5)
Red Clause:
When the
clause of the credit authorizing the negotiating bank to provide pre-shipment
payment to the advance to the beneficiary is printed/ typed in red, the credit
is called ‘Red Clause Letter of Credit’.

Under the above mentioned clause, the
opening bank is liable for the pre-shipment advances made by the negotiated
bank, in case the beneficiary fails to repay or deliver the documents for
negotiation.

4.2
Parties to Letter of Credit:

A letter of credit is
issued by the bank at the request of an importer in favor of an exporter from
whom he has contracted to purchase some commodities or services. Generally the
letter of credit is transmitted to the beneficiary through a bank in the
beneficiary’s country. Therefore, parties of letter of credit are mainly:

4.2.1
Obligatory Parties:

a) Importer / Buyer/ Applicant

b)   Opening Bank / Issuing Bank

c) Advising Bank / Notifying Bank

d)   Exporter /Seller / Beneficiary

Besides, there are
one or more than one banks who are involved in various capacities and various
stages to play an important role in the total operations of credit which are as
follows:

4.2.2
Optional Parties:

a.
Negotiating
Bank

b) Confirming Bank

c) Transferring Bank

d) Reimbursing / Paying Bank

4.2.3
Involved Parties:

This settlement procedure starts
with the submission of documents by the seller to the negotiating bank
accompanied by a draft drawn or the buyer or any other draw, at sight or at a
tenor, as specified in the credit. After scrutinizing that the documents meet
the credit requirements, the bank may negotiate the draft. This bank, if other
than the issuing bank, then sends the documents and the draft to the issuing
bank. As usual, reimbursement will be obtained in the pre agreed manner.

4.4
L/C Application:

L/C Application is a
sort of arrangement between client and the bank. Southeast Bank Limited
provides a printed form for opening a L/C to the importer. A special adhesive
stamp of value Tk.150 is affixed on
the form. While opening, the stamp is cancelled. Usually the importer expresses
his desire to open a L/C quoting the amount of margin in percentage. The
importer gives the following details-

Ø  Full name and address of the
Applicant.

Ø  Full name and address of the
Beneficiary.

Ø  Draft amount (both in figure and
word)

Ø  The form of credit whether
Revocable or Irrevocable.

Ø  Whether the credit is available
by payment, acceptance or negotiation.

Ø  On which party the draft are to
be drawn and the tenure of such draft.

Ø  A brief description of goods,
including details of quantity and unit price.

Ø  Whether the freight is to be
prepaid or not.

Ø  The country of origin

Ø  The port of shipment and
destination.

Ø  Whether the transfer of goods
from one vessel to another, or from one mode of transport to another, en route,
is prohibited or allowed.

Ø  The last date of shipment.

Ø  Partial shipment is allowed or
not.

Ø  The date and place of expiry of
the credit.

Ø  Negotiation period.

Ø  Details of the documents required
and mode of transmission of documents( Swift/ mail/ telex).

Ø  The time bar within which the
documents should be presented.

Ø  Whether the credit is to be
transferable one or not.

Ø  Sales terms (FOB/ C&F/ CIF)

·
Shipping
Mark

·
IRC
Number and LCA Number

·
Insurance
cover note

4.5
Scrutiny of L/C Application:

On receipt of L/C
Application, the branch officials scrutinize the same very carefully giving
emphasis to the following.

·
The
terms and conditions of the L/C must be complied with UCPDC 500 and Exchange
Control & Import Trade Regulation.

·
L/C
application is stamped as it is a guarantee of payment.

·
All
the information mentioned in different columns has been furnished.

·
Eligibility
of the goods to be imported.

·
If
L/C is opened against indent, Bangladesh Bank’s permission, valid registration,
authority to issue indent by indenter are to be checked.

·
The
L/C must not be opened in favor of the importer or his agent.

·
L/C
must be signed by the importer agreeing all terms and conditions mentioned in
the application.

·
IMP
form duly filled and signed.

·
Validity
of IRC.

·
HS
code of the goods.

·
Insurance
cover note with date of shipment.

·
Radioactivity
report in case of food items.

·
Survey
reports or certificate in case of old machinery.

·
Certificate
declaring that the item is in operation not more than 5 years in case of car.

First of all it must be ensured
that full set of documents as mentioned in the L/C has been received. The
branch will proceed  carefully look into
some main points of each of the documents keeping in view the terms of L/C.
Some key check points for the documents are as follows-

·
Bill of Exchange

·
Commercial Invoice

·
Bill of lading

·
Certificate of Origin

·
Other Documents

Other
documents called for in the credit such as packing list, weight list,
inspection certificate etc. to be checked whether drawn and issued in
accordance with the terms of the credit.

Fig#
4: L/C Opening Process.

5.1 Export Procedure:

According to Foreign
Exchange Regulation Act, 1947, nobody can export by post and otherwise than by
post any goods either directly or indirectly to any place outside Bangladesh,
unless a declaration is furnished by the exporter to the collector of customs
or to such other person as the Bangladesh Bank may specify in this behalf that
foreign exchange representing the full export value of the goods has been or
will be disposed of in a manner and within a period specified by Bangladesh
Bank. Payment for goods exported from Bangladesh should be received through an
Authorized Dealer in freely convertible foreign currency or in Bangladeshi Taka
from a Non-Resident Account. The Export section deals with two types of Letter
of credit that are as follows-

A)
Export Letter of Credit

B) Back-to-Back Letter of Credit

Export financing can
be done by Pre-shipment Credit and Post-shipment credit. In case of
pre-shipment financing 90% is financed by the bank. Of the portion 75% is by
Back-to-Back L/C and 15% by cash credit. Below the internship stated in broadly
those two types of L/C.

5.2 Export Letter of Credit:

The other type of L/C facility offered by Southeast
Bank Limited Kakrail branch is Export L/C. Bangladesh exports a large quantity
of goods and services to foreign households. Readymade textile garments (both
knitting and wove) jute, jute-made products, frozen shrimps, tea are the main
goods that the Bangladeshi exporters export 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 USA and
European Community (EC) countries. Bangladesh exports about 40% of its
readymade garments products to USA. Most of the exporter who exports through
Southeast Bank Limited Kakrail branch is readymade garment exporters. They open
L/C in this branch to export their goods, which they open against the import
L/C opened by their foreign importers.

Services against Export L/C:

5.3.1 Advising of Export L/C:

The advising bank
getting the import L/C sent by the issuing bank located abroad will advise the
L/C to the beneficiary without any engagement or responsibility on their part.
It will see the following only:

i. Authenticity of L/C (Test agreed
in case of Telex L/C and signature verified in case (air mail L/C).

ii.  Merchandise specified in the L/C is
permissible and clauses incorporated in the L/C are not against country’s
regulations.

5.3.2 Add Confirmation of Export
L/C:

Bank may add
additional confirmation to export L/C where there is specific instruction from
the L/ C issuing bank to do so. Additional confirmation of L/C gives the seller
a double assurance of payment. Bank’s requirement of adding confirmation:

i. Issuing Bank should be a reputed
bank.

ii. Credit line/Arrangement with the
L/C issuing bank.

iii.   L/C clause are to be acceptable
to confirming bank

iv.   Approval from the competent
authority for adding confirmation of export L/C.

