Updated upto 12.06.2011 Personal Question 1. Self Introduction 2. Do you deserve promotion? Why? 3. Some questions form academic backround. !. D"I##$full form% Diplomaed "ssociates of Institute of #ankers #an &. 'our duty Know BASIC Bank 1. Name of MD: (a)i *akrul Islam +Incomin, previously -D of #*/0 2. Name of AMD: -r. Sk. -on)ur-orshed +//0 3. Name of DMDs : Name Division -r. *a)lusSobhan uman esources Division -icro /redit Special *inance Division ecovery Division Small nterprise Davison 4reasur y Division -r. "bdul adi5holamSan6ari 4rade *inance Division *inance "ccounts Division 7eal Division esearch Development Division /onsumer *inance Division -r. (anak (umar 8urkayastha /ommercial /redit Division I/4 Division #ack 9:ice Division /ard Division -r. -d. Shahabad Do)a Industrial /redit Division -IS Division #ranch /ontrol -arketin Division /redit "dministration Division /apital -arket Services Division !. Name of Chairman :Mr. Sheikh Abul !"eBa##hu , /hairman, #"SI/ #ank 7imited. &. Name of Dire#tors : i. Mr. $ahan%ir AkhanSalim& *ounder 8resident /handpur /hamber of /ommerce and Industries ii. Mr. Shubhashish Bose& ;oint Secretary, *inance Division, -inistr *inance iii. Ms. Neelufar Ahme& D5, 8rime -inister<s 9:ice, Dhaka iv. Mr. Shakhawat!ossain& *ormer /ommissioner of /ustoms v. Prof. Dr. Ka'iAkhtar!ussain& /hairman Department of "ccountin and Information Systems Islami =niversity, (ushtia vi. Mr. (akhrul Islam& /hairman, #S/I/, Dhaka vii. Mr. M. Anwarul Islam& (CMA& -anain Director, " S 7ube #anladesh 7td. >. Name of Com)an" Se#retar" % -r. -d. Shah "lam#huiyan . Name of *Ms: Name Division -r. "bdul @ayum -ohammad (ibriya -icro /redit Special *inance Division -IS Division stablishment Division esearch Development Division Small nterprise *inance Division -r. Shahadat ossain 4rade *inance Division 7eal Division *inance "ccounts Division I/4 Division 4reasury Division -r. -ohammad Wahidul"lam "udit Inspection Division "udit *indins -onitorin Division /ompliance Division -r. (handakarShamim asan Industrial /redit Division #r. /ontrol and -arketin Division ecovery Division /onsumer *inance Division Page 1 of 119
Updated upto 12.06.2011
Personal Question 1. Self Introduction 2. Do you deserve promotion?
Why? 3. Some questions form academic backround. !. D"I##$full form%
Diplomaed "ssociates of Institute of #ankers #anladesh &. 'our
duty
Know BASIC Bank 1. Name of MD:(a)i *akrul Islam +Incomin,
previously -D of #*/0 2. Name of AMD:-r. Sk. -on)ur-orshed +//0 3.
Name of DMDs :
Name Division -r. *a)lusSobhan uman esources Division
4rade *inance Division *inance "ccounts Division 7eal Division
esearch Development Division /onsumer *inance Division
-r. (anak (umar 8urkayastha
/ommercial /redit Division I/4 Division #ack 9:ice Division /ard
Division
-r. -d. Shahabad Do)a Industrial /redit Division -IS Division
#ranch /ontrol -arketin Division /redit "dministration Division
/apital -arket Services Division
!. Name of Chairman :Mr. Sheikh Abul !"eBa##hu, /hairman, #"SI/
#ank 7imited.
&. Name of Dire#tors : i. Mr. $ahan%ir AkhanSalim& *ounder
8resident /handpur /hamber
of /ommerce and Industries ii. Mr. Shubhashish Bose& ;oint
Secretary, *inance Division, -inistry of
*inance iii. Ms. Neelufar Ahme& D5, 8rime -inister<s 9:ice,
Dhaka iv. Mr. Shakhawat!ossain& *ormer /ommissioner of /ustoms
v. Prof. Dr. Ka'iAkhtar!ussain& /hairman Department of
"ccountin
and Information Systems Islami =niversity, (ushtia vi. Mr.
(akhrul Islam& /hairman, #S/I/, Dhaka vii. Mr. M. Anwarul
Islam& (CMA& -anain Director, "S 7ube
#anladesh 7td. >. Name of Com)an" Se#retar" % -r. -d.
Shah "lam#huiyan . Name of *Ms:
Name Division -r. "bdul @ayum -ohammad (ibriya
-icro /redit Special *inance Division -IS Division stablishment
Division esearch Development Division Small nterprise *inance
Division
-r. Shahadatossain 4rade *inance Division 7eal Division *inance
"ccounts Division I/4 Division 4reasury Division
-r. -ohammad Wahidul"lam "udit Inspection Division
"udit *indins -onitorin Division /ompliance Division
-r. (handakarShamim asan Industrial /redit Division #r. /ontrol and
-arketin Division ecovery Division /onsumer *inance Division
Page 1 of 119
-r. -d. -o)ammelossain In /hare, "rabad #ranch
-r. ". -onaem (han uman esource Division /ommercial /redit Division
/ard Division
B. +h" BASIC Bank is uni,ue -Manate. #"SI/ #ank 7td is unique
in its ob6ectives. It is a blend of development and commercial
bankin functions. 4he -emorandum and "rticles of "ssociation of the
bank stipulate that &C percent of loanable funds shall be
invested in small and cottae industries sector. 4hus the banks
priority remains Eith promotin and Fnancin development of
small$scale industries in the country.
G. Date of In#or)oration % "uust 2, 1GBB 1C.Date of Commer#ial
o)eration % ;anuary 21, 1GBG 11.(ormation of BASIC
Bank
4he #"SI/ #ank 7imited +#anladesh Small Industries and /ommerce
#ank 7imited0 established as a bankin company under the
/ompanies "ct 1G13 launched its operation in 1GBG. It is overned by
the #ankin /ompanies "ct 1GG1. 4he #ank started as a 6oint venture
enterprise of the #// *oundation Eith C percent shares and the
5overnment of #anladesh Eith 3C percent shares. 4he #// *oundation
bein nonfunctional folloEin the closure of the #//I, the 5overnment
of #anladesh took over 1CC percent oEnership of the #ank on !th
;une 1GG2.
12.No. of em)lo"ee : 13./0ternal 1atin%s of Bank B" C1IS2 -Short
term 3 2on% term
atin year$2CCG 7on term$"" +in the lon term are ad6uded to be of
hih quality, o:er hiher safety and have hih credit quality. 4his
level of ratin indicates a corporate entity Eith a sound credit
proFle and Eithout siniFcant problems. isks are modest and may vary
slihtly from time to time because of economic conditions.0
Short 4erm$S4$1 +in the short term are considered as the hihest
certainty of timely payment. Short$term liquidity includin
internal fund eneration is very stron and access to
alternative sources of funds is outstandin. Safety is almost like
risk free 5overnment short$term obliations.0
1!.CAM/2S 1atin% b" Ban%laesh Bank % A4 as on
5676879668
(inan#ial Info of BASIC Bank 1&. Authori'e Ca)ital
:4k 2CC.CC crore as on 31.12.2C1C 1>.Pai u) Ca)ital
:4k1G>.CCcrore as on 31.12.2C1C 1.otal Ca)ital
: 4k.&C.CC crore as on 31.12.2C1C 1B.Ca)ital Ae,ua#" 1atio
:G.!1H as on 31.12.2C1C 1G.Creit De)osit 1atio: G!.CBH
2C.Classi;e 2oan: !.B3H as on 31.12.2C1C 21.Cost of De)osit:
22.Cost of (un:B.13H as on 31.12.2C1C 23.Interest S)rea: 2!.C11
: >.CH as on 31.12.2C1C +required >H &H of "verae
Demand
4ime 7iabilities0 2&.S21 : 1&.21H as on 31.12.2C1C
+required 13H of "verae Demand 4ime
7iabilities0 2>.otal C11 3 S21 : 21.2BH as on 31.12.2C1C
+required 1GH of "verae
Demand 4ime 7iabilities0 2.No. of Bran#hes : 3!
Page 2 of 119
Updated upto 12.06.2011
2B.ar%et vis<=<vis A#tual +"mount in crore 4aka0
ar%et 96>6
A#hieve 96>6
!&CC !BB1 >&CC
Avan# e
!CCC !>3! &&CC
Im)ort !CCC !221 &2CC /0)ort 3CCC 2!CC 3&CC Pro;t 2CC
21& 2>&
2G.Divien for 96>6 : 96? Sto#k
GENERAL BANKING
>. Di@eren#e between Pvt. 2t. an Publi# 2t. Private 2t. Co.
Publi# 2t. Co.
C1
Incase of 8rivate 7imited /o. minimum shareholder Eill be 2+tEo0
and maimum shareholder Eill be &C+Ffty0.
C1
Incase of 8ublic 7imited /o. minimum shareholder Eill be +seven0
and maimum Eill be unlimited or limited by share of the
company.
C2 /ertiFcate of the commencement of business is not
required.
C2 /ertiFcate of the commencement of business is must to startin
business.
C3
8rospectus can not be published to the public for share sales and
share cannot be transferred to the public.
C3
8rospectus must be published the Daily JeEspaper to the public for
share sales and share must be transferred.
C! "nnual 5eneral -eetin is not required.
C! "nnual 5eneral -eetin is a must on or before 1& months
of the last "5-.
C& "udit eport not to submit to the eister of the
/ompany.
C& "udit eport must be submitted to the eister of the
company.
9. Can minor o)en an" a##ount -ri%hts an reservation 'es
minor can open account but as per contract act 1B2, a minor en6oys
some privilees such as heKshe cannot be liable for any Eron doins.
So, banker should take etra care in openin and operatin of minor
accounts, i. Jatural uardian or 5uardian appointed by the court
should operate the
account. In this manner 6oint account can also be opened. ii. 4he
account can be opened and operated by them Ehere the minor
has
attained the ae of 12 years. iii. /urrent account should not be
opened in the name of minors. iv. /hequesKbills should not be
collected v. #ank should keep the recode of minors birth date
and after attainin
ma6ority uardian should not be alloEed to operate the account and
bank
Page 3 of 119
Updated upto 12.06.2011
should request the minor to open a fresh account before a third
party Eitness.
vi. If uardian dies before attainin ma6ority then bank should
ive the money to court appointed uardian or to him after attainin
ma6ority.
vii. -inor can draE endorse or neotiate any chq but there
Eill be no liability of minor.
viii. Jo 9D facility is alloEed to these accounts
5. Di@eren#e between DD 3 P DD and 89 both is remittance instrument
issued by bank. 4he main di:erence is, in case of 89, it is issued
to remit money Eithin the station and payment is made by the issuin
branch. 9n the other hand DD issued by one branch of the bank Eith
a advice issued on other branch to pay the money and it is issued
Ehen outstation remittance is required.
