marketing, General Banking & foreign exchange activities , Accounting etc. But what I had learnt was purely theoretical. It was needed to do some practical work for more clarification. Because of my great Banking on General Banking & foreign exchange activities procedure of Uttara Bank Ltd., I had chosen the Uttara Bank Ltd.

Objective of the Study :

The objective of my study are as follows : 1. To know about the history, culture, management of Uttara Bank Limited. 2. To evaluate overall financial performance of Uttara Bank Limited.
3.

To know about methodologies of General Banking & foreign exchange .

4. To text checks a few case studies.

Rationales of the study :

In all sorts of commercial operations Banking is inherent specially for the banks & financial institutions where General Banking & Foreign exchange activities an

essential factor which is required to be managed suitably at least to keep the same as minimum as possible. In simple language, general banking refers to the possibility of that extent of obligation which the borrower or concerned party will not be able to fulfill in accordance with the banking terms and conditions.

METHODOLOGY OF THE STUDY:

It is an exploratory study. The information to be presented in this report will be collected from both primary and secondary sources & case studies. Primary information to be collected from the executives of the bank & clients of the bank. And secondary data will be collected from Uttara Bank Ltd. Training Institute, Uttara Bank Annual Report, Journals and Credit Management related papers.

Sources of Data :
While determine the sources of information that would be required for the study. I used both primary and secondary data to conduct my survey. In addition, I have included my own observation as a valuable and first hand source while describing the performance and the evaluation of the bank.

1.5.1 PRIMARY DATA:

I have collected primary data by interviewing employees and clients of Uttara Bank Limited. Primary data were derived through the discussion with the employees of the organization. Clarifications of issues from different concerned of issues from different concerned officials of UBL. I have collected primary data in the following way:

Face to face interview with both employees and clients. By telephoning clients. Through structured questionnaire. Designing unbiased and uncontrolled survey.

1.5.2 Secondary data:

I have used different types of secondary data in my research. Sources of secondary data are is follows:

1.5.3 Internal Sources:

Annual report of Uttara Bank Ltd. Information regarding UBL Corporate Branch, Dhaka.

1.5.4 External Sources

Different books and periodical related Bangladesh Bank Report Various journal of Bank. Web site of Uttara Bank Ltd. (www.uttarabank-bd.com)

1.6 Limitation of the study:

Limitation of the study which I faced are as follows ----

1.

Three months time is not enough to evaluate the General Banking & Foreign Exchange activities of a bank.

2. To collect various papers I need a huge time is required but as an employee of the bank I dont have sufficient time. 3. As the employees are very much busy with their own work I didnt get enough time for discussion with them. 4. It is difficult to get information regarding case history, problems & allied matters from concerned officers.

Chapter 2

Profile the organization

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2.1 History & Background of Uttara Bank Limited :

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Before introducing Uttara Bank limited, one of the best private sector bank in Bangladesh, I would like to through some light upon the growth and development of our banking system since independence. Growth and development of our banking system may be divided into three phases. The complete government ownership and excessive government interference, absence of prudential regulation and inadequate legal support for debt recovery, characterized the first phase between 1972 to 1982. The performance of our banking system during 1972 to 1982 was commendable in respect of expanding network and providing easy credit to the socially desirable sectors but equally frustrating with regard to maintaining viability and customer services. The second phase from 1983 to 1989 was characterized by denationalization and privatization of banking system without broad-basing the prudential and information regulatory frame work, However, these measures of

denationalization and privatization could not the bring viability and operational efficiency of banking system.

Under the above circumstances and with the recommendation of Word Bank, a Financial Sector Reform Project (ESRP) was undertaken in 1989 by the government which can be identified with third phase of the development of our banking system. FSRP includes the following measures: Gradually allowing financial institutions to up financial product price according to market forces; raising the loan classification standard in phases; improving level of the financial institutions to international standard in phases; improving the capital positions of Nationalized Commercial Bank (NCBs) and private commercial banks (PCBs) and fixing it at international standard level' delegating greater autonomy banks specially in terms of selecting their loan portfolio' strengthening Bangladesh Bank's role in the field of supervision of banks' ensuring enabling legal environment by enacting bank companies act 1991 and financial loan court act 1990 etc. The government of Bangladesh has also enacted some important acts namely financial institutions act 1993, securities and exchange commission act 1993, the companies act 1994 and recently Bankruptcy act 1997. These reform measures have been aimed imposing financial discipline on the banks in the short-run and making bank operate increasingly on the basis of market forces so as to achieve operational efficiency.

The results so far achieved out of the reform measures are not very encouraging. The bankers and bank management is yet to be guided adequately by market forces. The financial discipline has not yet been brought back. The collapse of share price indexes during later part of 1996, show pace of industrialization, lack of potential commitment, recent flood of 1998 all have been further worsening healthy growth to our financial and economic system. However, there has been some positive side of financial sector form. New management tools like performance system (PPS), Lending Risk Analysis (LRA), New Loan Ledger Card (NLLC), Management information system (MIS), Credit Risk management & Assets Liabilities Management are contributing to improve loan portfolio management through a package deal. PPS plans for lending on good and profitable loan portfolios, LRA analyses risks before lending, NLLC records loan performance of borrowers with an early warning system through overdue aging and MIS ensures timely and accurate loan information flow. To conclude we can say reforms are on going process because there are always changed in banking business and situation. We must try out best to prepare ourselves for accepting the challenges of the new century knocking at the door.

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2.2 Legal Status & Nature of the Bank :

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Uttara Bank Limited has been a nationalized bank in the name of Uttara Bank under the Bangladesh Bank (Nationalization) order 1972, formally known as Eastern Banking Corporation Ltd. started functioning on and from 28-01-1965. Consequent upon the amendment of Bangladesh Bank (Nationalization) order 1972 the Uttara Bank was converted into Uttara Bank Limited as a Public Limited Company in the year 1983. The Uttara Bank Limited was incorporated a banking company on 19-06-1983 and obtained business of commencement certificate on 21-08-1983. The bank floated shares in the year 1984. The Registers Office of the bank is located at 90 Motijheel, Commercial Area, Dhaka-1000. It has 198 branches all over Bangladesh through which carries out all its banking activities. The bank is listed in the Dhaka Stock Exchange Ltd. as a Publicly quoted Company for trading of its ordinary shares.
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2.3 ORGANIZATIONAL STRUCTURE OF UBL:

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Uttara Bank Ltd. Expanded its network of operation at a measured pace and gradually covered the major cities, rural townships which are prospective business centers in Bangladesh. As of December 30, 2004, the total numbers of branches are 198. Out of which 21 branches in Dhaka Division branches are in Chittagong division , 19 branches are in Khulna division , 7 branches are in Rajshahi division , 6 branches are in Sylhet division, and 6 branches in Barisal division 2. The foreign correspondent relationship now stands with 289 offices of 134 foreign banking 55 countries as on 31st December, 1997. Furthermore, UBL has opened an overseas branch in Mumbai, India Representative office in

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UK and Myanmer and a wholly owned subsidiary company "UBL International Finance Ltd". in Hongking .
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FINANCIAL STATISTIC OF UBL:

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The Financial Statement of the Bank have been prepared in accordance with First Schedule of the bank Companies Act. 1991 as amended under sub section 38 (4) of the Act, Bangladesh Bank Circulars, Bangladesh Accounting Standards, the Companies Act. 1994, the Securities and Exchange Rules 1987 and other rules and regulations applicable in Bangladesh on a going concern basis under historical cost concept (without considering the effect of inflation). The policies whenever appropriate are explained in the subsiding sub notes.

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ORGANIZATION PROFILE :
------------------------------------------------------------------------------------------------------------Company Name Address : UTTARA BANK LIMITED : Uttara Bank Bhaban 90, Motijheel Commercial Area, Dhaka-1000, Bangladesh. Telephone : PABX : 9551162-3, 9553085-6, 9558656, 9566067-9, 9565732, 9568941 : Fax : 880-2-8613529, 9553081, 9666574 : uttara@citechco.net, ublmis@citechco.net : 1972 (Privatization in 1983) : Shaikh Abdul Aziz Managing Director : www.uttarabank-bd.com

Fax E-mail Year of Establishment Chief Executive Officer Web Site

UBL is one of the largest private banks in Bangladesh. It operates through 207 fully computerized branches ensuring best possible and fastest services to its valued clients. The bank has more than 200 foreign correspondents worldwide. Total number of employees nearly 3,000. The Board of Directors consists of 15 members. The Managing Director who is the Chief Executive heads the bank.

The Head Office is located at Banks own 18-storied building at Motijheel, the commercial center of the capital, Dhaka.

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UTTARA BANK LIMITED :

Number of Branches: 211 (only districts are shown below)

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ORGANO GRAM :
BOARD
OF

DIRECTORS

MANAGING DIRECTOR

ADDITIONAL MANAGING DIRECTOR

DEPUTY MANAGING DIRECTOR

ASSISTANT MANAGING DIRECTOR

GENERAL MANAGER

DEPUTY GENERAL MANAGER

ASSISTANT GENERAL MANAGER

SENIOR PRINCIPAL OFFICER

PRINCIPAL OFFICER

OFFICER GRADE #1

OFFICER GRADE #2

ASSISTANT OFFICER

COMPANY SECRETARY

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DEPARTMENT IN HEAD OFFICE :

Chairmans Secretariat Managing Directors Secretariat Board Department Share Department MIS & Computer Department Human Resources Division Personnel Department Test Key Department Disciplinary Department Establishment Department Stationary & Records Department Transport Department Training Institute Marketing Division Branches Department Business Development Department Engineering Department Public Relations Department Credit Division Credit Approval Credit Administration & Monitoring Lease Financing Unit C I B Cell CRM-Recovery Division Loan Classification Cell Debt Collection Unit Artha Rin Mamla Monitoring Cell Central Accounts Division Accounts Department Statistics Department Reconciliation Department (New)

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Reconciliation Department (Old) Expenditure Control Department Internal Control & Compliance Division Internal Audit Department Foreign Exchange Audit Department Vigilance and Complaints Department Pre-Audit Department External Audit Department International Division Treasury Department Dealing Room HUMAN RESOURCES OF UBL : As on 31-12-2003 the total manpower of the Bank in different grades were as under :Executives (AGM & above) Officers Assistant Officers Others Total : 116 1,971 434 688 3209 3.62% 63.42% 11.52% 21.44% 100.00%

Hu an Resou m rces (%)

Executives (3%)

Officers (64%)

Asstt. Officers (12%)

Others (21%)

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Chapter 3

# Literature Review of General

Banking

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GENERAL BANKING :
General Banking Department usually performs a lot of import banking activities. General banking department is that department which is mostly exposed to the maximum number of bank customers. It is the introductory department of the bank to its customers. All business concerns earn a profit through selling either a product or a service. A bank does not produce any tangible product to sell but does offer a variety of financial services to its customers. The Local Office of UBL has all the required section 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. In UBL the following department are under general banking section 3.1 The relationship between a banker and his customer beings with the opening of an account by the former in the name of the latter . Initially all the accounts are opened with a deposit of money by the customer and hence these accounts are called deposits accounts . Banker solicits deposits from the members of the public belonging to different walks of life , engaged in numerous economic activities and having different .

