“Genera Banking practice in Bangladesh case Study on Janata Bank Ltd”
CHAPTER – ONE
Introduction
1.
a) History of the janata Bank:
The bank was initially emerged in the banking scenario of the then Hast Pakistan as ‘The United Bank Limited” and ‘The Union Bank Limited” at the initiative of some Bangalee entrepreneurs in the year 1959 under Bank Companies Act l’)13. After the independence of Bangladesh in 1972 this Bank was nationalized as per policy of the Government and renamed as Janata Bank Limited. Janata Bank Limited is a 100% government owned commercial bank in Bangladesh.
b) Objectives of the Organization:
1. Board Goal:
As a commercial organization Janata Bank Limited belongs to people. It implies that it stands for meeting the banking needs of the mass of the society. It is new aspect of banking and this philosophy is to be transacted in functional terms in phases.
2. Operating Goal:
Janata Bank Limited is a commercial bank. In compliance with very nature of the organization, the objective in mind the bank aims at excelling quality and diversified services. To fulfill its mission Janata Bank Limited has its main objectives as follows:
o To make profit maximization.
• Act as a media of exchange.
• Contribute to the gross domestic product.
• Maintain to a satisfactory deposit mix.
• Help to grow entrepreneurship.
• Increase loan portfolio diversification and geographical cove
• Help to grow SME.
• Provide finance in information technology sector.
• Help to boost up economic development.
c) Function’s of the Organization:
Janata Bank offers all the major banking facilities and services to its customers. The Bank with its network spreading throughout the country has a unique feature of laughing back savings from those places and then investing them into different loan portfolios.
Janata Bank with its wide ranging branch network and skilled personnel provides prompt and personalized services like issuing:
· Demand Draft
· Telegraphic Transfer
· Mail Transfer
· Pay Order
· Security Deposit Receipt
·Transfer of fund by special arrangement,
·Normal transfer
·Electronic transfer through Ready Cash Card.
The Bank provides the following Internet facilities:
· Current/Savings/STD account status
· FDR account status
· Advance account status
Loan account status
Remittance services are available at all branches and foreign remittances may be sent to any branch by the remitters favoring their beneficiaries. Remittances are credited to the account of beneficiaries instantly or within shortest possible time. Janata Bank has correspondent banking relationship with all major banks located in almost all the countries/cities. Expatriate Bangladeshis may send their hard earned foreign currencies through those banks or may contact any renowned banks nearby ( where they reside/work) to send their money to their dear ones in Bangladesh.
Janata Bank has already established a world wide network and relationship in international Banking through its 4 (four) overseas branches and 1221 foreign correspondents. The Bank has earned an excellent business reputation in handling and funding international trade particularly in boosting export & import of the country. The Bank finances exports within the frame-work of the export policy of the country.
Other product facilities and services to the customers
d) Role of the Organization in the economy in the economic Development of Bangladesh: – Financial institutions are very much essential for the overall development of a country. Especially banks play an important role in the field of promotion of capital, encouragement of entrepreneurship, generation of employment opportunities etc. Market economy or free economy is widely used-concept about the present economy of Bangladesh. The country adopted the concept in the late seventies with the privatization of significant number of enterprises. The practices of free market economy started from the eighties with the changing of the world economy. A number of initiatives were taken from the nineties to increase the competition and efficiency in money market, relaxation of unwanted rules and regulations, improvement of loan related law and other situations and improve the financial base of the banks of the country.
e) Organ gram of the Organization:
f) Mission of the Organization
Janata Bank Limited will be an effective commercial bank by maintaining a stable growth strategy, delivering high quality financial products, providing excellent customer service through an experienced management team and ensuring good corporate governance in every step of banking network.
g) Vision of the organization:
To become the effective largest commercial bank in Bangladesh to support socio canonic development of the country and to be a leading bank in South Asia.
the critical evaluation of the credit management under the guidelines of the Bank Companies Act 1991, and a discussion on the major findings and recommendations.
Chapter-2
Research Methodology
a) RATIONALE OF THE STUDY
Due to the increased competition of the increased number of commercial banks and the growing economy, the expectations of the customers have also increased than ever before. Realizing the present condition, banks, especially the commercial banks are trying to elevate their loan giving service as much as reachable to their customers. The most serious difficulty facing the financial sector is the high level of interest rate and inflation rate. So it is the duty of the top management of the commercial banks to work with the situation.
b) Objectives of the study
The main objective of education is to acquire knowledge. To acquire knowledge ultimately we must do some practical application in addition to theoretical knowledge. Through this report, 1 tried my level best to present my practical knowledge as well as to find out.
• Foreign fund for industrial credit.
• Development of those funds.
• Repayment performance of the lenders.
• Import Business
• Export Business
• Remittance.
c) Data Collection :
In order to make the report more meaningful and presentable, two sources of data and information have been used widely.
The “Primary Sources” are inflows:
• I have made questionnaire survey of both managers of credit department and the customers who have taken loans from Janata Bank.
• Relevant file study as provided by the officers concerned.