Confirmation charges are to be
recovered as per rules.

5.3.3 Negotiation of Export Bill:

‘Negotiation
means that negotiating banker pays to the drawer the value of the bill on the assurance given by the opening banker.
When documents are presented for negotiation under letter of credit, the same
is thoroughly examined from the point of view of correctness and completeness
in all respect of terms of credit. The exporter submits the documents to bank
as per requirement of bank.

5.3.4 Acceptance of Export Bill:

In
this case, the exporter presents a bill of exchange payable to him and drawn on
a specified future date or event, to the bank that accept it. The bank signs
its acceptance on the bill and returns it to the exporter. The exporter then
can present it for payment on maturity or he can discount it in order to obtain
immediate payment.

5.4 Formalities for Export Letter
of Credit:

The
Export trade of the country is regulated by the Import & Export (Control)
Act, 1950. There are a number of formalities that an exporter has to fulfill
before and after shipment of goods. These formalities or procedures are
enumerated as follows-

5.4.1 Export Registration
Certificate (ERC):

The
exports from Bangladesh are subject to export trade control exercised by the
Ministry of Commerce through Chief Controller of Import & 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
ERC. The ERC is required to be renewed every year. The ERC number is to be
incorporated on EXP (Export) Forms and other documents related with export.

5.4.2 The EXP Form:

After
having the registration, the exporter applies to Southeast Bank Limited,
Kakrail branch with the Trade License, ERC and the Certificate from the
concerned Government Organization to get EXP Form. If the branch is satisfied,
an EXP Form is issued to the exporter. An EXP Form usually contains the
following –

i. Name and address of the
Authorized Dealer.

ii. Particulars of the commodity to
be exported with description and code number.

iii.   Name and address of the exporter

iv.   Name and address of the importer

v. Country of origin

vi.   Port of shipment

vii. Port of destination

viii. Quality

ix.   L/C value in foreign currency

x. Terms of sale

xi.    Bill of lading/ Railway Receipt/ Airway Bill/
Truck Receipt number and date.

xii. Shipment date

xiii. CCI& E’s registration number
and date

5.4.3 Securing the Order:

Upon registration, the exporter
may proceed to secure the export order. This can be done by contracting the
buyer directly through correspondence.

5.4.4 Signing of the contract:

While making a contract, the
following points are to be mentioned: (a) description of goods, (b) quantity of
the commodity, (c) price of the commodity, (d) shipment, (e) insurance and
marks, (f) inspection.

5.4.5 Procuring the material:

After making the deal and having
the L/C opened in his favor, the next step for the exporter is set about task
of procuring the merchandise.

5.4.6 Registration of Sale:

This is needed when the proposed
items to be exported are raw jute and jute-made good.

5.4.7 Shipment of Goods:

The following documents are normally
involved at the stage of shipment: (a) EXP Form, (b) registration certificate,
(c) contract, (d) copy of L/C (e) freight certificate from the bank in case of
payment of freight, if the port of lading is involved, (f) truck receipt,
railway receipt,(g) shipping instruction,(i) insurance policy.

The following points should be
checked-

·
The
follows terms of L/C are in conformity with those of the contract.

·
The
L/C is an irrevocable one, preferably confirmed by the Advising Bank.

·
The
L/C allows sufficient time for shipment and reasonable time for registration.

·
If
the exporter wants the L/C to be transferable, advisable, he should ensure
those stipulation are mentioned in the L/C.

At last the exporter submits all
these documents along with a Letter of Indemnity to Southeast Bank Limited,
Kakrail branch for negotiation. An officer scrutinizes all the documents. If
the documents are clean one the bank might decide to purchases the documents
within the limit sanctioned to the exporter, after verifying the confirmed
order covering each export. This is known as Foreign Documentary Bill
Collection (FDBC).

5.5 Procedure for Foreign
Documentary Bill Collection:

After purchasing the documents, Southeast
Bank Limited, Kakrail branch gives the following  Entries-

Before
realization of proceeds:

FDBC A/C……………………………..Debit

    Customer
A/C………………………….Credit

Adjustment after realization

  Southeast Bank, Head office General
A/C……………………..Debit

FDBC
A/C……………………………Credit

A 
FDBC register is maintained for recording all the particulars. The
salient contents of a FDBC register are as follows-

i. FDBC Ref. No

ii. Date

iii.   Drawer/ Beneficiary

iv.   Drawee / Applicant

v. Foreign currency

vi.   Rate

vii. Local currency

viii. Margin (% of amount)

ix.   Modes of transport

x. Merchandise

xi.   Documents

xii. L/C no. and name of the opening
bank

xiii. Name of the collecting bank

xiv. Initial, due date, date realized,
bank charges recovered with remarks

5.6 Negotiation:

If
the documents are free from Discrepancy or if the discrepancies are covered by
Indemnity of the party, Bank has to negotiate the Export Bills. For negotiation
of cash export bill buying rate prevailing on the date of negotiation is
applied for conversion of the foreign currency into Bangladesh currency. For
this, the following entry is given

Foreign
Bills Negotiated A/C………………Debit

Party
A/C…………………………………..Credit

Before the close of the business,
a consolidated voucher is passed against the total amount of all the bills
negotiated on that particular day.

Southeast Bank, Head office
General A/C………………………Debit

   Foreign bills negotiated A/C…………….Credit

All the transaction is reported
to the Head Office. The Head Office credits the Foreign Bills Negotiated A/C by
debit the balance with Foreign banks abroad A/C.

After negotiation of the export
bill, the documents are to be sent abroad (Normally to the L/C issuing bank) as
per the instruction of L/C and claim Reimbursement of the proceeds from the
Bank as mentioned in the L/C.

5.6.1 Risk Involved in
Negotiation:

If the bank failed to identify
any discrepancy in documents, prepared by the Exporter, on that time if the
amounts are paid to the exporter then the Bank face a great loss. In this
situation the Negotiating Bank try to contact with the party and if they agree
to deliver the required documents, the Bank get rid of the huge loss.

5.7 Inland Letter of Credit
(ILC):

Inland letter of credit means L/C within the
country. This type of L/C is opened when seller does not have trustworthy
relationship with the buyer though they are in the same country and also in the
case where the business involved a big amount. This L/C‘s are two types:

1) Local L/C (without EPZ)

2) EPZ (Export Processing Zone) L/C  

Settlement of Local
Bill

The settlement of local bill is done in the
following ways-

·
The
customer submits the L/C to the branch along with the documents to negotiate;

·
The
branch officials scrutinizes the documents to ensure conformity with the terms
and conditions;

·
The
documents are then forwarded to the L/C Issuing Bank;

·
The L/C Issuing Bank gives the acceptance and
forwards an acceptance letter;

·
Payment
is made to the customer on either by collection basis or by purchasing the
documents.

Accounting entries are made for purchasing the local
bill-

  Local
Bill Purchase A/C…………………..Debit

Client’s
A/C……………………………….Credit

Commission……………………………….Credit

Interest
A/C……………………………….Credit

A Local Bill Purchase
(LBP) Register is maintained to record the acceptance of the issuing bank.
Until the acceptance is obtained, the record is kept in a collection register.

