Evaluation of EXIM Bank Limited

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An overview
of EXIM Bank

EXIM
Bank Ltd is the name of a newly formed commercial bank but is the first of its
kind in Bangladesh. It has been incorporated in Dhaka, EXIM Bank Limited as a
public limited company and its head office is located at Printers Building, 5,
Rajuk Avenue, Motijheel Commercial Area Dhaka 1000.In the world of consumerism,
the business organization of the world strive for the consumers satisfaction as
a number one business strategy whatever may be the product of the organization,
either service or non-service. Service is the product a bank. There is a saying
that customer service starts right from the stairs of the bank building. The
guard at the door is the first person represents of the bank, receives a
customer with wishes in smiling face.

1.2 Background of the Bank

Export
Import Bank of Bangladesh Limited (EXIM Bank) is a private commercial bank
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 with the vision to
stand out as a pioneer banking institution in Bangladesh. It was incorporated
in 2nd June 1999 as a public Limited company under the companied act 1994 to
carry out traditional banking business in Bangladesh and started its banking
operation from 3rd August 1999 under the banking company Act 1991 with Mr.
Alamgir Kabir, FCA as the advisor and Mr. Mohammad Lakiotullah as the Managing
Director with the authorized capital of TK. 1000 million and initial Paid-up
capital of TK. 225 million respectively. Both of them have long experience in
the financial sector of our country. By their pragmatic decision and management
directives in the operational activities, this bank has earned a secured and
distinctive position in the banking industry in terms of performance, growth and
excellent management .Export Import Bank of Bangladesh Limited (EXIM Bank Ltd)
was named before as Bengal Export Import Bank Limited (BEXIM Bank Ltd.) being
newly formed commercial Bank of the country with a distinctive identity. Export
Import Bank of Bangladesh Limited is a 3rd generation bank in our country and
has been rendering an important service thedevelopment of economy since its
inception. As a commercial bank, the bank provides all traditional banking
business including the wide range of savings and credit scheme products, retail
banking and ancillary services with the support of modern technology and
professional Excellency. 

1.3. Mission

  • To maintain Corporate
    and business ethics.
  • To make stock superior
    and rewarding to the customers/ share holders.
  • To display team spirit
    and professionalism.
  • To provide high
    quality financial services in export and import trade.
  • To provide excellent
    quality customer service.

1.4 Vision

  • To be the pioneer bank
    in the banking arena of Bangladesh under the Shariah guidelines and
    contribute significantly to the national economy.
  • To provide standard
    financial services.
  • Wealth maximization.

1.5 Organization Structure:

In the
organization structure of the bank chairman is the head of the board of
directors. There is one managing director, also the president who controls and
supervises the main division of the bank. There is one Deputy Managing director
who reports to him. Four Executive Vice presidents (EVP) and one Senior
Executive Vice President (SEVP) report to the Deputy Managing Director.
Executive Vice Presidents controls the credit with the help of four vice
presidents who work under Executive Vice Presidents. Senior Executive Vice
President controls the human resources and marketing division. The
organizational hierarchy of EXIM BANK almost horizontal, which can show by the
following:

1.6 Objectives

To
receive, borrow or raise money through deposits, loan or otherwise and to give
guarantees and indemnities in respect of al debts and contracts.

  • To establish welfare
    oriented banking systems.
  • To play a vital role
    in human development and employment generation to invest money in such
    manner as may vary from time to time.
  • To carry on business
    of buying and selling currency, gold and other valuable assets.
  • To extend counseling
    and advisory services to the borrowers/ entrepreneurs etc. in utilizing
    credit facilities of the bank.
  • To earn a normal
    profit for meeting the operational expenses, building of reserve and
    expansion of activities to cover wider geographical area.

1.7 Management of EXIM Bank

Management
is the process of planning, organizing, leading and controlling the work of
organization members and of using all available organizational resources to reach
stated organizational goals. The strength of a bank depends of the strength of
its management team. EXIM Bank is proud to have a team of highly motivated,
well-educated and experienced executives who have been contributing
substantially to the continued progress of the bank.

Managerial
effectiveness has been measured in EXIM Bank in terms of come selected criteria
such deposit mobilization, loans and advances made, loan recovery,
profitability and productivity. It has been found that EXIM bank is effective
in respect of branch expansion, loan disbursement, loan recovery etc.

With
a short spam of time, EXIM Bank has become one of the leading and most
successful bank not only among the third generation banks but also it
superseded many other banks and financial institutions belonging to second and
even first generation banks fro the point of view of its excellent business
performance, extraordinary corporate culture and strong team work under the
dynamic leadership of its management. Management is trying to support and
assist well-motivated and experienced affairs to run the day to day affairs of
the bank smoothly For maintains quality management, it is required to train-up
more official at head office and branch level in respect of sanctioning,
disbursement and recovery of credit, project appraisals, customer services etc.

1.8 Human Resource Management of EXIM
Bank

Hunan
resource is the fundamental asset of the organization. Human resource approach
is concerned with the growth and development of people toward higher level of
competency, creativity and fulfillment. Therefore, human resources development
has been given its due importance in an environment that values performance,
teamwork, fairness and integrity, it has both qualitative and quantitative
dimension. EXIM Bank recognizes that intellectual capital is the most important
asset for a financial institution.

Without
proper and efficient human resources, no organization can run its operations.
The bank believes that the professional competence bank personnel and its
commitment for accomplishing assigned responsibilities are a first line of
defense to prevent irregularities.

The objectives of Human Resource management of EXIM
Bank are as follows:

  • Conducting job analysis
  • Planning employee needs
    and recruiting job candidates
  • Selecting ob candidates
  • Orienting and training new employees
  • Managing wages and salaries (Compensating Employees)
  • Providing incentives and benefits
  • Appraising performance
  • Training and developing managers
  • Building employee commitment
  • The hierarchical position of human resources in EXIM Bank Ltd. is
    shown in

Profile of EXIM Bank

. EXIM Bank
Ltd at a Glance

  • No. Of employees : 934 

2.7
Growth of the Bank

Figure
in Crore

Sl.
No

Particulars

2005

2006

2007

2008

1

Authorized
Capital

100.00

100.00

100.00

350.00

2

Paid-up
Capital

31.39

62.78

87.90

171.38

3

Reserve
Fund

22.82

35.73

57.00

81.09

4

Deposits

1524.30

1907.82

2831.90

3503.20

5

Investment
(General)

1228.91

1933.20

2604.60

3264.13

6

Investment
( Shares on Bonds)

237.70

154.30

163.30

223.33

7

Foreign
Exchange Business

3461.96

4931.24

7294.00

9617.51

a)
Import Business

1926.00

2678.10

4143.20

4959.67

b)
Export Business

1512.46

2241.84

3128.50

4623.46

c)
Remittance

23.50

11.31

22.30

34.38

8

Operating
Profit

56.27

83.58

117.58

137.87

9

Loan
as a % of total Deposit

80.62%

101.33%

91.97%

93.18%

10

No.
of Foreign Correspondent

185

200

222

246

11

Number
of Employees

627

768

934

1020

12

Number
of Branches

19

28

28

30

13

Return
on Assets

3.15%

3.44%

1.65%

1.73

Banking operation in various departments

2.1 GENERAL BANKING ACTIVITIES

General
Banking is the starting point and main function of all the banking operations.
It is the department, which provides day-to-day service to the customers.
Everyday it collect deposit from the customers by allowing borrowing interest
rate, meets their demand for cash by honoring cheques and lend it to the
customers against lending interest rate. Lending interest rate is higher then
borrowing interest rate, difference between borrowing interest rate and lending
interest rate is the profit for the bank. It opens different types of accounts,
remit funds, issue demand draft, telegraph transfer, pay order etc. since bank
is confirmed to provide the services everyday general banking is also known as
“Retail Banking’.

