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INTRODUCTION:
Economic history shows that development has started everywhere with the banking system and its contribution towards financial development of a country is the highest in the initial stage. Schumpeter (1933) regarded the banking system as one of the two main agents (other being entrepreneurship) in the whole process of development. Keynes also emphasized the role of banking services in the process of economic development of a country, while she was addressing the House of Lords regarding International and Monetary System (quoted in Sharma 1985). Moreover Alexander Gerashchenko (1962) in his popularly known “Gerschenkron’s Hypothesis” explained the banking system as the key role player at certain stage of the industrialization process.
The word ‘Bank’ comes from the word ‘Bancus’. Generally by the word “Bank” we can easily understand that the financial institution dealing with money. But there are different types of banks like Central Banks, Commercial Banks, Savings Banks, Investment Banks, Industrial Banks, and Co-operative Banks etc. But when we use the term “Bank” without any prefix, or restriction, it refers to the Commercial banks. Commercial banks are the primary contributors to the economy of a country. So we can say Commercial banks are a profit-making institution that collects the deposits from the surplus unit of the society and then lend the deposits collected to the deficit unit of the society. So the people of the society and the government are very much dependent on the commercial banks as the financial intermediary. As banks are profit-earning concern they collect deposit at the lowest possible cost and provide loans and advances at higher. The differences between two are the profit for them.
Modern banking system plays a vital role for a nation’s economic development. Over the last few years the banking world has been undergoing a lot of changes due to deregulation, technological innovations, globalization etc. These changes in the banking system also brought revolutionary changes in a country’s economy. Present world is changing rapidly to face the challenge of competitive free market economy. It is well recognized that there is an urgent need for better, qualified management and better-trained staff in the dynamic global financial market. Bangladesh is no exceptions of this trend. Banking Sector in Bangladesh is facing challenges from different angles though its prospect is bright in the future.
Internship program is essential for every Business Administration student. In other words it is mandatory for the student of any professional degree. It helps them to get acquainted with the real life situation. To acquire some practical knowledge it’s a best way. This internship report is based on the author’s internship experience in Dutch Bangla Bank Ltd, Malibagh Branch and Dhaka-1217.
Background of the study:
The internship program which is necessary to complete the BBA program exercise a significant importance as it enables a student to familiar with the practical business activities. The student work closing with the people of an organization and learn about the function of that organization. This program enables a student to develop his analytical skill and scholastic attitude.
Importance of Internship:
Classroom learning is all about theoretical and internship learning is all about practical. Characteristics of internship learning can be thought of as ‘touchable’ and ‘viewable’ whereas classroom learning is conceptual in nature. Here lies the importance of internship. It helps students to compare between classroom learning, knowledge and practical reality at the Community level. Just prior to joining the job it acts as a tool to accelerate the new graduates in their professional life.
Coverage of the study:
- To obtain practical experience about foreign exchange activities by involving Internship program.
- To build professional carrier in the banking sector as well as any financial institution.
- To know about the foreign exchange activities in Bangladesh.
RATIONALE OF THE STUDY:
Bangladesh is one of the underdeveloped countries in the world. The company of the country has a lot left to be desired and there are lots of scopes for massive improvement. In an economy like this, banking sector can play a vital role of an intermediary can mobilize the excess fund of surplus sector to provide necessary finance, to those sectors, which are needed to promote for the sound development of the economy.
Like in many other emerging market economies, commercial banks in the Bangladesh economy are to face an increasing competition for their business in the coming days. Their business will no longer remain easy as they had earlier the real change in the banking business has started to come with govt.’s decision to allow the business in the private sector in the middle of the eighties. This report is an effort to reflect a clear idea about the strategies, activities and performance of Dutch Bangla Bank Ltd Bangladesh Ltd. Regarding Foreign exchange banking practices in Bangladesh- A case study of Dutch Bangla Bank Ltd (Malibagh branch), Dhaka-1217.
Objectives of the study:
The objective of the study is to gather practical knowledge on banking system and operation. This internship gives us a chance to co-ordinate with the theoretical knowledge and the practical experience and to evaluate the Foreign exchange banking practices in Bangladesh- A case study of Dutch Bangla Bank Ltd And also the performance of general banking this Bank. The following are of objectives for internship in bank:
General Objective
The general objective is to prepare & submit a report on the topic of “Foreign exchange banking practices in Bangladesh- A case study of Dutch Bangla Bank Ltd.” The primary purpose of this report is to get an idea about the relationship between customers & Dutch Bangla Bank Ltd, a second-generation bank of the country and make an analysis of foreign exchange practices on the banking sector of Bangladesh.
Methodology of the study:
The planned methodology of the research is given below:
(A) Sources of data.
Data regarding the completion of this research will be collected from both primary and secondary sources.
The core information and data source is expected to be primary, because it will involve interviewing officials of Dutch Bangla Bank Ltd, Malibagh branch to get detailed information about the innovative products they offer. The officials who will be interviewed are:
- Branch Sales & Service Manager
- Sales Team Manager
- Cash Manager
- Personal Financial Consultant
(1) Primary sources.
