Pubali Bank Limited by Overall Banking Performance

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“Overall Banking Performance of Pubali Bank Ltd”

STAMFORD UNIVERSITY BANGLADESH



INTERNSHIP REPORTON

“Overall Banking Performance of Pubali Bank Ltd”

SUBMITTED TO

Sanjida Haider Lecturer

Department of Business Administration (Finance)Stamford University Bangladesh

SUBMITTED BY

Dalia Akter BBA (Major in Finance)

ID NO: 02808828Batch: 28(Q)

Stamford University Bangladesh

Date of Submission: 8th October, 2009



Letter of Transmittal

October 03, 2009.

ToSanjida Haider

Lecturer

Department of Business Administration (Finance)


Subject: Submission of the Internship Report.

Dear Madam,

Here is the report of my internship program in Pubali Bank Ltd, Principal branch. I have

truly enjoyed my three months internship program with Pubali Bank Ltd Principal

Branch and highly appreciate their co operation in this regard. I tried to reflect the

practical operational aspects of the bank, which is complementary to the theoretical

lessons.

I am very much glad that you have given me the opportunity to prepare this report.

So I therefore pray and hope would you be kind enough to accept my internship report

and oblige thereby.

Sincerely yours

…………………………

(Dalia Akter)

ID BBA-02808890

Major-Finance

Batch-28(Q)

Department of Business Administration




Supervisor’s Certification

This is to certify that analysis paper titled “Overall Banking Performance of Pubali Bank

Ltd”, submitted in partial fulfillment of the requirements for the award of the degree in

Bachelor of Business Administration of Stamford University Bangladesh is a record of

the analysis carried out by Dalia Akter, ID No-02808890 under my active supervision

and guidance and that no part of this report has been submitted for the award of the

degree.

I wish her success in the future.

Supervisor

…………………………………….Sanjida Haider

Lecturer

Department of Business Administration (Finance)




Declaration

I, Dalia Akter, student of Stamford University Bangladesh, solemnly affirm and hereby

declare that the analysis report titled “Overall Banking Performance of Pubali Bank

Ltd” submitted in partial fulfillment of the requirements for the award of the degree in

Bachelor of Business Administration of Stamford University Bangladesh, is my original

work and not submitted for the award of any degree, under the extensive supervision and

guidance of Mr.Sayeed Ahmed (CFO), Pubali Bank Ltd. and Ms.Sanjida Haider, Lecturer

of Business Administration of Stamford University Bangladesh.

Sincerely yours

(Dalia Akter)

ID BBA-02808890

Major-Finance

Batch-28(Q)

Department of Business Administration




Acknowledgement

At the very beginning I would like to express my deepest gratitude to Almighty Allah for

giving me strength and composure to finish the task within the schedule time.

Internship program is an integrate part of BBA degree. Every BBA student is deputed to

different organization to learn something within the pre-stipulated time by observing their

organization daily practices. In this regard my internship was arranged at Pubali Bank

Limited, Principal Branch with deliberate counseling of lecturer Ms. Sanjida Haider,

Faculty of Business Administration, Stamford University Bangladesh. My heartiest

gratitude for her enthusiastic guidance and consideration during the entire phase of the

study made it possible for me to prepare this report.

I could not possibly thank all of those people who have contributed a lot to prepare this

report. They are of course very special people who cannot go without mention.

Further more I want to pay thanks Mr. Sayeed Ahmed (CFO) to give me full support to

acquire knowledge.

Here again I have to mention who receive me as a member of their Banking family in

introduce with me whom I worked last three months. I would like to express my deep

sense of gratitude and thank to all officials and members for all their continuous guidance

valuable knowledge and suggestion during my “Internship Program”.



Executive Summary

The report is a prepared as part of practical orientation of BBA program a description of all activities done by Pubali Bank, Principal branch. The report is lively narration of

various banking activities like General Banking, loans and advance management and

foreign trade financing and other ancillary services.

As a conventional bank branch it has a general banking section where the primary task of

deposit collection, maintenance of accounts, cash and all local services are done. It

performs the job of fund management on behalf of the whole bank. Other main duty of

the department is maintenance of the accounts and dealing with the clearinghouse. The

loans and advance section is in charge of proper disbursement of the funds to productive

as well as profitable ventures. The foreign trade department is in charge of foreign trade

financing. The bank work as both issuing bank, negotiating bank and reimbursement

bank to international trading. Remittance of foreign currencies is another important job of

the department.

In this age when management requires proper flow of accurate information to run an

organization successfully than the banks way of information handling is quite outdated

from the view point of sophisticated management information science.

Facts and figures of the branch clearly indicates that the Principal Branch of Pubali Bank

Limited is as well run branch and the trends of graphs shows a sign of improvement and

expansion of activity in all spears of banking.



TABLE OF CONTENTS

SUBJECT PAGE NO

CHAPTER ONE 12-16

1.1 Introduction 13

1.2 Objective of the Study 14

1.3 Scope of the study 14

1.4 Methodology 15

1.5 Sources of Data 15

1.6 Limitation of the study 16

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CHAPTER TWO 17-22

2.1 History of Pubali Bank Ltd 18

2.2 About Pubali Bank Ltd 19

2.3Present Status of PBL 19

2.4 Vision of Pubali Bank Ltd 22

2.5 Mission of Pubali Bank Ltd 22

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CHAPTER THREE 23-53

Introduction 25

General Banking 26-53

3.1 Introduction 26



SUBJECT PAGE NO

3.2 Token Issue 27

3.2.1 Procedure 27

3.2.2 Maintenance of the subsidiary registers for receipt of cheques,

drafts 27

3.3 Account Opening Section 29

3.3.1 Classification of Customer 30

3.3.2 Different types of A/C of PBL Principal Office 30

3.3.3 Documents required for opening new account 31

3.3.4 Account opening procedure 31

3.3.5 Precautionary Measures of A/C Opening 32

3.3.6 Formalities for opening Current A/C and STD A/C 32

3.3.7 Formalities for opening Private foreign currency A/C 33

3.3.8 Issue of Duplicate cheque book 34

3.3.9 Formalities maintained for closing an account 35

3.3.10 Interest rate on deposit 36

3.3.11 Learning of This Section 36

3.4 Clearing Section 37

3.5 Local Remittance Section 38

3.5.1 Telegraphic Transfer (TT) 38

3.5.2 Demand Draft ( DD ) 40

3.5.3 Pay Order 46

3.5.4 Learning of This Section 48

3.6 Cash 49

3.6.1 Function of cash department 49

3.6.2 Cash Received tools 49

3.6.3 Cash Receiving Procedure 50

3.6.4 Cash Payment tools 50



3.6.5 Cash Payment Procedure 51

3.7 Accounts Department 52

SUBJECT PAGE NO

CHAPTER FOUR 54-90

Foreign Exchange

4.1 Introduction 56

4.2 International Trade 58

4.3 Function of Foreign Exchange Department 59

4.4 Import Section 63

4.4.1 Importer’s Application for L/C Limit/Margin 63

4.4.2 The L/C Application 64

4.4.3 IMP-Form 65

4.4.4 Scrutiny of L/C Application 66

4.4.5 Precautions for issuing L/C 66

4.4.6 Amendment of L/C 67

4.4.7 Credit Report on Beneficiary 67

4.4.8 Presentation of the Documents 684.4.9 Examination of Documents 69

4.4.10 Handling of Discrepant Import Document 72

4.4.11 Receiving Documents 73

4.4.12 Lodgment & Retirement 73

4.4.13 Payment against document (PAD) 74

4.4.14 Loan against Imported Merchandise (LIM) 75

4.4.15 Loan against Trust Receipt (LATR) 75

4.5 Export Section 76

4.5.1 Back-to-Back L/C 76

4.5.2 Export L/C 78

4.6 Exchange rate and foreign remittance 82

4.6.1 Exchange rate 82



4.6.2 Foreign Remittance 83

4.7 My Learning 90

SUBJECT PAGE NO

CHAPTER FIVE 91-104

Loans and Advances

5.1 Introduction 92

5.2 Manager’s Concern 92

5.2.1 How to locate purpose 92

5.2.2 How to locate security 93

5.2.3 How to locate borrower 94

5.3 Advance Secured and Unsecured 95

5.4 Function of Advance Department 95

5.5 Types of Loan 97

5.6 Process of Loan 101

5.7 State of Classification and Provision for 5 Years of PBL 102

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CHAPTER SIX 105-107

6.1 SWOT Analysis 106

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CHAPTER SEVEN 108-112

7.1 Findings 109

7.2 Recommendation 110

7.3 Conclusion 112



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CHAPTER EIGHT 113-115

8.1 Acronyms 114

8.2 Bibliography 115

CHAPTER

ONE

1.1 Introduction

1.2 Objective of the Study

1.3 Scope of the study

1.4 Methodology

1.5 Sources of Data

1.6 Limitation of the study



Introduction

A bank is a financial institution licensed by a government. Its primary

activities include borrowing and lending money. Many other financial

activities were allowed over time.

All over the world the element of Banking has been changing speedily

due to Technological innovation and Globalization. Banking in

Bangladesh has to keep pace with the global change. Now banks must

complete in the market place both with local institution as well as

foreign ones. To survive ad thrive in such a competitive banking world,

two important requirements are development of appropriate financial

infrastructure by the central Bank and development of

“Professionalism” in the sense of developing and appropriate

manpower structure and its expertise and experience. To introduce

skilled Banker, only theoretical knowledge in the field of banking

studies is not sufficient. An academic course of the study has a great

value when it has practical application in real life situation.



1.2 Objective of the Study

General Objectives:

This study is intended for providing me invaluable practical knowledge about banking

operation system in Bangladesh. The prime objective of the study is to examine the

performance of Pubali Bank Ltd.

Specific Objective:

• To accomplish the partial requisite of BBA program and achieve of good

judgment with theoretical base.

• To have a revelation on the banking environment of Bangladesh.

• To review the consumer banking service and operating system of Pubali Bank

Ltd.

• To evaluate the factors affecting performance of the Bank.

• To suggest the better ways of enhancing the performance of the Bank.

• To make myself confident and active in future to finger my job.

1.3 Scope of the study

This report covers the organizational overview of the Pubali Bank Ltd, Management and

Organizational Structure, functions performed by the Pubali Bank Ltd. It also covers

overview of the general banking, identification of problems regarding general banking, of

The Pubali Bank Ltd. Principal Branch.



1.4 Methodology

While conducting the study, sources were explored for primary information and data. But

hardly any updated data could be found. In the absence of updated information or data

dependence on secondary has been inevitable. However, wherever possibly primary data

has been used. Data were also collected by interviewing the responsible officers and from

some documents & statements printed by the bank and the website of PBL.

There have been used some statistical tools and graphical representation to find out

different types of analytical results and interpretations.

1.5 Sources of Data

The following sources have been used for the purpose of gathering and collecting data as

required.

Primary data

1. Practical desk work

2. Face to face conversation with the officers and clients.

3. Official record of PBL.

4. Data collection of own supervision.

Secondary Data

1. Annul report of PBL.

2. Official files and folders.

3. Working papers

4. Selected books.

5. Published and unpublished documents

6. Memo and circular



7. Website.

1.6 Limitation of the study

The limitation of the study is defined by the extensive of the facts covered by the study

and those that left out. However, these limitations can be presented in the following lines:

• The first limitation is that I failed to sketch the complete picture of the Pubali

Bank’s activities at the period of my internship programmed. So I tried my best to

focus on what I have done and also tried to make it consistent with other part of

the report.

• The second limitation is the lack of intellectual thought and analytical ability to

make in a perfect one.

• I have to offset with quality due to time constraint, which apparently seems to be

the most severe limitation.

• Another limitation of this report in non-availability of the most recent data &

information of different activities of Pubali Bank policy of not disclosing some

data & information for some reasons, which could be very much useful.

In spite of all these limitations, I have tried to put the best effort as far as possible.



CHAPTER

TWO

2.1 History of Pubali Bank Ltd

2.2 About Pubali Bank Ltd

2.3 Present Status of PBL

2.4 Vision of Pubali Bank Ltd

2.5 Mission of Pubali Bank Ltd



2.1 History of Pubali Bank Ltd

The Bank was initially emerged in the Banking scenario of the then East Pakistan as

Eastern Mercantile Bank Limited at the initiative of some Bengali entrepreneurs in the

year 1959 under Bank Companies Act 1913. After independence of Bangladesh in 1972

this Bank was nationalized as per policy of the Government and renamed as Pubali Bank.

Subsequently due to changed circumstances this Bank was denationalized in the year

1983 as a private bank and renamed as Pubali Bank Limited. The Government of the

People's Republic of Bangladesh handed over all assets and liabilities of the then Pubali

Bank to the Pubali Bank Limited. Since then Pubali Bank Limited has been rendering all

sorts of Commercial Banking services as the largest bank in private sector through its

branch network all over the country.



2.2 About Pubali Bank Ltd

Pubali Bank Limited is a scheduled private commercial bank established on May

20.1984. Licensing no Bl/DA/1/84. In exercise of the powers conferred on the

Bangladesh Bank under section 28(1) of the banking companies’ ordinance 1962 as

adopted in Bangladesh Pubali Bank Limited; Bank authorized to open the branch at 26

Dilkusha commercial area (Local Office) P.S Motijheel district Dhaka. Condition

mention in this office letter no. BCD(D) 200/42(a)/145. The bank has been widely

acclaimed by the business community from small entrepreneurs to large traders and

industrial conglomerates within this very short period of time it has been able to create an

image for itself and has earned significant reputation in the country’s Banking sector as a

bank of vision. Presently it has 371 branches in operations Principal branch is one of the

big and important branches of PBL.