Divisions
of General Banking in EXIM Bank Ltd:

Account Opening

Account Opening Section

Bank account
is a contractual relationship between a bank and the customers. It is the best
way for a customer to built relationship with the bank. Like interest-based
conventional banks, the main function of EXIM Bank Ltd. is to mobilize saving and
provide financial support to the entrepreneurs. Depositors receive interest in
a predetermined rate for their deposits make with an interest based banks,
where EXIM Bank Ltd. neither pay not receive interest and mobilizes saving of
the common people in line with Islamic Shariah.

Deposit
account can take on a various forms such as:

Al
– Wadiah Current Deposit (AC)

Mudarabah
Saving Deposit (MSD)

Short
– Term Deposit (STD)

Mudaraba
Term Deposit Receipt

Al
– Wadiah Current Deposit (ACD)

EXIM
Bank Ltd .received deposits in its Al – Wadiah Current Account. It has some similarity
with the current account of conventional bank. The term Al – Wadiah Current
Deposit means deposit of money allowing somebody to sue it. Banks being a
trustee preserves and keeps or in safe custody of what is deposited. Depositors
feel safe in keeping their money with the bank and take transaction facilities.
Bank provides assurance of returning money to the depositors on demand. In the
process of opening Al-Wadiah Deposit, the bank gets approval of the depositors
regarding the use of the deposited money and earns profit out of their
development. Any losses incurred by way of such investment are totally borne by
the Bank. Thus, the depositors don’t take the risk of losses with Al-Wadiah Current
Deposit, they also don’t expect any profit form it. Depositors are provided
with cheque book. They can withdraw or deposit any amount as and when they
like. Bank may charge a fee in the account. Al-Wadiah Deposits are short terms
and very uncertain, thus banks have to be very useful in the investment of
money from this account.

General
Documentation requires for opening a (ACD):

a) For a Individual Customer:

Copy
of the Passport, if available or Employer’s Certificate of Commissioner’s
Certificate or Letter of Introduction by a person acceptable to the Bank.

TIN
Certificate, if applicable.

Two
recent passport size photographs duly attested by the Introducer.

b) For Sole Proprietorship:

Copy
of Trade License.

Two
recent passport size photographs of the Proprietor/Signatory duly attested by
the Introducer.

Copy
of the passport of the Proprietor/Signatory, if available or
Commissioner’s/Chairman’s Certificate or Letter of Introduction by a person
acceptable to the Bank.

TIN
Certificate.

c) For Partnership:

v 
Copy of the
Partnership Deed of the Firm.

v 
List of Partners
with their address and phone number.

v 
Copy of Trade
license.

v 
Extract of
Resolution of the Partners of the Firm for opening the account and
authorization for its operation duly certified by the managing Partner of the
Firm.

v 
For Registered
Partnership, Certificate of Registration of the Firm along with duly certified
copy of the Partnership Deed.

v 
Two recent
passport size photographs of each Partner/Signatory duly attested by the
Introducer.

v 
Copy of the
Passport of each Partner/Signatory, if available or Commissioner’s/Chairman
Certificate or Letter of Introduction by a person acceptable to the Bank.

v 
TIN Certificate.

:

v 
Certified true
copy and Article of Association of the Company.

v 
Certified true
copy of Certificate of   Incorporation of the Company.

v 
Certified true
copy of Certificate of Business of the Company, in case of Public Limited
Company.

v 
Latest list of
Directors with address and phone number along with Form XII.

v 
Extracts of the
duly adopted Resolution of the Board of Directors of the Company for opening
the Account and authorization for its operation duly certified by the
Chairman/Managing Director of the Company.

v 
Copy of Trade
License.

v 
Two recent passport
size photographs of each signatory duly attested by the Introducer.

v 
Copy of the
passport of each Signatory, if available or Commissioner’s/Chairman’s
Certificate or

v 
Letter of
Introduction by a person acceptable to the Bank.

v 
TIN Certificate.

Opening a Mudaraba saving Deposit (MSD):

Mudaraba
Saving Deposit (MSD) is open by the lower and middle classer people who wish to
save a part of their incomes to meet their future need intend to earn an income
from their

savings.
It aims at encouraging savings of non-trading person(s), institution(s),
society, etc. by depositing small amount of money in the bank.

Restriction on withdrawals and deposit:

The
number of withdrawals over a period of time is limited. Two withdrawals per
week are permitted. But more than that no interest will be paid on rest amount
for that montThe total amount of one or more withdrawal on any date should not
exceed 25% of the balance in the account unless 7 (seven) days advance notice
is given. The customer may deposit any amount in the savings bank account
subject to a minimum of Taka. 2000/- in the account.

EXIM Bank
Ltd. is providing 8.5% profit on Mudaraba Saving Deposit.

Opening a saving account:

For Opening
a Mudaraba Saving Deposit following documentation are required:

v  Two copies of passport size photographs.

v  Introductory reference.

v  Commissioner’s/Chairman Certificate.

General
Precautions of opening an MSD Account: After opening an account and before
issuing a Chequebook the authorized officer should check the account opening
form for the complete information, which is given by the customers:

v  Name of the account holder.

v  Photos of the account holder.

v  Date of opening.

v  Types of account

v    Name of nominee and their address.

v  Specimen signature in the form and in the “Specimen
signature card”.

v  Name, address, and the account number of the
introducer

Mudaraba Short – Term Deposit (STD):

EXIM Bank
Limited also receives short-term deposit from the clients. The SND account is
different from the interest – based banks. It is also a Time Deposit account.
The formalities for opening of this account are similar to those required for
Al-Wadiah Current Account. The only difference is that seven (7) days notice is
required minimum balance of tk. 50000. The rate of profit for this account is
6.50%. If the withdrawal on demand is desired, it may be paid subject to the
forfeiture of profit for the period of notice or the expired of notice.

Mudaraba short term

It is like a
fixed deposit in the conventional baking system but it does not receive or
accept interest father, this account give profit and collect deposits. In this
mode less that Tk. 1 crore or Tk. 1 crore and above can be deposited against
client will get non-transferable instrument of equal amount. If a customer
withdraw his/her money before one month than he/she will not get any kind of
profit. On the other hand, after the matured if client don’t withdraw his/her
money than it will be auto renewed with imposed profit for the next days. If a
depositor would like to withdraw his profit after six months he/she will get
the profit accordance with previous years profit rate. After the announced
yearly profit or loss, if bank felt in loss positing then the depositor bound
to incur the loss. In absence of account holder the selected nominee will get
the money. Account holder bound to bear any kind of tax or excise duty
according to government circular. The profit rates of this account are:

Mudaraba
Fixed Deposit (FDR)

Provisional
Rate of Profit

Minimum
Deposit Requirement

1
(One) month

11.50%

3
(Three) months

12.6%

6
(Six) months

12.75%

01
(One) Year

13.00%

02
(Two) Years

13.00%

03
(Three) Years

13.00%

Mudaraba Super Savings Scheme (MSSS):

The
EXIM Bank Ltd. gives the facility to the client by the Islamic Shariah Mudaraba
rules and regulations. In this scheme depositors can deposit minimum than Tk.
5000/- for 6 years and after the maturity date accountholder will receive
double than his/her deposited amount. Depositor will get 80% investment
facility by deposit the deposit receipt. Bank can invest this amount any sector
by the Islamic Shariah rules and regulations. Accountholder are bound to pay
any government tax. For opening this account applicant need recent one copy
photograph and one copy photograph of nominee. The profit rates of this account
are:

Super
Savings Scheme (Double)

Minimum
Requirement Tk.

