Training Manual_77th FTC

Training Manual

Training Manual

on

77th Foundation Training Course for TA (Cash)May 17 to May 28, 2015 Prime Bank Limited

HR Training and Development Center

Al-Haj Mansion (3rd Floor), Head Office, DhakaPrime Bank LimitedHR Training and Development Center

Al-Haj Mansion (3rd Floor), 82 Motijheel C/A, Dhaka FOUNDATION TRAINING MANUAL SLTopic(s)Page #

01Account Opening- Personal, Non-personal/Corporate and Consortium Accounts 03

02Cash Management: Maintenance of Various Cash Insurance Limit(s), Exchange of Soiled/Mutilated note, Preparation of Cash Balance Book etc.07

03Negotiable Instruments Act, 188110

04Bank Company Act (Amended - 2013)18

05gvwbjvwis cwZiva AvBb, 201225

06Bangladesh Automated Clearing House (BACH), BEFTN, ALTITUDE, and RTGS36

07Deposit Schemes of Prime Bank Ltd & Premature encashment of FDR48

08Liability products in Islamic mode of Operations in Prime Bank Ltd.58

09Contract Act 1872: Essential Elements of Contract, Indemnity and Guarantee, Different types of Guarantee Issued by Bank65

10Local Remittance Issuance of DD, PO, PS, SDR etc. Isuance of Duplicate DD etc. and Online Banking71

11Rules & Procedures of Inward & Outward Foreign Remittance78

12Etiquette and Manner in Banks89

13Ethics in Banking92

14Some Laws, Acts, Policies, Bangladesh Bank orders for Banks & Financial Institutions99

Email Address: [email protected]: Prime1472All lecture copies will be available to the above mentioned email address.

Special Instruction: Do Not Delete any email from inbox & Do not try to change the password.Subject/TopicAccount Opening- Personal, Non-personal, Corporate and Consortium Accounts

HR-TDC

Account opening is a very important task to establish banking relationship with a customer. If the banker can ensure opening of an account properly complying the rules and regulations of Bangladesh Bank as well Head Office, they can protect themselves from the lapses, inadequacies, errors, fraudulent activities and malpractices, a customer wants to commit through an account opened and maintained with a bank. Therefore, the banker is required to take utmost care while opening account(s). In accordance with Sec. 3(b) of Negotiable Instrument Act-1881, a banker means a person transacting the business of accepting, for the purpose of lending or investment, deposits of money from the public, repayable on demand or otherwise and withdrawable by Cheque, draft or otherwise and includes any post Office Savings Bank.

NATURE OF ACCOUNTS:

a) Personal

b) Non-personal/Corporate

Corporate Accounts are:

i) Limited Company (Private & Public);

ii) Partnership Firm;

iii) Association/ Club/ Charity/ Trust/ Society etc.

iv) Sole Proprietorship.

For opening of an account a customer is to apply to bankers in a prescribed form which usually contains the following informations/ clauses/ steps:

In case of Personal Account:

1. Title of Account/ Name of the customer

2. Type of Account

3. Number of Account

4. Name of Branch

5. Name of Currency

6. Operating Instruction

7. Address (Present & Permanent)

8. Introducing information

9. Initial deposit

10. Nominees particulars

11. Signing Instruction

12. TIN Number

13. Sources of fund

14. Personal information

15. Transaction Profile (TP)

16. Know your Customer (KYC) Form

17. Nature of business

18. Networth of the customer

19. Expected monthly transactions

20. Expected number of monthly Transactions

21. Expected number of Cash Transactions

22. Expected number of monthly Cash Transactions

23. Overall Risk Grading

24. Information letter on Money Laundering Prevention Act- 2012

25. Approval of Head of the Branch

26. Caution letter against Money Laundering

27. Letter of Thanks

28. Letter of welcome

In case of Non-personal Account/ Corporate Account:

1. Title of Account

2. Type of Organization

3. Name of Currency

4. Address of Organization

Registered address

Business/ Office address

Factory/Industry address

5. Trade License no. and date.

6. Registration Authority and Country (Local & Foreign)

7. Registration no.

8. Tax ID number

9. VAT Registration certificate

10. Nature of business

11. Introducers particulars

12. Initial deposit

13. Sources of fund

14. Signing instruction

15. Personal information

16. Transaction Profile

17. KYC form

18. Networth of the customer

19. Expected number monthly transactions & volume

20. Expected number of monthly Transactions

21. Expected number of Cash Transactions & volume

22. Expected number of monthly Cash Transactions

23. Information letter on Money Laundering Prevention Act- 2012

24. Letter of Thanks

25. Letter of welcome

26. Caution letter against Money Laundering

27. Others paper of document if deem necessary.

The related circulars must be followed meticulously being issued by Head Office from time to time while opening the various accounts.