5.8 Back-to-Back Letter of
Credit:

Back-to-Back L/C is a
secondary L/C opened by the seller’s bank based on the original/ master L/C to
purchase the raw materials and accessories for manufacturing of the export products
required by the seller.

Under the ‘Back to
Back’ concept, the seller as the beneficiary of the master L/C offers it as a
security to the advising bank for the issuance of the second L/C. the
beneficiary of the Back to Back L/C may be located inside or outside the
original beneficiary’s country. In case of Back-to-Back L/C, the bank takes no
cash security (margin). Bank liens the Master L/C and the drawn bill is a Time
bill.

Readymade garment
industries and specialized Textile units have been allowed the facility of
importing fabrics and other material/accessories needed for manufacturing
garments/specialized textile, free of duty under bonded warehouse system
against back-to-back L/C arrangement, without involving cash foreign exchange
from Bangladesh Bank. The Bangladesh Bank has therefore allowed the authorized
dealer to open Back-to-Back L/C for import of raw materials by the readymade
garment industries/ Specialized textile unit to carry out their export orders
against export L/C.

In our country,
export oriented Garment Industry, operating under bonded warehouse system are
availing Back-to-Back facilities. In Southeast Bank Limited, Kakrail branch
most of the Back-to-Back L/Cs opened on Garment Industry Account. Therefore the
discussion is based on account of Garment Industry in Bangladesh. 

5.9 Opening of Back-to-Back L/C:

Besides normal
formalities and requirements for L/C opening, the following points are
considered.

a) No Back-to-Back L/C on account of
Garment industries should be opened without prior approval from Head Office.
Branches are required to obtain prior approval from Head Office Division/
Credit Committee for opening all Back-to-Back L/Cs.

b) While opening of Back-to-Back L/C
following instruction should be followed-

i. Separate L/C number should be
used for Back-to-Back L/C and are to be recorded in separate Register.

ii. L/C opening commission and
charges are to be realized as usual.

iii.   The following contingent
liability voucher is to be passed at the time of opening the L/C.

 
Customer liability for Back-to-Back L/C…………….Debit

Banker’s liability for Back-to-Back
L/C……………..Credit

5.10 Documents Required for
Opening a Back-to-Back L/C:

In Southeast Bank Limited, kakrail branch, following
papers/documents are required for opening a Back-to-Back L/C-

·
Master
L/C

·
Valid
Import Registration certificate (IRC) and Export Registration Certificate
(ERC).

·
L/C
Application and LCAF duly filled and signed.

·
Performa
Invoice

·
Indemnity
or undertaking

·
No
objection from previous bank (if any)

·
Factory
Inspection Certificate

·
Insurance
cover note with money receipt.

·
IMP
form duly signed.

·
VAT
Registration

·
In
addition to above documents, the following are also required to export oriented
garments industries while requesting for opening a Back-to-Back L/C-

·
Textile
Permission.

·
Valid
bonded warehouse license.

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

·
BGMEA
Membership 

In case the factory premises is a
rented one, the Letter of Disclaimer duly executed by the owner of the house /
premises to be submitted. A check list to open a Back-to-Back L/C is as
follows-

Applicant
is registered with CCI&E and has bonded warehouse license;

The
master L/C has adequate validity period and has no defective clause;

    5.11 Payment of Back-to-Back L/C:

Payment of import bills against
Back-to-Back L/Cs are made from relative export proceeds of export oriented
Garment Industry operating under bonded warehouse system. Therefore at the time
of negotiation of export bills on account of garment factory, bank retains a
portion covering to Back-to-Back liability to a separate foreign currency
account from the export proceeds. The amount is kept in Deposit Awating for
Disposal (DAD) A/C and in Retention Account (Exporter can bear this money
without given any answer to customs, if one’s will go aboard.) if customer had
given indication. After realization of export proceed, payment against import
bills are made from DAD A/C. L/C wise and party wise A/Cs are maintained in DAD
A/C ledger.

On
30/60/90/120/180 days of maturity period, deferred payment is made. Payment is
given after realizing export proceeds from the L/C Issuing Bank. For garment
sector, the duration can be maximum 180 days. In case of export failure or non
realization/ short realization of export proceeds forced loan i.e. OAP has to
be created in order to settle the Back-to-Back L/C payment.

Vouchers and
accounting treatments are the same normal L/C opening except margin.

In this case, no
margin is taken by the bank.  After
lodgment, maturity date of the import bill is intimated to foreign bank as per
L/C terms. The documents are delivered to the order of opener duty endorsed for
clearance of goods from custom authority. Goods are cleaned through approved
clearing and forwarding agent of the bank.

5.12 Accounting Treatment of
Back-to-Back L/C:

Negotiation

  Foreign
Bills Purchase……………….Debit

 FBPARA/C…………………………..Credit

 (Foreign Bills Purchase Acceptance Register)

     Party’s A/C…………………………..Credit

 
(Deducting import & other liability)

On realization of export proceeds, usual realization
vouchers are passed for adjustment of FBP. After realization of export proceeds
payment of import bills are made from FBPAR A/C and following vouchers are
passed

  FBPAR A/C……………………………………Debit

  (Foreign
Bills Purchase Acceptance Register)

    Southeast Bank, Head office General
A/C…………………Credit

If the party is paid
in foreign currency, BC rate is applied in this regard. Foreign remittance
department takes the T.T & O.D rate.

5.13 Maintenance of Register:

The
sanction must be recorded in the following register:

v
Document
execution register. All the charge documents must be recorded in this

Register.

v Limit
register

v Liability
ledger.

5.14 Test Key Arrangement:

Test key arrangement
is a secret code maintained by the banks for the authentication of their telex
messages. It is a systematic procedure by which a test number is given and the
person to whom this number is given can easily authenticate the same test number
by maintaining the same procedure. Southeast Bank Limited has test arrangements
with other banks for the authentication of L/C messages and transfer of funds.

5.15 Confidential Report (C.R) of
Beneficiary of L/C:

According to exchange control
regulations bankers are required to obtain confidential report of the
beneficiary of L/C before opening
the same, if the amount of L/C
exceeds Tk.5.00 lac. bank can open L/C below Tk.5.00 lac without obtaining C.R
.Bankers can write to their foreign correspondents to supply the C.R. But from practical experiences
foreign correspondents of different country are not supply timely.

To overcome the above situation
bankers can consult reference books i.e. MUWN / DUNN / BRADSTREET / Trade
directory of various Chambers of Commerce of different countries.

On receipt of C.R from any source the banker can
accumulate the same in one master file.

5.16 Disposal of L/C & LCA
Form Copies and Filing:

L/Cs is normally typed in respective
banks printed format in many folds.
The original L/C is sent to the
advising bank for beneficiary’s and  2nd copy sent to the above bank at the
same time for their own purpose 3rd
copy for importer, 4th copy for
reimbursing bank 5th copy office
copy of the bank,6th for Bangladesh
Bank & 7^th copy for CCI & E. One copy for importer is
sent to them along with the memo of charges incurred by the opening bank for
the L/C stating the amount has been
so debited for the amount of Memo including that amount of margin.