- Practical desk work
- Face to face conversation with the officer
- Direct observations
- Face to face conversation with the client
(2) Secondary sources.
- Annual reports of Dutch Bangla Bank Ltd.
- Files & Folders
- Memos & Circulars
- Daily diary (containing my activities of practical orientation) maintained by me,
- Various publications on Bank,
- Websites,
- Different circulars sent by Head Office and Bangladesh Bank.
Profile of the Organization
Historical Background of the Bank:
Dutch Bangla Bank Ltd is a public listed scheduled bank categorized in private sector and established under the ambit of Bank Companies Act, 1991 and incorporated as a public limited company under the Companies Act, 1994 on June 02. The Bank started commercial banking operations effective from August 03, 1999. The Bank converted its Banking Operations into Islamic Banking based on Islamic Shariah from traditional banking operation in July 01, 2004 after obtaining approval from Bangladesh Bank.
During the span of time the Bank has been widely acclaimed by the business community, from small entrepreneurs to large traders and industrial conglomerates, including the top rated corporate borrowers for forward- looking business outlook and innovative financing solutions. With a few of the Company’s activities and program on the basis of Islamic Shariah, within this period of time it has been able to create an image of responsibility for itself and has earned significant reputation in the country’s banking sector. Within an operative period as eight years, the bank has arrived at a strong financial and business position by expanding its market share compared to its contemporaries and to some extent to the 2nd even 1st generation banks of private sector. In edition, the Bank has also made a significant contribution to the national economy under the prudent leadership and untiring support of the member of the Board of Directors, who are leading business personalities and reputed industrialists of the country.
As a matter of policy, the Bank conducts its business on the principles of Mudaraba, Murabaha, Bai-Muazzal and hire purchase transaction approved by Bangladesh Bank. The Bank is one of the interest-free Shariah-based Banks in the country and its modus-operandi is substantially different from those of other commercial banks.
The gradual improvement in the overall policy environment has enabled Bangladesh to improve its economic performance in recent years. Successive governments in Bangladesh have been confronted with the problem of stimulating the economic growth rate in a country where a substantial segment of the population lives below the subsistence level. Economic policies are still guided by five year plans. The prospect of economic growth in Bangladesh in the near future will depend on the pace of economic reforms and the quality of macroeconomic management. Accelerating the rate of economic growth will require higher levels of investment. This will primarily come from private flows of foreign direct investment. This can be established by reforming the financial system and continuing the process of financial deepening.
The banking industry in Bangladesh is one characterized by strict regulations and monitoring from the central governing body, The Bangladesh Bank. As the government is often the owner and regulator as well as the supervisor and customer of a bank, there has been ample opportunity for mismanagement over the years. The banking sector is plagued with a lack of credit discipline, archaic loan recovery law, corruption, inefficiency, overstaffing, etc. Several reform measures of the financial sector have been taken to improve the situation. Relative stability achieved by the support extended by both the central bank and the Government of Bangladesh in the past has restored public confidence in the country’s banking sector. Moreover, Nationalized Commercial Banks (NCBs) and old generation Private Commercial Banks (PCBs) would have to lower the rate of NPAs in their portfolios. Failure to do so would mean re-capitalization, at least for the NCBs. This may in turn lead to a further drain on the limited resources of the Government of Bangladesh at this time or in the immediate future this recapitalization would not be feasible. With these conditions in place, the World Bank anticipates the likelihood of a situation where the ever-increasing burden of non-performing loans and growing rate of debt servicing would place the economy under enormous strain and result in a crisis in the banking sector in the long term.
The main concern is that currently there are far too many banks for the bank to sustain.
As a result the market will accommodate only those banks that can transpire as the most competitive and profitable ones in the future.
Dutch Bangla Bank Ltd that was named before as Bengal Export Import Bank Ltd. being newly formed commercial bank of the country with a distinctive identity was opened in 3rd August 1999,with the permission if Bangladesh Bank under Banking Companies Act-1991. The bank received the certificate of incorporation #C-37884(2164)/99 under the company act of 1994.
Dutch Bangla Bank Ltd was established in 1999 under the leadership of Late Mr.Shahjahan Kabir, founder chairman who had a long dream of floating a commercial bank which would contribute to the socio-economic development of our country. Mr.Nazrul Islam Mazumder became the honorable chairman after the demise of the honorable founder chairman respectively.
The bank has migrated all of its conventional banking operation into Shariah based Islamic banking since July/2004.
Currently the major financial institutions under the banking system include
- Bangladesh Bank
- Commercial Banks
- Islamic Banks
- Leasing Companies
- Finance Companies
Figure 1: Percentage different banking Sectors in Bangladesh
The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four are Nationalized Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign banks and the rest five are Development Financial Institutions (DFIs).