. Di@eren#e between Bankers Ch, 3 Customer Ch,. #ankers cheques are
those cheques issued by bank like DD, 89 and customer chq are chqs
issued aainst their account maintained Eith the #ank. If all other
thins are ok then main di:erence is that, a customer chq can be
dishonored for insu:icient of fund Ehich is not possible for
#ankers chq.
. *arnishee rer Its an order by the court of laE to suspend
the transaction in any customer account or to disclose the
information to the court or to any particular authority of any
customer account. 4he 5arnishee 9rder has tEo forms% 1. 9rder Jisi
+"sk for free)e the account, ii. "sk eplanation Ehy funds not
for payment of 6udment creditor0, 2. 9rder "bsolute% /ourt
directs to pay either Ehole or part of deposit aainst Ehich 9rder
Jisi issued.
8. Ne%otiable Instrument 3 Its Chara#teristi#s Jeotiable Instrument
are those instrument Ehich is declared neotiable as per Jeotiable
Instrument act$1BB1, as per the act #ill of chane, 8romissory Jote
and /hqs are neotiable instrument. Characteristics: i. -ust be
Eritten and sined ii. asy to transfer iii. 4ransfer free from
defects% transferor Eith bad title can pass ood title iv. iht to
sue v. Jo notice to transfer vi. Delivery ssential
vii. /redit of the 8arty
E. Di@eren#e between Bearer& rer 3 Not Ne%otiable #earer chq
can be paid to anybody. In case of order chq it should be paid to a
certain person and it can be neotiated by endorsement. Jot
Jeotiable chq is neotiable but it Eill not ive better title to the
ultimate holder and #anker should take etra care for these types of
chqs.
4. Pro#eure of ;lin% suit an )unishment on ishonor of #h,
DIS9J9= /@=S *9 IJS=**I/IJ/' 9* *=JD +8rovisions elatin cheque
dishonour described in the sections 13B, 13B", 13G", 1!C and 1!1 of
4he Jeotiable Instruments "ct 1BB10 Sec%$ 13B0 Dishonor of cheque
for insu:iciency , etc. of funds in the account%$ Where any cheque
draEn by a person on an account mentioned by him Eith a banker for
payment of any amount of money to another person from out
that
Page 4 of 119
Updated upto 12.06.2011
account LL is returned by the bank un paid , either because of the
amount of money standin to the credit of that account is
insu:icient to honour the cheque or that it eceed the amount
arraned to be paid from that account by an areement made Eith that
bank , such person shall be deemed to have committed an o:ense and
shall Eithout pre6udice to any other provision of this act , be
punished Eith imprisonment for term Ehich may etend to one year or
Eith Fne Ehich may etend to trice the amount of the cheque or Eith
both. 8rovided that nothin contend in this section shall apply
unlessM +a0 4he cheque has been presented to the bank Eithin a
period of si months
from the date on Ehich it is draEn or Eithin the period of its
validity, Ehichever is earlier.
+b04he payee or the holder in due course of the cheque as the case
may be makes demand for the payment of the said amount of money by
ivin a notice in Eritin to the draEer of the cheque, Eithin thirty
days of the receipt of information by him from the bank reardin the
return of the cheque as unpaid and
+c0 4he draEer of such cheque fails to make the payment of the said
amount of money to the payee of as the case may be to the
holder in due course of the cheque Eithin thirty days of the
receipt of the said notice.
1"0 4he notice required to be served under clause +b0 of
sub$section +10 shall be serve in the folloEin manner,
a0 #y deliverin it to the person on Ehom it is to be served
or
b0 #y sendin it by reistered post Eith acknoEledement due to that
person at his usual or last knoEn place of above business of
#anladesh.
c0 #y application in a daily banle national neEs paper havin Eide
circulation.
20 Where any Fne is reali)ed under sub$section +10 any amount up to
the face value of the cheque as far as is covered by the Fne
reali)ed shall be paid to the holder.
30 Jot Eithstandin anythin contained in sub$section +10 and +20 the
holder of the cheque shall retain his riht to establish his claim
throuh civil court if Ehole or any part of the value of the cheque
remains unreali)ed.
13B"0 estriction in respect of appeal%$Jot Eithstandin any thin
contained in the code of criminal procedure 1GBG , no appeal aainst
any order of sentence under sub$section $1 of section 13B shall lie
unless an amount of not less then Ffty percent of the dishonored
cheque is deposited before Fllin the /ourt Ehich aEarded the
sentence.
Sec 1!C%$ 9:ence of companies%$ If the person committin an o:ence
under section 13B is a company every person Eho at the time the
o:ence is committed Eas in chare of and Eas responsible to the
company shall be deemed to be uilty of the o:ence and shall be
liable to be proceeded aainst and punished accordinly.
Page 5 of 119
Updated upto 12.06.2011
8rovided that nothin contained in this sub$section shall render any
person liable to punishment if he proves that the o:ence Eas
committed Eithout his knoElede or that he had eercised all due
deleate to prevent the commission of such o:ense.
+20 JotEithstandin anythin contained in sub$section +10 Ehere any
o:ence under this act has been committed by a company and it is
proved that the o:ence has been committed Eith the consent or
connivance of or is attributable to any nelect on the part of any
director, manaer, secretary or other o:icer of the company such
director manaer, secretary or other o:icer shall also be deemed to
be uilty of that o:ence and shall be liable to be proceeded aainst
and punished accordinly. N87"J"4I9J %$ *or the purpose of this
section
+a0 /ompany means any body corporate and includes a Frm or other
association of individuals a Frm or other association of
individuals, and
+b0 Director in relation to a Frm, means a partner in the
Frm.
1!1. /oni)ance of o:ence%$ JotEithstandin anythin contained in the
code of criminal procedure 1BGB
+a0 Jo court shall take coni)ance of any o:ence punishable under
section 13B ecept upon a complaint in Eritin, made by the payee or
as the case may be the holder in due course of the cheque.
+b0 Such complaint is made Eithin one month of the date on Ehich
the cause of action arises under clause +c0 of the proviso to
section 13B.
+c0 Jo court inferior to that of a /ourt of Session shall try any
o:ence punishable under section 13B.
F. Bill of /0#han%e #ill of chane is an instrument in Eritin
containin an unconditional order, sined by the maker directin a
certain person to pay a certain sum of money payable on demand, or
Fed, or future determinable time, only to , or to the order of a
certain person or to the bearer of the instrument.
>6. 1ates of interest of i@erent a##ounts S#$ SJD$ *D$
>>. Di@erent Status of A##ounts: Dormant$> -onths,
Inoperative$2 'ears, =nclaimed$1C 'ears
>9. Di@erent A#ts relate to *B a. 4he /ompanies "ct$1GG! b. 4he
#ank /ompanies "ct$1GG1 c. 4he /ontract "ct$1B2 d. 4he *inancial
Institution "ct$1GG3 e. 4he 8artnership "ct$1G32 f. 4he 4ransfer of
8roperty "ct$1BB2
Page 6 of 119
Updated upto 12.06.2011
. 4he -oney 7oan /ourt "ct$2CC3 h. 4he -oney 7aunderin 8revention
act$2CC2 i. 4he Jeotiable Instrument "ct$1BB1
>5. +hat is /sto))el: "n estoppel is a defense aainst a
party renein on a previous statement assumed to be a leal truth.
9nce a statement of fact is entered into a court case, the person
Eho made that statement must stand by its truthfulness. e or she
cannot claim a neE position in a future business or private dealin.
If the other party makes a decision based on the untruthful second
statement and a laEsuit ensues, they can claim an estoppel in court
aainst the plainti:. In order for the estoppel to be considered
valid, hoEever, the defendant needs to demonstrate damaes stemmin
from the untruthful statement. /sto))el is a leal doctrine
reconised both at common laE and in equity in various forms.
It is meant to complement the requirement of consideration in
contract laE. In eneral it protects a party Eho Eould su:er
detriment if% • 4he defendant has done or said somethin to induce
an epectation • 4he plainti: relied +reasonably0 on the
epectation... • ...and Eould su:er detriment if that epectation
Eere false. =nconscionability by the defendant has been accepted as
another element by courts, in an attempt to unify the many
individual rules of estoppel.
>. Chara#teristi#s of SND: • days prior notice to be iven in
case of EithdraEal of amount otherEise
interest Eill not be accrued for that month
• /heque Eill be issued
• Interest to be calculated on the basis of Day$end balance and
accrued interest Eill be credit as alf$yearly or durin account
closin
• Interest rate may be Fed accordin to ceilin of amount not
customer$Eise or amount$Eise and Eill not eceed the rate of
interest of eneral savins account.
• -inimum balance may be Fed but Jo minimum balance feeKincidental
chareKleder feeKservice chare. #ut "ccount -aintenance *ee
4k.&CCKO half yearly, account closin fee 4k.3CCKO
Page 7 of 119
Updated upto 12.06.2011
Credit >. ProGe#t a))raisal H as)e#ts& KC& KP& PP
et#.
8ro6ect appraisal means pre$investment analysis of an investment
pro6ect to determine its commercial and socio$economic
feasibilities Ehile pro6ect evaluation shoEs the post investment
achievement. "spects % 10 4echnical 20 -arketin 20 *inancial
!0 conomic &0 Social environmental >0 -anaement
competence
9. Prin#i)le of soun lenin% Safety, 7iquidity, 8urpose,
8roFtability, Security, Spread, Jational interest and
sustainability.
5. 2oan )oli#" " policy ives loan o:icers and banks
manaement speciFc uidelines in makin individual loan decisions and
in shapin the banks loan portfolio. +contains 7endin authority,
lines of responsibility, operatin procedure, required
documentation, loan pricin, credit limit, etc.0
. /,uitable 3 1e%istere Mort%a%e In reistered mortae, the mortaor
transfers to the mortaee the leal title to the property. 9n
repayment of the loan the mortaee transfers the title to the
mortaor. In case of an equitable mortae, the mortaor deposits the
title deeds Eith the mortaee Eith the intention of ivin the mortaee
an equitable interest in the property. It does not require
reistration.
. SM/ nterprises shall be cateori)ed usin the folloEin deFnition
+Fed investment implies eclusion of land and buildin, and valuation
on the basis of current replacement cost only0% Small enterprise%
an enterprise should be treated as small if, in todays market
prices, the replacement cost of plant, machinery and other
partsKcomponents, Ftures, support utility, and associated technical
services by Eay of capitali)ed costs +of turn$key consultancy
services, for eample0, etc, ecludin land and buildin, Eere to be up
to 4k. 1& millionP -edium enterprise% an enterprise Eould be
treated as medium if, in todays market prices, the replacement cost
of plant, machinery, and other partsKcomponents, Ftures, support
utility, and associated technical services +such as turn$key
consultancy0, etc, ecludin land and buildin, Eere to be up to 4k.