LC
authorization
forms consisting of six copies. 1st copy
for exchange control purpose, 2nd
copies for the licensing authority,3^rd
and 4^th copy for
Bangladesh Bank and customs, 5th
copy for the registration unit and 6th
is the office copy of the bank.

5.17 Diagrammatic Representation
of Export:

A) Export process: At a glance

  Graphical presentation of Export process [Fig: -5]

B)
Payment Process of Export:

Payment Process of Export [Fig: – 6]

C) Core Process:

Core
Process [Fig: – 7]

D) Distribution process of EXP
Form:

	Triplicate copy

Distribution
process of EXP Form [Fig: – 8]

E)
Distribution process of LCA Form:

			This copy is sent to concern of Bangladesh Bank.

Distribution
process of LCA Form [Fig: – 9]

6.1 Introduction:

Import of merchandise involves two things:
bringing of goods physically into the country and remittance of foreign
exchange towards the cost of merchandise and services. In case of Import, the
importers are asked by their exporters to open a letter of credit. So, that
their payment against goods is ensured. Documentary credit has emerged as a
vital system of trade payment. It is a key player of foreign trade.

6.2 Classification of Importer:

Importers are those who are
authorized by the import Trade Control Authority that is CCI& E for import
of goods essential for consumption or for production purposes.

There
are mainly three types of Importer, viz:-

Ø 
Commercial
Importer

Ø 
Industrial
Importer.

Ø 
Importer
under Wage Earner Scheme. (WES)

 (1)
Commercial Importer:

 
It means an importer registered under the importers, exporters and
indenture registration order 1981 who
import goods for sale.

 (2) Industrial Importers:

When issued to an industrial
consumer, gives the items of import as raw materials and packing materials and
spare parts, the value of entitlement and ITC classification.

(3)
Importers under WES:

It means registered importers who
import only under the WES.  WES importers can be importing all
permissible items as declared by the import policy and notification. Besides
all registered commercial and industrial importer also can import under WES.

Another
Importer is as follows:

¨
Lease
Financing Import.

¨ Govt. Sector Importer.

¨
Import
under Bonded Ware-House System.

¨
Import
by Actual Users.

¨
Import
by E.P.Z.

6.3 Import Mechanism:

An Importer is required to fulfill some conditions/
criteria to be eligible as an importer as per provisions of Import Policy Order
and Guidelines for Foreign Exchange Transaction. An importer is required to
submit the following documents along with L/C application to get a license to
import goods through Southeast Bank-

·
An
account with Southeast Bank Limited, Kakrail Branch.

·
Import
Registration Certificate (IRC)

·
Proforma
Invoice/ Indent

·
Taxpaying
Identification (TIN) Number

·
Membership
Certificate from recognized Chamber of Commerce & Industry.

·
Letter
of Credit Authorization (LCA) Form duly attested.

·
L/C
Application duly signed by the importer.

·
One
set of IMP Form 

·
Insurance
Cover note with money receipt

To
import, a person should be competent to be an ‘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. After obtaining this,
the person has to secure a letter of credit authorization (LCA) from Bangladesh
Bank and then he becomes a qualified importer. He is the person who requests or
instructs the issuing bank to open a letter of credit. He is also called
applicant of the credit.

6.4 Letter of Credit
Authorization Form (LCAF):

The Letter Of Credit Authorization Form is the form
prescribed for the authorization of opening letter of credit or payment against
import and used in lieu of import license. The authorized dealers are empowered
to issue LCA forms to the importers to allow import in Bangladesh. If foreign
exchange is intended to be bought from Bangladesh Bank against a LCAF, it has
to be registered with Bangladesh Bank’s Registration Unit located in the
concerned area office of the CCI&E. the LCA forms available with the
authorized dealers are issued in a set of five copies each.

First copy
is exchange control copy, which is used for opening of L/C and effecting
remittance.

 Second copy
is the custom purpose copy, which is used for clearance of imported goods from
custom authority.

Triplicate and Quadruplicate copy of LCAF are sent
to concerned area of CCI&E office by authorized dealer / Registration Unit
of Bangladesh Bank.

Quintuplicate copy is kept as office copy by
Registration Unit.

6.5 Accounting procedure in case
of L/C opening:

When the L/C application is found to be in order and
the client has sufficient approved credit line for opening an L/C, vouchers are
prepared to record the contingent liability for the L/C opened and realized
margin, commission, telex charges, postage etc. as per bank’s schedule of
charges/ sanction letter. Accounting treatment at the time of L/C opening are
as follows-

a)
For recording contingent liability –

Customers liability……………………….Debit 
(In equivalent. BDT)

Bankers
liability…………………………Credit

b)
For realization of margin,
commission, telex and other charges –

Customer’s A/C………………………….Debit (In equivalent. BDT)

Margin on
L/C…………………………….Credit

    Commission
on L/C……………………….Credit

 
  Telex/Postage
charge………………………Credit

 Misc. charges………………………………Credit

After that, L/C
number and above entries are given in the L/C register. L/C opening register
has following details-

·
Date,
L/C number, Name of the customer, Foreign currency amount, Exchange rate, Taka
equivalent and source of import.

·
Goods,
country of origin, advising bank, Expiry date, Margin.

·
Charges:
commission, postage, SWIFT.

6.6 Distribution of L/C:

After giving the accounting entries the transmission
of L/C is done. Southeast Bank takes the following steps, Through SWIFT to
advise the L/C to the beneficiary.

a) Send the signed original L/C
together with the copy to the Dispatch section for mailing to the L/C Advising
Bank and L/C Reimbursement bank respectively by courier/Airmail.

b) Send the approved text of L/C and
reimbursement authorization to SWIFT service-charge for their onward
transmission to advising bank and reimbursing bank respectively.

c) Deliver the customer copy of the
L/C along with the debit advice to the customer over the counter or send the
same to the dispatch section for onward delivery to the customer.

d) Send the original accounting
vouchers in batches to the Accounts section for capture and updating of the
data-base/ records.

e) Check the L/C file to ensure that
all the related documents i.e. L/C application with supporting documents,
approval, L/C copy, reimbursement instruction copy and copy of accounting
vouchers are filed properly.

6.7 Amendment of L/C:

Parties involved in a
letter of credit, particularly the seller and the buyer cannot always satisfy
the terms and conditions in full as expected due to some genuine reasons. In
such a situation, the letter of credit is amended. In Revocable letter of
credit, it can be amended or cancelled by the issuing bank at any moment and
without prior notice to the beneficiary. But in case of irrevocable letter of
credit, it can never be amended or cancelled without the agreement of the issuing
bank, the confirming bank (if any) and the beneficiary. When the customer
approaches for amending the terms and conditions of a letter of credit opened
at his request, Southeast Bank checks the following:

1.  The type
of amendment the customer is asking for-

Whether
it is concerning an increase or decrease in the L/C amount.

whether
it is concerning extension of shipment/ expiry date of the L/C

Whether
it is relating to change in the merchandise/ mode or route of transportation.