Approximate
Tk. After Maturity

06
Years

5,000.00

10,000.00

Mudaraba
Multiplus Scheme (Triple)

Under
this scheme the depositor’s money will be almost triple in 10 years period. Any
individual, company, educational institution, government organization, NGO,
trust, society etc can invest their saving under this scheme.

Multiplus
Savings Scheme (Triple)

Minimum
Requirement Tk.

Approximate
Tk. After Maturity

10
Years

5,000.00

15,000.00

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 years periodfacility by
transfer funds from one place to another. Some of the instrument that EXIM Bank
Ltd., Foreign Exchange Branch provides are immense beneficial to the client.

Remittance

Facility
by transfer funds from one place to another. Some of the instrument that EXIM
Bank Ltd., Foreign Exchange Branch provides are immense beneficial to the
clients. These are:

Demand
Draft (DD)

Pay
Order (PO)

Telegraphic
Transfer (TT)

Demand Draft (DD):

Demand
Draft is an order of issuing bank in another branch of the same bank to pay
specified sum of money to the payee on demand. It is generally issued when
customer wants to remit money in any place which is out side of the
clearinghouse area of issuing branch payee can be purchaser himself or another.
Bearing money may be risky. It is anegotiable instrument and it can be crossed
or not. For payment of DD, paying branch first has to be confirmed that the DD
is not forged one.First bank Cheques the “Test Code” mentioned on the draft. If
“Taste Code” agrees then believe that DD is not forged and makes payments. For
further confirmation, the issuing bank sends an advice about the DD to the
paying branch. For DD, commission is taken in the following way:

Particulars

Charges

Commission

@
0.1% Minimum Tk. 25.00

VAT

@
15 % of commission

Postage

Tk.
20

Pay Order (PO):

This
is very important instrument of the Bank. Pay Order gives the payee the right
to claim payment from the issuing bank. It can be en-cashed from issuing bank
only. Unlike Cheque, there is no possibility of dishonoring pay order because
before issuing pay order bank takes out the money of the pay order in advance.
Pay order cannot be endorsed or crossed and so it is not negotiable instrument.
Pay Order commission is like this:

Telegraphic Transfer (TT):

Telegraphic
Transfer is the quick service system than others. By this method money is
transfer to another place by telegraphic message. The sender branch will
request another branch to pay required money to the required payee on demand.
Generally for such kind of transaction payees should have account with the
paying bank. Otherwise it is very difficult for the paying bank to recognize
the exact payee. Test code is also furnished on the TT message for the
protection of it. When sending money is urgent then bank use telephone for
remittance. This service is only provided for valued customers. Who is very
reliable and have long-standing relationship with bank, TT commissions are:

Particulars

Charges

Commission

@
0.15% or Minimum Tk. 25.00

Telephone
Charge

Tk.
50

Foreign Remittance:

Most outward
remittance is approved by the Add on behalf of the Bangladesh Bank following
declaration of Taka as convertible for current account payments from March,
1994. Only a few remittances of special nature require Bangladesh Bank’s prior
approval.All remittances from Bangladesh to a foreign country or local currency
credited to on resident Taka accounts of foreign banks or convertible Taka
account constitutes out ward remittances of foreign exchange. Add must exercise
greatest caution to ensure that foreign currencies remitted or released by them
are used only for the purpose for which they are released; they should also
maintain proper records for submission of returns to Bangladesh Bank as also
for the letters inspection from time to time. It is most important that, once
forms have been approved by or on behalf of the Bangladesh Bank, the Add carry
out the transactions only on behalf of the original applications for which the
forms were approved. Permits issued (where applicable) by the Bangladesh Bank
must be utilized within the period of its validity indicated in the permits.
The amount released must not exceed the Authorized limit. Also instructions, if
any given in the permits with regard to he amounts to be released periodically
e.g. monthly or quarterly must be strictly adhered.

Inward Remittance

The term
inward remittance includes not only remittances by T.T, draft, etc. but also
purchase of bills, purchase of Travelers cheque. Inward remittance covers
purchase of foreign currency sent from abroad favoring a beneficiary bank in
Bangladesh. Remittance receives against export should be certified and reported
on EXP forms. In case of remittance received in advance for exports the AD
should obtain a signed declaration from the beneficiary on the back of the
“Advance Receipt Voucher” certifying the purpose of remittance.

Activities of Clearing Department

On behalf of
the customer bank receives their proceeds of instruments such as Drafts,
Cheques, Pay Order and sends for collection through these methods:

Outward
Bills for Collection (OBC) and Inward Bills for Collection (IBC) (within the
clearinghouses area)

Clearing
Department works can be classified in two ways:

Outward
Clearing

Inward
Clearing

Outward Clearing:

Send
Return memo, showing cause, to Local Office for dishonored instrument The
instruments drawn on other banks, within the clearinghouse area, are deposited
through our clients are sent for collection is called outward clearing.

Procedure
for Outward Clearing:

Instrument
received Check these items in the instrument: a) date b) branch c) amount in
words and figure d) signature Special crossing seal, clearing seal, endorsement
seal as “Payees A/C Entry in the Outward Clearing Register.


 When we receive cheque drawn on our
branches within the clearinghouse area presented by other banks is known as
inward clearing

Procedure
for Inward Clearing:

v 
Instrument
(DD/Cheque/PO) comes from principal office

v 
Entry in “Inward
Register”

v 
Cheque – in
computer

v 
DD – DD payable

v 
Pay Order
respective register

v 
Sign in the
register by authorized officer

v 
Cancellation of
instrument

v 
Send IBCA to
Local Office for honored instrument

Transfer Delivery

Transfer
Delivery is of two types:

Outward

Inward

Outward Transfer Delivery:

Instrument
send for collection to other branches is outward transfer delivery. Its
procedure is like this:

v  Receive instrument

v  Special crossing seal, transfer delivery seal,
endorsement as “payees A/C will be credited”

v    Schedule enclosed.

v  Receive IBCA and credit the party A/C

Inward Transfer Delivery:

When
instrument come to our branch for collection then it is called inward transfer
delivery. Its procedure is as follows:

v  Receive instruments

v  Verification of following items is taken.

v  Branch

v    Amount in words and figure

v    Serial number

v  Entry in “Inward transfer Delivery” register

v  Voucher

v  IBCA issue

Activities of Cash Department

Cash
department is the most vital department of a bank and it is call blood of a
bank. It is a platform to communicate with customers. Cash department receives
& pays cash directly.

In the cash
department there are following register:

v  Vault register

v  Cash received register

v  Cash payment register

v  Cash balance register

v  Rough cash Balance book.

v  Cash remittance register

v  Key register

v  Cash position memo.

There is a
procedure of cash-in & cash-out from the vault. Also a systematic procedure
is maintained for receiving cash through different vouchers and payment against
different cheques & vouchers.

Vault Opening:

The Vault
opened with two different keys of two respective authorized officers. The
officers are:

Manager of
the Branch

Cash – in –
charge Officer

Strong room
has two keyholes opened by two officers respectively by two keys of cash.
Generally sub-manager of the Branch bears authority absence of manager. Grill
door one keyhole opened by – two keys of two officers and bring out following
thing: Cash, Vault register, Receive register, Payment register, Balance Book,
Security stationary. Enter the amount of cash withdrawal from the vault
register.

Cash Receiving Procedure:

Cash is the
life of a bank. Different types of form are used for cash deposits for
different types of accounts. Cash may be received by the following ways:

v  Current of Savings account pay-in-slip

v  Credit voucher

v  Different types of instrument remittances (TT, DD, PO
etc.) are received by respective forms.

v  Bills like National Life Insurance co. ltd

v  Share collection

v  Different types of scheme

v  Cash Payment:

Cash is paid
in payment counter against the following instruction;

v  Cheques

v  Cash debit voucher

v  Pay-in-slip

v  Pay Order, DD etc.

v  Bank’s expense also paid to outsider through cash
debit voucher.

v  Procedure:

v  Receive of the cheques with a signature behind it.

v  Scrutinize it by an authorized officer.

v  Submit to computer section for checking the available
balance.

v    Again submitted to computer section for debiting the
partly A/C and seal up “Posted”

v  Send to cash counter – payment officer.