1CC millionP
Page 8 of 119
Updated upto 12.06.2011
*or non$manufacturin activities +such as tradin or other services0,
the 4askforce deFnes% Small enterprise% an enterprise should be
treated as small if it has less than 2& Eorkers, in full$time
equivalentsP -edium enterprise% an enterprise Eould be treated as
medium if it has betEeen 2& and 1CC employeesP
S/D(: Small% Fed capital investments Q 1CC,CCC 4k +1,&C =SD0
and R 1CC m4k +=SD 1.& million0 -edium% Fed capital investments
1CC to 3CC million 4k +=SD 1.&million $ &.2& million0
SD* 4aret% 4k 1C$3CC million +=SD 1&,CCC $ &.2&
million0 in Fedcapital investments. Pro)ose e;nition of the *oB
Small nterprise has less than &C employees and K or less than
1& m4k in *ied /apital Investment -edium nterprise has
&1$GG employees and K or *ied /apital Investments betEeen
1.& and 1CC m 4aka BB 1e%ulations for Small /ntre)rises 8rivate
entity Eith less than >C employees for the -anufacturin Sector
3C employees for the Service Sector 2C employees for the 4rade
Sector 10Service Sector % 4otal "ssets +ecludin lands and buildins0
betEeen&C,CCC and 3 million 4k +BCC$&C,CCC =SD0 204 rad e
Sector % 4otal "ssets +ecludin lands and buildins0
betEeen&C,CCC and & million 4k +BCC$BC,CCC =SD0 30
-anufuacturin Sector % 4otal "ssets +ecludin lands and
buildins0betEeen &C,CCC and 1C million 4k +BCC$1>C,CCC =SD0
Banks: S#/ 4urnover R 2.& m=SD /itibank Jb employees R >C
#"/ #ank 7oan si)e R 3 m4k "# #ank 7oan si)e R 1CC
m4k De;nition of SM/s in Ban%laesh DoEnload this Document for
*ree8rint-obile/ollectionseport Document SM/ Bankin% nterprises
shall be cateori)ed usin the folloEin deFnition +Fed investment
implies eclusion of land and buildin, and valuation on the basis of
current replacement cost only0% Small enter)rise% an enterprise
should be treated as small if, in todays market prices, the
replacement cost of plant, machinery and other partsKcomponents,
Ftures, support utility, and associated technical services by Eay
of capitali)ed costs +of turn$key consultancy services, for
eample0, etc, ecludin land and buildin, Eere to be up to 4k. 1&
millionP Meium enter)rise: an enterprise Eould be treated as
medium if, in todays market prices, the replacement cost of plant,
machinery, and other partsKcomponents, Ftures, support utility, and
associated technical services +such as turn$key consultancy0, etc,
ecludin land and buildin, Eere to be up to 4k. 1CC millionP *or
non<manufa#turin% activities +such as tradin or other
services0, the 4askforce deFnes% Small enter)rise: an enterprise
should be treated as small if it has less than 2& Eorkers,
in full$time equivalentsP Meium enter)rise: an enterprise
Eould be treated as medium if it has betEeen 2& and 1CC
employeesP
Page 9 of 119
buildin0 -anpoEer
Service #D4&C.CC lac$1C.CC crore &C #usiness #D4&C.CC
lac$1C.CC crore &C -anufacturin #D41.&C crore$2C.CC
crore 1&C
buildin0 -anpoEer
Service #D4&C,CCC$&C.CC lac 2& #usiness
#D4&C,CCC$&C.CC lac 2& -anufacturin
#D4&C,CCC$1.&C crore &C
F. Cotta%e inustr" /ottae industryT means an industry in
Ehich members of a family are enaed part$time or full$time in
production and service$oriented activities.
>6. S+ Anal"sis Internal % Strenth, Weakness ternal %
9pportunity, 4hreats +/hallenes0 Stren%ths 5ood asset quality,
Satisfactory business roEth, 5ood proFtability, perienced top
manaement, 5ood operatin e:iciency, quity base enhancement
decision, Jo short fall in /apital "dequacy, Satisfactory J87
coverae, 8rofessional manaement team, Satisfactory risk manaement
structure, -ulti product Fnancial institution, Stron distribution
channel, Satisfactory I4 soft and hard infrastructure, "dequate
capital base, Satisfactory liquidity position, -arket leader in
Small -edium scale industry bankin amon the local banks, 5overnment
oEnership +eaknesses Dependent on Fed deposits, -oderate risk
manaement system, 7imited deleation of poEer, 7imited branch
netEork, 8oor /orporate 5overnance, InsiniFcant market share,
7imited disclosure, /oncentrated oEnership, 7oE non$funded business
))ortunities #asel$II compliance for capital adequacy, /reation of
brand imae, Dual currency credit card, S- and "ro based business,
eal time online bankin, Scope of Ehole sale bankin Eith J#*Is,
ousin Fnance hreats Increased competition in the market, -arket
pressure for increasin the S7, Supply ap of forein currency
>>. C1*M -+ith 1isks • 4he /redit isk 5radin +/50 is a
collective deFnition based on the pre$
speciFed scale and reUects the underlyin credit$risk for a iven
eposure. • " /redit isk 5radin deploys a numberK alphabetK
symbol as a primary
summary indicator of risks associated Eith a credit eposure. •
/redit isk 5radin is the basic module for developin a /redit
isk
-anaement system.
S#ore
1 Superior S=8 1CCH cash covered 5overnment uarantee
International #ank uarantees
2 5ood 5D B&V 3 "cceptable "//84 &$B!
! -arinalKWatc hlist
> Sub$standard SS !&$&! Doubtful D* 3&$!! B #ad 7oss
#7 R3&
Prin#i)al 1isk Com)onents: +ei%ht: *inancial isk &CH
#usinessKIndustry isk 1BH -anaement isk 12H Security isk 1CH
elationship isk 1CH
/stablish the Ke" Parameters Prin#i)al 1isk Com)onents: Ke"
Parameters:
*inancial isk 7everae, 7iquidity, 8roFtability /overae ratio.
#usinessKIndustry isk Si)e of #usiness, "e of #usiness, #usiness
9utlook, Industry 5roEth, /ompetition #arriers to #usiness
-anaement isk perience, Succession 4eam Work. Security isk Security
/overae, /ollateral /overae and
Support. elationship isk "ccount /onduct ,=tili)ation of 7imit,
/ompliance
of covenantsKconditions 8ersonal Deposit.
>9. Di@eren#e between CC-! 3 CC-P CC -h")o CC -Ple%e
C1 4he stocks of oods are under the control of borroEer.
C1 4he stocks of oods are under the control of lendin #ank.
C2 *or this letter of hypothecation is obtained from the
borroEer.
C2 *or this letter of plede is obtained form the borroEer.
C3 #orroEers have to submit stock report on monthly basis to
the lendin #ank.
C3 #ank maintains plede reisterP stock reports not require to
submit.
C! Incase of // +hypo0 #ank obtained su:icient collateral security
for coverin loan risk.
C! Incase of //+8lede0 #ank takes other collateral security if
available in the hand of borroEer.
>5. DP an Cal#ulation -arin is the borroEers contribution beside
the borroEin contribution beside the borroEin for procurement of
any asset Eith business interest. -arin of security is the
di:erence betEeen the Eritten doEn value of the asset Fnanced and
the outstandins in loan iven for it. 4he D8 of the clientK customer
to be
Page 11 of 119
Updated upto 12.06.2011
calculated after deductin the prescribed marin from the value of
the securities o:ered +pleded or hypothecated0. =nder no
circumstances, advance shall be alloEed in ecess of the D8 of the
customer. In case Ehere the D8 of the client eceeds the limit
sanctioned in its favor advances shall be alloEed upto the etent of
sanctioned limit only.
>. SMA " /ontinuous credit, Demand loan or a 4erm
7oan Ehich Eill remain overdue for a period of GC days or more,
Eill be put into the JS)e#ial Mention A##ount-SMAJ and
interest accrued on such loan Eill be credited to Interest Suspense
"ccount, instead of creditin the same to Income "ccount. 4his Eill
help banks to look at accounts Eith potential problems in a focused
manner and it Eill capture early Earnin sinals for accounts shoEin
Frst sin of Eeakness. 7oans in the XS)e#ial Mention A##ount -SMAX
Eill have to be reported to the /redit Information #ureau +/I#0 of
#anladesh #ank. oEever, it is reiterated that loans in the XSpecial
-ention "ccountX Eill not be treated as defaulted loan for the
purpose of section 2(a(a+30 of the #ank /ompany "ct, 1GG1. Interest
accrued on JS)e#ial Mention A##ount -SMA Eill be credited to
Interest Suspense "ccount, instead of creditin the same to Income
"ccount.
>. NPA "ainst Ehich income not eneratin basically
those account Ehich account has been classiFed.
>8. /@e#t of NPA on Bank B7S "sset quality ets reduced,
decreases proFt, hih provision has to be made
>E. +hat is 2oanable fun an how it is ,uanti;e 8aid up
capitalV5eneralreserveV9therreserveVDepositsV#orroEinsV=ndistributedpro
FtVeFnance loan +#anladesh bank, "D#, (fE, etc.0V/all
loan$S7$HDemand deposit
>4. 2ar%e loan 7oan sanctioned to any individual or enterprise
or any orani)ation of a roup amountin to 1CH or more of a bank<s
total capital shall be considered as lare loan. 9utstandin Fnancin
facilities by a bank to any sinle person or enterprise or
orani)ation of a roup shall not at any point of time eceed 3&H
+funded and non$funded credit facilities0 of the bank<s total
capital $$ funded facilities do not eceed 1&H$$ all non$funded
credit facilities included in the loan shall be considered as
&CH credit equivalent. oEever, in case of eport sector sinle
borroEer eposure limit shall remain unchaned at &CH of the
bank<s total capital. #ut funded facilities in case of eport
credit shall also not eceed 1&H of the total
capital.
4he banks Eill be able to sanction lare loans as per the folloEin
limits set aainst their respective classiFed loans % ate of net
classiFed loans 4he hihest rate Fed for lare
loan aainst bank<s total loans advances
=pto &H &>H -ore than &H but upto 1CH &2H -ore
than 1CH but upto 1&H !BH -ore than 1&H but upto 2CH !!H
-ore than 2CH !CH
Page 12 of 119
Frst reschedulin
more than tEo times
minimum &CH 3CH Ehichever, is less
Deman an Continuous 2oan Amount of verue 2oan 1ates of Down
)a"ment
=p to 4k.1.CC +one0 crore 1&H 4k. 1.CC+one0 crore to 4k.
