Non Resident Credit Scheme and Foreign Remittance of Pubali Bank Limited

EXECUTIVE SUMMARY

Foreign exchange earnings of Bangladesh are
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. Bangladesh is a major
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 Bangladesh
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 Bangladesh
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 Bangladesh. In fact it has already
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, Dhaka, a non resident dominated area, I have ample scope
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 Middle East countries and Malaysia. In
the year 2008, Bangladesh
sent 8,75,055 workers in different countries. But this year it is decreasing. Up
to August 2009, Bangladesh
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

Source: Manpower, Employment and
Training Bureau: The Daily Prothom Alo, September 7, 2009.

3.1.5 Migrant Workers Sent In
Different Years

The Bangladeshi workforce is one of
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.

Bangladesh sent 62.66 million workers
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 (in lakh)
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

Table: No of workers left for abroad

*Projected depending on figure up to August, 2009

It shows that a huge employment of
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.

3.1.6 Inward Foreign Remittance By Migrant Workers

is now earning almost USD10 billion
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:

In billion Taka

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%

Table: Inward Remittance of Migrant
Workers. (Source: Economic Trends, July-
2009, BB)

Figure: Comparative position of
Inward Remittance of Migrant Workers over years

From the above figure, we could get
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.

3.1.7 Reasons Of Recent Increase In Migrants’ Inward Remittance

The flow of remittances to

Bangladesh

has
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 Bangladesh;

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.

3.1.8 Impact of foreign inward remittances

Impact of foreign remittance is
significant for our country. It may be summerized, in brief, as follows:

§ § Helps in developing and maintaining a
healthy foreign exchange reserve;

§ § Finance imports and contribute to the
Balance of Payments;

§ Positive impact on economic, social
and political life;

§ Have positive impact on savings and
investment;

§ Contribute to the development of
money exchanges;

§ Contribute to the development of
financial markets;

§ Assisting the real sector to continue
productions;

§ Strengthen securities market through enhancing
flow of funds;

§ Contribution to GDP growth.

3.2 INFORMATION REGARDING PUBALI
BANK LIMITED

3.2.1 History and Overview of the Pubali Bank Ltd.

The Bank was initially emerged in the
Banking scenario of the then East Pakistan as
Eastern Mercantile Bank Limited at the initiative of some Bangalee
entrepreneurs in the year 1959 under Bank Companies Act 1913 . After
independence of

Bangladesh

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

Bangladesh

handed over all assets
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

The Bank has an authorized capital of
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.

The Bank has 13 Divisions headed by
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.

The Bank has a Board of Directors
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.

3.2.2.1 Balance Sheet
of Pubali Bank Ltd. for the year ended 31 December 2008

Pubali Bank Limited

Balance Sheet as at 31 December, 2008

Particulars

2008

2007

Taka

Cash

7,842,374,422

6,843,519,863

Cash in Hand (including
foreign currency)

2,029,132,949

2,087,901,273

5,813,241,473

4,755,618,590

Balance with Other Banks
& Financial Institutions:

2,000,450,636

1,101,569,774

In Bangladesh

1,833,882,772

779,517,461

Outside Bangladesh

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,
Overdrafts etc.

61,289,826,056

50,086,557,423

Bills Purchased and
Discounted

498,326,529

462,609,679

Fixed Assets including
premises, furniture & fixtures:

1,383,362,664

1,367,228,968

Other Assets

7,394,501,326

6,122,225,922

Non-Banking Assets

375,246

Total Assets

89,884,697,801

71,560,665,280

Liabilities and Capital:

Liabilities:

Borrowing from other banks, financial institutions
and agents

393,065,945

1,187,764,568

Deposits and Other
Accounts:

73,016,508,560

57,996,817,802

Current and Contingency
Accounts

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
reserve)