This intended to ensure the trust and confidence of the customers through focused

customer’s orientation qualities of services and state of art technology.

The company philosophy-A Bank for the 21st century has been precisely the essence of

the legend of the Bank success.

2.3 Present Status of PBL

PBL is one of the largest private sectors Bank in Bangladesh with years of experience.

Adaptations of modern technology both in terms of equipment of banking practice ensure

efficient service to clients.

(a) Capital structure of PBL:



The bank was incorporated as a public limited company under the companies’ act 1994.

The authorized capital and paid up capital of the bank stood at Tk. 5000 million and Tk.

2940 million respectively in 2008. Out of total 24153 shareholders, Bangladesh

government held 72 shares of Tk. 7200 while taka remaining shares of Tk. 2939.99

million where held by various institutions and individuals.

(b) Management structure:

Organizational Chart of PBL

Chairman

Vice Chairman Directors

Managing Director

Company Secretary General Manager Law consultant

Deputy General Manager

Asst. General Manager

Senior Principal Officer

Principal Officer

Officer

Junior Officer

Cash Officer



(c) Information Technology in Automation:

All the 371 branches have been computerized out of which 268 branches have been

running successfully with the in-house developed software, PIBS (Pubali Integrated

Banking System). Pubali Bank limited has implemented Centralized online Banking

system in the year 2008 through its in-house developed software. In the mean time 10

branches in Dhaka, Chittagong and Sylhet have been brought under online banking

system and more 40 branches will included during 2009. The remaining branches will

brought under online banking system gradually. The bank will also extend services to its

customers through internet Banking and mobile phone bank phase wise shortly. The bank

has developed Islamic Banking Software and 2 (two) Islamic banking wings will be

opened in Dhaka and Sylhet shortly. The bank has entered into the internet world through

its website www.pubalibangla.com and has also been operating Automated trailer

machine(ATM) and Point of sale (POS) services to meet the demand at the time.

(d) Other information:

Number of employees: 5321(annual report-2008)

Number of shareholder: 24153(annual report-2008)

Number of branches: 371(annual report-2008)

Earning per ordinary share: 51.54(annual report-2008)

http://www.pubalibangla.com/




2.4 Vision of Pubali Bank Ltd

To excel as best private commercial Bank in Bangladesh with meticulous observance of

rules and regulations and commitment to corporate social responsibility.

2.5 Mission of Pubali Bank Ltd

(A) To get recognition as a dynamic, innovative and customer supportive Bank.

(B) To maintain continuous & steady growth with utmost transparency and to diversify

development of resources.

(C) To enhance continuous development of information & technology to meet the

demand and challenges of the time.



CHAPTER

THREE

Introduction

General Banking

3.1 Introduction

3.2 Token Issue

3.2.1 Procedure

3.2.2 Maintenance of the subsidiary registers for receipt of cheques,

drafts

3.3 Account Opening Section3.3.1 Classification of Customer

3.3.2 Different types of A/C of PBL Principal Office

3.3.3 Documents required for opening new account

3.3.4 Account opening procedure



3.3.5 Precautionary Measures of A/C Opening:

3.3.6 Formalities for opening Current A/C and STD A/C:

3.3.7 Formalities for opening Private foreign currency A/C

3.3.8 Issue of Duplicate cheque book

3.3.9 Formalities maintained for closing an account

3.3.10 Interest rate on deposit

3.3.11 Learning of This Section

3.4 Clearing Section

3.5 Local Remittance Section

3.5.1 Telegraphic Transfer (TT)

3.5.2 Demand Draft ( DD )

3.5.3 Pay Order

3.5.4 Learning of This Section

3.6 Cash

3.6.1 Function of cash department:

3.6.2 Cash Received tools

3.6.3 Cash Receiving Procedure

3.6.4 Cash Payment tools:

3.6.5 Cash Payment Procedure

3.7 Accounts Department



Introduction

PBL survive and thrive in such a competitive banking world, two important requirements

are development of appropriate financial infrastructure by the central bank and

development of “professionalism” in the sense of developing an appropriate manpower

structure and its expertise and experience.

PBL has contributed in the economy of the country through their dedicated services,

business partnership and customer care over the last fifty years. They have seen

enormous changes over the period and have continued to keep on adopting to changes

their journey ahead.

They has been widely acclaimed by the business communicate from small entrepreneurs

to large traders and industrial conglomerates. PBL conducts all types of commercial

banking activities. The bank involve in most of the areas of commercial bankingoperation. PBL has acted as the lead arranger in raising term loan for a number of

projects under syndicate finance and also participate in some case under such financing

arrangement. The also providing personal credit, service related to local and foreign

remittances and several other product.

PBL entered the market at a time when economic policy environment of the country is

poised for higher levels of business activities and growth. The prevailing macro

economic management and government’s determination to carry on reforms in the

banking sector provide a supporting and encouraging environment.



General Banking

3.1 Introduction

General banking is the starting point of all the banking operations. It is the department,

which provides day-to-day services to the customers. Everyday it receives deposits from

the customers and meets their demand for cash by honoring cheques. It opens new

accounts, remit funds, issues bank drafts and pay orders etc. Since bank is confined to

provide the services everyday, general banking is also known as ‘retail banking’.

According to World Bank, the general people understand the depositing and withdrawal

of money and credit financing. But Bank performs numerous types of services. To deal

these services bank has to maintain many register/ ledger and documents. Some different

jobs that waive the General banking has shown in the following diagram

General Banking

Token

Issue

Section

A / C

Opening

Section

Cheque

Clearing

Section

Local

Remittance

Section

Cash &

Accounts

Section



3.2 Token Issue

The token issue department uses a register book and different types of tokens decorated

with different letters for different types of accounts. There are two types of tokens. One is

for savings A/C and another is current / other accounts.

3.2.1 Procedure:

The client will encash money from his account will show his cheque to the respective

officer of the desk. The officer will give him a token with particular number after being

sure of his two signatures on the back of the cheque. The officer will give him a token

with a particular number on the back of the cheque. The client will then proceed on for

encashment. The officer then gives an entry about the token number, account name and

the amount in the column of the register book.

The token will be checked by the responsible officer for maintaining at the end of each

business day. Tokens are then handed over to the supervising official concern to keep

them in a locked box. Tokens are checked once a month by the supervising officer in

charge whether tokens is ok or not. When a token is lost it is informed to the head office

for a matter of precaution.

3.2.2 Maintenance of the subsidiary register for receipt of cheques, drafts :

At the counter every cheque, demand draft and other credit instrument tender for the

credit of the customers account will be delivered. Deposits received by post will sent by



the receiving officer to the bills department against acknowledgment of the dealing

officer.

The dealing officer is concerned here about four types entries. They are

1. Local Clearing

2. IBC (Inter Branch Collection )

3. SC (Short Collection )

4. BT (Bank Transfer)

In case of local clearing one bank sends money by cheque or DD which will be collected

in the name of the account holder of this branch. This cheque or DD will be taken to the

clearing house where agents of all banks exchange these instruments. Important thing is

that the paying Bank must be in the local area (Dhaka).

In case of IBC the branches must be of the same banks for short collection, the paying

banker is in the area other than Dhaka whereas bank transfer will be between two

accounts of the same branch.

The dealing officer of this desk should be aware of the following things about

instruments:

©Name of the account is very clearly written on the deposit slip.

© Full particulars of the deposit instruments such as cheque numbers, name of bank, etc

are properly recorded on the paying slip as required.

© The pay in slip has been signed by the depositor.

© Full particulars of the railway receipts and instruments of title goods, bills of

exchange, invoice etc. associated with an inland documentary bill received from the



depositors direct at the counter or by post from other branches/ banks endorsement

thereon.

©All cheques, bills and other instruments are crossed with crossing seal .

After categorizing all the instruments and checked out the preliminary mandatory things,

the dealing officer gives entries in the appropriate column of subsidiary ledger for

crediting the accounts.

3.3 Account Opening Section

When a customer want to open a deposit account in bank, he/she will have to go the A/C

opening section to know the rules and regulations for opening account and to have the set

of documents required. Since PBL is an authorized dealer it can open deposit A/Cs

denominated both in Taka and approved foreign currencies.

Deposits are like raw materials out of which credits are created. Deposit accounts are one

of the important sources of funds. In order to attract customers the banks offer different

facilities to various types of account holders. Competition in accepting deposits takes two

forms:

(a) Improvement in customer service

(b) Offer a higher rate of interest.

In our country PCBs and foreign banks are appreciated to attract deposit because of their

superior customer services. PBL principal office branch with its traditions customer

service approaches faces difficulties to draw attention of new customers.

Main functions of account opening are given below:

•

To give answers to the queries regarding account opening• To supply the appropriate type of account opening form

• To put a/c number from a computerized sheet on advice of new account

• To input date into computer from a/c opening form.

• To maintain and update the a/c opening file for different types of accounts.



• To maintain a register for cash type of recording details of a/c opening

• To supply deposit slip books and cheque book on requisition

• To act on request for closing and transferring of deposit a/c

•

To act on request for closing and transferring of deposit a/c

3.3.1 Classification of Customer:

a) Individual (personal) b) Proprietorship (Sole traders)

c) Partnership firms (Register or Unregistered)

d) Joint Stock Companies ( Private Limited and Public Limited )

e) Municipalities/Municipal Corporations/Local Bodies etc.

f) Clubs / Societies / Associations /School / Colleges / Universities etc.

g) Executors /Administrators

h) Trustees

i) Illiterate persons

j) Constituted Attorney

k) Wage Earners

3.3.2 Different types of A/C of PBL Principal Office:

1. Current A/C: Interest free and generously withdrawal.

2. Saving Bank A/C: Interest bearing and checkable with some restriction

3. Short Term deposit: Usually interest bearing and with draw able on short

notice.

4. Fixed deposit: Interest bearing and definite period like one year or six month.



5. Non Resident foreign currency deposit: All non residents of Bangladesh can

open this interest bearing account in the form of term deposit with a minimum

amount of $1000 or equivalent.

6. Private Foreign Currency A/C: Bangladeshi National residing abroad or

foreign nationals may open this a/c with deposit mode from inward.

7. Convertible Take Amount: A type of non-interest bearing current a/c

designed specially for foreigners living here.

8. Private foreign Currency A/C: Bangladeshi nationals residing abroad or

foreign nationals may open this a/c with deposit mode from inward.

3.3.3 Documents required for opening new account:

1. Documents Common for all types of Account & Customers

a. Advise of New Account

b. Specimen signature cards

c. Account Opening Agreement Form

d. Photographs of Account Holder

e. Deposit Slips Book

f. Cheque book Requisition slips

g. Letter of mandate is required where necessary.

3.3.4 Account opening procedure:

a. Applying in a printed application in a certain stipulated form printed by the bank itself.

b. Supply a set of printed forms required for opening the account which willnormally include

i) Advise of new Account

ii) Specimen Signature Cards

iii) Account Agreement

iv) Deposit slip Book

v) Cheque Book Requisition slip

b. The account should properly introduced by any one of the following

i) An existing Current Account holder of the bank



ii) Officials of the Bank not below the rank of an Assistant officer

iii) A respectable person of the locality well known to the Manager or

Sub- Manger of the Branch concerned.

c. A number of photographs which must be duly attested by the introducer in front

of the manager or responsible officer. The signature of the introducer must be

attested. After being scrutinize the application and the manager or authorized

officer may give his consent to open the account.

d. A package with deposit book, cheque book with a unique A/C No. given to the

Customer maintaining the A/C opening register book.

3.3.5 Precautionary Measures of A/C Opening:

a. Soon after the opening of a new Account a letter of Thanks should be sent to the

introducer.

b. A letter of thanks as per prescribed should also be sent to the account holder

immediately upon opening the account, under registered post with a/c for

verification of postal address as well as genuineness of the Account holder.

c. In case of a new account is opened a proprietorship / partnership firm, having

local business address, a responsible officer of the branch will inform the firm to

obtain the confidential report on the firm.

3.3.6 Formalities for opening Current A/C and STD A/C:

These accounts are meant for business firms and corporate bodies. Initial deposit

requirement is Tk 5000 in addition to common documents required to open a saving a/c

following additional documents will be required for depending upon the nature of the

organization.

Joint Account of two or more persons

Mandate for Operation of Account: A clear authority by all the joint A/C holders

containing instructions as to who will operate the account and how the account is to



be operated should be obtained. The mandate should mention the name of the

persons authorized to draw check. In case of death, insanity, insolvency of one or

more of the joint a/c holders, the authority will cease to operate:

For sole traders:

i) Trade license

ii) A certificate with tax identification number from income tax authority

iii) Seal

iv) In case of current account an agreement to accept all responsibilities

for all over draws, interest cost and expenditures

For Partnership firms:

i) Trade license

ii) Notarized deed of partnership

iii) A mended in agreement form regarding operation of the account

signed by the entire partnership firm

iv) Sale/ Stump of the firms

v) 2 copy photo of all partners

vi) National ID card photocopy for all partners.

For Private and Public Limited Companies

i) Memorandum and Articles of association

ii) Certificate of incorporation

iii) Certificate of commencement of business if it’s Public limited

iv) Copy of board resolution to open a/c certificate by the chairman and

secretary

v) Power of attorney to operate a/c in favor of any one or more of

directors.

vi) Balance sheet and income statement

vii) List of Directors and their address and chairman certificate.

