Foreign Exchange operations of BASIC Bank Limited

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Foreign Exchange operations of BASIC Bank Limited

Chapter One

Chapter One

1.1 Objectives of the Study

  • To fulfill the requirement of the internship program under BBA program.
  • To familiarize with working environment and values in banking sector.
  • To identify some problem associated with BASIC Bank Ltd.
  • To give some Recommendation regarding the Problem.

1.3 Methodology of the Study

This report has been generated based on first three-month probationary period at BASIC Bank Ltd, Dilkusha Branch. The information has been put together from two sources.

1) Primary source & 2) secondary source

1) Primary source of data

· Officers and Staff of BASIC Bank Ltd.

· Clients of BASIC Bank Ltd.

Methods of primary data collection

· Practical desk work.

· Face to Face conversation with the officers and staff of BASIC Bank Ltd.

· Dealing with customers.

2) Secondary source of data

· Web page of BASIC Bank Ltd.

· Annual Report 2007, 2006, and 2005 of BASIC Bank Ltd.

Chapter Two

2. Overview of the Organization

2.1Name, Location & Historical Background of the Organization

2.2 Background of BASIC Bank

2.3 Mission, Vision, Objectives & Strategies of the Organization

2.4 Organizational Structure

2.5 Major & Various functions of BASIC Bank Ltd.

2.1 Name, Location & Historical Background of the Organization

2.1.1 Location of the Head office

BASIC BANK LTD. Bangladesh as a public limited company and its Head office of the Bank is located at Sena Kallyan Bhaban (6th Floor), 195 Motijheel commercial Area, and Dhaka-1000.

2.1.2 Location of Dilkusha Branch

The Dilkusha Branch located at 13 Dilkusha C/A, Dhaka-1000. The location is ideal as it is right at the heart of the Dhaka city.

2.2 Background of BASIC Bank

2.2.1 Preliminary Condition

At the outset, the Bank started as a joint venture enterprise of the Bank of Credit and Commerce International (BCC) Foundation with 70 percent shares and Government of Bangladesh with the remaining 30 percent shares. The BCC foundation had established to facilitate different service oriented organization like school, college etc. At the time of inception the Authorized Capital of the bank were Taka 100 million and Paid up Capital were Tk.80.00 million

2.2.2 Emergence

Established as a banking company under the Companies Act 1913 launched its operation in 1989. It is governed by the Banking Companies Act 1991.

2.2.3 Turbulence of BASIC Bank in 1990

In 1990 globally the operation of Bank of Credit and Commerce (BCC) had been suspended for the allegation of money laundering activity. The BASIC Bank then faces huge problem as it was carrying the name of Bank of Credit and Commerce though the BCC foundation was a separate entity and had not any attachment with the money laundering and other activity of the said BCC bank. Due to the outbreak of the BCC the bank faces problems in deposit, lending and also in foreign exchange business and the overall goodwill of the bank affected severely.

In that situation when the bank’s position and goodwill is at the stake, then Managing Director Mr. Qureshi came forward to salvage the bank from the distressed situation. He takes the bold steps to announce that the bank has no relationship with (BCCB) the Bank of Credit and Commerce Bangladesh.

At that time many other banks were attempted to merge or acquire the BASIC which then been stopped by the timely steps taken by Mr. Qureshi. By arranging meeting with different senior government officials Mr. Qureshi urge the government to take over the existing share and declare the bank as 100% government owned bank. In that rainy days AMEX and Bank of Tokyo Mitsubishi came forward to save the foreign exchange business which in rest save the bank from becoming closed down like BCCB, Dhaka.

At last due to honest endeavor of Mr. Qurashi the Government of Bangladesh took over 100 percent ownership of the bank on the 4th June 1992. From that time BASIC Bank Ltd. acts as State Owned Schedule Bank.

2.2.4 The present scenario of BASIC  Bank

At present the authorized capital of BASIC Bank in the year 2007 stood at Tk.2000.00 Million and the paid up capital at Tk.1247.40 Million, reserve at Tk.1349.17 Million and Shareholders equity at Tk.2596.58 Mill.

The government was increased the amount of Paid up capital up to 1000.00 Million, which the bank had met the position in year 2002.

In each year the bank has showing steady growth in deposit, advances and providing a handsome profit to the Government of Bangladesh.

BASIC Bank among other nationalized and specialized banks are providing highest profits to the Government.

In the year of 2007 it had been rated as “A” grade bank as per CAMEL rating. At the end of 2007, 30 branches the bank had been operating with 721 employees those are young, with extra ordinary academic background and experiences.