&.CC +Fve0 crore
1CH +but not less than 4k.1&.CC lac0
4k. &.CC+Fve0 crore and above &H +but not less than
4k.&C.CC lac0
If any /ontinuous or Demand 7oan is rescheduled by
restructurinKconvertin partly or Eholly into 4erm 7oan and
repayment installments have been Fed, application for reschedulin
such loans shall be considered on cash payment of minimum 3CH
of the overdue installments or 2CH of the total outstandin amount
of loan, Ehichever is less. *or subsequent reschedulin minimum
&CH of the overdue installments or 3CH of the total
outstandin amount of loan amount shall have to be deposited in
cash.
96. +rite o@ #anks may, at any time, Erite o: loans
classiFed as badKloss. 4hose loans Ehich have been classiFed as
badKloss for the last Fve years and for Ehich 1CCH provisions have
been kept should be Eritten o: Eithout delay. "fter issuance
of this circular the process of Eritin o: all other loans
classiFed as badKloss should be started immediately. =nder the
process the oldest badKloss classiFed loans should be considered
Frst for Eritten o:. #anks may Erite o: loans by debit to their
current year<s income account Ehere 1CCH provision kept is not
found adequate for Eritin o: such loans.
9>. Mone" loan #ourt A#t& 9665 ->9& 55& 8&
E& Mutual Settlement "rthain"dalat"in 2CC3 +B chapters
>C sections0 promulated in the year 2CC3 in place of the
"rthain"dalat "ct, 1GGC Ehich has came into e:ect on
C1.C&.2CC3. LLLLL from the previous such laEs. 4his laE, for
the Frst time empoEered Fnancial institutions Eith the riht to sell
the mortaed properties Eithout K before oin to the court, if 8oEer
of "ttorney to sell the mortaed property obtained from the borroEer
at the time of eecution of mortae and made it mandatory to sell out
the securities over Ehich the bank created chares before Flin of
suits. "rthain"dalat"in Y2CC3 has Fed time limit for Flin of
suit for recovery of debt. 4ime limit for servin of summons,
submission of Eritten statements, 6udment, etc. and time
limit for Flin of eecution suit has been reduced substantially in
this laE Ehich shall epedite disposal of suits. "rthain"dalat
"in$2CC3 provided for Settlement of disputes throuh Settlement
/onference at the initiative of the court and in case of
nonYsettlement throuh Settlement /onference, throuh "rbitration,
keepin pendin the normal proceedins of the suit. "rthain"dalat"in
Y2CC3 imposed some obliations to the bankers in respect of disposal
Ksale out of securities, Flin of suits, folloE$ up of suits etc.,
failure to perform some of Ehich is punishable o:ence and may
Page 13 of 119
Updated upto 12.06.2011
harm the interest of the bank to a reat etent. So relative o:icers
and eecutives of the bank should read this laE meticulously and
must act accordinly in timely manner to avoid leal
complications.
99. Di@eren#e between #reit an investment
95. Di@eren#e between %uarantee an inemnit" 5uarantee is a
promise by a third person to the lender for the present or future
debt of the borroEer. #ank uarantee is an irrevocable obliation in
the form of Eritten undertakin of a #ank to pay an areed sum, in
case of default by a third party in fulFllin their obliations under
the terms of the #ank 5uarantee. e.. #id bond, 8erformance bond,
Shippin uarantee, etc. /ontract of Indemnity is a contract by Ehich
one party promises to save the other from loss caused to him by the
conduct of the promissory himself, or conduct of any other person.
Di:erence % 5uarantee is an undertakin to pay the debts of the
creditor Ehereas Indemnity is an assurance to compensate for any
loss.
9. Char%es (i0e #har%e: " chare is said to be Fed is made
specially deFnite and assets of a permanent nature or assets
capable of bein ascertained and deFned, e.. chare or land and
buildin or heavy machinery. It prevents the loanee from Eith the
property chared Eithout consent of the chare holders. (loatin%
#har%e: It is a chare on property, Ehich is constantly charin
e.. stock. " company can Deal Eith such properly in normal course
of its business until it become Fed on the hamperin of an event.
4hus, it is a chare on the assets of a company in eneral.
Pari<)assu #har%e:8ari$passu chare is crated in cases of
consortium lendin Ehere several banks on Fnancial institution lend
to a sinle borroEers aeist some common securities in an areed
ratio. In such chares all the creditors have equal priority, i.e.
are entitled to have equal rihts over the assets as per the areed
share. Se#on #har%e: " creditor holdin a second chare by Eay
of mortae is entitled to the proceeds after the Frst chare is met.
4he second chare holder must inform the Frst mortae about the
second chare, so that he cannot part of title of the
property.
9. ime limit for ;lin% suit in Artha1inAalat Ain<9665.
"rthain"dalat "in$2CC3 Fes time limit for Flin of suit for
recovery of debt and stated that anythin otherEise contained in the
7imitation "ct,1GBC, a Fnancial institution shall Fle suit as per
provision of the "rthain"dalat "in$2CC3 .4he provisions and time
limit for Flin suits for recovery of debt in "rthain"dalat
"in$2CC3 are as under %$
10 +here re)a"ment )erio is less than three "ears% a0 If the
amount of recovery in the total loan period is less than 2CH,
the
Fnancial institution shall Fle suit Eithin the period of one year
from the date of epiry of the repayment schedule.
b0 In cases of reschedule of loan by the Fnancial institution
Eithin the validity period of repayment, if repayment amount
of loan is less then 2CH in the period of reschedule, the Fnancial
institution shall Fle suit Eithin the period of one year from the
date of epiry of reschedule period.
9 +here re)a"ment )erio is 5 "ears an above : If a borroEer fails
to pay back the loan as under after startin of re$ payment schedule
accordin to the terms of the loan areement ,the Fnancial
institution shall Fle suit Eithin the period of net one year
%$
Page 14 of 119
Updated upto 12.06.2011
a0 "t least 1CH of Frst one years repayable loan amount or b0 "t
least 1&H of Frst tEo years repayable loan amount or c0 "t
least 2&H of Frst three years repayable loan amount.
In cases of reschedule of loan by the Fnancial institution Eithin
the aforesaid time limit, the period of 1year or 2 years or 3 years
shall be reckoned from the date of the reschedule of the loan and
one years time limit for Flin suit shall be e:ective aneE as per
above rules.
98. 2imitation in im)osin% #laim : "rthain"dalat"in Y2CC3
provides that Ehatever may contain in the areement betEeen the
parties, the Fnancial institution Ehile institutin suit shall not
claim more than 2CCH of the capital + oriinal loan 4k. 1CCV
interest 4k. 2CC O 4k.3CC 0. 4he court shall not entertain any such
claim Ehich shall be more than 2CCH of the capital.
9E. (un#tion of 1elationshi) Mana%er 1e)orts to: !ea of
Cor)orate Bankin% Pur)ose of $ob: 4he 6obholder serves as the
primary relationship contact Eith the #anks corporate and
commercial customers. 4o maimi)e relationship proFtability throuh
cross sellin. 4o minimi)e credit losses throuh thorouh risk
assessment and timely identiFcation of deterioratin credit risk of
customers. 1es)onsibilities: • 8rovide ood customer service Ehile
ensurin the #anks interest is
protected. • 5roE the customer base throuh marketin and business
development
e:orts, includin cross sellin to eistin customer base. • nsure that
credit quality is maintained and customer revieEs are
completed in timely manner. • -aintain an in$depth knoElede of the
customers business throuh
reular customer visits and industry research. • nsure facility risk
rades are accurate, and are chaned in a timely
manner as soon as adverse information is knoEn. • Seek assistance
from /- at the earliest if adverse trends in a
customers Fnancial position are noted. • *olloE up Eith customers
to ensure the timely receipt of Fnancial
statements, loan payments and all documentary requirements of the
#ank.
• nsure compliance Eith internal policies and procedures and
eternal reulatory requirements, and that all internal and eternal
audit recommendations are implemented.
94. (un#tions of Creit Aministration De)artment i.
Disbursement
ii. /ustodian iii. /ompliance iv. -onitorin
9F. 2oan #lassi;#ation
Sub<stanar Doubtful Ba72oss
#ontinuous loan past dueKover due for > months or beyond but
less than G months.
past dueKover due for G months or beyond but less than 12
months
past dueKover due for 12 months or beyond.
Deman 2oan past dueKoverdue for > months or
past dueKoverdue for G months or
past dueKoverdue for 12 months or
Page 15 of 119
Updated upto 12.06.2011
beyond but not over G months from the date of claim by the
bank or from the date of creation of forced loan.
beyond but not over 12 months from the date of claim by the
bank or from the date of creation of forced loan
beyond from the date of claim by the bank or from the date of
creation of forced loan.
(i0e erm 2oans, Ehich are repayable Eithin ma0imum ;ve "ears
of time
If the amount of efaulte installment is equal to or more than
the amount of installment+s0 due Eithin > +si0 months, the
entire loan Eill be classiFed
If the amount of efaulte installment is equal to or more than
the amount of installment+s0 due Eithin 12 +tEelve0 months,
the entire loan Eill be classiFed
If the amount of efaulte installment is equal to or more than
the amount of installment+s0 due Eithin 1B +eihteen0 months,
the entire loan Eill be classiFed
(i0e erm 2oans, Ehich are repayable in more than ;ve "ears of
time
If the amount of <defaulted installment< is equal to or
more than the amount of installment+s0 due Eithin 12 +tEelve0
months, the entire loan Eill be classiFed
If the amount of <defaulted installment< is equal to or
more than the amount of installment+s0 due Eithin 1B
+eihteen0 months, the entire loan Eill be classiFed
If the amount of <defaulted installment< is equal to or
more than the amount of installment+s0 due Eithin 2! +tEenty
four0 months, the entire loan Eill be classiFed
Short<term A%ri#ultural an Mi#ro<Creit
after a period of 12 months
after a period of 3> months
after a period of >C months
56. Moe of #har%in% se#urit" a0 -ortae b0 ypothecation c0
8lede d0 7ien e0 "ssinment f0 Set$o:
5>. he )rovision rate of 2oans an Avan#es
8articulars ate 5eneral 8rovision on unclassiFed eneral loans
advances 1H 5eneral 8rovision on unclassiFed small enterprise
Fnancin 1H 5eneral 8rovision on unclassiFed housin Fnance, loans
for professional and loans to share business
2H
5eneral 8rovision on special mention account &H 5eneral
8rovision on unclassiFed consumer Fnancin other than housin Fnance,
loans for professional +?0 and loans to share business
&H
SpeciFc 8rovision on Sub Standard 2CH SpeciFc 8rovision on Doubtful
&CH SpeciFc 8rovision on #ad 7oss 1CCH
Page 16 of 119
Trade Finance
1. N(CD : -/1M +ho #an o)en% "0"ll non$resident #anladesh
nationals and persons of #anladesh oriin includin those havin
dual nationality and ordinarily residin abroad. #0 #anladesh
nationals servin Eith mbassiesKih /ommissions of #anladesh in
forein countries as also the o:icersKsta: of the
5overnmentKsemi$5overnment departmentsKnationali)ed banks and
employees of body corporate posted abroad or deputed Eith
International and eional aencies like I-*, World #ank, ID#, "D#
etc. durin their assinments abroad may open such accounts. /0
*orein nationals and companiesKFrms reistered andKor incorporated
abroad, banks, other Fnancial institutions includin institutional
investors and 1CCH forein oEned +"$4ype0 industrial units in the
port 8rocessin Aones in #anladesh, are also alloEedto open and
maintain J*/D accounts Eith the "Ds. 4he minimum amount of time
deposits in such cases should be =SZ 2&,CCC or its equivalent
in pound sterlin, uro or ;apanese yen. 9ther terms and
conditions in respect of these account$holders Eill be the same as
those mentioned above for J*/D accounts of non$resident #anladesh
nationals. +ho Can not o)en% /reE members of the #anladeshi
shippin companies are not entitled to open such accounts.