Mainly the following documents are to be obtained while opening the various accounts:

A. Savings Bank A/C:

- Photograph of the account holder(s) attested by the introducer/ Branch officials

Introducer ( other account holder accepted to the Branch officials)

Photocopy of National Certificate/ Photocopy of passport/ copy of National ID Card.

KYC form dully filled in;

Transaction Profile

Caution letter against Money Laundering

Letters of Thanks

Letter of Welcome

B. Individual/Joint A/C

Recent two copies of photograph of the account holder(s) who will operate the A/C

Introduction

Nationality certificate or photocopy of Passport (Relevant Pages) / Copy of National ID Card

Transaction Profile

KYC Form

Operational instruction ( In case of joint A/C)


Letter of Thanks & Letter of Welcome

C. Proprietorship Firm

Recent two copies of photograph of the account holder(s) who will operate the A/C;

Sole proprietorship declaration;

Introduction;

Certified copy of valid trade license;

Trade seal;

Nationality certificate or photocopy of Passport (Relevant Pages); Copy of National ID Card.

Transaction Profile

KYC Form duly filled in;



D. Partnership Firm

Recent two copies of photograph of the account holder(s) who will operate the A/C;

Introduction

Certified copy of valid trade license;

Trade seal;

Certified copy of partnership deed duly notarized registered and signed by all the partners;

Nationality certificate or photocopy of Passport (Relevant Pages), Copy of National ID Card.

Transaction Profile

KYC Form.



E. Trust

Two copies of photograph of the account holder(s) who will operate the A/C;

Uptodate list of members of the Trustee Board

Certified copy of Deed of Trust;

Certified copy of the Resolution of the Trustee Board for opening & operation of the account;

Introduction

Seal(Designation wise) who will operate the A/C;


Transaction Profile

KYC Form



F. Club/ Society/ School/ College


Certified copy of Bye Laws & Regulation /Constitution;

Certified copy of Resolution for opening & operation of the A/C;

Uptodate list of Officers/Bearers(office bearers);

Introduction

Seal (Designation wise) who will operate the A/C;


Transaction Profile

KYC Form



G. Limited Company


Certified copy of the Memorandum of Association & Article of Association;

Certificate of Incorporation;

Certified copy of Board Resolution for opening & operation of the A/C;

List of Directors with Signature (up-to-date) In Letter Head Pad.

Introduction

Official Seal (Designation wise) who will operate the A/C;

Form-XII(if old company) to know the up to date position of directors.

Form 117((if takes over another company)

Transaction Profile

KYC Form


Letter of Thanks & Letter of Welcome Certified copy of the Certificate of Commencement of Business (Incase of Public Limited company)

Valid Trade License;

H. Minor A/C

Two copies of photograph of the account Operator (guardian) who will operate the A/C

Introduction

Nationality certificate of the account operator or photocopy of Passport (Relevant Pages)/ copy of National ID Card

Minors Birth Cirtificate/

Minors date of birth & photograph duly certified by the guardian.

Transaction Profile

KYC Form


Minors attainment of major to be mentioned on the form


Subject/TopicCash Management: Maintenance of Various Cash Limit(s), mutilated note, Preparation of Cash Balance Book etc.

K. Z. SHOHAG, SEO, Motijheel Branch

CASH MANAGEMENTCash Management is a process by which cash in charge forecasts the future demand of liquidity, manage the availability of cash, set the officers in counter as needed and take the managerial decision where needed.

Cash Management in a Bank is crucial to ensure smooth customer service. This is one of the most important parts of total banking as well as General Banking. In order to meet up cash requirement, a customer has to visit the cash counter of his / her desired branch. Generally, the Principal Branch/Local Office acts as cash feeding/ managing branch of a Bank. It acts as the central depository of cash for all the branches within a specified area.

Cash Management is not only the routine work but also a managerial decision making task of cash in charge. Here cash in charge acts as a manager. That is why cash in charge is called cash manager.

Facts involve in cash Management

1. Insurance:Each Branch has, its own 3 (three) insurance coverage:-(a) Vault Limit Insurance : This is a Insurance for the cash which keeps in the Vault Room.

(b) Counter Limit Insurance : This is for cash which remains in the cash counter.

(c) Transit Limit Insurance : This Insurance covered all cash carrying transaction. 2. Cash remittance, inward & outward:

Excess cash of Branches are deposited in the Principal Branch / Local Office / Bangladesh Bank through out ward cash remittances.

Shortfall of cash in branches are also collected from the Principal Branch / Local Office / Bangladesh Bank through in ward cash remittances.

CASH RECEIVE

One of the most important functions of cash department is to receive cash from the customers.1. Deposit Slips

Deposit slips are used for depositing both cash and cheques into an account. Deposit may be for crediting to customers account or for any other purpose such as for issuance of TT, DD, PO, FDR, SDR, SP and other Utility Bills etc. in all the cases, the following jobs must be ensured:

(a) the deposit slip used is a prescribed one of the bank,

(b) the deposit slip should be correctly and properly filled in and signed,

(c) the amount should be written both in words and figures correctly.2. Procedure

(a) Writing of denomination on the overleaf of the voucher.