Functions of the department The following are the main functions performed by the department :

Accepting of deposit Opening of Account Check book issue Transfer of an account Closing of Account.

3.2 Accepting of Deposit :

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Deposit are life blood of a commercial bank . Without deposits there are no businesses for the commercial banks of any nature ( NCBs, PCBs, of FCBs. In this branch the various types of accounts are offered to various customers , which are grouped into : a) Demand deposit account b) Time deposit account c) Fixed deposit account .

a) Demand deposit account : The amount in accounts are payable on demand so it is called demand deposit account . The following account are under demand deposit account s. Current account Saving account Short notice term deposit (STD)

Current account : This type of account is opened by both individuals and business concerns. Frequent transactions ( Deposit as well as withdrawal ) are allowed in this type of account . A current a/c holder can draw checks on his account for any amount for any numbers of times in a day as the balance in his account permits. This account provides no interest . The minimum balance to be maintained is Tk.2000. No new account can be opened with a check .

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Saving accounts :

Individuals for savings purposes open this type of account . Current interest rate of these accounts is 7.00% per annum. A minimum balance of Tk.1000 is required to be maintained in a SB account interest on SB account is calculated and accrued monthly and credited to the account half yearly. Interest calculation is made for each month on the basis of the lowest balance at credit of account in that month . A depositor can withdraw from his SB account not more than twice a week up to an amount not exceeding 25% of the balance in the account .

* Special Notice Term Deposit (STD) : The deposits in account are withdrawal on prior notice varying from 7 to 29 days and 30 days or more. The interest is paid on the balance of the account. Current interest rate is 8.50% per annum. b) Time Deposit Account . The amount in this a/c is payable only after stipulated time . The following a/cs are under time deposit a/c. Fixed Deposits which are repayable after the expiry of fixed period and are negotiable . Bearer certificate of Deposits (BCD) which are repayable after expiry of fixed period but are negotiable. These are not renewable. Non-resident Foreign currency deposits are term deposits maturing after 1 month , 3 months, 6 months and 1 year . This a/cs can be opened wither I US dollar or pound sterling. No interest is paid in case of premature encashment.

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c) Fixed Deposit Account : These are deposit which are made with the bank for a fixed period specified in advance . The band need not maintain each reserve against these deposits and therefore, bank give high rate of interest on such deposit . A FDR is issued to the depositor acknowledging receipt of the sum of money mentioned therein. It also contains the rate of interest and the date on which the deposit will fall due for payment .

Interest on Deposits Particulars Interest rate on Deposits : Savings Deposits Special notice Deposits (STD) Fixed Deposit (time deposits ) 3(three ) months 6(six) months 1(one ) year 2(two ) years and above 3(three ) years Rate of interest 7.00% 8.50% 11.00% 11.50% 11.75% 12.00% 12.50%

3.3 ACCOUNT OPENING PROCEDURE Procedure to open a current account : ( personal account ) Two copy passport size photo attested by introducer . One copy passpost size photo of nominee attested by the account holder Introducer must be current account holder Fill up TP form ( Transaction Profile ) by the account holder KYC from ( know your customer ) fill up by the authoirized officer

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Procedure to open a saving account : ( personal account )

Tow copy passport size photo attested by introducer One copy passport size photo of nominee attested by the account holder Introducer must be current account holder Fill up TP form ( Transaction Profile ) by the account holder KYC from ( know your customer ) fill up by the authorized officer

Procedure to open a current account ( proprietorship farm )

Tow copy passport size photo attested by introducer One copy passport size photo of nominee attested by the account holder Introducer must be current account holder Fill up TP form ( Transaction Profile ) by the account holder KYC from ( know your customer ) fill up by the authorized officer Up to date Trade license TIN number of the firm If the firm operate import and export business they must submit IRC and ERC

Procedure to open a current account : ( Partnership Firm ) Account must be opened in the name of the firm Two copy passport size photo attested by introducer One copy passport size photo of nominee attested by the account holder Introducer must be current account holder . Fill up TP form (Transaction profile ) by the account holder KYC form ( know your customer ) fill up by the authorized officer Up to date Trade license TIN number of the firm If the firm operate import and export business they must submit IRC and ERc Registered partnership Deed

Procedure to open a current account : ( Limited company )

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Certificate of Incorporation . Certificate of commencement of Business . Memorandum of Association . Article of Association Power of Attorney Resolution of the Board of Director authorizing opening of and accounts Societies/ club/ associations Others than above mentioned common documents resolution of who will operate the account must be noted . Account Opening Procedure

Applicant fills up the application in the prescribe form After depositing cash, checkbook, is issued

He is requested to fill up the specimen signature Card Issuance of deposit slip and the deposit must be made in cash

An account holder needs introduction from an account holder The authorized officer scrutinizes the introduction and examines the documents

3.4 Issue of cheque book Issuance of Fresh cheque book . Fresh cheque book is issued to the account holder only against requisition on the prescribed requisition slip attached with the checkbook issued earlier after proper verification of the signature of the account holder personally or to his duly authorized representative against proper acknowledgment.

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Issuance of fresh cheque Book Requisition slip filled up properly along with the cheque book number Banker verifies the slip Banker issuance new cheque book if every Think in the right form

Enter the new cheque book number in the register bokk against the specific customers name

Issue of Duplicate cheque book .

Duplicate check book in lieu of lost one should be issued only when an a/c holder personally approached the Bank with an application letter of indemnity in the prescribed per forma agreeing to indemnify the Bank for the lost checkbook . Fresh check Book in lieu lost one should be issued after verification of the signature of the account holder from the specimen signature card and on realization of required Excise duty only with prior approval of manager of the branch . Check series number of the new check book should be recorded in ledger card signature card as usual. Series number of lost check book should be recorded in the stop payment register and caution should be exercise to guard against fraudulent payment. Account Transfer: The customer submits an application mentioning the name of the branch to which he wants the accounts to be transferred. His signature cards, advice of new account and all relevant documents are sent to that branch through registered post with acknowledgment the balance standing at credit in customers accounts is sent to the other branch through inter branch through inter Branch Credit advice (IBCA)

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3.5

Closing of Account :

The following circumstances are usually considered in case of closing and account of justifying the stoppage of the operation of an account: Notice given by the customer himself or if the customer is desirous to close the account. 1. Death of the customer 2. Customers insanity and insolvency. If account holder die than the remaining balance of the accounts is to giving the following process: If the balance is below Tk.15000/- than the require document are : 1. Death Certificate 2. Legal hears. 3. Indemnity Bond If the balance is above Tk.15000/- than the require document are : 1. 2. 3. 4. Death certificate Legal hears Indemnity Bond Succession certificate from the competent court of law .

Local remittance Department : UBL has its branches spread throughout the country and therefore, it serves as best mediums for remittance of funds from one place to another. This service is available to both customers and non customers of the Bank. The department, which provides the facility, is known as local remittance department.

Functions of the Local Remittance Department:

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The following are the main functions performed by the credit department issuing & payment of Demand Draft . All related correspondence with other Branches & Banks . Compliance of Audit & Inspection Balance of DD payable & DD paid with advice. Attached to Sanchaya Patra and Wage Earners Development Bonds. Payment of incoming TT Issuing , encashment of pay order and maintenance of record and proof sheet . Issuing and encashment of all kinds of Sanchaya Patras and wage Earners Development Bond .

All related statements & correspondence with Bangladesh Bank & other Branches.

Issuance of Local Drafts Issuing and encashment of BCD All related correspondences. Issuing of outgoing TT Issuance of Local Drafts Issuance of TT ICA IBCA & IBDA

Transaction Types : 1) Collection of Cheque Up to Tk.25000@ 15% Minimum Tk.50 Above Tk.25000/-100000 @ 15% Minimum Tk.50 Above tk.1,00,000 - 5,00,000/- @ 10% Minimum Tk.150. Avove Tk.5,00,000 @ .05% , Minimum tk.6000 Maximum 1,200 2) Demand Draft (DD ) Local Draft is an instrument containing an order of the issuing branch upon another branch known as Drawee Branch, for payment of a certain sum of money to the payee or to his order on demand by the beneficiary presenting the draft itself .

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Flow Chart of DD payment:

Receives money Sends Issuing Branch Advice of Drawing

DD presented paying Branch

Issued DD

Payment of DD

Cash Department : Cash payment of different instruments is made in the cash section . Procedure of cash payment against cheque is discussed under elaborately . Cash payment of cheque includes few steps : First of all the clients comes to the counter with the cheque and give it to the officer in charge there. The officer cheqcks whether there are two signatures on the back of the cheque and checks his balance in the computer. After that the officer will give it to the cash in charge. Then the cash in charge verifies the signature from the signature card and permits the officer in computer to debit the clients account by giving posting. A posted seal with teller number is given. Then the cheque is given to the teller person and he after checking everything asks the drawer to give another signature on the back of the cheque. If the signature matches with the one given previously then the teller will make payment keeping the paying cheque iwht him while writing the denomination on the back of the cheque . Cash paid seal is given on the cheque and make entry in the payment register.