Generally, the commercial banks and the finance companies provide
However, the Bangladeshi Banking industry is characterized by the tight Banking rules and regulations set by the Bangladesh Bank. All banks and financial institutions are highly governed and controlled under the Banking Companies Act 1993. The range of banking products and services is also limited in scope. With the liberalization of markets competitions among the banking products seems to be growing more instances each day. In addition, the banking products offered in Bangladesh are fairly homogeneous in nature due to the tight regulations imposed by the central bank. Competing through differentiation is increasingly difficult and other banks quickly duplicate any innovative banking service.
These private banks are popularly known to public as First Generation Banks (9 banks opened during 1982-88), Second Generation banks (13 banks opened during 1992-96) and Third Generation banks (13 banks opened during 1999-2001).
The name of all the banks operating in Bangladesh and their date of incorporation are given below:
| Name of bank | Date of incorporation | Name of bank | Date of incorporation |
| Nationalized commercial banks | Specialized banks | ||
| Sonali bank Ltd | 1972 | BKB | 1972 |
| Janata Bank Ltd | 1972 | BSB | 1972 |
| Agrani Bank Ltd | 1972 | BSRS | 1972 |
| Rupali bank Ltd | 1972 | RAKUB | 1987 |
| BASIC | 1988 | ||
| Private Commercial Banks | |||
| 1st generation private banks | 2nd generation private banks | ||
| AB bank Ltd. | 1982 | Eastern bank Ltd | 1992 |
| Utara bank Ltd | 1983 | National credit and commerce bank Ltd | 1993 |
| National bank Ltd | 1983 | Prime bank Ltd | 1995 |
| Islami bank Ltd | 1983 | Dhaka bank Ltd | 1995 |
| IFIC bank Ltd | 1983 | Southeast bank Ltd | 1995 |
| United Commercial bank Ltd | 1983 | Al-Arafah Islami Bank Ltd | 1995 |
| The City bank Ltd | 1983 | Social Investment bank Ltd | 1995 |
| Pubali bank Ltd | 1984 | Dutch-Bangla bank Ltd | 1996 |
| Al-Baraka bank Ltd | 1987 | ||
| 3rd generation private banks | Foreign commercial banks | ||
| Bangladesh Commerce Bank Ltd | 1998 | Standard Chartered bank | 1948 |
| Mercantile Bank Ltd | 1999 | ||
| Standard bank Ltd | 1999 | American Express Bank Ltd | 1996 |
| One Bank Ltd | 1999 | State Bank of India | 1975 |
| Dutch Bangla Bank Ltd | 1999 | Habib Bank Ltd | 1976 |
| Premier Bank Ltd | 1999 | Muslim Commercial bank | 1994 |
| Mutual Trust Bank Ltd | 1999 | National Bank of Pakistan | 1994 |
| First security Bank Ltd | 1999 | CITI Bank N.A. | 1995 |
| Bank Asia Ltd | 1999 | HSBC | 1996 |
| The Trust bank Ltd | 1999 | Shamil Islami Bank | 1997 |
| Jamuna Bank | 2001 | Credit Agricol Indosuez | 1997 |
| Shahjalal Islami Bank | 2001 | Hanvit Bank | 1999 |
| BRAC Bank | 2001 | Mashreq | 2001 |
| Bank of Ceylon | 2007 | ||
Source: Bangladesh Bank.
Key Function of Dutch Bangla Bank Ltd :
Like other commercial banks like Dutch Bangla Bank Ltd performs all traditional banking business including introduction of a wide range of caving and credit products, retail banking and ancillary service with the support of modern technology and professional management, but the Dutch Bangla Bank Ltd Bangladesh Limited emphasizes its function in export and import trade handing and financing of export oriented industries will enhance wealth, quotes more employment opportunities helps formation of capital and reduces in balance in the balance of payment in the country
Social Commitment:
The purpose of the banking business is, obviously, to earn profit, but the promoters and the equity holders of Dutch Bangla Bank Ltd are aware of their commitment to the society to which they belong. A chunk of the profit is kept aside and/or spent for socio-economic development through trustee and in patronization of art; culture and sports of the country and the bank want to make a substantive contribution to the society where we operate, to the extent of our separable resources.
Corporation Culture:
This bank is one of the most disciplined Bank with a distinctive corporate culture. Here we believe in shared meaning, shared understanding and shared sense making. Our people can see and understand events, activities, objects and situation in a distinctive way. They mould their manners and etiquette, character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to us. The people in the Bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture they belong has not been imposed; it has rather been achieved through their corporate conduct. The Bank achievement has been possible because of the able leadership; dedicated and committed services provided by all levels of management and staff which all possible because of a good and quality full corporate culture.
Communications Strategy of Dutch Bangla Bank Ltd:
Dutch Bangla Bank Ltd is a third generation bank. It has converted into Islami Banking in July 01, 2004 with the approval of Bangladesh Bank. Dutch Bangla Bank Ltd mainly emphasis on public relation out of four communications strategy. Dutch Bangla Bank Ltd does following activities for their market promotion and advertising.
- When they open new branch, send letter to the elite persons, offices and industries in that area for opening account in their bank.