The “secondary Sources” are as follows.-
• Annual report of Janata Bank
• Periodicals Published by Bangladesh Bank
• Office files and documents
• Study related books and journals
• Web sites
d) Analysis techniques and tabulation of data.
Collected information have then processed & compiled with the aid of MS Word, Excel & other related computer software. Necessary tables have been prepared on the basis of collected data and various statistical techniques have been applied to analyses on the basis of classified information. Detail explanation and analysis have also been incorporated in the report.
e) LIMITATION OF THE STUDY
To prepare a report on the topic like this in a short duration is not easy task. In preparing this report some problems and limitations have encountered which are as follows:
a) The main constraint of the study was insufficiency of information, which was required for the study. There are various information the bank employee cannot provide due to security and other corporate obligations.
b) As the data, in most cases, are not in organized way, the bank failed to provide all information.
c) Due to time limitation, many of the aspects could not be discussed in the present report.
d) Since the bank personnel were very busy, they could not pay enough time.
e) Lack of opportunity to access to internal data.
g) Legal action related information was not available.
h) All of them are not eager to give me any kind of legal action related information.
i) All the clients whom I interviewed did not want to necessary information.
Chapter-3
Theoretical Analysis
3.1 General Banking operations of Janata Bank Limited
3.2 The Banker Customer Relationship:
The Banker-Customer relationship is essentially a debtor-creditor contractual relationship. This relationship may be divided into two categories.
3.3 Legal Relationship.
Behavioral Relationship.
After the contractual relationship is established between the banker and customer. they have to avoid by some implied conditions of the contract as well as practices of the bank.
3.4 Some of the conditions and practices are as follows:
o Customer is to use cheque books while demanding payment from his account.
o Customer should keep cheque books in his safe custody.
o Customer must inform the bank on time for any loss of cheque leaf.
o Customer also should give necessary banking advice and help the customer in various banking activities.
3.5 Rights of customers:
· Right to deposit money in his account in time.
· Right to demand repayment by using cheque or written order properly in proper time and place.
· Right to get passbook or statement of account.
· Right to stop payment on his cheque.
· Right to give standing instruction.
3.6 Right to have secrecy of his account.
· Right to damages of any loss and for defamation due to wrongful or willful dishonor of cheque by bank.
· Right to claim money paid by bank from his account wrongly or payment is not made in due courses.
· Right to return deposit it not drowns properly or in time or for some other reason.
· Right to debit customers account for any charges, interest and commission if recoverable.
· Right to lien, right of set of etc.
3.7 Duties Obligations of a Banker
· Must credit the deposit the amount to customer’s account.
· Must apply pass book statement of account as demanded.
· Must abide by the stop payment order.
· Must abide instruction.
· Must pay/credit interest as per rule.
· Must collect the proceeds of the instrument in customer’s account and honor the cheque drawn against the amount.
· Payment should be made in due courses in good faith and without negligence.
· Must deposit the amount properly and in time.
3.8 Must demand payment by issuing cheque or written order properly.
· Must pay the bank charges, interest and commission if payable.
· Must abide by the law.
·Termination of Banker-Customer relationship:
· The legal relation between banker and customer may be terminated with a notice given by both of them with a view to close the account. Besides, there are some reasons for termination ollegal relationship. Some of these arc stated below:
· After the death of the customer.
· When a customer declared insolvent by the court.
· When a customer become lunatic etc.
· Forms of deposit, opening and operation of deposit accounts and their legal aspects:
3.9 General Banking Division
The relationship between the banker and the customer begins with the opening of an account by the customer. Initially all the accounts are opened with a deposit money by the customer and hence these accounts are called deposit account. Actually in our country the bank deposits take three different forms:
· Current or Demand Deposit.
· Savings Deposit.
· Fixed or Time Deposit.
3.10 Current Deposit
· Current account is purely a demand deposit account. It is a running and active account, which may be operated upon any number of times during a working day. There is no restriction on the number and the amount of withdrawals from a current account. It is noted that, the bank does not provide any in1~erest on current account. The special characteristics of current account are as follows:
· The primary objective of current deposit account in to save big customers as big businessmen, joint stock companies, public limited companies etc. from the risk of handling cash themselves.
·The cost of providing current deposit account facilities is considerable to the bank since they undertake to make payments and collect the bills, cheques for any number of times daily. The banks therefore do not pay interest on current deposit while on the other hand some banks charge for incidental charges on some account.
·For opening of a current deposit account minimum deposit of Takal000/= is required. Introductory reference is also required for opening for such type of account.
3.11 Opening of (‘current Account
Following documentation and formalities are required for opening a current deposit account in bank.
3.12 Proprietorship:
1. Attested photocopy of Trade License.
2. Two copies of Passport size photographs of account holder.
3. Partnership:
4. Attested photocopy of Trade License.
5. Two copies of passport size photographs of account holder.
6. Attested photocopy of partnership deed.
7. Two copies of passport size photographs of directors.
8. Certified copies of Memorandum of Articles of Association.
9. Certificate of Incorporation.
10. List of directors as per return of Joint Stock company with signature.
11. Regulation for opening account \with the bank.
1.13 Account Opening and closing Formalities of current Deposit Account:
1. Application of prescribed form: The person who desiring to open with the bank has to make application in the prescribed form. This form must be properly filled up and signed by the application.