Curren#ies:4he accounts may be maintained in =S dollar, pound
sterlin, uro or ;apanese yenP initially Eith minimum amount of =SZ
1CCC or pound sterlin &CC or equivalent. "ccounts may be opened
aainst remittances in other convertible currencies after conversion
of those into =S Dollar, pound sterlin, uro or ;apanese yen Perio %
4he accounts are in the nature of term deposits maturin after one
month, three months, si months and one year. Interest 1ates:4he "Ds
Eill pay interest on deposits into the accounts at theeurocurrency
deposit rates. In case of premature repayments, the interest amount
Eill be forfeited to the depositin "D. a0:4he interest on deposits
into this account is eempt from the ta payable under Income 4a "ct.
+ithrawl of Prin#i)al an Interest:4he account holder can
freely repatriate the balance and the interest accrue thereon in
forein echane to the country of his residence or anyEhere he
chooses and may at his option, convert the balance into local 4aka
at the prevailin echane rate.
2. 1(CD: +ho #an )en: 8ersons ordinarily resident in
#anladesh may open and maintain esident *orein /urrency Deposit
+*/D0 accounts Eith forein echane brouht in at the time of their
return from travel abroad. "ny amount brouht in Eith declaration to
/ustoms "uthorities in form *-; and upto =S Z 3CCC brouht in
Eithout any declaration, can be credited to such accounts.
+ho #an not: "ny non residents and International Frms
operatin in #anladesh Eill not be alloEed to open such accounts.
8roceeds of eport of oods or services from #anladesh or
commission arisin from business deals in #anladesh shall not be
credited to such accounts. Curren#ies:4he accounts may be
maintained in =S dollar, pound sterlin, uro or ;apanese yen. Perio
% 4he accounts Eill be treated as term only Ehen kept for a period
of minimum 1 month. Interest 1ates:Interest in forein echane
shall be payable on balances insuch accounts if the deposits are
for a term of not less than one month and the balance is not le ss
than =S Z1CCC or [&CC or its equivalent. 4he rate of interest
shall be one quarter percent +C.2& percent0 less than the rate
at Ehich interest is
Page 18 of 119
Updated upto 12.06.2011
paid on balances of bank in their forein currency clearin accounts
maintained Eith the #anladesh #ank. a0: Jothin has been said about
4a. It is deemed that "I4 Eill be applicable for such accounts.
+ithrawl of Prin#i)al an Interest: #alances in these accounts
shall be freely transferable abroad. *und from these accounts may
also be issued to account$holders for the purpose of their forein
travels in the usual manner +i.e. Eith endorsement in passport and
ticket, upto =S Z 1&CC in the from of cash currency notes and
the remainder in the form of 4/0.
3. 1etention Quota A##ount: +ho #an )en: "0-erchandise
eporters are entitled to a forein echane retention quota of &CH
of repatriated f.o.b value of their eports. oEever, for eports of
oods havin hih import content +loE domestic value$added0 like 897
products includin naphtha, furnace oil and bitumen. readymade
arments made of imported fabrics, electronic oods, etc. the
retention quota is 1CH of the repatriated f.o.b value. #0
Service eporters may retain &H and SoftEare and Data
entryKprocessin eporters may retain !CH of their repatriated income
as etention @uota. Curren#ies: 4he accounts may be maintained in =S
dollar, pound sterlin, uro or ;apanese yen
4. (C A##ount: Foreign Currency Account (FCA) is a trasa!tioa"
a!!out deo#iated i a !urre!$ ot%er t%a t%e %o#e !urre!$
ad !a &e #aitaied &$ a &a' i t%e %o#e !outr$ (os%ore)
or a &a' i aot%er !outr$ (offs%ore).
5. BP: +hat it is: #98 is a summary of statement of all its
economic transactions Eith the rest of the Eorld at a iven year.
4Eo components i0 /urrent account, ii0 capital account. /urrent
account includes trade in oods and services and unilateral
transfers. /apital account shoEs the chane in the nations assets
abroad and the forein asset in the nation.
Com)onents of Current a##ount an Ca)ital A##ount: Current a##ount%
ports of oods and services%
port of oods port of services
+$0 Import of oods and services% Import of oods Import of
services
Balan#e of rae 4he net of =nilateral transfers% eceipts
5rants 5ifts 8rivate InEard remittances
8ayments 5rants 5ifts 8rivate 9utEard remittances Balan#e of
Current a##ount Ca)ital A##ount: utLow: -Assets in abroa: 5ovt.
assets other than o:icial reserve
Page 19 of 119
Updated upto 12.06.2011
8rivate assets% Direct investment in abroad *orein Securities
Jonbank /laims #ank liabilities InLow: -(orei%n Assets in the
nation *orein Direct investment =.S.4reasury and other =.S.
Securities Jonbank liabilities #ank liabilities Balan#e of Ca)ital
a##ount
6. S+AP: In eneral SW"8 is simultaneous sale and purchase of
identical amounts of one currency aainst another, for di:erent
maturities. " SW"8 could be spot aainst forEard or forEard aainst
forEard.
7. NIA: Jon$resident personsKinstitutions includin non$resident
#anladesh nationals may buy #anladeshi shares and securities in
#anladesh aainst freely convertible forein currency remitted from
abroad throuh the bankin channel. 4ransactions relatin to such
investments includin repatriation of dividendK interest earnins and
sale proceeds shall be made throuh a Jon$resident Investor<s
4aka "ccount +JI4"0
8. /D( : 4his fund Eas created in 1GBB Eith the fund provided by
ID" to 59# vide #/D circular 2G dated CK12K1GBB to assure continued
availability of *orein chane to meet the import requirement for
eport of non traditional items includin -5. 4his fund is basically
used to provide funds to the eporters for import of raE materials
on siht basis to brin conFdence of the forein suppliers. 4he total
fund amount as of noE is Z1&C.CC million and the maimum amount
of credit can be iven to a particular eporter is Z1.&C million.
4he interest Eill be deducted \ 7I#9 V 1 from the date of
utili)ation of the fund.
9. Bill of /0#han%e: #ill of chane act 1BB2#ill of echane is an
unconditional order in Eritin addressed by one person to another,
sined by the person ivin it requirin the person to Ehom it is
addressed to pay on demand or at Fed or determinable future time at
a certain sum of money to or to the order of a speciFed person or
to the bearerT. 4he main features are% a0 It must be Eritten
unconditional order by a deFnite draEer to pay a deFnite sum of
money, b0 4he sum, as speciFed in it must be payable by a deFnite
draEee on demand or on a Fed date or on an ascertainable date, c0
It must be payable to a set person or to his order or to the
bearer, d0 It must be duly referred, dated, stamped, endorsed +if
required0 and sined by the draEer and also indicatin the place of
the draEin.
10. Nostro A##ount: " banks account Eith a correspondent
bankKbranch abroad in the currency of
that country.
11. ostro A##ount: " local currency account of a forein
bankKbranch. 4hus the nostro account of the account holder is a
vostro account for the bank Ehere it is maintained.
Page 20 of 119
Updated upto 12.06.2011
12. 2oro A##ount: 4he forein banks maintainin accounts Eith each
other in the separate territory other than host nation is knoEn as
7oro account. Simply their account Eith them.
13. Di@erent t")es of Intl rae Pa"ment: Cash in avan#e: #uyer
places the funds at the disposal of the seller prior shipment of
the oods or services. )en a##ount: "n arranement betEeen the
buyer and the seller Ehereby the oods or services delivered to the
buyer before any payment received by the seller.
Colle#tion: "n arranement betEeen the buyer and the seller
Ehere the seller ship the oods and relevant bi lo echane is draEn
by the seller on the buyer and document+s0 sent to the bank Eith
clear instruction for collection throuh one of its correspondent
bank located in the domicile of the buyer.
")e of #olle#tion: O1C 99& >FF8 Do#umentar"
#olle#tion: "fter shipment, the seller submits drafts and
other documents to the remittin bank Ehich sends the documents to
the collectin bank for payment. "rticle 2/, =/ &22, 1GG>.
Clean Colle#tion: "n arranement Ehereby the seller draEs only
a draft on the buyer for the value of the oods and submits the same
to the remittin bank for payment. "rticle 2/, =/ &22, 1GG>.
Dire#t #olle#tion: " direct collection is an arranement
Ehereby the seller obtains his banks pre$numbered direct collection
letter, thus enablin him to send his documents directly to his
banks correspondent bank for collection. 4his accelerates the paper
Eork process.
Do#umentar" Creit:4he documentary credit is a deFnite undertakin
issued by a bank on behalf of the applicant or for its oEn use, to
pay the beneFciary the value of the draft or documents provided
that the terms and conditions of the credit complied Eith.
14. Parties involve in 27C: a0 "pplicant, b0 Issuin bank, c0
"dvisin bank, d0 /onFrmin bank, e0 4ransferrin bank, f0 #eneFciary,
0 8ayinKJeotiatinK"cceptin bank, h0 eimbursin bank.
15. ")es of 27C: 1evo#able Creit: " revocable credit is a
credit Ehich can be amended or cancelled by the issuin bank at any
time Eithout prior approvalK notice to the beneFciary. Irrevo#able
Creit:Since an irrevocable credit is that Ehich can not be
amendedKcancelled Eithout any prior approvalKnotice to the
beneFciary. 1evolvin% Creit: 4he revolvin credit is one Ehich
restorin the credit to the oriinal amount after it has been
utili)ed. 4he revolvin credit can be /umulative or Jon$cumulative.