(Denomination should be verified by calculator.)

(b) Counting of money.

(c) Amount to be written in word and figures with red ink on the face of the voucher,

(d) Signature of Receiving Officer.

(e) Duly stamped by cash receipt seal.

(f) Entry to be passed in the receipt register.

(g) Release of the receipt register by the 2nd signatory.3. Precaution to be taken while receiving cash: Counting Machine can only ensure the accuracy of the amount but the genuineness of the currency notes can only be ascertained through human intelligence. Therefore, before receiving cash each bundle must be examined manually in order to detect counterfeit currency, if any.

CASH PAYMENT

Another most important function of this department is to pay cash to banks clients. Cash is paid through cheque leaf supplied by the bank.1. What is a Cheque?

A cheque is a bill of exchange drawn on banker to pay account holder or bearer on demand.2. Parties to a Cheque:01. Drawer: Drawer is the account holder.

02. Drawee: Drawee is the bank who is to pay the money.

03. Payee: Payee is the beneficiary who is to receive the money.

3. Scrutiny of a Cheque: We know that a cheque is the account holders order to the bank (drawee) to pay money from his account. Therefore when a bank makes payment of a cheque, it has to make sure that the same has been issued by the account holder. In other words the bank has to make sure that the cheque is genuine.

The following are the points to be taken into consideration by a banker while scrutinizing a cheque before payment;

(a) Date-Stale or post dated.

(b) Place-Name of Branch and cheque series accordingly.

(c) Crossed or Open Cheque.

(d) Posted seal & tracer number.

(e) Pay Cash seal

(f) Signed by Passing officer

(g) Material alteration/mutilation.

4. Procedure(a ) Writing denomination on overleaf of the Cheque. (b) Duly stamped by cash paid seal (c) Entry pass in the paying register.

(d) Release by the paying officer.

5. What is Stale Cheque?

If a cheque is presented for payment after six months from the date appearing on the cheque, it will be treated as Stale. The drawee banker does not honor such an instrument unless revalidated by the drawer.

Example: Date of issue 01.01.2013 Date of Presentation 08.07.20136. What is Post Dated Cheque?

If a cheque is presented for payment bearing a future date it will be treated as a Post-dated cheque and a bank will not pay such a cheque. But it can pay on the date appearing on the cheque or thereafter.

Example: Date of issue 10.07.2013 Date of Presentation 07.07.20137. Sale / Purchase of Prize bond & Maintaining of Register:

*Sale of Prize Bond: If your branch sales prize bond; you have to pass by simple credit voucher, mentioning serial numbers and make necessary entry in the register.

*Purchase of Prize Bond: If your branch purchases prize bond; you have to pass by cash debit voucher mentioning serial numbers and make necessary entry in the register

8. Sorting; Stitching & Leveling:(a) Notes should be sorted out into non-issuable and re-issuable and then make packets of 100 pieces each.

(b) Defective/Mutilated notes must not be kept in packets of good notes.

(c) Denomination notes of Tk. 1000, Tk. 500 & Tk. 100 to be stappled after using level in the packet & remaining notes i.e. 50, 20,10,5,2 &1 will not be stitched but bounded by the rubber bend. (d) Every packet should be signed by the counting & checking officer.(e) Branch round seal to be affixed on the level.

(f) Label to be affixed without attaching gum in the packets of denomination Tk. 50, 20,10,5,2 &1.CASH BALANCINGEvery day total receipt from clients & payment to clients related register maintained by branches to comply with the computer i.e. Cash Balancing.

1. Maintaining of Cash Balance Book:Opening balance added with total receipts & then less total payments i.e. Cash In Hand. The cash in hand are kept in denomination wise in the cash balance book .

2. Vault Register: Entry of the currency withdrawn or deposited to the vault with denomination and mentioning the time.3. Maintenance of Keys & Key Register: Duplicate set of vault/ Iron Safe Keys must be deposited with other Bank/Branches and should be withdrawn every 6 (six) months i.e. both set of keys shall be in use by interchanging the same in every 6 (six) months.

Records of Keys:

(a) As soon as keys of the vault / iron safe which included keys of the chubb door & the grill door are received by the branch all the keys shall be recorded in the key register.

(b) Name of the officers to whom the keys are allocated shall be recorded in the key register with date & time of allocation. Number of keys allocated to each office shall also be recorded in the key register against their name using one page for one key.

(c) The officer shall put their specimen signature in the key register as token of acknowledgement of the keys allocated to them and this is to be authenticated by the branch manager.