3.3.7 Formalities for opening Private foreign currency A/C:



Foreign Currency account may be opened in US dollar, Pound Sterling, Douche Mark

and Japanese Yen. Credit may be made to this A/C against inward remittance from

abroad. Usually this a/c operated like a current a/c but no checkbook are issued against

his a/c. Withdrawals may be made through withdrawals slips. Interest may be paid on this

a/c if it is maintained in the form of term deposit for a minimum of 90 Day’s

Bangladeshis’ living abroad can open even without initial deposit. A nominee can be

appointed.

Documents required: When an eligible person is interested to open an F/C account his

passport is to be checked and signature verified. When he is staying abroad his signature

is to be verified and attested by –

i) Bangladeshi embassy on that country

ii) His banker in this country

iii) Notary public of that country

Following documents are needed to:

i) Photocopy of 1st 4 pages of passport

ii) Photocopy of visa and work permit

iii) Nominees photo and account no.

iv) Declaration of source of income.

v) National ID card photocopy for both a/c holder& nominee.

3.3.8 Issue of Duplicate cheque book:

Duplicate cheque book in lieu of lost one should be issued only when A/C holder

personally approaches the bank with an application. Fresh Cheque Book in lieu of lost

one should be issued after verification of the signature of the Account holder from the

Specimen signature card and on realization of required excise duty only with prior

approval of manager of the branch. Cheque series number of the new cheque book should

be recorded in ledger card signature card as usual. Series number of lost cheque book



should be recorded in the stop payment register and caution should be exercised to guard

against fraudulent payment.

3.3.9 Formalities maintained for closing an account:

• The customer may inform the bank in writing of his/her intension to close the

account.

• The customer has to apply to the branch in charge for closing the account. Then the in

charge will remark on the account closing application for closing the account.

•By drawing a cheque of the whole amount and a nil balance confirmation to be takenfrom the account holder.

• Recover the unused cheque leaves and enter into the “Broken cheque book register”

• Remove the account opening form, specimen signature card and all other papers

relating to the closed account.

• Remarks of account closing at the ledger folio should be authenticated by themanager or supervising officials

• The banker may itself ask the customer to close the account when the banker findsthat the account is not been operated for a long lime.



• If the account is not operated upon for 6 months then the banker will try to do the

bilateral communication with the account holder. But if the banker does not get any

response from the account holder then the account becomes “Dormant” account.

• If the is not the operated upon for 2 years then the account becomes “inoperative”account.

• A new register for unclaimed deposit account will be maintained called “unclaimeddeposit account.

• For withdrawal at any amount from tat account, permission from head office or controlling office wins is required.

3.3.10 Interest rate on deposit:

Interest rate different types of deposit as prescribed by PBL head office from time to time

irrespective of size of deposit

Type of Deposits Interest rates

a. Saving deposit 6.25%

. Special notice deposit 6.50%

c. Fixed Deposit 8.50%

3 Months 8.00%

6 months 8.25%

1year 8.50%

3.3.11 Learning of This Section:

• The signature of the account holder use in all banking activities.

• The customer may appoint nominee who can handle his account in case of

holder’s death even in special circumstances with the permission of the account

holder.

• Present and permanent address with father’s or husband’s name of the concerned

account holder to be recorded very carefully.

• The type of account, the prospective Customer wishes to open should be

determined.



• In case of proprietorship or partnership business account proper trade license in

the name of business firm should be obtained.

• The required Account Number for the Account from the Account Opening

register should be obtained.

• Signature and a/c number of the introducer and gets the signature properly

verified by an authorized officer of the bank.

• The deposit slip properly filled in and signed by the customer in duplicate should

be collected.

• Have to place the signature cards, advice of new account, a copy of deposit slip

photographs and other necessary papers/documents etc in a file and obtain

approval of the authorized officer for opening the new account.

• Get each signature of the Customer/Introducer on the Advice of New a/c and on

the signature cards admitted by the authorized officer of the Bank using a rubber

stamp.

• When delivering the cheque book account number, name of customer branch seal

on each leaf of the cheque book have to check carefully..

3.4 Clearing Section

The Cheque Clearing Section of PBL principal office branch sends Inter Branch Debit

Advice (IBDA) to the Head office on the receiving day of the instruments. The main

Branch takes those instruments to the Clearing House on the following day. If the

instrument is dishonored, Head office of PBL, sends IBDA to the PBL, Principal Office

branch. The total procedure takes three days if everything goes orderly.

The Cheque Clearing Section of PBL, Principal Office branch sends Outward Bills for

Collection (OBC) to the concerned Paying Bank to get Inter Branch Credit Advice

(IBCA) from the paying Bank. If the instruments are dishonored by the Paying Bank, the



Paying Bank returns it to the PBL, Local Officer Branch describing why the instruments

are dishonored. The procedure takes around a week.

The Cheque Clearing Section of PBL, Principal office branch sends Outward Bills for

Collection (OBC) to the concerned paying Branch to get Inter Branch Credit Advice

(IBCA) from the paying returns it to the PBL, Local Office branch describing why the

instrument is dishonored.

3.5 Local Remittance Section

Local Remittance is used to transfer of funds denominated in Bangladesh Taka between

banks within the country. It is an order from the Issuing branch to the Drawee Bank/

Branch for payment of a certain sum of money to the beneficiary. The payment

instruction is sent by Telex / Telegram and funds are paid to the beneficiary through his

account maintained with the Drawee branch or through a pay order if no a/c is maintained

with the drawee branch. The cash department does remittance of cash. Instruments of

local remittances at PBL branches are follows

Local Remittance

Telegraphic transfer

TT

Demand Draft

DD

Pay Order

3.5.1 Telegraphic Transfer (TT):

Telegraphic Transfer is a quick mode of remitting funds over telex or Telegram. Now

this term has used as Telephonic Transfer also which is faster than previous one for

money transfer. Following points have to consider for the TT



1. On receipt of T.T payment instructions the following entries are passed by the

Drawee branch if the T.T is found to be correct on verification of Test Number.

i) Dr. PBL General A/C

Cr Remittance Awaiting Disposal- T.T Payable A/c

ii) Dr Remittance Awaiting Disposal-T.T Payable A/c

Cr Client’s Account P.O. A/C.

If the beneficiary does not maintain any a/c with the Drawee Branch a P.O is

issued in favor of the payee and sent to his banker/local address as stated.

2. Every branch maintains a prescribed T.T. Payable Register. All the particulars of

T.T are to be properly recorded in this Register duly authenticated. A separate

type of T.T confirmatory advice is sent to the Drawee branch on the same day. On

receipt of the T.T Confirmatory advice/confirmation copy of telegram from the

issuing branch, the particulars of the T.T are verified with reference to particulars

already recoded in the T.T payable Register.

The Confirmatory advice are kept attached with the relative Ticket No further

responding entry is required to be passed on receipt of such confirmation copy.

On payment of T.T the particulars are to be incorporated in the Extracts Responding

Debit entries as usual as usual and sent to HORC.

Procedure of Issuing TT

Customers fillup a printedapplication

form.

Cash Dept. receivecash with commission@ 15% telex charge

Tk. 40 and issue debitticket to L/R

On receiving debit ticketL.R dept. make entriesinto the register & issue

TT and issuing creditadvice in triplicate

LR dept prepares telexmassage in duplicatefor drawee branch andarrange to send the

same through test keyDept.



3.5.2 Demand Draft (DD):

Demand Draft is an instrument containing an order of the Issuing branch upon another

branch known as Drawee branch, for payment of a certain sum of money to the payee or to his order on demand by the beneficiary presenting the draft itself.

Precautions for Demand Draft

1. Get the application form properly filled up and signed by the applicant.

2. Complete the lower portion of the Application form meant for Bank’s Use.

3. Calculate the total amount payable including Bank’s commission/charges etc.

4. If a cheque is presented for the payment of the DD officer should get the cheque

duly passed for payment by the competent authority and record the particulars of

DD on the back of the cheque.

5. If the purchaser desires his account with the branch to be debited for the amount

of DD the officer should get the A/c holder’s signature verified properly, from

signature card on record of the branch and debit client’s a/c for the total amount

including commission charges etc.

6. If cash deposit is desired, request the purchaser to deposit the money at the

Teller’s counter.

7. The teller, after processing the application form, cash or cheque, will validate the

Application form.



8. The first copy of the Application form is treated as debit Ticket while the second

copy is treated as Credit Ticket and sent to Remittance Department for further

processing. The third copy is handed over to the Applicant as customer’s copy.

Each branch maintains a running control serial number of their own for issuance of

DD on each Drawee Branch. This control serial number should be introduced at the

beginning or each year which will continue till the end of the year.

Procedure of issuing D.D

The Remittance Department maintains prescribed DD Issue Register. All the required

particulars of all DD issued should be entered in that Register duly authenticated.

Separate folios are opened for each Drawee Branch. While issuing local Draft of Tk.

50,000/- and above, branches shall put a test number in Red-Ink on the upper portion of

the drafts so that the drawee branch can immediately make payment of the DD on

presentation after getting the Test agreed, if otherwise found in order.

Customers fill up a printedApplication form.

Cash dept. Receivecash withcommission and postage stamps.

On receiving IDT or applicant form withsignature verifiedL/R make entries in

to the register andissue inter bank credit advice in favor of Drawee branch

Cash dept. verified the signatureof the client and checks the balance of a/c L/R dept. Debitcustomers a/c



Issuing a Duplicate DD

Duplicate DD should not normally be issued unless thoroughly satisfactory evidence is

produced regarding loss a draft. If the DD reported lost/stolen, a duplicate draft may be

issued by the branch on receipt of a written request from the purchaser.

Before issuing a duplicate DD the branch should observe the following:

1. Verify the Purchase’ signature on the request letter from the signature appearing

on the original application form.

2. Immediately issue a stop payment instruction to the Drawee branch under advice

to Head Office and obtain confirmation of non-payment of the DD acquisition.

3. After the Drawee branch has acknowledgement the stop payment order and

confirmed that the local draft in acquisition remains unpaid at their and

confirmed that the local draft in acquisition remains unpaid at their end, the

Issuing branch should obtain an Indemnity Bond on stamped paper/letter of

indemnity branch should obtain an Indemnity Bond on stamped paper/letter of

indemnity as per prescribed format from the purchase duly signed by hi,. The

branch will therefore write to Head Office, for their approval to issue a duplicate

draft.

4. The Head Office on receipt of request from the issuing branch will immediately

issue a caution circular to all the branches regarding the loss of the local draft

asking them to record stop payment.

5. The Head Office will therefore issue clearance to the Issuing branch for issuing a

Duplicate draft in lieu of original reported lost.



6. Receipt of clearance from Head Office, the issuing branch will issue a

completely fresh draft marking clearly the words duplicate issued in lieu of

original draft no…………………. dated……………………….in bold letter on

the top of the front page of the draft. The printer serial number on the draft

should not however be struck off. Intimation should be given to the drawee

branch furnishing full particulars of the Duplicate draft. In case of issue of

duplicate foreign draft (F.D.D) the Reconciliation Department, Head Office

(HORC) should also be informed.

7. The particulars of the duplicate draft resemble those of the original draft in all

respects that is all the particulars to the duplicate draft must be identical with

those in the original draft. No further (Inter Branch Credit Advice) IBCA is to be

issued for the duplicate draft.

8. Prescribed duplicate issuance charge is to be recovered for issuing the duplicate

and credited to income a/c.

Cancellation of Demand Draft

The following procedure should be followed for cancellation of a DD:

1) The purchase should submit a written request for cancellation of the DD attaching

therewith the original DD.

2) The Signature of the purchase will have to be verified from the original

application form on record.

3) Manager/ Sub-Manager’s permission is to be obtained before refunding the

amount on cancellation.

4) Prescribed cancellation charge is to be recovered from the applicant and only the

amount of the draft less cancellation charge should be refunded.

Commission/Postage etc. Charge recovered for issuing the DD should not be

refunded.

5) The DD should be affixed with a stamps canceled under proper authentication and

the authorized office’s signature on the DD should also canceled with Red in but



in no case should be torn. The canceled DD should be kept with the relevant

ticket.

6) The original entries are to be reversed giving proper narration. An (Inter Breach

Debit Advice) IBDA for the canceled DD should be issued on the Drawee branch.

7) Cancellation of the DD should also recorded in the L.D Issue Register.

Payment of DD

1. When a DD is presented for payment at the paying branch its details are to be

carefully examined with references to the following points.

i) Whether the draft is drawn on their branch

ii) Whether the draft is crossed or not Amount of a crossed draft is not

paid in cash to the payee but to be paid to his account with a bank.

iii) Two authorized officials of the Issuing branch must have signed draft.

Their signatures are to be verified from specimen signature book let to

be sure that the draft is genuine. The verifier should out his initials in

red ink against the authorized signature in the draft.

iv) Endorsement on the back of the draft must be regular in case the draft

is presented through clearing.

v) The amount of the draft should not exceed the amount protect graphed

written in red ink on the top of the draft.

vi) The payee is to be properly identified in case of case payment.



vii) The particulars of the draft i.e. the draft number date amount and the

name of payee, should be verified from the DD payable Register.

2. On payment the DD is affixed with the branches Paid stamps and signatures there

on are canceled with red ink. The data of payment is recorded in the DD payable

register necessary accounting entries are also passed and recoded in the books of

Account.

