EXECUTIVE SUMMARY
Foreign exchange earnings of
not sufficient due to limited export earnings, while the import spending is
huge which makes the balance of trade position in a chronic deficit situation
of our country. Here foreign inward remittance by our migrant workers is very
important and significant for our country.
Migrant worker’s remittance have long
been seen as relatively less volatile source of foreign exchange earnings while
the earnings from export and other sources such as Foreign Direct Investments
and other sort of foreign private investments fluctuates widely depending on
the exchange rate variation, presence of investment enabling environment, and
the overall economic and political stability.
worker-exporting country, which has renewed its interest in migrant worker’s
remittance, mostly triggered by the continuous deficits in her balance of trade
and balance of payment. So, foreign inward remittances contribute to the
economy of
with strong positive impact on growth, employment, and balance of
payments.
Demand for migrant worker’s
remittance has now increased tremendously in developing countries including
since the world remittances of total USD397 billion in 2008, USD305 billion
went to developing countries and some 190 million people are migrants which
is 3.0% of world population. Besides
migrant worker’s remittance are substantially helping the macroeconomic
development process in the home country.
Bangladesh is earning yearly foreign
remittance of almost USD10 billion from its manpower export. Though 62.66
millions of Bangladeshi nationals have gone abroad for work from the year 1976
to 2008, there is no institutional financing to promote them. As a result they
are to depend on own source, relatives and individual loan with high interest
rate. Sometimes they are to sell their land even residence. To help this group
of people, Pubali Bank Limited, the
first Bangalee owned private commercial bank, emerged in the year 1959, has
introduced a new product namely “Non
Resident Credit Scheme (NRCS)”, a collateral-free loan. Besides the bank is
taking various steps to get foreign remittance through legal (banking) channel
which is helping the wage earners to get rid of illegal activities like money
laundering as well as increasing bank’s foreign remittance and profit.
CHAPTER
1
1.1
INTRODUCTION
Bangladesh is a developing country
with a population of more than 15 cores. Among them some cores are unemployed
and the government cannot create employment within the country for this huge
unemployed population. As such millions of unemployed young people are going
aboard for work. In the last year 2008, this number was 8, 75,055. But since
most of them are poor and there is no institutional financial support for them,
they are to depend on personal loan with high interest @ 25% to 30% monthly
basis. Otherwise they are to sell their land even residence to arrange money to
bear the expenses which is increasing the number of landless poor people that is
increasing by 3.7 percent per annum (BBS, 2004). To save this group of people
from loosing of land and to provide financial support, Pubali Bank Ltd.
introduced “Non Resident Credit Scheme (NRCS)”, a
collateral-free credit, in February, 2008. This report focuses the NRCS importance and flow of migrant
worker’s remittance in Pubali Bank Ltd. An effort has also been made to focus
how this product and flow can be increased and made more effective.
1.2
RATIONALE OF THE STUDY
Bangladesh
has earned USD 9,689.26 million in the fiscal year 2008-2009 from wage earners
that has helped to reach our foreign currency reserve over USD7,470.90 million
as at the end of June, 2009. And their remittance is going to be the main
source of foreign currency earning superceding Readymade Garments (RMG) which
is still leading foreign exchange earnings.
Introduction
of Pubali Bank’s “Non Resident Credit
Scheme (NRCS)” to help these Sonar Manush is expected to be
popular specially in the nonresident dominating areas that will help them from loosing of land and to provide financial support
. Through this product, the borrowers will be benefited by getting loans with
ease and low interest rate and without collateral security. The bank may also
make profit and increase their inward foreign remittance. Besides the bank is
making arrangement with different agencies of different countries specially
with that of our wage earners dominated countries which is helping to increase
foreign remittance inflow of the bank. This report will focus on the NRCS and
foreign remittance of the bank.
1.3
OBJECTIVES OT THE STUDY
1. To be familiarize
with the product prospect “Non Resident
Credit Scheme (NRCS)”.
2. To know the
disbursement of this credit of the bank.
3. To know the bank’s
set up of inward foreign remittance.
1.4
METHODOLOGY
This
research is basically descriptive in nature. Related available information have
been collected for thorough analysis from secondary sources like Pubali Bank’s
annual reports, websites, circulars, manuals, Foreign Exchange Remittance Cell,
Bangladesh Bank’s
website, RAMMRU, Ministry of Labour & Employment, Bureau of Statistics and different publications & compilations.