There are few things that shall be scrutinized and checked before making payments.

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Name of the drawer Account number Specimen signature The validity of the cheque and make it sure that it is not post dated or undated. The amount in worked and figures are same Cash balance calculation

The calculation is done by the officer in charge of cash section and then manager or authorized officer will check the balanced and sign in the cash balance book. The balance is maintained in the balance book . Opening balance of current day is the closing balance of the previous day . Total receive of the current day is added with the opening balance and total payment is deducted for calculating the closing balance or cash balance. 2.7 .I Clearing Department: According to the article 32(2) of Bangladesh Bank order , 1972 the banks which are the member of the clearing house , are called as scheduled Banks . The scheduled banks clear the chouse drawn upon one another through the clearing house. This is an arrangement by the central bank where everyday the representative of the member banks gathers to clear the chouse. Banks for credit of the proceeds to the customers accounts accept cheque and other similar instruments. The bank receives many such instruments during the day from account holders . Many of these instruments are drawn payable at other banks. If they were to be presented at the drawee banks to collect the proceeds it would be necessary to employ many messengers for the purpose. Similarly, there would be many chouse drawn on this the messengers of other banks would present bank and them at the counter. 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 positing regarding receipt or payment . The place where the banks meet and settle their dues is called the clearing house.

Functions of the Department :

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The following are the main function performed by the department : Pass outward instruments to the Clearing House . Pass inward instruments to respective department Return instruments to respective department . Prepare IBCA or IBDA for the respective branch and HO Account Entries of Clearing Department . 3.7.II Collection Department . Checks , drafts etc are drown on bank located outside clearing house are sent for collection . Principal Branch collects its clients above mentioned instruments from other branches of UBL and branches other than UBL . In case of out ward bills for collection customers account is credited after finishing the collection processor. And in case of in ward bills customers accounts is debited for this purpose .

The procedure of Govt. Bond Purchase & Encashment : The Prize bond/Govt. bond is one kind of direct investment of Government . By issuing this bond Government may collect money form public or private clients in this field . The Purchasing procedure of Prize Bond via Uttara Bank Ltd., form Bangladesh Bank : 1.2/3 months in advance the application should be submitted to Bangladesh Bank & within this time period they will issue the prize bond . 2. the written application with IBCA shall submit into the Treasury Department of Uttara Bank Ltd., at the date of purchase and then the treasury Department will issue the cheque in favor of Bangladesh Bank for purchasing the Prize bond . The reason behind the selling of prize bond by Bank : 1. The Bank will get 1% commission from Bangladesh Bank on the total amount of the purchasing prize bond . Bangladesh Bank directly deposits the commission amount to the Uttara Bank Ltd. On advice to local office and then local office Uttara Bank Ltd will collect this commission amount form their treasury department . 2. The owner of the amount of prize bond is Government & Government will utilize this fund for the development of the estate. The bank will do this job on behalf of development of state and as well as Government .
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The Funds source of prize & how to get the prize of the prize bond : 1. The 6.50% interest have been charged on total selling amount of prize bond by Bangladesh Bank & the prize shall buy from this interest amount . 2. At the specific date Bangladesh Bank will arrange the lottery of the prize bond by random procedure. What ever the bond sold or not all the number of prize bonds in available in the lottery . 3. the winner of the lottery has to apply for the prize under prescribed from & the specific bond will submit at the time of application . 4. Bangladesh Bank will receive the application of the prize bond winner & provide a token and after certain date Bangladesh Bank will provide the prize to the winner by cheque . 5. the winner of the prize bond holder may apply via his nominated bank and then Bangladesh Bank will issue the cheque in favour of that nominated bank of the winner . 6. Nothing should be written on prize bond , if anything found then it may cancel

The prize bond preservation & system of record : 1. At the time of purchase the prize bond instantly registered under noted book of the bank . 2. At the same time when selling then also record under register book . 3. The unsold bond , If selected as a winner then that amount of prize may earning revenue of the bank . 4. The signature of manager register & cashier may operate the prize bond of the bank . 5. The manager of the branch is only authorized to signing on purchase & selling voucher . The other important information : 1. The quantity of the every series of prize bond is 10 lacs & the amount is like 10 cores .

2. The prize of the every series I like as follows :

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Serial NO 1. 2. 3. 4. 5.

The category of the No. of Quantity prize 1st Prize 1 nd 2 Prize 1 rd 3 Prize 2 4th prize 2 th 5 prize 40

Amount of the Prize (Tk.) 6 lac 3.25 lacs 1 lac each 50 thousand each 10 thousand each

The amount of the each series is like Tk.16.25 lac only. Around the year every after 3 months the lottery & draw programmed will arrange on 31st January, 30th April, 31st July & 31st October. If the Govt. holiday may arise then the nest week days shall consider for the lottery. 5. The 2 months in advance the prize of the bonds shall fix up . 6. The winner f the prize bond holder may apply for the prize within 2 years from the date of drawings of the lottery or winning.
3. 4.

Government savings Bond : There are 3 types of Govt. savings bond sailing by Bank : 3 4 5 5 years Govt. savings Bond 3 months Govt. savings bond Pension savings Bond .

Profit of the saving Bond : 1. After 5 years of the time of maturity 12% profit may receive form the principle amount . If encashment before that time of period then the profit or interest are as follows: Number of year The end of 1st year The end of 2nd year The end of 3rd year The end of 4th year % of profit of Interest 9% 10% 11% 12%

2.

3 (Three ) months maturity or at the end of time period under each slab the profit margin is 11.50% . Every invested amount of Tk.1 lac the return in each 3 month Tk2,875/- but before maturity the profit is as following : Number of year The end of 1st year % of profit of Interest 9.50%

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The end of 2nd year

10.50%

3. The pension saving bonds duriation is 5 years & at the time of maturity the interest is 12.50% and every after 3 months the return is Tk.3,125/- after utilizing the amount of Tk. 1 lac Number of year The end of 1st year The end of 2nd year The end of 3rd year The end of 4th year % of profit of Interest 9.50% 10.50% 11.50% 12.50%

No profit or interest will be provided, if the bond will encashment before its maturity & the same application will applicable for the 3 months savings bond . And the interest amount will be deducted from the principle amount . The procedure of selling the Govt. savings Bond : 1. 2. 3. 4. the clients will apply under specific form The signature of the applicant & nominees are mandatory The applicant signature is also mandatory under specific card The attested photo both of applicant & nominee should be provided & the photo of nominee authorized by applicant .

The permitted amount of Govt. savings Bond : 1. Maximum Tk. 50 lacs in one name both for 5 years & 3 months 2. Under joint name maximum Tk.1 Core

Pension savings Bond : 1. Highest amount to be issued tk.30 lac 2. Joint purchase is not allowed under this practice . Other important issue : 1. Matured / immature both people may purchase these bonds .
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2. If the bond destroyed the duplicate copy may issued on the basis of further rules & regulation . 3. After any accident of the applicant the nominee can encash the bond . 4. Pension saving bond can buy the retired office of the Govt. The require papers to issue the duplicate copy of bonds : 1. The applicant should inform to bank first . 2. The GD entry is mandatory . 3. Declaration on two renowned news papers . 4. The 1st class Magistrates affidavit will be required 5. Indemnity bond is also require in this regards

How the bank provide interest amount of the Bond : 1. The Bank will receive the coupon form client & later on compare the sign with signature card . 2. The amount will be provided by debit voucher & to utilizing the suspense account . 3. Total coupon & statement will submit into Bangladesh Bank . Why Bank sale the savings bond : 1. the bank will receive the commission of 0.50% on the total amount in favour of each individual name . 2. In case of the corporate customers like company , then the Bank may reveiv the commission Tk.0.25 3. At the time of encashment of main savings bond , the bank will receive the commission of Tk.0.25.

Bangladesh Bank Guidelines relating to import :

1.

Import of goods into Bangladesh is regulated by the Ministry of Commerce in terms of the Import and Export (control ) Act , 1950 with Import policy orders issued biannually, and Public Notices issued form time to time by the officer of the Chief Controller of Imports and Exports (CCI&E). The instructions contained in this chapter apply to sales of foreign exchange or transfer to non resident taka accounts against import of goods in to Bangladesh .

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In terms of the importers, Exporters and Indenters ( Registration ) order ,1981 no person can import goods into Bangladesh unless he is registered with the chief Controller of Imports and Exports or exempted from the provisions of the said order . Before any letter of Credit (LC) is opened or remittance made for imports into Bangladesh the AD should verify that the importer is registered with the CCI & or otherwise exempted from such registration . The AD should ensure that the registration number of the importer is invariably furnished on the IMP form . Where the importer is exempted from such registration , a suitable mention of this fact should be made in the IMP form . 2. The ADs must ensure that they deal only with known customers having a place of business in Bangladesh arid can be traced easily should any occasion arise for this purpose .
3.

(a ) the ADs are authorized to issue Letter of Credit Authorization Forms (LCAFs) in conformity with the IPO allowing imports into Bangladesh . LCAFs or import permits or clearance permits are not required for imports by the Ministries and government departments . the LCAFs available with the ADs are issued in sets of 5 copies each of these, the one marked For Exchange Control Purpose should be used for opening LC and for effecting remittances . The ADs should be very careful about compliance with the instructions of the IPO and relevant Public Notices in the matter of issuance of LCAFs .

(b) If foreign exchange is intended to be bought form the Bangladesh Bank against and LCAF it has to be registered with Bangladesh Banks Registration Units located in the concerned area office of the CCI&E . For such registration the LCAF duly filled in and signed by the importer and authenticated by the AD shall be submitted by the Ad to the concerned Registration Unit . The Unit will put a registration number on all the copies and emboss an security seal . After registration the original and duplicate copies of the LCAFs will be delivered to the authorized representative of the ADs . The triplicate and

35

quadruplicate copies will be passed on to the concerned area office of the CCI&E and the quintuplicate will be retained by the Registration Unit .