2.3 Mission, Vision, Objectives & Strategies of the Organization

2.3.1 Organizational Goals and Objective

BASIC Bank is unique in its objectives. It is blend of development and commercial banks. The Bank is entrusted with the responsibility of providing medium and long term loans and other financial assistance for promotion and development of small-scale industries.

  • To employ funds for profitable purposes in various fields with special emphasis on small scale industries (SSI).
  • To undertake project promotion on identify profitable areas of investment.
  • To search for newer avenues for investment and develop new products to suit such needs.
  • To establish linkage with other institutions those are engaged in financing micro enterprises.
  • To cooperate and collaborate with institutions entrusted with the responsibility of promoting and aiding SSI sector.

2.3.2 Motto of BASIC Bank Ltd.

Serving people for progress

2.3.3 Vision of BASIC Bank

Provide the best banking services to all kinds of people and contribute for economic development of the country.

2.3.4 Mission of BASIC Bank

To provide best development and commercial banking services to the common people of Bangladesh. And provide special support to the small scale business enterprises.

2.3.5 Corporate Strategy

The corporate strategy of any organization plays a vital role on the company’s performance and lead to the way of being in growth prospect of the company. The corporate strategy of BASIC Bank is as follow-

  • Financing establishment of small units of industries and business and facilitate their growth.
  • Small Balance Sheet size composed of quality assets.
  • Steady and sustainable growth.
  • Investment in a cautious way
  • Adaptation of new banking technology

2.4 Organizational Structure

The Bank conducts its operations in accordance with the major policy guidelines laid down by the Board of Directors, the highest policy making body to achieve its organizational goals. The day to day operation of the Bank is looked after by the management.

2.4.1 Board of Directors

As stated earlier the Government holds 100 percent ownership of BASIC Bank Ltd. All the Directors as Board of Directors are appointed by Government of Bangladesh. The Secretary of the Ministry of Industries is the present chairman of the Bank. Other Directors of the Bank are senior Government and central Bank Executives.

The Managing Director is an Ex-officio member of the Board of Directors. There are at 7 Directors including the Managing Director.

2.4.2 Management
The management is headed by the Managing Director. He is assisted by the Deputy Managing Director, General Managers and Departmental Heads in the Head Office. BASIC Bank is different in respect of hierarchical structure from other banks in that it is much more vertically integrated as far as reporting to the Chief Executive is concerned. The Branch Managers of the Bank report direct to the Managing Director and, for functional purposes, to the Heads of Departments. Consequently, quick decision making in disposal of cases is ensured.

Management Hierarchy of BASIC Bank: (Table: 2)

(Source: Annual Report – 2007-2006)

2.5 Major & Various functions of BASIC Bank Ltd. (Table-3)

BASIC Bank Ltd.

Dilkusha Branch

Foreign Exchange Dept.

Ø Export

Export Advising

Back to Back L/C

Packaging Credit (P/C)

Export Bill Purchase (Discounting)

Exp. Document Forwarding

Export Incentives Realization (For Govt. Announced Product)

Ø Import

Import Advising

Import L/C Opening


Insurance of Travelers cheque

Foreign Currency Account Opening (FCT)

General Banking Dept

Account Opening

Savings Account Opening

Current Account Opening

Fixed Deposit Accounts

Short Term Deposit A/C

Issuance of Cheek Book

Issuance of P.O (Pay-order),

D.D (Demand Draft) &

T.T (Telegraph Transfer)

M.T (Money Transfer)

Loan & Advanced Dept.

Industrial Credit

Commercial credit

Micro credit

Cash Credit (Hypothecation), Cash Credit (Pledge),

Loan General,

Secured Overdraft (SOD)

And other Loans

Chapter Three

3. Foreign exchange Department of BASIC Bank Limited.

3.1 Introduction

3.2 Foreign exchange Operation (Export financing)

3.3 Back-to-Back Letter of Credit

3.4 Contents of the letter of credit

3.5 How to open an L/C

3.6Import of goods by letter of Credit

3.7Parties involved in letter of credit

3.8 Correspondent Banks

3.1 Introduction

Foreign Exchange is a process which is converted one national currency into another and transferred money from one country to another country. According to Mr. H. E. Evitt. Foreign Exchange is that section of economic science which deals with the means and method by which right to wealth in one country’s currency are converted into rights to wealth in terms of another country’s currency. It involved the investigation of the method by which the currency of one country is exchanged for that of another, the causes which rented such exchange necessary the forms which exchange may take and the ratio or equivalent values at which such exchanges are effected. Foreign exchange is the rate of exchange in the both country’s currency.

