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“Foreign Exchange Operations Of
Trust Bank Limited”
A study on Dilkusha Corporate Branch
1
TABLE OF CONTENTS
Chapter one: Introduction1.1 Introduction 021.2 Origin of the report 031.3 Background of the Study 031.4. Significance of the report 041.5 Scope of the Study 041.6 Objectives of the Study 041.7 Methodology 051.8. Limitation of the study 07
Chapter Two: Organizational Part2.1 An overview of Trust Bank Limited 092.2 Philosophy of TBL 092.3 Vision 102.4 Mission 102.5 Objective of the Bank 102.6 Values of the Bank 112.7. Corporate Information of TBL 122.8 Organizational Hierarchy of the Trust Bank Ltd. 142.9 Different Wings of TBL 15
2.9.1 Retail Banking 162.9.2 Islamic Banking 182.9.3 Merchant Banking 182.9.4 Automated Banking 19
2.10 Product and Services 202.10.1 Depositary products 202.10.2 Retail products 232.10.3 Card Facilities 242.10.4 SME financing 25
2.11 Others 272.12. Corporate Social Responsibility 282.13 Financial Performance of TBL 29
2.13.1 Capital 292.13.2 Share Holders Equity: 302.13.3 Reserve 302.13.4 Deposit and Deposits Portfolio 312.13.5 Loans & Advances 332.13.6 Profit and operating results 34
2.14 At a glance of TBL financial Performance of last 5 years 35
2
Chapter Three: Learning Part
3.1 Foreign Exchange- its meaning and definition 373.2 Different Types of foreign exchange operation 373.3 Import 38
3.3.1 Procedure of import 383.3.2. Licensing for Imports 393.3.3. An Opening of Letter of Credit 393.3.4. Verification and Lodgment of Documents by the L/C Opening Bank 413.3.5. Shipping Guarantee 423.3.6. Important points to prepare an L/C 423.3.7 L/C advising 453.3.8. Lodgment 453.3.9. Retirement 463.3.10. Post import finance 46
3.4 Export 463.4.1 Benefits of Export 463.4.2 Procedure/Formalities for Export 473.4.3. Securing Export Order 473.4.4. Receiving Letter of Credit 473.4.5. Procurement and Shipment of Goods 473.4.6. Preparation and procurement of Export Documents 473.4.7. Submission of documents to the bank for Negotiation 47
3.5 Role of Banks in the Export Sector of Bangladesh 473.6 Different parties involved Foreign exchange transaction 483.7 Document required for Foreign Exchange Transactions 503.8 Foreign Remittance 533.9 Different Methods of International Trade Payment 543.10 Examination and Negotiation of Export Documents 553.11 Modes of payment 583.12 Foreign Currency Accounts 593.13 Other services 61
3.14. Financial Performance of Foreign Exchange Operations of TBL3.14.1 Import Earnings 623.14.2 Export 623.14.3 Foreign Remittance 633.14.4. Income from Commissions 64
3.15 Findings of the Report 653.16 Recommendations of the report 653.17 Conclusion of the Report 66
References 67Appendix 68
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Table of Charts and Diagrams
Name & SL no Table PageNo
Name & SL no Charts & Diagrams Page No
Table 1: Installment of TSS
Table 2: Installment of LSS
Table 3: Total Assets
Table 4: Share Holders Equity
Table 5: Reserve
Table 6: Total Deposits
Table 7: Deposit Portfolio
Table 8: Total Assets
Table 9: Operating Profit, Profit before Tax and, Profit after Tax
Table 10: At a glance of TBL financial Performance of last 5 years
Table 11: Import Earnings
Table 12: Export Earnings
Table 13: Foreign
Table 14: Income from Commissions
22
22
29
30
30
31
32
33
34
35
62
62
63
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Chart 1: Values of the BankChart 2: Corporate Information of TBLChart 3: Organizational hierarchyChart 4: Different Wings of TBLChart 5: Different types of depository productsChart 6: Different types of LoanChart 7: Total Capital and Capital Adequacy RatioChart8: Shareholders EquityChart 9: Growth of ReserveChart 10: Deposit GrowthChart 11: Deposit Mix 2009Chart 12: Growth of Loans and AdvancesChart 13: Growth of ProfitChart 14: Different Wings of Foreign Exchange OperationChart 15: Advising of L/CChart 16: Flowchart of Letter of Credit OperationChart 17: Modes of PaymentChart 18: Import earnings growthChart 19: Growth of Export Earnings
Remittance Chart 20: Growth of Foreign Remittance
11131415
202329
303031323334
3745
51586262
63
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1.1 Introduction:
This internship is a part of the Bachelor of Business Administration (BBA) program that
provides an on-the-job experience to students. I was placed at Trust Bank Limited,
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Dilkusha Corporate Branch as an internee student for three months. This internship
program was my very first on-the-job exposure and provided me with learning experience
and knowledge in several areas. During the first few weeks of my internship period, I was
able to get accustomed to the working environment of Trust Bank Limited. As the
internship continued, I not only learned about the activities and operations of
correspondent Bank, but I also gathered some knowledge about the basic business
activities of banking in first one-month of my internship period.
Generally by the word “Bank” we can easily understand that the financial institution
deals with money. But there are different types of banks such as; Central Banks,
Commercial Banks, Savings Banks, Investment Banks, Industrial Banks, Co-operative
Banks etc. But when we use the term “Bank” without any prefix, or qualification, it refers
to the ‘Commercial banks’. Commercial banks are the primary contributors to the
economy of a country. So we can say Commercial banks are a profit-making institution
that holds the deposits of individuals & business in checking & savings accounts and then
uses these funds to make loans.
A company can increase efficiency through a number of steps. These include exploiting
economies of scale and learning effects, adopting flexible manufacturing technologies,
reducing customer defection rates, getting R&D function to design products that are easy
to manufacture, upgrading the skills of employees through training, introducing self-
managing teams, linking pay to performance building a companywide commitment to
efficiency through strong leadership, and designing structures that facilitate cooperation
among different functions in pursuit of efficiency goals.
Trust Bank Limited pursues decentralized management policies and gives adequate work
freedom to the employees. This results in less pressure for the workers and acts as a
motivational tool for them, which gives them, increased encouragement and inspiration to
move up the ladder of success. Overall, I have experienced a very friendly and supporting
environment at Trust Bank Limited, which gave me the pleasure and satisfaction to be a
part of them for a while. While working in different departments of this branch I have
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found each and every employee too friendly to us to cooperate. They have discussed in
details about their respective tasks. I have also participated with their works.
1.2 Origin of the report:
Education system will be more rich and helpful when there is a combination of theoretical and
practical relationship with a student. From education the theoretical knowledge is obtained from
courses of study, which is only the half way of the subject matter. Practical knowledge has no
alternative. The perfect coordination between theory and practice is of paramount importance in
the context of the modern business world in order to resolve the dichotomy between these two
areas. Therefore, an opportunity is offered by Daffodil International University, for its potential
business graduates to get three months practical experience, which is known as “Internship
Program”. To complete of the internship program, I was placed in a bank namely, “Trust Bank
Limited”, Dilkusha corporate branch for the period of three months starting from June 01, 2010 to
August 31, 2010. Internship Program brings a student closer to the real life situation and thereby
helps to launch a career with some prior experience.
1.3 Background of the Study:
Trust Bank Limited is one of the leading private commercial bank having a spread
network of 45 branches across Bangladesh and plans to open few more branches to cover
the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in
2010. The bank, sponsored by the Army Welfare Trust (AWT), is first of its kind in the
country. It performs all the modern banking activities to satisfy its clients. This study
attempts to analyze the performance evaluation and foreign exchange activities of TBL.
Through the internship program, close observation was made on different banking
activities of TBL. It performance was reviewed and analyzed through the annual report
and internal record of the bank.
1.4. Significance of the report:
7
The main reason of this study is to become familiar with the realistic business world to
attain practical knowledge about the banking and corporate world. We all know that there
is no alternative of practical knowledge which is more beneficial than theoretical aspects.
1.5 Scope of the Study:
The study focuses on the foreign exchange operations of Trust Bank Limited, Dilkusha
Corporate Branch. The study was wide spread and has greater scope to focus on different
aspect of foreign exchange on banking sector but my study probably will not reflect the
practices in the overall banking sector. Moreover, it does not include the foreign
exchange practices done by the non-banking financial organizations. It focuses on:
An overview of TBL
An overview of foreign exchange activities of TBL
Import and Export procedure of TBL
Foreign Exchange performance of TBL
1.6 Objectives of the Study:However, the broad and specific objectives of the study are as follows:
Major Objectives:The major objective of the study is to observe & evaluate Foreign Exchange activities &
performance evaluation of that department of the Trust Bank Ltd
Specific Objectives: Every report has an objective. The objective of the internship program is to familiarize students with the real business situation, to compare them with the business theories & at the last stage make a report on assigned task. Specific objectives are as follow:
To analysis the Foreign Exchange Transaction procedures maintained by the TBL
To know export procedures To know import procedures To evaluate Foreign Exchange performance of The Trust Bank Ltd. To know about the benefits and incentives provides to the export proceeds.
1.7 Methodology:
Research Design:
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The study requires a systematic procedure from selection of the topic to final report
preparation. In this study, descriptive method was undertaken to gain insights and
understanding of the foreign exchange operation of TBL. To perform the study data
sources were identified and collected, they were classified, analyzed, interpreted and
presented in a systematic manner and key points are found out. This overall process of
methodology is given in below that has been followed in the study.
Selection of the topic: The topic selected for the study was chosen by me and approved
by Mr. Mahbub Parvez, Assistant Professor, Department of Business
Administration, Faculty of Business & Economics, Daffodil International University
Identifying data sources: Essential data sources both primary and secondary had been
identified which were needed to complete and workout the study. To meet up the need of
data
Primary data are used and the study also required interviewing the officials and
staffs, clients where necessary.
Secondary data sources were files, documents, website of the bank, relevant
books, etc.
Target Population:
All officers and clients of Trust Bank Ltd, Dilkusha Corporate Branch.
Population Size:
No. of employees of this branch: 49
No. of clients of this branch: 6000(approximately)
Sample Size:
No. of employees: - 20
No. of clients: - 75
Sources of Data: Sources of data are given below: Primary Source
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Consultation with bank officials
Observing the activities of different departments of TBL.
Discussion with the supervisor.
Face-to-face conversation with the clients
Secondary Source Annual reports & documents of TBL
Web site of TBL.
Newspaper, journal, articles etc.
Credit Policy Manual
Different books and periodicals related to the banking sector
Bangladesh Bank Report
Method of Data Collection: For preparing this paper, I used both Secondary and
Primary data
Primary Data:
Practical experience and queries from the executives while doing my internship at
The Trust Bank Ltd.