( c) Where no registration of LCAFs is needed the AD will send the triplicate and quadruplicate copies to the concerned area office of the CCI&E , retaining the other copies with itself . Where an import is against a source of financing ( Foreign project loans grants ) usable through a specific designated bank , the nominated AD of the importer will forward to the designated bank the authenticated LCAFs and the designated bank will eventually forward the triplicate and quadruplicate copies of LCAF to the area office of the CCI &E . (d) (i) The ADs will not issue blank LCAFs to their clients . The importer should himself/ herself sign the LCAF in the presence of an office of the AD, and authorize official of the AD should put hi/ her signature with date and seal on the LCAF , evidencing verification of the importers signature and importer entitlement as per current IPO. (ii) The ADs will maintain records of the signatures of the authenticating officers of the Bangladesh Bank Registration Unit and verify , before opening LC that the signature of the authenticating officer of the Registration Unit is genuine . (iii) In no case the ADs will accept authenticated LCAF for opening LC direct from the parties. Normally the AD issuing and authenticating an LCAF would also open the LC but if it requires transfer to another AD this should be done directly by the transferring AD itself . The AD receiving the LCAF must conduct its own verification of the signatures on the LCAF before opening LC . (e) LCAFs remains valid for remittances for one year subsequent to the month of issuances/month of registration ( in case of registration with Bangladesh

36

Bank ) . For Example , If an LCAF is issued/ registered with Bangladesh Bank on 15th January 1992 remittances can be made there against upto 31st January 1993. However , LCAFs issued for import of capital machineries and spares will remain valid for remittances for 18 months subsequent to the month of issuance/ registration . The ADs should not under any circumstance, make remittance against any LCAF after the expiry of the above prescribed validity period without first obtaining revalidation of the LCAF . The may however allow such remittance without obtaining revalidation only against Foreign Currency funds of Bangladesh national working abroad .

37

Chapter 4 #Foreign Exchange Activities of Uttara Bank Ltd.(UBL)

FOREIGN EXCHANGE DEPARTMENT

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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, b 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 refers to the process or mechanism by which the currency f one county is converted into the currency of another country . foreign exchange is the means and methods by which rights to wealth in a countries currency are converted into rights to wealth in another countries currency .

--------- L.R chowdhury .

BANGLADESH BANK GUIDELINES RELATING TO IMPORT:

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1.

Import of goods into Bangladesh is regulated by the Ministry of

Commerce in terms of the Import and Export (Control ) Act.1950 with Import Policy Orders issued biannually, and public Notices issued form time to time by the office of the Chief Controller of Imports and Imports and Exports (CCI&E). The instructions contained in this chapter apply t sales of foreign exchange or transfers to non resident take accounts against import of goods into Bangladesh . In terms of the Importers, Exporters and Indentors ( Registration ) order 1981 no person can import goods into Bangladesh unless he is registered with the Chief Controller of Imports and Exports or exempted from the provisions of the said order . Before any Letter of Credit (LC) is opened or remittance made for imports into Bangladesh the AD should verify that the importer is registered with the CCI&E or other wise exempted from such registration . The AD should ensure that the registration number of the importer is invariably furnished on the IMP form. Where the importer is exempted from such registration a suitable mention of this fact should be made on the IMP form .
2.

The ADs must ensure that they deal only with known customers having

a place of business in Bangladesh arid can be traced easily should any occasion arise for this purpose . 3. (a) The ADs are authorized to issue Letter of Credit Authorization Forms ( LCAFs) in conformity with IPO allowing imports into Bangladesh . LCAFs or import permits or clearance permits are not required for imports by the Ministries and government departments . The LCAFs available with the ADs are issued in sets of 5 copies each of these , the one maked for Exchange Control Purpose should be used for opening LC and for effecting remittances . The ADs should be very careful about compliance with the instructions of the IPO and relevant Public Notices in the matter of issuance of LCAFs . (b) If foreign exchange is intended to be bought form the Bangladesh Bank against an LCAF it has to be registered with Bangladesh Banks registration

40

Unit located in the concerned area office of the CCI& E . For such registration the LCAF duly filled in and signed by the importer and authenticated by the AD shall be submitted by the AD to the concerned registration Unit . The Unit will put a registration number on all the copies and emboss a security seal . After registration the original and duplicate copies of he LCAFs will be delivered to the authorized representatives of the ADs . The triplicate and quandruplicate copies will be passed on to the concerned area office of the CCI& E and the quintuplicate will be retained by the Registration Unit . ( C) Where no registration of LCAFs is needed the Ad will send the triplicate and quadruplicate copies to the concerned area office of the CCI&E. retaining the other copies with itself . Where an import is against a source of financing ( foreign project loans grants ) usable through a specific designeated bank , the nominated AD of the importer will forward to the designated bank the authenticated LCAFs and the designeated bank will eventually forward the triplicate and quadruplicate copies of LCAF to the area office of the CCI&E. (d) (I) the ADs will not issue blank LCAFs to their clients . The importer should himself/ herself sign the LCAF in the presence of an officer of the AD an authorized official of the AD should put his/ her signature with date and seal on the LCAF, evidencing verification of the importers signature and import entitlement as per current IPO . (II) The ADs will maintain records of the signatures of the authenticating officers of the Bangladesh Bank Registration Unit and verify before opening LC that the signature of the authenticating officer of the registration unit is genuine .

(III) In no case the ADs will accept authenticated LCAF for opening LC direct from the parties . Normally the AD issuing and authenticating an LCAF would

41

also open the LC but if it requires transfer to another AD this should be done directly by the transferring AD itself. The AD receiving the LCAF must conduct its own verification of the signatures on the LCAF before opening LC . (e) LCAFs remains valid for remittances for one year subsequent to the month of issueance/ month of registration ( in case of registration with Bangladesh Bank ) . For Example if an LCAF is issued registered with Bangladesh Bank on 15th January 1992 remittances can made there against upto 31st January 1993 . However LCAFs issued for import of capital machineries and spares will remain valid for remittances for 8 months subsequent to the month of issuance/ registration . The ADs should not under any circumstance make remittance against any LCAF after the expiry of the above prescribed validity periods without first obtaining revalidation of the LCAF. They may however allow such remittances without obtaining revalidation only against Foreign Currency funds of Bangladesh nationals working abroad . (f) The AD should ensure that the registration number given by the Bangladesh Bank is correctly and legibly reproduced on the IMP forms covering the sales of exchange as also on the relative schedules.

4. Opening of LCs and payments for imports into Bangladesh should be made through and AD in the area where the holder of the LCAF is resident ( Appendix-4 list the areas for foreign exchange regulation purposes ) . 5. Specific procedural instructions regarding imports under special arrangements or agreements ( grants loans barters etc ) issued by the Bangladesh Bank from time to time should be followed by the ADS . 6. The ADs should take all precautions to quote the correct ITC nos ( HS Codes ) of the goods to be imported in the LCAF and the LC . Failure to do so may lead to imposition of penalties by the Customs Authorities . In all cases of doubt , reference should be made either by the AD or the customer direct to the area office of the CCI . 7 (a) When LCs are opened full particulars thereof must be endorsed on the back of the exchange control copy of the LCAF under the stamp and signature of the AD . The

42

taka equivalent of the LCopened must be endorsed on the LCAF at the ruling BC selling rate (spot) but if a forward exchange cover is provided the conversion should be made at the actual for ward rate . Foreign exchange must not be sold ready if a forward saleis outstanding against an LC . (b) Details of amounts remitted whether under LC or otherwise ,should be endorsed on the exchange control copy of the LCAF together with the number of the relative IMP form. Appropriate reference to the LCs the dates on which these were opened and remittances effected should be noted in order to indentify the endorsement against any particular LC opened or remittances effected . ( c) Before delivering the import documents to the importers the AD should invariably endorse on the invoices accompanying the bills the amount both in figures and words which they have remitted from Bangladesh . The endorsement should be under the stamp and signature of the ADs . In case of payment on DA terms the amount for which the bill has been accepted should be endorsed in the invoices . 8. On expiry of an LC unutilized patly or wholly or on cancellation or reversal of a sale of foreign exchange the endorsements made on the back of the LCAF may be canceled with appropriate remarks under the seal and signature of the AD. 9. In case an endorsement is made mistakenly on a wrong LCAF the AD may cancel the endorsement provided the endorsement is transferred simultaneously to the appropriate valid LCAF. Endorsement may be transferred only from one valid LCAF to another valid LCAF where both are identical in all respects . 10. The aggregate amount of foreign exchange sold against and LCAF , whether under LC or otherwise should not exceed the value mentioned in the LCAF In case where LC was opened and remittance is needed in in a floating currency against which no forward booking has been made the Taka value of the LCAF will be deemed to have been increased to the extent of appreciation of the foreign currency for the purpose of allowing remittance by the AD.

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11. Remittance in excess of the value of he LCAF is not permissible without prior approval of the Bangladesh Bank except for payment of normal bank charges of the foreign correspondent . In order words the ADs need not adjust the amount of bank charges from the LCAF value .Remittances of bank charges should be reported to the Bangladesh Bank as usual with TM forms and necessary supporting documents .The ADs will endorse the amount of bank charges remitted along with the date of remittance on the back of he exchange control copy of the LCAF . They should also quote the approval number and date if remittance is effected against any specific approval from the Bangladesh Bank . Bank charges of unusual nature i.e not commonly attributable to transactions against LCs cannot be remitted without Bangladesh Banks approval . Foreign bank charges in respect of imports in the public sector will be on the suppliers account and hence cannot be remitted from Bangladesh .Bank charges under barter/STA shall be payable in accordance with the relevant provisions therein.
12.