2. Introduction of the Applicant: The applicant also required to furnish in the application form the names of the referees from whom the banker may make requires regarding the character, integrity and respectability of the applicants. In most cases the introduction is done by the customer of the bank or some other person known to the bank by signing on the application form with his her account number.
3. Specimen Signature: Every customer is required to supply to his banker with one or more specimen of his/her signature. These signature are taken on cards. which are preserved by the banker, and the signature of the account holder on the cheques is compared with specimen signature.
4. Mandate for operation of the account by agent: In case a customer dieses to get his/her account operated upon by another person then the bank will obtain a mandate in writing to that effect as well as the specimen signature of the parser in whose favor the mandate is given.
5. Opening and operating the account: After the above formalities ~re over. ~he banker opens an account in the name of applicant. Generally the minimum amount to be deposited initially in Tkl000/- for opening a current account.
3.14 A pay-slip/Deposit book:
With a view to facilitate the receipt of credit items paid in by a customers. The bank will provide him her pay-in-slip either loose or in a book from. The customer has to fill up the pay-in-slip at the time of depositing the money with the bank. The cashier with his her initials and stamps will return the counterfoil to the customer on the receipt of the money.
Cheque Book: To facilitate withdrawals and payments to third parties by the customer, the book will also provide a cheque book, the customer has dully fill up the cheque slip to the baker.
3.15 Savings Deposit
A savings bank is meant for the people of the lower and middle class who wish to save a part of their incomes to meet their future need and intend to earn an income from their savings. It aims at encouraging savings on no-trading person, institutions, society, clubs etc. by depositing small amount of money in the bank. Both the elements of item and demand deposit are in this account.
3.16 Restriction on Withdrawals and deposit:
· The number of withdrawals over a period of time is limited. withdrawals per week are permitted. But more than that no paid on rest amount for that month.
· The total amount of one or more withdrawals on any date sheik not exceed 25% of the balance in the account unless seven days notice is given.
· The customer may deposit any amount in the savings bank account subject to a minimum of 100/-. On the other hand the savings account also required minimum balance to 100/- in the account.
3.17 Payment’ of Interest
The rate of interest payable by bank on deposit mentioned in the savings accounts will determine by the bank respective bank. Interest is now in the minimum balance of the credit to the account during the period from first to the last day of each calendar month on every at the end of June and December. In this regards Janata Bank Limited is providing 6.000 o interest on savings account.
3.18 Opening a Savings Account
· Documentations
· Two copies of passport size photographs.
· Introductory Reference.
· Account opening and Closing formalities of Savings account are same as current account.
3.19 Fixed Deposit
These are the deposit, which are made with the bank for a fixed period in advance. It is purely a time deposit account. The bank does not maintain cash reserve against these deposits and therefore the bank offers higher rates of interest on such deposits. Interest is paid at the rate determined by the length of for which the deposit is made. Obviously, the longer is the period of deposited higher is the rate of interest.
3.20 Opening and operating procedure of FDR
The deposit has to fill in an application for where in he/she mentions the impure of deposit, the period for which deposit is to be made the name in deposit receipt is to be issued. In case of a deposit i.e. whether payable joint or payable to either or survivor etc. the banker also takes the specimen: signature of the depositors. A fixed deposit receipt is than issued to the depositor date on the deposit will fail due for payment. In this account no transaction are allow ed and no cheque book is issued. Customers are given fixed deposit receipt only.
3.21 Other Importance Functions of General Banking Crossing:
Crossing of cheque, which is now universally adopted? had its origin in London clearing house. The name of the hank, whose claim was cleared, was written across the face of the cheque within two parallel lines. In the beginning of 19th century, this practice becomes common even outside of clearing house, as an element of safety.
Normally two types of cheque used in the bank such as,
· Open Cheque:
· A cheque capable of being paid over the counter in cash, is known as open cheque.
· Crossed Cheque:
· Those, which can oniy be paid to the banker for crediting the proceeds to the amount of its payee.
3.22 Types of Crossing:
General Crossing:
Under Section 123 of Negotiable Instrument Act 1881. a cheque crossed generally is defined as under: “where a cheque bears across its face an addition of the words ‘any company’ or any abbreviation thereof, between two parallel transverse lines simply, either with or without the words ~Not negotiable’ that addition shall be deemed a crossing and the cheque shall be deemed to be crossed generally.
· Special Crossing:
Where a cheque bears across its face an addition of the banker, either with or without the words ‘not negotiable’ that addition shall be deemed a crossing, and the cheque shall be deemed to specimen of special crossing.
· A cheque may be crossed by any of the following:
· The drawer of a cheque.
· The holder of the cheque. where a cheque is issued uncrossed, its holder may cross it generally or specially.