893,129,032

5,752,014

Proposed issue of bonus
share

–

840,000,000

Other reserves

1,294,861,481

1,195,682,084

–

Total shareholders’
equity

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
credit

12,616,319,942

11,408,136,788

Bills for Collection

605,147,834

266,327,336

Other contingent
liabilities

1,871,501,084

757,169,296

Total contingent liabilities

17,856,678,651

15,853,213,370

31 December 2008

PROFIT AND LOSS ACCOUNTS
For the year ended on 31 December, 2008
	2008	2007		Taka	Taka						Interest Income	6,804,089,811		5,339,968,424		2,820,169,022		1,910,406,167					Net Interest Income	3,983,920,789		3,429,562,257	Income from Investment	449,635,057	405,693,452		1,189,620,546		1,034,267,060		Other operating income	565,907,715		307,701,879
	Total Operating Income	6,189,084,107		5,177,224,648		Operating expenses										2,820,169,022
1,664,727,158		1,314,968,408		Rent, Taxes, Insurance, Lighting etc.	144,780,138		127,844,936		Legal expenses	8,730,106		14,791,309		Postage, Stamp, telecommunication etc	49,771,756		55,651,657		75,812,256		56,779,832	Managing Director’s salary & fees	5,300,000		4,380,000				Director’s Fees	4,188,474		4,348,956		Charges on loan losses			450,000		450,000
126,102,987		85,960,318

Other expenses	658,265,844		553,959,027
Total Operating Expenses	2,743,221,853		2,235,255,660
3,445,862,254		2,941,968,988
Provisions					Provision for classified loans & advances	–		57,700,000		Provision for unclassified loans & advances	240,000,000		102,300,000		Provision for diminution in value of investments	15,000,000		–		Provision for off balance sheet items	50,000,000	79,300,000
Total Provision	305,000,000		239,300,000		Provision before taxation	3,140,862,254		2,702,668,988
Provision for corporate tax	1,622,142,880		1,273,249,255
Provision for deferred tax	3,488,249		75,911,378
Total provision for taxes	1,625,631,129		1,349,160,633
Net Profit After Taxes	1,515,231,125		1,353,508,355
Appropriations
Statutory reserve	628,172,451		540,533,798
Retained surplus carried forward	887,058,674		812,974,557
Earnings per ordinary share (EPS)	51.54		46.04

3.2.2.3 Key Financials
of Pubali Bank Limited

Particulars

2008

2007

Million Taka

Authorized
Capital

5,000

Paid up capital

2,940

2,100

4,606.82

3,832.09

Deposits

73,016.51

57,996

Advances

61,788.15

50,549

8,375.59

Import Business

58,009.10

48,345.41

Export Business

24,795.65

19,907.50

Bridge Finance

6.89

Total Income

9,009.25

7,087.63

Total Expenditure

5,563.39

4,145.66

Profit before provision
& taxation

3,445.86

2,941.97

Net profit after provision
& taxation

1,515.23

1,353.51

Total
Assets

89,884.70

71,560.66

Fixed Assets

1,383.36

1,367.23

Other Information:

Number of employees

5,321

5,270

Number
of Shareholders

24,153

19,009

Number of Branches

371

361

Earnings per ordinary share
(TK)

51.54

54.45

3.2.3 Products and
Services:

Savings
Bank account
Current
account
Short
Term Deposit account
Pubali
Sanchay Prokolpo (Monthly deposit scheme)
Cash
Credit account
Over
Draft account
Term
Loan
Car
Loan
Doctors
Loan
Apartment
Loan
Consumer
Loan for Household Durables
Non
Resident Credit Scheme
Bank
Guarantee
Letter
of Credit (LC)
Bill
purchase/Discount
Export
Credit (Pre Shipment & Post Shipment)
Remittance
(Inward, Outward)
Collection,
Purchase and Sale
of Foreign Currency and Travelers Cheques.
Maintenance
of Student education file.
Guarantees
in Foreign Currency.
Foreign
Currency accounts.
NFCD
(Non-Resident Foreign Currency Deposit) A/C.
RFCD
(Resident Foreign Currency Deposit) A/C
Forward
Contracts
Correspondent
Banking Relations.
Taka
Drawing Arrangement
Dealing
Room
S.W.I.F.T.
(Society for Worldwide Interbank Financial
Telecommunication)
Safe
Deposit (Locker Service)
ATM
Service
Online
banking

CHAPTER
4

NON
RESIDENT CREDIT SCHEME AND FOREIGN REMITTANCE OF PUBALI BANK LTD.