With IBCA

Dr Remittance Awaiting Disposal L.D payable a/c

Cr. Client’s Account/Teller’s Cash

With IBCA

a. After receiving without Advice a/c

Cr. Client’s a/c/Teller’s Cash

b. After receiving the IBCA

i. Dr. PBL general A/c

Cr Remittances Awaiting Deposit DD payable a/c

ii. Dr Remittances Awaiting Disposal DD payable a/c

Cr DD Paid without Awaiting Disposal DD payable a/c.

As the draft is issued by the Issuing branch, the payee or purchase of the draft cannot give

stop payment instructions to the Drawee branch. If a paying branch receives any request

from the payee/endorsee or the purchase of a draft for stopping payment of the draft, it

will ask them to approach the issuing branch for the purpose. The paying branch should

however exercise necessary precaution in this regard. Only the Issuing branch can issue



instructions for stop payment of draft under special circumstances. However, if a draft on

which stop payment order is received from a court of law the same should be carried out.

Only the purchase can request the Issuing branch for cancellation of a L.D. The drawee

branch can not cancel a L.D. The Drawee branch can accept cancellation instructions

only from the issuing branch. When a draft is cancelled by the Issuing branch the relative

entry is the PBL general a/c is reversed and IBDA from the Issuing branch, the Drawee

branch should reverse the original liability entries the strength of the IBDA and record

suitable remarks in the L.D payable Register Related IBCA of the draft.

3.5.3 Pay Order:

a. Pay order issue process

For issuing a pay order the client is to submit an Application to the Remittance

Department in the prescribed form (in triplicate) properly filled up and duly

signed by application. The processing of the pay order Application form, despot

of cash/cheque at the Teller’s country and finally issuing a order etc, are similar to

those of processing of L.D (loan Draft) Application.

As in case of L.D each branch should use a running control serial number of their

own for issuance of a pay order. This control serial number should be introduced

at the beginning of each year which will continue till the end of the year. A fresh

number should be introduced at the beginning of the next calendar year and so on.

b. ChargesFor issuing each pay Order commission at the rate prescribed by Head Office isrealized from the client and credited to Income A/c as usual.

c. Entries

Dr. Teller’s Cash/client’s a/c

Cr pays Order a/c



Cr commission a/c

d. P.O issue Register

The remittance Department will issue the pay Order’s duly crossed “A/c payee”

and will enter the particulars of the P.O Issued in the prescribed P.O Register duly

authenticated.

e. Payment of pay orders

As the P. Os crossed A/c payee, the same are presented to the Issuing branch for

payment either through clearing of for credit to the client’s A/c. Os when

presented for payment are processed in the Remittance Department. On making

payment, the relative entry in the P.O Register is marked of by entering the date

of payment in the P.O Register duly authenticated. The paid instrument is treated

as Debit Ticket.

f. Refund of Pay Order

The following procedure should be followed for refund of pay order by

cancellation

1. The purchase should submit a written request for refund of pay order by

cancellation attaching therewith the original pay order

2. The signature of the purchaser will have to be verified from the original

application form on record.

3. Manager/Sub-manager’s prior permission is to be obtained before refunding

the amount of pay order cancellation.

4. Prescribed cancellation charge is to be recovered from the application and

only the amount of the pay order less cancellation charge should be refunded.

5. The pay order should be affixed with stamps “cancelled” under should also be

canceled with RED ink but in no case should be torn. The canceled pay order

should be kept with the relevant Ticket.

6. The original entries are to be reversed with proper narrations.

7. Cancellation of the pay Order should also be recorded in the pay order Issue

register #Issue and payment of Pay-order:



Strictly speaking pay-order is not meant for remittance. Because it is payable

by the issuing branch. An order is issued to facilitate fund transfer within a

clearing area.

Dr. Teller’s cash/Client A/c

Cr. Manages cheque

Cr. Commission

Up to Tk.1000 Tk. 10

Tk.1001-100000 Tk. 25

Tk.100, 001-500000 Tk. 50

Above Tk.500000Tk. 100

When paying against pay-order following entries are passed

Dr. Manager’s cheque

Cr Cash/Client A/c

3.5.4 Learning of This Section:

• The Applicant have to carefully fills up the relevant part of

the prescribed Application form in triplicate, duly signs the same andthen gives it to the Remittance Department

• Responsible Officer have to carefully fill up the

commission part for Bank’s use and request the Applicant to deposit

necessary cash or cheque at the Teller’s counter.

• The teller after processing the application form, Cash or

cheque has to validate the Application form. The first copy is treated

as Debit Ticket while the second copy is treated as Credit Ticket and

sent to Remittance Department for further processing. The third copy

is handed over to the applicant as customer’s copy.

• While transferring money using the mobile responsible

officer must be careful about the phone code of each branch and note

the name of responding officer of that branch. Communication



through mobile must carefully handled otherwise any fraud

transaction may happen.

• Necessary Advice has to prepare carefully considering the

date, amount, branch code, customer name, transaction code etc.

Debit Advice is sent to the client’s a/c is debited for the amount of

T.T

3.6 Cash

The cash section performs some important functions like cash payment and cash

received. Except these two major functions it also performs some other functions like

opening of cash every day balance calculation.

3.6.1 Function of cash department:

Cash department is the busiest and the most important department of the branch. All cash

receipts and payment including inter branch or inter bank cash transactions are doneunder the cash department.

Accounting and recording process of this department are very scientific, transparent and

modern. All cash transactions are put into computer in batches and balances are matched.



Unlike traditional banking, separate accounts are maintained for vault cash a/c and

teller’s cash a/c respectively.

There is no strict division of work among tellers. Each of them is doing both receipt and

payment. This is possible because cash is preparing separate tellers cash position.

3.6.2 Cash Received tools:

Cash is received in following forms or slips

i) Deposit slips (for deposit into clients account)

ii) IBCA For inter branch cash transaction

iii) I.D.T (inter department ticket)

iv) Prize Bond

v) Credit voucher

Cash department not only receives cash but also checks and drafts which are deposited

for collection. Cash proof sheet from each teller and cash transaction with branches or

BB (Bangladesh Bank) are recorded on reserve sheet to find out closing cash reserve. Atthe end of the day a summary cash position is prepared and matched with actual cash

position and computer balance report. If their closing position along with the subsidiary

register book then the transactions of the day is ok.

3.6.3 Cash Receiving Procedure:

Received cash by the

teller at cash counter ondeposit slip, credit ticketetc.

Counting the notes and

checking denominations givenon the back of the deposit slips,credit ticket etc. etc.

Filling the cash proof sheet

Having the original andthe duplicate copy of deposit slips signed by the

cash officer

Returning theduplicate copy to theclient



Cash proof sheet from cash teller and each transaction are recorded on reserve sheet to

find out closing cash reserve. At the end of the day a summery cash position is prepared

and checked with actual position and computer balance report. If the three closing

position matches, then the transaction of the day are ok .

3.6.4 Cash Payment tools:

1) Cheque, draft, pay order, TT

2) Debit voucher (Realization of FDR proceeds)

3) Debit tickets

4) IBDA (Inter Branch Debit Advice) issued from the branch.

5) IBCA (Inter Branch Credit Advice) issued by another bank of Head office.

Vault Limited TK. 1.00 Crore

Cheque Payment authority to cash in charge TK 1 lac

3.6.5 Cash Payment Procedure:

When cash is transferred to any other branch the following a/c entries are made with the

passing of inter branch debit advice.

Presenting Check (By order or by holder)

Scrutiny of Cheque by the teller

Checking computerizesStatement of Balance of A/C by the cash incharge

Approving/canceling the

Cheque by the sign of cash in charge

Verification whether checked by the teller



Dr. PBL general A/C

Cr. Reserve cash

When cash is received from any other branch of PBL following entries are made

Dr. Reserve Cash

Cr. Tellers Cash

When tellers take cash from reserve following entries for total receipt

Dr. Reserve Cash

Cr Teller Cash

For total cash received against Inter Department Ticket (IDT) following entries are made:

Dr. Teller Cash

Cr. IDT

At the end of the day for all payments against cheques and debit vouchers following

single entries are made:

Cr Tellers a/c

3.7 Accounts Department

Accounts Department is called as the nerve Centre of the bank. In banking business

transactions are done every day and these transactions are to be recorded properly and

systematically as the banks deal with the depositor’s money. Any deviation in proper

recording may hamper public confidence and the bank has to suffer a lot otherwise.

Improper recording of transactions will lead to the mismatch in the debit side and in the

credit side. To avoid these mishaps, the bank provides a separate department; whose

functions are to check the mistakes in passing vouchers or wrong entries or fraud of

forgery. This department is called as Account Department.Besides the above, the bank has to prepare some internal statements as well some

statutory statements which to be submitted to the central bank. Accounts Department

prepares these statements also. The department has to submit some statements to the

Head Office, which is also consolidated by the Head Office later on. The tasks of the

department may be seen in two different angles:



A. Daily Task: The routine daily tasks of the Accounts Departments are as follows,

1. Recording the transactions in the Clean cash books

2. Recording the transactions in general and subsidiary ledger

3. Preparing the daily position of the branch comprising of deposit and cash

4. Preparing the daily Statement of Affairs showing all the assets and liability of

the branch as per General Ledger and Subsidiary Ledger separately.

5. Making payment of all the expenses of the branch

6. Recording Inter branch fund transfer and providing according treatment in this

regard.

7. Checking whether all the vouchers are correctly passed to ensure the

conformity with the ‘Activity Report”, if otherwise making it correct by

calling the respective official to rectify the vouchers.

8. Recording of the vouchers in the Vouchers Register.

9. Packing of the correct vouchers according to the debit voucher and the credit

voucher.

B. Periodical Task: The routine periodical tasks performed by the department are as

follows:

1. Preparing the monthly salary statement for the employees.

2. Publishing the basic data of the branch

3. Preparing the monthly position for the branch which is sent to the Head Office

to maintain Statutory Liquidity Requirement (S.L.R)

4. Preparing the weekly positions for the branch comprising of the break of

sector wise deposit, credit.

5. Preparing the weekly position for the branch comprising of denomination wise

statement of cash in tills.

6. Preparing the quarterly statement (SBS-2 and SBS-3) where SBS-2 shows

“classifications of deposits excluding inter bank deposit, deposits under wage

earners’ scheme and withdrawals from deposit account” and SBS-3 shows

“classifications of advances (excluding inter bank) and classification of bills

purchased and discounted” during the quarter.



7. Preparing the budget for the branch by fixing the target regarding profit and

deposit.

CHAPTER

FOUR



Foreign Exchange

4.1 Introduction

4.2 International Trade

4.3 Function of Foreign Exchange Department

4.4 Import Section

4.4.1 Importer’s Application for L/C Limit/Margin

4.4.2 The L/C Application

4.4.3 IMP-Form4.4.4 Scrutiny of L/C Application

4.4.5 Precautions for issuing L/C

4.4.6 Amendment of L/C

4.4.7 Credit Report on Beneficiary

4.4.8 Presentation of the Documents

4.4.9 Examination of Documents

4.4.10 Handling of Discrepant Import Document

4.4.11 Receiving Documents

4.4.12 Lodgment & Retirement

4.4.13 Payment against document (PAD)

4.4.14 Loan against Imported Merchandise (LIM)

4.4.15 Loan against Trust Receipt (LATR)

4.5 Export Section

4.5.1 Back-to-Back L/C

4.5.2 Export L/C

4.6 Exchange rate and foreign remittance

4.6.1 Exchange rate



4.6.2 Foreign Remittance

4.7 My Learning

Foreign Exchange

4.1 Introduction

Foreign trade financing is an integral part of banking business. Documentary Credit (also

called letters of credit or "L/Cs") is the key player in the foreign exchange business. With

the globalization of economies international trade has become quite competitive. Timely

payment for exports and quicker delivery of goods is, therefore, a pre-requisite for

successful international trade operations. Growing complexity of international trade,

separation of commercial parties across the globe and operating In a totally unknown

environment underlined the need for evolving a system that balances between the

expectations of the seller and the buyer Documentary Credit has emerged as a vital



system of' trade payment, and fulfilled the requisite commercial need. This system

substantially reduces payment-related risks for both exporter and importer. Not

surprisingly, therefore, the letter of credit is the classic form of international export

payment, especially in trade between distant partners. The bank upon presentation makes

payment, acceptance or negotiation of the credit by the seller of stipulated documents

(e.g., bill of lading, invoice, and inspection certificate).

This part of the report consists of the following areas

1) International Trade : Import & Export

2) Foreign Exchange related banking terms & rules

3) Foreign Exchange rate & foreign Remittance.

Foreign exchange transaction is classified according to their activities:

Foreign Exchange

Export Import Back to Back Remittance

Govt Sector Private Sector



Outward Remittance Inward Remittance

4.2 International Trade

International trade is the trade between countries with the rest of the World. Now we live

in a global economy. In the age of globalization each country has free access to the

market of other with quality goods and services.

International Trade has two components – as following Import & Export.

International Trade

Import Export



To handle of International transaction in a sound and efficient manner there must have

a written contract between the buyer & seller. For international trading purpose a Bank or

Banks may involve in this contract and then the contract renamed into a letter of credit. It

is the media under which the international trades are concluded.