· The banker. in whose favor the cheque has been crossed specially, may again cross it especially in fovor of another banker. The later bank is such a case acts as the agent of the former.
Endorsement:
An endorsement is the mode of negotiating a negotiable instrument. According to section 15 on the NI Act 1881, an endorsement is “when the maker or holder of a negotiable instrument sign the same. Otherwise then as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, he is said to endorse the same and is called the endorser.
Essential of a valid endorsement:
· An endorsement in order to operate, as a negotiation musi comply with the following conditions:
· It must be written on the instrument itself and be signed by the endorser.
· •The endorsement must be of the entire instrument.
· .When a negotiable instrument is payable to the order of two or more payees or endorsees that are not partners all must endorsing has authority to endorse for the others.
· Where in a negotiable instrument is payable to order, the payee or endorsee is wrongly designated or his name is miss-spelt, heshe should sign the instrument in the same manner as the given in instrument. Though he/she may add, if he/she thinks fit, his/her proper signature.
· Where there are two or more endorsements on an instrument, each endorsement is deemed to be made in the order in which it appears on the instrument, until contrary is proved.
· An endorsement may be made in bank or special. It may also be restricted.
Kinds of Endorsement:
1. Conditional Endorsement.
2. Endorsement in blank.
3. Endorsement in full.
4. Restrictive endorsement.
5. Endorsement Sails Recourse.
6. Facultative Endorsement.
7. Partial Endorsement.
Conditional Endorsement: A conditional endorsement in one, which makes the transfer of property in a negotiable instrument from the endorser to the endorsee dependent upon fulfillment of a stated condition. Thus according to the section 52 of NI Act 1881, where an endorser makes his/her liability on the instrument conditional on the happening of particular event, it is called conditional endorsement, though such event may happen.
Endorsement in Blank: Where the endorser just puts his/her signature without specifying the endorsee, then the endorsement is said to be Endorsement in Blank.
Endorsement in Full: Where along with endorser’s signature. the name of the endorsee is specified; the endorsement is called Endorsement in Full.
Restrictive Endorsement: An endorsement is restrictive, which prohibit further negotiation of a negotiable instrument.
· Endorsement Sans Recourse: An endorsement of a negotiable ins
· expressing words in the endorsement exclude own liability thereon.
· Facultative Endorsement: Where such words are added to ~n
· whereby the endorser waives his/her right to receive notice dishonor. the endorsement is termed as facultative endorsement.
· Partial Endorsement: Where the negotiable instrument is for part of the amount, it is called partial endorsement. Such an endorsement is not vdlid.
·v pay in advance. Pay order cannot endorse or crossed and so it is not negotiable instrument.
3.4.2 Demand Draft (DD):
Demand Draft is an order of issuing bank on another branch of the sane bank to pay specified sum of money to the payee on demand. It is generally issued when customer wants to remit money in place. This is out side of the clearinghouse are of issuing branch. Payee can be purchaser himself or another mentioned in DD. It is a safe technique of transferring money from one place to another place. Bearing money may be risky. It is a negotiable instrument and it can be crossed or not.
For payment of DD, paying branch first to be confirmed that the DD is not forged one. First bank checkups the ‘Test Code’ mentioned the draft. It Test Co&’ agreed then believe that, DD is not forged and makes payments. For further confirmation, the issuing bank send and advice about the DD to the paving branch. Without advice the paying branch generally dot not pay.
3.4.3 Telegraphic Transfer of Telephonic Transfer (TT):
By this method money is transferred to another place by another branch to pay required money to required payee on demand. Generally for such kind of transaction payee should have account with the paying bank. Test code is also furnished on for the protection of it.
3.4.4 Mail Transfer (MT):
It is the least used technique for transferring fund. Here there is no telex or telephone line then this method is used. It is also time consuming and risky because missed.
they have duly declared its equivalent to the customer on from “FMJ” at the time of arrival.
.‘- Portion of repatriated export proceeds merchandize service exporters are allowed to credit to the exporters retention quota account.
Withdrawals:
# Payments may be made freely abroad from these F.C. accounts to the extent of balance lying therein local disbursement may also be made freely in taka from such currency account.
‘- Fund lying in F.C. account can be utilized for import of goods and commodities as per instructions issued by CCI and Bangladesh Bank.
Interest:
Ads may pay interest at prevailing Euro Currency deposit rate if balance in
account is not less than USS 1,000 or Pound Sterling500 and are maintainer for a minimum period of one month. Foreign nationals/Companies/Firms registered and/or incorporated abroad and A-type industries of EPZ may also open F.C. account in the form of Term deposit.
3.5.2 Convertible and Non-Convertible Taka Account:
The branch with authorized dealership license may open convertible Taka account in the name of foreign organizations! foreign nationals viz, diplomatic missions, UTh’.T organizations, Non-profit international bodies. Foreign contractors and consultants engaged for specific projects under the government, semi-government agencies and the expertise employees of such missions! organizations who are resident in Bangladesh.
