Chapter-1 Introduction Banks are the key financial institutions that play a vital role in the country’s economy. Globalization in the banking sector has thrown up opportunities as well as challenges. Competition is getting edge day by day. It paces with the continuous development occurring in the tremendous competitive environment. To keep pace with this situation, need banking knowledge for future career. If I want to buildup my career in banking area, not only theoretical knowledge would help me.
As internship program is established to gather practical knowledge regarding various sector of economy, I chose to get practical knowledge regarding banking sector then I choose Jamuna Bank limited as my organization to work. However this Bank performance of online system, corporate social responsibility, other’s opportunities. The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country. JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units.
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Financial performance statements of commercial banks and presents a procedure for analyzing bank profitability and risks using historical data. The bank has advantage of loans & advance, remittance business, import, export business and foreign exchange. This procedure involves capital structure aggregate profit ratios into their components to help identify key factors that influence performance. Objectives of the Study 1. To evaluate the performance of the bank. 2. To establish relationship banking and improve service quality through development of Strategic Marketing Plans. 3.
To develop and retain a quality work-force through an effective human Resources Management System. 4. To evaluate the investment performance under loan and advance. 5. To explore the scenario of foreign exchange activities & performance of Jamuna Bank Limited 6. To know the overall functioning of Jamuna Bank Ltd. 7. To explore the general Baking scenario of JBL. 8. To have some practical exposures that will be helpful for my future career. Methodology This report has been prepared on the basis of experience gathered during the period of internship from 26 July 2009 to 3 September 2009.
For preparing this report, I have undergone group discussion, collected data and to the selected Officers and interviewed with some of them. I also studied different circulars, bank report and files of the bank. I hope these criteria will be enough to find out different picture of financial performance of the selected bank Jamuna Bank Limited. Sources of data: In order to make the report more meaningful and presentable, two sources of data and information have been used widely. The “Primary Sources” are as follows: ? Face-to-face conversation with the respective officers and staffs of the Branch. Informal conversation with the clients. ? Practical work exposures from the different desks of the departments of the Branch covered. ? Relevant file study as provided by the officers concerned. The “Secondary Source” of data and information are: • Annual Report of Jamuna Bank Ltd. • Various Books, articles, compilations etc. regarding general banking functions, foreign exchange operations and credit policies. • Different ‘Procedure Manual’, published by Jamuna Bank. • Banks financial statement. • Marketing research book. • Periodicals. • Bulletins. • Circular. Monthly transaction record of the bank. A good Annual Report is the mirror of a bank. I have gone through the “Annual Reports” of the bank very carefully. To compare the performance of NBL, I also collect the Annual Reports of International Finance Investment and Commerce Bank Limited (IFIC). I have chosen this bank as peer group of National Bank because this is belonging to first private sector bank. I posted the Balance sheet items and income statements of the bank on MS-Excel and SPSS software to calculate the Financial Ratios regarding bank’s performance.
In this case I have strictly followed the ratios given in the textbook of “Commercial Banking The Management of Risk” by Fraser, Gup & Kolari. Here I focused the profit ratios, Risk Ratios, Operating Efficiency and Liquidity Ratios. SCOPE OF THE STUDY This study is based of on theoretical discussion practical & mathematical analysis. it is hardly possible to become familiarized with the total banking system of the different organization particularly of the service-oriented organizations.
Therefore, the scope of the report encompasses the areas covered by the theoretical and the project part however the scope of the study is confined within the region of Agrabad. ? I have examined accounts statement of the bank. ? The major source of primary data in business respondent, corporate clients and individual. ? Discuss with the executives & officers. ? Going through printed material of the bank. ? Marketing of export items-its challenges and strategy. LIMITATIONS OF THE STUDY Objective of the practical orientation program is to have practical exposure for the students.
Our tenure was for one month only, which was somehow not sufficient. After working whole day in the office it was very much difficult if not possible to study again the theoretical aspects of banking. Other Limitations are as follows: ? Research within a short period of time. ? Un-wiliness to disclose banks information as Premier Bank, shahjalal Bank. ? Work primary & interview and survey as well as banking activities. ? For the lack of our practical knowledge, so shortcoming may be available in the paper. ? The bank has naturally shown us some in difference connecting its most confidential information. The executives of Jamuna Bank Limited were too busy to spare time for the internee. ? The duration of our internship program is only one months. The allocated time is not sufficient for us to gather knowledge and to make the study a complete and fruitful one. ? The study also suffered inadequacy of data provided by JAMUNA Bank. Chapter-2 Overview of Organization History/Background Jamuna Bank Limited (JBL) is Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban (2nd floor, 3rd & 8th floor), 3, Dilkusha, C/A, Dhaka-1000.
The Bank started its operation from 3rd June 2001. Jamuna Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capital of Tk. 1600. 00 million which is amended by Tk. 4000. 00 million and Paid-up capital of Tk. 390. 00 million respectively. The Paid-up Capital has been raised to 429. 00 million and the total equity of the bank stands at 725. 00 million as on June 30, 2005. As of December 2007 Paid-up capital of the Bank raised to Tk. 1313. 27 million.
Currently the Bank has 44 (Forty four) branches 16 in Dhaka, 2 in Gazipur, 8 in Chittagong, 3 in Sylhet 1 in bogra, 2 in Naogaon, 1 in Munshigonj, 1 in Narayangonj, 1 in Rajshahi, 1 in Basurhat, Noakhali, 1 in Shirajgonj, Dinajpur, Kustia, Comilla, Laksham (including 12 Rural and 2 Islamic Banking Branches). More branches and service centre will be opened at commercially important locations during the year 2009. The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country.
JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Jamuna Bank Ltd. , the only Bengali named new generation private commercial bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the filed of trade, commerce and industries.
The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The Management of the bank constantly focuses on understanding and anticipating customers needs. The scenario of banking business is changing day by day, so the bank’s responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress within only two years. The bank has already ranked as one of the quality service providers & is known for its reputation.