4.3 Function of Foreign Exchange Department

1. L/C Opening

2. L/C Amendment

3. Sanction Payment against Document (PAD), Loan against Imported Merchandise

(LIM), Loan against Trust Receipt (LATR).4. T.C issuing

5. Foreign Bill Purchase (FBP)

6. Local Bill Purchase (LBP)

7. Foreign Remittance

8. FC A/C maintaining

9. Foreign Currency remitting

Foreign Exchange Mechanism

1) L/C Opening

2) Issue the L/C by issuing Bank and send to advising bank

3) Advised and or confirm the L/C by Advising and Add confirming Bank

4) Submit the documents to Negotiating Bank by export



5) The Negotiating Bank makes payment

6) The Negotiating Bank forward/sends documents to issue bank

7) Issuing Bank makes payment to negotiating bank

8) A issuing bank instructs to pay or reimburse the paying bank and paying bank

makes payment or reimburse to the negotiating bank

9) Issuing bank sends documents to the importer

10) The importer makes payment

Types of L/C Offered:

Letter of Credit (L/C) can be defined as a ‘Credit Contract’ whereby the buyer’s bank is

committed (on behalf of the buyer) to place an agreed amount of money at the seller’s

disposal under some agreed conditions. It is also known as documentary letter of credit. It

may be either:

(i) Revocable: A revocable credit is a credit, which can be amended or

cancelled by the issuing bank at any time without prior notice to the

seller.

(ii) Irrevocable: It constitutes a definite undertaking of the issuing bank

(since it can’t be cancelled or amended without the agreement of all

parties thereto), provided that the stipulated documents are presented

& the seller satisfies the terms and conditions.

Special documentary Credit:

• Revolving Credit: It is the credit, which provides for restoring the

credit to the original amount after it has been utilized.

• Transferable Credit: the original beneficiary in full or in part to one

or more subsequent beneficiaries can transfer it.



• Back-to-Back Credit: It is a new credit opened on the basis of anoriginal credit in favor of another beneficiary.

• Anticipatory Credit: The anticipatory credit makes provision for pre-

shipment payment, to the beneficiary in anticipation of his effecting

the shipment as per L/C conditions.

• Red Clause Credit: A red clause credit is a credit with a special

condition incorporates into it that authorizes the confirming Bank or

any other Nominated Bank to make advances to the beneficiary

before presentation of the documents.

• Green Clause Credit

Parties Involved in L/C:

There are number of parties involved in a letter of credit and the right and obligation of

the different involved parties will differ from each other. The involved parties to a letter

of credit are named below:

1) The applicant/The importer/The buyer 2) Opening bank/Issuing bank

3) The beneficiary/The Exporter/The seller

4) The Advising Bank/The transmitting Bank/The notifying bank

5) The Confirming Bank

6) The Negotiating Bank

7) The Reimbursing Bank/Paying Bank

Characteristics of the importer who wants to open a letter of credit

• Must have an A/C in the branch

• Must be a member of the Chamber of Commerce

• Must be a TIN holder

• Must have IRC(Import Registration Certificate)



• VAT(Value Added Tax certificate)

2. Apply for L/C

ImportL/C

Documentary Credit:

8. Instructto pay or reimburse

ExportL/C

1. Sales Contract

Exporter Importer

Advising/

Confirming

Bank

Issuing

Bank

2. Shipment of Goods

Presenting/

Negotiating

Bank

3. Issues L/C

4.Advises/

Confirms

L/C

6. Sends Documents

for

Reimbursement

7. Asks for Settlement

5. Presents Documents

for Negotiation

Paying/Reimbursing

Bank

Pays or reimburse





4.4 Import Section

The Ministry of Commerce in terms of the Import & Export (Controls) Act 1950regulates import of goods into Bangladesh with import Policy Orders issued periodically

& public notices issued from time to time by the office of the Chief Controller of Import

& Export 9CCI&E).

4.4.1 Importer’s Application for L/C Limit/Margin:

To have an import L/C limit, an importer submits an application to the issuing Bank

furnishing the following information:

1) Full particulars of bank account

2) Nature of business

3) Required amount of limit

4) Payment terms and conditions

5) Goods to be imported

6) Offered to be imported

7) Offered security

8) Repayment schedule.

A credit officer scrutinizes this application and accordingly prepared a proposal (CLP)

and forwards it to the Head Office Credit Committee (HOCC). The Committee, If

satisfied, sanctions the limit and returns back to the branch. Thus the importer is entitled

for the limit.



4.4.2 The L/C Application:

Pubali Bank Limited provides a printed form for opening of L/C to the importer. This

form is known as letter of Credit Application form. A special adhesive stamp is affixed

on the form. While opening the stamp is cancelled. Usually the importer expresses his

desire to open the L/C quoting the amount of margin in percentage.

1) Full named and address of the importer.

2) Full named and address of the beneficiary.

3) Draft amount

4) Availability of credit by sight payment acceptance/negotiation/deferred payment.

5) Time bar within which the documents should be presented

6) Sales type (CIF/FOB/C&F)

7) Brief specification of commodities, price, and quantity, indent no etc.

8) Country of origin

9) Bangladesh bank registration no

10) Import license/LCAF No

11) IRC (Import Registration Certificate) no

12) Account No.

13) Documents required

14) Insurance cover note/Policy no, date amount

15) Name and address of insurance Company

16) Whether the partial shipment is allowed or not

17) Whether the transshipment is allowed or not

18) Last date of shipment

19) Last date of negotiation

20) Other terms and conditions if any

21) Whether the confirmation of the credit is requested by the beneficiary or not.

The above information are given along with the following documents

1) Pro-forma invoice stating description of the goods including quantity, unit price.

(i) Indent: An indent stating the description of the goods including

quantity, unit price, etc. given by the Supplier/Exporter given by the

Indenter.



(ii) Proforma Invoice: Proforma Invoice states the description of the

goods including quantity, unit price, etc. given by the

Supplier/Exporter.

2) The insurance cover notes, issuing company and insurance number.

3) Four set of Import Form (IMP) form.

The Letter Of Credit Authorization (LCA) Form contains the following:

1) Name and address of the importer

2) IRC no. and year of renewal

3) Amount of L/C applied for (Both in figure and in word)

4) Description of item(s) to be imported

5) ITC Number/HS code

6) Stamp and Signature of the importer with seal

4.4.3 IMP-Form:

The IMP form contains the following

1) Name and address of the authorized dealer

2) Amount of remittance to be permitted (i.e. L/C amount)

3) LCA form number, date, and value in Tk.

4) Description of goods, quantity

5) Invoice value in Foreign Currency (i.e. L/C amount)

6) Country of origin

7) Port of Shipment

8) Name of steamer/airline (i.e. by road/by ship/by Air)

9) Port of Importation

10) Indenter’s name and address

11) Indenter’s Registration number with CCI & E and Bangladesh bank

12) Full name and address of the Applicant

13) Registration number of the Applicant with CCI & E

14) Type of LCAF



4.4.4 Scrutiny of L/C Application:

The dealing Officer scrutinizes the application in the following manner-

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

2) Exchange Control & Import Trade Regulation

3) Eligibility of the goods to be imported

4) The L/C must not be opened in favor of the importer

5) Radioactivity report in case of goods item

6) Survey reports in certificate in case of old machinery

7) Carrying vessel is not of Israel or of Serbia-Montenegro

8) Certificate declaring that the item is in operation not more than 5 years in case of

car.

4.4.5 Precautions for issuing L/C:

After submission of documentary letter of credit application form, the concerned officer

scrutinizes the terms and conditions that mentioned in application. He must check the

following things:

1) Whether the terms and conditions of L/C application are consistent with

Exchange control and import Trade regulation UCPDC-500.

2) L/C must not be opened in favor of the importer of his agent.

3) The importer agreeing all terms and conditions mentioned in the application

must sign L/C.

4) Indenting registration number.

5) Whether IMP form dully filled and signed.

6) Validity of Import Registration Certificate (IRC).

7) Insurance cover note with date of shipment.

8) The Harmonize System (HS) code of the goods

9) The balance of the accounts of the importer

10) The goods are not from Israel and vessels to be used is not of Israel

11) The issuing officer will try to keep as much margin as possible.



4.4.6 Amendment of L/C:

Parties involved in a L/C particularly the seller and the buyer cannot always satisfy the

terms and conditions in full as expected due to some obvious ad genuine reasons. In such

situation, the credit should be amended. Issuing Bank transmits the amendment by tested

telex to the advising bank. In case of revocable credit, it can be amended or cancelled by

the using bank at any moment and without prior notice to the beneficiary. If the L/C is

amended, service charge telex charge is debited from the party account accordingly.

4.4.7 Credit Report on Beneficiary:

Before opening of letter of credit, the Authorized Dealer (A/D) branch must obtain a

confidential report on the supplier/beneficiary through its correspondent bank/ recognized

credit agencies.

Accounting and voucher to be passed

Vouchers for Margin Deposit

At the time of opening the L/C the importer is to deposit cash margin as per sanction

terms. After deposit of the cash margin the Authorized Dealer (A/D) or non- Authorized

Dealer (A/D) branch shall credit the same in their Margin Deposit Account. The

following vouchers are to be passed:

Dr. Customers Current A/C

Cr. Other Deposit-Margin Deposit L/C (Foreign)

The following liability vouchers for L/C are to be passed

Dr. Customers Liability under Foreign L/C

Cr. Acceptance Liability under Foreign L/C



Showing Accounting Treatment at The Time Of L/C Opening

Particulars Debit/ Credit Charges in Taka

Customer’s A/C Debit

L/C Margin A/C Credit Commonly 10-30%

Commission A/C on L/C Credit 0.5%

VAT Credit 15% on commission

SWIFT Charge Credit Tk. 2000/=

Foreign Courier Charge (FCC) Credit US$ 25/=

Stamp Credit Tk. 150/=Others Credit Tk. 200/=

Source: Principal Branch, Pubali Bank Ltd.

4.4.8 Presentation of the Documents:

The seller being satisfied with the terms and the conditions of the credit proceeds to

dispatch the required goods to the buyer and after that have to present the documents

evidencing dispatch of goods to the negotiating bank on or before the stipulated expiry

date of the credit. After receiving all the documents, the negotiating bank then checks the

documents against the credit. If the documents are found in order then the bank will pay,

accept, or negotiate to issuing bank checks the documents. The usual documents are

1) Commercial Invoice2) Bill of lading3) Certificate of origin4) Packing list5) Shipping advice6) Non negotiable copy of bill of lading

7) Bill of exchange8) Pre-shipment Inspection report9) Shipment certificate

4.4.9 Examination of Documents:



Import documents include a lot of forms and certificates. Proper checking or inspection

can only ensure the correct and smooth foreign exchange or trade. While checking those

documents following things need to be ensured.

The Letter of Transmittal

Following points have to consider

Addressed to L/C issuing branch.

Current date.

Documentary Credit number.

Documents enumerated are attached.

Value of the documents and the value mentioned in the cover are the

same;

Whether any discrepancy has been noted and whether payment,

acceptance or negotiation was effected against an indemnity or under

reserve.

The Documentary Credit


Correct referenced documentary credit.

Still valid (not expired/cancelled).

Balance in the Documentary Credit is sufficient to cover the value of the

drawing.

Draft/Bill of Exchange




Draft bears the correct L/C number;

Correctly dated;

Name of the Drawer corresponds with the name of the beneficiary;

Drawn on the correct drawer indicated in the L/C;

Amount in words agrees with the amount in figures;

Beneficiary has duly signed the draft;

Tenor is as required by the credit;

No restricted endorsement;

Value of the draft and the value of invoice are identical.

Commercial Invoice


Beneficiary as stated in the documentary credit issues that.

Issued in the name of the applicant (the buyer) named in the documentary

credit.

Description of goods correspondent exactly to that stated in the credit.

Description of goods, value and unit price matches that of the

documentary credit as regards to the amount and currency.

Currency of the invoice is the same as stipulated in the credit.

Value of invoice does not exceed the available balance of the credit.

Invoice is signed as required in the credit.

Correct numbers of original is presented.

Terms of shipment, the invoice amounts correspond proportionally to thedispatched quantity.

Marine/Ocean Bill of Lading




Issued by a shipping company.

Full set of originals issued and presented.

Consignees name and address and correct as stated in the credit;

Bill of lading bears a date of issue, duly signed by the issuer and the name

of the ship appears;

Port of departure and post of destination are correct.

Bill of landing bears an “on board shipped” notation

Name of notify parts name and address are correct.

Goods have been loaded on board, or shipped on a named vessel (indicates

the name of the carrier and it is signed or authenticated by the master or a

named agent for or on behalf of the master.

Correctly marked Freight prepaid or Freight collect.

Issuer has properly authenticated the alteration on the bill of lading.

Goods are consigned as stipulated in the credit (to order of a named

consignee i.e. to the order of the L/C issuing bank.

Bill of lading has been properly endorsed;

Bill of lading is issued to be correct order party as required by the

documentary credit.

Airway Bill


Consignees name and address and the airports of departure and destination

are stated in the Airway bill are consistent and in agreement with the terms

of credit. An air transport document is evidence of contract of carriage

between the carrier and the sender. It is not a document of title of goods;

Document indicates the name of the carrier;

Issuer is the carrier (identifiable as the carrier) or a named agent of the

named carrier;



Airway bill indicates the actual flight date and flight numbers;

Carrier signs that document;

Consignees name and address and notify party’s name and address are

correct.

Issuer authenticates any alternations;

Correctly marked “Freight Prepaid “or” Freight collect” etc;

Shippers’ (consignors) copy being presented.

Certificate of Origin


Country of origin of the goods as stated as in the certificate agrees with the

terms of the credit;

Certificate has been signed as required by the credit;

Stipulated authorities have authenticated the certificate.

Packing List


A unique document and not combined with any other documents;

List contains all the necessary information especially concerning the

packing units;

Data on it is consistent with that of the other documents.