Some data are collected from Informal discussion with the executives of the bank.
Collection of Secondary Data:
Most of financial data are collected from the Annual Reports of the year 2005,
2006, 2007, 2008 and, 2009.
Import Export Manual published by Bangladesh Bank.
Some data are collected from different vouchers,
I also used different Manuals and Publication of The Trust Bank Ltd to collect
some information ,
Website of TBL
Data Analysis and Reporting:
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To analyze the gathered data of foreign exchange department, I used different types of
charts, tables and graphs. To do that analysis I used different types of computer software
like Microsoft Word and Microsoft Excel.
Findings of the study: After finding out the data problems of the study were pointed out
and they were shown under concerned heads. Recommendations were suggested
thereafter to overcome the problems.
Final report preparation: On the basis of the suggestions of my honorable supervisor
some deductions and additions were made and final report was prepared thereafter.
1.8. Limitation of the study:
I have tried my best to provide with all necessary information about Trust Bank Limited
but the main problem faced in preparing the paper was the inadequacy and lack of
availability of required data. This report is an overall view of Foreign Exchange
Operations and performance evaluation of The Trust Bank Ltd. But there is some
limitation for preparing this report. These barriers, which hinder my work, are as follows:
Difficulty in accessing latest data of internal operations for data security.
Non-availability of some preceding and latest data.
Some information was withheld to retain the confidentiality of the bank.
Since the bank personnel are very busy with their activities, as a result they were
unable to provide much information about the report.
I was placed to this department for only 3 months of time and working like a
regular employee hindered the opportunity to put the better effort for the study.
With all of this limitation I tried my best to make this report as best as possible. So
readers are requested to consider these limitations while reading and justifying any part
of my study.
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2.1 An overview of Trust Bank Limited
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Trust Bank Limited is one of the leading private commercial bank having a spread network of 45 branches and 5 SME center across Bangladesh and plans to open few more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in 2010. The bank, sponsored by the Army Welfare Trust (AWT), is first of its kind in the country. With a wide range of modern corporate and consumer financial products Trust Bank has been operating in Bangladesh since 1999 and has achieved public confidence as a sound and stable bank.
In 2001, the bank introduced automated branch banking system to increase efficiency and improve customer service. In the year 2005, the bank moved one step further and introduced ATM services for its customers.
Since bank’s business volume increased over the years and the demands of the customers enlarged in manifold, our technology has been upgraded to manage the growth of the bank and meet the demands of our customers. In January 2007, Trust Bank successfully launched Online Banking Services which facilitate Any Branch Banking, ATM Banking, Phone Banking, SMS Banking, & Internet Banking to all customers. Customers can now deposit or withdraw money from any Branch of Trust Bank nationwide without needing to open multiple accounts in multiple Branches.
Via Online Services and Visa Electron (Debit Card), ATMs now allow customers to retrieve 24x7 hours Account information such as account balance checkup through mini-statements and cash withdrawals.
Trust Bank has successfully introduced Visa Credit Cards to serve it’s existing and potential valued customers. Credits cards can now be used at shops & restaurants all around Bangladesh and even internationally.
Trust Bank is a customer oriented financial institution. It remains dedicated to meet up with the ever growing expectations of the customer because at Trust Bank, customer is always at the center.
2.2 Philosophy of TBL
At present the bank has as many as 45 branches and 5 SME centre across the country.
It is committed to become equal service providers compatible with the norms of
commercial schedule bank.
It renders all types of personal, commercial and corporate banking services to its
customers within the purview of the Bank Companies Act, 1991 and in line with the
directives and policy guidelines lay down by Bangladesh bank.
2.3 Vision
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Its aim to provide financial services to meet customer expectations so that customer’s feel
they are always there when customer need them, and can refer them to their friends with
confidence.
Trust Bank wants to be a preferred bank of choice with a distinctive identity.
2.4 Mission
The mission of TBL is to make banking easy for their customers
Implementing one-stop service concept and provide innovative and attractive products &
services through technology and qualified human resources.
They always look out to benefit the local community through supporting
entrepreneurship, social responsibility and economic development of the country.
2.5 Objective of the Bank
There are some objectives of this bank, which are as follows:
To establish, maintain, carry on, transact, undertake and conduct all types of
banking, financial, investment and trust business in Bangladesh and abroad.
To form, establish and organize abroad any bank, company, institution,
organization, either single or joint collaboration for partnership with any
individual, bank, company, institution, organization, or any other government
agency for the purpose of carrying of business, financial investment or any other
business as provided hereafter.
To carry on any business relating to wage earners scheme as may be allowed by
the Bangladesh Bank from time to time including maintaining of foreign currency
accounts.
To conduct or negotiate all kinds of loan and assistance, private or public, from
any source, local and foreign, and to take all such steps as may be required to
complete such deals.
To form, promote, organize, participate and aid in forming, promoting, organizing
any bank, company, institution, organization, or any holding company in
Bangladesh and abroad for the purpose of undertaking any banking, financial and
investment or trust business.
2.6 Values of the Bank
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Chart 1: Values of the Bank
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2.7. Corporate Information of TBL
Registered Name of the Company
“Trust Bank limited”
Legal Form
The company was incorporated on 17 June 1999 under the Companies Act 1994 as a
public company limited by shares for carrying out all kinds of banking activities.
Registration Number & Date C-37960 (2260)/99, 17 June 1999
Sponsor Shareholders Army Welfare Trust
Certificate of Incorporation Received on 17 June 1999
Certificate of Commencement of Business Received on 17 June 1999
Banking Licenses Received on 15 July 1999
First Branch Licenses Received on 9 August 1999
Formal Inauguration on 29 November 1999
Corporate Web Site www.trustbank.com.bd
Email [email protected]
Initial Public Offering
Publication of Prospectus 17 May 2007
Subscription Opening 15 July 2007
Subscription Closing 19 July 2007
Listed With Dhaka Stock Exchange (DSE) on 25 September 2007
Listed with Chittagong Stock Exchange (CSE) on 24 September 2007
Commencement of Trading of Shares at DSE 01 October 2007
Commencement of Trading at CSE 01 October 2007
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Chart 2: Corporate Information of TBLCompany Secretary
Mr. Farhad Uddin
Auditors
Howlader Yunus & Co., Chartered Accountants
67 Dilkusha C/A, Dhaka-1000
Tax Consultant
M/S ADN Associates
Kaizuddin Tower (8th fl oor), 47 Bijoy Nagar, Dhaka-1000
Registered Office & Head Office
Peoples Insurance Bhaban, 36 Dilkusha C/A, Dhaka-1000
Tel: 9570261, 9570263, 9572012-3, Fax: 880-2-9572315
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2.8 Organizational Hierarchy of the Trust Bank Ltd.
The Organizational hierarchy of the Trust Bank Ltd. can be shown by the following diagram:
Chart 3: Organizational hierarchy
Board of directors
Managing Director (MD)
Senior Vice President (SVP)
Vice President (VP)
Senior Assistant Vice President (SAVP)
Assistant Vice President
Deputy Managing Director (DMD)
Senior Executive Officer
Junior Officer (JO)
Senior Officer (SO)
Executive Officer (EO)
Officer
Principal Officer (PO)
Executive Vice President (EVP)
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2.9 Different Wings of TBL: There are several types of department in TBL. These are
mentioned below:
Chart 4: Different Wings of TBL
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2.9.1 Retail Banking:
Accounts opening
Cash Department
Credit Department
Remittance Department
Foreign Exchange Department
Accounts opening:
The name of the department informs that different types of account are opening here. All types of
formalities related to account opening are done in this department. The activities and services of
account opening are mentioned in ‘product and services’ portion of the report.
Cash Department:
All sorts of transaction considering the cash are taken into the care in the cash department. Cash
is deposit in the name of concern bank and disbursed to the client by his/her department.
Credit Department:
“Credit” it is a very similar word for the bank. It contents a huge meaning. A bank’s main earning
source is credit. If bank’s credit management is not good then the bank will never ever achieve its
proper goals. Question may arise what are the proper goals for the bank? The proper goals for the
banks are profit maximization and shareholder’s wealth maximization. The fundamental nature of
credit is that an element of trust exists between buyer and seller whether of good or money. The
main use of bank fund is to collect money from surplus unit and lend it to deficit economic unit.
Remittance Department:
Remittance is another significant part of the general banking. The bank provides
services and various types of bills through the remittance within the country.
Obviously, the bank charges commission on the basics of bills account. Types of
remittance are as follow:
Pay Order:
A Pay-Order is issued only with in the members of Bangladesh Bank clearing house.
It can be issued in favor of a customer holding account by debiting his/her account
and crediting bills payable account. In case of non-customer, cash equivalent of
payment plus pay order charges is received in cash and held in daily expanses
account until the payment is made through clearing.
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Pay Slip:
Pay Slip is issued when bank created expanses for his own purpose.
Demand Draft (DD)
Demand Draft is as same as Pay Order, but it can be drawn on other branches of The
Trust Bank and Bangladesh Bank. A DD is drawn on the bank’s other branches when
payment has to b made outside of Dhaka. The bank has to have a branch over there
and prayer should have an account with the bank
Telegraph Transfer (TT):
TT is one of the quickest methods for remittance. All incoming telexes are kept in the
telex room and test agreed. One copy of telex is kept in the file and other is worked
on. Payments of incoming TT’s are made either issuing DD or Po depending upon
the requirement of the customer.
Foreign Exchange Department:
Foreign exchange department mainly operate foreign trade operation of the bank,
mainly in respect of export, import and foreign remittance. The bank maintains
excellent relationship with the leading international banks, for handling all foreign
correspondent and maintaining all foreign business there is an International Division,
which is called ID.
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2.9.2 Islamic Banking
Islam is a complete code of life. The prime objective of Islamic life style is to conquer success in
life here and hereafter. Trust Islamic Banking is solely committed to conduct and manage the
banking system abiding the Islamic law. Islam has given right to attain and own assets. Trade is
mainly of two kinds- buy/sell and investment and both segment avoid the Interest completely.
According to Islamic Shariah, buy/sell is process of purchasing of goods in a certain price with
the buyer and seller’s consent. Shariah has the explanations for different kinds of purchasing
contracts. On the other hand, investment is a business based on profit-loss sharing. There are
Shariah compliant explanations for it and Islamic banking is managed complying all the Shariah
commandments.
Success of Islamic Banking mostly depends on the commitment and knowledge of all the
participators (bank and customer). Trust Bank is committed to offer the finest and modernized
Islamic Banking system by means of its administrative professionalism and dedication.