The research has done on the basis of
secondary data.
Collected
data have been furnished in Microsoft Excel and then analyzed for growth,
trend, and relevant graphs by using Ms- Excel software.
Finally,
Interpretation of results and recommendation and conclusion have been done.
1.5
SCOPE AND LIMITATIONS
1.5.1
Scope
Millions
of workers of our country are going abroad for work without institutional
financial support. Here introduction of Pubali Bank’s “Non
Resident Credit Scheme (NRCS)” to help these workers is expected to be
popular that will help them from loosing of land and
to provide financial support . Through this product, the borrowers will
be benefited by getting loans with ease and low interest rate and without
collateral. The bank may also make profit and increase their inward foreign
remittance. Besides the bank is making arrangement with different agencies of
different countries specially with that of our wage earners dominated countries
which is helping foreign remittance inflow of the bank. So there is huge scope
to study on the topic.
1.5.2 Limitations
Data used
in study have been collected from secondary source. Since bank always wants to
maintain business secrets, it was tough to obtain available data. Besides since
the product has been introduced recently, credit disbursement is negligible and
the bank has no suitable database for the product and foreign remittance. Time
and resource are other constraints for which extensive study can not be carried
out. Despite having all these limitations, I have tried my best to make a clear
view of the facts with the available information.
CHAPTER 2
LITERATURE
REVIEW
Foreign remittance is going to be the
main source of foreign exchange of
superceded RMG sector, the main source of foreign exchange that earns almost
75% of foreign exchange, if cost of
import of RMG raw materials and other related cost are deducted. But unfortunately there is no institutional
financial support for these wage earners. Recently Pubali Bank Ltd. has
introduced NRCS for these workers. So far I know no study on the product and foreign
remittance of the bank has been made yet. Since I am in the bank since the year
2000 and now serving as Branch Manager at Komorgonj branch, Nawabgonj,
to make a study on this area of the bank.
I have
gone through Pubali Bank’s annual reports of different years of the bank’s
financial position. Bank’s circulars and manuals have been reviewed to know the
product feature of Non Resident Credit Scheme. Besides database of Foreign
Exchange Remittance Cell of the bank has been used to know yearly remittance inflow
and its pattern of the bank. For loan disbursement information, I have
consulted with bank’s Credit Division. Besides
Bangladesh Bank’s
website and publication have been viewed for foreign remittance inflow,
different banks’ position relating to foreign remittance etc. Moreover RAMMRU
publications, website of Ministry of Labour & Employment, Statistical
Pocket Book of Bureau of Statistics, newspapers and different publications & compilations have been
reviewed.
CHAPTER 3
CONCEPTUAL
ANALYSIS AND COMPANY INFORMATION
3.1 DIFFERENT TERMS AND CONCEPTUAL
FRAMEWORK:
3.1.1 TERMS
NRCS (Non Resident Credit Scheme): A
collateral-free loan product offered by the Pubali Bank Limited for the
Bangladeshi nationals who are going to foreign countries for work.
Non Resident: Bangladeshi
nationals who are residing in foreign countries as workers.
Foreign Remittance: In brief sending and receiving small amounts of money from one country
to another. Foreign remittance refers to the transfer of fund from one country
to another either through official channels i.e. banking channel, different
exchange houses or through informal channels.
Agent:
Exchange house in foreign countries who have agreement with Pubali Bank Ltd. to
remit money to the bank on their (bank’s) behalf.
: It is the process of selling
domestic-made goods or services in another country. Export is the main source
of our foreign inward remittance.
RCES OF FOREIGN INWARD REMITTANCE:
Major sources of foreign inward
remittances are as follows:
Migrant Workers’ Inward Remittance
Export Proceeds
Foreign loans, aids, grants, foreign
investments etc.
Channels Of Migrant
Workers Foreign Inward Remittance:
Channels used for sending foreign
inward remittance are:
1. Formal Channel:
Banks
Approved Exchange House
2. Informal Channel:
Hundi
Hawla
Friends/Relatives
3.1.4 MAJOR COUNTRIES OF EMPLOYMENT
OF OUR MIGRANT WORKERS
Most of our migrant workers are going
to the
the year 2008,
sent 8,75,055 workers in different countries. But this year it is decreasing. Up
to August 2009,
sent 3,27,359 workers comparing to 6,18,080 workers up to August 2008.
|
Employer country of our workers |
No. of workers sent in 08 |
No. of workers sent Up to Aug. 09 |
|
UAE |
4,19,356 |
1,72,917 |
|
K.S.A. |
1,32,124 |
10,777 |
|
Malaysia |
1,31,762 |
12,213 |
|
Oman |
52,896 |
31,437 |
Training Bureau: The Daily Prothom Alo,
Different Years
the country’s principal assets. In these days when unemployment problem is
acute in our country, workers’ migration is playing a vital role in our
economy.