2.  Depending
on the type of amendments, bank has to review the matter in the same way as
applicable while opening a letter of credit in accordance of the provisions.

Amendment
Procedure:

On receipt of a request letter for amendment of L/C
from the customer the bank takes the following steps-

a) Record the date and time of
receipt of the application.

b) Read the request letter for
amendment briefly to ensure that concerned L/C number and the instructions
mentioned are clear.

c) If found in order check the
request letter for amendment together with all supporting papers.

d) In case the letter of amendment
is not complete or required papers are not submitted, the customer should be
contacted promptly for rectification of the defects.

e) In case the customer does not
have approved credit line for increasing/ amending the L/C, the import section
has to submit proposal to the Executive Committee of the Board and keep pending
of amending the L/C till its approval.

f)   When the request letter for
amendment with all papers is found to be in order, record the particular of
amendments with date in appropriate column against the relevant L/C in the L/C
register.

g) Prepare the letter of amendment
either in mail, Swift or telex format.

Accounting Entries of
Amendment:

After preparing the
letter of amendment, the bank prepares the vouchers so amend the amount of
contingent liability for increase (in case of increase in L/C value) and
commission & charges. In case of decrease in L/C value, refund the margin
to the credit of customer account if the L/C was established under 100% margin,
otherwise management consent is required. The Accounting treatments are-

i) For amending
contingent liability

a.   Increase of L/C value

Customer liability…………………………Debit

Banker’s liability…………………………Credit  

b. Decrease of L/C value

Banker’s liability…………………………..Debit

Customer liability………………………….Credit

ii) For increase of
L/C value

Customer
A/C (in BDT)………………………Debit

 
Margin on L/C…………………………………Credit

 
Commission on L/C……………………………Credit

 
Misc. charges…………………………………..Credit

 
Telex/ Postage charges…………………………Credit

iii) For refunding
customer liability (after the amendment by the advising bank)

  Margin A/C……………………………………Debit

 
CD account customer………………………….Credit

Southeast Bank Limited, Kakrail branch transmits the
letter of amendment to the advising bank and L/C reimbursing bank respectively by
Courier/ Airmail. A letter of amendment executed by issuing bank becomes
enforceable / valid only after agreement of the parties in documentary credit
operation.

6.8 Adding Confirmation:

Sometimes beneficiary or supplier of the goods
insists the importer for adding confirmation to L/C or to issue L/C with added
confirmation. In that case, at the request of the importer, the issuing bank
request the advising bank or the third bank to add their confirmation to the
L/C. Normally the charge of confirmation is borne by the beneficiary and it
differs from bank to bank.

6.9
Examination of Shipping Document:

The seller being satisfied with the terms and
conditions of the credit proceeds to dispatch the required goods to the buyer,
has to present the documents evidencing dispatching of goods to the Negotiating
Bank. The exporter will submit those documents in accordance with the terms and
conditions as mentioned in L/C. Generally the Exporter sends the following
documents.

1.
Commercial invoice

2. Bill of lading

3. Packing list

4.
Certificate of origin

5. Bill of exchange

6. Clean report of
finding (CRF)

7. Weight list

8. Insurance cover
note

9. Pre-shipment
certificate

The negotiating bank carefully
checks the documents provided by the exporter against the credit, and if the
documents meet all the requirement of the credit, the bank will pay, accept, or
negotiate in accordance with the terms and conditions of the credit. Then the
bank sends the documents to the L/C Issuing Bank /opening bank.

Scrutiny
of Documents:

First of all it must be ensured
that full set of documents as mentioned in the L/C has been received. On
receipt of shipping documents from the Negotiating bank, Southeast Bank officials check whether these documents have any discrepency or not.
‘Discrepency’ means the dissimilarity of any of the documents with the terms
and conditions of the L/C. the same. If any discrepency noticed or there is any
deviations of the terms and conditions of L/C , the same should be immediately
brought to the notice of the importer for his written instruction before
lodgement. If the importer refuges to accept the documents it should be
notified to the Negotiating bank advising them within reasonable time but not
more than 7 working days from the date of receipt of the shipping documents.
Some of the usual discrepencies are—

·
L/C expired

·
Late shipment

·
Amount drawn in excess of the letter of credit

·
Bill of Exchange not properly drawn

·
Description of the goods differ

·
Interest clause is missing in Bill of Exchange

·
Bill of Lading or Airway Bill stale or Bill of Lading is
issued under a charter party.

·
Insurance cover note as per terms of L/C and insurance does
not cover the entire voyage and insurance policy is not properly stamped.

The branch will proceed  carefully look into some main points of each
of the documents keeping in view the terms of L/C. Some key check points for
the documents are as follows-

Bill of Exchange:

·

Bill
of exchange is an unconditional order written (signed) by the drawer, to
another person (the drawee) which directs to pay a certain sum at sight or at
fixed or further determinable date to the order of the party which is to
receive payment. Officials check the following-

·
That the bill of exchange has been properly drawn and signed
by the beneficiary as mentioned in the L/C terms.

·
That the draft amount drawn does not exceed the amount
available under the credit.

·
That the amount is identical with that amount mentioned in
the invoice.

·
That the bill of exchange is in order and endorsed properly.

2. Commercial Invoice:

Commercial Invoice issued by
exporter is the book keeping instruments for the importer. The invoice is the
list of articles containing their particulars and prices. Here the following
points are checked-

·
That the merchandise is properly invoiced by the beneficiary.

·
That the merchandise is invoiced to the importer on account
of whome the L/C was opened.

·
That the description of the merchandise as shown in the
invoice correspond to that required in the L/C.

·
That the unit price of the merchandise in the invoice tallies
with that of the unit price stipulated in the L/C and indent.

·
That the invoice has been correctly and properly drawn and
signed by the beneficiary as per terms of L/C.

·
That the relevant LCA form number, IRC number of the importer
alongwith the Registration number of the indentor with Bangladesh Bank, are
correctly incorporated in the invoice.

3. Bill of lading:

A bill of lading is a document
generally issued by a carrier to a shipper, usually stipulated in a credit when
exporter dispatches the goods. It is an evidence of a contract of carriage,and
is a document of title to goods. It also constitutes a document that is or may
be, needed to support an insurance claim. The key check points are-

·
That the bill of lading is clean “Shipped on Board” B/L
showing freight prepaid and properly endorsed.

·
That the bill of lading covers the merchandise described in
the invoice.

·
That the port of shipment, port of destination, date of
shipment, the name of the consignee etc. shown in B/L are in agreement with
those mentioned in the L/C.

·
That the bill of lading is properly signed by authorized
signatory of the Shipping Company or by their authorized agents.

·
That the bill of lading is not stale and has been produced in
full set as per terms of L/C.

4.
Certificate of Origin:

In case of certificate of origin
the officials check that the certificate of origin of the merchandise is in
conformity with that stipulated in the L/C.

5.
Other Documents:

·
Other documents called for in the credit such as packing
list, weight list, inspection certificate etc. to be checked whether drawn and
issued in accordance with the terms of the credit.