Jamuna Bank offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities. Corporate Information: Name of the Company : Jamuna Bank Limited. Legal Form : A Private Limited Company incorporate in Bangladesh on 2nd April 2001 under the Company act 1994. Date of certificate of Incorporation:3rd June 2001. Date of certificate of Commencement of Business:1st May 2001. Registered Office:Chini shalpa Bhaban 3, Dilkusha. Commercial Aria Dhaka-1000
Total Number of sponsor directors:13 Number of Branches:44 Auditor:M/S Howladar Yunus & Co. Website :www. jamunabankbd. com The location of Jamuna Bank Branch in Bangladesh. Branches Network: |Head Office |01. Danmondi Branch | |Chini Shalpa Bhaban, |House # 17, Road # 6 | |3,Dilkusha Commercial Aria, |Danmondi R/A Dhaka. |Dhaka-1000. |Phone : 8613920 | |Phone:9570912. |Fax : 9675344. | |Fax. 88-02-9570118. | | |Telex: 632153 JBLHO BJ. | | |E-mail: [email protected] com | | |www. jamunabankbd. com | | |02.
Foreign Exchange Branch |03. Gulshan Branch | |2,DIT Avenue |28,Gulshan North C/A | |Motijeel C/A, |Land View commercial center | |Dhaka-1000. |Gulshan circle-2, Dhaka. | |Phone: 9554467, 9554474. Phone : 8852540 | |Fax : 9554568. |Fax : 8852540. | |04. Shantinagar Branch |05. Nayabazar Islamic Banking branch | |41/B, Chamilibag, |10/3, North South Road, Malitola | |Shantinagar |Dhaka. | |Dhaka. Phone :9553977 | |Phone: 8355179, |Fax : 9568989. | |Fax : 835564 | | |06. Dilkusha Branch |07. Konabari Branch Gazipur | |33, Dilkusha C/A Dhaka. A-140 & A-141 Bacic I/A | |Phone:9565608, 551419, 9555795. |Konabari Gazipur. | |Fax : 9562485. |Phone : 9289045 | |08. Mohakhali Branch |09. Jubilee Road Islami Banking Branch | |Ismail Mension |Modina Tower | |32, Mohakhali C/A Dhaka. 57, Jubilee Road, Ctg. | |Phone : 9889273-4. |Phone : 616266 | |Fax : 9888358 | | |10. Sonargaon Road Branch |11. Katunganj Branch | |1/G, Free School street, |1575, Pathorghata, Ctg. | |Sonargaon Road, K. Bazar Dhaka. Phone : 625454 | |Phone : 9670655. |Fax : 841435 | |Fax : 9669206. | | |12. Bhatiary Branch |13. Moulvi Bazar Branch | |Nawaz Market |Mostakim Mension | |Shitakunda, Ctg. 77/3, Moulvi Bazar | |Phone : 106414 |Phone:7315026 | | |Fax: 7315391 | |14. Agrabad Branch |15.
Goala Bazar Branch | |76-77, Agrabad C/A |New Plaza, Goala Bazar | |Chittagong. |Osmani Nagar, Balaganj, Sylhet. | |Phone: 031-727727 |Phone: 0822287352-3 | |Fax: 813271 |Fax : 08222-87353 | |16. Sylhet Branch |17.
Beani Bazar Branch | |Sahir Plaza |Fatehpur Union-6 | |7647, Zinda Bazar |Beani Bazar, Sylhet | |Kotwali, Sylhet |Phone :08223-88022 | |Phone: 0821-725409 | | |Fax : 725239 | | |18.
Mohadevpur Branch |19. Naogaon Branch | |Mohadevpur, Naogaon |247, Sadar Road, Naogoan | |Phone : 07426-75137 |Phone : 0741-61840 | |Fax : 07426-75138 |Fax : 0741-61850 | |20. Chistia Market Branch |21.
Bogra Branch | |393/B Elephant Road (2nd floor) |Kazi Nazrul Islam Sarak | |Chistia Market |898, Borogola | |Dhaka. |Bagra. | |Phone: 9673742 |Phone:051-69834-6 | |22. Baligaon Bazar Branch |23. Narayangong Branch | |Aziz Plaza,Baligaon Bazar |Holding no:207. |Tongibari, Munshiganj. |B B Road, Chashara | |Phone:0690-74078. |Narayangang. | | |Phone:7635166,7630900 | |24. Motijheel Branch |25. Rajshahi Branch | |2, DIT Avenue |88, Shaheb Bazar | |Motijheel Commercial Aria |Pampur, Boalia | |Dhaka. Rajshahi | |Phone:9554474,9554467. |Phone: 01713329204 | |26. Bashurhat Branch |27. Dholaikhal Branch | |Basurhat, Compnygonj, |119/B/1, Distillary Road, | |Noakhali. |P. S. : Sutrapur | |Phone:03223-56023. |Dhaka | | |Phone:7410415 | |28.
Bahaddarhat Branch |29. Sirajgonj Branch | |1068/69, Arkhan Road |975,S. S. Road | |Bahaddarhat |Hossain Plaza | |Chittagong |Sirajgonj. | |Phone:031-2551851-4. |Phone: 0751-64378, 0751-64377. | Functional Area Of JBL: The followings are the functional areas of Jamuna Bank Limited: ? Export and Import Financing ? Deposit Scheme ? Industrial Financing & Trade ? Financing. Retail Banking ? Syndicate Loan ? Project Financing ? Hire-Purchase ? On line banking ? Lease Financing ? Shop Finance Scheme ? 24 Hours Banking: Q – cash ATM Facility ? Personal Loan for Women ? Consumer Credit ? Remittance and Collection. ? Act as an Authorized Primary Dealer of Govt. Securities and Bonds Vision To become a leading banking institution and to play a pivotal role in the development of the country. Mission The Bank is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and ontribution to the development of the country can be ensured with a motivated and professional work force. Corporate Slogan Your partner for growth. Future Thrust Of JBL ? Internet Banking. ? Phone Banking. ? Introducing more innovative products and services. ? Expansion of branch network throughout the country. ? Expansion of business network at home and abroad. JBl Corporate Culture Employees of JBL share certain common values, which helps to create a JBL Culture. • The client comes first. • Search for professional excellence. • Openness to new ideas & new methods to encourage creativity. • Quick decision-making. • Flexibility and prompt response. • A sense of professional ethics. Organization Structure Of JBL (Head Office)
Organogram of Head Office of Jamuna Bank Organogram of Agrabad Branch of Jamuna Bank Agrabad branch structure 1. Manager control all over the department. 2. Sub-manager control general banking incharge, credit incharge and foreign exchange incharge. 3. General Banking control Accounts department, Customer Care department and Remittance department 4. Accounts : Recodes the banks all transaction. • Customer care: Customer care activities is the A/C opening giving reference and cash transaction. • Credit: Credit department has fine employee. Credit incharge control four employee. • Foreign exchange: Foreign exchange department has two types, such as Import and Export.