2.9.3 Merchant Banking
The capital market is an intermediation through which the surplus money of the society can be
mobilized and then channeled into productive investments with the eventual aim of fostering
development of the country's economy. Capital market is also beneficial for the entrepreneurial
classes not merely because it provides access to surplus savings of investors, including many
small ones, but also because they do not incur fixed repayment obligations, as is the case of bank
financing. Besides an orderly and transparent capital market enables the small savers to
participate in the fruits of economics development. Capital market is yet to play its potential role
in Bangladesh.
Difference between Merchant Banking and Investment Banking
In olden times, merchant banks were also known as "accepting and issuing houses" in the U.K.
and "investment banks" (IB) in the USA. Except of this distinction in nomenclature, there is no
essential functional difference between them.
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2.9.4 Automated Banking
All the branches of the TBL are fully computerized. New software is now in use to provide faster,
accurate and efficient service to the clients. The bank is continuously striving for better services
through extensive automation of its branches. Trust bank has launched “One Branch Banking”
through on-line connectivity. The bank has set up a full-fledged IT division to keep abreast of the
latest development of IT for better service in the days to come.
Internet Banking
It is time of Internet and one can access his/her account from any where in the world by using
his/her unique user id and password. Here a User can see his/her account balance as well as take
print out of transactions with specific date range and can preserve it as a document.
Phone Banking
Trust Bank has easy way to serve customers banking needs using any phone, whether they are at
home, office, or on the road. Trust Bank’s phone banking is absolutely free. This service
performs balance query and mini statement of a customer via phone. This service will soon
include utility bill and fund transfer facilities. Phone Banking is available 24 hours a day, seven
days a weak.
SMS Banking
Trust Bank offers yet another great, timesaving banking service: SMS banking. This
automated SMS banking can be reached 24 hours a day, 7 days a weak. This service
performs balance query and mini statement through SMS via a fixed mobile number
given by you. Mini statement contains last five debit and credit transactions including
balances. This service will soon include utility bill and fund transfer facilities.
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2.10 Product and Services:
Several types of product and services are provided by TBL. These are:
2.10.1 Depositary products: TBL is providing six types of depository product. these are
Chart 5: Different types of depository products
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Savings Deposit Account
A Saving Bank account (SB account) is meant to promote the habit of saving among the people.
It also facilitates safekeeping of money. In this scheme fund is allowed to be withdrawn
whenever required, without any condition. Hence a savings account is a safe, convenient and
affordable way to save your money. Bank also pays a minimal interest for keeping money with
them.
Choose the savings account to suit you from our wide range of options. Enjoy convenient, instant
access to your savings account at your branch, over the phone or via the internet. These accounts
have attractive interest rates.
Types of Savings Deposit Account:
Individual
Joint
Club
Society ,Others
Current Deposit Account
Current Deposit (CD) Account is the net flow of current transactions with no restriction,
including services and interest payments. It is an easy-to-use, convenient current account
with instant access and withdrawals to your money anywhere in Bangladesh. Customer
can get credit facilities against CD account.
Fixed Deposit Account
A fixed deposit is meant for those investors who want to deposit a lump sum of money for a fixed
period; say for a minimum period of 30 days to one year and above, thereby earning a higher rate
of interest in return. Investor gets a lump sum (principal + interest) at the maturity of the deposit.
Bank fixed deposits are one of the most common savings scheme open to an average investor.
Short term deposit Account
Short Term Deposit Account is the net flow of current transactions including services and
interest payments. It is an easy-to-use, convenient current account with instant access and
withdrawals to your money anywhere in Bangladesh.
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Trust Smart Savers Scheme (TSS)
The name of the scheme is 'Trust Smart Savers Scheme (TSS)' and an Account holder
subscribing to this scheme will be called TSS Account holder.
Amount 3 years 5 years 7 years 10 years
500 20,316 36,717 55,851 90,691
1,000 40,632 73,434 111,702 181,383
2,000 81,264 146868 223,403 362,766
3,000 121,897 220,303 335,105 544,149
4,000 162,529 293,737 446,806 725,532
5,000 203,161 367,171 558,508 906,914
Table 1: Installment of TSS
Source: Web site of TBL
Lakhopati Savings Scheme (LSS)
At the maturity the depositor will get TK. 1.00 Lac by the depositing monthly
installment as per following arrangement:
Terms & Conditions:
1. Monthly installment size, tenor and terminal benefit of the scheme will be as follows:
Monthly payable
amount
(Installment in BDT)
Duration/Period of
the
Scheme
Amount payable
at
maturity (BDT)
Rate of
interest
552 10 Years 1,00,000.00 7.78%
13,65 5 Years 1,00,000.00 7.78%
2,462 3 Years 1,00,000.00 7.78%
Table 2: Installment of LSS
Source: Web sites of TBL
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2.10.2 Retail products:
Chart 6: Different types of Loan
Car Loan:
Now a car is no longer luxury but necessity. Moreover, a car is more than a symbol of prestige.
TBL offers to materialize customer’s dream of owning a car through TBL car loan facility.
Consumer Durable Scheme Loan:
Need are constantly changing phenomena in human life to improve the standard of living.
Sometimes saving is not good enough to meet the requirements. At, the Trust Bank, it takes care
customers financing needs and customer can trust on it as their financial partner indeed.
Doctor’s Loan:
Medical is a noble profession which is evolving fast. In a country like ours it is important to be a
part of those changes as we cannot afford to be lag behind. Keeping that in mind and with a
vision to support and promote health services, TBL is at your side with our Doctors' Loan.
Car Loan
Consumer Durable
Scheme Loan
Doctor’s LoanAdvanced
Against Salary Loan
Apon Nibash Loan
Any purpose
Loan
Travel Loan
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Advanced Against Salary Loan:
Life is continuously facing unforeseen events. For which sudden financial support is essential.
We are at your side to meet up your urgency at any moment through our "Advance against
salary" scheme.
Travel Loan:
When you plan to travel local or global exotic location, financing is the key issue. Don't be
worried; TBL Travel loan is ready to provide instant financial support.
Any purpose Loan:
We have so many needs, some are attainable with our means & standing and some are
unattainable. The unattainable needs can be met by TBL. "Any Purpose Loan'
Apon Nibash Loan:
TBL offers Apon Nibash (House Finance) to client with easy repayment schedule matching their
affordability. You have unlimited options of choosing your home with limited means and
standing. Here, TBL Apon Nibash helps you to match your long cherished dream.
2.10.3 Card Facilities: There are two types of card facilities; these are debit card& credit card.
Debit Card:
Look into your pocket. Is there a Trust Debit Card? If yes then you are free to move anywhere
round the clock all over Bangladesh without carrying cash. Even the card can be used without a
secret code (PIN) in departmental stores, shopping centers or restaurants, petrol pump or even for
paying phone bills, just like a credit card. Additionally client can enjoy overdraft facility prior to
subsequent approval. To make the life hassle-free client can take Trust Debit Card without giving
a second thought.
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Credit Card:
Visa Gold Local
Unsecured credit line
Operable only within Bangladesh
Credit line for up to BDT 100,000. Limit may be extended as per Management's
discretion
VISA Classic Local
Credit line for up to BDT 50,000
Operable only within Bangladesh
Unsecured credit line
VISA Classic InternationalVISA Gold LocalVISA Dual Card
2.10.4 SME financing:
Despite multidimensional constraints, SME is universally recognized as the thrust sector
and driving force of the economy which has injected the appetite for bringing consistency
in the banks credit portfolio by striking balance between SME and corporate lending. The
issue of fostering SME growth in Bangladesh can in no way be ignored as these
industries have huge prospects for creating large scale employment opportunities and
potentialities of huge income generation especially in semi-urban and rural areas. As
such, the Bank is moving forward to SME customer segment, considering the business
potentials and return on investment. The business expansion and monitoring is carried out
29
throughout its 42 country wide branches and 4 SME/Agri branches service centers
dedicated to full-fl edged SME business. The Bank has launched different products, and
is marketing these products matching with the customer needs. Its especial emphasis is
on:
Loan for shopkeepers,
Loan for light engineering,
Loan for power loom and handloom industries,
Agri-business loan
Loan for Women Entrepreneurship
Peak seasons loan
Bio –gas and alternative energy
30
2.11 Others:
Web Page:
The introduction of Internet has change the traditional concept of world trade and commerce. As
the time is progressing its necessity is being felt more in the prevailing competitive since no
organization can afford to remain in isolation with the rest of the world for its survival. In order to
provide up-to-date information on the bank at fingertips to the trade and business communities of
the world, their own IT team has developed a web page for the bank. It can be accessed to under
the domain:
http://www.trustbank.com.bd/
SWIFT:
The bank is a member of SWIFT Alliance Access, a sophisticated; fraud proof secured financial
messaging system provided by the Society for Worldwide Inter-bank Financial
Telecommunication (SWIFT), Belgium. With the installation of the SWIFT system the bank
would ensure and reliable transmission of L/C, funds transfers, outgoing and incoming massages
and other financial services.
Branch Expansion:
The TBL has taken up a program to expand its branches. The bank has already 45 branches and 5
SME center in many different places in Bangladesh; most of them are inside the different
cantonments. The management is filling that they need more branches all over the Bangladesh.
As per Bangladesh Bank circular that if any bank opens a branch in Dhaka then they have to be
open a branch in out side Dhaka.
31
2.12. Corporate Social ResponsibilityThe TBL believe that their revenue that leads to earning profit and increasing wealth of
the stakeholders comes from our society. They acknowledge their responsibility to all of
stakeholders including our society. Their commitment to socially responsible business is
reflected in their business policy, pricing products, rewarding employees, discharging
duties to government, and direct participation in CSR activities. As part of CSR through
direct participation program, we have established a special reserve fund named Trust
Bank Limited Special Reserve Fund, with 5 percent contribution from Bank’s total
income every year, which is run by a Board of Trustees that includes a Chairman and six
members from Board of Directors and management. Moreover, they also transferred
Taka 64.20 million from the profit of 2009 to the fund for discharging CSR activities in
2010.
Notable Donation
Some of their notable contributions for social causes include: (i) Tk.25 million for
construction of School Building of Sena Sahayak School, (ii)Tk.21 million to Trust
Technical Training Institute, (iii) Tk.2.5 million to Prime Minister’s Relief fund for
Cyclone “Aila” stricken people, and (iv) Tk.5 million to Bangladesh Olympic
Association for organizing the South Asian Games. Apart from above, as part of CSR
activity, they have been contributing Tk.1 million lac to promote Taekwondo game every
year since 2008.
Promoting Sports and Games
Bank has been contributing Tk.1 million every year to promote Taekwondo game since
2008. Moreover, The Bank spontaneously donated Tk.5 million to Bangladesh Olympic
Association for organizing the South Asian Games. The Bank also awarded two sports
men for wining gold medal in 5th Korea Open Taekwondo Championship. Thus, the
Bank is committed itself to promote sports and game of the country.