LCAFs can normally be utilized on C&F basis. Full LCAF value is therefore not remittable as f.o.b value of goods . In other words , freight charges payable on imports on f..o.b basis are to be adjusted against the relative LCAF value . In case of f.o.b import the AD should endorse . bdeside f.o.b value , the freight payable in Taka as indicated in the Bill of lading etc. In case where miscellaneous charged i.e handling charges, cartage/surface transportation, documentation charges etc., are required to be paid by the importers on arrival of goods through the Airlines , the ADs will also endorse on the exchange control cop of the LCAFs the amount of such charters as indicated in the Airway bill the freight in Bangladesh Taka . The ADs should also give a certificate to the importers in the form given in Appendix 5/11 to the effect that the amount of freight handling charges etc have been endorsed on the relative LCAF . The issue of this certificate is essential as the shipping companies etc are under instruction not to accept payment of freight in Taka unless the above

44

mentioned certificate is produced to them . In cases where the f.o.b value and the amount of freight payable in Taka exceeds the value of the LACAF the application should be referred to the Bangladesh Bank for consideration with full particulars and supporting documentary evidence . 13. An AD may not open LC or make remittances of roreign exchange covering import into Bangladesh in cases where the exchange control copy of the relavent LCAF has been issued in the name of a person or firm other than that of the applicant . Such request receive by an AD should be referred to the area office of the CCI .
14.

An AD should not remit the proceeds of bills in cases where the name of the importer on the bill of exchange differs from that on the LCAR. As and exception where goods are imported on DP or DA basis or even under LC and the original drawee dishonors the bill and the foreign shipper or his local agent finds another buyer for the goods the AD may make the remittance without prior permission of the Bangladesh Bank provided the remitter is in possession of a valid LCAF covering the import of the goods in question .

15. Exchange control copies of the LCAFs submitted by the importer should , when fully utilized , be forwarded by the ADs to the Bangladesh Bank . Exchange Control Copies of LCAFs which remain unutilized for the full amount , should also be surrendered by the ADs to the Bangladesh Bank after expiry of the validity period for remittance . 16. An AD may not make remittance in payment of goods if the exchange control copy of a valid LCAF is not produced even though the goods may have been cleared by the customs . Good imported in an unauthorized manner are liable to be confiscated by the Government . All applications for remittances of foreign exchange covering such imports should be submitted to the Bangladesh Bank for prior approval and should be accompanied by the exchange control copy of the Customs Bill of Entry for Consumption in Bangladesh , the relative

45

penalty order together with full particulars of he circumstances under which the goods were imported without the requisite LCAF .

CLLASIFICATION OF THE IMPORTER : Importers are those who ate authorized by the import Trade authority i.e & CCI & E for import of goods essential for consumption or for production purposes . There are mainly three types of importers . 1. Commercial importer 2. Industrial importer 3. Importers under Wage Earner Scheme . 1. Commercial Importer : It means an importer registered under the importers , exporters and indention registration order 1981 who import goods form sale , when issued to commercial importers, given the category held by him with ITC classification and public notice against which they are admitted into import trade . 1 Industrial importers :

When issued to an industrial consumer, gives the items of import as raw materials and packing materials and spate parts , the value of entitlement and ITC classification .

3. Importers under WES : It means registration importers who import only under the WES. In this scheme the foreign exchange required for import of goods is met out of the remittance made by Bangladesh national earning wage abroad. WES importer can be importing all permissible items a declared by the importer also can import under WES . Registration of Importer :

46

As per import & Export control Act . 1950 no person can indent , import or export any goods in to Bangladesh except ki case of exemption issued by the Government of the peoples Republic of Bangladesh . Violation of this order is punishable with fine under the provisions of Sea Customs Act . 1878 as applied by sub section (3) of Section 3 of this Act . Foreign exchange department plays significant roles through providing different services for the customers. Opening or issuing letter of credit is one of the important services provided by the banks .

Letter of Credit : A letter of credit is a letter issued by a bank ( known as the opening or the issuing bank ) at the instance of its customer ( Known as the opener ) addressed to a person (beneficiary ) undertaking that the bills drawn by the beneficiary will be duly honored by it (opening bank ) provided certain conditions mentioned in the letter have complied with . THE CUSTOMARY CLAUSES CONTAINED IN A L/C THE FOLLOWING : (i) (ii) (iii) (iv) (v) A clause authorized the beneficiary to draw bills of exchange up to certain on the opener . List of shipping documents which are to accompany the bills . Description of the goods ot be shipped . An undertaking by the opening bank that bills drawn in accordance with the conditions will be duly nonored . Instruction to the negotiation bank for obtaining reimbursement of payment under the credit .

a) Parties to a letter of Credit :

47

The parties to a L/C are : Importer /buyer . Opening bank / Issuing bank Exporter/ seller/ Beneficiary. Advising bank/ notifying bank Negotiating bank Confirming bank Paying / Reimbursing Bank . b) The Advising Bank : It is the bank in the exporters country ( normally the exporters bank ), which is usually the foreign correspondent of importers bank through which the L/C is advised to the supplier. If the intermediary Bank simply advises/ notifies the L/C to the exporter without any obligation on its part , it is called Advising Bank .

c) The Confirming Bank : If the advising Bank also adds its own undertaking to honor the credit while advising the same to the beneficiary, he becomes the confirming Bank , in addition, becomes liable to pay for documents in conformity with the L/Cs terms and conditions . d) The Negotiating Bank : The bank that negotiates the bill of exporter drawn under the credit is known as Negotiating Bank . If the advising bank is also authorized to negotiate the bill drawn by the exporter, he becomes the Negotiating Bank . e) The Accepting Bank : A Bank that accepts time or unasked drafts on behalf of the importer is called an Accepting Bank . The issuing Bank can also be the Accepting Bank .

f) The paying Bank & The reimbursing Bank :

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If the issuing Bank does not maintain any account with a bank that will be negotiating documents under a L/C then arrangement is made to reimburse the negotiating Bank for the amount to be paid under from some other bank with which the issuing Bank maintains his account . the letter bank is known as Reimbursing Bank . A letter of credit may be either .

In the Uttara Bank Ltd, Local Office , Foreign Exchange section performs various functions under three departments : i) ii) iii) Import department . Export department Foreign Remittance .

IMPORT DEPARTMENT : IMPORT : Import are foreign goods and services purchased by consumers, firms & Governments in Bangladesh . Nature of the L/C Code 01 02 03 04 05 06 07 08 09 10 11 12 99 Nature At sight L/C cash Cash Deferred Inland B/P L/C at sight Local Back to back deferred Foreign back to back at sight Foreign back to back deferred L/C under Aid/ Loan L/C under STA Import from EPZ cash L/C at sight Import form EPZ cash deferred Import form EPZ B/P L/C at sight Import form EPZ B/P L/C Other L/C.

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Import Procedure : When importer import goods or equipment they must submitted the following documents . 1. 2. 3. 4. 5. 6. Trade licence . IRC ( Import Registration certificate ) TIN Certificate Vat Certificate Membership Certificate Importer must be current accountholder .

After this document submitted to the Bank than . Proforma invoice Indenting farm gives indent Importer application 100% margin new L/C holder .

Import L/C Document Sending Process : SWIFT TLEX MAIL

Mailing charge of L/C : By registered post Tk.400/By courier minimum charge Tk.1500/Amendment of L/C mail Tk.700/-

Swift & Telex charge of L/C : L/C is transmitted by full tested Telex / Swift at actual minimum charge Tk.3500/L/C is transmitted by short and non operative Telex advice than charge Tk.1000/Amendment of L/C is transmitted by Telex/ Swift than charge Tk.1000/

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For adding confirmation charge is .10% of total L/C value . If L/c is the cross border than bank send the L/C copy custom border . Import L/C cash : Post import facility are tow type : 1. LIM(Loan against import merchandise) : In this facility goods are received by the bank CNF . In this condition goods are send the CNF in bank godown . 2. LTR ( Loan against trust receipt ) : In this facility goods are received by the customer CNF . In this condition goods are send the CNF in customer godown . PAD( Payment against document ) : It is create by bank for foreign payment purpose of the L/C holder . This Temporary loan account is held 21 days .

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IMPORT PROCEDURE DRAW FRAM : Import Registration Certificate Purchase contract with Foreign Supplier directly or Through Agent Letter of Credit authorization (LCA) form Opening of letter of credit by the importers bank Dispatch of letter of credit to the beneficiary by issuing banks correspondent Receipt of import documents from negotiation/ collecting bank
Scrutiny of import documents Instruct reimbursing bank not to claim Inform negotiating bank about discrepancies honor

Are the documents discrepant ?

Inform opener about discrepancies

Do they accept documents with discrepancies

Lodgment of import bills Request negotiating bank for disposal instruction Request the opener to take delivery of import documents for release of goods

Have they responded

Do they accept documents on collection basis

Deliver the documents to the importer for release of goods

Whether they want post import finance ?

Send back the documents

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Retire the import bill and documents to the opener for released of goods

Retire the bill through creation of forced LIM & clear the goods through C&F agent and store the same under effective control relevant expenses in connection with clearing of goods by debiting forced LIM A/c If you agree recover further margin form the opener & retire the documents by creation of LIM & clear the goods through C& F & store the same under banks effective control relevant expenses of clearing of goods by debited LIM A/c.

Import Mechanism :

To import, a person should be competent to be an importer. According to Import and Export Control Act.1950 the office of Chief Controller of Import and Export provides the registration (IRC) to the importer. After obtaining this person has to secure a letter of credit authorization (LCA ) from Bangladesh Bank . And 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 . There are one chief officer , one senor officer, two officers, one probationary officer and trainee asst, Officer in this department . THINGS ARE DONE HERE : The following things are done in this department : Total supervision of Import Department ( Back to Back/ Cash ) . Foreign Correspondence related to above . Payment of Back to Back L/C and endorsement of Export L/C against payment . Follow of Back to back overdue bill Correspondence Regarding , Back to Back L/C and Cash L/C Maintenance of Due Date Diary .

53

Maintenance & record of related L/c Documents . Audit Compliances . Matching of Bill of Entry With IMP , Follow up to pending Bill of Entry Quarterly Statement . Batch Checking .