Foreign Exchange Foreign Exchange means exchange foreign currency between two countries. If we consider “Foreign Exchange” as a subject, then it means all kind of transactions related to foreign currency. In other wards Foreign Exchange deals with foreign financial transactions. Foreign Exchange Regulation Items: 1. Local regulation for foreign exchange: Our foreign exchange transactions are being controlled by the following rules & regulation: ? Foreign Exchange Regulation Act 1947. ? Bangladesh Bank has published a book “Guideline for Foreign Exchange Transaction (Volume- 1 & 2)” to regulate foreign exchange. It is amended after every five years. Bangladesh Bank issues foreign exchange circular from time to time to control the export, import & remittance business. ? Ministry of Commerce issues export & import policy giving basic formalities for import & export business. ? Sometime Chief Control of Import & Export (CCI & E) issues public notice for any kind of change in foreign exchange transaction. ? Bangladesh Bank published two volumes in 1996. This is compilation of the instructions to be followed by the authorized dealers in transactions related to foreign exchange. ? Statutory Revenue Order (SRO). 2. International Regulation for Foreign Exchange: There are also some international organizations, influencing our foreign exchange transactions.
Few of them are discussed bellow: thousand of companies. It was founded in 1919. ICC has published some publications like UCPDC (Uniform Customs & Practices for Documentary Credit), URC, and URR (Uniform Rules of Reimbursement) etc. , which are being followed by all the member countries. Modes of opening a L/C (Letter of Credit) under JBL: ? 100% Margin L/C: In this way, bank only takes their service charge like commission, fax, telephone, and telex etc. charges. ? Partial Margin L/C: If client does not give 100% margin then the Bank participate with the client for the rest of the money. Here client’s margin treats as security or down payment.
Client pays the Bank’s proportion and profit after selling the imported goods. It is noted that before payment in full, goods will be under Bank’s custody. Activities of foreign exchange: There are three kinds of foreign exchange transactions: A) Import Business, B) Export Business, C) Foreign Exchange Remittance. Import Business Introduction: Importers are those who are authorized by the import trade control authority. Under the import policy of Bangladesh, the importer has get the valid Import Registration Certificate (IRC) from the Chief Control of Import & Export (CCI). Types of Importer: There are mainly two types of importers in JBL: ? Commercial importers, ? Industrial importers. Letter of Credit:
Letter of Credit (L/C) can be as a “Credit Contract” whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some condition. The Uniform Customs & Practices for Documentary Credit (UCPDC) published by International Chamber of Commerce (1993) Revision No. 500 defines Documentary Credit: “Any arrangement however named or described whereby a bank (the “Issuing Bank”) acting at the request and on the instructions of a customer (the “Applicant”) or on its own behalf, ? Is to make a payment to or the order of a third party (the Beneficiary) or is to accept and pay bills of exchange (drafts) drawn by the beneficiary, or ?
Authorizes another bank to effect such payment or to accept and pay such bills of exchange (drafts) ? Authorizes another bank to negotiate against stipulated documents provide that terms and conditions are complied with”. L/C is called documentary letter of credit, because the undertaking of the issuing bank is subjected to presentation of some specified documents. Types of Documentary Credit: Documentary Credit may be three types: 1. Revocable Credit, 2. Irrevocable Credit, and 3. Add confirmed credit. 1. Revocable Credit: This type of credit can be cancelled or amended at any time by the issuing bank without prior notice to the seller. Now it is not used. 2.
Irrevocable Credit: This type of credit can’t be cancelled or amended by the issuing bank without the agreement of parties concerned thereto. All the credits issued in our country are in irrevocable nature. 3. Add confirmed credit: When a third bank provides guarantee to the beneficiary to make payment in case of failure of making payment of issuing bank, the L/C is called confirmed L/C. In case of confirmed L/C, a third bank adds their confirmation to the beneficiary to make payment in addition to that of issuing bank. Confirmed L/C gives the beneficiary a double assurance of payment. Special Documentary Credit: There are some other special documentary credits that are given below: 1. Revolving credit, 2.
Transferable credit, 3. Back-to-back credit. Revolving credit: This provides for restoring the credit to the original amount after it has been utilized. Transferable credit: If the word ‘Transferable’ incorporated in an L/C, then the L/C is transferable. The first beneficiary can transfer transferable L/C to second beneficiary. But second beneficiary cannot transfer it further to another beneficiary. Back-to-back credit: The back to back is a new credit opened on the basis of an original credit in favor of other beneficiary; under this concept the seller of the first credit offers it as security to the advising bank for the assurance of the second credit.