- Firstly,
it reduces unemployment;
- Secondly,
migration results in remittance flow to the country, which serve as an
important but less expensive source of much needed foreign currency.
abroad for work from the year 1976 to 2008. A comparative position of number of
workers left for abroad in different years is presented in the next Table.
|
Year |
Number of workers left for abroad |
|
2000 |
2.13 |
|
2001 |
1.85 |
|
2002 |
2.41 |
|
2003 |
2.73 |
|
2004 |
2.52 |
|
2005 |
2.86 |
|
2006 |
2.63 |
|
2007 |
8.32 |
|
2008 |
8.75 |
|
2009* |
4.90 |
our workers has been made in foreign countries. But it is decreasing in this
year for different reasons like world recession, bad image of our workers in
abroad, weak diplomatic communications by our foreign embassies, lack of exploration
of new markets etc.
per year from the remittance of migrant
workers. It is a good news for our country that the volume of migrant workers’
remittance has been showing a tremendous growth over last few years. It has now
been a very significant source of foreign currency for our country which is
helping our country in maintaining a healthy foreign exchange reserve,
financing the import payments, removing the dearth of foreign currency,
increasing national income and many more. The volume and growth of migrant
workers’ foreign remittance is presented in the following table:
|
Year |
% change over the previous year |
|
|
1993-94 |
43.55 |
— |
|
1994-95 |
48.14 |
10.54% |
|
1995-96 |
49.70 |
3.24% |
|
1996-97 |
63.00 |
26.76% |
|
1997-98 |
69.35 |
10.08% |
|
1998-99 |
81.98 |
18.21% |
|
1999-00 |
98.07 |
19.63% |
|
2000-01 |
101.70 |
3.70% |
|
2001-02 |
143.77 |
41.37% |
|
2002-03 |
177.29 |
23.32% |
|
2003-04 |
198.70 |
12.08% |
|
2004-05 |
236.47 |
19.01% |
|
2005-06 |
322.75 |
36.49% |
|
2006-07 |
412.99 |
27.96% |
|
200708 |
538.20 |
30.31% |
|
2008-09 |
658.86 |
22.42% |
Workers. (Source: Economic Trends, July-
2009, BB)
Inward Remittance of Migrant Workers over years
the comparative position of migrant worker’s remittance over the years, which
represent the steady growth in remittance that has actually resolved our
foreign exchange constraints, helped to increase the supply of savings.
increased substantially in volume to recent years. This rise in inward
remittances is the outcome of Bangladesh Bank, commercial banks as well as
Bangladesh Government’s initiatives to facilitate remittance service both at
home and source countries. These are:
- Expanding
access, bringing the services closer to their work places in host
countries and closer to the recipients in rural
- Lowering
cost of the remittance services;
- Ensuring
competitive exchange rate and providing convenient saving and investment
options both in foreign and domestic currencies;
- Providing
information about the remittance services and the savings and investment
options with sufficient details to enable migrant workers to choose the
best suited, least cost options.
- Pre-departure
briefing
- Offering
reduced interest rate on loan to the remitters and their families for
sending foreign remittance to different banks. For example, NCC Bank Ltd. offers reduced
interest rate if foreign remittance is sent through the bank.
significant for our country. It may be summerized, in brief, as follows:
healthy foreign exchange reserve;
Balance of Payments;
and political life;
investment;
money exchanges;
financial markets;
productions;
flow of funds;
BANK LIMITED
Banking scenario of the then
Eastern Mercantile Bank Limited at the initiative of some Bangalee
entrepreneurs in the year 1959 under Bank Companies Act 1913 . After
independence of
in 1972 this Bank was nationalised as per policy of the Government and renamed
as Pubali Bank. Subsequently due to changed circumstances this Bank was
denationalised in the year 1983 as a private bank and renamed as Pubali Bank
Limited. The Government of the People’s Republic of
and liabilities of the then Pubali Bank to the Pubali Bank Limited. Since then
Pubali Bank Limited has been rendering all sorts of Commercial Banking services
as the largest private commercial bank through its branch network all over the
country. Online banking and Islamic banking are in progress in the bank. It
TK. 5,000 (Five thousand) million only and paid up capital of TK. 2,940
(Two thousand nine hundred forty) million only. Reverse Fund & Other
Reserve is 4,606.42 million as on 31, December, 2008.