- Every year they arrange get together for their loyal customer in Dhaka and Chittagong. For that reason Dutch Bangla Bank Ltd build good relationship with their clients. Dutch Bangla Bank Ltd also solves the clients problems and they show the procedure the overcoming the problem.
- They arrange the ceremony of award to the honorable person in every year.
- They send gift item at the beginning of the year to the senior citizen of the society. These items include pen, dairy, calendar, pen stand, wall clock etc.
- They also give special gift to the elite person in different occasions.
- In every month the higher authority of Dutch Bangla Bank Ltd give information about the market condition and suggestion to the branch manager.
- The managers of every branch tell present condition of his branch to the head office in every month.
- Head Office updates deposit and investment guideline to the branch manager.
- Dutch Bangla Bank Ltd sponsors different types of National games.
Dutch Bangla Bank Ltd will soon setup a Research and Development Division and separate marketing divisions, which are, help them to implement better marketing strategy.
Place Strategy of Dutch Bangla Bank Ltd:
One of the simplest methods of segmenting markets is by their geographic location. People who are living in one region of the country have consuming and purchasing habits that differ from those who live other regions. For example, the usage of woolen sweaters and jackets is higher in north India, due to the extreme cold during cold during the winter months, compared to consumers in south India. Even in local markets, geographic segmentation is important. A bank branch in the western part of the city may attract account holders from that part of town to the bank. However, the bank branch manager may find it difficult to attract customers from the eastern part of the city due to the location inconvenience. When marketers analyze geographic data, they study sales by region, by state, city size, specific locations and the kind of retail outlets where sales are made.
Its may be seen and unseen it is not necessary that bank perform its activities by branch network. Bank may be deal contacts with a client or corporation in different location out of Bank branch. Dutch Bangla Bank Ltd has 54 branches in urban and rural area. But most of them are in urban commercial area.
DUTCH BANGLA BANK LTD.’s Objectives:
Based on their mission and vision, Dutch Bangla Bank Ltd has come up with few objectives, which they believe will help them reach their desired destination. They are:
Gaining a larger market share: Dutch Bangla Bank Ltd currently has a quite low market share of less than 6%. They want to increase their market share in the coming years.
Strengthening brand image: Dutch Bangla Bank Ltd. wants to establish them as a bank providing excellent service in the minds of the customers. This will help them strengthen their brand image.
Provide technologically advanced services:
Dutch Bangla Bank Ltd. wants to provide technologically advanced services for the convenience of their customers. They were the first bank in the country to introduce Money link ATM cards. Now they have introduced Phone-banking, Internet banking and sms/ online banking.
Making banking comfortable and convenient for customers: Dutch Bangla Bank Ltd. wants to retain their customers by making customers feel comfortable while they are at the banking premises. For this reason they have arranged for adequate seating facilities. Now customers do not have to wait for long hours in queues, they can sit with their token until their token number appears on the screen and they are called to the counter.
Encourage and motivate customers so as to increase sales and profits: Dutch Bangla Bank Ltd. wants to retain their previous customers by keeping them motivated by providing them with gifts for extensive use of ATM cards and Credit Cards and by providing higher interest rates to customers who open their accounts with a higher initial balance. This will also help them to attract new customers.
Ensuring customer satisfaction: Standard Chartered Bank has made use of different means of getting feedback from customers so as to understand their level of satisfaction, based on which they can take the necessary actions to ensure customer satisfaction.
DUTCH BANGLA BANK LTD.’s Strategies:
Dutch Bangla Bank Ltd has formulated some strategies to achieve their desired Objective. These are:
Promotional activities: Dutch Bangla Bank Ltd is trying to achieve their objective of increasing their market share by engaging in promotional activities. Example: They are offering free shopping worth Tk 2,000 from Agora to customers who will be able to refer at least 5 new customers to DUTCH BANGLA BANK LTD…
Assigning targets to salespeople: The salespeople of Dutch Bangla Bank Ltd are assigned targets based on their desired increase in market share. Salespeople are paid based on the number of sales they can make. If they are unable to achieve their target, they are not paid. This acts as a negative motivational factor, which is a driving force for the salespeople.
Offering a very wide range of innovative products: Dutch Bangla Bank Ltd wants to establish themselves as a strong brand name in the minds of customers. In order to achieve this objective they are continuously coming up with innovative products such as night banking, 24 hours ATM banking, 24 hours Phone banking, Internet banking, Sms banking, platinum credit cards having a maximum credit limit of BDT 1,000,000 and many more.
Introducing more convenient and comfortable means of banking: The innovative products offered by Dutch Bangla Bank Ltd. have already made banking more convenient for customers. They have introduced token systems for customers who want to engage in cash and cheque transactions or want to make remittances. Customers no longer have to wait for long hours in the queue; they can sit making themselves comfortable and wait for their token number to appear on the screen before they go to the counter.
Vision of Dutch Bangla Bank Ltd:
The gist of their vision is “Together towards Tomorrow”. Dutch Bangla Bank Ltd , as the name implies, is not a type of Bank in some countries on the globe, but is the first of its kind in Bangladesh. It believes in togetherness with its customers, in its march on the road to growth and progress with services.