The beneficiary of the back-to-back credit may be located inside or outside the original beneficiary’s country. Description of the above indicators: ? Buyer offers his Bank to open a L/C. ? Opening Bank sends L/C to the Advising Bank. ? Advising Bank transfers L/C to the supplier. ? Supplier sends shipment documents to the Negotiating Bank and also claims on this bank. ? Negotiating Bank sends the shipment documents to the Advising Bank. ? Opening Bank transfer the shipment documents to the Buyer / Importer. ? L/C opening bank purchases foreign currency from Bangladesh Bank. ? Bangladesh Bank credited the supplier’s countries central banks A/C. ? Central Bank then credits the reimbursement banks A/C. Opening Bank has an A/C in reimbursement bank (Nostra A/C). Opening Bank request to pay the required amount to Negotiating Bank from their Nostra A/C. ? Reimbursement Bank pays the L/C value to Negotiating Bank. Parties involve in documentary credit: ? The Issuing Bank: This is the bank, which issues documentary credit on account of its client. ? The Advising Bank: This is the bank, acting as agent of the issuing banks to advice the L/C to the beneficiary. ? Negotiating Bank: This bank provides value to the beneficiary against presentation of documents complying credit terms. Usually this is exporter’s bank that purchase the export documents. Reimbursing Bank: This bank acts as an agent of the Issuing Bank, authorized to make payment or to honor reimbursing claim of the Negotiating Bank. ? The Applicant / Importer / Buyer: The importer or buyer is the applicant of a letter of credit. Applicant must be a client of the Issuing Bank. ? The Beneficiary / Exporter / Seller: The exporter or seller of the goods is the beneficiary of a letter of credit. ? Notify Party: The party / bank to whom the arrival of shipment has to be notified or to be informed, is called notify party. Operation of Documentary Credit: A documentary letter of credit is one, which is undertaken by the issuing bank to honor the documentary bills.
Documentary bills may be bill of lading, bill of exchange, insurance cover note, transport document, consular invoice, certificate of origin, proforma invoice etc. The following five major steps are involved in the operation of a documentary credit: (i) Issuing, (ii) Advising, (iii) Amendment, (iv) Presentation, (v) Settlement. Issuing of L/C: An importer may define to have import L/C when he wants to import something. He needs to apply the designated bank in a prescribed form for the sanction of his required credit. Required information: ? Full particulars of the Bank Account of having same Bank. ? Nature of business (Proprietorship, partnership or limited company) in case of limited company, the name of directors & the balance sheet of last three years are required. Historical background of the individual or institution. ? Amount of limit required. ? Modes of payment. ? Statement of assets & liabilities. ? Balance of fund in Bank account. ? Trade license & import registration number with renewal date. Receiving the above particulars the foreign exchange section of the bank will prepare credit report of the concerned import. The report should be collected from the previous banker of the party. Preparation of credit report: Bank prepared credit report in prescribed forms. Character, capacity & capital, which are known as the three C’s of credit. Instead of the three C’s some mention three R’s, i. e. collateral and conditions.
Position of the Account: Import section will investigate whether there is sufficient fund available in the account to cover the margin to be sanctioned, commission, postage cable or telex charge etc. If it is found ok L/C will be sanctioned. In all cases the sanction must be informed the importer for acceptance. Receiving the confirmation from the client, the terms & conditions of the sanctioned are acceptable, the subsequent documentation / charged documents are taken up. Before opening a L/C, the following documents are required to be submitted by the importer: ? Up-to-date trade license. ? Import registration certificate (IRC). ? Tax identification certificate. Membership certificate from relative association. ? Pass book import. ? VAT registration certificate. ? Memorandum of association & Articles of incorporation in case of Limited Company. ? L/C margin, commission charges as per issuing bank’s requirement. ? Chamber of commerce certificate. Bank will provide the following documents/papers: 1. L/C application form. 2. L/C authorization form. 3. Import form. 4. Murabaha agreement. Bank will perform the following functions with the above essentials: 1. Landed cost analysis. 2. Present market position of the goods to be imported. 3. Credit Information Bureau report from the Bangladesh Bank. L/C Application:
For opening the L/C, the client submits an application in the printed format of the designated bank. This is called L/C application form, which is also an agreement between the importer & the bank. The application from must be completed, filled and signed by the authorized person of the importing & give the following information: o Full name & address of the importer & exporter. o L/C value for USD, which must not exceed the LCA value. o Brief description of the goods with its unit price, quantity, quality etc. o Origin of the goods, port of destination, port of loading etc. o Mode of advising L/C (i. e. Airmail / Full Telex / Short Cable etc. ). o L/C opening under UCPDC published no. 500, ICC revision 1993. Mode of shipment (Sea / Air / Truck / Rail etc. ). o Insurance cover note number and name of the company. o Last date of shipment & negotiation time (must not be beyond 30 days from the shipment date). o Special instruction if any (If it is back-to-back L/C, the no. of related export L/C). Confidential report of beneficiary: According to exchange control regulations Bankers are required to obtain confidential report of the beneficiary of L/C before he open the L/C, if the amount of L/C exceeds Tk. 5,00,000. Bank can open L/C below Tk. 5 lac without obtaining C. R. LCA Form: Lca form is mandatory for importing through a Bank. The importer cannot import the goods without LCA.
LCA Registration: Letter of credit of authorization form is an important component of this purpose. It consists of six (6) copies. First copy for exchange control purpose, second copy for licensing authority, third and fourth copy for CCI, fifth copy for the registration unit & sixth copy for the office copy the particular Bank. All LCA from should be registered with registration unit & exchange control department of Bangladesh Bank. The procedure for registration of LCA form with the Bangladesh Bank is as under: ? All LCA forms should be registered with Bangladesh Bank, registration unit, exchange control department, and Bangladesh Bank, Dhaka. After filling up the relevant portion of the LCAFs and duly signed by the importer there are forwarded to the area registration unit of the Bangladesh Bank by the authorized dealers duly authenticated. The Bangladesh Bank registration unit subject to observation of usual drill registration number on all the copies of LCAFs. The officer in charge of the Bangladesh Bank registration unit will give the registration number on all the copies of LCA forms under his signature. Thereafter, the same will be opened unless an LCA form which has been registered with the Bangladesh Bank. ? After registration the original and duplicate copies of the LC authorization forms will be delivered to the authorized representative of the banks form whom the same received by the registration unit. rd & 4th copies of the form will be passed on to the concerned licensing office, 5th copy of the form will be retained in the record of the registration unit of the Bangladesh Bank. Time limit for opening L/C: L/C has to be opened within one hundred fifty days from the date of registration of LCA form. L/C Advising: Advising through a Bank is a proof of evident authenticity of the credit to the seller. The process of advising a credit consists of forwarding the original credit to the beneficiary to whom it is addressed. Before forwarding the Advising Bank verify the signature (s) of the officer (s) of the Issuing Bank & ensure that the terms & conditions are not in violation of existing exchange control regulation & the other regulation relating to export.