4.4.10 Handling of Discrepant Import Document:

While making scrutiny & examination of the documents, the A/D branches shall ensure

that-

a) Full set of documents as stipulated in the credit has been received.

b) The documents have been drawn strictly as per L/C terms.



The dealing officer checks whether these documents have any discrepancy or not. Here

discrepancy means the dissimilarity of any of the documents with the terms and

conditions of L/C.

4.4.11 Receiving Documents:

If the beneficiary is being satisfied with the terms and conditions of the L/C then dispatch

the goods to the buyer. After that dispatch the documents evidence dispatching of goods

to the negotiating bank on or before the stipulated expiry date of the L/C. After receiving

all the documents, the negotiating bank then checks the documents against the credit. If

the documents are found in order, the bank will send it to the issuing bank.

4.4.12 Lodgment & Retirement:

While lodgment of the import bills under cash L/C, A/D branch shall reverse the liability

vouchers passed at the time of opening L/Cs.

• Reversal of the liability vouchers:-

Dr. Acceptance liability under Foreign L/C

Cr. Customer liability under Foreign L/C

•

Lodgment vouchers to be passed:-Dr. PAD (Payment against document) Account

Cr. Head Office ID through PB General A/C

Cr. Interest Account

Cr. Commission Account- L/C Misc. Handling Commission A/C

• Transfer of Margin to PAD Account:-

Dr. Other deposit-Margin deposit L/C (Foreign)

Cr. PAD Account

Lodgment means retirement of funds. If the documents receiving from the negotiating

bank issuing bank also carefully scrutinize all the documents.



4.4.13 Payment against document (PAD):

This is most sensitive task of the import department. The officials have to be very much

careful while making payment. This task constitutes the following.

Date of Payments:

Usually payment is made within seven days after the documents have been received. If

the payment is become deferred, the negotiating bank may claim interest for making

delay.

Preparing Sale memo:

A sale memo is made at B.C rate to the customer. As the T.T & D.D rate is paid to the

ID, the difference between these two rates is exchange trading. Finally an inter branch

exchange trading credit Advice is sent to ID.

Requisition for the foreign currency:

For arrangement necessary fund for payment, a requisition is sent to the international

Department.

Transmission of telex

For arranging necessary fund for payment bank ensure that payment is being made.

For PAD the following voucher will be passed:

Dr. PAD (Payment against Document)

Dr. Margin on L/C

Cr . Income A/C on PAD

Cr. Income A/C interests on PAD

Cr. Commission on PAD



Reverse entry is given:

Dr. Acceptance liability under Foreign L/C

Cr. Customer liability under Foreign L/C

4.4.14 Loan against Imported Merchandise (LIM):

Loan against import merchandise through the bank may be allowed retaining margin

prescribed on their landed cost, depending on the categories and credit restrictions

imposed by the Bangladesh bank/head office from time to time. Branches shall also

obtain letter of undertaking and indemnity from the clients, before getting goods cleared

through LIM account clearance of the goods should be taken through Approved Clearing

Agent of the Bank.

The following point must be taken to consideration while allowing advance against the

security of imported goods.

Storage of imported goods under Lim facility may be allowed for specified time as

prescribed by Bangladesh Bank/head office of the bank which period importer should

take delivery of the goods against payment, generally part delivery is not allowed from

LIM Account. This may however; it must be ensure that the landed cost the merchandise

is properly worked out before the goods are delivered to the customers against

proportionate payment. Landed cost of valuable and less valuable items should not be

average together. LIM A/C should properly maintain by the bank, Vouchers will be

Dr. LIM A/C

Cr. PAD A/C

4.4.15 Loan against Trust Receipt (LATR):

If the documents are required to deliver against LATR (Loan against Trust Receipt), prior

approval is required from Head Office. Documents to be delivered to the Importer

through approved C&F agent for clearance of good for a certain period on the merit of

goods & nature of business. For LATR the following vouchers are to be passed:



Dr. LATR A/C

Cr PAD A/C

4.5 Export Section

In the export section two types of L/Cs are opened

• Back to Back L/C

• Export LC

4.5.1 Back-to-Back L/C:

A back-to-back mechanism involves two separate L/Cs. One is master export L/C and

another is back-to-back L/C. On the strength of Master L/C Bank issues Back to Back

L/C. Back to Back L/C is commonly known as Buying L/C. On the contrary, Master

Export L/C is known as Selling.

Features of Back-to-Back L/C:

• Is an import L/C procedure goods/raw materials further processing

• Is opened based on Export L/C

• Is a kind of Export Finance

• Export L/C is at sight but back to back L/C

• No margin is required to open Back to Back L/C

Checklist to open Back-to-Back L/C:

• Application is registered with CCI & E and has bonded warehouse License.

• The Master L/C has adequate period and has no defective clause

• L/C value shall not exceed the admissible percentage of net FOB value of relative

Master LC

• Usage period will be up to 180 days

• Papers required opening back to back L/C

• Import registration certificate & Export Registration certificate

• L/C Application & LCA form.



• Proforma Invoice/Indent

• Insurance Policy

• IMP form

•

In addition to above following papers are required for read made garmentsindustry

• Bonded warehouse license

• Quota allocation letter from EPB (where applicable)

• Letter of disclaimer from Landing if rented premises.

Steps to issue Back-to-Back L/C

• Obtain all required papers

•

Check the credit limit• Prepare offering sheet if regular credit line is not available

• Mark lien on the master L/C

• Issue the L/C

Payment under back-to-back L/C

• Payment at maturity out of exports proceeds

• In case of export failure or non-realization/Short realization of export proceeds

forced loan i.e. Pad has to be created in order settle the back-to-back L/C payment.

Precautionary measures:

• Including the clause for pre-shipments inspection certificate

• Shipping guarantee under no circumstances

• Discrepant documents shall not be accepted

• Proper care regarding amendments of Master L/C

Accounting Treatment for Back-to-Back L/C

When the documents is arrived the following vouchers are passed

Customer’s Ac--------------------Dr

Commission on acceptance ……Cr



In case of payment, if the fund is at hand, the accounting entries are sundry deposit

Margin on Acceptance…………Dr

Customer’s A/C………………..Cr

If the party is paid foreign currency B.C rate is applied in this regard. International

Department takes the T.T.O.D rate. If the payment is made to ID in local currency in

national rate ID following T.T Clear rate. When the party is to pay OD sight rate is

followed.

If the fund is not available to make the payment, the following vouchers are to be passed.

PAD……………….Dr

Customer’s AC…Cr

Reporting to Bangladesh Bank:

At the end of every month, the reporting the following information is mandatory:

a) Filling of E-2/P-2 schedule of S-1 category; which covers the entire month

amount of import category of goods, currency, country etc.

b) Filling of E-3/P-3 schedule for all charges, commission with T/M form.

c) Disposal of IMP form, which including

(i) Original IMP is forwarded to Bangladesh Bank with invoice

and indent

(ii) Duplicate IMP is kept with the bank along with the bill of

entry/certified invoice.

(iii) Triplicate IMP is kept with the bank for office record.

(iv) Quadruplicate is kept for submission to Bangladesh Bank in

case of imports where documents are retired.

4.5.2 Export L/C:

The other type of L/C facility offered by Pubali Bank Limited is Export L/C. Bangladesh

export a large quantity of goods and services to foreign households. Ready made textile



garments (both knitted and woven), jute, Jute made products frozen shrimps, tea are the

main goods that Bangladesh exporters exports to foreign countries.

Formalities for Export L/C:

The export trade of the country is regulated by the exports (control) Act, 1950. The

formalities of export L/C are as follows

1) ERC: Exporters must hold a valid Export Registration Certificate (ERC). The

ERC is required to be renewed every year. The ERC number is to be incorporated

on EXP forms and other documents connected with exports.

2) Obtaining EXP: After having the registration, the exporter applies to Pubali

Bank Ltd. With the trade license, ERC and the Certificate from the concerned the

exporter, An EXP from contains the following particulars:

i) Name and address of Authorized Dealer ii) Particulars of the commodity to be exported with Codeiii) Country of Destinationiv) Port of Destinationv) Quantityvi) L/C value in Foreign Currencyvii) Terms of saleviii) Name and address of Importer/Consigneeix) Bill of Landing/Railway Receipt/ Airway Bill/Truck Receipt/Post

Parcel received no and datex) Port of shipment/Post office of Dispatchxi) Land customer postxii) Shipment datexiii) Name of the exporter with addressxiv) CCI & E’s Register number and date of the exporter xv) Sector (Public or Private) under which the Exporter falls.

3) Securing the order: Upon registration, the exporter may proceed to secure the

export order. Contracting the buyers directly through correspondence can do this.

4) Signing of the contract.

5) Procuring the materials. After making the deal and on having the L/C opened in

his favor, the next step for the exporter is to set about the task of procuring or

manufacturing the contracted merchandise.



6) Registration of Sale: This is needed when the terms proposed to be exported are

raw jute and jute goods.

7) Shipment of goods: The following are the documents normally involved at the

stage of shipment.

i) Export form

ii) Photocopy of registration certificate

iii) Photocopy of the contract

iv) Photocopy of the L/C

v) Customs copy of ERF form shipment of jute goods and EPC form for

raw jute.

vi) Freight certificate from the bank in case of payments of the freight at

the port of landing is involved

vii) Railway receipt, Berg Receipt of truck Receipt

viii) Shipping instructions

ix) Insurance policy

After that exporter submit all these documents along with a letter of indemnity to Pubali

Bank for negotiation. An officer scrutinizes all the documents. If the documents is a

clean one. Pubali Bank purchases the documents the documents on the basis of banker,

customer relationship. This is known as foreign Documentary bill purchase (FDBP).

Procedure for Foreign Documentary Bill Purchase (FDBP)

If all the documents are in order then the bank purchase the documents. Several things

should be checked at the time of purchasing.

How much back-to-back and PC (packing Credit) facility the client has taken.After taking all these charges, the rest amount is paid to the client and a FDBP account isopened.

After purchasing the documents, Pubali Bank given the following entries:-

FDBP A/C……………Dr



Customer A/C………Cr (Before realization of proceeds)Head Office, ID A/C………Dr.FDBP A/C………………..Cr (Adjustment after realization of proceeds)

Foreign Documents Bills for Collection (FDBC):

Pubali Bank forwards the documents for collection due to the following reasons –

i) If the documents have discrepanciesii) If the exporter is new clientiii) The banker is in doubt.

Foreign documentary bills for collection signify that the exporter will receive payment

only when the issuing bank gives payment. The exporter submits duplicate EXP from and

commercial invoice subsequently. The of the bill is calculated and the following

accounting entries are given-

Head office A/C Dr. @ T.T CleanClient’s A/C Cr @ O.D SightGovernment Tax A/C Cr. % invoice valuePostage A/C Cr Income A/C. Profit on exchange Cr.

After passing the above vouchers, an inter Branch exchange trading debit advice is sent

to debit the NOSTRO account. Pubali Bank has NOSTRO accounts with its reimbursing

bank. An FDBC register is maintained, where first entry is given when the documents are

forwarded to the issuing bank for collection and the second one is done after realization

of the proceeds.



4.6 Exchange rate and foreign remittance

4.6.1 Exchange rate:

Exchange rate and is the rate at which a specific currency can be exchanged with a

standard foreign currency. A foreign exchange transaction is either sells or purchase

transaction. Therefore, the bank would quote two different rates of exchange.

Buying Rate & Selling rate:

The rate at which the central bank of any country buys foreign money is called buying

rate. On the other hand, the rate at which the central bank of any country sells foreign

money is called selling rate:

Classification of Exchange Rate:

1) Fixed Rate

2) Floating Rate:

• Independent Floating

• Managed floating

• Pegging

o Single currency

o Composite currency: a SDR, & b) Other basket

Exchange Rate Quotation:

Exchange rate quoted by the following two ways:



Direct: If the exchange rate is expressed in variable units of domestic currency for

a fixed unit foreign currency. It is also called pence rate.

Indirect: If the exchange rate is expressed in variable units of foreign currency for

a fixed unit of domestic currency. It is also called currency rate.

4.6.2 Foreign Remittance:

"Foreign remittance" means purchase and sale of freely convertible foreign currencies as

admissible under Exchange Control Regulations of the country. Purchase of foreign

currencies constitutes inward foreign remittance and sale of foreign currencies constitutes

outward foreign remittance.

The transaction of the authorized dealer in foreign exchange involves either outward or

inward remittances of foreign exchange from one country to another.

Foreign remittances of two kinds

(i) Inward remittance &

(ii) Outward Remittance

The term “ Inward remittance” including not only remittances by TT, MT, Draft etc but

also purchase or bills travelers cheque etc.

On the other hand, remittance from our country is called outward foreign remittance.

The foreign remittance department of Principal Branch, Pubali Bank, Dhaka is equipped

with a number of foreign remittances facilities, which are –

1) Issuance of Foreign Demand draft

2) Issuance of Traveling Cheques3) Endorsement of US $ in Passport

4) Opening of Foreign Account

5) Opening of Student file

Foreign Demand Draft (FDD):



Pubali Bank accepts the charges for TOEFL, SAT, GMAT etc. through foreign demand

draft. Pubali Banks opens students files to issue foreign demand draft following the

permission if Bangladesh bank. Before issuance of FDD Pubali Bank asks the students to

fill up the Travel & miscellanies (TM) form, which contains the following particulars.

1) Name of the students

2) Full address of the students

3) Amount of FDD in foreign currency

4) Purpose of Remittance

5) Address of the institution to which the FDD will be favored

6) Country of receiving payment

7) Passport No of the students with date of issue

8) Signature of the student

The TM is sent to Bangladesh Bank with photocopies of the Passport of the students and

the FDD issued.