" cumulative revolvin credit is that Ehich can not eceed the total
7K/ value after revolvin. " non$cumulative revolvin 7K/ is that
Ehich is established for a certain amount and can revolved Eith
that amount for a certain period of time. ransferable Creit:4he
transferable credit is the one that can be transferred by the
oriinal beneFciary in full or in part to one or more subsequent
beneFciaries. Such credit can be transferred one only. "rticle 3B
=/8 >CC. 1e Clause Creit: " red clause credit is a credit
Eith a special condition incorporate into it that authori)es the
conFrmin bank or any other nominated bank to make advances to the
beneFciary before presentation of the documents.
Page 21 of 119
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=nder this type of credit the openin bank is liable for such
pre$shipment credit made by the neotiatin Knominated bank. Stan b"
Creits:4he stand by credit is a documentary credit or similar
arranement hoEever named or described Ehich represents an obliation
to the beneFciary on the part of the issuin bank to% a0 epay money
borroEed by the applicant or advanced to or for the
account of the applicant. b0 -ake payment on account of any
indebtness undertaken by the
applicant or c0 -ake payment on account of any default by the
applicant in the
performance of an obliation.
16. 27C settlement methos: a0Settlement by 8ayment, b0 Settlement
by "cceptance, c0 Settlement by
Jeotiation.
17. INC/1MS 9666 -/+&C(1& CI(& CP& CIP&
DA(& (AS&(B : /+: N Works means theseller delivers the oods
at the disposal of the buyer at his premises or at any named places
not cleared for eport and not loaded on any vehicles. C(1: /ost and
*reiht means the seller must pay the costs and freiht necessary to
brin the oods to the named port or destination but the risk
of damae or loss after delivery are transferred from the
seller to buyer. =sed for marine and inland EaterEay transport.
CI(: /ost Insurance and *reiht means the seller must pay the
costs and freiht necessary to brin the oods to the named port or
destination but the risk of damae or loss after delivery are
transferred from the seller to buyer. -oreover the seller has to
procure marine insurance aainst the buyers risk of loss or damae to
the oods durin the carriae. =sed for marine and inland EaterEay
transport. CP% /arriae 8aid 4o means the seller delivers the oods
to the carrier nominated by him and should pay the cost of the
carriae to brin the oods to the named destination but the risk of
damae or loss after delivery are transferred from the seller to
buyer. =sed for any mode of transportation includin multimodal.
CIP% /arriae and Insurance 8aid to means the seller delivers the
oods to the carrier nominated by him and should pay the cost of the
carriae to brin the oods to the named destination but the risk of
damae or loss after delivery are transferred from the seller to
buyer. -oreover the seller has to procure marine insurance aainst
the buyers risk of loss or damae to the oods durin the carriae.
=sed for any mode of transportation includin multimodal. DA(%
Delivered "t *rontier means that the seller delivers the oods at
the disposal of the buyer on the arrivin means of transport not
unloaded for eport but not cleared for import at the named point or
place. =sed mainly for land K frontier trade. (B% free on #oard
means that the seller delivers Ehen the oods pass the ships rail at
the named port of shipment. 4his means that the buyer has to bear
all the costs and risks of loss or damae to the oods from the point
of delivery. =sed for marine and inland EaterEay transport.
18. ransshi)ment: 4ransshipment enerally means transfer and
reloadin from one mode of transport to another mode of
transport + Incase of multimodal transport document0 or from one
vessel to another vessel Eithin the same mode of transport +
incase of marine and air transport document0. #ut in case of
road,
Page 22 of 119
rail or inland EaterEay transport document, transshipment means
conveyance to another means of conveyance, such as road to rail to
EaterEay etc.
19. ")es of B72: "rticle Y 2C =/8 >CC
hrou%h B72:When a #K7 covers oods bein transshipped en$route. It
covers the Ehole voyae from one point of shipment to Fnal
destination. Simply one transport document is used. Short
(rom7Blank B72: #K7 in Ehich the detailed conditions of
transportation are not listed in full on the back of the #K7.
Strai%ht B72: 4he #K7 Ehich is issued to the name of a certain
party or directly in the name of the consinee and Ehich can not be
transferred by endorsement. Port or Custo" B72: #K7 issued by
the port o:icer or Eare house supervisor statin that the oods have
been received for shipment. Mates re#ei)t: When the oods are
handed over to the aent of the shippin company for shipment and the
aents contracts to do so and issues a receipt Ehich is knoEn as
-ates eceipt. When the oods are actually shipped the -ates receipt
is echaned Eith the reular #K7. n Boar B72: It is issued after
the oods have been received on board of the ship. Charter
Part" B72: " charter party is a contract under Ehich a ship
oEner arees to place his ship, at the disposal of a merchant or
other person +/harterer0 for the carriae of oods from one port to
another +voyae charter0 or to let his ship for a speciFed period
+time charter0. 4Eo types % Demise + Ehen the ship oEner only
provides vessel and Jon demise +Ehen the ship oEner provides both
vessel and creE0. "rticle 22,, =/8 >CC. (orwarers Certi;#ate of
1e#ei)t: It is issued by a freiht forEarder as a carrier or
multimodal transport operator or as an aent of a carrier or
multimodal transport operator for the oods received from shippers.
Clean B72: " #K7 or transport document is one Ehich bears no
clause or notation Ehich epressly declares a defective condition of
the oods andKor packain. "rticle Y 2, =/8 >CC.
20. Do#uments of 27C -")es 3 Name: a0 #ill of echane, b0 Invoices
and other documents, c0 4ransport documents, d0 Insurance
documents. 4otally these all are called shippin documents.
21. Convertibilit" of #urren#": " currency is said to be
convertible Ehen it may be fully echaned for another currency.
/onvertibility of currency is not meant for domestic transaction
purposes. It is only required for international transactions. In
#anladesh /urrent account has made convertible on 9ctober 2C, 1GG3.
4he capital account has been made partially convertible Eith the
*orein Direct Investment and for Securities investment throuh
JI4".
22. ver invoi#in% 3 Oner invoi#in% an its e@e#t: 9ver Invoicin Y
ecess value than the actual value Y e:ect $ *orein /urrency Drain,
=nder Invoicin Y less value than the actual value Y e:ect $ Duty
7oss.
23. /@e#t on im)ort 3 e0)ort when taka %ets stron%er than (.C.:
When #D4 ets stroner than the vale of the */ ets doEn, means the
more */ is available Eith the same amount of #D4. =sually it is
done Ehen the countrys *N reserve remains more than required level
and Ehen the eport V remittance earnins are much hiher than the
import V */ payments. "t this situation import
Page 23 of 119
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is encouraed since more */ can be obtained aainst #D4 and the eport
is discouraed since the eporters Eill receive less #D4 aainst */
earnins.
24. A##ommoation bill: "n accommodation bill is prepared
by the draEerKseller on the draEeeKbuyer Eithout any supply of any
oods and services. 4his is done to provide some Fnancial help to
the draEerKseller. In our country this is possible for inland
transactions and for international transactions this type of
accommodation is not possible.
25. /0)ort ;nan#in% H Pre<shi)ment& Post<shi)ment:
8re$shipment eport Fnancins are Y ##7/, 8ackin /redit, // +ypo0, //
+8lede0, 8ost Shipment eport Fnancins are Y Jeotiation of eport
bill, #ill purchase, "dvance aainst port bill, Short 4em advances
aainst eport etc.
26. OCP 866: /@e#tive from $ul" 6>& 966E. 5F arti#les 27.
O1C 99: /@e#tive from $anuar" 6>& >FF8. 9 arti#les.
28. Di@eren#e between 2BP72ADB: 7#8 is 7ocal #ill 8urchased Ehich
means the bank shall purchase the clean inland eport documents on
presentation and shall ive the value to the eporters Eithout charin
any interest on the face value of the bill. 9n the other hand the
7"D# is 7oan aainst Documentary #ill means providin an eporter a
post shipment loan aainst an eport document, Ehether clean or not,
Eithout purchase of the same and shall chare interest on the face
value of the bill.
29. (orei%n e0#han%e )osition: *orein echane positions are
represented by the balance of forein echane operations +purchase
and sale of forein currency, securities and documents that
represent them, and old Y echane instrument0 recorded in a bank at
a certain day. )en )osition: ach open position has four ma6or
characteristics% 'ou<re tradin a particular currency pair,
you<re either lon or short the market +you<ve bouht or sold,
respectively0, the si)e of the position in increments of 1CC,CCC of
the base currency, and an echane rate at Ehich the position Eas
opened. *or eample a X=K=SD, &CC, S, C.G22CX, means the trader
Sold &CC,CCC uros for =.S. Dollars at an echane rate of C.G22C.
Short Position: Short positions are taken Ehen a trader sells
currency in anticipation of a doEnturn in price. -akin this move
alloEs the investor to beneFt from a decline. 2on% Position:7on
positions are taken Ehen a trader buys a currency at a loE price in
anticipation of sellin it later for more. Intera" an verni%ht
Position:Intraday positions are all positions opened anytime durin
the 2! hour period "*4 the close of *ore /apitals normal tradin
hours. 9verniht positions are positions that are still on at the
end of normal tradin hours Ehich are automatically rolled by *ore
/apital -anaement.
30. Dealin% room: A dealing room is a place where shares,
currencies, or commodities are
bought and sold.
31. Di@eren#e between entre<)ot an re<e0)ort: /ntre)ot
/0)ort: ntrepot trade may be carried out in compliance Eith the
port 8olicy and Import 8olicy 9rder in force sub6ect to the
folloEin conditions%
Page 24 of 119
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a0 4he value of eport is at least &H more than the import value
b0 Jo chane can be made in respect of quantity, quality, shape or
any other attribute of the oods intended to be imported for
entrepotP c0 5oods imported to #anladesh may be taken outside the
port area only Eith the special approval of the concerned
authorityP d0 "D Eill not provide any forein currency from local
sourceP import cost +on back to back basis0 may be met from
reali)ed proceeds throuh entrepot tradeP that is, "D Eill not bear
any liability on behalf of its customers for import payment in
entrepot tradeP
1e</0)ort: e$eport +import for eport0 may be carried out in
compliance Eith the port 8olicy Import 8olicy 9rder in force
sub6ect to the folloEin conditions Eherein import, processin and
subsequent re$eport shall be conducted under the authori)ation and
supervision of /ustoms "uthorities% a) 5oods +includin oods under
control list0 may be imported for re$
eport under bonded EarehouseK 1CCH bank uaranteeK provision
of duty draE back for 1CCH eport Eithin stipulated
timeP
&) -inimum value addition shall be 1CHP Eherein re$eport
consinment is brouht in #anladesh for subsequent re$shipment in
favor of forein buyer, import cost alonEith freiht Eill not
eceed GCH of the *9# value of re$eport.