Ø  Cash officer checks the cancellation, seal and seal up
“Cash Payment”

Ø  Entry the payments register.

Ø  Take another signature of payee behind the cheque and
pay cash.

Cash Remittance:

Requisition
letter, which must be authorized by the Manager, is sent to Principal Officer
for Cash Remittance.

Inward Cash:

Counting the
cash.

Prepare
simple credit voucher

Prepare IBCA

Entry in the
cash receipt register

Car
requisition (Call through phone)

Taking
counter part of forwarding (Including name & specimen) signature of
authorized officer and Guard. Remit the cash Prepare simple debit voucher

Cash Balance:

At the end
of the transaction:

v  Sum of total received

v  Sum up total payment

Total
receiving + Opening balance – Total payment = Closing balance for that day
& opening balance for the next day.

Check it
with computer sheet.

Counting
cash.

Entry the
cash balance register Write cash position memo with denomination.

Position of
the Cash Department:

The position
of the cash department is very important. The cash department should be at a
safe place. It should be at the middle position of the branch. The cash
position of the Foreign Exchange Branch is in the front side of the branch and
its safe and vault is at the behind.

2.2
Foreign Exchange

Foreign exchange is the means and
methods by which rights to wealth in a country’s currency are converted into
rights to wealth in another country’s currency. In banks when we talk of
foreign exchange, we refer to the general mechanism by which a bank converts
currency of one country into that of another. Foreign Exchange Department (FED)
is the international department Bangladesh Bank issues license to scheduled
banks to deal with foreign exchange. These banks are known as Authorized
Dealers.  If the branch is authorized
dealer in foreign exchange market, it can remit foreign exchange from local
country to foreign countries.  So EXIM Bank, Principal branch is an authorized
dealer

There
are three kinds of foreign exchange transaction:

Import

Export

2.2.1
Import

To import, a
person should be competent to be and importer’. According to Import and Export
Control Act, 1950, the Office Of Chief Controller Of Import and Export provides
the registration (IRC) to the importer. In an international business
environment, buyers and sellers are generally unknown to each other. So seller
of goods always seeks security for the payment of his exported goods. Bank
gives export guarantee that it will pay for the goods on behalf of the buyer if
the buyer does not pay.

Letter of Credit ; A conditional written undertaken issued by the importer’s
(applicant) bank to the exporter (beneficiary) at the request of the importer
to effect payment up to a stated amount within a stated time period against
presentation of complaint documents. 

The
LC is governed by International Chamber of commerce (ICC)publication no.500.

Steps for
import L/C Operation – 8 steps operation

engaging in international, trade, every trader must
be first registered with the
Chief Controller of Import and Export,

• By payingStep 2 – Determination terms
of credit

• The terms of
the letter of credit are depending upon the contract between the

Importer and
exporter. The terms of the credit specify the amount of credit, name and address of the beneficiary
and opener, tenor of the bill of exchange, period and mode of shipment and of
destination, nature of credit, expiry
date, name and number of sets of ship documents etc

Step 3 –
Proposal for Opening of L/C

To have an import
LC limit an importer submits an
application to department to EXIM Bank. The proposal contains the
following particular

• Full
particulars of the bank account

• Nature of business

• Required amount of limit

• Payment terms and
conditions

• Goods to be imported

• Offered security

• Repayment schedule

Step 4 – Application
by importer to the banker to open letter of credit

• For opening L/C, the importer is required to fill up a
prescribed application form provided by the banker along with the following
documents:

Step 5 – Opening of
L/C by the bank for the opener:

• Taking filled up application form
from the importer.

• Collects credit report of exporter
from exporter’s country through his foreign correspondence there.

• Opening bank then issues credit by
air mail/TEL EX/SWIFT followed by L/C advice
as asked by the opener through his foreign correspondent or branch as the case
may be, at the place of beneficiary.
The advising bank advises the L/C to the beneficiary on his own form where it is addressed to him
or merely hand over the original L/C to the beneficiary if it is so addressed.

Step 6 – Shipment of goods and lodgment of documents
by exporter:

• Then exporter
ships the goods to the
destination of the importer
country.

• Sends die documents to
the L/C opening bank through his
negotiating bank. Generally the
following documents are sent to the Opening Banker with L/C:

1. Bill of Exchange

6. Packing List

2. Bill of Lading

7. Advice Details of Shipment

3. Commercial Invoice

8. Pre-shipment Inspection Certificate

4. Certification of Origin

9. Vessel Particular

5. A certificate stating that each
packet contains the description of goods over the packet.

10.Shipment Certificate

Step 7 – Lodgment of Documents by the opening Bank from the negotiating bank

After receiving the documents, the opening banker scrutinizes the documents. If any discrepancy
found, it informs the importer, If importer accepts the fault, then opening
bankers call importer retiring the
document. At this time many thing can happen. These are indicated in the following:

• Discrepancy found but the
importer accepts – no problem occurs in lodgment.

• Discrepancy
found and importer not agreed to accept –
In this case, importer protest
and send back all the documents to the exporter and request his to make in the
specified manner. Here banker is not bound to pay because the documents send by
exporter is not in accordance with the terms of L/C.

• Documents
are OK but importer is willing to retire the documents – In this case bank is obligated to pay the price of
exported goods. Since importer
did not pay for bill of  exchange, this payment by bank is one kind of credit to the importer
and this credit in banking is known as
PAD.

• Everything is O.K. but importer fails
to clear goods from the port and request bank to clear – In this case banks clear the goods and
takes delivery of the same by  paying
customs duty and sales tax etc. So, this expenditure is debited to the importer’s account and in
banking it is called LIM.

2.2.2 Export

The goods
and services sold by Bangladesh to foreign households, businessmen and
Government are called export. The export trade of the country is regulated by the Imports and Exports (control)
Act, 1950. There are a number of
formalities, which an exporter has
to fulfill before and after
shipment of goods. The exports from Bangladesh are subject to export trade
control exercised by the
Ministry Of Commerce through
Chief Controller of Imports and Exports (CCI & E). No exporter is allowed
to export any commodity permissible for export from Bangladesh unless he is
registered with CCI & E and holds 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. The
formalities and procedure are enumerated as follows;

1. Obtaining exports LC: To get export LC form exporter issued by the importer.

  2. Submission of export documents; Exporter has to submit all necessary documents to the
collecting bank after shipping of goods

 3. Checking of export documents; after getting the documents banker used to

Check the documents as per LC terms

4. Negotiation of export documents; If the bank accepts the document and pays the value
draft to the exporter and forward the document to issuing bank that is called a
negotiating bank. IF the bank does buy the LC then the bank normally acts as
collecting bank.

5. Realization of proceeds: This is
the period when the issuing bank has realized the payment.

  6. Reporting to the Bangladesh bank: As per instruction by Bangladesh bank the bank has to report to respective
department of Bangladesh bank by mentioning latest payment.

7. Issue to proceeds realization
certificate (PRC): Bank has to issue
precedent realization certificate of export LC to the supplier/ exporter for
getting cash assistant.

Export
operation

Bangladesh exports a large quantity of goods and
services to foreign households. Readymade textile garments (both knitted and
woven). Jute, Jute-made products frozen shrimps, tea are the main goods that
Bangladeshi exporters exports to foreign countries. Garments sector is the
largest sector that exports the lion share of the country’s export. Bangladesh
exports most of its readymade garments products to U.S.A and European Community
(EC) countries.