If credit is transmitted via telex, advising Bank will match the test used in the telex. The L/C advising process is shown in figure: – L/C Amendment: Amendment of irrevocable letter of credit is not permissible without the joint consent of all the parties involved in documentary credit operation. Procedure and dispatch: Amendment is to be typed in the banks printed format. The copies of the amendment must be dispatched to all concerned as done in dispatching the L/C. Amendment can be done either by cable or telex or airmail. Each and every amendment of L/C must be noted in the L/C file and copies of each amendment are kept in the L/C file. Chronologically date wise. Bank Charge:
Amendment commission is to be realized from the party as per instruction of Bangladesh Bank F. E. circulars. Presentation of Documents: – If the seller / beneficiary are being satisfied with the term and conditions of the L/C then dispatch the goods to the buyer. After that dispatch-evidencing dispatching of goods to the negotiating bank on or before the stipulated expiry date of the L/C the documents include- |1. |Commercial Invoice |7. |Packing list | |2. |Bill of Leading. |8. |Insurance cover note with insurance | |3. |Bill of exchange. | |paid slip. | |4. |Shipment certificates. |9. Non Negotiable copy of BL. | |5. |Shipping advice. |10. |Radio Activity Report | |6. |Pre-shipment inspection certificates | |(Applicable for import of foods only) etc. | After receiving all the documents, the negotiating bank then checks the documents against the credit. If the documents are found in order, the bank will pay, accept or negotiate to the issuing bank. The issuing bank also checks the documents & if they are found as per credit requirements, then either effects payment on reimburses in the per-agreed manner. Lodgment and Retirement of Shipping Documents: Lodgment:
When the documents received from the foreign correspondent and checked with L/C file by two persons to ascertain the correctness if it is found in order at that time make entry in the bill register and pass the necessary voucher. This process is known, as lodgment must be lodged within 3 days. The local office passes the following vouchers after negotiation. PAD (Payment against documents) A/C – Dr, [Converted the bill amount at Bangladesh currency rate prevailing on the date of lodgment] H. O- International Division A/C — Cr. [By the bill amount converted at T. T rate prevailing on that date & credit advise is sent along with a statement of transaction] Retirement: When the parties retire the documents by cash payment or by MPI/LIM arrangement is known as retirement. Kind of bills (documents): ? At sight. ? Collection. ? Cash/Loan/Barter. ? Deferred.
Check-up the Documents: Before lodgment, documents must be checked with L/C file. Check up as under: ( Bank invoice: a) The invoiced amount tallied with draft amount. b) The invoice is shown by the beneficiary and is signed by him. c) Description of goods in the invoice and bill lading are identical. ( Bill of lading: a) Full set of on board and freight prepaid incase of CRF value fuly signed by the shipping company. b) Correct description of goods is given as per invoice and bill of lading. c) Shipment date is given as per L/C. d) Bill of lading not caused or dirty, if so, the acceptance of importer is required. ( Draft. ( Forwarding date. Other Documents:
Certificate of origin, packing list, inspection certificates, health certificate, shipment advice, etc. must be relevant to the L/C. Intimation to the importer: Importer is to be advised on the date of lodgment of documents with full particulars of shipment to retire the documents against payment or to dispose the import documents as per pre-arrangement, if any. Documents must not be handed over to the importer without payment of without making any arrangement for disposal. Refusal Notice: After examination, if the documents become discrepant, issuing bank will through the refusal notice to the negotiating Bank with seven Banking days. Reporting: After completing of the above procedure, the relevant exchange control forms rescribed by the Bangladesh Bank, exchange control department have to be completed and reported to the Bangladesh bank vide schedule no S/1S/2/3 as the case may be long with IMP/TM form in the monthly summery statement. Disposal of LCA: Exchange control copy of LCA if fully utilized or when the balance is too much small is submitted to the Bangladesh bank, exchange control department along with IMP/TM and schedule. Retirement (At sight Bill) WES: All the import bill must retired by the importer immediately after receipt i. e. within 72 hours against payment. IMPORT ITEMS OF Jamuna Bank Limited: ( Sugar ( Lime Stone ( Clinker ( Synthetic (Mixed Yarn) ( Garments (Capital Machinery) ( Spices ( Iron & Steel Products ( Tanning Materials ( Scrap Vessels ( Motor Vehicle ( Textile Fabrics & Accessories ( B. P.
Steel for Garments ( Polyester Textured Yarn ( Chemical Products ( Recondition Vehicle IMPORT FINANCING: The post import finance extends the import credit in the following forms: ? PAD (Payment Against Document). ? LTR (Loan against Trust Receipt). Payment against Document: PAD Loan is created upon lodgment of import documents. This Loan is created for 21 days – the time being the tolerance for taking documents for the importer. If after 21 days the documents are not taken by the importer, the Bank may sell the imported goods to recover the given amount. Loan against Trust Receipt: Under this Loan is allowed only to first class importers.
Here only on the basis of trust without paying the Bank anything or a partial amount, the importer takes the documents. Then importer is allowed 60-90 days time to make payment. EXPORT BUSINESS Introduction: Export means law fully carrying out of anything from one country to another country for sale. In our country the import & export trades are regulated by the import & export control Act-1950. Under the export policy of Bangladesh, the exporter has to get the valid export registration certificate (ERC) from chief controller of export & import (CCI). The ERC is required to renew every year. The ERC number is to be incorporated on export form & other papers related with exports.