The accounts may be credited with foreign currencies brought in or remitted from abroad or transferred from the another convertible Taka account. the Taka amount from the transfer’s account would be converted into foreign currency for transfer and credit to the recipient account by recon version into Taka. No money minting from a business originating in Bangladesh and otherwise reportable to Bangladesh can be carrier to these accounts.
they have duly declared its equivalent to the customer on from “FMJ” at the time of arrival.
.‘- Portion of repatriated export proceeds merchandize service exporters are allowed to credit to the exporters retention quota account.
Withdrawals:
# Payments may be made freely abroad from these F.C. accounts to the extent of balance lying therein local disbursement may also be made freely in taka from such currency account.
‘- Fund lying in F.C. account can be utilized for import of goods and commodities as per instructions issued by CCI and Bangladesh Bank.
Interest:
Ads may pay interest at prevailing Euro Currency deposit rate if balance in
account is not less than USS 1,000 or Pound Sterling500 and are maintainer for a minimum period of one month. Foreign nationals/Companies/Firms registered and/or incorporated abroad and A-type industries of EPZ may also open F.C. account in the form of Term deposit.
3.5.2 Convertible and Non-Convertible Taka Account:
The branch with authorized dealership license may open convertible Taka account in the name of foreign organizations! foreign nationals viz, diplomatic missions, organizations, Non-profit international bodies. Foreign contractors and consultants engaged for specific projects under the government, semi-government agencies and the expertise employees of such missions! organizations who are resident in Bangladesh.
The accounts may be credited with foreign currencies brought in or remitted from abroad or transferred from the another convertible Taka account. the Taka amount from the transfer’s account would be converted into foreign currency for transfer and credit to the recipient account by recon version into Taka. No money minting from a business originating in Bangladesh and otherwise reportable to Bangladesh can be carrier to these accounts.
A convertible Taka account may bc debited for payment in foreign currency abroad, for credits to a non-convertible Taka account.
The branch may open Taka STI) (7-30 days special notice) accounts in the names of foreign diplomatic missions and their expatriate personnel, foreign airlines and shipping lines operating in Bangladesh, international non-profit organizations including charitable organizations, UN organizations and their respective expatriate personnel and pay interest thereon provide that the amount of interest accrued on balance of these accounts will be disbursed locally in non-convertible Taka and that on part of the earned interest will be remittable abroad at any stage.
3.6 Outward Remittance:
The term “Outward Remittance” include not only remittance i.e, sale of foreign currency by T.T. M.T. Draft. Traveler’s Cheque but also include payment against imports into Bangladesh and local currency credited to no-resident Taka accounts of Foreign banks or convertible Taka account.
3.6.1 Private Remittance:
Family Remittance Facility:
‘- National working in Bangladesh with the approval of the Government may remit through and authorized dealer 5 ( ~ of 100% of leave salary as also actual savings and admissible pension benefits. No prior approval of Bangladesh Bank is necessary for such remittance.
,- Remittance of moderate amounts of foreign for maintained abroad of family members (Spouse, Children. of Bangladesh Nations are allowed by Bangladesh Bank, or by certificate from the Bangladesh Mission in the concerned country.
Authorized dealer may remit without prior approval of Bangladesh Bank, membership fees of foreign professional and scientific instructions and fees for application registration, admission fees, examination (TOEFL. IELTS etc.) fees in connection with admission into foreign educational institutions on the basis of
A convertible Taka account may bc debited for payment in foreign currency abroad, for credits to a non-convertible Taka account.
The branch may open Taka STI) (7-30 days special notice) accounts in the names of foreign diplomatic missions and their expatriate personnel, foreign airlines and shipping lines operating in Bangladesh, international non-profit organizations including charitable organizations, UN organizations and their respective expatriate personnel and pay interest thereon provide that the amount of interest accrued on balance of these accounts will be disbursed locally in non-convertible Taka and that on part of the earned interest will be remittable abroad at any stage.
3.6 Outward Remittance:
The term “Outward Remittance” include not only remittance i.e, sale of foreign currency by T.T. M.T. Draft. Traveler’s Cheque but also include payment against imports into Bangladesh and local currency credited to no-resident Taka accounts of Foreign banks or convertible Taka account.
3.6.1 Private Remittance:
Family Remittance Facility:
‘- National working in Bangladesh with the approval of the Government may remit through and authorized dealer 5 ( ~ of 100% of leave salary as also actual savings and admissible pension benefits. No prior approval of Bangladesh Bank is necessary for such remittance.
,- Remittance of moderate amounts of foreign exchange for maintained abroad of family members (Spouse, Children. of Bangladesh Nations are allowed by Bangladesh Bank, or by certificate from the Bangladesh Mission in the concerned country.
Authorized dealer may remit without prior approval of Bangladesh Bank, membership fees of foreign professional and scientific instructions and fees for application registration, admission fees, examination (TOEFL. IELTS etc.) fees in connection with admission into foreign educational institutions on the basis of
A convertible Taka account may bc debited for payment in foreign currency abroad, for credits to a non-convertible Taka account.