L/C opening / Amendment ( Back to Back L/C) Endorsement of Export L/C when opening . Balancing of L/C contingent Liability Back to Back L/C Follow up of Sub Judaic bills and maintaining liaison with Head Office and Foreign Correspondent . All correspondence related to Back to Back L/C both with Head Office and foreign correspondent . Supervision of checking Lodgment and retirement of import documents under Back to Back L/C . Issuance of Certificate and attestation of papers/ documents of garments clients as required by BGME , EPB & other regulatory bodies . Checking , lodgment , retirement of Import documents under Back to Back L/C . Issuance of shipping Guarantee ( Back to Back L/C ) IMP Form Fill up ( Cash L/C) . Inform negotiating Bank about maturity date of Back to Back L/C Quarterly statement for Bonded Ware House . Balancing of Accepted Liability . Statement of outstanding accepted import bills under Back to Back L/C L/C opening and Amendment of Cash/ Inland L/C. Maintenance and record of pass Book and IRC Maintenance & Record of related L/C (S) & Documents . Credit Report . Statement of IRC Renewal Fees to CCI&E. Preparation of monthly foreign exchange business position.
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L/C Lodgment (Cash) Checking of Cash L/C documents . L/C Retirement. LCA Issue. BLC Statement Differed Payment (Cash) Follow up of outstanding BLC Correspondent ( Cash L/C ) Proof sheet of LC Margin and Contingent Liability ( Cash L/C) Issuance of shipping guarantees (Cash ) IMP forms fill up (Cash )

4.8 Accounting Procedure Involved in L/C opening : There are two, one is L/C opening and another is liability register which includes liability amount, Margin, foreign correspondent etc. While opening L/C there are few accounting entries . For Margin importer account with bank is debited and Margin A/C is credited . For continent liability (L/C amount ) Customers liability on L/c cash is debited and Bankers liability on cash is credited . For other charges customers current account is debited and commission /C , income A/C , Foreign correspondent charge A/C and other related A/C is credited .

4.9 Advising a letter of credit : The Advising or notifying bank is the bank through which the L/C is advised to the exporter , It is a bank situated in the exporting country and it may be a branch of the opening bank. It becomes customary to advise a credit to the beneficiary through an advising bank . advising depicts the proof of authenticity of the credit to the seller . The opening bank has a corresponding relationship or arrangement

55

throughout the world by which the L/C is advised . Actually the advising bank does not take any liability if otherwise not requested .

IMPORTER (L/C APPLICANT )

Issue L/C OPENING BANK

FIGURE ADVISING LC/

L/C ADVISING BANK/ CONFIRMING BANK

Source : Key Note papers of Seminar of Banking Techniques organized by ICC

4.10.1

Adding confirmation :

The confirming bank does adding confirmation . Confirming bank is a bank , which adds its confirmation to the credit , and it is done at the request of the issuing Bank . The confirming bank may or may not be the advising bank . The advising usually does not it if there is not a prior arrangement with the issuing Bank . By being involved as confirming agent the advising bank under takes to negotiate beneficiaries bill without recourse to him .

4.10.2 L/C Transmitting : Letter of credit can be transmitted to the advising bank through three methods . They are in Telex, Courier or SWIFT ( Society for Worldwide inter bank Financial Transaction ) L/C is send to advising bank in three copies . The advising bank

56

authenticates the original copy of L/C and delivers it to the exporter . The duplicate copy is kept with the advising bank . 4.10.3 Negotiating : The beneficiary (exporter ) receives the letter of credit from advising bank . After proper shipment of goods as per terms and conditions of the L/C required documents like commercial invoice ., Bill of landing and bill of exchange are presented to the negotiating bank by the beneficiary for negotiation . If the documents are in order as per L/C then the negotiating bank negotiates the drafts making payment to the beneficiary . Then the negotiating bank forwards the drafts along with the shipping documents to the L/C opening bank . The negotiating bank reimburses the amount paid against the draft from reimbursement bank ( authorized by opening bank ) by debiting Nostro A/C of the opening bank . Negotiating bank have the option the to send the drafts and documents to the opening bank for collection . 4.10.4 Amendment : After opening of L/C sometime alteration to the original terms and condition become necessary . These amendments involve changes in (I) unit price (II) extension of validity the L/C (III) documentary requirements etc . such amendments can be affected only if all the concerned parties agree i.e the beneficiary , the importer , the issuing bank and the advising bank . For any amendment the importer must request the issuing bank in writing duly supported by revised indent / proforma invoice . The issuing bank then advises the required amendment to the advising bank . L/C amendment commission including postage is charged to the clients A/C. 4.10.5 Lodgment :

The opening bank receives imports bills, which have been negotiated . After receiving the documents , they are to be thoroughly scrutinized before lodgment . Scrutiny of the documents : First of all it must be ensured that :

57

Full set of documents as mentioned in the L/C has been received Documents have been negotiated within the negotiation period . The Bill of landing / Air way Bill/Railway receipt is not dated later than the last date of shipment mentioned in the L/C The L/C has not been amended or subjected to any special instruction , which might alter the value of L/C. Import bills include following documents, which are to be scrutinized : i. ii. iii. iv. v. Bill of Exchange Commercial Invoice Bill of Lading Certificate of origin Others

4.10.5 (1) Bill of exchange : It has to be verified that the bill of exchange has been properly drawn and signed by the beneficiary according to the terms and conditions of L/C The amount in the Bill is identical with that mentioned in the invoice The amount drawn does not exceed the amount mentioned in the L/C The amount in words and figures should be same The bill of exchange should be properly endorsed .

4.10.5 (2) Commercial Invoice

It has to be verified that the commercial invoice has been properly drawn and signed by the beneficiary according to the terms and conditions of L/C. The beneficiary should properly invoice the merchandise . The merchandise is invoiced to the importer on whose account the L/C is opened . The description of merchandise and the unit price correspond with that given in the L/C The import license or IRC number of the importer , indenter registration number and number of Letter of Credit Authorization number are incorporated in the Invoice .

58

4.10.5(3) Bill of Landing First of all it has to be cleared that the Bill of Landing is showing Shipped on Board and it has to be properly endorsed to the Bank . The B/L should include the description of the merchandise according to invoice . The port of shipment and destination , a date of shipment and the name of the consignee are in agreement with those mentioned in the L/C. The Shipping company or their authorized agent properly sign the B/L The date on the B/L is not stale which means it is not dated in unreasonably long time prior to negotiation . 4.10.5(4) Certificate of Origin . The merchandise described in the Certificate is in accordance with L/C .

Others : There are some other documents , which are also attached, with the shipping documents like packing list , pre shipment inspection certificate etc, These documents are also verified carefully before lodgment . Steps involved in Lodgment : When the scrutiny of import bills is over the steps should be taken for lodgment . At first all the particulars of the documents are entered in the PAD ( payment against document ) register and PAD No. Seal is given on all the copies of he received documents. Convert the foreign currency into Bangladeshi currency . Reverse the contingent liability and entry in the liability register . Prepare lodgment voucher. Prepare other voucher . Send IBCA to the Head Office

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Make intimation to the importer

Accounting effect : I. II. For reversing contingent liability contra voucher is debited by Bankers Liability A/C and credited with Customers Liability A/C. For PAD , income on exchange there tare few credit voucher and one debit voucher. In the debit voucher the debit head is PAD and income and head office is credited . In the credit vouchers the opposite of these entry in made .

4.10.5(5) Retirement : The importer receives the intimation and gives necessary instruction to the bank for retirement of the import bills or for the disposal of the shipping document to clear the importer goods form the customs authority . The importer may instruct the bank to retire the documents by debiting his account with the Bank or may ask for LTR *( Loan Against Trust Receipt .Following steps are to be taken for retirement of documents . Steps involved in retirement : Calculation of interest is any . Calculation of other charges . Passing vouchers . Entry in the register . Endorsement in the Bill of Lading or other transport documents and in the Bill of Exchange .

Accounting Effect : 4.10.6 BACK TO BACK L/C DEPARTMENT : Back to Back letter of credit may be fined as a credit which is opened at the instruction are request of the original Export L/C on the basis of strength of that L/C . Ready made garment industries and specialized textile units are allowed the
60

facility of importing fabrics and other material needed for manufacture of garments / specialized textiles against back to back L/C arrangement . Back to Back is of two types . i) Foreign back letter of credit ii) Inland back to back letter of credit . A back to back L/C is opened against an irrevocable L/C opened bank having reasonable period of validity to cover shipment of merchandise after completion of validity to vover shipment of merchandise after completion of th manufacturing process . The export L/C is lien marked with the back to back L/C issuing branch . Import L/C is opened on usance basis covering usance of not more than 180 days . The import L/C is proceeds of export bills negotiated after shipment .

Procedure for opening Back to Back L/C : The following papers / documents are required to be submitted by the exporter to the bank for opening foreign back to back L/C . i) ii) iii) L/C authorization form s duly filled and signed Indent / Pro forma invoice . Imp form .

Along with the above papers / documents , original export L/C is to be submitted by the exporter. On receipt of these documents the bank scrutinizes the terms and conditions of the export L/C . After getting approval from head office through Credit Section , The particulars of the L/C are entered in the L/C opening register . EXPORT DEPARTMENT : The goods and services sold by Bangladesh to foreign households , businessmen and Government are called export . The export trade of the country is regulated by the Imports and Exports (Control ) Act . 1950. There are a number of formalities which and exporter has to fulfill before and after shipment of goods . the exports form Bangladesh are subject to export trade control exercised by the Ministry of Commerce through Chief Controller of Imports and Exports (CCI & E) . No exporter is allowed

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to export any commodity permissible for export form Bangladesh unless he is registered with CCI & E and holds valid Export Registration Certificate (ERC) . The ERC is required to be renewed every year . The ERC number is to be incorporated on EXP form and other documents connected with exports . There are one chief officer, one senior officer, one officer and one probationary officer working in this department .