Flow Chart of Cash Management

Subject/TopicThe Negotiable Instruments Act, 1881

HR-TDC

IntroductionThe law relating to Negotiable Instrument is contained in the Negotiable Instrument Act, 1881. The law came into force on 1st March 1882. This is not the law of one country or one nation; it is the law of the commercial world in general.

Utilities of the Negotiable Instrument act

a. Provide legal status.

b. Worldwide acceptability of instruments.

c. General confidence amongst the users.

d. To bring uniformity into forms and applications.

e. Guarantee judgments to any dispute in using instruments.

Negotiable Instrument

The term Negotiable Instrument means a written document which creates a right in favour of some person and which is freely transferable. A Negotiable Instrument is one, the property in which is acquired by any one who takes it bonafide and for value notwithstanding any defect in the title of the person from whom he took it. Thus free negotiability is an important characteristic of a Negotiable Instrument.

According to section 13 of the NI Act, a negotiable instrument means a Promissory note, Bill of Exchange and Cheque payable either to order or to bearer.

Negotiation

When a Promissory Note, Bill of Exchange or Cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated. The term negotiable means transferable or exchangeable for value. Negotiation therefore involves the transfer of right, title and interest of a person in a Negotiable Instrument to another to give a valid title to the transferee and make him a holder thereof. A person taking a Negotiable Instrument in good faith and for value is not affected by any defect in the title of the transferor.

Negotiation & Simple Transfer/Assignment

The term assignment means transfer of ownership of an article by means of a written and registered document under the provision of the Transfer of Property Act. The assignee gets the rights of a holder but not of a holder in due course. In other words, the assignee only acquires the rights of assignor and no more.

Promissory NoteSection 4 of the NI Act defines a Promissory Note as an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker to pay a certain sum of money only to, or to the order of a certain person, or to the bearer of the instrument.

Characteristics:

1. It is an instrument in writing:

A mere verbal promise to pay is not a promissory note. The promise should be in writing.

2. It is promise to pay

There must be an expressed undertaking or promise to pay. A mere acknowledgement of the debt will not suffice.

Bank notes and currency notes though are similar to promissory notes in every aspect, have been expressly excluded. They are considered as money and not merely securities for money. A currency note is a note issued by the Government containing a promise to pay to the bearer a certain sum of money on demand. A Bank Note is a promissory note issued by a banker for payment of money to the bearer on demand.

3. The undertaking to pay is unconditional

The payment should not depend upon contingencies which may or may not happen because uncertainty badly affects the business and commerce.

4. It is signed by the maker

The person who promises to pay must sign the instrument even though it might have been written by the promisor himself. There are no restrictions regarding the form or place of signature in the instrument. It may be in any part of the instrument.

5. The maker must be certain

The note itself must show clearly who is the person agreeing to undertake the liability to pay the amount.

6. The payee must be certain

The instrument must point out with certainty the person to whom the promise has been made. The payee may be ascertained by name or by designation.

7. The promise should be to pay money and money only

Money means legal tender money and not old and rare coins. A promise to deliver paddy either in alternative or in addition to money does not constitute a promissory note.

8. Amount should be certain

One of the important characteristics of a promissory note is certainty not only regarding the person to whom or by whom payment is to be made but also regarding the amount.

Bill of ExchangeSection 5 of the NI Act defines Bill of Exchange as an instrument in writing containing an unconditional order, signed by the maker directing a certain person to pay (on demand or at a fixed or determinable future time) a certain sum of money only to, or to the order of a certain person, or to the bearer of the instrument.

Characteristics:

1) It must be in writing conform2) It must be signed by the drawer

3) The drawer, drawee and payee must be certain.

4) The sum payable must also be certain

5) It should be properly stamped

6) It must contain and express order to pay money and money only.

Classification of Bills:

Bills can be classified as follows:

1. Inland and Foreign Bills

2. Time and demand Bills

3. Trade and Accommodation Bills

1. Inland and Foreign Bills

A Bill is drawn by a merchant in Dhaka on a merchant in Chittagong, the bill is an inland Bill.

A Bills which is not an inland bill is a foreign bill. A bill drawn outside Bangladesh on any person residing outside Bangladesh is a foreign Bill.

Usance: Time fixed for the payment of bills drawn in one country and payable in another is called usance.

2. Time and Demand Bills

Time Bill: A bill payable after a fixed time is termed as a time bill. A bill payable after date is a time bill.

Demand bill: A Bill payable at sight or on demand is termed as a demand bill.

3. Trade and Accommodation Bill:

Trade Bill: A bill drawn and accepted for a genuine trade transaction is termed as trade bill.

Accommodation Bill: A bill drawn and accepted not for a genuine trade transaction but only to provide financial help to some party is termed as an accommodation bill.

Illustration: A is in need of money for three months. He induces his friend B to accept a bill of exchange drawn on him for Tk 5.00 lac for three months. The bill is drawn and accepted. The bill is an accommodation bill. A may get the bill discounted from his bankers immediately paying a small sum of money as discount. Thus, he can use the funds for three months and then just before maturity he may remit the money to B, who will meet the bill on maturity.