Cancellation of FDD

i. Application by party with original FDD.

ii. Signature verified, checking in the counterpart.

iii. Cash debit voucher to return money to customer:

Dr- HO A/C @ T. T. clean

Cr- Party /Cash A/C

iv. IBETDA & Purchase memo @ T. T. Clean.

v. Cancellation mark on the register & instrument.

The procedure seems to be peculiar as party depositing money and getting money back at

the same time but this has been adopted to avoid complications.

Stop payment



When the instrument is lost party shou1d inform it immediately to the bank in application

along with the photocopy of the draft. Bank should check it with ID whether payment has

been made against this FDP if paid then party won't get back his money. But if it still lies

outstanding, then a telex message is given to the drawn on bank instructing 'STOP

PAYMENT'. Drawn on bank will reimburse the amount to ID, who then will give a credit

memo to the issuing branch. The remaining procedure is same as draft cancellation.

Issuance of Traveler’s cheque (TC):

Pubali bank limited issued only American Express Traveler’s cheque. For TC customer

has to fill up TM from. He has to fill up the purchase form. Purchase for, has four copies.

One copy for American Express Bank, one copy for Pubali Bank and two copy for the

customer. For TC Pubali Bank limited charges 1% as commission.

Requirements for purchasing TC:

There are some requirements that are to be fulfilled by the Traveler’s cheque purchaser.

The requirements are

i) Passport holder himself has to present while issuing Traveler’s cheque.

ii) The passport must be a valid one

iii) Air ticket has to be confirmed

Opening of Foreign Account:

Pubali Bank limited opens foreign account. Foreign account is used for receiving foreign

currency from abroad or for sending the currency to abroad. It can be used in favor of a

person or in favor of exporters.

Following papers are required to open a foreign account:

i) Exporters foreign currency account opening form (application form,

two signature cards duly filled in an signed with authenticated seal and

introduction)

ii) Two copies of passport size photographs of each operator attested by

chairman of the company.

iii) Export registration certificate.



iv) Attested photocopy of the membership certificate of the concerned

association (BGMEA)

v) An export proceeds realization certificate-declaration/undertaking

regarding the utilization of foreign currency.

vi) Incase of Limited company

(a) Memorandum & articles of Association of the company.

(b) Power of Attorney

(c) Resolution of the Board of Directors.

(d) Certificate of Incorporation.

(e) Certificate of Commencement of Business

(f) List of Directors

(g) Trade License

Student file opening:

Student can endorse $200.00 at a time in his own name. But if the amount exceeds $

200.00 then the student has to open a student file. For opening a student file, the

following documents are required:

i) Preliminary application and information admission

ii) Letter of approval of the student by the University.

iii) A filed up application form for foreign currency in abroad

iv) “Transcript given by the Board for S.S.C/H.S.C equivalent examination.

v) A photocopy of 1-7 form.

In case of tuition feeds, application must send the currency in favor of the institute. He

can not take the fees of the institute with him personally. Usually a student has to endorse

at least one third of the feeds of a year.

As an authorized dealer the principal branch of PUBALI BANK LIMITED also provides

its customer foreign remittance facilities by FBC, LFBC, sale and purchase of FCY, FTT.

Foreign Bills Collection



A foreign bill for collection refers to collection procedure of foreign DD/PO/Cheques as

per arrangement between PUBALI BANK LIMITED and its corresponding banks. The

collection procedure is as follows:

i. Entries in the FBC register and get a FBC number. This number will be on the

bill and be treated as reference no.

ii. Forward the bill along with a forwarding letter to the corresponding bank. Send

the draft through courier service and keep a courier receipt in the file.

iii. Crossing on the bill indicating UC131, as a collecting bank. Endorsement on

the back of the bill-"Payee's A/C” will be credited on realization.

iv. Prepare a liability voucher-

Dr- Customers' liability @National rate

Cr- Bankers' liability

v. A photocopy of the bill to be kept on the file

Realization

ID will send a credit memo to the concerned branch informing that Nostro A/C has been

credited.

Prepare a credit advice:

Dr- HO A/C @Ready buying

Cr-Party A/C @T.T. clean

Reversal

Dr- Bankers’ liability @Notional rate

Cr- Customers’ liability

Branch to Branch

Whenever another branch of PUBALI BANK LIMITED forwards an instrument to the

principal Branch to collect it on its behalf, the branch has to do it as the collecting agent

but confirming branch endorsement and putting own FBC on the bill. Rest of the

procedure remains the same. At the last stage an IBCA will be originated from the

principal Branch crediting concerned branch and debiting HO A/C.



Balance Sheet Impact

The Balance Sheet will display the figure of the bill until reversal voucher is released and

thus will constitute contra item on the part of the bank in the following manner.

ASSET - Bills Receivable being Bills for Collection.

LIABILITY - Bills for Collection being Bills Receivables.

Local Foreign Bills Collection

Instruments originating outside Bangladesh but drawn on a Bangladeshi Bank Is known

as Local Foreign Bill. In LFBC forwarding letter is sent to the local drawn on

bank/branch along with the instrument and payment instruction is given to them.

However payment instruction differs depending on the currencies in which the A/C is

maintained.

The collection procedure involves payment instruction by a P.O./D.D. favoring the

beneficiary. The instruments, after receiving will be send for collection through preparing

a credit advice:

Accounting Procedure

Dr- Clearing A/C

Cr- Party A/C

LFBC: Collection of FTT

Sometimes FTT arrives at another bank whereas beneficiary's account lies in PUBALI

BANK LIMITED, In that case receiving bank of FTT informs to this bank to collect the

proceeds. This collection procedure to come under LFBC mechanism. Here a letter is

forwarded to that bank giving payment instruction and all other procedures remain the

same.

Sale of FCV (Cash)

PUBALI BANK LIMITED sells US dollar only to the customers who want to visit

abroad. No other currency is sold to public, as per the practice of this bank, not due to



any regulatory covenants. 'Travel quota entitlement of Bangladeshis for travel by air to

countries other than SAARC countries and Myanmar shall now the US $3000 per person

per calendar year. For SAARC countries and Myanmar this quota stands reaffixed at US

$1000 for travel by air and US $500 for travel by land.

The maximum limit of US $300 that may be taken in cash either in US dollar ($) or any

other convertible currency.

The stages of cash dollar ($) selling is as follows:

1) Application form filled in by the customers with two TM forms. Accounting

treatment in this regard would be:

Dr- Cash A/C

Cr- FCY on hand $ SPL @Cash Book Rate

Cr- Income A/C Tk.200 (Endorsement charge)

Cr- Income A/C (Diff between Cash sell & Cash book rate)

2) Sale memo to ID @cash sale rate.

3) Photocopies of the passport of' first six pages, visa (only for student), PP

renewal (if any) and pages recording endorsement of foreign exchange, and photocopies

of the pages of ticket showing name of the passenger, route and date of journey and

endorsement of foreign exchange along with the relative Travel & Miscellanies (TM)

form.

4) Endorsement on the passport.

5) In each case of release of foreign exchange for travel abroad, photocopies of

first six pages of the passport and the page recording endorsement of foreign exchange

along with the relative TM form should be sent to Bangladesh Bank along with report of

the transaction in the usual monthly returns.

Purchase of Foreign Currency (FCY)

Purchase of foreign currency means legal encashment of US $ from a bank. The

procedures are as follows:



i. Prepare a debit voucher (equivalent to cash debit voucher)

Dr- FCY on hand $ SPL @Cash Buy Rate

Cr- Cash

ii. Purchase memo @ Cash Buy Rate.

iii. Proceeds Certificate (Legal Document of Encashment) for customer.

4.7 My Learning

1. Pubali Bank, Principal branch has SWIFT facilities. Very few bank in our country

offer this. By using this modern technology Principal branch provide fastest service

on L/C operating to its client.

2. Pre-shipment inspection certificate should obtain from the exporter of back-to-back

L/C. Because it reduces fraud and forgery in case of import against master export

L/C. But all the time the bank does not want it.

3. In some cases, this branch takes different Margin and commission on L/Cs from

different customer. A customer is allowed to open a L/C even with 10% margin. I

think that the bank should review the customers' behavior for a period and should

develop a certain policy in this regard.

4. Pubali Bank, Principal branch do not practice revocable L/C.

5. The bank should try to arrange more training programs for their officials. Quality

training will help the officials to develop the knowledge of International Trade

Financing.

6. Pubali Bank, Principal branch does not have adequate number of skilled manpower in

foreign exchange department.

7. With the pressure of the top management the employees are some time bound to do

things, which is beyond the rules and regulations.

In case of month end report so many register has to be maintained which is time

consuming. Number of register can be lessening with the help of computers.



CHAPTER

FIVE

Loans and Advances

5.1 Introduction

5.2 Manager’s Concern

5.2.1 How to locate purpose

5.2.2 How to locate security

5.2.3 How to locate borrower

5.3 Advance Secured and Unsecured

5.4 Function of Advance Department

5.5 Types of Loan

5.6 Process of Loan



5.7 State of Classification and Provision for 5 Years of PBL

Loans and Advances

5.1 Introduction

Major source of income of a bank is the earning from credit. Borrower selection is the

main and prime task of this department. Advancing loans is the primary function of the

commercial banks. Without loans country’s industrial and commercial development is

not possible. Therefore, smooth loan system in banking sector is a catalyst for economic

development of a country.

5.2 Manager’s Concern

In the process of loan Manager has to ensure three things:

1) How to locate purpose

2) How to locate security

3) How to locate borrower

5.2.1 How to locate purpose:

Manger has to ensure that the loan will generate adequate cash. For that matter the loan

should be engaged in productive activities. Such an employment will increase economic

activities, promote trade and commerce, create employment avenues and increase



movement of goods and flow of cash. This flow of cash is known in the banking concept

as cash generation. If there is enough cash generation, funds will automatically flow into

the borrowers accounts with the bank and will show a satisfactory turnover in accounts

which the lending bank always demands. This is why the manager’s speculation should

be making the highest cash through the employment of the advances.

5.2.2 How to locate security:

As soon as the evaluation of purpose is done manager will examine and evaluate in the

following manner the securities offered by the prospective borrower:

a) Security is the source of information on the prospective borrower. If offered are

valuable properties like land, building, shares of stocks or pledged goods, these

will offer adequate information about the borrower as to his financial position.

b) If securities are hypothecated stocks of raw materials for production, these will

offer adequate information about the borrower as to his ability or capacity to

utilities

c) Securities (tangible or intangible) offer a yardstick for measuring the extent of

involvement of the borrower himself. The lending bank’s investment of funds is a

joint venture of the banker and the borrower. The securities offered are the borrower’s portion of involvement i.e. his equity or capital. Thus the greater is his

involvement, the better for the banks. The borrower in that case will think twice

that if the business goes wrong, it is who will suffer most. Thus it will be in his

own interest that he will avail and utilize the loan as per agreed stipulations. Thus

the best way to safeguard the lending banks interest is, as far as possible to

maximize the banks commitment.

d) The branch Manager’s responsibility as to provide security is also to see how

much control he will be in a position to exercise on the entire stocks of the

borrower.



5.2.3 How to locate borrower:

In appraising a loan process, the selection of the prospective borrower is the most vital

point. The borrower is the real actor and must be in position to achieve the purpose for

which the loan has been requested. In selecting ideal borrower, the branch manager thus

assumes the greatest responsibility. Capital is another point to indicate the borrower’s

position. He should be given loan in proportion to this own investment as working

capital. As a general rule a bank should not sanction loan more than the investment of the

borrower.

Then the consideration of borrower’s capacity - whether the borrower can utilize the

funds or not.

Of all the qualifications of a prospective borrower, character is undoubtedly the greatest.

While the capacity and capital are the factors upon which depends his ability to repay the

money advanced, the character of the borrower indicates his intention to repay the loan.

To select the ideal borrower the following points have to consider:

a) Branch records: The manager may have first hand information on a prospective

borrower by a reference to his records. The turnover of his financial dealings is

reflected in the ledger folios of his branch.

b) Borrower’s Record: The prospective borrower may be advised to submit his

books of accounts balance sheet etc. for examination by the manager. These

financial tools reflect the position of his assets and liabilities and a fair idea about

the capital and capacity of the borrower.



c) Personal Enquires: As an individual the borrower must be a desirable person in

the society. He must have integrity. There are some factors such as the sobriety,

the promptness of payment goods habits personality, the ability and the

willingness to carry a project

5.3 Advance Secured and Unsecured

1. Secured Advance: Secured advance are those advances which are secured by

tangible securities of adequate value over which the bank has either absolute or

constructive control in addition to the personal guarantee of the customer.

2. Unsecured Advance: The advances which are granted to a constituent of

undoubted standing and reliability and only in exceptional circumstances and for

short period without any tangible security are called unsecured advances.

5.4 Functions of Advance Department

Ensuring that funds are disbursed only after compliance with terms and conditions or

required documents received.

Make sure that the bank has always valid and current loan documentation.

Ensuring that the collateral security is adequate at times to support the loans.

Keeping the loan documentation under safe custody.

Ensuring that the bank receives sufficient valid insurance cover whenever

required from a recognized insurance company.

Monitoring the receipt of periodical receivable. Debiting the client for all charges,

interest etc.