4.1.1 Product Feature

Pubali
Bank Ltd. started NRCS from March 01, 2008 for
Bangladeshi citizens who have work-permit of foreign countries and visa. The
features of the product are:

1.	Product Name	Non Resident Credit Scheme (NRCS)
2.	Credit Limit	TK 2,50,000.00 per person
3.	Period	24 months
4.	Eligibility of Availing Credit	Bangladeshi citizens who have work-permit of foreign countries and visa.
5.	Educational Qualification	Minimum SSC.
6.	Collateral	No collateral security required.
7.	Documents Required	a) appointment letter, b)Work-permit, c) Passport, d) Visa, e) Realize letter from the Ministry of Labour and Employment of Bangladesh.
8.	Rate of Interest	13% (quarterly compounding)
9.	Security	a) 23 undated cheques (1 for full loan amount and 22 for equal monthly installment) of the borrower. b) Letter of authority for marking lien and debiting the account (of the borrower with the bank branch) for recovery of installments. c) Borrower’s undertaking to refund the loan amount if he/she fails to go abroad within 15 days after disbursement of loan. d) Dead of agreement among bank, borrower and guarantors on non-judicial stamp of TK 150. e) Personal guarantee of 2(two) acceptable relatives of the borrower and other charge documents.
10.	Grace Period	2 months from the date of disbursement.
11.	Mode of Repayment	To be paid by 22 equal monthly installments from the foreign remittance received in the Savings Account of the borrower opened in the bank branch. The account is to be marked lien until full adjustment of the loan.

4.1.2 Loan Procedure

Branch
will receive application from the borrower and particulars of guarantors on the
bank’s prescribed form. Upon verification of Appointment letter, Work-permit,
Passport, Visa, Release letter from the Ministry of Labour and Employment of
Bangladesh and all other documents supplied by the borrower, branch will send
the loan proposal to the Human Resources Division, Head Office through their
respective Regional Office. Upon sanction of loan by the Human Resources Division, branch will
disburse the loan to the borrower having 23 undated cheques, tri-party
agreement, life policy, FDR etc, if any.

4.1.3 Legal Procedure

Bank
can initiate legal action to recover loan if the borrower fails to repay 3
consecutive installments.

4.1.4 Loan Disbursement Under NRCS

The
bank has already disbursed TK1.10 core through its 24 branches 64
beneficiaries. Recovery rate is 100% and present outstanding is TK 0.6268 core
against its outstanding advances of TK6,178 crores

So
it is clear that the product has almost
no impact on the bank.

4.1.5 Reasons of Poor Performance
of NRCS

Since
opportunity of service in the foreign countries is generating a huge employment
for our country and this sector is going to be the main source of our foreign
exchange earnings, government and banks need special attention to the non
resident workers. Though Pubal Bank Ltd. has introduced NRCS, it has some
drawbacks. These are:

1.Criteria
of getting loan is rigid and in some cases irrational. Such as educational qualification
to be minimum SSC. But in fact most of them who are going abroad for work are
not SSC. Passed. Moreover it is not necessary for such unskilled workers.

2.
Bank makes finance after getting visa of the proposed borrower. But in reality
specially in case of middle east counties where most of our workers are going,
visa is delivered after getting full payment by the manpower agencies.

3.
Bank asks for appointment letter and work permit of foreign countries. But in
most cases these are not given to the workers specially in case of middle east
countries and Malaysia.
Rather work permit (Akama) is given after reaching in the country.

4.
Bank ask for personal guarantee from 2 acceptable relatives of the borrower.
But relatives of poor borrower may not be acceptable to the bank.

5.
Bank processes the loan application after getting all the documents. But when a
worker gets these documents, he/she has not enough time left to avail this
loan.