3.1.1 Function of Foreign Exchange

The Bank actions as a media for the system of foreign exchange policy For this reason, the employee who is related of the bank to foreign exchange, specially foreign business should have knowledge of these following functions :-

1) Rate of exchange.

2) How the rate of exchange works.

3) Forward and spot rate.

4) Methods of quoting exchange rate.

5) Premium and discount.

6) Risk of exchange rate.

7) Causes of exchange rate.

8) Exchange control.

9) Convertibility.

10) Exchange position.

11) Intervention money.

12) Foreign exchange transaction.

13) Foreign exchange trading.

14) Export and import letter of credit.

15) Non-commercial letter of trade.

16) Financing of foreign trade.

17) Nature and function of foreign exchange market.

18) Rules and Regulation used in foreign trade.

19) Exchange Arithmetic.

3.2 Foreign exchange Operation (Export financing)

Export means any person lawfully exporting goods from Bangladesh to any other country after shipment the exporter has to tender the documents to the Bank within the stipulated period for the negotiation of the documents are drawn under a letter of Credit. If require, finance the duty drawback and cash compensatory support claims of the exporter. Packing credit means any loan or advance grated or any other credit provided by an institution to the exporter for financing the purchase, processing or packaging or goods on the basis of L/C.

Export Finance:

  1. Packaging credit
  2. Extent of export credit
  3. Credit to first time Application
  4. Back to Back L/C

3.2.1 Export Formalities

There is certain formalities involved exporting such as maintaining the books register, L/C checking etc.

  1. Procedure of Registration of Exporter.
  2. Books and Register/ Ledger required for export
  3. B.B. Bill checking/ Lodgments.
  4. Export document checking and negotiation/ collection basis
  5. Pre- shipment financing
  6. Disposal of EXP forms
  7. Export Incentives
  8. Disputes and settlement of Export claim.

3.2.2 Procedure for obtaining Export Registration Certificate (ERC)

For obtaining export registration certificate form CCI & E, the following documents are required.

  1. Application form
  2. Nationality Certificate
  3. Partnership deed (registered)
  4. Memorandum & Article of Association and Incorporation Certificate
  5. Bank Certificate
  6. Valid Trade License
  7. Copy of rent of the business firm.

3.2.3 Preparation of Export Documents

  1. Bill of Exchange or Draft
  2. Commercial Invoice
  3. Bill of Leading
  4. Inspection Certificate
  5. Packing list
  6. Export License
  7. Shipment Advice
  8. Certificate of Origin
  9. Weight Certificate
  10. EXP form
  11. Courier Receipt

3.2.4 General Verification of Export document:

a) L/C registers or not

b) Exporters submitted documents before expiry date of the credit

c) Shortage of documents etc.

3.3 Back-to-Back Letter of Credit

Under this arrangement the bank finances export business by opening a letter of credit on behalf of the exporter who has received a letter of credit form the overseas buyer but is not the actual manufacturer of producer of the exportable goods. The letter of credit opened in favor of the actual producer or supplier within or outside the country. Since the second letter of credit is opened on the strength of and backed by another letter of credit it is called “Back to Back” credit. The back to back letter of credit must conform to the terms and conditions of the original letter of credit with the following exceptions:

  1. Name of the original beneficiary shall be substituted by that of the actual supplier.
  2. The credit amount shall normally be lower than that of the original letter of credit.
  3. The back to back letter of credit shall be made valid for shipment and negotiation prior to expiry of the corresponding date.

3.3.1 Processing and opening of BTB L/C

An exporter desired to have an import L/C limit under Back to Back arrangement. In that case the following papers & documents are required:

a) Full particulars of bank account.

b) Balance Sheet

c) Statement of Assets & liability.

d) Trade License.

e) Valid Bonded Warehouse License

f) Membership Certificate

g) Income Tax Declaration

h) Memorandum of Article

i) Partnership Deed.

j) Resolution

k) Photographs of all Directors.

On receipt of above documents and papers the Bank to Back L/C opening section will prepare a credit report. Branch must obtain sanction from Head office for opening Back-to-Back L/C.

3.4 Content of the Letter of credit

Banks normally issued letter of credit (L/C) on forms which clearly indicate the banks name and extent of the banks obligation under the credit. The contents of the L/C of different Banks may be different .In general L/C contains the following information:-

1) Name of the buyer: A buyer is also known as the accounted since it is for his account that the credit will be opened.