Bangladesh exports about 40% of its readymade garments
products to U.S.A. Most of the exporters
who export through EXIM BANK are readymade garment exporters. They open
export L/Cs here to export their
goods, which they open against the import L/Cs opened by their foreign
importers. Export L/C operation is just reverse of the import L/C operation.
For exporting goods by the local exporter, bank may act as advising banks and
collecting bank (negotiable bank) for the exporter,

*
As an advising bank

It receives documents from the foreign importer and
hands it over to the exporter. Sometimes it adds confirmation on the L/C on
request from the Opening Bank. By adding confirmation, it assumes the
responsibility to make payment to the exporter.

*
As Negotiating Bank

It negotiates the bills and other shipping documents
in Favor of the exporter. That is, it collects the proceeds of the export-bill
from the drawer and credits the exporter’s account for the same. Collection
proceed from the export bill is deposited in the bank’saccount in the
importer’s country. Sometimes the bank purchases the bills at discount and
waits till maturity of the bill. When the bill matures, bank presents it to the
drawer to incash it.In our
country, Export and Import operation of bank is very much related with one
another because of use of Back to Back and maturity of payment for Back-to-Back
L/C is set in such that it can be paid out of export.

It is simply issued to the clients against an import
L/C. Back-to-Back mechanism involves two separate L/C. One is master Export L/C and another is Back-to-Back L/C. On the strength of Master Export L/C
bank issues bank 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 L/C.

Features of Back to Back L/C


An Import L/C to
procure goods /raw materials for
further processing.

It is opened
based on Export L/C.

It is a kind of
Export Finance.


Export L/C is at Sight but back to Back L/C is at Usance.

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


Application is
registered with CCI&E


Applicant has
bonded warehouse license.

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

Usance period will be up to 180 days.

The import L/C is
opened for 75% of the value of Export L/C.

Here L/C issued
against the lien of export L/C.

Arrangements are
such that export L/C matures first then
out of this export profit,
import L/C is paid out.

Documents
Required for Opening a Back-to-back L/C

In EXTM Bank Principal Branch, following papers/ documents are required for opening a
back-to-back L/C-

1. Master
L/C

2. Valid Import Registration Certificate (IRC)
and Export Registration Certificate
(ERC)

3. L/C
Application and LCAF duly filled in and signed.

4. Perform
Invoice or Indent

5. Insurance
Cover Note with money receipt

6. IMP Form
duly signed

In addition
to the above documents, the followings are also required to export oriented garment
industries while requesting for opening a back-to-back L/C –

1. Textile
Permission

2. Valid
Bonded Warehouse License

3. Quota
Allocation Letter issued by the Export Promotion Bureau (EPB) in favor of the
applicant for quota items.

Checklist of
exports L/C:

Following defective points are usually found in the Master L/C. So, the
bank officials so much carefully check these points. These are:

*
Name of the
Advising Bank.

*
Name of
Transferring Bank

*
Form of Doc.
credit:

*
Name of Issuing
Bank

*
Documentary
Credit No. and issuing date

*
Date of shipment

*
Expiry date and
place

*
Applicant/ for
order of/ On Account.

*
Beneficiary/
Favoring

*
Amount

*
Availability of
Credit

*
Partial shipment/
Transshipment

*
Payment condition
/Draft Sight

*
Category

*
Description of
goods:

*
Item

*
Total Qty

*
Unit price

*
B/L Clause

*
Reimbursement
clause.

*
UCPDC Clause

*
Net FOB value.

Payment of back to
back L\C

In case back
to back as 60-90-120-180 days of maturity period, deferred payment is

made.
Payment is given after realizing export proceeds from the L/C issuing bank.

L/C under EDfF.

• Exporter development Fund is created by Bangladesh Bank to give
encourages to the exporter in Bangladesh.

• Generally Back-to-Back L/C is Usance L/C that is here bill of exchange is
payable after some maturity date say 90 or 120 days after the date of acceptance/negotiation. But
some foreign seller may require sight payment. Here import L/C matures first.
In that case Bangladesh Bank gives me fund to the bank to pay the price of
imported goods in favor of the local purchaser of raw materials. When export
proceeds come, first Bangladesh Bank loan to the importer is adjusted and
remaining part goes to the importer of raw materials.

Negotiation of exports documents:

The most
common method of financing exporters is negotiation of documents under L/C. It
is a post-shipment credit. Here the bank acts as a negotiating bank. After the
shipment of the goods, the exporter submits the relative documents to the
branch for negotiation.  The documents
are to submit within the period mentioned in the L/C. after approval of
negotiation of the bill the full particulars of the documents are entered into
the Foreign bill Purchased (F.B.P) register. The documents are sent to the L/C
opening branch with a forwarding letter. The branch claim reimbursement from
the issuing bank or from the reimbursing bank, giving clear instructions to
credit the proceeds of the bill to the EXIM Bank head office NOSTRO A/C
maintained with the named correspondent bank abroad under telex intimation to the
Principal branch and Head Office (International Division). Negotiation stands
for payment of value to the exporter against the documents stipulated in the
L\C. If documents are in order, EXIM Bank purchases (negotiates) on the
basis of banker- customer relationship. This is known as Foreign Documentary
Bill Purchase (FDBP).If the bank is not satisfied with the documents submitted
to EXIM Bank gives the exporter reasonable time to remove the discrepancies or
sends the opening bank for collection. This is known as Foreign Documentary Bil
for Collection (FDBC)

Mode of payment of export bill under
L/C:

As per UCPDC
500, 1993 revision there are four types of credit. These are as follows:

*
Sight Payment
Credit:
In a Sight Payment Credit, the bank pays the stipulated
sum immediately against the exporter’s presentation of the documents.

*
Deferred
payment Credit:

In
deferred payment, the bank agrees to pay on a specified future date or event,
after presentation of the export documents. No bill of exchange is involved.
Payment is given

to
the party at the rate of D.A 60-90-120-180 as the case may be. But the Head
office is paid at T.T clean rate. The difference between the two rates us the
exchange trading for the branch.

*
Acceptance
credit:

In
acceptance credit, the exporter presents a bill of exchange payable to himself
and drawn at the agreed tenor (that is, on a specified future date or event) on
the bank that is to accept it. The bank signs its acceptance on the bill and
returns it to the exporter. The exporter can then represent it for payment on
maturity. Alternatively he can discount it in order to obtain immediate
payment.

*
Negotiation
Credit:

In
Negotiation credit, the exporter has to present a bill of exchange payable to
him in addition to other documents that the bank negotiates.

EXIM
BANK LC nature of code

·
Cash
LC (sight) Foreign –  01

·
Cash
LC (usance) Foreign –
02

·
Inland
back to back LC (sight) –
03

·
Inland
back to back  LC (usance) – 04

·
Foreign
back to back LC (sight) –
05

·
Foreign
back to back LC (usance) –
06

·
LC
under AID/Loan  ED –
07

·
LC
under STA –
08

·
Import
from EPZ (cash LC) (sight)   –
09

·
Import
from EPZ (cash LC) (usance)   –
10

·
Import
form EPZ (B/B LC) (sight) –
11

·
Import
from EPZ (B/B LC) (usance) –
12

·
Others
(LC) cash LC Local sight or usance   – 99

EXIM
BANK BACK-TO-BACK LC COMMISSION

·
Back
to Back (Foreign):

1st
quarter- 0.50%

(LC issue date
to asperity date with in 90 days than 90 days (0.50%+0.30% = 80%)

 Back to Back (foreign) other charge

Data
max charge – 1000

Swift
– 3000

Stem-
150

·
Back
to Back  (Local):

1st
quarter- 0.50%

(LC
issue date to expiry date with in 90 days than 90 days (0.50%+0.30% = 80%

·
Back
to Back (Sight Local) :

1st quarter- 0.50%

(LC
issue date to expiry date with in 90 days than 90 days (0.50%+0.30% = 80%).