For obtaining export registration certificate from CCI, the following document are required: ? Nationality & assets certificates. ? Trade license. ? Partnership deed (for partnership business). ? Bank certificate. ? Income Tax Certificate. ? Memorandum & article of association & certificate of incorporation (for Limited Company). Export Procedure: Securing the order: After having the ERC, the exporter may proceed to secure the export order. He can do this by contracting the buyer directly or through agent. In this endeavor, our exporter can get help from: ? Liaison office. ? Buyer’s local agent. ? Bangladesh mission abroad. ? Export Promoting organizations. ? Chamber of commerce (Local & foreign). Signing the contract:
After communication with buyer, exporter has to get contracted for exporting exportable items from Bangladesh detailing, commodity, quantity, price, shipment, insurance, & inspection and settlement etc. Receiving the L/C: After getting contract for sale, exporter should ask buyer for L/C clearly stating terms & conditions of export & payments. Procuring the materials: After knowing that the L/C has opened in his favor, the next step for the exporter is to set about the task of procuring the contracted the merchandise. If the exporter has to procure the raw materials from another supplier (local or abroad), he has to open Back-to-Back L/C. Procedures for opening Back-to-Back L/C:
An expected exporter having export, L/C must have applied to designate bank in prescribed forms to open an import L/C under back-to-back arrangement. ? The application must consider the following essentials: a) Complete particulars of the Bank Account b) Nature of business. c) Historical background. d) Required amount of limit. e) Modes of payments. f) Goods to be imported. g) Security to be pledged. h) Trade license. i) Income Tax Certificate. j) Registered Partnership Deed. On receive of the above essentials the bank will prepare a credit report for concerned application. The report should be collected from their previous banker, if any. By doing so, the banker will submit the report to the Head Office.
After getting his legality, the Head Office may permit the particular Branch to open Back to back L/C. ? Bank will supply the following papers for opening a Back to Back L/C: a) L/C application form. b) LCA form (Letter of Credit Authorization). c) IMP form. d) Charge document papers. The above must be completed, filled & signed by the all-concerning party. The party will submit the entire filled document along with application in printed form of the designated bank, which is also an agreement between applicant & the Bank. ? LCA form: There are 5 copies of LCA form: 1. Original copy for exchange control purpose (provided by Bangladesh Bank). 2.
Duplicate for custom purpose. 3. Triplicate & quadruplicate for licensing authority (CCI&E). 4. Quadruplicate for the registration unit of Bangladesh Bank. 5. Remaining copy for the issuing Bank. ? L/C numbering & advising: Having L/C application & other formalities maintained properly, a serial number is recorded in the Back to Back L/C register. The L/C number is inserted in the L/C application by realizing all other charges & commissions then L/C is typed in a printed format and check-up again before dispatching. It is dispatching under their full signature, bearing signature number. ? Clearance of L/C copies: a) L/C is normally typed in bank’s prescribed form.
There may be many copies. b) First copy is sent to the advising bank for the beneficiary. c) Second copy is sent to the said bank at the same time for his own purpose. d) Third copy to importer. e) Fourth copy for reimbursing bank. f) Fifth & sixth copy for issuing bank. g) Seventh copy for CD. h) Eighth copy for CCI. i) Ninth copy for Bangladesh Bank. The remaining copy is sent to the importer along with the menu of charges, charged by the issuing bank. ? Shipment of goods: The exporter should take the preparation for delivery of goods as L/C & under other terms & conditions, prepare and submit shipping documents for payments/acceptance/negotiations in due time. L/C opened under export development fund: Back-to-Back L/C can also be opened under EDF. This fund is provided by Bangladesh Bank to encourage the exporters. The liability in EDF of a party must be within US$ 1000000. ? Back to Back L/C: Back-to-Back import L/C is backed by another export L/C. Where import of the goods to be made to execute the export L/C & payments of Back to Back Bills to be made normally from related export proceeds, the import L/C is called Back to Back L/C. ? Cash L/C: Where payment of import bill under L/C is being made from Foreign Currency Reserve of Bangladesh Bank. Foreign currency A/C with authorized dealer, the L/C is called Cash L/C. Barter L/C: Where final settlement is being made through commodity exchange between the nations, the L/C is called Barter L/C. ? The relevant documents for shipment: 1. EXP form 2. Export Registration Certificate (Valid). 3. L/C copy. 4. Custom duty certificate. 5. Insurance documents. 6. Invoice. 7. Bill of Lading. 8. Bill of Exchange. 9. Inspection Certificate. 10. Packing list. 11. Weight certificate. 12. Beneficiary’s signed statement. 13. Multiple country declaration. ? Negotiations of document: The exporter should make arrangement for early submission of the documents to the Banks for negotiations. Documents should be submitted: 1.
In entirely. 2. Correctly prepared in conformity with the terms of credit. 3. With indemnity signed by the authorized officials if there are discrepancies in the document. EXPORT ITEMS: The main export items of the banker garments and steels. FOREIGN REMITTANCE Introduction: Foreign remittance refers that the exchange of money between two countries or among several countries. This is mainly occurred through Banking institution. Jamuna Bank Limited is not beyond this. It performs the remittance function with different countries. It maintains the foreign remittance in the following form: ? Foreign Demand Draft ? Inward ? Outward Foreign Demand Draft (FDD)
A FDD is a negotiable instrument issued by a bank drawn on other Bank of another country having the instruction to pay a certain amount to the beneficiary on demand. Remittance through demand draft may be inward or outward. Inward Inward remittance refers to the extent where the bank makes payment to the client against foreign demand draft. Bank will make payment to the client by verifying the test number and signature of the authorized officer. Outward It refers to the extent where bank issues foreign demand draft. The bank is not exercising outward remittance yet now. Problems of Foreign Exchange Operation 1. Frequent fluctuation of domestic currency worth against US dollar. 2. Unavailability & shortage of foreign currency. 3.
Political crisis, lack of faithfulness to the foreign respondents. 4. Unavailability of high tech electronic facilities. 5. Lack of favorable environment, government restrictions, and the unfavorable balance of trade. 6. Insufficient port and harbor facilities. Human resources management & Development Every year The bank always acknowledges the valuable contribution made by its employees for remark able achievements every year. The total number of employees was 938 as at 31st December 2008. The cost income ratio and better per employee performance bear testimony to their improved productivity and efficiency. In Jamuna Bank Limited, are committed to creation of community sense among our workforce.