2) Name of the seller: Seller is also known as the beneficiary of the credit.

3) Moment of the credit: It should be the value of the merchandise plus any shipping charges intent to be paid under the credit.

4) Trade terms: Such as F.O.B and CIF.

5) Expiration date: Which is specified the latest date documents may be presented. In this manner or by including additionally a latest shipping date, the buyer may exercise control over the time of shipment.

6) Documents required: Which will normally include commercial invoice consular or customers invoice, insurance policies as certificates, if the source is to be effected by the beneficiary and original bills of lading.

7) General description of the merchandise: Briefly and in a general manner duly describes the merchandise covered by a letter of credit.

3.5 How to open an L/C

For opening an L/C there must be a relationship between banker and customer through opening an account with the bank.

Letter of Credit (L/C)

L/C is the most important thing for doing any sort of foreign business. There is no guaranteed relation between importer and exporter. As a result they use a media to secure their goods and currency. So, exporter and importers use their respective banks as a media and L/C is a legal obligation between the exporter and importer. It is necessary to fill up following forms.

a) LCF form

b) Application and agreement for confirmed irrevocable without resource to drawer’s letter of credit

c) Letter of credit authorization form

d) Form of IMP (importer) and EXP (exporter)

3.5.1 Procedures for opening L/C

Then the importer have to submit a proposal for opening L/C along with-

· L/C application.

· License no.

· Proforma invoice.

· Detailed Price list

· Parties’ application.

· L/C set

· IRC (Import Registration Certificate)

· Insurance covered note.

Check list in issuing L/C

Description of goods along with its price, quantity, quality, sources of export country, marketability of goods, shipment dates, shipping days, bill of entry. Packing list, certificate of origin, H. S. code no. brand new

· Certificate of tax payers from tax commissioner.

· Trade License from city commissioner.

· Certificate from import and export registration department.

· Money receipt from insurance company to reduce risk export port to import destination.

· L/C Authorization form of the bank contains IRC number, shipping period, description of goods date of L/C issues. – 1 copy for Bangladesh banks. With name and address of dealer remittance, L/C form, description of goods, inventor name, price for exchange clearance. 1- Copy for custom purpose, another copy for office record.

3.6 Import of goods by letter of Credit

A letter of credit is a conditional Bank Undertaking of Payment. In other words letter of Credit is a letter form the importer Banker to the exporter that the bills if drawn as per terms and conditions are complied with will be honored on presentation.

3.6.1 L/C procedure

The various steps involved in the operation of credit are described as follows

· The importer and exporter have contract before a L/C has been issued.

· The importer applies for a L/C from his banker known as the issuing bank. He may use his credit lines.

· The issuing bank opens the L/C that is channeled through its overseas correspondent bank, known as advising bank.

· The advising bank informs the exporter of the arrival of the credit.

· Exporter ships the goods to the importer or other designed place as stipulated in the L/C.

· Meanwhile the exporters also prepare his own documents and collects transport documents or other documents from relevant parties. All documents will be sent to his banker which is acting as negotiating bank.

· Negotiation of export bills occur when the banker agrees to provide him with finance. In such case he obtains payment immediately upon presentation of documents. If not the documents will be sent to the issuing bank for payment or an approval basis in the next step.

· Documents are sent to issuing banker reimbursing bank, which is a bank nominated by the issuing bank to honor reimbursement from negotiating bank for reimbursement or payment.

· Issuing bank honors to its undertaken to pay the negotiating bank on condition that the documents comply with the L/C terms and conditions.

· Issuing bank releases documents to the importer when the letter makes payment to the former or against the letter trust receipt facilities.

· The importer takes delivery of goods upon presentation of the transport (usually shipping documents).

Following papers are to be submitted by the importer before opening of the L/C

1) Trade license

2) Import Registration Certificate.

3) Income Tax Declaration with TIN

4) Membership Certificate

5) Memorandum of Article

6) Registered Deed

7) Resolution

8) Photographs

9) VAT Registration.

Bank will supply the following papers/documents before opening of the L/C:

1) L/C application

2) IMP

3) IRC Form

4) Charge Documents

5) Guarantee Form

The above papers /documents must be completed dully filled and signed by the party and to be verified the signature.