The branch may open Taka STI) (7-30 days special notice) accounts in the names of foreign diplomatic missions and their expatriate personnel, foreign airlines and shipping lines operating in Bangladesh, international non-profit organizations including charitable organizations, UN organizations and their respective expatriate personnel and pay interest thereon provide that the amount of interest accrued on balance of these accounts will be disbursed locally in non-convertible Taka and that on part of the earned interest will be remittable abroad at any stage.
3.6 Outward Remittance:
The term “Outward Remittance” include not only remittance sale of foreign currency by T.T. M.T. Draft. Traveler’s Cheque but also include payment against imports into Bangladesh and local currency credited to no-resident Taka accounts of Foreign banks or convertible Taka account.
3.6.1 Private Remittance:
Family Remittance Facility:
National working in Bangladesh with the approval of the Government may remit through and authorized dealer 5 ( ~ of 100% of leave salary as also actual savings and admissible pension benefits. No prior approval of Bangladesh Bank is necessary for such remittance.
,Remittance of moderate amounts of foreign exchan~e for maintained abroad of family members (Spouse, Children. of Bangladesh Nations are allowed by Bangladesh Bank, or by certificate from the Bangladesh Mission in the concerned country.
Authorized dealer may remit without prior approval of Bangladesh Bank, membership fees of foreign professional and scientific instructions and fees for application registration, admission fees, examination (TOEFL. IELTS etc.) fees in connection with admission into foreign educational institutions on the basis of written application supported by demand notice/letter of the concerned institutions.
3.6.2 Education:
Prior permission of Bangladesh Bank in not required for releasing foreign exchange in favor/on behalf of Bangladeshi students studying abroad or willing proceeding abroad for studies. Ads shall allow exchange facilities for this purpose according to the following drill:
· Application duly filled in by the student as per prescribed format of Bangladesh Bank.
· Original and photocopy of admission letter issued by the concerned institutions in favor of the student.
· .Original and photocopy of estimate relating to annual fee. and lodging, incidental expense etc. issued by the concerned intuitions.
· Attested copies of educational certificates of the app1~car-.: and valid passport.
3.6.3 Remittance of Consular Fees:
Consular fees collected by foreign embassies in Bangladeshi and deposit in a Taka account maintained with and AD solely for purpose may be remitted abroad with prior approval of Bangladesh Bank.
3.6.4 Remittance of Evaluating Fees:
Authorized dealers without prior approval of Bangladesh Bank may remit evaluation fees on behalf of Bangladesh to foreign countries for getting educational certificate of the evaluated by a foreign institutions. A deemed note of the foreign authority is required for the purpose.
3.6.5 Travel:
Endorsement on passport and ticket private traveler quota entitlement of
Bangladesh Bank Nationals is set at USS3.000.QO per year for visit to continues other than SAARC member countries and Meaner. Quota for SAARC member
countries and Meaner is USS 1,000.00 for travel by air and USS500.00 for travels by overland route. However the travelers have to produce VISA for release of foreign currency exceeding US$500.00. Ads may release this travel quota in the form of T.C. or total quota in the form of The annual quotas mentioned above are for adult passengers. For minors (below 1 2 year in age) the applicable quota wills half the amount allowable to adults.
Ø The intending traveler is customer of the Asian Development Bank or sufficiently well known to the Asian Development Bank or the intending traveler Tax. The intending traveler has a valid passport.
Ø The Asian Development Bank verify and satisfy itself that any foreign exchange released for an earlier travel was utilize with the joyride being actually undertake or was duly en-cash utilized.
Ø The intending traveler is in possession of a confined are the for journey to be undertaken and that the intended .he not later than two weeks after the date on which exchange is
Ø The amount released in endorsed on the passion of the traveler with indelible ink. With the signature and the of AD branch embossed in the passport and
3.7 Commercial Remittance
·Remittance of up to US$30,000 or equivalent pa: annum may be released by the Ads without prior approval of Bangladesh current expenses of offices/branches opened abroad by resident ii: Bangladesh or a Commercial Industries concern incorporated in Ban g1ades~
· Approval letter of the component authority of the country concerned for opening the office in that country.
· Copy of report submitted to Bangladesh Bank. as per prescribed format with in one month of opening of foreign branches subsidiaries.
Before effecting remittances for subsequent years the shall verify the renewed lease agreement (if applicable) and shall satisfy itself about the actual necessity or remitting funds by examining the actual and estimated in conies and expenses of the offices abroad as revealed from its audited accounts and the other papers.
3.7.1 Remittance by shipping companies, and courier seines:
Foreign shipping companies, Airlines and Courier service companies may send, through ad funds collected in Bangladesh towards freight and passage after adjustment of local cost and taxes, if any without prior approval of Bangladesh.
3.7.2 Remittance on Account and Technical Fees:
No prior permission of Bangladesh Bank or BOI is required by the enterprises for entering into agreement involving remittance of royalty, technical know-how or technical assistance fees, operational services fees, marketing commission etc, if the total fees and other expenses connected with technology transfer do not exceed.