6.10 Lodgement of Import
Documents:

On
scrutiny, if it is found that the documents drawn in conformity with the terms
of the credit, Southeast
Bank KAKRAIL branch lodges the documents in
Inland Bill Purcshe( IMP) register/ database giving a bill reference serially
in numerical order. 

The bank that opens
the letter of credit is bound to honor its commitment to pay for import bills
when these are presented for payment, if drawn strictly in terms of letter of
credit. The opening bank will lodge the shipping documents to their book and
will respond to the debit advice originated by the foreign correspondent to the
debit of “Inland Bill Purcshe A/C” or
“Bills of Exchange A/C” and present the bill to the importer for payment.

The
following steps are involved in lodgement-

·
First all the particulars of the documents are entered in the
IMP register and IMP No. Seal is given on all the copies of the received
documents.

·
Convert the foreign currency into Bangladeshi currency.

·
Reverse the contingent liability and entry made in the
liability register.

·
Prepare lodgement voucher.

·
Send IBCA to the Head Office.

·
Make intimation to the importe Worry

Accounting Entries

 
Payment Against Document A/C …………………..Debit

 
Head Office General A/C…………………………………..Credit

  Exchange Earnings………………………………… ……..Credit

For Contingent liability the
reversal entries are as follows-

Bankers Liability…………………………Debit

    Customer
Liability………………………Credit

After realizing the charges, the
shipping documents are then stamped with IMP number and are entered in the IMP
register. Intimation is given to the customer calling on the bank’s counter
requesting retirement of the shipping documents.

6.11 Retirement of Documents:

The importer receives the
intimation and gives necessary instruction to the bank for retirement of the
bills or for the disposal of the shipping documents to release the imported
goods from the customs authority. The importer may instruct the bank to retire
the documents by debiting his account with the bank. During delivery of the
documents the following accounting entry is given-

  Customer A/C or LTR a/c ( with IMP
interest)…..Debit

Margin on L/C A/C……………………………….Debit

IMP A/C………………………………………….Credit

Interest/ Commission A/C…………………………Credit

6.12 Shipping Guarantee:

In the absence original documents, goods may be
cleared by non-negotiable copies of documents against shipping guarantee issued
by L/C opening bank. The importer requests the bank to issue shipping
guarantee/ indemnity for clearance of consignment against non-negotiable copies
of documents received directly from the exporter as per clause incorporated in
the L/C. before issuance of shipping guarantee, bank recover full value of
import documents and collect an undertaking from the importer that they will
accept original documents inspire of any discrepancy and bear rate fluctuation
of foreign currency at the time of lodgment.

Voucher to be
passed:

Reversal of contra voucher passed at the time of
opening of the L/C

Banker’s
liability for L/C……………………..Debit

     Customer liability……………………………..Credit

 Contra
voucher

 
Customer liability on Shipping Guarantee…….Debit

 Banker’s liability on Shipping
Guarantee……..Credit

Importer A/C………………………………….Debit

 Margin on L/C………………………………..Debit

 Margin on shipping Guarantee………………..Credit

    Commission/ charges………………………….Credit

On receipt of original documents, lodgment of the
same is made as usual and on retirement following vouchers is passed.

Reversal of contra voucher passed at the time of
issuance of Shipping Guarantee

Banker’s liability on S.G……………………..Debit

Customer liability on
S.G……………………..Credit

 
Margin on shipping guarantee………………..Debit

Importer’s A/C……………………………….Debit

Payment
against document……………………Credit

Charges/ interest
A/C………………………….Credit

6.13 Import Financing:

If there is no available in cash in
importer’s hand, he can request the bank to grant loan against the documents
for the purpose of post import  finance.
There are two following forms of  import
finance-

1.
Loan against imported merchandise (LIM).

2.
Loan against trust receipt (LTR)

 LTR facility is available in
SoutheastBank,KAKRAIL Branch, but LIM is not provided.

The following steps are involved
for retirement of documents-

·
Calculation of interest.

·
Calculation of other charges.

·
Passing vouchers.

·
Entry in register.

·
Endorsement made on the back of the bill of exchange as
‘Received Payment’ and bill of lading or other transport document is endorsed
under two authorezed signatures of the bank’s officers.

·
Finally documents are delivered to the Importer.

1.
Loan Against
Imported Merchandise(LIM):

On the arrival of goods and
lodgment of import documents, importer may request the bank for clearance of
goods from the port (custom) and keep the same to bank godown. Proper sanction
from the cxompetent authority is to be obatained before clearance of consignment.

In case of Loan Against Imported
Merchandise, L/C department alongwith credit department take prior approval of
Head Office credit committee with other necessary instructions regarding
payment of duty and other taxes and mode of transportation from Chittagong/
Chalna. After getting approval from H/O, bank grants loan in the form of either
LTR or LIM. This facility is not available in SoutheastBank,KAKRAIL Branch.

2.  Loan against Trust
Receipt Facility (LTR):

Loan against Trust Receipt is post import finance,
offered by SoutheastBank,KAKRAIL Branch.From
bank’s point of view; it is risky because usually no security is taken. When
customer’s commitment is as good as cash, LTR is then issued. Loan is
sanctioned based on trust receipt (prescribed form) only, in this case the
title and possession of goods both lying with the customer. Documents are also
handed over to the importer against LTR facility

For clearance of the goods, the goods are handed
over to the importer under trust with the arrangement that sale proceeds should
be deposited to liquidate the advances within the specified period.

Accounting
treatment:

While creating LIM facility following vouchers to be
passed-

Margin
on L/C…………………….Debit

LTR
A/C………………………….Debit

IMP
A/C…………………………Credit

On delivery of goods part/ whole the LTR liability
should be adjusted part/ whole to comply the instruction of Head Office
sanction advice passing following vouchers-

Customer
A/C………………………Debit

     LTR A/C……………………………Credit

 Interest on LTR……………………..Credit

6.14 Making Payment Of Foreign
Bill:

The L/C issuing bank, after getting
the documents, checks immediately and if they are in order and meet the credit
requirements, it will arrange to make payment against L/C through reimbursement
bank and documents will be handed over to the importer or his duly authorized
clearing or forwarding agent for clearance of the goods from customs at his own
account. But if there is any discrepancy in the documents, the L/C isssuing
bank send message to the negotiating bank to rectify it under its risks and
responsibilities. Payment is the most sensitive task of import department. The
officials have to be very careful while making payment.

6.15 Procedure for Obtaining IRC
(Import Registration Certificate):

To perform the import business
registration with the licensing authority of the area is an urgent.  Through public notice the chief controller of
Imports and Exports invites applications usually for registration of importers.  For getting this registration the following
papers/ documents are required for submission to  CCI&E or area office of CCI &E for
import registration certificate: –

1. Application form

2. Nationality certificate

3. Income tax registration
certificate

4. Trade License from the municipal
or the local authority

5. Membership Certificate

6. partnership Certificate (for
partnership concern)

7. Certificate of Registration with
the registrar of joint Stock Company.

8. Memorandum of Association in case
of Limited Company.

9. Bank Certificate.

10.  Ownership documents or rent
receipts of the place of business.

11.  Original Copy of Treasury Challan
being payment of registration fees.

12.  Other documents prescribed in the
import policy.

The nominated bank of
the applicant will examine the papers/ documents and verify the signature of
the applicant and forward the same to the concerned office of the CCI&E
with a forwarding schedule through Bank’s representative. The duplication copy
of the same bearing the acknowledgment of CCI&E office of the receipt of
the documents is received back by the bank and is preserved.