- Provides the greatest return to the stakeholders by the stakeholders by achieving sound profitable growth.
- Be perceived by the customers and employees as the best whenever it operates.
Customer Services and Automation:
“To human and forgiveness divines” a proverb, the bank believes but the customers will not accept. Because for a service they pay for they want it 100% defect free. So improvement of the customer service should always be their motto altered expectations of the customer have shifted the focus from resource base productivity.
To operate in the globalize environment, the banks future plan is to equip all the units of the bank with the modern technology, such as online computer network telex, fax, e-mail etc. for the service of the customer round the clock, it has a plan to install ATMs suitable places in Dhaka and other cities of the country.
Missions of Dutch Bangla Bank Ltd:
The bank has chalked out the following corporate objectives in order to ensure smooth achievement of its goals-
- To be the most caring and customer friendly and service oriented bank.
- To create a technology based most efficient banking environment for our customer.
- To ensure ethics and transparency in all levels.
- To ensure sustainable growth and establish full value of the honorable shareholders.
- To add effective contribution to the national economy.
- Provide high quality financial services in export and import trade.
- Providing efficient customer service.
- Maintaining corporate & business ethics.
- Become trusted repository of customers’ money and their financial advisor.
- Making its products superior & rewarding to the customers.
- Display team spirit and professionalism.
- Create sound capital base.
- Enhance shareholders wealth.
- Fulfilling its social commitments by expanding its charitable & humanitarian activities.
8 Organizational (General) Hierarchy of DBBL
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Flow chart-2.8 Organizational (General) Hierarchy
| Services and Products:
Products and Services offered by DBBL: · Retail Banking · Remittanceand collection · Importandexport handlingand financing · Corporate Banking · Project Finance · Investment Banking · Consumer credit · Agriculture Loan · Real time any branch banking · 24 Hours Banking through ATM o DBBL-NEXUS Debit card o DBBL-Maestro/Cirrus Debit card o DBBL Credit card · Internet Banking · SMS Banking · On line Banking through all Branches |
Banking Products
Various Deposits: · Savings Deposit Account · Current Deposit Account · Short Term Deposit Account · Resident Foreign Currency Deposit · Foreign Currency Deposit · Convertible Taka Account · Non-Convertible Taka Account · Exporter’s FC Deposit(FBPAR) · Current Deposit Account-Bank · Short Term Deposit Account-Bank Loan & Advances: · Lease Finance · Other Term Loan · FMO Local currency Loan for SME · FMO Foreign currency Loan · Cash Credit (Hypothecation) · Small Shop Financing Scheme |
Organizational Structure of Dutch Bangla Bank Ltd:
The development of on organization depends on the management style of their organizations the same the development if the bank is being occurred only for the good management team. Management of the Dutch Bangla Bank Ltd controlling of all the resources of the organization. To achieve the ultimate objective of making Dutch Bangla Bank Ltd the finest banking of the country, the workforce will be futuristic in outlook, professional in attitude and honest in reputation.
The board of directors wants to repose in the management all executive powers to run this service industry administration and credit portfolio independently without any undue influence from outside. The board formulates policy and gives policy directives to the management. Transparency and accountability are strictly ensured at all leaves of the bank. Bank operate with integrity, competence and farsightedness abiding by all the principals and provisions laid down in the bank company act 1991, 1994 and the guidelines of Bangladesh Bank. The bank is committed to pursue a straight forward, upright legitimate banking business, never be tempted by the abnormal prospect of large returns to do any thing. It will only do what may be done under the national policy.
Organizational Development of the Dutch Bangla Bank Ltd:
In the 1450s and 1960s a new integrated type of training originated knows was organizational development. Organizational development is an intervention strategy that uses group processes to focus on the whole culture of an organization in order to bring about planned change, it seeks to change belief attitudes, values structure and practices so that organization can better adapt to technology and live with the fast pace of change. The general objective of organization development is to change all parts of the organization in order to make humanly responsive, more effective, and more capable of self-renewal.
The organizational development process does not preclude the use of conventional training method, which is useful for some purpose. The management of Dutch Bangla Bank Ltd is also concern about the training for its development. They believe that if the employees will be trained enough they would contribute more for the development of the banking business that is why; they send some employee in every batch. So a number of employees took training from different training institutions such as Bangladesh Bank, National Bank training Institute, Bangladesh Institute of Bank Management.
Shariah Auditing:
This is the civil supervisory aspect that shapes the Bank’s main feature. Its existence is part of the Shariah Supervision procedures. One of its main tasks is to check the Shariah complacency in the Bank’s transactional procedures in accordance to the Fatwa’s issued in that regard, under the guidance of the Shariah Supervisor.
The Shariah auditor is assigned the task of revising the bank’s transactional procedures throughout the year to check the extent to which the staff members and the different departments have abided by the regulations, advices, and Fatwa’s issued by the Fatwa & Shariah Supervisor Board, forums & banking conferences. As well as, the Shariah Supervision Board certifies assuring that all the contracts that state a right for the Bank or an obligation on the Bank.