·
Export
Development fund:

 1st quarter- 0.50%

(LC
issue date to expiry date with in 90 days than 90 days (0.50%+0.30% = 80%)

·
Export
processing Zone:

 1st quarter- 0.50%

(LC
issue date to expiry date with in 90 days than 90 days (0.50%+0.30% = 80%).

·
Export
processing Zone other charge:


Data max charge – 1000


Courier charge    – 200

 

EXIM/
NJ/FR/2002/   Internal Memo

Date :
28/01/2002

TO

The
Managing  Director,

EXIM Bank, Head
office, Dhaka.

FM : The Vice
President, Narayanganj Branch, Narayanganj.

Dear Sir

) limit of Tk. 50.00 lac A/C M/S Banijya Bitan

a customer Of Our Branch.

We enclose
herewith an application since received from the above party along with other
necessary papers for your kind perusal and consideration.

The particulars of the party are as follows:

1. Name of the
firm : M/S Banijya Bitan

ii) Sutapatti,
Narsingdi Sadar, Narsingdi.

4. Trade
License   : 4017

5. TIN : 125-300-0812/Narsingdi

6. Nature of
Business :  Wholesale of 
Cotton Yarn.

7. Experience :  25 Years

8. A/C
Transaction   :

With our Bank(in CD a/c)

Cr. Summation:
Tk 2.80  crore

Dr.
Summation: Tk 2.77 crore

(w.e.f.
03-01-2002 to 24-01-2002)

With Dutch-Bangla Bank (Tanbazar Branch)

Cr.
Summation: Tk 68.11crore

Dr.
Summation: Tk 67.98 crore

10. Value of
stock of goods : Tk1.77 crore

i) Advance
paid for Godown:  Tk. 10.00 lac

ii) Present
Value of Stock :  Tk. 177.00 lac

Tk.
437.00 lac

 
11. Business background : Mr. Md. Safiqul Islam, Proprietor of the firm,
is engaged in whole sale business of
cotton yarn

 the last 25 years. Usually the party purchases
cotton yarn from the local importer and direct from Mills in cash and on credit
basis. The party has two sale centers at Tanbazar and Narsingdi. We have
visited the godown of the party and found the stocks valued about Tk 1.77 crore.
Now  the party is enjoying a CC(Hypo)
limit for Tk 10.00 Lac and CC(pledge) limit for Tk.30.00 lac in the name of M/S
Tareq Traders with Islami Bank Bangladesh ltd, Narsingdi Branch. At the same
time the party is maintaining a well transacted CD a/c in the name of M/S
Banijya Bitan with Dutch-Bangla Bank Ltd., Tanbazar Branch.

12. Present liability   :  a)  Nil (in the name of Banijya Bitan)

b) In the name of
Tareq Traders(Sister concern

Nature of credit

Limit

Outstanding

CC(Hypo)

Tk.10.00 lac

Tk.10.00 lac

CC(Pledge)

Tk.30.00 lac

Tk.27.00 lac

Particulars of the Limit :

i) Limit
applied for : Tk.1.00 crore

ii) Nature of
Limit : Cash Credit (Pledge)

iv) Purpose of
Limit : To purchase and store the cotton yarn.

vi)  Rate of interest : 15% p.a. at
quarterly rest.

x) Delivery
of Goods : Delivery of goods shall be effective
after issuance of delivery order against real payment. The margin shall be
adjusted with the last and final delivery only.

13. Recommendation :   Considering the goodwill, market reputation and business  worthiness of the party, we recommend Head
Office may kindlysanction a Cash Credit (Pledge) Limit of Tk.50.00 lac in favour of the above party.

With kind regards

EXIM/NJ/FR/2002

Internal
Memo

Date
: 12-03-2002

TO : The Managing Director, EXIM Bank Ltd.,
Head Office, Dhaka.

Dear
Sir,

Sub:
Proposal for SOD limit
of Tk.9,00,000.00 (Nine lac) only.

We enclose herewith an application since
received from Mr. Md. Alaol, a customer of our branch to allow him a SOD limit
for Tk.9,00,000.00 (Nine lac) only against FDR. 
The particulars of the limit are as follows:

Name of the Party :
Mr. Md. Alaol

Amount of Limit
: Tk. 9,00,000.00(Nine Lac)
only.

Purpose of limit
: For smooth running of the
business.

Rate of interest : 14.50% (3.00% above of the FDR
interest).

We would therefore request you to accord
your kind approval to sanction the above limit.

With
kind regards,

·
Preparing
the monthly salary statements for the employees.

·
Preparing
the weekly position for the branch which is sent to the  Head Office to maintain Cash Reserve
Requirement (C.R.R)

·
Preparing
the monthly position for the branch which is sent to the Head Office to
maintain Statutory Liquidity Requirement (S.L.R)

o
Make
charges for different types of duties

o
Preparing
the budget for the branch by fixing the target regarding profit and deposit so
as to take necessary steps to generate and mobilize deposit  .Step 8 Retirement

The
importer receives the intimation and gives necessary instruction to the bank
for retirement of the import bills or for the disposal of the shipping document
to clear the imported goods from the customs authority. The importer may
instruct the bank to retire the documents by debiting his account with the bank
or may ask for LTR (Loan against
Trust Receipt .When the officer thinks fit the application to open a L/C, giving the following entries
creates the following charge

Accounting Procedure in ce of L/C
Opening

Table

Particulars

Debit/
Credit

Charges
in Taka

Customer’s
A/C

Debit

L/C
Margin A/C

Credit

Commission
A/C on L/C

Credit

50%

VAT

Credit

15%
on commission

SWIFT
Charge

Credit

3000/-

Datamax

Credit

1000/=

Stamp

Credit

I50/=

Postage

Credit

300/-

Products
of EXIM bank;

Super
Savings Scheme

Monthly
Savings Scheme

Monthly
Income Scheme

Smart
Saver  Hajj Deposit

Super
Savings Scheme

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, EXIM Bank offers SUPER SAVINGS Scheme.

Terms and conditions
of the scheme

1. Any individual,
company, educational institution, government organization, NGO, trust, society
etc may invest their savings under this scheme.

2.
The deposit can be made in multiples of Tk 10,000.

3.
The period of deposit is for six years.

4.
Any customer can open more than one account in a branch in his name or in joint
names.

5.
If the deposit is withdrawn before six years term, then savings interest rate
+1% will be applied before payment is made.

6.
A depositor can avail loan up to 80% of the deposited amount under this scheme.

7.
In case of death of the depositor, before the term, the deposit (with interest5
at savings rate +1%) will be given to the nominee.

In case of issuing
a duplicate deposit receipt the rules of issuing duplicate receipt of Term

Deposit will be applicable

MONEYGROWER

Savings period and monthly installment
rate

The savings period
is for 5, 8, 10 or 12 years. Monthly installment rate is Tk. 500/-, 1,000/-,
2,000/- or 5,000/-

Monthly
installment deposit

*
The savings
amount is to be deposited within the 10th of every month. In case of holidays
the deposit amount is to be made on the following day.

*
The deposits may
also be made in advance.

·
The depositor can
have a separate account in the bank from which a standing instruction Withdrawal

o
Generally,
withdrawal is not advised before a 5-year term, but if it is withdrawn before
the above term, then interest will be paid at savings rate. However, no
interest will be paid if the deposit is withdrawn within 1 year of opening the
account.

o
In case the
depositor wishes to withdraw between the 5, 8, 10 or 12-year period then full
interest will be paid for a completed term and savings rate will applicable for
the fractional period can be given to transfer the monthly deposit in the
scheme.

Loan Advantage

After three years
of savings in this scheme the depositor (if an adult) is eligible for a loan up
to 80% of his deposited amount. In that case, interest rates on the loan will
be applicable as per prevailing rate at that time. 