!) @uality, quantity and shape of the oods are required to be
chanedP
32. Pro#eure for issuan#e of Inustrial I1C: "t Frst an
industrial I/ is issued on adhoc basis for an year Eith the amount
to be imported for the 1st year. "fter completion of the Frst
year the concerned authority of //I shall check the H of the amount
authori)ed at the time of 1streneEal. If the industrial
concern Eas able to utili)e at least BCH of their limit then //I
issues the reular I/. If the amount is less than BCH then the
concern Eill be iven as 2ndadhoc.
33. BB2C ? as )er Im)ort Poli#" rer: a. *or (nit arments minimum
value addition should be 2CH b. *or all non$quota cateory oven
items minimum value addition should be
2CH c. If the price of the quota cateory oven item is *9# =SD!C.CC
the3n
minimum value addition should be 2CH d. *or all type of quota
cateory if *9# value more than =SD!C.CC minimum
value addition should be 2CH but minimum price per d)n should
be not less than =SD12.CC
e. *or hih value added quota and non quota -5, minimum value
addition should be 2CH and 1&H respectively.
f. *or all type of sEeater eport minimum value addition should be
at least 2CH
. *or kids Eear the minimum value addition should be 1&H
34. Cash (C an C sell limitation: *or any esident #anladeshi the
maimum amount of */ can be taken under travel quota is =SD3CCC.CC
of Which maimum =SD1&CC.CC can be taken as cah and other in the
form of 4/. #ut if the esident #anladeshi maintains */D account, he
Eill be alloEed take */ upto the account balance Eith the
endorsement in the passport and Eith the cash limitation of
=SD1&CC.CC.
35. 1ules relate to /P #on#erns: (C A##ounts of /P
#on#erns: 4he folloEin procedure shall apply to release of
forein echane to the enterprises aainst eports made from 8As%
>66? of re)atriate e0)ort )ro#ees of a ")e A inustrial unit
in
Page 25 of 119
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8A may be retained in */ account in the name of the unit Eith an "D
in #anladesh. #alances in the */ account may freely be used to meet
all forein payment obliations includin import payment obliations of
the unit and payment obliations in forein echane to #8A". #alances
from the */ account Eill also be freely encashable for local
disbursements or for creditin 4aka account maintained Eith an "D
for meetin 4aka payment obliations like Eaes, rents, rates, taes
etc. 4aka account maintained Eith "Ds by 4ype " units in 8A
may be credited only Eith encashments of funds from */ accounts or
of other inEard remittances from abroad. oEever, receipts from 4aka
sales of factory refuses and of unusable portion of raE materials
of 4ype " industries may be credited to the 4aka accounts provided
the permission letter of #8A" for the sale and evidence of payment
of dutiesK taes on sale proceeds are produced to the "D. #alances
in the 4aka accounts cannot be converted to forein echane and may
only be used for meetin local epenses
=pto BCH of the repatriated eport proceeds of 4ype # and 4ype /
units other than those in the arments sector may be retained in */
"ccounts maintained in the names of the units Eith their "DsP for a
4ype # or 4ype / unit in the arments sector, upto &H of the
repatriated eport proceeds may be credited to */ account maintained
in the name of the unit Eith an "D. 4he remainder of the eport
proceeds should be encashed to taka at the prevailin echane rate.
"ll forein payments obliations of 4ype # and 4ype / units includin
import payments and repayments of forein loans may be met out of
the balances in their */ accountsP payment obliations in forein
echane of a type # unit to the #8A" may also be settled from
balances in its */ account. #alances in the */ accounts of the 4ype
# and 4ype / units are freely encashable to 4aka for local
disbursements
Creit fa#ilities to /P #on#erns: +"0 1CCH forein oEned
enterprises in the 8As knoEn as type " industries may obtain short
term forein currency loans from overseas banks and Fnancial
institutions sub6ect to the folloEin conditions% +i0 4he loan shall
be received throuh an "D in #anladeshP and the loan
proceeds Eill be credited to the */ account maintained by the "D in
the name of the 4ype " unit, to be used for Fnancin import of
capital machinery and raE materials, payment of interest Kservice
chares, repayment of loans and for creditin 4aka account for meetin
local epensesP
+ii0 9nly assets fully oEned by the 4ype$" industry may be loded as
collaterals for such loansP
+iii0 epayment of principal and interest on the loan shall be
remitted out of the balances available in the */ account Eithout
prior #anladesh #ank approval. Jo fund may be provided from
the "Ds oEn resources for such repayment ecept Eith prior approval
of #anladesh #ankP
+iv0 In case the loan is called up by the creditor, the asssets
chared to forein lender Eill be alloEed to be sold only in forein
echane and proceeds, after payin o: all local liabilities in
#anladesh, may be remitted abroad Eith #anladesh #anks
approvalP
+vi0 Jo 4aka loan aainst repatriable short term forein currency
loan Eill be alloEed to a 4ype " industry.
+#0 4ype # industries +6oint venture pro6ects0 may also obtain such
loans sub6ect to conditions applicable to 4ype " industries as
indicated above, ecept that 4ype # industries Eill not be permitted
to mortaeK hypothecate their Fed assets, raE materials in favour of
any non$resident. 4he "Ds may, hoEever, issue uarantee to overseas
banksK Fnancial institutions for short term forein currency loans
brouht into #anladesh by 4ype # industries, sub6ect to prior
approval of the #anladesh #ank.
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4aka loan maybe ranted to a 6oint venture +4ype #0 industrial unit
in 8A upto 1CCH of short term forein currency loan brouht in and
encashed to 4aka. 7oan in 4aka for procurement of capital
machineries for settin up a 4ype # industry, not eceedin the local
partners share of oEnership of the unit, may be etended on normal
4aka loans to 4ype # units banker$customer relationship. 8rior
#anladesh #ank approval should be obtained by the "D Ehile providin
forein echane for import of the machineries out of the 4aka loan.
epayments of the 4aka loans alonEith interests should be received
out of the forein echane earnins of the unit.
"Ds may etend credit facilities to 4ype / industries +1CCH
locally oEned0 as admissible to
such industries outside 8 A.
In establishin import 7/s on account of 4ype ", # and / units in
the 8As "Ds shall bear in mind the position that the import
payments may be made only out of the forein echane earnins of
the concerned units or out of their borroEins abroad credited in
their */ accounts, and that no funds from the "Ds oEn forein echane
resources can be used for this purpose. #efore openin inputs import
7/ aainst an eport 7/ or eport order received by an 8A unit the "D
should satisfy itself completely about the clarity of the
conditions in the eport orderK 7/, the standin and credit of the
forein buyer and the ability of the eportin unit for timely
eecution of the eport order. In openin inputs import 7/s on account
of 4ype # and 4ype units, domestic value addition
requirements prescribed for the respective items by the -inistry of
/ommerce should also be abided by. Import payments aainst the 7/s
should be scheduled in a manner that payment obliations do not fall
due before receipt of eport proceeds. In all cases of openin input
import 7/s on accounts of units in the 8A, "Ds should satisfy
themselves that necessary arranements have been made by the opener
that in case of shortfall or delay in eport receipts, forein echane
Eould be made available from eternal sources.
36. Quota : "pplication of a reduced or )ero duty rate for a
speciFed quantity of imported oods, or for oods imported durin a
iven period.
37. *SP: 5S8 +5eneral System of 8references0 =nder Ehich oods from
certain countries are iven preferential rates of import duty.
38. Chan%es in OCP 866: a. 4he term parties has been replaced by
banks. b. Important deFnitions of the =/8 have been accumulated
into a sinle
article c. "ll interpretive issues of =/8 have been placed into a
sinle article d. evocable letter of credit has been kept out of the
scope of the =/8 >CC. e. In eneral, articles stated in future
form in =/8 &CC are restructured into
present form. f. 4he phrase unless otherEise stipulated in the
credit has been removed
from =/8 >CC. . 4he phrase on its face has been mostly taken out
from the articles Ehile
composin the tets of the =/8 >CC h. 4he common startin of
transport document if a credit calls for has been
dropped, and in all other respects meets the stipulations of the
credit of =/8 &CC has been removed form =/8>CC.
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i. "rticle & and 12 of =/8 &CC reardin incomplete and
unclear instructions, "rticle B in reard to evocation of a /redit,
and article 3C connected Eith 4ransport documents issued by freiht
forEarders of =/8 &CC have found no place in the =/8
>CC.
6. In the article 1 of =/8 &CC, the phrase shall apply to
all documentary credit is replaced by are rules that apply to any
documentary credit.
k. Some of the deFnitions of article 2 ]line G^ appears to have neE
meanin. "pplicant has been termed as party. /redit has been deFned
only as irrevocable undertakin.
l. Introducin the term onour o:ers a neE dimension. 4he deFnition
of Jeotiation appears di:erently. "nd the =/8 >CC has deFned
presentation eplicitly.
m. Interpretation of the term #ank rihtly accommodates other
entities to demonstrate Eider scope.
n. "ddition of a sentence has made it is more distinct that credit
is a separate contract
o. "ll parties concerned has been replaced by banks of =/8 >CC.
p. =/8 >CC has identiFed four terms of payment , no di:erent
from =/8
&CC. q. 4he liabilities and responsibilities of issuin and
conFrmin bank have
been split out in tEo articles. r. =/8 >CC brins in the concept
of second advisin bank. s. "mendment issues alon Eith advisin banks
responsibilities related to
amendment of =/8 &CC have been placed in a neE article. t.
Slihtly modiFed tet of the article 1C ]c^ of =/8 &CC has been
placed
under a neE title Jomination. u. emoval of as reUected in these
articles at the end of international
standard bankin practiceP v. -aimum period alloEed to eamine
documents reduced to Fve bankin
days from sevenP E. 4he term reasonable time has been removed in
connection Eith time
required for eamination of documents . 4he =/8 &CC provision on
submission of documents Eithin 21 days after
the date of shipment has been accommodated under a neE articleP
y. 4he =/8 &CC article 22 on Issuance Date of Documents
_. /redit Date
retained in the =/8 >CC Eith neE Eordins. ). 4he presentation of
documents by or on behalf of the second beneFciary
has been made to the transferrin bank.
Page 28 of 119
Di@erent t")e of Bankin% 3 Bankin% Prou#ts
1. Mer#hant bankin%: Mer#hant Bankin% encompasses tEo ma6or
businesses Y 8ortfolio -anaement, and Issue -anaement and
=nderEritin Y Ehich serve both the demand and supply sides of the
capital market.
2. @ shore Bankin%: 8art of international bankin business operates
free of various constraints and taes. 9:$shore bankin
transactions are carried out in forein currencies and transacted
betEeen foreiners.
3. Bri%e (inan#in%: 8urely short$term creditKadvance etended to a
person or a concern pendin the receipt of fund from another source.