3.6.2 Checking of Documents

Before lodgment, documents must be checked with L/C file. Check-up as under.

a) Invoice

b) Bill of lading

c) Draft

d) Bank forwarding date

Classification of L/C

  1. Revocable L/C
  2. Irrevocable L/C
  3. Transferable L/C
  4. Red Clause L/C
  5. Green Clause L/C

Explain below

1. Revocable L/C

This type of credit can be revoked or cancel at any time without the consent of, or notice of the beneficiary. A revocable credit may be amended or cancelled by the issuing bank at any moment and without prior notice to the Beneficiary.

2. Irrevocable L/C:

The Irrevocable credit is a commonly used type of documentary credit. The credits which can not be revoked varied or change/amended without the consent of all parties- buyer (applicant), seller (Beneficiary) Issuing Bank and confirming Bank (in case of confirmed L/C).

3. Transferable L/C:

The Original beneficiary when request the banker in writing to effect transfer the L/C to the secondary beneficiary, the signature of the original beneficiary on the letter of request must be verified by his banker. The L/C can be transferred only the terms and conditions specified in the original credit.

4. Red Clause L/C:

A red clause credit is a credit with a special clause incorporated into it that authorizes the advising bank or confirming bank to make advances to the beneficiary before presentation of documents. A red clause is used, for example, by a wool importer in England to enable a wool shipper in Australia to obtain funds to pay the actual suppliers by direct purchase by obtaining a loan from the Australian bank.

5. Green Clause L/C:

A green Clause Credit is a credit with a special clause incorporated it to it that which not only authorizes the advising bank to grant pre-shipment advances but also storage cost for storing the goods prior to shipment. It is useful in situations where shipping space is not readily available, i.e. some African countries. It is so called because the clause was originally written in green ink to draw attention to the unique nature of this credit. At present this type of credit is not in use.

Import Export Finance of BASIC Bank (Graph-1)

Source: Annual report 2007 of BASIC Bank Ltd.

3.7 Parties involved in letter of credit

A letter of credit is issued by a Bank at the request of an importer in favor of an exporter from whom he has contracted to purchases some commodity or commodities. The importer, the exporter and the issuing bank are parties to the letter of credit.

There are however, one or more than one banks that are involved in various capacities and at various stages to play an important role in the total operation of the credit.

1) The opening Bank.

2) The Advising Bank.

3) The Buyer and the Beneficiary.

4) The paying Bank.

5) The negotiating Bank.

6) The confirming Bank.

1) The opening Bank: The opening Bank is one that issues the letter of credit at the request of the buyer. By issuing a letter of credit it takes upon itself the liability to pay the bills drawn under the credit. If the drafts are negotiated by another bank, the opening Bank reimburses that Bank. As soon as the opening Bank, issuing a letter of credit (L/C), it express its undertaking to pay the bill or bills as and when they are drawn by the beneficiary under the credit. When the bills are presented to or when antic is received that bills have been presented to a paying or negotiating Banks its liability matures.

2) The Advising Bank: The letter of credit is often transmitted to the beneficiary through a bank in the latter’s country. The bank may be a branch or a correspondent of the opening bank. The credit is some times advised to this bank by cable and is then transmitted by it to the beneficiary on its own special form. On the other occasions, the letter is sent to the bank by mail or telex and forwarded by it to the exporter. The bank providing these services is known as the advising bank. The advising bank undertakes the responsibility of prompt advice of credit to the beneficiary and has to be careful in communicating all its details.

3) The Buyer and the Beneficiary: The importer at whose request a letter of credit is issued is known as the buyer. The exporter in whose favor the credit is opened and to whom the letter of credit is addressed is known as the beneficiary. As the seller of goods he is entitled to receive payment which he does by drawing bills under the letter of credit (L/C). As soon as he has shipped the goods and has collected the required documents, he draws a set of papers and presents it with the documents to the opening bank or some other bank mentioned in the L/C.

4) The paying Bank: The paying bank only pays the drafts drawn under the credit but under takes no opening bank, by debating the latter’s accounts with it if there is such an account or by any other measured up, between the two bankers. As soon as the beneficiary has received payment for the draft, he is out of the picture and the rest of the operation concerns only the paying bank and the opening bank.

5) The Negotiating bank: The negotiating bank has to be careful in scrutinize that the drafts and the documents attached there to be in conformity with the condition laid down in the L/C. Any discrepancy may result in refused on the part of the opening bank to honour the instruments is such an eventuality the negotiating bank has to look back to the beneficiary for refund of the amounts paid to him.