Reasons for
disqualification from this scheme

If the depositor
fails to pay 3 installments in a row, then he will be disqualified from this
scheme and interest will be applicable as mentioned in withdrawal clause.

·
If a depositor
fails to pay 5 installments in a row after completion of 5-year term, then the
Bank reserves the right to close the account and interest will be paid as,
mentioned in withdrawal clause.

·
In case of death
of the depositor the scheme will cease to function. The amount will be handed
over to the nominee of the deceased depositor. In case of absence of the
nominee the bank will handover the accumulated amount to the successor of the
deceased

·
Example Table-1

Monthly
Installment

Profit rate %

1,000/-

2,000/-

5,000/-

5 Years

10.00

82,800/-

1,65,000/-

4,14,000/-

8 Years

10.15

1,63,600/-

3,27,200/-

8,18,000/-

10 Years

10.30

2,36,400/-

4,72,800/-

11,84,500/-

12 Years

10.50

3,31,986/-

6,63,973/-

16,59,932/-

Monthly Income Scheme

Monthly Income Scheme

Highlights
of the Scheme

Minimum deposit
Tk. 25,000/-

Higher monthly
income for higher deposit.

The scheme is for
a 5-year period.

Monthly income
will be credited to the depositor’s account on the 5th of each month.

Deposit Amount

Income

Tk. 25,000/-

Tk. 250

Tk. 50,000/-

Tk. 500

Tk. 1,00,000/-

Tk. 1000

Tk. 2,00,000/-

Tk. 2000

Tk. 5,00,000/-

Tk. 5000

Tk. 10,00,000/-

Tk. 10,000

Objectives of
the Scheme

An account is to
be opened by filling up a form.  

·
The Bank will
provide to the customer a deposit receipt after opening the account. This
receipt is non-transferable.

·
If the deposit is
withdrawn before a 5-year term, then saving interest rate will be applicable
and paid to the depositor. However, no interest will be paid if the deposit is
withdrawn within 1 year of opening the account and

·
Monthly Income
paid to the customer will be adjusted from the principal amount depositor can
avail loan up to 80% of the deposit amount under this scheme. In this case,
interest will be charged against the loan as per Bank’s prevailing rate.

Smart
Saver

Smart
Saver is a high return investment plan, which helps a customer build 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-year
term deposit scheme.

Terms and conditions

One unit of Smart
Saver Term Deposit is Tk. 25,000.

During the tenure
of the loan the Term Deposit will be kept in the Bank as security.

The customer will
have to open an account and monthly installment of loan will be debited from
the account commencing from 30 days after opening loan account.

Within the 1st
year if the customer fails to repay 3 consecutive installments then only the
principal amount of Smart Saver Term Deposit will be encased and the loan will
be liquidated inclusive of accrued interest and balance paid to the customer.
After completion of 1 year, Savings rate

For missed
installments on due date customer will be charged Tk. 25 per unit per month.

In the event of
death of the customer, the bank shall be entitled to incash the Term Deposit
and adjust the dues first before any refund is made to the nominees/
successors.

The bank reserves
the right to amend the rules and rates as and when deemed necessary.

In order to made smooth arrangement of fund for
performing Hajj, the bank has introduced this scheme for 5, 8, 10, 15, &20
year’s period.

3.1. Deposit Section

Deposit is the
lifeblood of a bank. From the history and origin of the banking system we know
that deposit collection is the main function of a bank is accepting deposit.
The deposits that are accepted by EXIM Bank like other banks may be classified
in to:

*
Demand Deposits

*
Time Deposits

*
Demand deposits:

These
deposits are withdrawn able without notice, e.g. current deposits. EXIM Bank
accepts demand deposits through the opening of,-

a)
current account

b)
Savings account

c)
Call deposits from the fellow bankers.

*
Time deposits:

A
deposit which is payable at a fixed date or after a period of notice is a time
deposit. EXIM Bank accepts time deposits through Fixed Deposit Receipt (FDR),
Short Term Deposit (STD) and Bearer Certificate Deposit (BCD) etc.While
accepting these deposits, a contract is done between the bank and the customer.
When the banker opens an account in the name of a customer, there arises a
contract between the two. This contract will be valid one only when both the
parties are competent to enter into contracts. As account opening initiates the
fundamental relationship & since the banker has to deal with different
kinds of persons with different legal status, EXIM Bank officials remain very much careful about the
competency of the customers.

Banks,
as a financial institution, accept surplus money from the people as deposit and
give them opportunity to withdraw the same by cheque, etc. But among the
banking activities, cash department play an important role. It does the main
function of commercial bank i.e. receiving the deposit and paying the cash on
demand. As this department deals directly with the customers, the reputation of
the bank depends much on it. The functions of a cash department are described below:

Functions
of Cash Department:

Cash Payment

1. Cash payment
is made only against cheque

2. This is the
unique function of the banking system which is known as “payment on demand”

3. It makes
payment only against its printed valid Cheque

Cash Receipt

1. It receives
deposits from the depositors in form of cash

2. So it is the
“mobilization unit” of the banking system

3. It collects
money only its receipts forms

?
Cash packing:

After the banking hour cash is packed
according to the denomination. Notes are counted and packed in bundles and
stamped with initial.

? Allocation of currency:

 Before starting the banking hour all tellers
give requisition of money through
“Teller cash proof sheet”. The  head
teller writes  the number of  the 
packet denomination wise in “Reserve 
sheet”  at  the 
end of the day, all the  notes 
remained  are  recorded 
in  the  sheet.

3.3. Local Remittance

Carrying
cash money is troublesome and risky. That’s why money can be transferred from
one place to another through banking channel. This is called remittance.
Remittances of funds are one of the most important aspects of the Commercial
Banks in rendering services to its customers.

Types of remittance:

Ø Between banks and non banks customer

Ø Between banks in the same country

Ø Between banks in the different centers.

Ø Between banks and central bank in the same country

Ø Between central bank of different customers.

The main ways used by EXIM
Bank for remitting funds are

Ø Payment order ( PO)

Ø Demand Draft ( DD)

Ø Telegraphic Transfer (TT)

So the basic three types of local
remittances are discussed below

Points

Pay Order

Demand Draft

TT

Explanation

Pay Order gives the payee the right to
claim payment from the issuing bank

Demand Draft is an order of issuing
bank on another branch of the same bank to pay specified sum of money to
payee on demand.

Issuing branch requests another branch
to pay specified money to the specific payee on demand by Telegraph
/Telephone

Payment from

Payment from issuing branch only

Payment from ordered branch

Payment from ordered branch

Generally used to Remit fund

Within the clearinghouse area of issuing branch.

Outside the clearinghouse area of
issuing branch. Payee can also be the purchaser.

Anywhere in the country

Payment Process of the paying bank

Payment is made through clearing

1. Confirm that the DD is not forged
one.

2.Confirm with sent advice

3.Check the ‘Test Code’

4.Make payment

1.Confirm issuing branch

2.Confirm Payee A/C

3.Confirm amount

4.Make payment

5.Receive advice

Charge

Only commission

Commission + telex charge

Commission   +

telephone

Test – key Arrangement:

Test
key arrangement is a secret code maintained by the banks for the authentication
for their telex messages. It is a 
systematic  procedure by  which a test number is and  the person to 
whom this number  is  given 
can easily authenticate the same test number  by maintaining that same procedure. EXIM Bank
has test key arrangement with so many banks for the authentication of LC message
and for making payment.