Medical Treatment
The Bank extended its helping hand to many unwell people and assisted in bearing their
medical expenses. The donation in this regard stood Tk.13.50 lac in 2009.
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2.13 Financial Performance of TBL
TBL a blend of expertise and technological excellence is in place to meet varied needs of modern
customers. The bank aims at mobilizing untapped money of the country and prudent deployment
for productive activities in the form of lending at a competitive interest rates/loan pricing.
Towards attainment of its goals and objectives, the bank pursues diversified credit policies and
strategic planning in credit management. To name a few, the bank has extended micro credit,
consumers durable scheme loans, house building loans etc. to cater to the needs of the
individuals, which in turn has helped thousands of families. The bank also extends loan in the
form of trade finance, industrial finance, and project finance, export & import finance etc. The
bank’s credit polices aimed at balanced growth and harmonious development of all the sectors of
the country’s economy with top most priority to ensure quality of lending by averting growth of
non-performing assets.
2.13.1Capital:
At the end of 2009, total capital stood at Tk.4215.98 million against Tk.3,504.44 in 2008
registering a growth of 20.30 percent over preceding year. And capital adequacy ratios
were 12.66% and 12.81% of total risk weighted assets in 2009 and 2008 respectively
against the regulatory requirement of 10%.
Year 2005 2006 2007 2008 2009
Total Assets 14,782.15 21,060.77 30,382.22 38475.64 54,206.65
Table 3: Total AssetsSource: Annual Report of TBL, 2009
Chart 7: Total Capital and Capital Adequacy Ratio
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2.13.2 Share Holders Equity:
Total shareholders’ equity increased by 20.36% and stood at Tk.3,754.87 million at the
end of 2009 as against Tk.3,119.65 million in 2008. The increase was mainly attributed to
the issue of bonus shares of Tk.308 million, increase of Tk.609.80 million in statutory
reserve and other reserve also increased by Tk.48.28 million in 2009. However, share
premium and retained earnings dropped by Tk.308 million and Tk.22.85 million
respectively due to issuing bonus shares out of premium in the year 2009.
Table 4: Share Holders Equity Chart8: Shareholders Equity Source: Annual Report of TBL, 2009
2.13.3 Reserve:
In accordance with the provision of the Bank Companies Act, 1991, minimum 20% of operating profit before tax is required to be transferred to Statutory Reserve. In 2009, 53% of profit before tax amounting to Tk.609.80 million was transferred to Statutory Reserve and thus balance of statutory reserve stood at Tk.1, 138.33 million at the end of 2009. The larger amount was transferred in order to meet regulatory capital requirement within the deadline set by Bangladesh Bank.
Satutory Reserve
0
100
200
300
400
500
600
700
2005 2006 2007 2008 2009
SatutoryReserve
Table 5: Reserve Chart 9: Growth of Reserve Source: Annual Report of TBL, 2009
34
Year Share Holders Equity
2005 991.97
2006 1,155.00
2007 2,154.29
2008 3,119.65
2009 3,754.87
Year Statutory Reserve
2005 112
2006 214.67
2007 330.632008 528.53
2009 609.80
2.13.4 Deposit and Deposits Portfolio
In spite of sharp decline in market interest rates resulting from fixation of ceiling of
interest rate of bank deposits by the Association of Bankers Bangladesh (ABB), in the
year 2009, the deposits of the Bank shot up by 47% to Tk.48,464.64 million from
Tk.32,919.76 million as recorded in the year 2008. The combination of competitive
interest rates, depositors’ trust in the Bank and mobilization efforts of the Bank
Management resulted in this rapid growth of deposits. Mix of deposits showed that fixed
deposits and short-term deposits contributed 57% and 16% respectively, i.e. 73% of total
deposits of 2009 resulted in higher cost of fund. The share of cost free or low cost
deposits decreased slightly by 2% , i.e. from 29% to 27% of the total deposits at the end
of year 2009. We have plan to increase low cost deposits, especially scheme deposits
because the effective cost of scheme deposits is lower than that of fixed deposits. The
Bank’s deposits include the deposits from both conventional and Islamic banking deposit
vehicles.
Table 6: Total Deposits Chart 10: Deposit GrowthSource: Annual Report of TBL, 2009
35
Year Deposits
2005 12,704.90
2006 18,985.95
2007 27,101.59
2008 32,919.76
2009 48,464.64
Table 7: Deposit PortfolioSource: Annual Report of TBL, 2009
Chart 11: Deposit Mix 2009Source: Annual Report of TBL, 2009
36
2.13.5 Loans & Advances
Total loans & advances of the Bank as on 31 December 2009 was Tk.32, 663.11 million
as against Tk.27, 528.08 million in the year 2008, showing an increase by 18.65% over
the preceding year. The Loans and advances cover up the areas of corporate (based on
both conventional and Islamic Shariah mode), SME, retail and credit Card. The credit
portfolio of the Bank also included mix of scheme loans, namely- Renovation and
Reconstruction of Dwelling House Loan (RRDH), Consumers Durable Scheme Loan
(CDS), Marriage Loan, Car Loan, HBF Loan and Commercial Loan. Corporate lending is
still the core business of the Bank and continues to remain the major segment of the
business. While providing loans to our customers the policy of Bangladesh Bank is
strictly followed. The portfolio has been further diversified to avoid risk of single
industry concentration and remains in line with the Bank’s credit norms relating to risk
quality. The Customer Relationship has been strengthened and frequent visits to the
clients have been ensured for further cementing existing relationship.
Table 8: Total Assets Chart 12: Growth of Loans and Advances
Source: Annual Report of TBL, 2009
37
Year Loans & Advances
(Million Taka)
2005 9,738.32
2006 13,188.09
2007 18,682.16
2008 27,528.08
2009 32,663.11
2.13.6 Profit and operating results
The Bank earned operating profit of Tk.1,358.35 million during 2009 as compared to
1,252.44 million in the immediate preceding year, registering a growth of 8.46%. After
keeping Tk.207.78 million as provision against classified and unclassified loans &
advances, diminution in value of investment, off-balance sheet exposure and other assets,
pre-tax profit stood at Tk.1, 150.57 million. After keeping Tk.539.67 million as provision
for income tax, net profit stood at Tk.610.90 million as against Tk.463.05 million in
2008, posting a growth of 32%.
Year Operating profit Profit Before Tax Net profit (Profit after tax)
2005 264.27 226.29 114
2006 546.89 507.70 263.15
2007 853.71 579.77 239.02
2008 1252.44 989.47 463.05
2009 1,358.35 1,150.57 610.91
Table 9: Operating Profit, Profit before Tax and, Profit after Tax
Source: Annual Report of TBL, 2009
Chart 13: Growth of ProfitSource: Annual Report of TBL, 2009
38
2.14 At a glance of TBL financial Performance of last 5 years:
Table 10: At a glance of TBL financial Performance of last 5 yearsSource: Annual Report of TBL, 2009
39
40
3.1 Foreign Exchange- its meaning and definition:
Foreign exchange refers to the process or mechanism by which the currency of one country is
converted into the currency of another country. Foreign exchange is the means and methods by
which rights to wealth in a country’s currency are converted into rights to wealth in another
country’s currency. In banks when we talk of foreign exchange, we refer to the general
mechanism by which a bank converts currency of one country into that of another. Foreign trade
gives rise to foreign exchange. Modern banks facilitate trade and commerce by rendering
valuable services to the business community. Apart from providing appropriate mechanism for
making payments arising out of trade transactions, the banks gear the machinery of commerce,
specially in case of international commerce, by acting as a useful link between the buyer and the
seller, who are often too far away from and too unfamiliar with each other. According to foreign
exchange regulation act 1947, “Any thing that conveys the right to wealth in another country is
foreign exchange”. Foreign exchange department plays significant roles through providing
different services for the customers. Opening or issuing letters of credit is one or the important
services provided by the banks.
3.2 Different Types of foreign exchange operation:
There are three kind of foreign exchange transaction:
Import
Export
Foreign Remittance. The following chart is showing different types of activities
of foreign exchange operation:
Chart 14: Different Wings of Foreign Exchange Operation
Foreign Exchange Operation
NRB Services (New Concept)
Import Export Foreign Remittance
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3.3 Import:
Import trade in Bangladesh is controlled under the Import and Export control Act 1950.
Authorized Dealer Banks will import the goods into Bangladesh following the import policy,
public notice, F.E. circular and other instructions from competent authorities from time to time.
The whole import functions of the branch as far I have understood are discussed bellow:
3.3.1 Procedure of import
Import of merchandise essentially involves two things:
Bringing of goods physically into the country
Remittance of foreign exchange towards the cost of the merchandise
The Ministry of Commerce through the Chief Controller of Import regulates physical import and
Exports being office at the important trade center while Bangladesh Bank regulates the payment
for the imports through its various departments. The following are the steps involved in import of
merchandise into Bangladesh.
Registration of importer: In terms of the Importers, Exporters and Indenters (Registration)
Order 1981, no person can import goods into Bangladesh unless he is registered with the Chief
Controller of Import and Export or exempted from the provisions of the said order. So the
following documents are required to be submitted to the licensing authority for registration as
importers:
Questionnaire form duly filled in and signed
Income tax registration certificate
Trade License from the Municipal or Local Authority
Bank certificate
Nationality certificate
Partnership Deed where applicable
Certificate of Registration with the Registrar of Joint Stock Companies,
Certificate from the Chamber of Commerce/Registered Trade Association
Ownership documents or rent receipts of the place of business
Any other documents required under the relevant import policy.
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3.3.2. Licensing for Imports:
Most imports into Bangladesh require a license from the Licensing Authority. In recent years, the
task of licensing has been delegated to the commercial banks. It is done by LCA (Letter of Credit
Authorization Form). Blank LCA forms can be obtained by the importer from their banker. The
following documents are required to be submitted by the import to his banker.
o LCA Form property filled-in and signed.
o LC Application
o Purchase Contract in the shape of an Indent or Proforma Invoice.
o Insurance Cover Note
o Membership Certificate from a chamber of Commerce and Industry or Registered Trade
Association
o Import Registration Certificate (IRC).
3.3.3. An Opening of Letter of Credit:
o Importer applies to the bank to open L/C in favor of foreign supplier. The bank has its
printed application form and the importer should carefully fill in this form. On receiving
this application, the bank scrutinizes it to ensure that:
o Whether the customer fulfils all the required conditions/criteria to be eligible as an
importer as per provisions of the Import Policy Order and Guidelines for Foreign
exchange Transactions in force and the supporting documents/papers required are
submitted.
o Whether the items for import of which the documentary credit need to be opened is
permissible i.e. not included in the negative/restrictive list as per Import Policy order in
force.
o Whether we are holding satisfactory credit report on the beneficiary to satisfy the relevant
provisions of the guidelines for Foreign Exchange transactions
o On receipt of the L/C application over the counter or through dispatch/mail section, the
receiving date and time to be recorded on the L/C application.
o Signature of the customer on the L/C application to be verified by authorized/ designated
officer.