Difference between a Bill of Exchange and a Promissory Note:(1) Number of parties:

There are three parties in case of a Bill of Exchange drawer, drawee and payee. One person may however, assume any of the two capacities out of the three. But in case of promissory note, there are only two parties maker and payee.

(2) Promise and order:

A Promissory Note contains a promise and an undertaking and not an order to pay. A Bill of Exchange must at least imply that the drawer has a right to ask the drawee to pay.

(3) Acceptance:

Bill payable after sight requires acceptance of the drawee before it is purchased for payment while a Promissory note does not.

(4) Nature of liability:

The liability of a maker of a note is primary and absolute but that of a drawer of Bill of Exchange is secondary and conditional since he can be held liable only on the default of the acceptor in payment of the money due and provided the fact of dishonor has been notified to him.

(5) Makers position:

In a Promissory Note maker stands in an immediate relationship with a payee, whereas in a Bill of Exchange the maker (i.e., drawer) stands in immediate relationship with the acceptor and not the payee.

ChequeSection 6 defines a Cheque as a Bill of Exchange drawn on a specified Banker and not expressed to be payable otherwise than on demand.

Characteristics:

A cheque is also, therefore, a Bill of Exchange with two additional qualifications:

2) It is always drawn on specified Banker

3) It is always payable on demand.

Difference between a Bill of Exchange and a Cheque:(1) A Bill of Exchange is usually drawn on some person or Firm while a Cheque is always drawn on a Banker. In case of Bill of Exchange, drawee can be any one including a Bank. A Cheque is generally used for inland payment but a Bill of Exchange may be used both for inland and foreign payments.

(2) It is essential that a Bill of Exchange must be accepted before its payment can be claimed. A Cheque does not require any such acceptance.

(3) A Cheque is always payable on demand. A Bill of Exchange may be payable on demand or on the expiry of the fixed period.

(4) A Cheque is payable immediately on demand without any days of grace but in case of a time Bill of Exchange, three days of grace allowed from due date, within which the payment can be made.

(5) A Bill of Exchange must be properly stamped. A Cheque does not require stamp.

Uncommon features of Negotiable Instruments

FeaturesPromissory NoteBill of ExchangeCheque

Parties2 (Two): Maker & Payee of the promise3 (Three): Maker, Drawee, Payee3 (Three): Drawer, Drawee and Payee

AcceptanceNot requiredA legal necessityNot required

PeriodPayable on demand or after a certain periodPayable on demand or after a certain periodOnly payable on demand

Promise or OrderA promise to payAn order to payAn order to pay

StampA legal necessityA legal necessityNot required

CrossingCannot be crossedCannot be crossedCan be crossed

Grace daysNo grace of days after the expiry of time3 (Three days of grace after the expiry of timePayable on demand

Liability in case of Non-presentationThe maker is not free from liabilityThe acceptor is liable to payThe maker is not free from liability.

AreaGenerally inlandInland and foreign bothOnly on the bank of the depositor

Demand Draft

Demand Draft is also a Negotiable instrument according to Section 85(A) of N.I. Act. Demand Draft is drawn by one Branch of a Bank on another Branch of the same Bank instructing the later to pay specified sum of money to a named payee or to his order. The essential features of a Bank Draft are as under:

1. It is drawn by a Banks Branch on another Branch.

2. It can not be made payable to bearer

3. Its payment cannot be stopped or countermanded.

4. It is always payable on demand.

Drawer & DraweeThe maker of a Bill of Exchange or Cheque is called the drawer, thereby the person directed to pay the money by the drawer is called the drawee.PayeeThe person named in the instrument to whom or to whose order the money is directed to be paid by the instrument is called the payee.

HolderHolder is either the original payee or endorsee.EndorserWhen the holder transfers or endorses the instrument to any one else the holder becomes the endorser.

EndorseeThe person to whom the instrument is endorsed is called the endorsee.Holder in due course

Holder in due course means who for value consideration becomes the possessor of a negotiable instrument payable to bearer or the endorsee or payee thereof before the amount mentioned in the document becomes payable without having sufficient cause to believe that any defect existed in the title of the person from whom he derives his title.

The essential qualifications of a holder in due course may, therefore, be summed up as follows:

1. He must be a holder for value consideration.

2. He must have become a holder (possessor) before the date of maturity of the negotiable instrument.

3. He must have become a holder of the negotiable instrument in good faith. Good faith implies that he should not have accepted the negotiable instrument after knowing about any defect in the title to the instrument. But notice to defect in the title received subsequent to the acquisition of the title will not affect the rights of a holder in due course.