THNGS ARE DONE HERE : The following things are done in this department :

Scrutiny of Export Shipping Documents Follow up for realization of export Proceeds . All correspondence relating to export department . Compliance of Audit & Inspection . Advising of Export L/Cs to the beneficiary . Authentication of L/C and Amendments from other correspondent Bank . Transfer of export L/C to the 2nd Beneficiary & issuance of notice of transfer to L/C issuing Bank . Recording of Export L/C particulars in Export L/C Transfer Register Realization of transfer changes . Issuance of precedes realization certificated And other works as & when directed by the manager and Sub Manager , Certificate of EXP Forms . Posting of Tickets . Lodgment of Export Bills (FBP , FDBC, IBP & IBC ) Preparation of tickets elating to negotiation of documents . Negotiation of inland Bills . Maintenance of all records related to FBP & A/ R Export A/Cs

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Preparation of statement and all returns to Bangladesh Bank and Head Office ( Weekly/ Monthly/ quarterly ) .

EXPORT BILL SCRUTINY : Scrutinize the export bill on the following points : i. General : Late shipment . Late presentation L/C expired L/C overdrawn Partial shipment or transshipment beyond L/C terms .

ii. Bill of Exchange: Amount of bill differs with invoice . Not drawn on L/C issuing bank Not signed Tenor of B/C not identical with L/C Full set not submitted Invoice Not issued by the beneficiary Not signed by the beneficiary Not made out in the name of the Applicant . Description , Price, quantity sales terms of the goods not correspond to the credit . Not marked one fold as original Shipping marks differs with B/L & packing list .
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iii. Packing list :

Gross weight , net weight & measurement , number of cartoons / packages differs with B/L. Not marked one fold as original Not signed by the beneficiary . Shipping marks differs with B/L.

iv. Bill of landing / Air way Bills : Full set of bill not submitted . B/L is not drawn or endorsed to the order of Eastern Bank Ltd., Shipping on Board Freight Prepaid of Freight Collect etc . notations are not marked on the B/L. B/L not indicate the name and capacity of the party i.e carrier or master on whose behalf the agent is signing the B/L. Shipped on Board Notation not showing name of pre carriage vessel/intended vessel . 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 lading ) . Short Form B/L . Charter party B/L . Description of goods in B/L not agree with that of invoice B/E & P/L Alteration in B/L not authenticated . Loaded on deck B/L bearing clauses or notations expressly declaring defective condition of the goods and/ or the packages .

v. Others .

Non-Negotiable documents not forwarded to buyers or forwarded beyond L/C terms . Inadequate number of Invoice, Packing List & Others submitted . Short shipment certificate not submitted

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5.3 EXPORT FINACNE : 4.3.(1) Pre shipment Credit : Pre shipment credit usually takes the following forms . i. ii. iii. Overdraft against hypothecation of exportable commodities . Overdraft against Trust Receipt (T.R) Packing credit (PC ) .

(i) O/D (Hypothecation ) : Under this arrangement , limit is sanctioned against hypothecation of raw materials / finished goods meant for export . the exporter creating a charge in faovor of the bank on the goods hypothecated signs a letter or hypothecation . Possession ownership and control of goods remain with borrower. Bank sometimes takes collateral security in the form of land and building . (ii) O/D against (R.R) Under this arrangement the exporter is required to execute a Trust Receipt in favor of the Bank undertaking hold the goods or rate proceeds there of in trust on behalf of the bank till the loan is liquidated . This type of credit facility is granted to very trustworthy customer whose integrity is beyond doubt .

(iii) Packing Credit . Packing credit limit is sanctioned to the exporter against the security of Railway Receipt, truck and Receipt etc. In addition to the usual charge documents and the original export letter of Credit . This type of credit is given for transit period staring from dispatch of the goods to the port till the negotiation/purchase of export bills , to enable the exporter to finance purchase of further goods for export

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5.3(2) Post Shipment Credit : Post shipment credit refers to credit facilities extended to export after shipment of goods against shipping documents . It is usually provided in the following ways . i) ii) Bill negotiations / purchase . Bill for collection .

(I) Bill negotiation/ Purchase . The most usual method of financing exporters at the post shipment stage is negotiation of documents under L/C . Here the bank act as negotiating bank . After the shipment of the goods , the exporter submits the relative documents to the branch for negotiation . The documents generally include a) Bill of Exchange b) Bill of lading C) Insurance policy d) Invoice e) Certificate of origin f) Inspection Certificate g) Packing lit h) any other documents specially mentioned in the letter of Credit . The documents are to submit within the period mentioned in the L/C . After approval of negotiation of the bill the full particulars of the documents are entered into the Foreign Bill Purchased (FBP) register . The documents are sent to the L/C opening branch with a forwarding letter and the branch claim reimbursement from the issuing bank or from the reimbursing bank , giving clear instructions to credit the proceeds of the bill to the ABLE head office Nostro A/c maintained with the named correspondent Bank abroad under telex intimation to the Principal branch and Head Office ( international Division ).

On negotiation / Purchase of the export bills , the exporter is paid the value of the bill ( converted into Bangladesh Taka at the ruling bill buying rates ). The branch completes the duplicate copy of EXP from and forwards the same to Exchange Control Department (ECD) of Bangladesh Bank.

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(II) Documents on collection basis : The documents , which are not negotiable by the branch due to some discrepancies are sent to L/C opening bank on collection basis . The Bank mentioned the discrepancies on their forwarding schedule . On receiving the documents , the L/C opening bank will further scrutinize the documents with the L/C and inform the importer regarding discrepancies found in the documents . If these are acceptable to the importer and permissible with the exiting Exchange control regulation, the Documents will be lodged and L/C opening bank will send the payment instruction to the collection Bank .

6. Foreign Remittance Department deals with the following instruments: i. ii. iii. Travelers Check (TC ) Foreign demand Draft (FDD) Telegraphic Transfer (TT)

6.1 Travelers Cheque Travelers cheque is very popular method of foreign remittance. It is usually used by the travelers who are willing to remit found to the place where they are going to visit and encash it from there . Travelers cheque is a substitute for cash and it is the safest method of transferring fund . A ) Issue of Travelers cheque Requirements : There are some requirements which are to be fulfilled by the Travelers cheque purchaser. Passport holder himself has to be present to issue Travelers cheque . The passport must be valid one
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Air Ticket has to be confirmed.

Steps involved in issued of Travelers cheque :

After verifying all these documents the customer is asked to fill up prescribed application form . In the application the customer states the amount he is willing to endorse and it is be verified that his required amount is within the stipulated amount. Then the customer pays cash or by debiting his account the Travelers cheque is issued . Endorsement is given on the passport and on the ticket. Customer full up the Travel & Miscellaneous form. Purchase Application Form is prepared and handed over to the purchaser along with Travelers cheque . Entry given in three registers, Foreign Currency issue register, Travelers cheque on hand register and Foreign Currency in hand register .

Payment of Travelers cheque : When a customer wants to encase his Travelers cheque he has to show his passport and it is to be verified form the passport that he has traveled outside the country.

Then the Travelers cheque will have to be scrutinized very strictly. If every thing in the Travelers cheque is in order then the customer will be asked to give his signature on the place of Counter Signature . If the signature agrees with the one in the place of The signature of the holder then the payment will be made through giving cash to the customer or crediting his account . Travelers cheque will be crossed and endorsement given on the back of the received travelers cheque .

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Foreign Demand Draft : Foreign Demand Draft (FDD) is popularly used for educational purpose in our country. It is used for other commercial purpose also. (I ) Issued of FDD The relevant papers which establish that the issuing Bank requires the purpose of issuing the FDD. The procedure concerning issue of FDD is same as issue of Travelers cheque except that the customer is not required to submit his passport . (II) Payment of FDD After receiving the FDD for payment there are few steps which are to be followed.

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.

Endorsement of Cash : Cash foreign currency can also be remitted through endorsement in the passport. In case of endorsing cash on passport the requirements are same as in case of issue of Travelers Check . WAGE EARNER DEVELOPMENT BOND. Type of denomination of the bond. 25000 value of bond 50000 value of bond 100000 value of bond

Bank received 1% commission on the WED bond

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When purchase on bond in foreign currency then bond are two types 1. Investment bond: This bond is three years time period and interest rate is 6.50% Interest and face value payment in U.S dollar Purchasing process of investment bond:
3.

FDD/CA must need. DB-1 form fill up with passport photocopy Authorization from debiting account.

Premium Bond: This bond is three years time period and after maturity interest rates 7.5% . Interest must be received in local currency, but face value of the bond received in U.S dollar. Purchasing process of premium bonds: FDD/FCA must need. DB-1 from fill up with passport photocopy. Authorization from debiting account. WAGE EARNER DEVELOPMENT BOND: Purchasing process or requirement document submitted to the bank. Passport photocopy. 2. Work permit or job contract photocopy attested by ambassador , 3. Tow copy passport size photo and nominee two passport size photo attested by ambassador. 4. DB-1 form: These forms carry the following information. Bondholder name and address. Nominee name and relation with bondholder Value of the bond Passport number with details Address on abroad. Employer name and address. Bond numbers and denomination. Total bond value.
1.

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INTEREST OF W.D.B BOND : Interest and face value payment of wage earner development bond in local currency . If encasher interest rate for 6 month 1 year 1.5 year 2 year & above 11% 12% 13% 14%

If bondholder received only interest without face value, than interest 12% simple rate. After maturity of three types of denomination bond interest given . BOND 100000 50000 25000 interest after maturity interest after maturity interest after maturity Amount of interest 79084 Tk. 39542 Tk. 19771 Tk.

If bondholder died before age of 55 and reported within six months of death , than death risk benefit is allowed highest up to 250000Tk. FORIGN CURRANCY ACCOUNT : Three types of foreign currency account . 1. R.F.C.D ( Residential foreign currency account in dollar ) 2. N.F.C.D ( Nonresidential foreign currency account in dollar ) 3. F.C.A.D ( Foreign currency account in dollar ) 1. R. F. C. D ( Residential foreign currency account in dollar ) : In this account normal transaction are occurs and uses only currency purpose . 2. N.F.C.D ( nonresidential foreign currency account in dollar ) : It is a fixed deposit account . In this account normal transaction are not occurs. Basis of the account quarterly , yearly . 3. F.C.A.D 9 Foreign currency account in dollar ) : This account uses for currency and foreign remittance pupose .