L/C application with all supporting papers to be checked to ensure that the required papers are as
per requirement of Guidelines for Foreign Exchange Transactions and are consistent to each other
43
L/C application must show the following clearly:
o Full name & address of the beneficiary
o The amount of the credit
o The Credit whether to be irrevocable or confirmed irrevocable.
o Whether the credit is available by payment, acceptance or negotiation
o On which party the drafts are to be drawn and the tenure of such drafts
o A brief description of the goods, including details of quantity and unit price
o Whether freight is to be prepaid or not
o The port of shipment and the destination
o Whether the transfer of the goods from one vessel to another, or from one mode of
transport to another, route, is prohibited.
o The last date for shipment
o The date and place of expiry of the credit
o Negotiation period
o Details of the documents required and how those are to be dispatched to the issuing bank
i.e. by ordinary mail/courier.
- Whether the credit is to be a transferable one.
- How the credit is to be advised i.e. by mail/telex.
o Letter of Credit authorization form duly filled in and signed.
o Indent or Proforma Invoice issued by Seller or his agent (Indenter) duly counter signed
by the customer.
o Insurance certificate or policy (Marine/Air/Mail/Truck) covering the goods at 10% above
L/C value for the whole journey/shipment together with unconditional premium paid
receipt.
o Prior permission/registered LCA form, No objection/any other certificates from the
concerned authority as required as per provision of the Import Policy Order.
o I.M.P. form duly filled in and signed.
o In case the L/C application is not complete or in consistence or the required papers are
not submitted, the customer should be promptly contacted for rectification of the defects.
44
Before Dispatching/ Transmitting the L/C:
Check whether the opening of the Letter of Credit is approved by the competent
authority.
Review all documents including the Letter of Credit and vouchers.
If found in order, sign the letter of credit including the accounting vouchers.
The original L/C must be signed jointly by two authorized signatories.
3.3.4. Verification and Lodgment of Documents by the L/C Opening Bank:
On receipt of the shipping documents from the negotiating bank, the L/C Opening Bank should
carefully examine these to ensure that they confirm to the term of the credit:
The documents have been negotiated within the stipulated date.
The amount drawn does not exceed the amount authorized in to credit.
The merchandise is properly invoiced.
The bill of Lading is clean, shipped on board, showing freight prepared and endorsed
to the order of the issuing bank shows the port of shipment, the port of destination,
the name of the consignee and the date of shipment are in keeping with the term of
the credit.
It is properly signed by the shipping company
The Certificate of Origin
Other documents like weight list, packing list, pre-shipment Inspection Certificate
etc.
After the lodgment, the bank asks the importer to retire the bill. After retirement the amount of
remittance towards cost of the merchandise is reported to Bangladesh Bank on Form “IMP”.
45
3.3.5. Shipping Guarantee:
Shipping guarantee is a Letter of Guarantee/Indemnity issued jointly by importer (consignee)
together with a bank (L/C opening Bank) in favor of a commercial carrier or their agent whereby
they are authorized to release imported merchandise (title being in favor of the co-issuer Bank) to
a consignee in the absence of original shipping bill i.e. bill of Lading/airway bill while the co-
issuer furnish an assurance/undertaking to submit the original Bill of Lading/airway Bill to the
carrier as soon as the same is in their possession. However against the issuance of a letter of
indemnity, the bank should obtain a counter indemnity signed by the importer in favor of the
issuing bank whereby they assume full responsibility for any obligation the bank assume in
issuing the shipping guarantee and also undertake acceptance/payment of documents/draft under
the related Letter of Credit irrespective of whether those are discrepant or not.
Before Issuing the Shipping Guarantee:
Head Office approval is essential in cash where the customer has not adjusted the
related import liabilities or do not have approved LIM/LTR facility limit.
The Branch shall obtain counter indemnity from the customer in favor of the Bank.
The customer shall submit an unconditional undertaking to accept the related
shipping documents even with any discrepancies.
The Shipping Guarantee/Letter of indemnity must be signed jointly by two
authorized signatories.
3.3.6. Important points to prepare an L/C:
To prepare an L/C the branch takes care on the following points:
L/C number: The branch will put a number for each L/C., which is the serial number of the L/C
for a particular year. First L/C of TBL SKB branch in 2009 may be numbered like TBL / SKB
/1742010401.
Place and date of issue: L/C must indicate the place and date of issue.
46
Date and place of expiry: L/C must have an expiry date. This is the last date of presentation of
document under the L/C. Place of expiry of the L/C also to be mentioned in the L/C. Normally it
should be the counter of the Negotiating Bank.
Shipment date: There should be a last shipment date after which shipment is not allowed. Bank
may also fix-up a first shipment date before which shipment will not be allowed.
Presentation period: Issuing bank will allow a period within which exporter must present the
export documents to the negotiating bank or to any other nominated bank. This may be 15 days
from the date of shipment. Maximum may be allowed one month, but within the expiry date of
the credit.
Applicant: Name of the applicant with business address to be put in the L/C.
Beneficiary: Name of the beneficiary with address also to the indicated in the L/C.
Advising Bank: Name of the advising bank with address to be mentioned in the L/C.
Amount: Every L/C must show the amount of the L/C. The word “About” may be used
with amount, which means 10% more or less of the said amount.
Part-shipment and Trans shipment: Issuing bank also clearly indicate in the L/C
whether part-shipment and trans shipment are allowed or not.
Availability: L/C must indicate whether the credit is available by payment, by
negotiation or by acceptance.
Port of shipment and port of destination: L/C will also indicate from where shipment
to be made and where goods to be delivered.
Tenure of the draft: Whether the draft to be drawn at sight or usance, also to be cleared
in the L/C.
47
Documents required: Bank will give the list of required documents and data content
therein. Each and every term must be supported by the documents, because any term
without asking document is valueless.
Payment: When, where and by whom payment is to be made, also to be indicated in the
L/C.
Bill of lading: B/L must be issued or endorsed to the order of the Issuing Bank. It should
be ‘clean’ and “freight prepaid” if L/C is on CFR basis short form and charter party B/L
to be avoided. All these terms must be incorporated in the B/L clause of the L/C.
Bill of exchange: bill of exchange to be drawn on the Issuing Bank.
Pre-shipment Inspection: Pre-shipment inspection certificate is compulsory for both
government and private import except in few cases.
Data content: Invoice and other documents if required should indicate the H.S. code
number. LCAF No with description of the item and country of origin.
Special conditions: Special conditions, such as in case of food, machineries, vehicles
and any other items should be incorporated in the L/C where required.
Authenticity of the credit: L/C to be authenticated by putting a test number or signing
by two authorized officers.
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3.3.7 L/C advising:
The L/C duly signed by two authorized officers, whose specimen signatures are already recorded
with the correspondent banks, must be addressed to the beneficiary. Bank generally does not
enter into direct contact with the beneficiary. Instead they utilize the services of its own branch
office (if any) or correspondent bank at seller’s country for the purpose of advising it to the seller
(beneficiary). Thus the correspondent bank becomes the “Advising Bank”.
The process of advising a credit consists of forwarding the original credit to the beneficiary to
whom it is addressed. Before forwarding/advising the credit to the seller under appropriate
forwarding coverage, the advising bank has to verify the signatures of the officers of the opening
bank and ensure that the terms and conditions of the credit are not in violation of regulations
relating to export. While advising, the advising bank does not undertake any liability.
Advising a letter of credit
Chart 15: Advising of L/C
3.3.8. Lodgment:
If import documents are found in order, they are to be made entry in the bill register and
necessary vouchers to be passed, putting Bill number on the documents. This process is called
Lodgment of the bill. The word “Lodgment’ means temporary stay. Since the documents stays at
this stage for a temporary period i.e. up to retirement of the documents, the process is called
lodgment. Bank must lodge the documents immediately after receipt of the same, not exceeding 7
banking days, following the day of receipt of the documents, (Article 14, UCPDC-500).
IMPORTER (L/C APPLICANT)
1) L/C OPENING BANK
L/C BENEFICIARY
L/C ADVICING
BANK/CONFIRMING
APPLICATIISSUE L/C ADVICE
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3.3.9. Retirement:
When the importer release the import documents from the bank by acceptance/cash payment or
under post import bank finance, it is known as retirement of the import document.
3.3.10. Post import finance:
When the importer does not come forward to retire the import documents, or requests the bank
for finance against the imported consignment, then arises the necessity of post import investment.
If the consignment is not cleared within 45 days, from the date of arrival, custom authority may
auction the consignment under section 167 (8) and amended section 82 of the Custom Act 1969.
Under such a situation bank becomes compelled for forced clearance of the consignments under
Murabaha post import investment. If the documents are discrepant, party’s acceptance is required
for clearance of the goods.
3.4 Export:
Export means outflow of goods and services produced in one country, which purchase by
Government, Firms and individuals of other countries. Development of a country depends on its
participation in the international trade by increasing production and export of commodities and
service sector. By way of this a country can improve Employment Generation-Income level-
Savings-Growth-Economic Development.
The imports and exports trade in Bangladesh is regulated by the Import & Exports Control Act
1950. There are number of formalities an exporter has to fulfill before and after execution of
export, some of are as under:
3.4.1 Benefits of Export:
Development of a country depends on its participation in the international trade by increasing
production and export of commodities and service sector. By way of this a country can improve
Employment Generation-Income level-Savings-Growth-Economic Development.
50
3.4.2 Procedure/Formalities for Export:
The imports and exports trade is regulated by the Import & Exports Control Act 1950.
There are number of formalities an exporter has to fulfill before and after execution of export, some of are as under:
The intending exporter has to register with CCI&E and obtained Export Registration certificate [ERC]. The ERC number is to be used in all places relating to exports.
3.4.3. Securing Export Order:
To secure export order the exporters may contact local chamber commerce of potential buyers,
the export promotion bureau, Bangladesh mission abroad and by direct contact with foreign buyer
through correspondences.
3.4.4. Receiving Letter of Credit:
After making contact with foreign buyers and reaching on agreed price and terms, conditions the
exporters receive Letter of Credit.
3.4.5. Procurement and Shipment of Goods:
After receipt of LC the exporter has to procure or manufacture the contracted goods and ship the
same.
3.4.6. Preparation and procurement of Export Documents:
After making shipment the exporter has to prepare documents i.e. Bill of Exchange, Commercial
Invoice, Beneficiary’s certificates and procure some documents i.e. Transport Documents,
Certificate of Origin, Insurance certificate, Inspection certificate and other documents as required
as per LC terms.