6.
If the borrower fails to go abroad within 15 days from the date of disbursement
of the loan, he/she has to repay the full loan amount and bank can initiate
legal action which worsen the borrower’s condition who lost their amount to the
tout agents.

7.
Maximum credit amount of TK2,50,000 is not sufficient specially for KSA. and
European countries and other developed countries.

8.
Bank officials are not interested to disburse this loan.

For
these problems the product is not working well which is reflected in its
negligible disbursement of TK1.10 million only in more than 1 year time against
its disbursement outstanding of TK61,784 million as on 31 December, 2008. And NRCS has almost
no impact in foreign remittance of the bank. Though the bank’s inward foreign
remittance is increasing day by day, it is for arrangement of new agencies in
different countries, specially for Western Union Money transfer, and prompt and
dedicated remittance service of the bank. In recognition of this service, Mr.
Abu Fuad, officer, of the bank’s
Komorgonj branch, Nawabgonj, Dhaka has been awarded “Sonar Manush Seba Padak, 2008” by RAMMRU (Refugee and Migratory
Movement Research Unit), a research project of Dhaka University.

4.2 Foreign Remittance of Pubali
Bank Ltd.

4.2.1 Agencies and Network

Pubali
Bank Ltd. is playing a vital role in receiving foreign remittance by banking
channel. Bangladesh is now earning almost USD 10 billion from wage earners that
has helped to reach our foreign currency reserve over USD08 billion. Though
Readymade Garments (RMG) is still leading our exports, if cost of import of raw
materials for RMG and others is deducted, foreign remittance of these wage
earners will lead our foreign exchange earnings.

Pubali
Bank Ltd. is playing a vital role in receiving foreign remittance by banking
channel. The bank is using its wide network to receive foreign remittance.
Agent network is different countries are:

Country	Agents
United Arab Emirates	1. Wall Street Exchange Centre 2. Habib Exchange Co. 3. Al-Ahalia Money Exchange Bureau 4. Lari Exchange Establishment 5. National Exchange Co. 6. Al Mona Exchange Co. 7. Al Rostamani Int’l Exchange Co. 8. Emirates India Int’l. Exchange Co. 9. UAE Exchange Centre 10. Al-Ansari Exchange 11. Reda Al-Ansari Exchange UST. 12. Federal Exchange 13. Al-Falah Exchange
Kuwait	14. Al-Mulla Int’l Exchange Co. 15. Oman Exchange Co. 16. City International Exchange Co. 17. Bahrain Exchange Co. WLL. 18. Al-Muzaini Exchange co. 19. Security exchange co. 20. UAE Exchange Centre 21. Dollarco Exchange co. Ltd.
Qatar	22. Al Mana Exchange Co. 23. Oman Exchange Co. 24. National Exchange Co. 25. Eastern Exchange EST. 26. Habib-Qatar Int’l Exchange Ltd. 27. Trust Exchange Co.
KSA	28. Al RAJI banking & Investment Corporation 29. Bank Al Bilad 30. Al-Amudi Exchange Co.
Oman	31. Hamdan Exchange 32. Musandam Exchange Co. 33. Oman Int’l Exchange LLC. 34. Modern Exchange Co. 35. Laxmidas Tharia Dev Exchange Co. 36. Mustafa Sultan Exchange Co. 37. Oman & UAE Exchange Centre & Co. 38. Purusshuttam Kanji Exchange Co.
Bahrain	39. Bahrain-India International Exchange Co. 40. Zenj Exchange Co. 41. Nunu Exchange Co.
USA.	42. Wall Street Finance, LLC
UK.	43. Bangladesh Money Exchange Ltd.
Italy	44. Dhaka Janata Exchange, SRL.
Singapore	45. Balaka Exchange Private Ltd.
All Over the World	46. Western Union Money Transfer

Besides
the bank is receiving foreign remittance from all over the world by SWIFT.

4.2.2 Foreign Remittance of Pubali
Bank Ltd.

Pubali
Bank Ltd. is one of the leading banks in receiving foreign remittance. The bank
received almost TK 2800 crores per year from migrant foreign remittance.

Pubali
Bank foreign remittance receipt from migrant workers in different years:

Year	TK in crore
2006	2110
2007	2406
2008	2800
August 09	2115

Pubali
Bank Ltd. is now one of the 5 leading banks in Bangladesh in receiving migrant
workers foreign remittance. The other banks are Sonali Bank Ltd., Agrani Bank
Ltd., Janata Bank Ltd. and Islami Bank Bangladesh Ltd.

Pubali
Bank Ltd. is releasing payment of
remittance to the beneficiaries within 48 to 72 hours. At present most of the
remittance of middle east countries are made through TT. that are centrally
processed by the bank’s Foreign Exchange Remittance Cell at its Head Office.
Besides fastest payment is done by Western
Union Money Transfer that has been introduced in the bank in the year 2009.

CHAPTER 5

CONCLUSION
AND RECOMMENDATIONS

5.1Recommendation

The
report is completely done on foreign remittance with special emphasis on Non
Resident Credit Scheme of Pubali Bank Ltd.

Though NRCS is an excellent product,
it is not working well. For proper functioning of the product and increasing
inward foreign remittance of the bank, the following recommendations may be
considered by the bank management:

1. To relax the bindings of
educational qualification. Rather bank may provide additional amount for the
borrowers who have technical/vocational education.

2. Bank may provide loan to the
workers by arranging proper technical training for them through a reputed
agency that will ensure their attractive income which will increase the bank’s
inward remittance as well as remittance of the country.

3. Loan limit may be increased up to
4,00,000 at least.

4. Interest rate may be reduced to
10%.

5. Insurance of the credit may be
introduced by the bank’s cost that may reduce the bank’s credit risk as well as
save the borrowers in case of unwillful default.

6. Bank officials may be motivated to
disburse this loan that will generate income, increase foreign remittance and
after all help this poor workers from burden of high interest rate and being
ousted from their residence land.

Besides bank may initiate the
following steps to increase foreign remittance:

7. To make agreement with more
agencies specially in the new markets where the bank has no agent. These
countries may be Iraq,
Libia, Sudan, South Africa, Mali, Malaysia, East Europe, Latin America etc.

8. Proper marketing of the product
and foreign remittance channel may be done.

9. Special exchange rate of remitting
foreign currency by the wage earners may be allowed which is in most cases less
than that of new generation banks that may increase the bank’s remittance
inflow.

10. Incentive may be allowed to the
agencies for achieving target of remitting foreign currency to the bank.

5.2 Conclusion

Finally, we can conclude by stating
that foreign inward remittance is indispensable and very important for the
development of our economy. Because it helps in increasing national income,
reducing unemployment, developing and maintaining a healthy foreign exchange
reserve, facilitates investment, finance import payments and important projects
of the country and many more. So we should take all sort of initiatives, so far
possible for us, to augment the flow of foreign inward remittance. The
government of the country will have to play proactive role in this regard. The
embassies of our country working in different parts of the world must also play
their role effectively to explore markets for our workers as well as solving
various problems of the people of our country working over there.

The Government as well as different
regulatory bodies like Bangladesh bank and other banks will have to provide
maximum effort so that the possible foreign inward remittances get into the
country through proper channels. They should also offer different loan and
other products for helping these migrant workers. A system should also be
developed for proper management of the foreign inward remittances that we are
earning with our all efforts.

Appendices

1. Kothari C. R., Research Methodology, Methods and
Techniques, New Age International Publishers, New Delhi

2.Annual Report, Pubali Bank Limited, 2007,2008.

3. Economic Trends, Bangladesh Bank, July-2009.

4. Annual Report, Bangladesh Bank, 2007-2008

5. Bangladesh
Statistical Pocket Book

6. RAMMRU publications

7. The daily Prothom Alo, September 07, 2009

8. www.bangladesg-bank.org

Disclaimer:

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