It is nothin but a stop$ap arranement to avail a temporary credit
line by a customer from his banker. _ery frequently this sort of
Fnance is required by pro6ects Ehen actual credit ivin aency is
unable to disburse the loan in time, the concern of the pro6ect
then moves to a bank to avail credit line to establishKcommission
the pro6ect in time. It is also called SEin 7oan, made in
anticipation of lon term Fnancin.
!. S"ni#ation: " Syndicated facility is a lendin facility,
deFned by a sinle loan areement, in Ehich several or many banks
participate.
&. Se#uriti'ation: Securitisation is the process of poolin and
repackain of homoenous illiquid Fnancial assets into
marketable securities that can be sold to investors. 4he process
leads to the creation of Fnancial instruments that represent
oEnership interest in, or are secured by a sereated income producin
asset or pool of assets. 4he pool of assets collateralises
securities. 4hese assets are enerally secured by personal or real
property +e.. automobiles, real estate, or equipment loans0, but in
some cases are unsecured +e.. credit card debt, consumer
loans0.
>. (a#torin%: 4he factor, the banker, undertakin to collect, to
account for and manae clients debts and also Fnances the clients
either by lendin aainst account receivables or purchasinKdiscountin
them outriht for a chare called discount.
E. Bankers A##ount:
B. 1etail Bankin% 3 +holesale bankin%:etail bankin is typical
mass$market bankin Ehere individual customers use local branches of
larer commercial banks. Services o:ered include% savins and checkin
accounts, mortaes, personal loans, debit cards, credit cards, and
so forth. etail bankin Xis typical mass$market bankin Ehere
individual customers use local branches of larer commercial banks.
Services o:ered include% savins and checkin accounts, mortaes,
personal loans, debit cards, credit cards, and so
forth.XWhereas
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Eholesale bankin is #ankin services betEeen merchant banks and
other Fnancial institutions.
G. Suborinate& suborinate& suborination:Debts or claims
that have a loEer status or priority than other debts or claims are
subordinate. *or eample, creditor " may aree in a subordination
areement to have its claims on the cash UoE or on the assets of a
borroEer loEer in priority than +i.e., subordinate to0 the claims
to that cash UoE or collateral by creditor #. In Fnance and
accountin, the term also refers to debts that include provisions
makin them subordinate to other liabilities. *or eample, a bond
issue may, by contractual areement, be subordinate to all other
bonds issued by a company.
1C.ero #ou)on bon: " type of debt security that does not pay
periodic interest. Aero coupon securities are bouht and sold at
prices that are less than the par value of the securities.
4he discount, or di:erence betEeen the principal paid to purchase
the security and the principal returned at maturity, constitutes
the investor<s return.
11. enture #a)ital:/apital provided by a bank or any other
Fnancial institutions to a business enterprise to start a neE
business. 4his capital is often considered as risk capital since
neE business or the pro6ect may collapse at the beinnin of
its operationP but such venture may also brin hih returns as
Eell.
12.*reen Bankin%: "mericans are startin to turn to
eco$friendly bankin as a Eay to help reduce the carbon footprint
from their normal bankin activities. 4his movement aEay from branch
and paper bankin is bein led by reen banks that believe in social
responsibility.
4he easiest Eay for you to bank reen is to start usin the online
bankin services that are available. #eneFts of online bankin
include less paperEork, less mail and less drivin to branch o:ices,
Ehich all have a positive impact on the environment. Interestinly,
online bankin can also increase the e:iciency and proFtability of a
bank. " bank can loEer their oEn costs that result from paper
overload and bulk mailin fees as more customers use online
bankin.
5reen bankin can also reduce the need for epensive branch banks and
customer service representatives. So if a bank is not yet utili)in
reen bankin, shareholders of the bank may start askin....Ehy
not?
#anks can do much more to help the environment than 6ust promote
online bankin. " truly reen bank Eill reduce their carbon
footprint by buildin more e:icient branches, implementin
enery$e:icient operational procedures, o:erin transportation
services for their employees, promotin sustainable bankin and
increasin their lendin in environment$sensitive industries. #anks
can also support eco$friendly roups and raise money for local
environment initiatives.
#ank products and services can also reUect a reen bankin
commitment.
5reen Deposits% #anks can o:er hiher rates on /Ds, money market
accounts, checkin accounts and savins account if customers opt to
conduct their bankin activities online.
5reen -ortaes and 7oans% " bank can o:er reen mortae Eith better
rates or terms for enery e:icient houses. Some reen mortaes alloE
home buyers to add as much as an additional 1& percent of the
price of their house into loans for uprades includin enery$e:icient
EindoEs, solar panels, eo$thermal heatin or Eater heaters. 4he
savins in monthly enery bills can o:set the hiher monthly mortae
payments and save money in the lon run.
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4he nery :icient -ortae +-0 is a type of =D$approved reen mortae
that Eill credit you for your homes enery e:iciency in the mortae
itself. -any home improvements also qualify for the enery ta
credit. "nyone undertakin an enery$savin house pro6ect, should shop
around for a bank that o:ers a special rate for a reen mortae or
loan.
5reen /redit /ards% " reen credit card alloEs cardholders to earn
reEards or points Ehich can be redeemed for contributions to
eco$friendly charitable orani)ations. 4hese cards o:er an ecellent
incentive for consumers to use their reen card for their epensive
purchases. Imaine the millions of dollars that could be raised for
EorthEhile environmental roups if reen credit cards really took
o:.
5reen eEard /heckin "ccounts% " bank product called a reard !%e!'ig
a!!outs pays a bonus rate for customers Eho o reen. /ustomers can
earn hiher checkin account rates if they meet monthly requirements
that miht include receivin electronic statements, payin bills
online or usin a debit or check card. With this bankin product
hiher rates and eco$friendly livin o hand$in$hand.
What can you do?
/onvertin to online bankin and mobile bankin are tEo Eays that you
can do your part to bank reen and help the environment. 5reen
bankin via your computer or cell phone includes settin up direct
deposit to receive your paychecks, receivin electronic statements
from your bank and payin bills online. "ll of these steps can
drastically reduce the amount of paper produced by your bank.
9nline bankin and mobile bankin are also hihly e:ective Eays to
keep track of your Fnances and to avoid late payment fees.
"nother reen bankin step you can take is to suest that the
company you Eork for sin up for a product called Xemote
DepositX. 4his service is o:ered by a roEin number of banks to
their commercial customers. emote deposit is the diital scannin and
processin of checks from your computer or smartphone. It is a
convenient service Eithout the paperEork and environmental costs
associated Eith traditional branch deposits.
-any banks claim to be be eco$friendly, but in fact do little to
support environment initiatives Eith the money you deposit Eith
them. "sk your local bank eactly hoE they support the environment
before assumin that their self$anointed X5reen #ankX label is
deserved. /hances are ood that there is a bank in your local area
that is more socially$conscious than their competitors. If you open
an account Eith that bank, then you are doin your part to support
the environment.
*inally, the more people Eho actively search for and support
eco$friendly banks, the more competition for deposits Eill
increase. 4his Eill help raise the aEareness for reen bankin. (eep
track of the latest neEs on reen bankin on -oneyates.
Poli#" *uielines for *reen Bankin%
Introu#tion:
We are aEare that lobal Earmin is an issue that calls for a lobal
response. 4he rapid chane in climate Eill be too reat to alloE many
eco$systems to suitably adapt, since the chane have direct impact
on biodiversity, ariculture, forestry, dry land, Eater resources
and human health. Due to unusual Eeather pattern, risin reenhouse
as, declinin air quality etc. society demands that business also
take responsibility in safeuardin the planet. 5reen Fnance as a
part of 5reen #ankin makes reat contribution to the transition to
resource$e:icient and loE carbon industries i.e. reen industry and
reen economy in eneral. 5reen bankin is a
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component of the lobal initiative by a roup of stakeholders to save
environment. 4he state of environment in #anladesh is rapidly
deterioratin. 4he key areas of environmental deradation cover
air pollution, Eater pollution and scarcity, encroachment of
rivers, improper disposal of industrial medical and house$hold
Easte, deforestation, loss of open space and loss of biodiversity.
In addition, #anladesh is one of the most climate chane vulnerable
countries. In line Eith lobal development and response to the
environmental deradation, Fnancial sector in #anladesh should play
important roles as one of the key stake holders. In response to the
above, urent measures are required by stake holders for sustainable
development and thereby save the planet. #anks hold a unique
position in an economicsystem that can a:ect production, business
and other economic activities throuh theirFnancin activities and
thus may contribute to pollute environment. -oreover, eneryand
Eater e:iciency and Easte reduction are of hih concern for many bi
banks. 5reenbacks or environmentally responsible banks do not only
improve their oEn standards butalso a:ect socially responsible
behavior of other business.
Ban%laesh Banks /arlier Initiatives:
## is Eell aEare of the environmental deradation situation as
mentioned above and hasalready iven time to time directions to all
scheduled banks. /ommercial #anks are noErequired to ensure
necessary measures to protect environmental pollution Ehile
Fnancina neE pro6ect or providin Eorkin capital to the eistin
enterprises. #anks have beenadvised to facilitate their clients
Eith utmost care in openin 7etter of /redit +7K/0 forinstallation
of `uent 4reatment 8lant+480 in the industrial units. #anks have
beenadvised to Fnance in Solar nery, #io$as, 48 and ybrid o:man
(iln +(0 inbrick Feld under reFnance proramme of ##. "
comprehensive uidelines on /orporateSocial esponsibility +/S0 has
been issued Ehere banks have been asked to concentratehard on
linkin /S at their hihest corporate level for inrainin
environmentally andsocially responsible practices and enain Eith
borroEers in scrutiny of theenvironmental and social impacts. #anks
have been brouht under the purvieE of$commerce Eith a vieE to
providin the customers Eith online$bankin facilitiescoverin
payments of utility bills, money transfer and transactions in local
currencythrouh internet as Eell. /onsiderin the adverse e:ects of
/limate /hane, banks havebeen advised to be cautious about the
adverse impact of natural calamities and encouraethe farmers to
cultivate salinity resistant crops in the salty areas, Eater
resistant crops inthe Eater locked and Uood prone areas, drouht
resistant crops in the drouht proneareas, usin surface Eater
instead of underround Eater for irriation and also usinoranic
fertili)er, insecticides by natural means instead of usin chemical
fertili)er andpesticides.
Ao)tin% *reen Bankin% Poli#":
JoE it is the hih time for the banks to adopt a comprehensive 5reen
#ankin 8olicy ina formal and structured manner in line Eith lobal
norms so as to protect environmentalderadation and ensure
sustainable bankin practices.With a vieE to developin reen bankin
practices in the country, an indicative 5reen#ankin 8olicy and
Stratey frameEork has been developed for the banks in thefolloEin
manner%
5reen #ankin 8olicy needs to be covered throuh time fr