4. A holder in due course must have the negotiable instrument complete and regular on the face of it.Payment in due coursePayment in due course means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession therof under circumstances which do not afford a reasonable ground of believing that he is not entitled to receive payment of the amount mentioned therein.

These conditions should be observed for payment in due course:

1. Payment must be in accordance with the apparent tenor of the instrument.

2. Payment in order to be payment in due course must be in all good faith i.e., bona fide. Person making payment should have made the payment under the belief that the person demanding the payment is legally entitled to it.

3. The drawee must not be guilty of any negligence in making the payment.

4. Payment must be made to person who has the actual possession of the instrument. Person making the payment must insist on seeing the instrument before payment and obtain its delivery to himself on payment.

5. Payment should not be made under circumstances which afford reasonable ground for believing that the person was not entitled to receive the amount mentioned in the instrument.EndorsementWhen a maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation on the back or face thereof or on the slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended, to be completed as Negotiable Instrument he is said to endorse the same and is called the endorser.

Endorsement may be of any of the following kinds:1. Blank or General EndorsementIn the case of an endorsement in blank, the person making it signs on the back of the negotiable instrument his name only. He does not make any mention of the name of the endorsee. It is to be noted here that there is no difference between a negotiable instrument endorsed in blank and one payable to the bearer. In both cases the property will pass by mere delivery only.2. Full or special endorsementIt is endorsement in full when the person signing adds direction to pay the amount to or to the order of a specified person. A blank endorsement can be easily converted into special endorsement by any holder of the negotiable instrument. Illustration:

(i) A bill is payable to the order of Mr. James. He signs on the back of the bill thus: James. This is an endorsement in blank.

(ii) If in the above case Mr. James signs after putting these words pay to Mr. Phillip, This is an endorsement in full.3. Partial endorsement

A negotiable instrument can not be endorsed for a part of its value. A partial endorsement is invalid.

4. Restrictive endorsementIt prohibit the endorsee from further negotiating the instrument or restricts the endorsee to deal with the instrument as directed by the endorser.Illustration: If A the holder of a bill, writes on the bill for negotiation

(a) pay C or order for the account of D

(b) pay C only

The endorsement is restrictive.5. Conditional endorsement

Conditional endorsement limits the liability of the endorser. A conditional endorsement may be in any of the following forms:

(a) Sans Recourse In this case endorser expressly excludes his own liability for dishonor of instrument towards the endorsee or any subsequent holder. This he does by writing the words Sans Recourse or without recourse to me after the name of the endorsee. Endorsee may refuse to take an instrument with such endorsement. Generally such endorsement is made to avoid personal liability when instruments are endorsed by agents on behalf of the principal.

(b) Facultative If the endorser by express words increases his liability or gives up some of his rights under the negotiable instrument, the endorsement is termed as Facultative.

Illustration: A, the holder of a bill makes the following endorsement on the bill pay C or order. Notice of dishonor waived.A has given up the right of receiving notice in case of dishonor of the bill. The endorsement is a facultative endorsement.

(c) Sans Frais Where the endorser does not want the endorsee or any subsequent holder of the instrument, to incur any expense on his account on the instrument, the endorsement is Sans Frais.Order/Bearer ChequeThe paying banker is to identify the payee while paying in cash of an order Cheque over the counter. A bearer Cheque is payable to the bearer and the banker is discharged from liability by payment in due course to the bearer of the Cheque.

CrossingA Cheque is said to be crossed when two transverse parallel lines with or without any words are drawn across its face. Cheques may be classified as:

a) an open Cheque which can be presented for payment by the holder at the counter of the drawees Bank.

b) a crossed Cheque which can be paid only through a collecting banker.

A crossing is a direction to the paying Bank to pay the money generally to a banker or a particular banker as the case may be and not to the holder at the counter. Crossing may be written, stamped, printed or purported.Objects of Crossing

Crossing affords security and protection to the true owner, since payment of such a Cheque has to be made through a banker. Cheques are crossed in order to avoid losses arising from open cheques falling into the hand of wrong persons. Crossing of a Cheque does not affect its negotiability. Crossed cheques are negotiable by delivery in case they are payable to bearer and by endorsement and delivery when they are payable to order. Holder of a crossed Cheque, who has no account in any bank can obtain payment by endorsing in favor of some person who has got an A/C with a Bank.Cheque crossed Account PayeeWhere a Cheque crossed generally bears a cross in its face an addition of the words Account Payee between the two parallel transverse lines constituting the general crossing, the Cheque besides being crossed generally, is said to be crossed account payeeWhen a Cheque is crossed Account payee

1) it shall cease to be negotiable; and

2) it shall be the duty of the Banker collecting payment of the Cheque to credit the proceeds thereof only to the account of the payee named in the Cheque.