3.4.7. Submission of documents to the bank for Negotiation:
After preparation and collection of all documents as per LC terms the exporter has to submit the
documents to the bank for Negotiation/Payment/Purchase.
3.5 Role of Banks in the Export Sector of Bangladesh:
All the financial requirements of an exporter, from the time he enters into a sale contract and start
working on it and till he receives final payment from abroad, are met by commercial banks. In
that case banks play an important role in the export sector of Bangladesh and contribute by
financing in the export sector by following categories:
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Pre-Shipment Credit: Pre-shipment credit is given to the exporters, for the activities
prior to shipment of goods for export. Some example of Pre-shipment credit: Cash for
local procurement of raw materials and its related expenses, Procuring & Processing of
goods for export, Packing and transportation of goods for export, Payment of insurance
premium, Inspection fees, Freight charges etc.
Post-Shipment Finance: Usually the exporter can not afford to wait for a long time for
payment to local manufacturer/supplier and other financial obligations. Resulting which
the exporters need post-shipment credit facility. Considering the genuine need, and
worthiness of export and other security measures bank allow credit facility to exporters.
3.6 Different parties involved Foreign exchange transaction:
Normally the following parties are involved to a documentary credit:
Importer:
The buyer or the importer is he who initiates the credit. He applies to bank for issue foreign a
documentary credit. The obligations between the importer and the issuing bank are governed by
the application-cum-agreement submitted by the importer to the bank. He is bound to reimburse
the bank, which effects payment or incurred a deferred payment undertaking or has accepted or
negotiated under the credit as per terms, and to take up the documents.
Opening Bank:
The issuing or opening bank is the importer’s bank and it issues a letter of credit normally
pursuant to the terms of sales contract as set out in the application for the credit by the importer.
The issuing bank should nominate the bank, which is authorized to pay or to accept drafts or to
negotiate, unless the credit allows negotiation by any bank.
Exporter:
The seller or exporter is the beneficiary of the credit. The letter of credit is opened in his favor
and addressed to him. The beneficiary has the obligation to make export as per the contract and
produce the documents as required by the credit.
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The Advising Bank:
It is the bank in the exporter’s country (normally the exporter’s bank), which is usually the
foreign correspondent of importer’s bank through which the L/C is advised to the supplier. If the
intermediary bank simply advises/notifies the L/C to the exporter part, it is called “Advising
Bank”.
The Confirming Bank:
If the advising bank also adds its own undertaking to honor the credit while advising the same to
the beneficiary, he becomes the confirming bank. In addition, becomes liable to pay for
documents in conformity with the L/C’s terms and conditions. The liability of the confirming
bank is the primary liability and it is not contingent on the fulfillment of the obligation by the
issuing bank.
The Accepting Bank:
Accepting bank is the bank nominated in the letter of credit to accept bills drawn under the credit.
If the bank so nominated accepts the nomination, its responsibility to the beneficiary is not only
to accept the drafts drawn but also to make payment on their due dates.
The Paying Bank:
Paying bank is a bank in the beneficiary’s country nominated in the letter of credit to make
payment against documents to be tendered under the credit. Paying Bank must examine all
documents with reasonable care to ascertain that these are drawn in accordance with the terms
and conditions of the credit.
Reimbursing Bank:
The issuing bank may indicate in the credit the name of a bank. From whom the
paying/negotiating bank can obtain reimbursement. The documents are sent to the issuing bank.
The negotiating/paying bank simultaneously makes a claim with the reimbursing bank for the
payment effected. Normally the reimbursing bank would be the bank with which the issuing bank
maintains an account.
The Transferring Bank:
If the L/C is transferable, then the 1st beneficiary of the L/C may transfer the L/C to the 2nd
beneficiary, through a bank nominated by the Issuing Bank. This bank is called the Transferring
Bank.
53
3.7 Document required for Foreign Exchange Transactions:
Export-Import transactions ask for the following documents:
Transport Documents
Letter of Credit
Insurance Documents
Commercial Invoice
Other Documents
Transport Documents:
Transport documents comprises of Bill of Lading, Airway Bills, Truck Receipts, Railway
Receipts and Inland Waterway Receipts.
Checking points of this document are:
The Bill of Lading is issued/endorsed to the order of Negotiating Bank.
Bill of Lading is clean, showing “Shipped on Board” notation, marked ‘Freight
o Prepaid” [For CFR Basis] and ‘Freight Collect” [For FOB Basis], not short form,
Blank back or pre dated.
The Bill of Lading appears the merchandise covers in Commercial Invoice.
The port of Shipment, Destination, Shipment Date, Name of consignee,
o Shipping Mark [if any] appears on the Bill of Lading are as per LC term.
Bill of Lading is signed by the carrier company or his agent.
Letter of credit:
A letter of credit is a letter issued by a bank (know as the opening or the issuing bank) at the
instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking
that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain
conditions mentioned in the letter gave been complied with.
54
The following diagram brings out clearly the operation of letter of credit:
Chart 16: Flowchart of Letter of Credit Operation
Commercial Invoice:
It include all types of information such as description of goods, Port of destination, Port of
loading, LC no, Importer name, name of issuing Bank etc.
Checking points of this document are:
The invoice dated and signed by the beneficiary.
The invoice is issued to the party concerned as stated in the LC.
Description of goods is as stated in the LC.
Contract of Sale(1)
Ships Goods to(5)
M/s. Concord Int’l New York, USA
(Exporter/Beneficiary)
Forwards L/C to
(4)
Presents Docts. and
obtains payment from
M/s. Mark Style73 Motijheel C/A. Dhaka
(Applicant/Importer)
Applies For
opening of L/C
RecoversAmount From
(8)
SCB, USAAdvising/Negotiating
Bank
The Trust Bank Ltd.Dhaka
(Issuing Bank)
Obtains Reimbursement From Citibank NA, USA
(7)
Opens L/C and Sends it to(3)
55
Unit price mentioned as stated in the LC.
Proper Trade-Term is mentioned.
Insurance Documents:
Checking points of this document are (in case of CIF basis):
The Insurance Policy is valid.
The policy is issued in the name of LC Issuing bank a/c: importer.
The policy is signed by the authorized official of the Insurance Company.
The policy is in negotiable form, duly stamped and dated prior the BL date.
Description of goods, name of carrying vessel shown in Insurance Policy are same as
shown in BL.
The policy covers Transshipment [if allowed in LC] clause.
Policy covers 10% above the value of consignment.
Policy indicates where and in which currency the claim [if any] will be settled.
Other Documents:
As per UCP 600, other documents comprises of all other documents other than Transport Documents, Insurance Documents and Commercial Invoice.
Certificate of Origin: Checking points of this document are:
The Certificate is issued by the concerned authority of exporting country as stated in the LC [usually such Certificates are issued by the Chamber of Commerce & Industry of exporting country].
Beneficiary’s Certificate: Checking points of this document are:
The certificate issued by the beneficiary stating the particulars as stated in the LC.
Packing List: Checking points of this document are:
The Certificate is issued and prepared by the beneficiary as per instruction given in the LC.
Inspection Certificate: Checking points of this document are:
The Certificate is issued by the competent authority as approved for that country.
56
The Inspection Certificate can also be issued by the beneficiary/manufacturer if allowed in the LC.
The Certificate is signed-sealed certificate the contents as required and issued prior to shipment of the goods.
Bill of exchange: Checking points of this document are:
The bill of exchange is drawn by the beneficiary as mentioned in the LC duly signed and dated.
The amount is identical with the amount of Commercial Invoice. The amount mentioned in figure and words are consistent. The bill of exchange is in order and/or endorsed properly.
3.8 Foreign Remittance:
Outward remittance:
On March 24, 1994 Bangladesh Taka was declared convertible for current international
transaction. As a result remittances become more liberalized. Outward remittance include sale of
Foreign Currency by TT, MT, Draft, TC or in cash for private, official and commercial purpose.
Issuance of outward DD and TT:
ADs may also issue DD, TT on their foreign correspondent favoring Bangladesh nationals or
foreign nationals as per their entitlement. But foreign TT and DD are not issued in this branch.
Inward remittance:
The term inward remittance includes not only purchase of foreign currency by TT, MT, Draft etc.
but also purchase of bills, purchase of TC. Utmost care should be taken while purchasing notes,
TC, DD and similar instrument for protecting the bank from probable loss as well as safety of the
bank officials concerned. But this type of purchase is not done in this branch.
Collection of foreign currency instrument:
The Trust Bank Ltd. collects F.C. instruments on behalf of their customer. To collect proceed of
Foreign Instrument following procedures to be maintained:
Receive instrument with deposit slip
Affix crossing stamp of the bank
Entry in the register putting OFBC number
Affix endorsement “pay to the order of any bank or trust company, prior endorsement
guaranteed.”
Instrument to be sent to adjacent correspondents.
57
3.9 Different Methods of International Trade Payment:
Cash in Advance: Under this arrangement, buyer pays the value to exporter against the goods to
be shipped and services to be provided in some future date. After receipt of payment exporter
ship the goods and provides services to buyers. But the system is disadvantageous for buyer
because buyer blocking his fund in advances having no assurance of receipt of goods and service
in time as per contract. So such type of payment is considered as risky and expensive for buyers
but favorable for seller.
Open Account: Under this method, the sellers are in risky situation because he has to deliver the
goods and service to buyer before receiving payment. Buyer makes payment only after receipt of
goods and services as per contract terms. So before going such transaction sellers should check
the past record, worthiness and business history of the buyer and if it is found satisfactory only
seller can proceed further.
Collection against Payment [D/P]: Under this method, exporter ship the goods and draw bill of
exchange on the buyer and submit the documents to a bank with instruction to collect the
proceeds through its correspondent bank located in the buyers country. In this case documents
delivered only against payment.
Collection against Acceptance [D/A]: Under this method, exporter ship the goods and draw bill
of exchange on the buyer and submit the documents to a bank with instruction to collect the
proceeds through its correspondent bank located in the buyers country. In this case documents
delivered against acceptance of Drafts by the buyer.
Documentary Credit: Documentary credit is the classic method. This method reduced payment
related risks for both exporter and importer substantially. Because documentary credit is
conditional payment undertaking of issuing bank to the exporter against compliance of certain
terms and conditions and submission of required documents as per credit terms. So under this
payment method both exporter and importers feel safe to deal.
58
3.10 Examination and Negotiation of Export Documents:
There are many instances where exporters involve themselves in committing fraud so while
exporters tendered export documents for negotiation, special care should be taken in checking the
said documents to avoid fraud forgery and protect the interest of the bank. Following are some
important checking points:
1. Know your exporter: You should know your customer considering his relationship with the
bank, previous track record and worthiness.
2. Proper checking of Export LC: Export LC is authenticated, irrevocable, valid, Free
Negotiable in Bangladesh, Payment instruction is clear, issued under UCPDC.