· 6% of the cost of imported machinery in case of new projects.
· 6% of the previous year’s sales as declared in the income tax returns of Bangladesh Bank.
Royalty and other fees beyond the rate mentioned above may be remitted by the ADs without prior approval of Bangladesh Bank provide specific approval of BOl has been obtained by the applicant company.
3.7.3 Remittance of profits of foreign Firms/Branches
may be without prior approval of Bangladesh Bank remit abroad the post tax profits of branches of foreign firms and companies including foreign banks and other financial institutions subject to submission of relevant documents! Information along with the application.
3.7.4 Remittance of Dividends:
Prior permission of Bangladesh Bank is not required for:
> Remittance of dividend income to non-resident shareholders on receipt of application in the prescribe form the companies concerned.
p Remittance of dividend declared out of previous vears accumulated reserves.
3.7.5 Subscriptions to foreign media services
On application form the total newspapers, ADs may remit foreign exchange towards cost of subscription of new items, features, articles of foreign news agencies subject to submission of i) contracts entered into between the applicant and the foreign news agency and ii) NOC of Ministry of Information.
3.7.6 Costs/Fees for returns monitors.
may remit abroad costs/fees on account of their own subscription to foreign media services such as monitor service, without prior approval of Bangladesh
Bank.
3.7.7 Advertisement of Bangladesh! Products is mass media abroad
Prior permission of Bangladesh Bank is not required by the ADs for remittance of changes for advertisement of Bangladeshi commodities in mass media abroad subject to submission of invoice from the concerned foreign mass media along with the applications of the remitter. The applicant will have to submit copy of advertisement to the ADs within one month of its issuance.
3.8 Inward Remittance
The term ‘inward remittance’ includes not only purchase of foreign currency by
TT, MT and Demand Draft etc. but also purchase of Travelers Cheque.
Two forms as prescribed by Bangladesh Bank are used for purchase of foreign currencies such as:
Exp Form: Remittance received against export of goods from Bangladesh is done by form EXP.
Form C: Inward remittance equivalent to US$2,000, and above are done by form “C,,.
3.8.1 Purchase of Currency Notes, Traveler Cheques, Draft etc.
Following general observations arc required in addition to common judgment/intelligent vigilance of the dealing offices.
.‘ Currency notes to be checked very carefully so as to avoid risk of purchasing counterfeit notes.
~ Draft should not be purchase under circumstances unless the holder is regular/valued customer of the Bank. Indemnity bond to be obtained for recovering the amount paid in advance to the holder in case of dishonor of the instrument.
Private cheque should not be purchase under any circumstances with
prior approval of Head Office.
While purchasing travelers cheque signature of the holder to be obtained on the TCs in front of the Bank officials and should be verified with the signature
holder already given at the time of issuance of TCs passport of the seller as
as purchase contract of the TCs to he asked for the ensure genuineness Je of the transactions.
3.8.2 Dealings in foreign currency Notes and Coins.
The authorized dealer branches are permitted to deal in and coins and may freely buy foreign currency from incoming of nationality and regardless of whether or not a is produced at the time of encashment. If this form is produced en-cash should be endorsed on it.
The ADs may also purchase foreign currency notes. coins and other travel instruments freely from authorized money changes without production of EMJ. The branches with AD license to other ADs and :he public in accordance with the instruction of the Bangladesh Bank.
Chapter-4
Findings and Analysis
a) Brief Description of the Organization
The Bank has a geographically well spread network in the country. It has 851 branches across the country including 02 newly opened branches in Jamalpur and Mirpur, Dhaka. The distribution network covers all the six divisions of the country. Of the branches, 444 are located in urban areas and 407 are in rural areas. The Bank has 5 Divisional ,1S Area and 30 Regional Offices through which the branches are guided and controlled.
The Bank also maintains an international banking channel through its 4 overseas branches in U.A.E, 1 subsidiary company in Italy having branches in Rome & Milan and 1 208 foreign correspondents all over the world. In order to facilitate the flow of foreign remittances and providing exclusive service to the NRBs, the Bank operates an NRB branch with on-line networking booths at Dhanmondi, Uttara Model Town and Kamal Ataturk Road Branch, Dhaka.
Merchant Banking Operation
The Bank opened its Merchant Banking Unit in March 2009 with the permission of Securities and Exchange Commission. The function of the unit are providing margin loan against portfolio, underwriting of shares in case of public offering, acting as issue manager and trading in the capital market on behalf of the investors. The Unit managed 1,007 investors accounts through whom it provided portfolio loan of Tk. 254.75 million as of 31 December 2009. The Unit plays a vital role to make the capital market more active and thereby raise the income of the Bank. The Bank’s reputation and sound strength has resulted in general investors to have their confidence and trust on the activities of the Unit.
The Bank converted the Merchant Banking Unit into a separate subsidiary company, named Janata Capital and Investment Company Limited as per directive of Bangladesh Bank. The company has got its registration on 14 April 2010 from Registrar of Joint Stock Companies and Firms with authorized capital of Tk. 5,000 million and paid up capital of Tk. 2,000 million.