For disseminating of ideas and thoughts for better understanding an d working out strategies to be undertaken to create a congenial work atmosphere we have Management Committed and in the Head Office and at Branch level which sit at regular intervals to discuss different strategic and operational issues and exchange views with one another. This discussion helps employees to learn each other’s jobs and roles and develop understanding about the Bank as a whole. In order that our employees are trained on different aspects of banking operations and they are updated about the development s taking place around them in respect of banking, finance, economy, trade etc. we have already established Raining Institute.
The institute is arranging training coursed, workshops, seminars on general banking, credit operation and management, international trade finance & foreign exchange operation, risk management , anti money laundering campaign, customer service’s etc. The institute starred its journey from September 2006. Customer Service: Five department of JBL, Agrabad Branch provides service for the customers. These departments are very essential part of banking activities to render various services to their clients. These departments help bank to perform its banking activities in systematically and efficiently. The operations of the bank are clearly distributed among the department in order to avoid the haphazard situation. Since bank is a service oriented financial organization, every department of bank plays an important role in rendering banking service to the client.
JBL, Agrabad Branch has several departments and sections for rendering different customer services. Remittance: To facilitate the need of customers, commercial banks transfer funds from one place to another, through Demand Draft or Telegraphic Transfer. These methods of remitting money from one place to another, with are known as remittance. Advantage: ? Convenience ? Speed ? Minimum Cost ? Least risk Function of Remittance Section ? Coming and outgoing foreign and local remittance is the major function for this department. ? Handling of incoming and outgoing T. T. ? Outstation cheques collection. ? Outstation cheques purchase. ? Demand Draft handling. Other miscellaneous work of the department E-Service of Bank: ATM Banking: The Bank is offering Q-Cash ATM for ensuring 24 hours Banking services. Our customer can transact round the clock through 45 ATMs and more than five hundred point of sales located at Dhaka, Chittagong, Sylhet and Khulna. Features of Q-Cash ATM are: – 24 hour banking. – Cash Withdrawal – Balance inquiry – Account transfer. – Utility payment. Features of Q-Cash point of sales are: Retail purchase. Balance inquiry. On Line Banking: Banking sector has become very competitive. We have established online Banking system to provide better satisfaction and advantages to the customers.
The board of directors and management of Jamuna bank Limited are always aware of this fact and have eagerness for providing world class banking facilities to its valued customer. With this end in view a group of talented IT professionals under the excellent leadership of the Managing Director started the journey to reach the ultimate goal. Taking future vision for improvement of the project and minimize the cost from the vary beginning; JBL established centralized integrated on-line system among all of its branches. Flora Bank on-line Banking software, switching software, servers, ATM data storage system and other hardware simultaneously set up to acquire a fully equipped data center at banks computer Division, Head Office. The Disaster Recovery site is going to be established very soon.
The customer of JBL can enjoy the world class banking service locally at a very reasonable cost through the fully automated on-line banking system. The key features of JBL On-line Banking are: – Centralized Database. – Platform Independent. – Real time any Branch Banking. – Internet Banking interface. – ATM interface. – Corporate MIS facility. Delivery channels of JBL online Banking are: – Branch network. – ATM network. – Point of sales network. – Tele-Banking network. – SMS Banking network. – Internet Banking network. Clearing Department: In the clearing department the work is to clear the cheques and pay order through Bangladesh Bank that are submitted for cash collection.
Everyday clearinghouse takes a place in Bangladesh Bank, once in the morning called morning house (1st house) another in the evening called return house (2nd house). In the house all the banks representative sit together and change their money receive instrument of the particular banks to clear the paper and transfer the money to their particular accounts. Types of Clearing There are two types of clearing: a. Inward Clearing: The cheques or instruments of JBL that are submitted to other banks for collections are called Inward Clearing. b. Outward Clearing: The cheques of other banks that are submitted to the JBL for collection are called Outward Clearing. Clearing House A place that provides an arrangement by which various representative of each learing bank assemble there each business day to exchange local cheques, drafts, bill of exchange etc. Which are received by them for collection from their customers. Its object is to settle balances between the banks of a city, town or a region with a minimum of inconvenience and labor. Before the establishment of clearing house, the bank had to send their bill by clerks to other banks for getting cash against those cheques obviously this was a laborious and time consuming process and waste full procedure. Besides it was risky to carry cash from one bank to another and it also invalid lot of daily under the auspices of the modern clearing house transaction involving of taka are settle easily with in a matter of an hour or so.
Under the clearing system, reciprocal claims of one bank against others are offset and only the net balance or difference between receipts and payments are settled by drawing on the account of the debtor bank maintained with central bank. In Bangladesh Bank organizes the clearinghouse. Different Types Of Securities Under Loan & Advance: ? Goods and Product. ? FDR ? Sanchaya patras. ? ICB unit certificates. ? Share. ? Debenture. ? Gold. ? Insurance Policy. ? Provident Fund. ? Transport. ? Land Building Machinery. ? L/C Common ways of charging securities under loan & advance: 1. Lien 2. Pledge 3. Hypothecation 4. Mortgage 5. Assignment 6. Set-off 1. Lien: Lien means right to hold the securities till the liability is adjusted. For excusing the right of lien the following condition to be fulfilled: ?
The security over which the right is to be executed must be in possession of the creditor who will exercise it. ? There must be a lawful debit due to the person in possession of the goods by the owner of the goods. 2. Pledge: Pledge may be define as the transfer of possession of goods and produce by a debtor at his creditor as security for the payment of a debt or the fulfillment of some obligation by the transfer. The essence of pledge is that possession passes to the pledge but legal ownership remains with the pledger. Only movable property can be pledged. 3. Hypothecation: Hypothecation means the charging of property to secure debt while the possession and ownership of the property remain with the debtor.