6) The Confirming Bank: Sometimes an exporter stipulates that a L/C issued in his favour be confirm by a bank in his own country. The opening this country to add its confirming to the credit the bank confirming the credit is known as the confirming bank and the credit is known as confirmed credit.

3.8 Correspondent Banks (Table-4)










NEW YORK NY 10005-1339 USA






NEW YORK, NY 10285-2200 USA
























23-25 M.G. ROAD


















293, DR. D.N. ROAD, FORT

MUMBAI – 400 001 INDIA




Chapter Four

4.0 Trend Analysis of BASIC Bank Ltd.

Trend Analysis


The financial data of 2004, 2005, 2006 and 2007 have been taken based on the annual report 2007. The key points of the financial statements take the following figure: (Table -5)

Particulars 2007 2006 2005 2004
Authorized Capital 2000 2000 2000 2000
Paid-up-Capital 1247.40 945.00 810.20 675.20
Reserve Fund 1349.17 1294.20 916.14 816.23
Shareholders Equity 2596.58 2239.00 1726.14 1491.23
Fixed Assets 196.11 154.52 135.78 101.41
Total Assets 38773.91 29417.09 27136.37 19436.57
Deposits 31947.98 24084.65 22325.58 15509.18
Classified Loans and advances 1385.81 830.06 937.51 839.61
Advances (Gross) 22263.35 19000.00 15339.35 12000.15
Investments 13560.92 8212.23 10236.82 6098.51

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

The authorized capital of the bank is Tk. 2000.00 Million since the year 2003 which was increased by the Govt. Each of the years the paid up capital and reserve capital were increased then the previous year. The increment was done from the market competitiveness and future expansion.

4.1.1 Shareholders’ Equity

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

The equity of the Shareholders in 2004 was Tk. 1491.23Million Taka. The total equity of shareholders of the Bank at the end of the year 2005 is1726.14 million and in 2006 stood at Tk 2239.00 million. In 2007 it has increased by 2596.58, 32% It is due to the expansion of the bank and the financial more strength of the BASIC Bank Ltd.

Shareholders’ Returns

As per Article no. 130 of the Memorandum and Articles of Association of the Bank, unless otherwise decided by the shareholders at least fifty percent (50%) of the net profit (after tax) to be reinvested in the capital of the Company and to that extent bonus shares to be issued to the shareholders. The Board of Directors with a view to improving its equity by issuing bonus shares to its existing shareholders is pleased to propose to its sole shareholder, the Ministry of Finance, subject to approval of the Annual General Meeting, 1 (one) bonus share against each 20 (twenty) shares amounting to Tk. 62.37 million and 5% cash dividend amounting to Tk. 62.37 million.

4.1.2 Fixed Assets

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

Fixed assets include Furniture and Fixture, Office equipment, Motor vehicles, office Computer and leasehold land. The depreciation on the fixed assets is charged on straight line basis at the following rates: (Table: 6)

Particulars & Assets Rate of Depreciation Method of Depreciation
Furniture & Fixture 10% Reducing Balance Method
Machinery & Equipment 20% Reducing Balance Method
Computer & copier 20% Straight Line Method
Vehicles 25% Straight Line Method
Leasehold Land Straight Line Method over the lease hold period

Depreciation has been charged on fixed assets from the date of acquisition and suspended on the date of disposal.

Source: Annual Report of BASIC Bank Ltd. for the year ended Decembers 1, 2007

4.1.3 Total Assets

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

Total Assets of BASIC Bank Ltd. includes Cash, Balance with other Bank, Loan & Advances, Fixed Asset, Deferred Tax Asset, and Non-Banking Assets.

4.1.4 Total Deposits

Particulars 2007 2006 2005 2004 2003
Deposits 31947.98 24084.65 22325.58 15509.18 11266.54

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

The pictorial graph and the subsequent numerical figure show that the deposit collection was more in the year of 2007. Total Deposit includes Term Deposit, Savings Deposit, Current Deposit & other Accounts, and Bills Payable. In 2007, total deposit was increased by 7% than the deposit of accumulated in 2006. So it is divided from the viewpoint of deposit collection the performance of the bank in 2006 was far better than 2007.

4.1.5 Loans and Advances

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

Loans and advances of the bank constitute different purpose loans (repair and maintenance of dwelling house, customer durable loan scheme, Project loan, term loan, loans against Trust Receipt etc), cash credit (cash credit, cash collateral) and overdraft (normal overdraft, secured overdraft).The total loans, cash credits and overdrafts, bills purchased and discounted.