Moreover, the Shariah Auditing submits periodic reports to the Shariah Supervisor in order to be proposed to the Shariah Supervisor Board to state what it finds appropriate in that regard.
SHARIAH BOARD:
The Board of Directors has formed a Shariah Supervisory Board of the bank. Their duty is to monitor the entire Bank’s transactional procedures, & assuring its Shariah complacency. This Board consists of the following members headed by its chairman.
The tasks of the Shariah Supervisory in summary is replying to inquires of the Bank’s administration, staff members, depositors, customers, follow up with the Shariah auditors and private them with the guidance, submitting reports & remarks to the Fatwa & Shariah Supervision Board and the administration, participating in the Bank’s training programs, participating in the supervision & handling the duty being the General Secretary of the Board.
The Bank operates through its Head Office at Gulshan, Dhaka and 54 branches in the whole Bangladesh. In Dhaka city there are 16 branches with a head office. They are:-
1) Motijheel Branch 2) Rajuk branch, 3) Malibagh Branch,4) New Eskaton Branch,
5) Elephant Road Br, 6) Islami Banking Branch (Uttara, Dhaka), 7) Gulshan Branch, 8) Panthapath Branch, 9) Nawabpur Branch, 10) Imamgonj Branch, 11) Dhanmondi Branch, 12) Mirpur Br. 13) Bashundhara Branch (Badda), 14) Paltan branch, 15) Kawran bazaar branch, 16). Shatmasjid Road Branch (Dhaka). The branches of Dutch Bangla Bank Ltd outer from Dhaka are:-
1) Mawna Chowrashta Branch, 2) Agrabad Branch (Chittagong), 3) Khatungonj Branch (Chittagong), 4) Gazipur Chowrashta Branch (Gazipur), (Dhaka), 5) Sonaimuri Branch (Noakhali), 6) Sylhet Branch (Sylhet), 7) Jessore Branch, 8) Asulia Branch,
9) Narayangonj Branch (Narayangonj), 10) Shimrail Branch (Dhaka) , 11)Laksham Branch (Comilla), 12) Jubilee Road Br. (Chittagong), 13) Rangpur Branch(Rongpur), 14)Moulvi bazaar Branch,(Moulovibazar),15) Fenchugonj Branch(Fenchugonj,Sylhet), 16)Savar Bazar Branch(Savar,Dhaka),17)Comilla Branch(Monoharpur Comilla), 18)Bogra Branch(Barogola, Bogra),19) Ashuganj Branch, 20) CDA Avenue Branch (Chittagong), 21) Chowmuhani Branch (Noakhali), 22) Mudaforganj Branch ( Laksam Comilla), 23) Kustia Branch, 24) Rajshahi Branch, 25) Golapgonj Branch (Sylhet), 26)Chagalnaiya Branch (Feni), 27)Naria Branch (Shariatpur), 28) Khulna Branch, 29)Pahartoli Branch (Chittagong), 30)Beani Bazar Branch (Sylhet), 31)Nabiganj Branch (Sylhet), 32)Barishal Branch, 33)Bianibazar(sylhet), 34) Nobigong (sylhet). And there are also proposed four branches in the country. They are 1) Dinajpur, 2) Feni
3) Narayangonj, 4) Panchoghoti. The Bank also carries out international business through a Global Network of Foreign Correspondent Banks.
Slogan of the Dutch Bangla Bank Ltd “Local Bank Global Network”. DUTCH BANGLA BANK LTD. branch also open an offshore banking outer the country. It is called “Dutch Bangla Bank Ltd. exchange”. It works as like “Western Union”, “American Express”, “Money gram” etc.
Products & Services:
Dutch Bangla Bank Ltd launched several financial products and services since its inception. Among them are Monthly Income scheme, Monthly Savings Scheme, Super Savings Scheme, Education Savings Scheme, Multiplus Savings Scheme, Hajj Deposit Smart Saver Scheme. All of these have received wide acceptance among the people.
Monthly Savings Scheme
The prime objective of this Scheme is to encourage people to build up a habit of saving. In this Scheme one can save a fixed amount of money every month and receive substantial lump sum of money after five, eight, ten or twelve years.
Monthly Income Scheme
Under this Scheme, customer has to deposit a fixed amount of money for five years and in return he will receive benefits on monthly basis. Benefits start right from the first month of opening an account under the Scheme and will continue up to five years when the depositor will get refund of his deposit. This scheme is a sure investment for a steady return.
Super Savings Scheme
Super Saving Scheme offers a small depositor to invest his fund (minimum 10,000/-) and the fund will be double in 6 (six) years period. This scheme will secure the future of the investment with ease.
Saver Scheme
Smart Saver is a high return investment plan which helps a customer builds up sizeable amount in a period of 5 years. This scheme offers a customer to buy Smart Saver Term Deposit 5 times the invested amount. Smart Saver is a 5 years term deposit scheme.