If the documents are found in
order and the CCI&E is satisfied the IRC is issued to the applicant and
sent direct to the nominated bank. The pass book is also issued by the CCI
& E simultaneously to the importer and sent direct to the nominated bank.

The IRC and pass book are
security documents issued under embossing seal of the CCI & E and duly
signed by the authorized official of CCI & E. 

The IRC is to be renewed every year
on payment of usual fees through Bangladesh Bank challan or cash payment in
their bank’s A/C directly.

Fees shall be paid in Bangladesh
Bank or in the Government Treasury or in Sonali Bank under the Head “42 Trade & Commerce fees realized
under Import and Export Control Act, 1950”.

6.16 Reporting to Bangladesh
Bank:

At the end of every
month, the reporting to Bangladesh Bank regarding the following information is
mandatory-

i. Filling of E-2/P-2 Schedule of
S-1 category that covers the entire month’s amount of import, category of
goods, currency, country etc.

ii. Filling of E-3/P-3 Schedule for
all charges, commission with T/M Form.

iii.   Disposal of IMP Form that
includes:

(a) Original IMP is forwarded to Bangladesh Bank
with invoice and indent,

(b) Duplicate IMP is kept with the branch along with
the Bill of Entry/ Certified invoice,

  (c)
Triplicate IMP is kept with the branch for office record,

(d) Quadruplicate is kept for submission to
Bangladesh Bank in case of import where documents are retired.

6.17 Diagrammatic Representation
of Import:

a)Diagrammatic Presentation of
Import Procedure:

  Diagrammatic
Presentation of Import Procedure: [Fig :-10]

b) Payment Procedure of Import:

Chart of Payment Procedure of Import:
[Fig:-11]

c) Core Process of IBP (Inland
Bill Purchase) in case of Importer:

d) Diagrammatic Presentation of
Distribution process of IMP Form

Chart of Distribution process of
IMP Form [Fig:-13]

e)
Distribution process of LCA Form

Chart of Distribution process of
LCA Form [Fig:-14]

7.1 Introduction:

For
the purpose of analysis use various bar diagram, trend analysis and standard
deviation, co-efficient of variance etc. All these are effectively used in most
of analytical report.

7.2
Import Business Analysis:

Table no -2

Import
Business Analysis Table (In
million taka)

Sources:
Apendix-1

Explanation:
From Table- 2, It is found that the average Import is Tk.4,605.55(million),
where STD (Standard Deviation) is 1704.3187 & CV (Co-efficient of
variation) is 37%, which is the sign of medium degree of variation. Here CV
didn’t cross 50% so, this is reasonable and indicate positive situation. Here
growth rates are also increased. So we can easily comment that Import of SEBL
is very stable and good in position. We have explained the above table with
representation of various graphs. 

Graph no-1: Year wise Import

Explanation: 
From graph no-1, It is found that the Import of 2009 is 6958.29 (Tk in
million), which is the Highest in position of Bar diagram. On the other hand
the Import of 2004 is 2022.96 (Tk in million), which is the worst in position
of Bar diagram. So we can easily comment that Import of 2009 is very good in
position and there have positive growing tendency.  

Graph no-2: Year wise growth of Import

Explanation: From graph no-2, It is found
that the Import growth rate of 2009 is 16.62%. On the other hand the Import of
2005 is 30.43% and in the middle years the growth were fluctuated. But the
growth is always in increasing. So I can command that the growth is moderate
compare to the others in a reason that there are lots of competitions in this
sector.

Graph no- 3:
Comparison of Import & Export

Explanation: From graph no- 3, It is found
that the Import growth rate of SEBL is higher than the Export growth rate of
SEBL in position of diagram. So we can easily comment that Import position of
SEBL is better than Export position of SEBL. But there have positive growing
tendency in both sections.

Graph no- 4:
Comparison of Import & Foreign Exchange

Explanation: From graph no-4, It is found as
usually the Import growth rate of SEBL is lower than total Foreign Exchange
growth rate of SEBL in position of diagram. But Import section occupied large
part of Total Foreign Exchange Business. So we can easily comment that Total
Foreign Exchange position of SEBL is better and in positively growing
situation.

7.3 Export Business Analysis:

Table-
3: Export Business Analysis

Explanation: From Table- 3, It is
found that the average Export is Tk.3,141.20(million), where STD (Standard
Deviation) is 1330.85 & CV (Co-efficient of variation) is 42%, which is the
sign of medium degree of variation. Here CV didn’t cross 50% so, this is
reasonable and indicate positive situation. Here growth rates are also
increased. So we can easily comment that Export of SEBL is very stable and good
in position. It has been explained the above table with representation of
various graphs. 

Graph no- 5: Year wise Export
Business

Explanation: From graph no- 6, the internship
find that the Export of 2005 is 1351.11(Tk in million), which is the Highest in
position of Bar diagram. On the other hand the Import of 2002 is 226.35 (Tk in
million), which is the worst in position of Bar diagram. So is is said easily
that Export of 2005 is very good in position and also there have positive growing
tendency. 

Graph no- 6: Year wise growth
rate of Export Business

Explanation: From graph no-6, It is found that
the Export growth rate of 2005 is 49%; which is the Highest in position of
diagram. On the other hand the Export of 2007 is 10 %, which is the worst in
position of Bar diagram. So we can easily comment that Export of 2005 is the
best in position and 2007 is the worst. But more importantly there have
positive growing tendency.

Graph no- 7: Comparison of Export
& Import Business

Explanation:
From graph no-7,
It is observed that the Import growth rate of SEBL is higher than Export growth
rate of SEBL in position of diagram. So we can easily comment that Import
position of SEBL is better than Export position of SEBL. But there have positive
growing tendency in both sections.

Graph no- 8: Comparison of Export
& Total Foreign Exchange Business

Explanation: From graph no- 8, It is found
that the Export growth rate of SEBL is lower than total Foreign Exchange growth
rate of SEBL in position of diagram. But Import section occupied a part of
total Foreign Exchange Business. So we can easily comment that Total Foreign
Exchange position of SEBL is very good and in positively growing situation.

7.4 Total Foreign Exchange
Business Analysis:

Table no:-4: Foreign Exchange
Business Analysis

Sources:
Apendix-1

Graph no- 9: Year wise Foreign
Exchange Business

Explanation:
From graph no-
9, It is found that the total Foreign Exchange Business of 2005 is 11,630.74(Tk
in million), which is the Highest in position of Bar diagram. On the other hand
the Import of 2001 is 2699.15 (Tk in million), which is the worst in position of
Bar diagram. So we can easily comment that Export of 2009 is very good in
position and also there have positive growing tendency. 