Loans and advances consist of industrial loans, micro credit, commercial loans and bills increased by 17.18 percent to Taka 22,263.34 million compared to Taka 19,000.00 million in 2006.

4.1.6 Investment

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

Investment at the end of 2007 was for Taka 5,303.39 million compared to Taka 3,270.87 million in previous year. Investment was concentrated in approved securities such as Government treasury bills, treasury bond, reverse report and a few debentures and shares During the year 2007 treasury bills, treasury bond including reverse report had the largest share 98.98%) in the investment portfolio Debentures, shares in listed and unlisted companies and prize bond altogether constituted 1.02 percent. BASIC’s placement in different Banks in Bangladesh and outside Bangladesh was Taka 6,937.53 million in 2007 compared to Tk 4,191.37 million in 2006.

4.1.7 Analysis of the Profit and Loss Account

The profitability of any business concern can be understood by analyzing the Profit And Loss Account of that concern. Profit And Loss Account shows the revenue generated, corresponding expenditure and the resulting profit or loss. Analysis of the Profit And Loss Account of the BASIC Bank Ltd. exhibits the following summarized information: (Table: 7)

Particulars 2007 2006 2005 2004 2003
Gross Income 3549.51 2870.32 2228.21 1768.85 1558.52
Gross Expenditure 2741.37 1858.69 1599.77 1241.63 1004.85
Pre-Tax Profit 808.14 1011.63 628.44 527.22 553.67
Post-Tax Profit 282.96 554.14 285.49 291.48 236.39
Tax Paid (Cumulative) 2790.98 2245.16 1777.70 1434.76 1199.02

Source: Auditors Report of BASIC Bank Ltd. for the year ended December31, 2007

4.1.8 Operating Income

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

The Bank’s total income was 23.66 percent higher than that of previous year. Interest income from loans and advances increased by 25.81 percent while other operating income increased by 38.18 percent over 2006. Commission income was higher by 34.85 percent.

4.1.9 Operating Expenditure

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

The total expenditure was 47.52 percent higher than that of 2006 due to increase of interest expenses as a consequence of increase of deposit substantially. Salary and allowances to employees increased by 13.57 percent mainly due to annual increment, dearness allowance, promotion of existing employees and fresh recruitment. General and administrative expenses (excluding salary and allowances) increased by 14.72 percent. Hiring of additional space for Head Office mainly contributed to this increase.

4.1.10 Profit before Tax

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

From the information mentioned above a comment can be made that Year-2006 was its “Golden Age”. In 2007it also decreased its “profit before tax” yet they gained an honorable position in the banking sector.

4.1.11 Profit after Tax

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

From the above mentioned statement, it is visible that the net profit touches the peak in the year 2006 by accomplishing a stunning rise of 217.68%. But the journey of increasing profit can more in forward in the 2006.

4.1.12 Contribution to Government Exchequer

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

From the very inception, BASIC Bank has been posting profit and paying income tax to the government. The cumulative figure of contribution to the Government exchequer by way of corporate tax up to December 31, 2007 amounted to Taka 2,790.98 million, which is almost 35 times the amount of original paid-up capital of the Bank.

4.1.13 Total income, Interest income, Non Interest income

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

Figure shows the earnings from the source of interest and non-interest income that is increasing over the year. Total income is the sum of interest and non-interest income. It is founded that income year 2007 is successful year for BASIC Bank Ltd. It also emphasis on credit quality and customer’s services yielded the desired growth in profit, capital, assets and shareholders’ value.

4.1.14 Distribution of Value Addition in 2007

4.1.15 Distribution of Value Addition in 2006

Sources: Annual Report of BASIC Bank Ltd. for year ended December 31, 2007

Graph 15 & 16 is the percentages of value distributed at the year ended 2006 & 2007.The value added statement of BASIC Bank Ltd. show how the value is created and distributed among different stakeholders of the bank.

Chapter Five

5.0 Internship position and Duties

5.1 Learning Points

5.2 SWOT Analysis of BASIC Bank Ltd.

5.1 The Job Descriptions

The nature of job and several rules-regulations was defined in the acceptance letter that was supposed to give regular attendance at the Branch where I would be deputed to work as internship. Within three months of my internship period I have to do almost all the activities of Foreign Exchange Department especially in Export section. Some major functions are as follows.

  • Forwarding of Export document
  • Incentive document audit and forwarding the document to the company’s auditor (ACNABIN).
  • Export (EXP) registration
  • Export bill realization
  • Data entry, cheque posting, check and clearing.