Education Savings Scheme
The most gratifying experience for parents is proper education of their children. Educational expense is rapidly increasing and therefore appropriate planning needs to be done by all parents. Dutch Bangla Bank Ltd offers “Education Savings Scheme” to assist in financial planning well ahead in time for the children’s higher education. Deposit of Tk 25,000/- and multiples thereof at a time will be accepted under the scheme. The instrument shall be issued for 7 years, 10 years or 20 years terms.
Multiplus Savings
Savings helps to build up capital and capital is the prime source of business investment in a country. Investment takes the country towards industrialization which eventually creates wealth. That is why savings is treated as the very foundation of development. To create more awareness and motivate people to save Dutch Bangla Bank Ltd offers multiplus savings scheme any individual, company, educational institution, government organization, NGO, trust, society etc may invest their savings under this scheme. The deposit can be made in multiplus.
Mudaraba Hajj Scheme
In order to smooth arrangement of fund for performing Hajj, the bank has introduced this scheme for 5, 8, 10, 15 & 20 year’s period
Swift Service
The SWIFT services helped in sending and receiving the messages and instructions related to NOSTRO Account operations and L/C related matters. The bank has brought 06 of branches under SWIFT network.
Dutch Bangla Bank Ltd is foreign commercial bank in the arena of banking business, To all intents and purposes; it’s on time delivered service to the customers as demand is considerably better than others. By means of day to day customer service, the customers are being well-informed concerned with its contemporary and up – to -the- minute invented products easily. It also thinks that Customer Care brings perfection to a bank and believes that effective Customer Care strengthens the product knowledge in to customer’s mind more positively and precisely.
The following financial products are available for the customers. The products are customers friendly and easy to use. The product mix is maintained in accordance with the need basis for the customers and profit generating for the banks as well.
Finance/Investment
- Corporate finance
- Industrial finance
- Commercial finance
- Lease finance
- Syndicate finance
- Hire purchase finance
- Real state finance
Modes of investment
- Murabaha
- Bai Muazzal
- Izarah Bil Baia
- Wazirat Bil Wakala
- Quard -e- Hassan
- Local Documentary Bill Purchased
Foreign exchange
- Non Resident Foreign Currency Deposit Account.
- Foreign Currency Deposit Account.
Deposit
- Al- Wadiah Current Deposit.
Mudaraba Saving Deposit:
- Mudaraba Monthly Saving Scheme (Money Grower)
- Mudaraba Monthly Income Scheme (steady Money)
- Mudaraba Super saving Scheme (Double in6 Years)
- Mudaraba Multiple Saving Scheme (More than triple in10 years)
- Mudaraba Education Saving Scheme.
Mudaraba Short term Deposit.
Mudaraba term Deposits.
- One month
- Three months
- Six months
- Twelve months
- Twenty Four months
- Thirty Six months
Market:
Dutch Bangla Bank Ltd of Bangladesh limited, one of the leading private commercial banks, its banking operation on 3rdAugust 1999. Within an operative period as short as six years, the bank has arrived at a strong financial and business position by expanding its market share compared to contemporaries and to some extent to the 2nd even 1st generation banks sector. In addition, the bank has also made a significant contribution to the national economy sector under the prudent leadership and steady support of the member of the Board of the Directors, who are leading business personalities and reputed industrialists of the country.
The progression of marketing operation of any organization depends on the efficacy of custom service. To achieve superior customer responsiveness often requires that the company achieve superior efficiency, quality and innovation. To achieve superior customer Responsiveness Company needs to give customers what they want when they want it. It must ensure a strong customer focus, which can be attained through leadership; training employees to think the customers; bringing the customers into the company through superior market research; customize the product to the unique needs of individual customers or customer groups and respond quickly to customers’ demands. Customers’ service is the set of activities and organization use win and retains customers’ satisfaction. It can be provided before, during or after the sale of product or exist on its own. The progress of Dutch Bangla Bank Ltd is very rapid with the concern of profit making and growth of its operation within the country towards the country’s economy.
Overall Performance of Dutch Bangla Bank Ltd:
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In the annual report of the year 2008, capital structure did not contain any value for the component of proposed cash dividend, but in the annual report of the year 2007, it was mentioned hat proposed cash dividend was 31.5 million taka for the year 2007. Annual reports 2004, 2005, 2006, 2007 and 2008.
From the table in the last page, paid up capital was the largest component of the bank’s capital structure for each year though contribution of this component in the capital structure was declining gradually. Two components of the capital structure; proposed issue of bonus share and share premium had no contribution in the capital structure in the year 2006. It is observed that in the year 2007, there is neither proposed issue of bonus share nor proposed cash dividend. Instead of these two things the amount of retained earnings became too large.
Figure: Capital structure
The authorized and paid up capital of the bank was Tk. 3500 million and Tk. 2142.20 million while it started its banking operation in 2007. The capital and reserve of is bank as on 31st December 2007 stood at Tk. 14000.00 million. The bank also made a 1% general provision on unclassified investments of the bank, which amounted to Tk. 188.22 million.
Theoretical Discussion About Foreign Exchange.