Commission for PO:

EXIM
Bank charges different amount of commission on the basis of Payment order amount.
The bank charges for pay order are given in the following chart

Table
no-19

Total
amount of PO

Commission

VAT

Up
to TK. 10,000.00

Tk.3

TK.
10,001.00 – TK .1,00,000.00

Tk
4

TK.
1,00,001.00 – TK. 5,00,000.00

Tk
8

TK.
5,00,001.00 and above

Tk
15

Deposit

The Local
Remittance section of EXIM Bank Motijheel Branch also issues FDR. They are also
known as time deposit or time liabilities. These are deposits, which are made
with the bank for a fixed period, specified in advance. The bank need not
maintain cash reserves against these deposits and therefore, the bank offers
higher of interest on such deposits.

*
*
*
Term Deposits:
These rates are not negotiable. In this table we can find out the percentage
that is given by the bank for specific period of time to the customer.

MTDR
for 3 (three) month

SL
no.

Range
of amount

01

TK
10000.00-Above

12.60%

MTDR for: 6
(six) month

SL
no.

Range
of amount

01

TK
10000.00-Above

12.75%

*
Payment of interest: It is usually paid on maturity of the fixed deposit. EXIM Bank
calculates interest at each maturity date and provision is made on that
“miscellaneous creditor expenditure payable accounts” is debited for the
accrued interest

*
Encashment of FDR: In case of premature FDR< EXIM Bank is not bound to accept
surrender of the deposit before its maturity date. In order to deter such a
tendency the interest on such a fixed deposit is made cut a certain percentage
less the agreed rate. Normally savings bank deposit is allowed.

*
General
Banking department

  • In general banking
    department they follow the traditional banking system. The entire general
    banking procedure is not fully computerized.
  • The cash counter we
    think is congested and the procedure is also traditional
  • Lack of variety of
    services is also a back of the general banking department. The bank
    provides only some traditional limited services to its clients.
  • They are not using
    data base networking in the Information Technology (IT) Department.
  • According to some
    clients opinion introducer is one of the problems to open an account. If a
    person, who is new in the city, wants to open account, it is a problem for
    her/his to arrange an introducer of SB or CD account holder.

*
Loans and
Advances Department

  • Political influence is
    one of the major problems in Bangladesh. Due to political intervention the
    bank becomes obligated to provide loans in most of the cases, which are
    rarely recovered. Bank has to face this in convenience situation almost
    every year.
  • The Loans and Advances
    Department takes a long time to process a loan because the process of
    sanctioning loan is done manually.
  • Sometimes the securities taken against the loan
    are deliberately overruled by the employees to unlawfully help the client.
    As a result if the clients fail to repay the bank authority cannot invested
    by the selling those assets is also a very important factor that leads to
    loan default.
  • CIB report is not
    readily available from Bangladesh Bank.

*
Foreign
Exchange Department

  • In Foreign Exchange
    Department it is required to communicate with foreign banks frequently and
    quickly. To make the process easily modern communication media for example
    e-mail, fax, Internet etc. should be used. But the bank has not so much
    practice of using these media.
  • Modern technical
    equipment such as computer is not sufficient in Foreign Exchange
    Department. As a result the exchange process makes delay and it is also
    complicated.

·
Other Problem; EXIM Bank doesn’t give their attention on
advertisement. As a competition market it is too much important for any
organization to increasing their advertisements procedure.

Recommendations

1. The entire department should be
well informed regarding their goals and objectives. It is essential to execute
company objectives into individual target. There must be a clear allocation of
responsibility authority and accountability.

2. One of the most import
limitations is that it has no that much of advertisement of its EXIM bank
operations. It can gain dual benefit of attracting deposit and credit. The bank
should take the initiative to develop an effective research and development
center to get innovative ideas to capture the competition. Job description
should be clarified and proper training should be imparted to improve the
performance of bottom level management.

3  
Selection
and training must be focused to develop and exploit leadership and
entrepreneurial qualities within the work place.

4  
While
the other banks are launching “Consumer Credit Scheme” EXIM Bank is failing to
launch this kind of scheme. The management can undertake such sort of schemes
and earn profit.

5  
 To meet today’s urging of the customer, the
bank should introduce Automated Teller Machine (ATM).

6  
The
bank should provide total investment money at once to the clients so that they
can exploit money properly.

7  
EXIM
Bank should provides facilities to the internees through monthly allowance,
proper placement and practical operations as well as job certainly to those who
have shown better performance in doing their particulars. Because this
internship program may act as promotional program.

Appendix

  Comparative profit position of private Banks as on
December 31, 2007

(Figure
in Crore)

Sl
No

Name
of the Bank

Profit

2003

2004

2005

%
of Growth

01

Uttara
Bank Ltd.

160.00

135.00

114.05

-16%

02

Pubali
Bank Ltd.

120.54

125.00

93.00

-26%

03

BASIC
Bank Ltd.

41.26

50.00

65.00

30%

04

169.00

160.00

218.28

36%

05

National
Bank Ltd.

105.00

95.00

100.00

5%

06

IFIC
Bank Ltd.

55.00

48.00

68.00

42%

07

AB
Bank Ltd.

59.38

54.00

60.00

11%

08

UCBL

50.26

48.00

72.00

50%

09

The
City Bank Ltd.

41.00

55.00

69.09

26%

10

Prime
Bank Ltd.

79.05

81.00

110.00

36%

11

Southeast
Bank Ltd.

50.29

52.00

71.03

37%

12

Dhaka
Bank Ltd.

56.16

62.82

63.00

0%

13

Dutch
Bangla Bank Ltd.

40.22

45.00

48.03

7%

14

Al
Arafah Islami Bank Ltd.

12.00

16.00

31.37

96%

15

Social
Investment Bank Ltd.

30.23

42.00

51.20

22%

16

Eastern
Bank Ltd.

74.00

74.00

76.00

3%

17

NCC
Bank Ltd.

57.00

59.00

64.00

8%

18

Mercantile
Bank Ltd.

42.08

48.05

61.10

27%

19

EXIM
Bank Ltd.

28.38

40.40

56.27

40%

20

Standard
Bank Ltd.

8.10

12.10

30.00

148%

21

Bank
Asia

13.00

24.00

43.00

79%

22

Premier
Bank Ltd.

12.66

19.68

40.15

104%

23

One
Bank Ltd.

12.05

22.00

26.50

20%

24

Mutual
Trust Bank Ltd.

12.87

18.00

38.00

111%

25

First
Security Bank Ltd.

8.14

15.00

24.00

60%

26

The
Trust Bank Ltd.

7.00

11.00

9.00

-18%

27

Shahjalal
Bank Ltd.

0.71

9.76

19.35

98%

28

Jamuna
Bank Ltd.

0.02

1.52

14.00

821%

29

BRAC
Bank Ltd.

3.00

3.24

8%

CONCLUSION

EXIM
Bank is one of the third generation Banking service providers, but heir
employees are needed to prompt service provider. We strongly believe that
banking service marketing is different from goods marketing in the significant
way. It involves totally different strategy and tactics.

From
the practical implementation of customer dealing procedure during the whole
period of my practical orientation in EX1M Bank we have reached a firm and
concrete conclusion in a very confident way. we believe that my realization
will be in harmony with most of the banking scholar. Performance of EXIM Bank
Ltd. during the last Nine years has proved that with strong desire and will
power one achieve whatever target it may have. Almost all the leading banks in
our country have various extra facilities in offer for the customers in
comparison with EXIM Bank but EXIM Bank has succeeded in achieving more
customers than many other competitors. These have been possible only because of
strong customer relation and excellent customer service.

Through
there are some drawbacks in implementing Credit facilities in EXIM Bank Ltd. as
per manual, it can be overcome through involvement of more financial expert in
the decision making process and utilizing the tolls to judge integrity of the
customers, Finally it can be argued that through the results so fur are not
satisfactory, Credit Financing is a modem scientific technique for enhancing
EXIM Bank’s strength and there lies the opportunities to make it more effective
in the future for their own benefit