5.2 Learning Points

I had work as an Internship student at BASIC Bank Ltd. Dilkusha Branch from October 14 to January 15, 2009. During internship period I have learned about the activities of Foreign Exchange Department .Some of them are given bellow

  • Export document’s Forwarding
  • Check issuing
  • Document copying
  • Issue pay order
  • Issue demand draft

5.3 SWOT Analysis of BASIC Bank Ltd.


· A state owned schedule Bank in the country.

· Interest rate is too much low compare to other commercial Bank.

· Staff’s are very much cordial and always dedicated to clients as well as organization.

· A short listed of customer as because no congestion in Dispatch.

· Reputation and Goodwill within the Banking sector.

· High growth rate accompanied by an impressive increase in the authorized capital, paid up capital and reserved fund.

· High quality services.

· Co-ordination and Co-operation among staff.

· Branches with attractive location.

· Increasing rate of earning profits.


· Lack of technological know-how among the staff.

· Lack of technological resources compare to some other modern banks.

· Lack of customer attraction products for customers.

· Lack of marketing strategy to attract customer.

· Lack of training and motivation to the employees.


· Increasing the number of Branches in the country.

· Potential market for Modern banking services.

· Small Industries are increasing.

· Online Banking.

· Globalization effect


· Other Commercial Banks are offering higher salary’s to the employees that may create problem for BASIC Bank Ltd.

· Intense competition in the market lot of private commercial banks, foreign banks and multinational banks pose significant threats of BASIC Bank Ltd.

· Lack of appeal to younger, student potential customers.

· Political instability in the country.

Chapter Six

6.1 Findings

6.2 Recommendations

6.3 Conclusion

6.1 Findings

Positive Findings of BASIC Bank Ltd.

  • The bank has sufficient deposit to provide long term advances in the industrials sector.
  • Total investment of BASIC Bank Limited as increasing.
  • Total loan and advances growth rate as increasing over the year.
  • Total asset is in increasing trends.
  • The Bank introduced online “Export-Import Registering program”
  • BASIC Bank has portfolio with huge asset to meet up its liabilities.
  • Interest rate is lower comparatively other commercial Banks.

Negative Findings of BASIC Bank Ltd.

  • The branch has not any receptionist so new customer face trouble.
  • BASIC Bank is not well establishing as with modern banking technology.
  • There have not online Banking services.
  • The decoration of the branch is not competitive.
  • The bank does not have any so called IT section. So the maintenance of computer is very unsound.
  • BASIC Bank at now is in manual registering system.
  • BASIC Bank has not provided Evening Banking Services.

6.2 Recommendations

Following are some suggestible measure or point I tried to mention which may help the organization to overcome some of its drawbacks and help it to survive in the competitive market by increasing its effective and efficient business operation.

· Management can well decorate to increase branch space by developing a new floor in current two storied building which can reduce congested atmosphere in desk decoration.

· The branch need to set up well designed IT section by using more update technology.

· Bank can introduce the print out Pay Order and Demand Draft to ensure the efficient client service.

· Fill management need to be well designed. They can attached a print out list of file into the outside of the self and strictly follow the list. Then it will be easy to find out any previous document.

· Account opening process need to be completed by efficient work which can reduce the lag time to issue a new cheque book.

· BASIC Bank should introduce online Banking and Evening Banking Services.

6.3 Conclusion

BASIC Bank Ltd. has committed to Boost up the export position and diminishes the import position, rising of Gross Domestic Product (GDP) maximizing the national growth & abolishing the unemployment percent of an educated sector of the nation.

All the brunches of BASIC Bank Limited are authorized dealer of Foreign Exchange Business. The authorized dealer motivates the importer to import Raw materials, Fabrics, Frozen fish, jute items, and electronics goods, Accessories, Chemicals, and Vegetable Fat etc.

The import or exports are motivated by the BASIC Bank Limited to the foreign exchange business, particularly to open the letter of credit. A letter credit offer advantages both to the importer and exporter. The advantages accruing to either of the parties differ depending upon the nature of credit opened There Certain Common benefit accruing from the use of credit as under.

BASIC Bank Limited playing a vital role in financing import and exports of the country. Without Bank’s co-operation, it is not possible to run any business or production activity in this age. Exports and import need finance in various stages of their activities. Export and import financing are letter of credit (L/C), payment against documents (PAD), loan against imported merchandise (LIM) etc. All these facilities are provided by BASIC Bank Limited. For this purpose Bank’s con