Foreign Exchange:
One of the largest businesses carried out by the commercial bank is foreign trading. The trade among various countries falls for close link between the parties dealing in trade. The situation calls for expertise in the field of foreign operations. The bank, which provides such operation, is referred to as rending international banking operation. Mainly transactions with overseas countries are respects of import; export and foreign remittance come under the preview of foreign exchange transactions. International trade demands a flow of goods from seller to buyer and of payment from buyer to seller. In this case the bank plays a vital role to bridge between the buyer and seller. Foreign exchange department of Dutch Bangla Bank Ltd is one of the most important departments of all departments. This department handles various types of activities by three separate sections.
Foreign exchange means the exchange which is happen with the foreign market or the foreign countries. From one country to another country which criteria is occurred that is foreign exchange. There are three types of foreign exchange. They are:–
1) Import business 2) Export business 3) Remittance
1) Import business : The business which is from the importer that is import business.
Suppose- I am a businessman. I want to buy something from the foreign country then I will be the importer. To do import business at first I have to open a LC (letter of credit) by the support of a bank in my country. And there are also some bank formalities which should I fulfill.
2) Export business : The business which is from the exporter that is export business.
Suppose- I am a businessman. I want to sell something to the foreign country then I will be the exporter. To do export business I have to get an order from the importer for export something. Here are also some bank formalities which should I fulfill by my country bank.
Foreign Exchange Market:
The meaning of foreign exchange market is, in which international currency trade take place is called the foreign exchange market. There are two types of foreign exchange market. They are: – 1) Wholesale or Interbank 2) Retail or client market.
Foreign Exchange Market Participants:
Foreign exchange market Participants can be categorized into five groups. They are:-
1) International banks
2) Bank customers (Include MNC’s, many managers & private speculators)
3) Non bank dealers (They are large number of financial institutions/ investment banks.)
4) For: Ex: brokers (Match dealer orders to buy & sell currencies for a fee but don’t take
Position themselves).
5) Central bank
Foreign Exchange Rate Market:
There are two types of foreign Exchange rate market. By which rate the customer & the dealer will exchange their money. They are:-
1) Spot exchange rate: It means the rate which is applicable for the spot time or the current exchange rate is used for the foreign exchange that is called spot exchange rate.
Suppose- I am a businessman. I want to business something by the foreign exchange then I should have to follow the exchange rate system. If the exchange rate is fixed today but whatever when will I do my business after one month or three months later this exchange rate should applicable for that day business or exchange, it is called the spot exchange rate. Actually the spot market involves almost the immediate purchase or sale of foreign exchange. It contains some types. They are-
a) Spot rate quotations =
1. Direct quotation or American term: The U.S. dollar equivalent. As the price of the foreign currency in terms of dollar. For example, $0.009198=1yen; and 1 taka= $0.01428571.
2. Indirect quotation or European term: The price of a U.S dollar in the foreign currency. Foreign currency units per dollar or as the price of dollars in terms of the foreign currency. For example, 108 yen= per dollar; and1$/70taka.
· Note that the direct quote is the reciprocal of the indirect quote.
b) The Bid- Ask spread =
- The bid price is the price a dealer is willing to pay you for something.
- The ask price is the amount the dealer wants you to pay for the thing.
- The bid-ask spread is the difference between the bid and ask prices.
c) Spot FX. Trading = For most currencies quotations are carried out of four decimal places in both American and the European terms. However some currencies (Japanese yen, Slovakian Korna, South Korean Won) quotations may be carried out only two or three decimal places, but in American terms the quotations may be carried out to as many as eight decimal places.
d) Cross rates =A cross exchange is an exchange rate between a currency pair where neither currency is the U.S dollar. The cross exchange rate can be calculated from the U.S dollar exchange rate for the two currencies using either European or American quotation terms. Suppose that S ($/DM) = .50
i.e. $1= 2 DM
and that S(Y/DM) = 50
i.e. DM1=Y 50
e) Triangular Arbitrage = Triangular arbitrage is the process of trading out of the US dollar into a second currency, then trading it for a third currency, which is in turn traded for US dollars. The purpose is to earn an arbitrage profit via trading from the second to the third currency. Suppose: The cross rate trader at Deutsdche bank notice that, Credit Lyonnais is buying dollar at S (e/$)= 1.0240(also the same as Deutsdche bank). The next find that credit agricole is making direct market between the Euro and the Pound with a current ask price of S(E/Eh)= 1.5580.
2) Forward exchange rate: It means the rate which is applicable for the forward time or the future exchange rate will use for the foreign exchange that is called forward exchange rate. Suppose- I am a businessman. I want to business something by the foreign exchange then I should have to follow the exchange rate system. If the exchange rate will fixed that day when will I do my business after one month or three later this is called the forward exchange rate. When I will do my business & which exchange rate will happen in that time it is called forward exchange rate. Some time it should be beneficial or loser for the importer or the exporter. Actually the forward market involves contracting today for the future purchase or sale of foreign exchange. A forward contract is an agreement t