Business Review
Deposits, loan & advances, export, import, remittance, non-funded facilities, investment, position of non performing loan and recovery there against are the main segments of the banking business. Segment wise performance of the Bank for the year 2009 are described below:
Deposit and Deposit Mix
The Bank mobilized total deposit of 1k 246,175 million as of 31 December 2009 as compared to 1k 221,336 million in 2008 resulting in a deposit growth of 11.22%. The share of low cost deposits to total deposits is 66 %. The Bank has a well diversified deposit base with 48% of deposits coming from outside Dhaka division The deposit mix of the bank is shown in table 1
Table -1
Loans and Advances
Total Loans and Advances of the Bank stood at 1K166,359 million as of 31 December 2009 as compared to TK.1 44,678 million in 2008, registering a growth rate of 14.86% The Bank attached due importance to scrotal needs in sanctioning loans and advances during 2009 and credit facilities were extended mainly to productive and priority sectors. Sector-wise distribution of loans and advances are shown in Table 2
Loans to Directors.
Directors are allowed to take loan from the respective bank for their private business subject to certain terms and conditions imposed by Bangladesh Bank. No loan was taken from Janata Bank Ltd. by any director of the Bank during the year 2009.
Rural Credit, Micro Enterprise and Special Program Financing
In consideration of the importance of the rural sector on overall economy of the country, Janata Bank Ltd. started rural financing back in 1974. The Bank has been extending rural credit through its vast branch network all over the country on easy terms and conditions. There are 34 products under the rural credit portfolio. The outstanding balances as on 31 December 2009 in rural credit sub- sectors are shown in Table -3
Small and Medium Enterprise Financing
Janata Bank Ltd. has been actively involved in SME financing. Small and Medium Enterprises have huge prospects for creating job opportunities and potentialities of large income generation especially in semi-urban and rural areas. During the year, Janata Bank provided working capital and term loan to different manufacturers, traders and service providers including backward linkage industries that fall into SME sector. Light engineering, cottage industries, handy crafts, CNG station, power loom, garments accessories etc. are considered as thrust segment under this sector. The Bank disbursed Tk. 25,500 million in SME sector during the year 2009.
Industrial Credit
Janata Bank Ltd. has been playing a vital role in supporting rapid industrialization in the country. The Bank continues to provide medium and long-term loans as well as working capital finance to the industrial projects. The Bank also continues to invest in well-structured syndicated loans with other sister banks and financial institutions. The amount of industrial credit sanctioned, disbursed and outstanding as on 31 December 2009 are given in Table 5.
| SL No | Particulars | 2009 | 2008 |
| 1 | Sanctioned Project (No | 123 | 168 |
| 2 | Sanction (TK) | 18123 | 19930 |
| 3 | Disbusement (TK) | 13239 | 15491 |
| 4 | Outstanding (TK) | 9633 | 11, 600 |
Foreign Remittance
Foreign remittances from NRBs reached a record high of Tk. 56,190 million in 2009 against TK,45,924 million in 2008 and continued to play an important supporting role in strengthening the economy of the country. Janata Bank Limited, by reducing lead-time, has ensured quick delivery of remittances to the beneficiaries’ account in 843 branches through Speedy Money Remittance System with instant SMS to the beneficiaries.. To attract more foreign remittance, an NRB branch has been serving exclusively to Non-resident Bangladeshis. Besides, we have alternative channel of inward remittance through Western Union Money Transfer. Such arrangement with Placid Corporation, USA and IME, Malaysia are in the pipeline. The achievement of Janata Bank Ltd. in attracting foreign remittance as compared to country’s performance is given in Table 6.
| Year | Janata Bank | Grouwth | National | Growth |
| 2009 | 65190 | 22.35 | 738,773 | 19.85 |
| 2008 | 45,924 | 24.83 | 616,442 | 36,41 |
| 2007 | 36788 | 25.70 | 451890 | 17.78 |
Foraging Trade
In the pace of resurfacing the economy from world financial crisis, import and export financing business was impressive in 2009. During the year, the Bank achieved export credit growth of 3.78% while import credit growth reduced by 8.40%. Import remained confined mainly to consumer’s goods, capital machineries and industrial raw materials. Major export items were readymade garments, shrimps, tea and non-traditional ones. Table 7 shows comparative volume of foreign trade. Table -7
| Particulars | 2009 | 2008 | Increase / Decrease |
| Import | 112525 | 129413 | (10, 888) |
| Export | 88,600 | 85,418 | 3235 |
Classification and Reduction of NPL
Classified loan of the Bank was reduced to 8.70 % at the close of the year 2009 from 12.34% at the end of 2008. The Bank has geared up its overall efforts to recover the classified loans and to reduce the CL ratio further. For the employee’s motivation towards reduction of loans in general and classified loans, in particular, the Bank has introduced a special reward policy for the best performers. An amount of Tk.6263 million of classified loans was reduced d