Maintaining the central liability records for all extensions of credit and balancing the

totals with General Ledger

LOAN&ADVANCES

ADVANCE

ForeignInland

Advance(Loans)

Advance(Overdraft)

Advance(Discount)

PCS

Transport Loan

HBL( General)

Loan( General)

HBL( Staff)

Project Loan

Furniture Loan

LTR

LIM

PC

FPB

IBP

LPDB

PAD

TOD

SOD

CC(Hypo)

CC( Pledge)



5.5 Types of Loan

Pubali Bank Principal Branch has the following loan schemes

Continuous Loan

• Demand Loan

• Term Loan

• Cash Credit (CC)

• Overdraft (OD)

• Bank Guarantee

• Staff Loan(PBL)

Continuous Loan: The limited loans with expiry date of loan payment, which can be

transacted without any particular payment schedule, are termed as continuous loan.

Following are the various categories:

1. Small Enterprise Financing (SEF)

2. Consumer Financing (CF)

3. Other than SEF and CF

Demand Loan



The loans, which become eligible for payment when demanded by the bank, are termed

as demand loan. If contingent or any other debt becomes forced loan, then those are also

termed as demand loan.



2. Consumer Financing (CF)

3. Other than SEF and CF

Term Loan

The loans which are to be paid within limited term with a particular payment schedule are

known as term loan.


(a) Term loans up to 5 years


2. Consumer Financing (Other than HF & LP)

3. Housing Finance (HF)

4. Loans for Professionals to setup business. (LP)

5. Others

(b) Term loan over 5 years


2. Consumer Financing (Other than HF & LP)

3. Housing Finance (HF)

4. Loans for Professionals to setup business. (LP)

5. Others



Short term Agro and Micro Credit: The short-term loans which are listed in yearly

loan disbursement schedule served by the loan department of Bangladesh Bank, are

termed as short-term agricultural loan and micro-credit. The loan given to the agricultural

sector for less than 12 months is also included in this category. By short-term loan we

mean the loan below Tk 10,000 to be paid within 12 months.

Cash Credit (CC)

a. Cash credit is given through the Cash Credit (CC) account.

b. Cash credit account is basically a current account, however a little difference exist

between them. The distinction between a current account a CC account is that the former

is intended to be an account with credit balance and the latter an account for drawing of

advances.

c. Operation of cash credit is as same as overdraft. The purpose of cash credit is to meet

working capital needs of traders, farmers, and industrialists.

Over Draft (OD)

a. Overdrafts are those drawings which are allowed by the banker in excess of the

balance in the account up to a specified amount for definite period.

b. Generally it is given to the businessmen to maintain their business activities.

c. Any deposit in the SOD account is treated as repayment of overdraft.

d. Generally provided against FDR, any primary security etc.

OD and CC amount as on 30th June, 2008

• Over Draft 11,787,897,330

• Cash Credit 12,202,851,147



Bank Guarantee

a. The bank is very often requested by his customer to issue guarantees on behalf of their party – committing to make an unconditional payment of certain amount of money

to the third party, if the customer (on whose behalf guarantee is given) becomes liable,

or creates any loss or damage to the third party.

b. It is a contingent liability for the bank and 3% commission is charged for this. After

the expiry of the period bank is no longer liable to the third party.

c. Generally issued by the banker for payment of tender. Paying customs duty, sales

tax, insurance premium, guarantees are also issued on behalf of the customer.

Bid BondGenerally issued while dropping tender for work.

Performance

Bond

It is issued when customer gets a specific work-order. Here bank

guarantees that his customer is willing and able to complete the

required work, and bank takes the responsibility of completing the

contracted work.

Staff Loan

1. STAFF HOUSE BUILDING LOAN – SHBL

a. 120 times of the basic salary is provided as SHBL

b. Bank Rate + 1%, interest is charged to the employee

c. Repayment is adjusted from their monthly salary

d. Repayment is made at equal monthly installment

2. STAFF LOAN AGAINST PROVIDENT FUND – SPF

a. 10% of basic is contributed by employee in every month

b. 10% of basic is also contributed to the PF by the Bank

c. Repayment is adjusted from their monthly salary

d. Maximum Sanction from PF

5.6 Process of Loan



Application

Applicant applies for the loan in the prescribed form of the bank describing the types and

purpose of loan.

Sanction

a. Collecting credit information about the applicant to determine the credit worthiness of

the borrower. Sources of information

i. Personal Investigation, Confidential Report from other bank, Head

Office/Branch/Chamber of Commerce.

ii. CIB (Central Information Bureau) report from Central Bank.

b. Evaluation of compliance with its lending policy.

c. Evaluating the proposed security

d. If loan amount exceeds 50 lac then bank goes for LRA Analysis.

e. LRA is must for the loan exceeding one crore – as ordered by Bangladesh Bank. LRA

has described at the end of this chapter.

If everything is in accordance the loan is sanctioned

Documentation

a. Then the bank prepares a loan proposal containing terms and conditions of loan for

approval of H.O. or Manager.

b. Takes the necessary papers and signatures from borrower

Disbursement

A loan Account is opened where

Dr customer A/C.

Cr Respective Loan A/C



5.7 State of Classification and Provision for 5 Years of PBL

(Figures in Million)SL

No

Particulars 2004 2005 2006 2007 2008

1. Deposit 39789.7

1

44443.0

3

48675.9

3

57996.8

2

73016.51

2. Total Loans &

Advance

27542.3

3

32639.6

8

40386.6

5

50549.1

6

61788.15

a) Unclassified 19790.8

3

24747.4

8

35208.4

4

46006.8 57450.27

b) Classified 7751.5 7892.2 3206.82 2514.90 2219.31

3. a) Required amount

of Provision

321.85 289.22 104.97 113.98 137.82

b) Provision Obtained 145.79 216.87 111.48 117.67 142.78

c) Not Obtained/Short

fall

243.77 102.95 65.05 36.88 49.57

4. Net Profit/Loss 134.70 573.45 845.53 1353.51 1515.23



With the passage of time the bank is expanding day by day. That is what we see

that the amount of deposit is increasing gradually from year 2004 to 2008.Total deposit

of the bank was TK 73016.51 million during 2008 showing 25.90% increase than the

previous year.



Total advances of the bank as on 31st December 2008 stood at TK. 61788.15

million showing an increase of Taka 11238.98 million @22.23% growth. .

Due to expansion the bank is offering more loans to its clients. That is why we see that

the amount of loan is increasing gradually from year 2004 to 2008.

Again from the figures and graphs above we see that during the year the bank made

provision of TK. 305.00 million against loans and advances, diminution in value

investments, exposure of Off Balance sheet items and provision of TK. 1515.23 million

which is higher than previous year. Profitability of the bank has increase 19.55% in the

year of 2008.



CHAPTER

SIX

SWOT Analysis



Introduction

SWOT is an acronym for the internal Strength and Weakness of a firm and theenvironmental Opportunity and Threat facing that firm. So if we consider Pubali Bank as

a business firm and analyze its strength, weakness, opportunity and threat, the scenario

will be as follows:

Strength:

(a) Good management.

(b) Cooperation with each other.

(c) Usage of faster pc bank software.

(d) Membership of SWIFT.

(e) Good banker-customer relationship.

(f) Online Banking services.

(g) Strong financial position.

(h) Strong position of CAMEL rating.

(i) Huge business area.

(j) Excellent monitoring and supervision.

(k) Energetic as well as smart teamwork.



Weakness:

(a) Lack of proper motivation, training and job rotation.

(b) Lack of experience employees in junior level management.

(c) Lack of own ATM services.

(d) Tendency to leave the bank in quest of flexible environment.

Opportunity:

(a) Expand market.

(b) Growth of sales service.

(c) Change in political environment.

(d) Lunching own ATM card.

Threat:

(a) Different service of FCB’s (Phone Banking / Home Banking)

(b) Daily basis interest on deposit offered by HSBC.

(c) Entrance of new PCB’s.



CHAPTER

SEVEN

7.1 Findings

7.2 Recommendation

7.3 Conclusion



7.1 Findings

I have find out some points by screening the whole study, which is expressed as major

findings. I have analyzed the data sincerely and carefully and have tried to identify

appropriate findings. Moreover, conversations with the PBL officials were very

significant for these findings.

After overall appraisal of PBL, the major findings are as follows:

# Position: Pubali Bank Limited is the pioneer in private sector banking operations of the

country.

# Operational Orientation: Its’ major operations are development & welfare oriented.

# Management System: Management system of PBL is fully democratic.

# Requirements of Bangladesh Bank: PBL always maintains the rules declared by

Bangladesh Bank.

#Training Facilities: PBL provides training facilities to its officer of the bank and also

provides executive development & internship program.

#Management Functions: The management functions (from planning to control) are not

clearly present in their various activities.

# Computerization: Most of the activities are computerized.

# Manual Work: Paper-based works are still existed in branch.

# Decoration: It is a leading bank of Bangladesh but it has no attractive appearance in

office environment.



7.2 Recommendation

In order to get competitive advantage & to deliver quality service, top management

should try to modify the services. For the improvement of the service the following

measures should be taken:

# Customer’s Convenience: For customer’s convenience, PBL should provide more

personnel to deliver faster services to their honorable customer.

# Human Development: Development of human resources should be ensured to increase

efficiency in work.

# Communication System: Ensure proper communication system and maintenance of

files & machineries should modernize.

# Interest: More interest should be paid on deposit account so that customers are

convinced to deposit their money in bank.

# R & D: Research & Development wing must be more extensive & rich.

# Strategy: Effective strategies must be undertaken against defaulter.

# Project Management: ‘Project Management’ must be practiced in case of investing in

the project. Feasibility study of the project, project planning, monitoring & evaluation

should be undertaken.

# Managerial Function: PBL must have to follow the management functions (from

planning to control) strictly in all of their business activities and also operation the bank.

# Financial Analysis: Branch should have a separate section to analyze the financial

statement for fining its liquidity, profitability & ownership ratios.



# Strict Rules for arrival and departure for the employee: Management should strict about

the arrival and departure time for the employees.

# Job Rotation: In PBL job rotation is fully absent job rotation is very important to make

the entire employee efficient for all departments.

# Appreciation: No doubt that in PBL female employees is more efficient and hard

working than male employees. It is very important to appreciate them and give them

proper respect. Because if they get the appreciation then they can increase their volume

of work. It is not only for the female it is also important both for male and female

employees.

# Image: Office should be fully redecorated to attract people to conic into it.

Some other important factor that should be focused on the development process:

# Time consumed at service level should be minimized at optimum level.

# Evaluate customer’s needs from their perspective and explain logically the

shortcomings.

# Improve office atmosphere to give customers better feeling.

# Use of effective MIS (Management information system).

# To deliver quality service top management should try to mitigate the gap between

customer’s expectation & employee’s perception.



7.3 Conclusion

There are a number of nationalized and foreign banks operating their activities in

Bangladesh. The PBL is one of them. For the future planning and the successful

operation in achieving in its’ PBL goal in this current competitive environment this report

can be a guideline.

Bank always contributes towards the economic development of a country. PBL,

compared with other banks are contributing more by investing most of their funds in

fruitful projects leading to increase in production. It is obvious that right thinking of this

bank including establishing a successful network over the country and increasing

resources, will be able to play a considerable role in the portfolio of development

financing in the developing country like ours.

PBL continues to play its’ leading role in socio-economic development of the country as

a companion of Independent Bangladesh. Besides its’ traditional function such as deposit

mobilization, deployment of fund in trade, commerce, industry, agriculture, import &

export business, outward and inward remittance as an agent of Bangladesh Batik of PBL

has emerged as the pioneer of playing key role in the country.

Pubali Bank is a private bank but it has no attractive environment ii their branch and all branches are not computerized, even total cash are not properly use when this bank

develop their all branch by attractive environment and computerized. On the other hand

cash are properly used at that time this bank reached in the top-level private bank in our

country. If the Bank cannot fulfill these things, they cannot run in the future with their

competitors Bank.



CHAPTER

EIGHT

8.1 Acronyms

8.2 Bibliography



8.1 Acronyms

BB Bangladesh Bank

PBL Pubali Bank LimitedBL Bill of LadingCC Cash CreditC & F Clearing & ForwardingCIB Credit Information BureauCRF Clean Report FindingsEPB Export Promotion BureauERC Export Registration CertificateEXP

For m

Export Form

IBCA Inter Branch Credit AdviceIBCT Inter branch Credit TransactionIBDA Inter Branch Debit AdviceID International DivisionIMPForm

Import Form

IRC Import Registration CertificateLIM Loan against Imported

MerchandiseLATR Loan against Trust ReceiptMBM Masters in Bank ManagementOBC Outward Bills for Collection

PAD Payment against DocumentSOD Secured OverdraftSWIFT Society for Worldwide Inter bank

Financial TelecommunicationTIN Tax Identification Number



8.2 Bibliography

• Brigham, Eugene F Joel E. Houston, “ Fundamental of Financial

Management ”, Ninth Edition, Harcourt Publisher International Company,2001.

• Basudevan, S.V., Theories of Commercial Banking , Reading Materials onTheory & Practice of Banking (B-101), Bangladesh Institute of Bank Management (BIBM), 2000.

• Rose Peter. “Commercial Bank Management ”, Third Edition, Irwin McGraw-Hill Publisher, 1996.

• Others

Diary- Diary has been maintained regularly to record all the activitiesof practical orientation.

• Bangladesh Bank, Guideline for Foreign Exchange Transactions, Volume 1 &2

• Pubali Bank Limited, Manual of Foreign Exchange.

• Pubali Bank Limited, Annual Report 2008

• Pubali Bank Limited, Financial Transaction’s Abstract.

• Website

www.pubalibangla.com

www.google.com