Cheque crossed speciallyWhere a Cheque bears a cross in its face an addition of the name of a banker, either with or without the words not negotiable that addition shall be deemed as a crossing, and the Cheque shall be deemed to be crossed specially, and to be crossed to that banker.Cheque bearing not negotiable CrossingA person taking a Cheque crossed generally or specially, bearing in either case the words not negotiable, shall not have, and shall not be capable of giving a better title to the Cheque than that which the person from whom he took it had.Cognizances of offencesNotwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act-V of 1898)

1) no court shall take cognizance of any offence punishable under section 138 except upon a complaint in writing made by the payee or as the case may be, the holder in due course of the Cheque.

2) Such complaint is made within one month of the date on which the cause of action arises under clause (c) of the provision to section 138;

3) No court inferior to that of a Metropoliton Magistrate or a Magistrate of the first class shall try any offence punishable under section 138.Subject/TopicBank Company Act (Amended - 2013)

HR-TDC

The Companies Act,1994 came into force with effect from the 1st January 1995 vide Gazette notification dated November 30, 1994 replacing the Companies Act 1913. It is Act XVIII of 1994 . The Act of 1994 has 404 sections and 12 schedules whereas the Act of 1913 had 288 sections. There are rules , regulations and formats under the schedules. The 404 sections have been arranged in XI parts.

Part -I:

Preliminary:

Section 1-3 are included within this part. The issues and provisions contained in this part are short title and commencement, definitions and the jurisdiction of the Court.

Part II:

Constitution and Incorporation:

Sections 4-29 are within this part. The main issues and provisions that the part dwelt on this part are Memorandum of Association, Article of Association, General provisions regarding Memorandum and Articles of Association and Companies Limited by Guarantees.

Part-III

Share Capital :

Sections 30-76 are within this part. The issues and provisions that this part covered are Distribution of Share Capital, Reduction of Share Capital etc.

Part -IV

Management and Administration:

Sections 77-233 are included under this section . Main issues and provisions covered are office and Name, Meeting and Proceeding, Directors, Compensation for loss of office, Managing Agent, Contract, Prospectus , Commissions and Discounts, Certificate of Share, Mortgage, Charges, Debentures and floating Charges, Balance Sheet, Investigation by the Registrar, Inspection and Audit, Arbitration and Compromise.

Part -V

Winding Up:

Sections 234-346 are under this part. The main issues and provisions covered under this section regarding winding up of a company are winding up by Court, official liquidator, powers of Court, voluntary winding up.

Part- VI

Registration Office & Fees:

Section 347-350 are under this part.

Part -VII

Application of the Act to companies formed under former Act:

Sections 351-353 are under this part regarding application of the Act to companies formed under the former Act 1913.

Part -VIII

Companies Authorized to be registered:

Section 354-370 are under this part. They deal with companies authorized to be registered.

Part -IX

Winding up of unregistered Companies:

Section 371- 377 are within this part. They deal with winding up of unregistered companies.

Part -X

Registration of Foreign Companies:

Sections 378-392 are within this part. They dwell on registration of foreign companies.

Part -XI

Supplemental:

Sections 393-404 are within this part. They deal with legal proceedings, offence etc.

Let us now discuss on some common corporate terminologies, issues relevant thereto and practices in corporate management for your understanding.

01. Company : The origin of the term Company may be traced from the Latin word Cum means With and Panis means Bread. They jointly mean taking bread together. Today Company is widely and commonly used for (i) Joint Stock Companies designed for profit and (ii) Statutory Companies for undertaking works of public utility. In ordinary non- technical sense, company means as association of individuals grouped together to attain some common goals/ objectives which may be with or without profit.

Holding Company : When a company acquires controlling interest in the affairs of another company or companies it is known as the holding company( Section 02)

Subsidiary Company : It is a company whose more than 50 % issued share capital or voting power is held by another company(Section- 2).

02. Memorandum of Association: Memorandum of Association lays the foundation of the company . It contains the Name, Registered Office, Object Clause, Limited liability of members and the Capital of the Company ( Section-5)

03. Articles of Association : The Articles of Association govern the administration of the company. It, inter alia, spells out all internal regulations such as the Directors, their appointment, conduct of Board Meetings, General Meetings, Share transfer, Reserve and Dividend, Common Seal, Accounts, Audit etc. (Section 17)

Memorandum and Articles of Association can be changed / amended through a course . Necessary resolution has to be passed in the Companys Extra Ordinary General Meeting.

ChangeResolution Required Statutory Requirement Returns to Registrar of Joint Stock Companies & Firms

NameSpecial Resolution Permission from Registrar of BOIReturn Form No. VIII

Registered OfficeOrdinary ResolutionPermission from BOIReturn Form No. VI

ObjectSpecial Resolution Permission from BOI & High CourtReturn Form No. VII along with amended Memorandum and Articles of Association

Capital IncreaseOrdinary Resolution-For authorized Capital fee to be deposited. Return Form No. IV

ArticlesSpecial Resolution For banking company permission from Bangladesh Bank is required Amended Memorandum and Articles of Association. Return Form No. VIII

For Change/ amendment in the Articles of Association of a banking company, the approval of Bangladesh Bank is mandatory .