Graph no- 10: Year wise growth
rate of Foreign Exchange Business

Explanation: From graph no-10, it is found
that the Foreign Exchange growth rate of 2005 is 36%, which is the Highest in
position of diagram. On the other hand the Foreign Exchange growth rate off
2007 is 10 %; is negative situation, which is the worst in position of Bar
diagram. So we can easily comment that Foreign Exchange of 2005 is the best in
position and 2007 is the worst. But most of there have positive growing
tendency.

Graph no- 11: Comparison between
Export, Import & Foreign Exchange Business

Explanation: From graph no-11, it is found as
usually the Total Foreign Exchange growth rate of SEBL is higher than Import
& Export growth rate of SEBL in position of diagram. Here Import bar
position is in the middle and Export bar position is in the lower level. So we
can easily comment that Total Foreign Exchange position of SEBL is very good
and in positively growing situation in both two wings (Import &Export) of
it.

Table no- 5: Year Wise Progress
of Import, Export & Foreign Exchange Business

7.5 Other Analysis of SEBL:

Table no- 6

Sources:
Apendix-1

From the above table it is found
that the growth rate of most of factors are positive. The graph of these variables
is given below.

Graph
No-12: Comparison of Paid-up Capital, Deposit, Advance, Operating Profit &
Total Assets

Explanation:
From the above
graph no-12, it is said that the growth of total asset, advanced, deposit, was
increased highly, but paid up capital and operating profit was also increased
slowly. Here growth rate of total asset was increased gradually.

Table
-7: Employee, Branches & Correspondent

Explanation:
From the above
table, It is found that the growth of total Employees was increased highly, but
Branches was also increased slowly. Here growth rate of Correspondent was
increased gradually. The graph of these variables is given below:

Graph
No-13: Growth Employees

Explanation:
From the above
graph no-13, it is found that the growth of Employees, was increased highly
& gradually.

Graph
No-14: Growth of Branches

Explanation:
From the above
graph no-14, it is found that the growth of Branches, was increased slowly but
gradually.

Graph
No- 15: Growth of Branches

Explanation: From the above graph no-15, It
is found that the growth of Correspondents, was only decrease in 1998, others
years increased gradually and some times highly.

Graph
No- 16: Growth of Employees, Branches & Correspondence

Explanation:
From the above
graph no-16, It is found that the growth of employee was increased highly, but
branches and correspondent were also increased slowly. Because branches and
correspondents required more employment, so those are indicted; the SEBL has in
good position.

Table no-8

The above table represents return on
equity ratio during the study period of 2005 to 2009. The average of the ratio
is 16.81 whereas the standard deviation is 2.92. The co-efficient of variation
is 17.4% which is the sign of medium degree of variation.

Table no- 9

The above table represents return
on equity ratio during the study period of 2005-2009. The average of the ratio
is 44.75 whereas the standard deviation is 12.22. The co-efficient of variation
is 27.32% which is the sign of medium degree of variation.

7.6 Finding of the study:

We have found the following
things in my study-

a) Southeast Bank is very much
expert in export import trade handling.

b) Southeast Bank is also cautious
in export import trade financing to avoid any types of fraud.

c) The culture of Southeast Bank is
very much suitable.

d) Clients are also very pleased on
their services.

e) All documentary credit is
following the UCPDC rules and regulations.

f) Most of the years, import and
Export Both are positively increased.
g) As usually Bank’s branches, employee
and also Correspondent’s growth rate is highly increased.
8.1
Recommendations

In the light of above studies we
have found that banking sector requires to be studied in right perspective and
individual bank has mapped out of its own course of action /business strategy
to survive and to do good with the nation of survival of the fittest. Here we
have attempted to draw some recommendations in the light of my study of
Southeast Bank Limited.

Though the Southeast Bank is very
much specialized on export import dealing so it is very much necessary to take
care of export import department.

2. Few persons are working in export
import department. So, more should be recruited.

3. One stop care service point
should be opened to give better service to the clients.

4. Modern technology should be
installed to cope up in this competitive era.

5. Customer’s waiting room in
Foreign Exchange Section is essential.

6. More space should be required in
Foreign Exchange Section.

7. Recording and Filling system
should be up dated.

8. Banking is a service -oriented
marketing .Its business profit depends on its service quality. That’s why the
authority always should be aware about their service quality.

9. To provide quality service to the
customer it is necessary to have a trained team of an organization or an
institution .For this reason the bank should recruit more fresh, bright and
energetic persons such as MBA, BBA, MBM etc.

10.  The bank has a provision for
internship program, but it is not well organized. Although the officials are
very careful and cooperative with the interns, the authority should be more
structured .If they can properly make them trained it will be very fruitful to
recruit them. Because-they learn overall banking in the internship period, so
in the beginning of the job they can work as experienced persons. It is also
very important that they should give an honorarium to the intern.

11.  As soon as possible the bank
should start more branches in Dhaka city as well as the other cities of the
country.

12.  One of the business strategies is
promotion. Successful business depends how they can promote their products or
service to the customer .In this connection to improve the business status bank
should introduce more promotional programs.

13.  The recruitment process of the
bank is very lengthy. The bank should reduce the cost and select the employee
by restructuring the lengthy process.

14.  In addition with the present
services, they should include more services. It is badly needed to provide more
services to the customer in order to compete in the market.

15.  Sufficient books on banking and
financing and other necessary journals are not available in the bank, the bank
authority should enrich its collection in order to keep all necessary reference
available to the employees as needed. This step will able to make employees
knowledgeable on banking different critics and current banking events.

16.  Southeast Bank limited should
give special gifts like key ring, pen, moneybag etc. embossed Southeast Bank’s
monogram to be provided to the customer.

8.2 Conclusion:

Southeast Bank Limited has been a
more successful second-generation bank. The Bank has followed a slightly
conservative and balanced banking which has enabled it to achieve steady growth
in profit and wealth together. Besides these, blended recruitment of new and experienced
bankers in all the levels of management level has been very fruitful. The
recruits have carried forward their social connections and ultimately
contributed to strengthen the asset and liability base of the bank. Although
Southeast Bank Limited is good in operation of export import trade handling and
financing.

The Bank’s vision has always been to
give customer service one step forward from its competitors and ultimately
contribute to the national economy. The fact of being successful in its journey
of 14 long years speaks for itself and the Bank is hoped to continue its
competitive edge in the coming years.

Bibliography

1. Anonymous, (2000). Bank Loan
Application Procedures; A Hand book for SEMS, First ed. JOBS, Dhaka.

2. Gordon & K. Batrajan, Banking
Theory, Law and Practice, Himalaya Publishing House, Mumbai, 1996.

3. The Southeast Bank Limited  home page 2010, viwed on 1^st
January 2010,www.sebankbd.com

4. The Southeast Bank’s annual report-2006

6. Wilson, R. (1983). Banking and Finance in Arab Middleast. London: Macmillan Publisher Ltd.

8.   Annual Import 2004-2005 –Statistic
Department, Bangladesh Bank.

9. Annual Export receipts 2004-2005 –
Statistic Department, Bangladesh Bank.

12.   Foreign Exchange Policy, Bangladesh Bank
F, E Circular no. 5, 10 June,2002

APENDIX-1

Performance
of Southeast Bank Limited from 1995-2009
 Source:-Annual Report of SEBL-2009

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