3. Proper checking of Export Documents: Bill of exchange, Commercial invoice, Transport
documents and other documents are prepared and presented as per LC terms.
Shipment:
After the contract the exporter takes all necessary steps to ship the goods. He may procure or
manufacture the goods. Failure to maintain the delivery schedule will expose the exporter to
claim from the buyers for damages on account of non-shipment or late shipment, and in addition
the exporter may also loose the patronage of the buyer for future export orders. While shipment
and after shipment the exporter should obtain or prepare the following documents:
EXP Form
Photocopy of registration certificate
Photocopy of the contract
Photocopy of the L/C
Customs copy of ERF Form for shipment of jute goods and EPC Form for raw jute
Freight certificate from the bank in case of payment of the freight at the port of lading is
involved
Bill of Lading, Railway receipt, Postal receipt, Air way bill or Truck receipt
Packing list
Certificate of origin
Shipping instructions
Insurance policy.
59
Issuance of EXP Forms:
All exports must be declared on EXP Form. AD branches supply these forms. The bank certifies
EXP form only after confirming the following:
Arrangements have been made for realization of export proceeds.
Bonfires of the importer/consignees abroad
Arrangements have been made for receipt by authorized dealer of documents of title to
goods,
The exporter has signed the EXP.
EXP number should be as under:
ADs Code Register Serial No Year
2 3 5 9 0 0 2 5 3 1 0
Submission of documents:
After the shipment, the exporter submits all these documents to bank for negotiation. The
exporter remains in constant touch with the negotiating bank for early negotiation of export bills.
If any minor mistake is detected or any document is found missing the same should immediately
be corrected or supplied for early settlement of the matter.
Export documents checking:
After submission of exports documents by the exporter, bank must check, whether all the
required documents submitted or not. Bank must examine all documents stipulated in the credit
with reasonable care to ascertain whether or not they appear, on their face to be in compliance
with the terms and conditions of the credit. Documents not stipulated in the credit will not be
examined by the bank. The following points of documents should be carefully scrutinized:
Bill of exchange
Amount of bill differs with invoice
Not drawn on L/C issuing branch
Not signed
Tenor of C/E not identical with L/C
Full set not submitted
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Invoice:
Not issued by the beneficiary
Not signed by the beneficiary
Not made out in the name of the applicant
Description, price, quantity, sales terms of the goods not correspond to the credit
Not marked one fold as original
Shipping marks differs with B/L and packing list
Packing List:
Gross weight, net weight and measurement, number of cartoons/ packages differs with
B/L.
Not marked one fold as original
Not signed by the beneficiary
Shipping marks differs with B/L
Bill of Lading/Air Way Bill:
Full set of bill not submitted
B/L is not drawn or endorsed to the order of IBBL
“Shipping on Board”, “Fright Prepaid” or “Freight collect” etc. notations are not marked
on the B/L.
B/L not indicate the name and capacity of the party i.e. carrier or master, on whose behalf
the agent is signing the B/L.
Shipped on board notation not showing name of pre-carriage vessel/ intended vessel
Shipped on board notation not showing port of loading and vessel name (in case B/L.
indicated a place of receipt or taking in charge different from the port of lading)
Short form B/L.
Charter party B/L.
Description of goods in B/L. not agrees with that of invoice, B/E.
Alterations in B/L. not authenticated
Loaded on deck
61
3.11 Modes of payment:
The most common methods of payment under a L/C are as follows:
Chart 17: Modes of Payment
Sight or Payment credit: When the credit stipulates that drafts (bill of exchange) should be
drawn under it on DP terms involving payment to the beneficiary on presentation of documents, it
is known as a “Sight or Payment Credit”. In this credit the issuing bank nominates a bank in the
exporter’s country as the paying bank. If the paying bank accepts its nomination, its position is
that of an agent of the issuing bank. When the documents under the credit are presenter to it, it
pays the beneficiary provided all the terms and conditions of credit have been complied with. It
gets reimbursement from the issuing bank for the amount paid.
Deferred Payment Credit: The term “Deferred” means postponed to a future period or date.
When a credit does not require the payment to the beneficiary immediately on presentation of the
documents but after a specified period has elapsed, it is known as “Deferred Payment Credit”.
According to this type of credit, the payment is hot made in full on the tender of documents but
by installments at pre-determined future dates. Deferred payment credit may be used where the
beneficiary wishes to allow the importer time to pay for the document.
Payment methods under L/C
Sight or Payment creditDeferred Payment
Acceptance CreditNegotiation Credit
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Acceptance Credit: When under the terms of a letter of credit drafts are drawn on DA terms
involving payment to the beneficiary on the maturity of the accepted Bill of Exchange drawn
under it, the letter or credit is referred to as an “Acceptance Credit” or a “Term Credit”. In this
form of credit the beneficiary draws a draft for particular usance (e.g. 30, 60, 90 days sight or
even longer), payable upon either the correspondent bank or the issuing bank.
Negotiation Credit: In a negotiation credit the documents are accompanied by a sight draft (bill
of exchange). The bill of exchange may be drawn on the issuing bank or the importer or any other
bank stipulated in the credit. The bank, which negotiates documents under the credit, purchases
the bill of exchange and pays the amount to the beneficiary who tenders the documents. The
issuing bank reimburses the negotiating bank.
Settlements of claim:
Exporter very often claims of various natures from the foreign buyers against their exports. It
should be ensured that genuine claims of the foreign buyers are settled expeditiously by the
exporters concerned so that the reputation of the country is not jeopardized in the international
market.
Under the Exchange Control instructions in force, Bangladesh bank’s prior approval in individual
case is necessary for making remittances against export claims.
General permission has, however, been accorded to the ADs to make remittances in foreign
exchange towards claims against exports of non-traditional items, provided the exporters are
willing to make such remittance from the exchange market. Settlement of claims against cash
foreign exchange resources of the country will, however, require Bangladesh Bank’s prior
approval.
3.12 Foreign Currency Accounts:
The Trust Bank Ltd opens the following accounts for dealing remittances
NFCD Accounts:
Non-resident Foreign Currency Deposit (NFCD) accounts may now be maintained as long as the
account holders desire. Amounts brought in by non-resident Bangladeshis can be deposited in
foreign currency account any time after return to Bangladesh
63
F.C Accounts of non-resident Bangladeshis:
Foreign currency accounts opened in Bangladesh in the names of Bangladesh nationals or persons
of Bangladesh origin working or self employed abroad can now be maintained as long as the
account holders' desire.
RFCD Accounts:
Persons ordinarily resident in Bangladesh may maintain foreign currency accounts with foreign
exchange brought in at the time of their return to Bangladesh from visits abroad. These accounts
are termed as Resident Foreign Currency Deposit (RFCD) accounts. The amount brought in with
declaration to customs authorities on form FMJ and up to US $ 5000 brought in without
declaration may be credited to this account. RFCD accounts may be opened in US Dollar, Euro,
Pound Sterling, Deutsche Mark or Japanese. Interest may be paid on these deposits if these are
for a term of not less than one month and the balance is not less than US $ 1000 or Pound Sterling
500 equivalent.
F.C Accounts of other entities:
ADs do not require prior permission of Bangladesh Bank for opening of foreign currency
accounts of:
o Non-resident foreign persons/firms;
o Diplomatic missions in Bangladesh and their expatriates;
o Diplomatic bonded warehouses (duty free shops);
o Local and joint venture contracting firms employed to execute projects financed
by foreign donors/international donor agencies;
Foreign Remittances occurs for the following reasons:
Investment in shares/securities by non-residents
Remittance of profits
Remittance of dividend/capital gain
Remittance of salaries and savings by expatriates
Remittance on account of training and consultancy
Remittance by shipping lines, airlines, courier service companies
64
Visit Abroad:
Booking of Passage
Private Travel
Business travel quota for importers and manufacturers producing for domestic markets
Education
Medical treatment
Taking out/bringing in of Bangladesh Taka
Taking out/bringing in of personal jewelry
Miscellaneous Remittances:
Remittance of membership fees
Evaluation and Visa Processing Fee
Visa fee:
Family maintenance
3.13 Other services: There are some other activities performed by foreign exchange
department. These are mentioned in below:
NRB( Non-resident of Bangladesh) Share
Different types of security for NRB, Wage earner
Passport services
NRB Share:
Now Non-Resident of Bangladesh can invest in capital market. Every company provides some
benefit to attract NRB investors. They give quota on a portion of their authorized capital for
NRB. TBL also provide these services to their NRB clients.
TBL apply for NRB share on behalf of their clients TBL issues DD Other services like refund warrant, buy sell of their share etc.
It is also most profitable for the bank. The contribution of NRB share on total earnings of foreign
exchange will discuss in next part of the report.
Different Types of Securities for NRB:
TBL also issues different types of government securities for wage earners, these are: Wage Earners Bond Wage Dollar Bond etc.
3.14 Financial Performance of Foreign Exchange operation of TBL
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3.14.1 Import Earnings:
The import earning of the TBL from the import related services has increased to Tk 23,680.00
million in 2009 from Tk 9,746.00 million in 2005.
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
2005 2006 2007 2008 2009
Import Earnings
Import Earnings
Table 11: Import
Earnings Chart 18: Import earnings growth
Source: Annual Report of TBL, 2005 -2009
Interpretation: In the year 2009, import earning is in the highest level, it was increasing from
the year 2005. The line is upward slopping. So it indicates a positive sign on import earnings of
TBL.
3.14.2 Export:
The export earning of the TBL from the export related services has increased to 6078.79 million
in 2008 from Tk 2636 million in 2004.
66
Year Import Earnings(Taka in Million)
2005 9,746.002006 11,483.002007 13,816.162008 16,660.982009 23,680.00
0.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
2005 2006 2007 2008 2009
Export Earnings
Export Earnings
Table 12: Export Earnings Chart 19: Growth of Export EarningsSource: Annual Report of TBL, 2005-2009
Interpretation: The table and graph show the same result that the export earnings are increased
year by year. In the year of 2009 it was in the highest point as the same time upward slopping. It
is also positive sign for TBL.
3.14.3 Foreign Remittance:
The foreign remittance of the TBL is increased to TK. 5789 million in 2008 from Tk 2612
million in 2007. This indicates a 121% increase in remittance performance from the previous
year. The following graph shows the growth in the foreign remittance:
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2005 2006 2007 2008 2009
Foreign Remittance
ForeignRemittance
Table 13: Foreign Remittance Chart 20: Growth of Foreign Remittance
Source: Annual Report of TBL, 2005-2009
67
Year Export Earnings(Taka in Million)
2005 2,911.002006 2,884.002007 3,980.872008 6,078.792009 12,770.00
Year Foreign Remittance (Taka in Million)
2005 535.20
2006 765.00
2007 2,532.98
2008 5,788.87
2009 8,669.00
Interpretation: In the year 2005, TBL earn only 535.20 million taka from foreign remittance.