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PROCEDURE TO OPEN F.C.A.D : Detail of the form given below : Full name of the applicants Father name / Husband name Nationality Occupation Permanent address Local address Foreign address Passport number Issue at location of passport Issue date of the passport Validity date of passport Validity date of visa Name of the nominee Gradient of the nominee Address of the nominee Introducer must have current account holder .

3. Driving license of the applicant . 4. Permanent residential card 5. Job contract document 6. Citizenship certificate 7. Two cope passport size photo 8. Two cope passport size photo of the nominee

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Chapter 5 SWOT Analysis

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SWOT Analysis? Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis is a strategy development tool that matches internal organizational strengths and weaknesses with external opportunities and threats. A Balanced Perspective SWOT analysis helps you balance idealism and pragmatism, and obtain a balanced perspective of your internal strengths and weaknesses and external opportunities and threats to develop an effective strategy. Why SWOT Analysis? SWOT Analysis is the Key Component of Strategic Development. It can prompt actions and responses. Successful businesses build on their strengths, correct their weaknesses and protect against internal vulnerabilities and external threats. They also keep an eye on their overall business environment and spot and exploit new opportunities faster than competitors. SWOT analysis is a tool that helps many businesses in this process. Competitive Strategies: 2 Types SWOT analysis is based on the assumption that if managers can carefully review such strengths, weaknesses, opportunities, and threats, a useful strategy for ensuring organizational success will become evident to them. Strengths Two factors contribute to your strengths: ability and resources available. Ability is evaluated on 3 counts: 1. 2. 3. Versatility: your ability to adapt to an ever changing environment. Growth: your ability to maintain a continuing growth. Markets: your ability to penetrate or create new markets.

The strength of resources has three dimensions: 1. Availability: your ability to obtain the resources needed.
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2. Quality: the quality and up-to-dateness of the resources employed. 3. Allocation: your ability to distribute resources both effectively and efficiently.

Weaknesses Your weaknesses are determined through failures, defeats, losses and inability to match up with the dynamic situation and rapid change. The weaknesses may be rooted in lack of managerial skills, insufficient quality, technological backwardness, inadequate systems or processes, slow deliveries, or shortage of resources. There are three possible outcomes to the analysis of your weaknesses.1 1. Correction of an identified defect. 2. Protection through cover-up and prevention strategies to reduce the exposure of your weaknesses. 3. Aggression to divert the attention from your weaknesses. Opportunities 3Ss of Winning in Business Surprise To Win: 3 Strategies Blue Ocean vs. Red Ocean Strategy Opportunities are abundant. You must develop a formula which will help you define what comes within the ambit of an opportunity to focus on those areas and pursue those opportunities where effectiveness is possible. The formula must define product/service, target market, capabilities required and resources to be employed, returns expected and the level of risk allowed. Weaknesses of your competitions are also opportunities for you. You can exploit them in two following ways: 1. Marketing warfare: attacking the weak leader's position and focusing all your efforts at that point, or making a surprise move into an uncontested area. 2. Collaboration: you can use your complementary strengths to establish a strategic alliance with your competitor. Threats

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External threats arise from political, economic, social, technological (PEST) forces. Technological developments may make your offerings obsolete. Market changes may result from the changes in the customer needs, competitors' moves, or demographic shifts. The political situation determines government policy and taxation structure.

Chapter 6 # Findings &Recommendation

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FINDINGS My experiences as an intern in the Uttara Bank Ltd., over the last three months give me the opportunity to prepare this report . In those days I worked in different desks and try to understand the overall activities of the bank . In this report I focused on the issues regarding the foreign trade especially the letter of credit mechanism , I Found that the following mistakes happen by the parties in letter of credit : 1. The agreed time schedule is not followed , because of late shipment or late presentation .
2.

Stipulated documents are not prepared as specified by the letter of credit , other than the transport document , insurance document and invoice .

3. Certificates , such as the certificate of origin and certificate of inspection , are not signed . 4. The goods description on the commercial invoice does not correspond to the description on the letter of credit . 5. Documents are not properly endorsed . 6. Drafts ( Bill of exchange ) are not presented as required by the letter of credit or are prepared improperly .
7.

The insurance document is dated after the shipment date, or does not cover the risks as required by the credit . The types of risk, extent of risk coverage or currency differ from what is stated in the letter of credit .

8. The transport document is not properly signed or it is not prepared in accordance with the latter of credit . 9. The documents are inconsistent with one another . 10. The type and number of stipulated documents and copies are not the same as those required by the letter of credit .

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Recommendation :
1. Bank officer must follow the time schedule which was mention in L/C paper . 2. Bank officer must check it properly the entire document which was mentioned in L/C paper 3. L/C documents should be endorsed properly 4. Bank officer must check Bill of exchange is that attached or not 5. the insurance document must be A graded as par rule of Bangladesh Bank . 6. The transport document must be properly signed as par rule of L/C paper 7. The document should consistent with one another . 8. The number of stipulated document should be exact , which was mentioned in L/C paper .

RECP,EMDATOPM Faulty letters of credit are a common problem for companies and banking sector involved in international trade . Payment is subject to compliance. A discrepancy in documentation leads to non compliance, and non compliance results in non payment . Surveys suggest that letter of credit are often rejected because of errors in preparation . Payment is refused or delayed as a result .

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When the parties submit L/C application forms , the following points should be checked the bank officials . Name and address of the applicant . Name and address of the beneficiary Amount of L/C Shipping terms (FOB, CFR, CIF etc ) Mode of advice (airmail telex) Tenor of draft ( Slight , deferred ) Description of merchandise ( item, unit price, quantity, proforma invoice/ indent etc) Port of shipment and destination Mode of shipment , part shipment & transshipment Date of shipment and expiry place of expiry Origin of goods Insurance clause . LCAF number and registration ( If any ) Other terms and conditions ( transferable, confirmation, inspection etc ) Signature of applicant ( authorized )

Bank officials also checks the following documents : a. b. c. d. e. f. g. Trade license ( valid ) Import Registration certificate ( Must be kept in the bank custody ) Passbook import . Income tax declaration . Membership certificate Memorandum of Articles ( In case of Ltd . Co) Registrar deed ( In case of partnership firm )
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h. Resolution. i. Photo one copy .

In case of satisfying the customers Uttara Bank Ltd., can look upon the following factors : 1. Uttara Bank Ltd., can think online banking system and thereby can enhance customer support . 2. Bank can recruit good and talented personnel .
3.

Though it is a private commercial bank , but its environment and corporate culture looks like govt. commercial bank . I feel that every department of the branch suffering lack of adequate manpower . So the people have to work more and the feel too much workload and thus why the output is not always upto the mark .

4.

5.

Nowadays conventional banking concept is outmoded .

Now banks are

offering more ancillary services like credit card, online services and may others . IFIC bank Ltd., should differentiate its services adopting the modern facilities . 6. Bank is providing both internal and external training for the officers but bank should be scrupulous about the training facilities so that official can implicate this in their job .

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Chapter 7 # CONCLUSION

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CONCLUSION
Banking sector is the chief financial intermediary in a county . it is a very challenging institution and in age of globalization and free trade , the process and the system of running a bank is changing . Uttara Bank Ltd., already managed itself with this changing environment . The company strategies are clean and concise . Their return is pretty good . If the company goes this way one can expect that in near future Uttara Bank Ltd., may become one of the top performers .

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REFERENCE

1. Annual report 2006-2007 , Uttar Bank Ltd., 2. Official Record of Uttara Bank Ltd., 3. A hand book of Banks advances LR. Chowdhury
4. 5. 6.

WWW.uttarabank-bd.com www.bangaldesh-bank.com Some publication in The Daily papers.

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ACKNOWLEDGEMENT

In the context of the rapidly changing global scenario the importance of practical knowledge can no longer be ignored. We are in fact leaning process. Hence, what ever is the yield this report undoubtedly enreached our learning with a lot of knowledge not available in the traditional system of education.

I truly believe that saying Thank You to all individuals of Uttara Bank Ltd.Bank is not enough to honor their support that I have been provided for preparing my report. My extreme gratitude goes to General Manager, A.H.M yah-eya, md. nuruzzaman (d.G.M.), khandaker ali samnoon (d.g.m.), sayed Maruf habib (P.o.), Mr. mahbubul islam (P.O.), and other officers of Head Office, Uttara Bank Limited who has given their cooperation in terms of providing necessary information. I am also greatful to md. abdur Rahim and sharif ahamed bhuyian for providing me information to prepare my report.

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EXECUTIVE SUMMARY

It is very much important to coincide the academic knowledge with the practical one. Keeping this view in mind, Institute of Business studies, BIU makes proper arrangements of practical orientations (Dissertation) each year for the students of MBA which is a part of MBA program. This is because the academic knowledge is not sufficient enough to match with the real life situation. After completion of MBA program I was placed in the Uttara Bank Ltd, Local Office, for my Dissertation program to have a practical working experience and have an understanding of the real life with a closer look. The prime objective of Dissertation program is to introduce the learners with the practical organizational environment. So that they can turn themselves for the jobs in future and can get an opportunity to reflect their theoretical learning with real life situation. In my Dissertation with Uttar Bank Ltd., at Local Office I worked with the activities of branch banking especially general banking and their functioning and accounting procedures.

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Contents
___________________________________________________________________

1. Chapter 1, Introduction 1-5

1.1 Introduction of the Study 1.2 Objective of the Study 1.3 Rational of the Study 1.4 Methodology 1.5 Sources of Data 1.6 Limitation of the Study

2. Chapter 2, Profile The Organization 6-15

2.1 History & Background of UBL 2.2 Legal Status & Nature of the Bank 2.3 Organizational Structure of UBL 2.4 Financial Statistic of UBL 2.5 Organizational Profile 3. Chapter -3 Literature Review General Banking 16-31 4. Chapter -4 Foreign Exchange Activities 32-56 5. Chapter -5 57 6. Chapter -6 Findings

Recommendation

58

3. Conclusion 59

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4. Bibliography 60

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