A deed of hypothecation gives the bank the right to sell the goods if the loan is not repaid. 4. Mortgage: Mortgage is a transfer of interest in specific immovable property security by the owner for the payment of debt. Mortgage is mainly two types such as: ? Equitable Mortgage. ? Legal Mortgage. 5. Assignment: An assignment means a transfer by one person of a right, property or debt (existing or future) to another person. The most common examples of assignment are: ? Contract money due from government and semi government body. ? Supply bills ? Books debts ? Life insurance policy 6. Set off: Set off means the total or partial margining of claims of one person against another to counter claim by the later against the former.
It is combining of accounts between debtor and creditor; so as to arrive at the net balance payable to one or the other. Preferable ways of charging securities: JBL usually applies Pledge & Mortgage as the ways of charging securities. But if necessary, bank can consider the other ways of charging securities. Risk Analysis For Loan & Advance: A bank has to consider the following risks while investing under the several Investment Principles: |Risk |Measures |Analysis | |1. Suppliers Risk |Price |Review recent changes in Govt. egulation. | | |Quality |Discuss with Industry/ Exporter/ Importer in Bank. | | |Quantity | | |2. Sales Risk | |Obtain Industry turnover data for at least three years. | | | |Analyze financial data for at least to major competitors. | | | |Review Govt. regulation. | | | |Discuss industry experts in banks. | | |Identify client’s five largest customers. | |3. Performance Risk | |Analyze recent performance history. | | | |Analyze competitive position rank in Industry. | | | |Analyze cash flow forecast. | |4. Resilience Risk |Leverage |Analyze debt to equity ratio. | | |Liquidity |Analyze current quick receivable turnover payable turnover & inventory | | |Connection |turnover ratios. | | |Determine political & private sector affiliations of owner & key manager. | |5. Management |Ability |Obtain managers bio-data & interview with management. | |Competence Risk |Level of Team Work |Review Organization Chart. | | | |Compare with competitors about profit & growth. | |6. Management |Honesty |Interview Management. | |Integrity Risk | |Analyze audit problems. | | | |Look for characteristics of managers. | | |Use political power to recover loans. | |7. Security Control |Ease of obtaining |Verify documentation. | |Risk |favorable judgment. |Conduct site visit to verify security existence. | | |Ease of taking | | | |possession | | Opening of Accounts: In case of Joint Account : Any balance to the credit of the account is and shall be owned by us as joint depositors. Any liability which incurred in respect of the account shall be joint and several. In case of Partnership Account: 1.
We request and authorize you until any one of us shall give you notice in writing to the contrary, to honor and debit to the firm’s account al cheques, Guarantees, Negotiable Instruments or other Order which may be drawn, or bills Accepted or Notes Made or receipts for money owing by you to the firm signed by any one of us in the name or on behalf of the firm, whether the firm’s account be for the time being in credit or overdrawn or may become overdrawn in consequence of such debit and we will be jointly and severally responsible for the repayment for the repayment of any such overdraft and interest there against. 2. We also request and authorize you to accept the endorsement of any one of us in the name or on behalf of the firm on cheques, order bills, notes or other negotiable instruments. 3.
You are hereby authorized to carry out any instruction in connection with the account (including instructions countermanding payment of cheques, bill of exchange, promissory notes or order for payment) when such instructions are given by all or any one of us. 4. Any security or other property deposited in the name of the firm may by withdrawn and any financial facility may be availed from you in the name or on behalf of the firm and may be secured in any manner upon any security money or title deed of property6 deposited in the name of the firm by any one of us and we will jointly and severally be responsible for repayment of such money with profit costs charges and expenses. 5. Any liability whatsoever incurred in respect of the account shall be joint and several. 6.
This authority shall remain in force until revoked not withstanding any change in the constitution or name of the firm and shall apply notwithstanding any change in the membership of the firm by death, bankruptcy, retirement or other wise or the admission of new partner(s), All the partners must sign below. 1st Partner’s Signature 2nd Partner’s Signature 3rd Partner’s Signature In case of Limited Company: At a meeting of the Board of Directors/ General meeting of … ……………………. Limited held at its office at………………. On…………….. The company decided to open at Al-Wadiah Current / ………… Account with JBL …………………… Branch and we have been authorized to advise the bank accordingly. We enclose the following documents for the purpose: 1. Certified true copy of the Memorandum & Articles of Association of the company. 2.
Certificate of incorporation of the company for inspection and return along with the duly certified photocopy for bank’s records. 3. Certificate from the registrar of joint stock companies that the company is entitled to commence business (in case of Public Ltd. Co. for inspection and return) along with a duly certified Photocopy for Bank’s records. 4. Latest copy of balance sheet. 5. Extract of resolution of board / general meeting of the company for opening the account with JBL and authorization for its operation duly certified by the chairman / managing. 6. List of directors with address (A latest certified copy of the form—Xii) We would now request you to open an Al-Wadiah Current /………. account in the name of company.
We undertake to advise the bank any changes in the authorized signatures and these will be supported by further specific resolution of the company. We agree to comply with the rules governing the account of JBL and agree to company with the Schedule of Charges of the Bank. Chapter-3 Project: Financial performance of Jamuna Bank Ltd ( JBL): Profit: Showing the table and graph. |Year |2002 |2003 |2004 |2005 |2006 |2007 |2008 | |Amount of profit|15. 20 |128. 88 |308. 83 |419. 94 |701. 32 |824. 21 |1040. 20 | [pic]
Graph no: 01 (Amount of Profit) In 2002, 2003, 2004, 2005, 2006, 2007 & 2008 profit amount corresponding are 15. 20, 128. 88, 308. 83, 419. 94, 701. 32, 824. 21 and 1040. 2 million. In 2008 Jamuna Bank Limited posted an operating profit of Tk. 1040. 20 million as against Tk. 824. 21 million in 2007 with a spectacular growth of 26. 21 percent over the preceding year in this graph shows 2008 is the highest profit. In 2002 profit Tk. 15. 20 million. In this graph shows 2002 is the lowest profit. It was executed year by year then 2008 is the better financial performance. In this graph shows year to year financial performance is higher and highest. Deposits: