Internship Report Prepaired By Tonmoy July29.2008.doc

8/9/2019 Internship Report Prepaired By Tonmoy July29.2008.doc

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Chapter: One

Introduction


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1.1Origin of the Report:

TheTerm paperprogram is itself an attempt to provide graduates an orientation to a real life situation in which they

can observe and evaluate the use and applicability of theoretical concepts, which were taught in the classroom. The

! program of "T re#uires that each student must complete anTerm paperattachment period of at least $2

wee%s with an organi&ation to introduce the studentsto introduce the students with the real life business administration and submit a report

on the basis of it. !s per norm, this report is the re#uirement of fulfillment of theTerm paperprogram as well as of

! program.

In this conte't, I have tried to wor% with (utual Trust an% )imited *(T)+, and the department of - of

(T) gives me the chance to wor% in the /anthapath ranch of (T). ere I have free option to choose any topic

forTerm paperreport but after discussing with my supervisor I have chosen the topic 01valuating oreign 1'changeOperation of (T)3 /anthapath ranch *Theory 4 /ractice+5.

1.2 General Objective:

The ob6ective of this report is to fulfill the re#uirement of theTerm paperprogram as a course re#uirement of !

program of !I". The general Ob6ective of the study is to give realistic viewpoints of e'pediency and significant

function of overall departments of (utual Trust an% )imited and specially the oreign 1'change activities of

(T).

1.3Objective of the Study:

The broad ob6ective of the study is to obtain practical %nowledge of foreign e'change activity at branch level of

(utual Trust an% )imited with special emphasis on import and e'port procedure and finance.

7pecifically, the study see%s to achieve the followings:

• To ac#uire %nowledge of foreign e'change activities in ban%.

• To develop an idea of the mechanism of import and e'port finance of (utual Trust an% )imited.


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• To loo% at the problems in the processes of foreign e'change activity and provide possible solutions for

improvement.

1.4Scope of the report:

8ow in this global arena the activities of ban%ing sector are very much essential and also it is growing very fast.

uring myTerm paperperiod, I have wor%ed months to gather all the relevant data and information re#uired for the

successful completion of my study. This report is an attempt to evaluate foreign e'change activities and how they

serve the customers with their product and services as well as they e'ist with current rivals.

1.5 Reader! "enefit:

This study or report will tend to describe in briefly the function of foreign e'change, international trade and finance,

which will provide an overall view of (T)s foreign e'change departments activity. This report also provides

elaborate discussions about (T)s goods 4 services, #uality, forecasting, and reliability. The apparent benefits

that the readers will get are as follows:

#nfor$ation: !s a financial Institution, (T)s operation is some different than some other financial

Institution in angladesh. 7o, I thin% that by letting readers %now the aspects of (T)s operations, I would be

able to provide sufficient information to satisfy our readers thirst about general ban%ing activities.

Good! % Service!: ecause I have thoroughly analy&ed (T)s total area of products and services they

provide, this report will give the readers some e'tra information to %now (T). Through this report they will

learn about the product and services of (T)

#nternational trade: people will %now about the import and e'port procedure of angladesh. !nd how is

(T) finance in that international trade.

1.&Source! of #nfor$ation:

oth primary and secondary sources of information were pursued regarding to the presentation of this study. The

procedure and sources were:

ace to face interview with ranch (anager, officer of the panthapath branch and other officer of the

international division3(T).

! significant amount of information was gathered from secondary sources such as the ban%s brochures,

relevant different printed formats, statements, etc.

ifferent types of relevant boo%s and 6ournals are used as secondary source.

/ersonal observation during the attachment period.

/rior -esearch report is also provided information on this topic.

Collect information from the official websites.

1.' (i$itation! of the !tudy:


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I have tried my best to provide with all the necessary information about (utual Trust an% )imited */anthapath r.+

7upplied by the managers and employees best ability but due to the e'haustive nature of this study the most secret

4 strategic ethics could not be brought into this report. !s having the status of an empirical study, this research is

sub6ect to following limitations:

To protect the organi&ational loss in regard of maintaining confidentiality, some parts of the report are not

in3depth li%e , 7;IT etc.

The duration of the intern period is not sufficient to learn all the foreign e'change activities.

! worthwhile study re#uires the analysis of as much data as possible covering various aspects of the

study. ut I did not have easy access into various types of information about foreign e'change activities of the

whole (utual Trust an% limited rather than the respective branch only. 7o, I had to accomplish my thesis only

basing on the information of the /anthapath ranch of (utual Trust an% )imited. 7ome of the data re#uired

for preparation the statement were not available in the computer3records of their standard practices.

)a%e of e'perience has also acted as constrains for the e'ploration of the topic.

7ome participants were unable to spare enough time because of their wor% schedule.

There are few new employees who do not %now the e'act wor% activity and they did not provide the

accurate information about the foreign e'change activity.

The findings of the study are based on the primary data provided by the participants, some time it could be

biased.


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Chapter: Two

Overview of (T)


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2.1 )utual *ru!t "an+ (td:

(utual Trust an% )imited *(T)+ is one of the leading third generation private sector commercial ban%s that

started its ban%ing operation in ha%a on October 2


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)isting of 7hares : 71 4 C71

8umber of ranches : $

(ain operational areas : ha%a, Chittagong 4 7ylhet

2.3 ,i!ion:

To be the ban% of $st choice by creating e'ceptional value for our clients, investors and employees ali%e

2.4)i!!ion:

;e aspire to be the most admired financial institution in the country, recogni&ed as a dynamic, innovative and client

focused company that offers an array of products and services in the search for e'cellence and to create an

impressive economic value.

2.5 Objective! of the "an+:

/rovide standard financial services and wealth ma'imi&ation.

2.& "an+! -hilo!ophy:

;ith the mission to become a dependable client focused financial institution in the country by proving service with

trust and integrity

2.' -ro$oter! of the "an+:

The promoters of the ban% are renowned industrialists in the arena of Te'tiles, /harmaceuticals, Tannery, IT,

(edicare and -eal 1state sectors. There are $ directors in this ban%. The founder chairman of (utual Trust an%

*(T+ is (r. 7yed (an&ur 1lahi, the founder chairman of !pe' Tannery Broup and /ioneer Insurance Co. he is

also the chairman of the angladesh !ssociation of an%s *!+. The chairman of (T is (r. 7amson .

Chowdhury, he is also the chairman of the largest conglomerate of the country %nown as 7#uare Broup of

Industries. Other big names are such as !dvanced Chemical Industries *!CI+ ltd., 1ast ;est /ropertiesevelopment ltd., 7!CO International ltd., associated builders Corporation )td. ave participated in the e#uity of

the ban%.

2. /apital:

(T started its operation on 2< October, $999 as a private sector ban% with an authori&ed capital of T% $.

million and paid up capital of T% 2 million. The paid up capital of the ban% amounted to T% 9D.


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7ource: !nnual -eport

2.0 epo!it!:

Total deposit of the ban% as on ecember $, 2? stood at T% 222?


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7ource: !nnual -eport

2.1 Operating -rofit:

(T) earned an operating profit of T% E?.@D million in 2E compared to T% 9?9.


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2.15 Organogra$ of )*"( -anthapath "ranch6:

.

2.1& S8O* 9naly!i! of )*"(:

1very organi&ation has some internal strengths and wea%nesses and also has some e'ternal opportunities and threats

in its whole life cycle. This is called 7;OT analysis. ere briefly give an idea about the (utual Trust an%s

internal strengths and wea%nesses, and e'ternal opportunities and threats as I have e'plored in the past twelve

wee%s.

2.1&.1 Strength:

$. ;ell3capitali&ed an% with potential to increase capital base continuously.

2. In the ran%ing of angladesh an%, in 2D (T) was rewarded as a first group ban%.

. The oard of irectors are very well repotted business personnel.


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2. )imited !dvertisement: (utual Trust an% has a lac%ing of advertisement both printed media and

1lectronic media. 8ow in this global arena it is a great opportunity to reach their goal by using these

media. "nless it will be a great wea%ness for any profit oriented organi&ation.

. )imitations on 7oftware: This is the age of computer. ut (T) has some limitation on software. They

are still using the older version of software. 7o it is not only creating some problems for the official

personnel to wor% properly but also delaying to serve their customer.


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in our country that lots of new ban%s are coming in the scenario with new services. The (T)

should always be prepared for the competition in the coming years.

Chapter: Three

/roduct 4 7ervices of (T)


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3.1 ifferent type! of 9ccount at )*"(:

(T) have the following types of accounts:

3.1.1 /urrent 9ccount

It is easy to manage every ones daily finances with an (T) current account. Current !ccount is normally for

those who have business transaction or a huge amount of transactions in every month. ! current account holder can

ma%e several times of transaction in a day. (a%ing payments has never been so simple. 8o one is needed to rush

around to pay hisAher bills with a current account. Hust heAshe can simply write out a che#ue and mail it at their

convenience. In case of current account ban% do not pay any interest for any amount.

3.1.2 Saving! account:

7avings !ccount is a secure, rewarding and accessible way to manage routine money matters effectively. 7avings

account is for those who have limited transaction in every month. It is easier to open this account. 8ormally savings

account holders can not ma%e more than two or three transaction in a wee%. There is also limitation of transaction

huge amount without proper declaration. In case of savings account ban% will pay at a rate of interest for any

amount. 8ow the interest rate of this account is ?.2DF. an% has the rights to change this interest rate for changing

their business policy.3.1.3 R:

It is one of the best accounts by where an investor can get best returns from hisAher invested amount. ere the

investor invests their money for a certain period. !nd ban% will pay a high interest rate for this account. (T) have

three different periods with three different rates.

This rate chart is given here.

uration Interest -ate

months $$.2DF

? (onths $2.2DF

$ Jear $2.F

an% has the rights to change this interest rate for changing their business policy.

3.2 ifferent *ype! of (oan:

(T) do not provide very large loan. They provide the following loan to its clients:

3.2.1 /on!u$er (oan:


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(T) provide consumer loan to improve the life style of the clients. Only salary e'ecutives Aprofessionals can avail

this type of loan. They give the loan on the basis of the clients salary. The age limit of the clients should be 2D3?

years. (T) give minimum T% , and ma'imum T% , as a loan. Clients can repay the loan from $23


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limit. (T) give $2.2DF in this segment. If anybody withdraws money before the maturity, they will get only

?.2DF interest on the deposit.

3.3.4 )*" *riple Saver -lan:

"nder this scheme, clines money will be triple after 9 years. The minimum amount should be T%$, and there

is no limit for ma'imum amount. The clients can avail loan up to 9F of the deposited amount but minimum loan

amount against this plan will be T%. 2D,A3.

3.3.5 )*" )onthly "enefit -lan:

!ny Individual, 8BO, 1ducational institution etc can invest their saving in this pan. The clients may open more

than one account in the same branch. (inimum deposit is T% D and there is no upper limit. The maturity period

is and D years. or premature encashment, interest will be paid as per savings rate but no interest will be paid if

en3cashed within one year.

; /lan. The primary advantage of this plan is that you are absolutely free to choose your own time for

depositing money into this account. Jou can deposit daily, wee%ly monthly. The choice is yours, but the transactions

will have to be within the an%=s transaction hour. This is a D year plan and you will be re#uired to open the account

with an initial deposit of T%. 2DAL only. They offer you very attractive interest rate, which is accrued in this

account on a daily basis.

3.3.' e!tival Saving! -lan:

(T festival savings plan has been designed to generate savings for religious festival. This pan includes: 1id3ul3

itr, 1id3ul3!&ha, urga pu6a, Christmas ay and udha /urnima. !ny individual can open this account by

depositing T% D only. This account must be opened at least three months prior to any festival. Clients may deposit

any amount of hisAher choice. (inimum deposit is T% 2D. Interest would be calculated on a daily balance basis at

9F. Clients may en3cash the deposit with interest within $D days prior to the desired festival. Ta'A 1'cise uty will

be deducted as per government rules.

3.3. =ni>ue Saving -lan:

The main advantage of this plan is client can deposit any day, any time and any amount. The plan will generate high

income with withdrawal facilities. "ni#ue savings plan offers you to deposit any amount of your choice but not less

than T%. DA3. Customer can select a savings period of A


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calculated on a daily product basis. Interest rate is 2F above the prevailing savings rate. Client can withdraw any

amount of his choice but it is restricted once a month up to DF of the balance.

3.4 Other !ervice!:

(T) provide different types of financial services to its clients. 7ome of their services are given below:

3.4.1 -ay Order:

(T) provide this type of service. ;hen clients want to give money to its clients or any other purpose they can

give pay order. It is safe because they should not carry the money and the receivers can en3cash the money. There is

no option for dishonor, the client have to deposit money before do /O. The commission of the /O is given below:

!mount Commission

"p to $, T% 2DM$DF G!T

$,$3$, T% DM$DF G!T

$,$3D, T% $M$DF G!T

3.4.2 *elegraphic *ran!fer **6:

It is an order from the issuing branch to the drawer ban% A branch for payment of a certain sum of money to the

beneficiary. The payment instruction is sent by telephone and funds are paid to the beneficiary through his account

maintained with the drawer branch or through a pay order if no account is maintained with the drawer branch.

3.4.3 e$and raft 6 #!!ue:

7ometimes customers use demand draft for the transfer of money from one place to another. It is must need for

sending money out side ha%a city. (T) charges $DF commission on the face value of as service charge

3.4.4 (oc+er !ervice:

(T) provide loc%er service to their clients. Clients can rent a loc%er for one year. 1very year they have to pay a

fee. They can %eep any documents, ornaments and valuable thing in the loc%er. One %ey is given to the clients.

There are three types of loc%er at (T): small, medium and big. The fee of this loc%er is Ta%a $D, 2, and

2D.

3.4.5 9*) /ard:

(T) gives free !T( card to its savings account holder. Through this !T( card anyone can withdraw money from

the ) !T( booth with free of cost. !fter one year clients have to renew it and the fee is T% D only. They also

can get very short statement form the !T( booth.

Chapter: our

Clearing 4 8egotiable Instruments

4. /learing ou!e? #n@ard and Out@ard /learing? Return Settle$ent:

4.1 /learing:


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The ban%ing machinery set up for setting payment of che#ues, drafts, bills etc. drawn on other ban% is called

clearing. The ban% who clears the instrument drawn on other ban%s through the central clearing house is called

clearing ban%.

4.2 /learing ou!e:

! place provides an arrangement by which various representatives of each clearing ban% assemble there each

business day to e'change local che#ue, drafts, bill of e'change etc. which are received by them for collection from

their customers. Its ob6ect is to settle balancesAdrawing between the ban%s of a city, town, or a region with a

minimum of inconvenience and labor.

Inward Clearing:

a+ The instruments drawn on our ban% are received from other ban%s in the clearing house.

b+ The amounts and numbers of instruments received are entered in the house boo% from the main schedules of

respective ban%s.

c+ The amount of instruments delivered, received and the difference is written on a igure 7lip provided in the

clearing house and the slip is returned.

c+ The instruments with schedules are arranged branch3wise.

e+ ! copy of each schedule is detached.

f+ The amount of each schedule received is entered in the house pages of the respective branches.

g+ The respective house pages are totaled, the total of each is noted on a slip and a grand total is ta%en out.

h+ The grand total is agreed with the total of the house boo%.

i+ The instruments are sent to respective branches with the slip showing total= amount and number of instruments.

4.3 Return of /learing #n!tru$ent

Benerally ban%s are ma%e payment the instruments presented through clearing house. "nder the following main

reasons a ban% return the instrument through clearing house with mentioning the reason*s+ of return *(emorandum A

(emo of return+:

Insufficient und

!mount in figure 4 word differs

Che#ue out of date A /ost3dated

rawer=s 7ignature differs

/ayment 7topped by drawer

/ayee=s endorsement re#uired

Che#ue not properly filled up or staled che#ue

4.4 Settle$ent of /learing


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7ettlement of clearing performs through angladesh an% or 7onali an% *in absence of angladesh an% generally

in the district town clearing function performed by 7onali an%+ of our country. 1very clearing member A ban% or

financial institution has to maintain an account with the central an%. Central an% settles the transactions of the

member ban%s or financial institutions through the respective members account maintained with them. Inter branch

clearing transactions settled through central account.

4.5 -ro$i!!ory 7ote? "ill of ;ue! and di!tingui!hing feature

4.5.1 7egotiable #n!tru$ent:

! negotiable instrument is a method of transforming a debt from one person to another person. The term =negotiable

instrument= is not defined in the 8egotiable Instrument !ct $@@$ but according to section $ of 8egotiable

Instrument !ct, it means a promissory note, bill of e'change or che#ue payable either to order or bearer.

4.5.1.1 #$portant characteri!tic! of negotiable in!tru$ent:

$+ It must be in writing, unconditional and payable after a specific time or on demand.

2+ It should be for a certain sum and payable to a certain person by another person or to the bearer on demand.

+ The ownership passes from one person to another by delivery, in case of bearers instrument and by

endorsement and delivery in case of order instrument.


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d6 Signed by the $a+er: promissory note must be signed by the ma%er.

e6 *he $a+er $u!t be certain: The promissory note must show clearly on its face the name of person who is

liable as a ma%er. ! promissory note may be made by two or more ma%ers and they may be liable thereon 6ointly

and severally.

f6 /ertain !u$: The payable amount must be certain and must not be capable of

contingencies or subtractions.

g6 )oney: The promise should be to pay money only.

h6 -ayee $u!t be certain: It is essential that the person who is to receive the money

7hould be certain.

4.5.3 "ill of ;


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a+ lan% or Beneral 1ndorsement

b+ 7pecial or full endorsement

c+ -estrictive 1ndorsement

d+ /artial 1ndorsement

e+ Conditional on #ualified 1ndorsement

f+ 7ans -ecourse 1ndorsement

4.' /he>ue:

!s defined in 7ection 3 ? of the 8egotiable Instrument !ct 3 $@@$, a che#ue is a ill of e'change drawn on a

specified ban%er and not e'pressed to be payable otherwise than on demand.

! che#ue is an unconditional order of the drawer to the ban%er for payment of a specific sum of money to his order

or bearer. !ccording to 7ection 3 E of bill of e'change *1ngland+, a che#ue is a bill of 1'change drawn on a ban%er

payable on demand.

4.'.1 eature! of a che>ue:

i. It is an unconditional order to a ban% to pay a specified sum of money.

ii. Order must be in writing and properly signed by the ma%er.

iii. ate and amount of money must be clearly mentioned on the che#ue.iv. /ayment should be made on demand and che#ue must be presented to the ban% in time.

v. The che#ue can be written only by the person who is maintaining his account with the ban%.

vi. /arties *twoAthree+ must be mentioned in the che#ue *drawerApayeeAdrawee+.

4.'.2 *ype! of a che>ueC

1. "earer /he>ue : earer means a person who by negotiation comes into possession of a negotiable instrument

which is payable to bearer. ere ban%er is discharged from liability by payment in due course to the bearer thereof.

It is always a bearer one and no endorsement is re#uired for ma%ing it payable.

2. Order /he>ue: ;hen a che#ue payable to order purports to be endorsed by or on behalf of the payee, the

drawee is discharge+ by payment in due course. an%er must be sure regarding identification of the payee before

ma%ing payment such type of che#ue. !s per 7ection 3 $< of 8egotiable Instrument !ct such type of che#ue can

only be transferred through *a+ 1ndorsement and *b+ elivery.

3. /ro!!ed /he>ue: ;hen a che#ue bears across its face two parallel transverse lines, the

che#ue is said to be crossed. The linear are usually drawn on the left hand top corner of the che#ue. The crossing of

che#ue is a material part of the che#ue.


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4.'.3 Bind! of /ro!!ing:

*a+ Beneral Crossing

*b+ 7pecial crossing

4.'.3.1 ifference bet@een General and Special /ro!!ing:

*a+ ;hen the lines of crossing may be blan% or contain the words 4 Co., not negotiable, !AC payee etc. said to be

called Beneral Crossing. 7uch type of che#ue can be encashed through any ban% branch where payee maintains a

ban% account. or this reason this type of che#ue is secured from open che#ue.

*b+ ! che#ue is said to be crossed especially where the lines of crossing bear the name of a ban%er either with or

without any additional words and to be crossed to that ban%er. Its payment can be obtained only through the

particular ban%er whose name appears between the lines. It is very much secured 4 safe than general crossed

che#ue.

4. 9ccount -ayee /he>ue :

! che#ue mar%ed >!ccount /ayee> or >/ayees !ccount only> between the two parallel lines of general crossing is

said to be crossed >!ccount /ayee> and ceases to be negotiable.

4..1 eature! of 9D/ -ayee /he>ue :

;hen a che#ue is crossed !AC payee:

*a+ It shall cease to be negotiable remains transferable and

*b+ It shall be the duty of the ban%er collecting payment of the che#ue to credit the proceeds thereof only to theaccount of the payee named in the che#ue.

4..2 Role of ban+er for pay$ent of a cro!!ed 9D/ payee che>ue :

;hen a che#ue is crossed !AC payee:

*a+ If the ban%er receives payment of3 such a che#ue on behalf of any person other than the payee, the ban%er

will be guilty of negligence and will not get legal protection.

*b+ !s a result no ban% would li%e to collect it on behalf of any other person.

*c+ The duty of the paying ban%er is fulfilled by payment, of such che#ue in good faith and without negligence.

o -o!t ated /he>ue :

ears a future date as its date of issue such che#ue is valid, but the ban%er can not pay it earlier than its dale because

the drawers mandate is not to pay it earlier. If the ban%er pays it before the schedule date, the payment is not a

payment in due course and as such, he loses legal protection and is liable to his customer for any loss that may arise

out of his action.

o 9ntedated /he>ue :


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!ntedated che#ue bears a date before the date of its issue. Che#ue antedated for more than si' months becomes stale

or out of date as per ban%ing practice.

The points of difference among the negotiable instruments *Che#ue, ill of 1'change /romissory 8ote+ may be

summari&ed as under:

Che#ue ill of 1'change /romissory 8ote

!n order to pay money *!n order to pay money+ ocument of

claiming money.

!n underta%ing to repay money.

!lways drawn on specified ban%er (ay be drawn on any one including a

ban%er.

;ritten promissory note by the

debtor to the creditor for repayment of

debt.

/ayable immediately on demand *1ntitled to days of grace+ /resented for

ma%ing payment on maturity.

*(ay or may not be+ /ayable on demand.

Intended for immediate payment (ay or may not be intended for

immediate payment.

(ay or may not be intended for

immediate payment.

-e#uires no acceptance, rawer is

responsible.

(ust be accepted *before+, acceptor can

be made liable.

-e#uires no acceptance, ma%er

should be liable.

/repared in one set /repared in more than on set. /repared in one set.

/repared in a printed form /repared in a p rinted or while sheet or

paper.

/repared in a printed or white sheet or

paper.

Benerally there are three parties3drawer,

drawee and payee

(ay be four parties3drawer, drawee,

acceptor and payee.

Benerally there are two parties

/romise and payee.

Galid within the country Galid within and outside the country. Galid within the country.

-e#uires no stamp duty 7tamp duty is re#uired. -e#uires stamp duty.

Cannot be paid by installment /ayment can be made by

installment.

/ayment can be made by

installment.

Chapter: ive

Card ivision

5. )utual *ru!t "an+ /ard ebit % /redit6:


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(utual Trust an% is always trying to reach the height satisfaction level of the customers. To meet up the goal they

have followed different successful strategy and newly launched credit card is one of that. They launched credit card

in 2@ in may by inviting all the valuable clients. They launched some other cards as well and they are giving

some outstanding features to attract the customer as its a new product. The entire cards are the GI7! card.

5.1 /la!!ification of /ard! of )*"(:

ebit Card:

(T) gives debit card to its customer when they open a savings account. !t that time they have to apply for the

debit card by filling up a specific form. There is no limit for debit card. Client can able to withdraw the withdraw3

able money which is set by the lora ban% software. !s it is a GI7! card so client can able to withdraw money from

any booth which accepts the GI7! logo. (T) has an agreement with utch angla an% )td. that if any Client of

mutual trust ban% withdraws money from the ) !T( booth then no charge will be charged. There is no binding

for transaction in a day but for security purpose there is a limitation. That is no one will able to withdraw more than

, Ta%a In a single day.

(T) is giving a opportunity of free debit card for the first year and from the second year there will be a charge of

D ta%a.

5.1.1 Re$ittance /ard:

-emittance card is really a uni#ue product for those clients who get remittance from the outside of the country. 8ow

a days receiving the remittance is became faster, #uic%er then previous with help of 1'press (oney 7ervice. !nd

(T) again made it effortless as well for the clients. ;hen remittance comes by someones name then he or she

needs to fill up a remittance card form for the first time to get the remittance card. Client does not need to open anyaccount in (T) 6ust need to fill up the form. !fter that (T) will create an account against his or her card

number. rom then whenever the remittance will come by his or her name the amount will be automatically debited

by (T). !nd beneficiary will able to withdraw money from the booth as li%e debit card. (ore amusingly !nnual

charge for this card is &ero.

.

5.1.2 *raveler! /ard:

8ow a day people certainly go outside of the country for business purpose and other purpose as well. y thin%ing of

this (T) has introduced a card for travelers. It is the travelers card which is a one time card. ;hen a person goes

outside heAshe needs foreign currency. 7o they endorsed their needed amount of currency from the ban%. ut if

someone ta%es the travelers card heAshe does not need to ta%e that currency on hand. !fter endorsement ban% will

create an aAc against that card number. Travelers card is an international debit card. Its a debit card because traveler

must have to deposit the amount on the ban% to get that card. 1ndorsement amount varies depend on how will he

travel *by road, by air or by sea+. !gain the endorsement amount *ban% gives+ varies country to country. ! person

can able to use his or her travelers can until his endorsed foreign currency have been finished. ut he can not use it

Card

Debit Card Credit Card

Internationa

Classic Card Travelers

Card

Gold Card

Remittance

CardLocal


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29

more that one year. There is no annual charge for this travelers card but there is a processing fee of 2. /rocessing

or every single travelers card is 2N it does not depend on the endorsement amount of foreign currency.

(i$itation: ! single person can not able to ta%e more than within a year because of angladesh ban%s

restriction.

5.1.3 /redit card:

Credit always creates liability. Credit card is one %inds of loan which is given by the ban% to its clients. ut the main

difference here to give a loan ban% wants e#ual amount of wealth to be mortgage or %ept to ban% until the loan

amount is repaid with interest. ut here ban% gives credit card only basis on some legal documents. If someone want

to ta%e credit card he or she needs to fill up a form provided by the (T) Card department and he has to submit the

necessary documents which is ban% re#uired to ensure his or her credit card. "ser gets benefit in two ways by using

these credit cards. One, they can withdraw cash from any booth which has GI7! logo and second, they can able to

buy products from the shop. !nd more interestingly charge for any point of sale is completely free.

There are two types of credit card

$. )ocal *Classic 4 gold+

2. International

5.1.3.1 (ocal:

)ocal credit card is used locally that means within the country. There is limit of withdraw money through this credit

card which is set by the (T) authority based on the documents he or she provided. !fter analy&ing all those

documents (T) approved his or her credit card *classic or gold+. It might be happen that someone wants to ta%e

the gold credit card but ban% found that he is not applicable for gold credit card. Then ban% should give him classic

one.5.1.3.1.1 /la!!ic /redit card:

$. !nnual service charge for classic credit card is Ta%a D.

2. Credit )imit is $, to ?D, ta%a.

5.1.3.1.2 Gold credit card:

$. !nnual service charge for gold credit card is Ta%a $


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(utual Trust an% card ivision by phone followed by written confirmation containing cardholder=s signature of

the said loss.

b+ 8otwithstanding the loss or theft of any Card or discloser of the /I8 in respect of any Card, (utual Trust an%

may charge and debit the Card !ccount the amount of each and every Card Transaction made or effected before

written confirmation by the Cardholder of such loss, theft or disclosure is received by (utual Trust an%

replacement Card may be made to the Cardholder on payment of re#uired charges in this regard.

5.3 ReApay$ent !y!te$! of credit a$ount:

If anyone buys from the shop by using credit card then he or she must have to repayment that amount within


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29

7elf employed group Two copies Color /hotograph */./. 7i&e+ duly attested by the

applicant.

Galid Trade )icense *if /roprietor+, /artnership eed *if

partnership+.

(emorandum of !rticles with Incorporation. Certificate *for

)td. Co.+.

Current si' months an% 7tatement *personal 4 Co.+.

TI8 Certificate *only personal TI8+ )atest *no more than

two years old+.

-ent !greement for officeAcompany premises.

/hotocopy of /assport *I> 7even pages 4 dollar

endorsement pages+.

/roof of -esidence *1lectricityA;!7!A Bas ill, if any+.

/roof of Car ownership */hotocopy of lue oo% of the car,

if any+.

/roof of T4T ownership */hotocopy of T4T ill, if any+.

/hotocopy of ClubA /rofessional membership *lf any+.

/hotocopy of 1'isting Credit Card.


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International

Cards

"nsecured Two copies Color /hotograph */,/, 7i&e+ duly attested by the

applicant.

7alary Certificate *if 7alaried+.

Galid Trade )icense *if /roprietor+ /artnership eed *if

partnership

Current si' months an% 7tatement *personal+.

(emorandum of !rticles with Incorporation Certificate *for

)td. Co.+.


endorsement pages+.

/roof of Car ownership */hotocopy of lue oo% of the car,

if any+.

/roof of -esidence *1lectricityA;!7!A Bas ill, if any+.

/hotocopy of ClubA /rofessional membership*lf any+

emand /romissory 8ote

/ersonal Buarantee from 7pouse.

"ndated Che#ue.

eclaration on T( form.

)ien Two copies Color /hotograph */, /, 7i&e+ duly attested by

the applicant.

/artnership eed *if partnership+.


)td. Co.+.


endorsement pages+.

TI8 Certificate *only personal TI8+ A latest *not more than

two years old+.

)ien confirmation from the respective ranch )etter of )ien

for !dvance against -.

emand /romissory 8ote */3$D2+.

)etter of !uthority.

eclaration on T( form.


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-C *-etention foreign

currency deposits+

Two copies Color /hotograph */./. 7i&e+ duly attested by the

applicant

7alary Certificate *if 7alaried+ Galid Trade )icense *if

/roprietor+

/artnership eed *if partnership+


)td, Co.+


endorsement pages+

TI8 Certificate *only personal TI8+ A )atest *no more than

two years old+

-C eclaration form.

und hold instruction

)ien confirmation from the respective ranch )etter of )ien

as per our format


)etter of !uthority eclaration on T( form

1-P *1'porters retention

#uote+

Two copies Color /hotograph */./. 7i&e+ duly attested by the

applicant


endorsement pages+

TI8 Certificate *only personal TI8+

/hotocopy of (emorandum 4 !rticles of !ssociation oard

resolution

und hold 4 replenish instruction

)etter of !uthority


)ien confirmation from the respective ranch

Chapter: 7i'

oreign 1'change epartment


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&.1oreign ;


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29

To perform their activities Q department have to follow some national and international rules strictly. !mong

these, oreign 1'change !ct.$9


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29

to the clients instantly. In this case the sender gives a pin code to the receiver. The receivers go to the ban% with

passport or any identification certificate and tell the pin code then the ban% give them amount. Through this

e'change house (T) get remittance of .E million in 2D.They also get the foreign remittance of T% 2?E$.D

million in 2?.

&.5;ndor!e$ent of /a!h:

Cash foreign currency can also be remitted through the endorsement in the passport. (T) *oreign e'change+

give endorsement service to its clients. In case of endorsing cash on passport, they re#uire valid passport and the

tic%et should be confirmed. !ny traveler can ta%e or endorse ma'imum for a year. The concerned officer

chec%s the last voyage of the purchaser. If he found that the purchaser has bought dollar less than in year then

he give the rest amount to the purchaser. or cash endorsement (T) maintain separate register and they charges

T% 2 as a service charge.

&.& #!!uance of *raveler! /he>ue */6:

(T) issues only !merican 1'press Travelers che#ue. or TC customer has to fill up a T( form. The clients also

have to fill up a purchase form. It has four copies. One copy for (T), one copy for !(1Q and two copy for the

customer. (T) charges $F commission for TC.

Re>uire$ent for purcha!ing */:

There are some re#uirements that are to be fulfilled by the TC purchaser. The re#uirements are3

• /assport holder himself has to present while issuing TC.

• The passport must be valid one.

• !ir tic%et has to be confirmed.

Step! involved in i!!ue of */:

• !fter verifying all these documents the customer is as%ed to fill up prescribed application form.

• In the application the customer states the amount he is wiling to endorse and it is to be verified that his

re#uired amount is within the stipulated.

• Then the customer pays cash or by debating his account the travelers che#ue is issued.

• 1ndorsement is given on the passport and on the tic%et. Customer fills up the T( form.

• /urchase application form has to be filled up by the purchaser.

• 1ntry has to given in the foreign currency register and in the Travelers Che#ue register.

&.' oreign /urrency 9ccount:

(T) opens foreign currency account. It is used for receiving foreign currency from abroad and sends the currency

to the abroad. It can be used in favor of the person or in favor of the e'porters.

ollowing papers are re#uired to open a foreign currency account:


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• 1'porters foreign currency account opening form*application form, two signature cards dully filed in and

signed with authori&ed seal and introduction+

• Two copies of passport si&e photographs of each operator attested by chairman of the company.

• 1'port registration certificate.

• !ttested photocopy of the membership certificate of the concerned association.

• 1'port proceed reali&ation certificateRdeclarationAunderta%ing regarding the utili&ation of the foreign

currency.

• In the case of limited company:

(emorandum and articles of association of the company.

/ower of attorney.

-esolution of the oard of irectors.

Certificate of Incorporation

Certificate of Commencement of business.

Trade license.

Import /rocedure

&. #$port )echani!$:

Import finance is an important activity of the foreign e'change department of (T). oreign 1'change department

of panthapath ranch *(T)+ is very active. To import, a person should be competent to be an importer. !ccording

to Import and 1'port control !ct $9D, the office of Chief Controller of Import and 1'port provides the registration

*I-C+ to the importer. !fter obtaining this, the person has to secure a )etter of credit authori&ation *)C!+ from

angladesh an% and then the person becomes a #ualified importer. e may re#uest or instructs the opening ban% to

open an )AC. he is also called an opener or applicant of the credit.

&..1 #$porter! application for (D/ li$it or )argin:

To have an import )AC limit, an importer submits an application to the Q department of (T) furnishing the

following information:

$. ull particulars of an% account.

2. 8ature of business.

. -e#uired amount of limit.


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! credit officer scrutini&es this application and accordingly prepares a proposal *C)/+ and forwards it to the ead

Office Credit Committee *OCC+. The committee verified it and if they are satisfied then sanctions the limit and

returns bac% to the branch.

&..2 (D/ 9pplication:

(T) provides a printed form for opening of )AC to the importer. This form is %nown as )etter of Credit

!pplication form. ! special adhesive stamp is fi'ed on the form. ;hile opening, the stamp is cancelled. "sually the

importer e'presses his desire to open the )AC #uoting amount of margin in percentage. The importer gives the

following information:

$. ull name and !ddress of the Importer.

2. ull name and address of the eneficiary

. raft amount.


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parties involved in a )AC, particularly the seller and the buyer can not be always satisfy the terms and conditions in

full as e'pected due to some obvious and genuine reasons. In that situation, the credit should be amended. (T)

transmits the amendment by tested tele' to the advising ban%. In case of revocable credit, it can be amended or

cancelled by the issuing ban% at any moment and without prior notice to the beneficiary. ut in case irrevocable

)AC, it cans neither be amended nor cancelled without the agreement the issuing ban%, the confirming ban% and the

beneficiary. If the )AC is amended, services, charge and tele' charge is debited from the party account accordingly.

&.12 pre!entation! of ocu$ent!:

The seller satisfied with the terms and conditions of the credit proceeds to dispatch the re#uired goods to the buyer

and alter that has to present the documents evidencing dispatching of goods to the negotiating ban% or before the

stipulated e'piry date of credit after receiving all the documents, the negotiating ban% then chec%s the documents

against the credit. If the documents are found in order, the ban% will pay, accept or negotiate to (T). (T)

chec%s the documents. The usual documents are the following:

$. Invoice.

2. ill of )ading.

. Certificate of origin.


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?. ill of e'change.

E. /re3shipment inspection report.

@. 7hipment certificate.

!fter receiving all the documents, the negotiating ban% then chec%s the documents against the credit. If the

documents are found are in order, the ban% will send it to the (T).

&.1&-artie! to (D/:

Importer !pplicant for )AC

Issuing an% It is the ban%s that openAissue a )AC on behalf of the importer.

Confirming ban% It is the ban%, which adds its confirmation to the credit and it is done on the

re#uest of issuing ban% confirming ban% may or may not be the advising ban%.

!dvising an% It is the ban% through which the )AC is advised to the e'porter. This ban% is

actually situated in e'porters country. It may also assume the role of confirming

and A or negotiating ban% depending upon the condition of the credit.

8egotiating ban% This ban% negotiates the bill and pays the amount of the beneficiary. The

advising ban% and the negotiating ban% may or may not be same. 7ometimes it

can also be the issuing ban%.

/aying ban% It is the ban% on which the bill will be drawn.

-eimbursing ban% This ban% reimburse the negotiating ban% after getting payment S instruction

from issuing ban%

&.1'/a!h (D/: when cash foreign e'changes are used to meet obligation against import of goods and services to a

country under an )AC is called a cash )AC.

&.1'.1-rocedure: before opening of a a cash )AC, the seller concludes a sales contract with the buyer for shipment

of certain commodity providing for payment credit and accordingly instruct (T) to open a letter of credit in favor

of seller. uring open cash )AC the importer has to submit the following in (T) foreign e'change departmentA

branch.

$. prayer for opening )AC

2. trade license

. I-C


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$. indemnityAunderta%en

$$. charge documents $ set

$2. !ny other if necessary.

!fter receipt the )AC application form along with all necessary papers (T) verify the following point:

$. verify the signature

2. ;hether the value, #uantity unit price and description of goods as mentioned in the )AC.

. whether I-C number, )C! number shipment date , e'piry date , negotiation time mode of

shipment country of origin are properly mentioned in the )AC application form.


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!s soon as lodgment is completed, the importer is to be intimated for retirement of the documents against payment

as per arrangement within specific period. (oreover import is to be lodged within E2 hours of it receipt date.

&.1'.4 Shipping guarantee:

7ometimes vessels carrying imported goods arrive at destination much earlier than the shipping documents received

by the )AC issuing ban%. In that case in absence of original shipping documents goods may be cleared by non

negotiable copy of documents against shipping guarantee issued by (T). !ctually the importer re#uest to the

(T) to issue shipping guarantee for clearance of goods against non3negotiable copies of documents received

directly from the e'porter as per credit items.

&.1'.5 (#):

!fter lodgment of import documents, the importer may re#uest to the (T) for clearance of consignment from the

port %eep the same to ban% warehouse. Then (T) clears the goods by creating loan on account of importer against

imported merchandise which is termed as )I(, after clearance from the port, goods are to be %ept in ban%

warehouse. Importer ta%es delivery of the goods against payment as per repayments schedule of the sanction advice.

To get the loan through )I( process customer should fill up the )I( registration form. ;hich are given below3

$. 8ame and address of importer

2. )AC and /! number with date

. )I( number


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Trust receipt is the receipt when importer doesnt able to pay the loan amount to the ban%. Importer re#uest is to the

(T) to open T- with a $


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!7 *free !longside 7hip6 "nder !7, the seller #uotes the price covering all his charges until such time as

goods are loaded on train at the specified railway station. The buyer is

responsible for all future necessary agreements and charges.

&.21/redit! occurred in (D/ operation:

uring )AC operation some credit facilities evolved to the importer and e'porter. These credit facilities are

mentioned below:

1'port Cash Credit *1CC+ a+ It is given to the e'porter for processing of raw materials.

b+ This is pre3shipment credit and short term in nature.

/ayment !gainst

ocument */!+

a+ This is related to the cash )AC

b+ !fter opening )AC, foreign e'porter sends goods to the importer and a bill of

e'change along with shipping documents to the )AC opening ban%. Then ban%

immediately ma%e payment to the e'porter if there is no discrepancies are found on

the shipping documents. an% hand over the shipping document to the importer only

after his recovery of payment from the importer. 7ince the ban% pay to the e'porter

on the basis of the shipping documents, this is called /ayment !gainst ocuments

)oan !gainst (erchandise

*)I(+

a+ )I( is occurred from /!

b+ !fter payment to the e'porter on the basis of shipping documents, ban% recovers

the amount from the importer. 7ometimes for financial crisis, importer fails to pay the

amount. In this amount, importer re#uest o the ban% to treat /! as credit and

handover the shipping documents to him. 7o that he can clear the imported goods

from the port. Then ban% convert the /! to regulate credit and handover the

documents to the importer and ta%e the imported goods as security of loan. 7ince this

loan is given on the imported goods, this is called )oan !gainst (erchandise *)I(+.

uration of this loan is very limited li%e one month.

oreign ills /urchased

*/+

a+ This loan is given to the e'porter.

b+ ;hen local e'porter gets a usence bill of e'change, he has to wait until the

maturity of the bill for receiving payment. 7ometimes he can not wait until maturity

and re#uest the ban% to purchase it. If ban% agree, then they give loan against the bill

of e'change. "pon maturity, ban% presents it to the drawee of the bill for encashment.

an% purchase it at discount rate.


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I/ )oan a+ ;hen )AC opener has no sufficient fund to purchase oreign e'change to open

)AC, then the ban% provides him credit to purchase necessary foreign e'change under

the ;17A 71(. This loan is called I/ )oan.

1'port /rocedure

&.22;


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• Galue of commodity #uoting its O, C-, CI etc.

• Insurance and mar%s.

• Inspection.

• !rbitration.

&.23.4;


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&.23.& Obtaining ;E-:

!fter having the registration, the e'porter applies to (T) with the trade license, 1-C and the certificate from the

concerned Bovernment organi&ation to get 1Q/. If the ban% is satisfied, an 1Q/ is issued to the e'porter. !n 1Q/

form contains the following particulars:

• 8ame and address of the !uthori&ed ealer.

• /articulars of the commodity to the e'port with code.

• Country of destination.

• /ort of destination.

• Puantity.

• )AC value in the foreign currency.

• Terms of sale.

• 8ame and address of the importer.

• ill of lading A-ailway receiptA airways billA post parcel receipt no, date.

• /ort of shipment.

• )and custom port.

• 7hipment date.

• 8ame of the e'porter with address.

• CCI41s registration number etc.

&.23.' )a+ing out and delivery of !hipping docu$ent!:

!ll carriers *-ailway, 7hipping+ and their agent s will ensure that the railway receipt, ills of lading and any other

documents of title to cargo are drawn only to the order of an !uthori&ed ealer designated for this purpose by the

respective e'porters and delivered to the authori&ed representatives. In the case of e'port, the e'porter get the

advance payment through ! ban% *(T)+ but the ill of )ading and other document may be endorsed by the

!uthori&ed ealer in favor of foreign importers and sent directly to the importers. If the goods reached earlier than

the documents to the foreign country, it causes inconvenience and involves payment of demurrage at the port of

destination due to delay in receipt of shipping documents. To avoid this type problem, shipping company re#uest the

negotiation ban% in angladesh to issue telegraphic delivery order to the importers ban%.

&.23. -reparation of ;


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#. 1'porter prepares 2 or sets of ills of 1'change or raft. It must bear a date and he number and

date of )AC or e'port order under which it is drawn. The date must not be prior to the date of

shipment.

##. It must be in the name of the beneficiarys ban% the draft is to be drawn to the issuing ban%. If the

shipper is not the beneficiary of the foreign )AC, the draft is drawn on the beneficiary named in that

credit who, in turn, draws the draft on the buyer. This situation arises when shipment is made on

the strength of a local )AC which is opened on bac%3to3bac% basis against a foreign )AC.

###. The draft may be at 7ight or "sance. "nder the oreign 1'change -egulation in angladesh,

e'port proceeds must invariably be repatriated into the country within < months from the date of

e'port. 7o, draft can not be longer than $2 days sight. 7ight bill is to ma%e payment immediately

on presentation of the bill. "sance bill is to be paid after the period say ,? 9 or $2 days,

specified in the bill has e'pired. 7o such draft must bear the date of shipment with date of maturity

calculated from the date of shipment and to be mar%ed on the draft.

#,. In the case of usance bill, the re#uisite foreign bill stamp must be affi'ed as per stamp !CT in

force in the country.

,. !mount of the draft must correspond to the value of the invoice and must not e'ceed the )AC

amount.

"6 /o$$ercial #nvoice:

! commercial invoice is a statement prepared by the e'porter containing full details of the goods shipped. It gives

description and price of the merchandise, #uantity, #uality, pac%ing details and mar%s, names and address of the

seller and buyer, )AC and contract no, terms of trade3 O, CI and C- etc, details of freight charges, insurance premium and other charges, name of the vessels, date of shipment, number of bills of lading etc.

(T) chec% the following thing before sending it to the importer:

I. They chec% the name of the foreign buyer and signature of the e'porter. They also chec% the invoice

number

II. They chec% very carefully the amount of the draft and invoice is same or not and is it within the )AC

value or not.

III. -e#uired number of invoices as per )AC plus 2 copies duly signed by the beneficiary should be

submitted. (T) submit one copy of commercial invoice with duplicate 1Q/ form to the

angladesh an% and %eep one copy for their record.

IG. The mar and number on the pac%ing shown in the A) must be identical with those given in the

invoice and other documents.

/6 "ill of (ading:

ill of )ading is the evidence of carriage of goods by sea. it contains brief description of the goods accepted for

transport. !ctually the shipping company issues the bill of lading but I is very important for he e'porter to e'amine


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that they are correctly issued to avoid delay in negotiation of documents. the following thing should be scrutini&ed

carefully:

I. It must be made out in the specific format of the shipping company according to the instruction of the

e'porter and maintaining the )AC terms.

II. ills of lading are issued in re#uired sets and presented to the ban%s along with sufficient number of

non3negotiable copies.

III. It must be stamped while issued I angladesh.

IG. It must be signed by the authori&ed agent of the shipping company.

G. It must list the port of departure and the port of discharge and the name of carrying vessels, name of

the shipper and the buyer, notifying the party and their full address as per terms of the )AC.

GI. It must give evidence of payment of freight. If the contract is for delivery on O basis, the bill of

lading should bear notation li%e 0reight payable5. If the price is on C- or CI basis, it must be

mar%ed 0reight paid5

GII. escription of goods, mar%s, numbers, gross and net weight, 1Q/ numbers should correctly

mentioned in the bill of lading.

GIII. ill of )ading should not be stale. If is stated in the )AC, the bill of lading presented to the ban% for

negotiation beyond 2 days becomes stale and is not accepted for negotiation.

6 -ac+ing (i!t:

! pac%ing list is prepared by the e'porter to indicate or e'plain the e'act nature, #uantity, #uality of the contents of

each pac%age in the shipment. This lists help importer to identify the goods and chec% them against the order. an%

also re#uires the pac%ing list.;6 /on!ular #nvoice:

It is a special %ind of invoice re#uired by some countries where consul or some other member of the consular

service office of the importing country signed. The main purpose is to enable the authorities of the importing

countries to collect the accurate information of the volume, values, #uantity, grade, source etc. They also use it for

statistical purpose.

6 /ertificate of Origin:

It is the document certifying the country of origin of the goods. It is very essential for e'port. Through this

certificate importer can understand where the goods actually produced or manufactured.

G6 Other certificate!:

7ome other certificates are re#uired during the shipment depending on the types of the products. ! weight certificate

is re#uired for grains, oil and for similar product. 0Certificate of !nalysis5 is re#uired for chemicals and drugs.

0/hyto Control Certificate5 is re#uired for the sale of plants, seeds, herbs, fresh fruits and vegetables.

&.23.0 7egotiation of ocu$ent!:


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!fter the shipment the e'porter should arrangement for early submission of the documents to the ban%, correctly

prepared in conformity with the terms of the credit for negotiation. The e'porter should remain in consistent touch

with the negotiating ban% for early negotiation of e'port bills. If any minor mista%e is detected or any document is

found missing, the same should immediately be corrected or supplied for early settlement of the matter.

&.24 )ode of pay$ent:

There are wide ranges of choices to receive payment against the e'ports of goods. "nder mutual understanding both

importer and e'porter fi'ed the mode of payment. There are different types of payment methods commonly used in

the international trade as given below:

&.24.1 9dvance -ay$ent:

The e'porter may re#uire that the importer should ma%e full payment for the goods to be e'ported in advance. If

e'porter negotiation is strong then this procedure e'ists. ;hen the relation between the e'porter and importer is

very good then importer gives full payment advance. In that case the e'porter sent all the documents directly to the

importer.

&.24.2 Open account:

This method of settlement is possible where the commodity commands buyers mar%et. In this method the e'porter

dispatch the goods to the importer and the importer give the payment in future date. ;hen there is very good

relation between the buyer and seller then they do it.

&.24.3 /on!ign$ent !ale: sometime the seller may have their own selling agent abroad. They send the goods to

their agent. The agent receives the goods and arrange store and sell it. Then they remit the money to the original

seller. The ownership of the goods throughout remains with the e'porter. Consignment e'port is allowed only in

respect of selected commodities.&.24.4 "ill! for /ollection: a documentary collection is an operation in which a ban% collects payment on behalf of

seller by delivering documents to the buyer. "nder this method, the goods are dispatched to the importers country

but the relative shipping documents, including the documents of title to the buyer and a bill of e'change are sent

through a ban% for collection of payments. This method is sometimes designated as 0Cash against /ayment5 *C!+

or 0ocuments against /ayment5 */+. This service is cheaper and more fle'ible than a documentary credit.

!nother method is fre#uently used to receive payment is by sending the documents on what is %nown as ocuments

against !cceptance *A!+. "nder this method, the documents are delivered to the buyer on acceptance of the bill

signifying his ac%nowledgement of the debt as well as a commitment to pay on the maturity date of the bill.

&.24.5 (etter of /redit: This is the most important method used widely to ma%e a bridge between importer and

e'porter. In the international trade sometimes buyer and seller do not %now each other. They open )AC and start

trade. In this case ban% act as guarantee. The )AC is an underta%ing by the importers ban% if the e'porter e'ports

goods and produces shipping documents and other papers, the ban% would ma%e payment to the e'porter.

&.25 i!crepant ocu$ent!:


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If ma6or discrepancies are found in documents and the same are not possible to be rectified, the following ways are

open for disposal of documents:

i. an% should immediately advise the importer to see% his acceptance of documents despite the

discrepancies. If the importer refuses to accept the documents, the ban% should the negotiating ban%

by tele' for instructions with regard to disposal of goods and documents.

ii. 7ometimes ban% may b prepared to negotiate the documents in spite of discrepancies and the amount

for documents are negotiated is held 0under reserve5

iii. In some cases where documents submitted differ from the conditions of credit and which can no

longer be corrected, the ban%er opts to send such documents on collection basis, the payment of

which is disbursed after the proceed are received.

&.2& ;


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including e'port duty. ;hen the relation between the client and ban% is good then they provide the ma'imum limit

of credit.

The e'porter may borrow money from the (T) in the following ways:

$. /ac%ing Credit.

2. !dvances under 0-ed Clause )etter of Credit5

. ac%3 to Sac% credit.

&.2.1 -ac+ing /redit:

(T) give short term loan with a fi'ed repayment date. an% allows this credit for buying, processing,

manufacturing, pac%ing and shipping of the goods meant for e'port. The ban% gives this credit to e'porter when he

gets the foreign order. The first step is to fi' a pac%ing credit limit based on the need of the borrower and the

e'porter is permitted to draw a part or whole of the amount of limit according his re#uirements. It gets repaid with

the proceeds of the bill drawn on the foreign buyer. /ac%ing credit advances does not normally e'tend beyond $@

days and has to be li#uidated by negotiation A purchase of the e'port bills covering the particular shipment for which

the pac%ing credit was granted. The pac%ing credit facility may be e'tended in form of hypothecation of goods,

pledge, and e'port trust receipt.

&.2.1.1 ypothecation of good!:

(T) provide this facility when the company has good reputation and relation with the ban% and when there is

good credit standing for procuring. The possession and ownership of the goods remain wit the e'porter and the

e'porter creates a charge in favor of the ban% on the goods hypothecated by signing a duly stamped letter of

hypothecation. or this case (T) usually as% for collateral or personal guarantee from the directors of the

company. an% also as%ed to the company to give them periodic statement on the hypothecated goods and theresponsible officer conduct inspection to verify the stoc%.

&.2.1.2 -ledge:

In this case the e'porter surrenders the physical possessions of the goods under the ban%s effective control. The

ownership of the ban% remains with the e'porter. The pledge creates an implied lien in favor of the ban% and ban%

can sell the goods for ad6ustments of the advance by giving notice to the e'porter on his failure to honor

commitment. (T) do not re#uire any collateral security.

&.2.1.3 ;


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In this case, )AC opening ban% of the importer authori&es (T) to ma%e advances to the e'porter prior to shipment.

It is intended to enable the e'porter to procure goods and e'ecute the order of the foreign buyer. It generally

happens when there is a very theres a strong commercial relationship between the e'porter and importer. The

advance is li#uidated against the e'port bills negotiated under the )AC. this clause in the )AC authori&ing the

negotiating ban% to ma%e advance to the beneficiary, is typed in red in% and thus the name 0-ed clause )AC5

&.2.3"ac+A to H"ac+ (D/:

(T) open this type of secondary )AC for e'port financing. It is a secondary credit opened by a ban% on behalf of

the beneficiary of the original credit, in favor of a supplier located inside or outside the original beneficiarys

country. The beneficiary in this case is a middleman who may not be the actual manufacturer of the e'ported goods.

! lien is created on the original e'port )AC as security. The two credits operate 0bac% to bac%5, one being issued on

the security of other. The e'porter gets the facility of purchasing goods without investing his own funds. In such

cases, the original credit should be an irrevocable credit. The terms and conditions of both th credits should be

substantially same e'cept:

• 7uppliers name of the bac% to bac% credit will be different.

• The invoice value of the good on the second credit is a little less than that of the first credit to give a

profit to the e'porter

• The validity of second credit should also be a little earlier than that of the first credit leaving

sufficient time for the e'porter to ship the goods within the validity of the first credit.

The beneficiary *7upplier+ of the second credit presents his bill together with necessary documents to the ban% after

dispatch of the goods to the e'porter to get payment. The e'porter then arranges for the shipmen of goods, attaches

the necessary documents and presents his own bill with the documents to the negotiating ban%. The supplier is

generally paid after negotiation of the documents submitted by the e'porter. y opening a bac%3to3bac% )AC, the

e'porter gets the facility of purchasing the relative goods without investing his own fund.

&.20-rocedure for !anction of -reA!hip$ent inance:

(T) as well as other ban%s ensured the following thing for pre3shipment credits:

i. (T) must chec% the e'perience of the customer in the line of e'port. The credit worthiness of the

e'porter or his e'port performance are to be verified from the financial statement.

ii. The )AC should be from a reputable ban% abroad whose status has to be ascertained. The )AC should

be irrevocable, unrestricted, valid, and preferably confirmed.

iii. 1'piry date of )AC should be properly recorded in the boo% and no drawing should be allowed against

an e'pired )AC.

iv. The period for which the credit is sanctioned should be clearly mentioned.

v. oth irrevocable )AC and the firm contract deposited with the ban% must be carefully scrutini&ed to

ensure that there are no conditions. )AC or firm sale contracts not only serve as evidence of definite


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arrangements for reali&ation of the e'port proceeds but also indicate the #uantum of finance re#uired

by the e'porter.

vi. The ban% officers should periodically inspect the goods and verify that they confirm the #uantity and

#uality.

vii. In the case of goods pledged to the ban%, guards and supervisors nominated or appointed by the ban%

should be posted to the godown. Comprehensive insurance should also be ta%en against the goods.

viii. Charge documents and other necessary documents as stipulated in the sanction letter should also be

properly obtained.

i'. The e'porter could be as%ed to ma%e a forward sale of the foreign e'change to the ban% if the bills

have to be drawn in foreign currency

&.3-o!tA!hip$ent inance:

(T) provide post3shipment facilities to their clients to continue their business process smoothly. This facility is

provided after the shipment of goods. ;hen the e'porter e'ports the goods abroad they have to wait long time for

getting their payment. In that time they need money to operate their business. !nd they as%ed for loan to the ban%.

(T) generally finance the e'porters at post Sshipment stage on verification of the credit worthiness and financial

soundness of both buyers and sellers. an% normally gives this finance facility in them following way:

• 8egotiation of documents under )AC.

• /urchase of foreign bill under ./ and .! ills.

• !dvance against oreign ills under collection.

&.3.17egotiation of docu$ent! under (D/:

!fter the shipment of the goods in terms of )AC, the e'porter presents the relative documents to the negotiating

ban%. The documents in the set generally include *a+ bill of e'change *b+ bill of lading *c+ marine insurance policy

*d+ commercial invoice *e+ certificate of origin *f+ inspection certificate *g+ pac%ing list or any other document

specified in the )AC.

;hen the documents are received under a )AC for negotiation, the negotiating ban% act as an agent of the foreign

ban% and verify the documents carefully. (T) verified and chec%ed the following documents for negotiation:

• The documents should be presented for negotiation before the e'piry date of credit.

• The amount of the bill does not e'ceed the amount available under the )AC.

• !ll the documents stipulated in the )AC are submitted and these are prima facie in order.

;hen the ban% is satisfied with the documents and if the documents fulfill the re#uirements for credit, they may be

negotiated and amount is paid to the e'porter. They apply the bill buying rate for this credit.

&.3.2-urcha!e of oreign "ill under .- and .9 "ill!:

7ometimes e'porter directly e'ports their goods without opening )AC. in this case they ma%e a contract between the

e'porter and importer. ocuments are delivered to the buyer through intermediary of the foreign correspondent.


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In that situation (T) finance or give loan to the e'porter against the A/ or A! bills. The credit is given after the

careful scrutiny of the credit worthiness, business e'perience and integrity of the drawer and the drawee. an% may

advances the ta%a e#uivalent of the foreign currency amount of the bill. In this case (T) chec% the following

things:

• efinite instructions must be given whether the documents are to be delivered against payment or

acceptance.

• It should be clear by the e'porter whether the sale contract stipulates that interest and collection charges

are to be paid by the overseas buyer or are to be observed by the e'porter.

• The e'porterAdrawer should give clear instructions whether the ban% can protest if the bills are dishonored

by non payment.

• The e'porter also has to give clear instruction on the action to be ta%en regarding the Clarence, storage,

insurance etc.

• The drawer must give instructions regarding the disposal of the proceeds. 7pecify the account to which it

must be credited or ad6usted.

&.3.39dvance again!t oreign "ill! under collection:

1'porter gives bill to the ban% for collection. In that time they may need fund or money to operate his business. The

ban% grants a loan of certain percentage of the bill and already has been sent for collection. In addition of the e'port

bill as security (T) usually as% collateral security.

;hen the bill is purchased the full value of the bill is paid to the e'porter. If margin stipulated, the full value less the

margin is paid to him. !fter purchasing the bill, the ban% becomes the holder of the bill. If the bill is dishonored the

ban% usually recover the advance from the e'porter.

&.3.4 #ncentive! to e


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Bovernment refunds the G!T, if the e'porter uses 6ute clothes and bags on the e'ported goods as pac%age.

#$port inance

&.31ocu$ent! u!ed for foreign trade:

or the international trade e'porter and importer used some documents. These documents are almost common in

every country. oreign trade involves the movement of good from one country to other, passing of ownership of the

goods from the seller to the buyer. The payment for the goods and its remittance from the importers is to the

e'porters country. These documents are by the negotiating ban% for settlement of claims. These documents are

classified into five categories:

• Commercial documents.

• Official documents.

• Insurance documents.

• Transport documents.

• inancial documents.

&.32/o$$ercial ocu$ent!:

The following commercial documents are generally used in foreign trade. These are:

• #nvoice!: this is the evidence the contract of sale and purchase between the buyer and seller. In the pro

forma invoice, the sellers give the #uotation of the goods to their potential buyer. If they agree then they

come to the contract. Commercial invoice is the seller bill for merchandise. In the commercial invoice the

seller describe his business name, #uality and #uantity of goods, unit price etc.

• /ertificate of origin: it is the statement that specifies where the good were produced. 7ometimes there is

restriction for foreign trade for the goods produced in certain country. It the part of shipping documents

when the importing country re#uires the production of the certificate for the clearance of the imported

goods. 7uch certificate is issued by chamber of commerce, trade associations or any other authority

authori&ed by the government

• 8eight note!: it is a certificate which indicates the weight of the goods to be carried to the destination by

the carrier and the weight should tally with that shown in all the other documents. It is issued by a public

agency. This is mainly re#uired for transportation


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• -ac+ing li!t: This list gives the description of the goods, net weight and gross weight, measurement etc. it

helps to identify the contents. an% re#uires this pac%ing list for their financial interest in the merchandise.

• Iuality or in!pection certificate!: this is the certificate declaring that the goods have been e'amined and

found to be in accordance with the contract of sale. This is signed by the supplier but the contract of sale

may re#uire, it should be issued by recogni&ed independent inspection body.

&.33 Official docu$ent!:

The official documents include the following things:

• /on!ular #nvoice: (ainly !merican continent re#uires this special type invoice for import. !ny false

declaration in this involves heavy penalty.

• (egalied #nvoice: some countries re#uire that commercial invoice should be countersigned and stamped

by the authori&ed officer in their embassy. 7everal middle3east countries re#uired this type of invoice.

• "lac+A li!ted certificate: some countries do not allow import from other countries for political reasons.

This countries and e'porters are blac%3listed. In such case the seller has top provide this certificate as

evidence that all parties involved in the trade are not blac%3listed.

&.34 #n!urance ocu$ent:

Trader re#uires insurance for the safety of their goods imported or e'ported. !fter the shipment the goods may be

damaged or lost for various reasons. To avoid this ris% they need marine insurance. (arine insurance comprises the

following:

• (arine cargo insurance.

• (arine ull insurance.

• reight.

There is various type of marine insurance policy who is differing in respect of the cover provided to the insured.

These are the followings:

• loating policy.

• Time policy.


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• Goyage policy.

• (i'ed policy.

• Open cover or ban% policy.

• Galued policy.

• "nvalued policy.

• 7pecific policy.

&.35 *ran!port ocu$ent:

These are the documents which evidence that the goods have been delivered to the name shippers, airlines or

transporter for carriage to a named port, air port or place of delivery. The following documents are used in the

international trade:

• !ir way illA !ir consignment note

• (ates -eceipt.

• ill of )ading.

• /ost parcel documents

Chapter: 7even


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Hob -esponsibility

'.1 Job Re!pon!ibility:


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In my three monthsTerm paperperiod I wor%ed in different department of (T) panthapath branch. asically I

wor%ed in the Beneral an%ing department and oreign e'change department. In the Beneral an%ing and )oan 4

!dvance, I wor%ed almost one and half months. -est of the time I wor%ed in the foreign e'change department.

In the general ban%ing department I wor%ed in the account opening section, and accounts and IT and Clearing

section. !nd in the foreign e'change department I wor%ed in the import section and e'port section.

'.2 Specific re!pon!ibilitie! of the job:

In B and foreign e'change department I wor%ed in the following things:

'.2.1 9ccount opening:

!t the initial stage I was sited to the front des% to provide information to the clients. I provide them account opening

form and told the necessary documents need to open the account. In that case they are re#uired two copy passport

si&e photograph, the photo of the nominee, photocopy of a valid passportA driving licenseA certificate from the

chairman or the national I card and the signature of the introducer. Then I give entry of that information which are

provided by the client to the computer and lin%ed it with the flora ban% software.

'.2.2 /he>ue receive!:

I received accounts payee che#ue that was send to the clearing house for clearing. In this 6ob I have to chec%

carefully the amount, the signature and the date of the che#ue, ban% name, branch name on the credit voucher and

most importantly I chec%ed the payee name in both che#ue and credit voucher. ecause it is must have to be same.

Then I send it to the accounts department.

'.2.3 -ay order:

ew days I prepared the par order. ;hen the customer wants to give money in the ha%a city they can give pay

order to their party. In that case they have to fill up a form *credit voucher+ and deposit the money to the cashcounter with commission. Then the authori&ed officer give received sill and signature. Then I write /O to the /O

form. Then I have to ta%e signature form the authori&ed officer and give it to the clients after ta%ing the signature in

the /O register and pay order bloc%.

'.2.4 O"/ Out@ard "ill for /ollection6:

In the accounts section I did OC. In that case ban% sends the che#ue outside the ha%a city for collection. In that

case I have to write all the information in the OC register and give OC number to the che#ue and send it to the

principal officer for chec%ing and signature. If there is any branch of (T) then we address to that branch, if not

we send it to the same ban% for collection. uring that time I have to write a voucher. !fter chec%ing the entire thing

I send the che#ue through courier. ;hen the che#ues came bac% after collection, I have reali&ed it.

'.2.5 Re$ittance:

;hen remittance comes to our ban% I wrote it down to the register and wrote a credit voucher and gave it to the

principal officer of account section.

'.2.& -o!ting:


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;hen clients give their non cash che#ue for collection, I have given the posting to the computer. There is special

software which is used in this purpose named 08I!75. The debit side and credit side should be same.

'.2.' Scanning:

In the accounts section I have done scanning. !fter opening an account the accounts opening section send the

signature card for scanning. !fter scanning the signature card I have lin%ed it to the flora ban% software.

'.2. (D/ for$

In the foreign e'change department I have provided )AC opening form to the clients. The number of the form should

be registered in the register boo%.

'.2.0 #)-:

1very month an% has to send I(/ to the angladesh an%. They have to fill up an I(/ form. Then stapled one

commercial invoice, one copy of pro3forma invoice and the form should be sent to the angladesh an%. In that

form I have written the name of the importer and the e'porter, #uantity, 7 code, amount in foreign currency,

country of origin , destination etc.

'.2.1 other @or+ activitie! in the foreign e


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• 7ome wor%s of B have to the accounts section that ta%es more time and it arise conflict.

• 1mployees are not very efficient for solving clients problem.

•

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