General Managers and 2 Deputy General Manages in its Head Office. It has also
17 Regional Offices to monitor the branches. It is now operating its activities
all over the countries with 371 branch network which will be 386 by the year
2009 with the existing manpower of 5,321.
comprising of 13 members headed by Chairman. Management team is comprised of 1
Deputy Managing Director, 25 General Managers, 64 Deputy General Managers and
131 Assistant General Managers headed by Managing Director & Chief
Executive Officer.
of Pubali Bank Ltd. for the year ended
|
Pubali Bank Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance Sheet as at |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Particulars |
2008 |
2007 |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Taka |
Taka |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Cash |
7,842,374,422 |
|
6,843,519,863 |
|
Cash in Hand (including |
2,029,132,949 |
|
2,087,901,273 |
|
5,813,241,473 |
|
4,755,618,590 |
|
Balance with Other Banks |
2,000,450,636 |
|
1,101,569,774 |
|
In |
1,833,882,772 |
|
779,517,461 |
|
Outside |
166,567,864 |
|
322,052,313 |
|
Money at call and short notice |
1,099,886,667 |
|
20,000,000 |
|
Investments: |
8,375,594,255 |
|
5,556,578,405 |
|
Government |
7,805,362,751 |
|
5,426,589,401 |
|
Others |
570,231,504 |
|
129,989,004 |
|
Loans and Advances: |
61,788,152,585 |
|
50,549,167,102 |
|
Loans, cash credits, |
61,289,826,056 |
|
50,086,557,423 |
|
Bills Purchased and |
498,326,529 |
|
462,609,679 |
|
Fixed Assets including |
1,383,362,664 |
|
1,367,228,968 |
|
Other Assets |
7,394,501,326 |
|
6,122,225,922 |
|
Non-Banking Assets |
375,246 |
|
375,246 |
|
Total Assets |
89,884,697,801 |
|
71,560,665,280 |
|
Liabilities and Capital: |
|
|
|
|
Liabilities: |
|
|
|
|
Borrowing from other banks, financial institutions |
393,065,945 |
|
1,187,764,568 |
|
Deposits and Other |
73,016,508,560 |
|
57,996,817,802 |
|
Current and Contingency |
11,575,101,378 |
|
10,619,221,463 |
|
Bills Payable |
1,948,443,847 |
|
1,909,137,199 |
|
Savings bank deposits |
26,030,281,124 |
|
24,291,225,666 |
|
Term deposits |
30,889,775,302 |
|
18,956,529,157 |
|
Other deposits |
2,572,906,909 |
|
2,220,704,317 |
|
Other liabilities |
8,928,304,917 |
|
6,443,993,397 |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Total Liabilities: |
82,337,879,422 |
|
65,628,575,767 |
|
Capital/ Shareholders’ Equity |
|
|
|
|
Paid-up Capital |
2,940,000,000 |
|
2,100,000,000 |
|
Statutory Reserve |
2,418,827,866 |
|
1,790,655,415 |
|
Retained surplus (general |
893,129,032 |
|
5,752,014 |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Proposed issue of bonus |
– |
|
840,000,000 |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Other reserves |
1,294,861,481 |
|
1,195,682,084 |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
– |
|
– |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Total shareholders’ |
7,546,818,379 |
|
5,932,089,513 |
|
89,884,697,801
|
|
71,560,665,280 |
|
Off Balance Sheet Items: |
|
|
|
|
Contingent liabilities |
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Acceptance for endorsements |
|
|
|
|
Letters of guarantee |
2,763,709,791 |
|
3,421,579,950 |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Irrevocable letters of |
12,616,319,942 |
|
11,408,136,788 |
|
Bills for Collection |
605,147,834 |
|
266,327,336 |
|
Other contingent |
1,871,501,084 |
|
757,169,296 |
|
Total contingent liabilities |
17,856,678,651 |
|
15,853,213,370 |
31 December 2008
3.2.2.3 Key Financials
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||