After 2005 it was increased dramatically. In the year of 2009, it was earned 8669.00 million taka
which was nearly 16 times greater than the year 2005.
3.14.4. Income from Commissions:
Commission on Taka 2009 2008 2007Demand Draft, Money Transfer, Telegraphic Transfer, Pay Order etc
3,891,278 3,896,687 2,807,677
Travelers cheque 19,632 123,445 114,190
Bills 12,571,947 9,625,773 6,585,756
Letter of Guarantees 19,413,672 17,491,298 18,440,533
Letter of Credits 93,704,012 100,616,897 86,563,891
Foreign Remittances 732,719 490,028 363,107
Commission on Sale of Government Securities
9,691,460 5,912,668 5,431,650
Fund Transfer Commission 64,087 1,012 205,202
Commission on Sale & Purchase of Shares
615,186 111,825 91,129
Under writing Commission 9,615,465 1,769,902 225,000
Comm. on Commitment fees on FCL - 1,075 -
Acceptance Commission 25,972,134 24,159,243 13,347,252
Foreign Correspondence Charges 121,000 96,253 -
68
Miscellaneous Commission 17,376,973 12,321,732 8,586,775
193,789,565 176,617,838 142,762,162
Foreign Currency Exchange Gain 161,824,777 129,544,895 165,139,669
Total commission: 355,614,342 306,162,733 307,901,831
Table 14: Income from CommissionsSource: Annual Report of TBL, 2008, 2009
3.15 Findings of the report:Major’s findings of the study are as follows
Foreign exchange is one of the most important departments of TBL, as the same time it plays important role in making profitable of this bank.
Foreign exchange department maintain the entire legal requirement in processing all the transaction.
Foreign exchange department of TBL is much respectable to the foreign exchange act and laws.
Though TBL has qualified employee in foreign exchange department, but bank should recruit some new employee to run this department smoothly.
In case of foreign remittance, they have no any debit card facility to their customer.
Import earnings, export earning and, earnings from remittance quite satisfactory levels.
Most of the time they try to provide quality services to the known person, it may loses general customer.
3.16. Recommendation of the report:
During three month practical experience in TBL, it is not easy to recommend some
suggestion to enhance the performance level of the organization. I have observed some
shortcoming regarding operational and other aspects of their banking system. On the
basis of my observation I would like to present the following recommendations:
In case of L/C opening, Bank provides NIL margin facility to only some big
client, but they should also provide this facility to some small but efficient client.
In opening L/C, bank sometimes bank reject the small business enterprise; bank
should come forward to help this small business enterprise.
69
Bank should increase incentives facilities to their employees, so that they can
perform more effectively. There are lots of department under foreign exchange
operation.
Bank needs to provide more incentives to their exporter to attract such as credit
facilities.
Bank should increase the interest rate on FC account so that they can attract more
NRB clients.
In case of payment of remittance, they should introduce debit card so that
customer can withdraw money within a second.
Bank should increase their advertisement so that general people can be attracted.
The software (Flora Banking Software) which is used by TBL; it must be more
options, quick response time, more secured.
The server which is used by TBL, it should be more error free; otherwise it may
be the sign of huge loss of this bank one day!
To minimize the risk Bank follows all the prudential guidelines of foreign
exchange risk management set by Bangladesh Bank.
3.17 Conclusion:
As an internee of Trust Bank Limited I have truly enjoyed my internship from the learning and
experience viewpoint. I am confident that this three months internship program at TBL will
definitely help me to realize further career in the job or personal life.
TBL offers full range of banking services that include deposit banking, loans & advances, export,
import and financing national and international remittance facilities etc. A country cannot long
continue to have a deficit on foreign current account but a favorable balance of payments on
current account may conceal a heavy adverse balance of payments with one individual country or
group of countries.
As developing country, Bangladesh is striving to reduce its trade gap. Government is taking
necessary steps to enhance its Export sector through the help of market mechanism as well as
different financial and institutional incentives to the exporters. At the same time it is taking
necessary steps to attract foreign investments and creating efficient human resource to fight the
edge of competition. In the line of liberalization of our economic sector, our current account has
70
already been made convertible along with floating exchange rate. With the help of continuous
increase in wage earners remittance and inclusion of non-traditional items in export list
Bangladesh emerging towards a more stable economy. The Bank already has shown impressive
performance in different financial sector. The bank now should start new services and take
different types of marketing strategy to get more customers in this competitive market of banking
business.
I do believe that all these will assist me in my career build-up.
References
Bangladesh Bank (1997), Guideline for Foreign Exchange Transactions, Vol-1, Dhaka
Ali, Syed Ashraf (1995), Foreign Exchange and Finance of Foreign Trade, First Edition,
Lita Academics, Dhaka
Madura, Jeff International Financial Management 9th EditionAnnual Report of TBL - 2009 http://www.trustbank.com.bd/financial_statement/2009/Trust%20Bank%20Annual%20Report%202009.pdf
Annual Report of TBL – 2008 http://www.trustbank.com.bd/financial_statement/2008/annual_report_2008.pdf
http://www.trustbank.com.bd/corporate_info/about.php
http://www.trustbank.com.bd/deposit/deposit.php
http://www.trustbank.com.bd/retail/retail.php
http://www.trustbank.com.bd/islamic_banking
http://www.trustbank.com.bd/contact/contact_us.php
Consultation with the Following Persons
Mr. Galib Mahmood, Executive officer, TBL, Dilkusha
Md. Shoid Ahmed – Officer, Fex, TBL, Dilkusha
Md. Sazzad Hossain – SO-Remittance, Dilkusha
M K Touhidur Rahman PO/TBL/Dilkusha
Ms. Mosfeka Rahman – EO,TBL, Dilkusah
71
Zabir Md. Taqui -Officer, TBL, Dilkusha
Appendix
To doing Internship in TBL, I have also get opportunity to know about their Foreign Exchange Department and their Remittance Department. Both of this section is described below:
Foreign exchange department
FA Account (Foreign Nationals)
FA Account (Bangladesh Nationals)
NFCD A/C
RECD A/C
Foreign Trade:
Foreign exchange means the exchange of currency in terms of goods from one country
another. This is the most well-known and well-organized business uniform in world
business. Foreign exchange mainly has two parties:
Import Operations:
These are the following:-
IRC (Import registration certificate):
Performa Invoice / Indent Letter:
Current VAT& TAX Certificate:
L/C Authorization Application form:
IMP (Import) form:
Letter of Application:
72
Application & Agreement for confirmed irrevocable without Resource to
drawer’s letter of credit:
Export Operations
For becoming an Exporter a person needs:
1. Current A/C in TBL.
2. ERC (Export Registration Certificate) issued by CCI & E (Chief Controller of
Import & Export).
3. Permission from sponsoring Authority such as Board of Investment for industries,
epartment of Textile for garments etc.
4. Traders Association’s certificate
5. VAT (99Value Added Tax) & TIN (TAX Identification Number) certificates.
6. Common documents involved in the transportation of goods:
Airway bill:
Bill of Lading (B/L).
Commercial invoice:
Certificate of Origin:
Export packing list:
Inspection certificate:
Insurance Certificate:
Consular invoice:
Foreign Remittance Department:
For reimbursement in foreign exchange business different banks that are intermediary
between importers and exporters maintain internationally three of account. These
accounts are:
a) NOSTRO A/C:
Our foreign currency accounts with other bank. This mean TBL maintains its account in
different banks outside Bangladesh for reimbursement in foreign exchange businesses.
b) VOSTRO A/C:
73
Their foreign currency account with us. This means different banks outside Bangladesh
maintain their account in TBL for reimbursement in foreign exchange businesses.
c) LORO A/C:
Your foreign currency account with me. When two banks one country maintain their
A/C’s in one bank outside their country. Ex. Suppose TBL and IFIC have A/C’S in
American Express Bank (AMEX) in New York. Then, TBL’s A/C maintaining in AMEX
is LORO to IFIC Bank. IFOC’s A/C maintaining in AMEX is LORO to TBL.
Acronyms
A/C : AccountAD : Authorized DealerATM : Automated Tailor MachineBB : Bangladesh BankBIBM : Bangladesh Institute of Bank ManagementBL : Bill of Lading BM : Branch ManagerBOE : Bill of ExchangeC&F : Clearing and Forwarding CC : Cash CreditCCI & E : Chief Controller of Import & ExportCDS : Consumer Durable SchemeCFR : Cost & FreightCIB : Credit Information BureauCIF : Cost Insurance & FreightCRF : Clean Reporting FindingsCRIS : Credit Rating Information & Services Ltd.DD : Demand DraftDP Note : Demand Promissory NoteDP : Deposit PromissoryECC : Export Cash CreditEDF : Export Development FundEPB : Export Promotion BureauEPZ : Export Processing ZoneERC : Export Registration CertificateEXP : Export Form
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FC : Foreign CurrencyFCB : Foreign Commercial BankFDBP : Foreign Document Bill PurchaseFDD : Foreign Demand DraftFDR : Fixed Deposit ReceiptFI : Financial InstrumentFOB : Free on Board HBL : House Building LoanIBC : Inward Bills for CollectionIBCA : Inter Branch Credit AdviceIBDA : Inter Branch Debit AdviceIBETCA : Inter Brach Exchange Transaction Credit AdviceIBETDA : Inter Branch Exchange Transaction Debit AdviceIBP : Inland Bill PurchaseIMP : Import FormIPO : Initial Public OfferingIRC : Import Registration FormIRR : Internal Rate of ReturnKYC : Know Your CustomerL/C : Letter of CreditLCAF : Letter of Credit Authorization FormLDBP : Local Document Bill PurchaseLIBOR : London Inter Bank Offered RateLIM : Loan against Imported MerchandiseLRA : Lending Risk AnalysisLSS : Lakhpati Savings SchemeLTR : Letter of Trust ReceiptsNCB : Nationalized Commercial BankOBC : Outward Bills for CollectionOD : OverdraftPAD : Payment against DocumentPBL : Prime Bank Ltd.PCB : Private Commercial BankPCC : Packing Cash CreditPO : Payment Order PSI : Pre-Shipment InspectionRM : Relationship ManagerRMG : Ready Made GarmentsROO : Rules of OriginSEDF : South Asia Enterprise Development FacilitiesSOD : Secured Over DraftSTD : Short Term DepositSWIFT : Society for Worldwide Interbank Financial TelecommunicationTBL : Trust Bank Ltd.TC : Traveler ChequeTIN : Tax Payers Identification Number
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TR : Truck ReceiptTSSS : Three Stage Savings SchemeTT : Telegraphic Transfer
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