04. Resolution : Resolution means decisions taken in a meeting. More clearly, the record of expression of the decision of a meeting is called the resolution.

a) Ordinary Resolution : It is the resolution which is passed by a simple majority of members entitled to be present and vote at a general meeting. For such resolution in a meeting, 14 (Fourteen) clear days notice is to be given.

b) Special Resolution : Such resolution has to be passed by not less than three fourth(75%) of the members present and vote in an Extra-Ordinary General Meeting (EGM) . It can be called with 21(twenty one) clear days notice

05. Statutory Meeting: Every Company within a period of 6(six) months from the date of commencement of business shall hold a general meeting of members. It is known as the Statutory Meeting( Section-83) . Statutory Report is submitted to the Registrar of Joint Stock Companies and Firms (RJSC) at the time of issuing the notice for the meeting.

06. Annual General Meeting(AGM): Every Company holds an Annual General Meeting of members every year ( Section 81). It deals with normal business of the company. To convene such a meeting 14 (fourteen) clear days notice is served.

The following business is transacted in an Annual General Meeting :

a) To adopt the Balance Sheet and Profit and Loss Account of the Company, along with Auditors Report thereon ( Section 183);b) To approve Directors Report(Section 184);c) To elect Directors in place of retiring Directors(Reg. 78-82)d) To appoint Auditors( Section 210)e) To declare Dividend, if any(Section 184)Any other business other than the above cannot be transacted in an Annual General Meeting. For transacting any special business or ordinary business not falling within the purview of above function , an Extra Ordinary General Meeting(EGM) may be called.

Time of Annual General Meeting: The 1st Annual General Meeting of a company is required to be held within 18(Eighteen) months from the date of its incorporation. Subsequent AGMs shall be held within 15 (Fifteen) months from the date of the last AGM(Section 81) and within 9 (Nine) months from the date of last annual accounts of the Company(Section 183)

Extra Ordinary General Meetings(EGM): EGM may be called at any time if the company needs to pass any special resolution/ ordinary resolution which cannot be resolved by the Annual General Meeting. To exemplify, advance to Directors needs approval of general meeting(Section-103) . For approving such advance, an EGM is to be called to pass ordinary resolution.

07. Board Meeting: Directors as the representative of the Shareholders, control and administer the company . The companies Act 1994 provides that the meetings of the Board must be held once in every three months and at least 4(four) meetings must be held in a year(Section 96).

Notice Time for Meeting:

MeetingNotice Time

Statutory Meeting21(Twenty One) days

Annual General Meeting(AGM)14 (Fourteen) days

Extra Ordinary General Meeting(EGM)21 (Twenty One) days

EGM to pass special resolution21 (Twenty One) days

Board MeetingNo time frame regulated as per its Articles of Association

08. Minutes: When there is a meeting, Minute of that meeting is a must. In corporate affairs, Minute is known as the recording of meeting proceedings methodically. Every motion(proposal), discussion and the consequent resolution when recorded in a summarized form, they constitute the Minutes. Minutes can be distinguished from Proceeding of a meeting . Proceedings of a meeting on the other hand, include every details of the matter transacted in a meeting. Generally, recording of meeting decision, inter alia, by naming who proposed the motion and who seconded it is called Minutes.

09. Quorum: When there is a meeting there is the requirement of quorum. Quorum is the minimum number of authorized persons required to enable a meeting go into session. Articles of a company specify the quorum requirement for a particular type of meeting. Attendance of 5 (five) members in a General Meeting constitutes Quorum( Reg.- 52 under Schedule-1)

10. Directors: Directors are appointed by the Shareholders with the power and duties to manage the business of the company subject, however to restrictions imposed by the Articles of the Company and the statutory provisions. A Director has to have qualifying shares in the company.

11. Ways of Appointment of Directors:

a) By subscribing the Memorandum and Articles of Association of the Company

b) By the Shareholders in Annual General Meeting

c) Board of Directors(Casual vacancy & Alternate Director)

d) Government.

12. Alternate Director : The Board of Directors of a company , if authorized by its Articles appoint an Alternate Director in place of an original Director during the latters absence from Bangladesh for a continuous period of 3(three) months and above.

13. Casual Vacancy of Director: The Board of Directors has power to appoint a person as Director to fill a casual vacancy in the Board created by way of resignation, death , removal (Section 91, Reg. 85)

14. External Auditors: As per requirement of Section 210 of the Companies Act, a company has to appoint one or more qualified firms as Auditors of the company and the 1st Auditors of the company is appointed and their fees is fixed by the Board of Directors. The subsequent appointments and fixation of fees are made by the Shareholders in the Annual General Meeting(AGM). An appointment Auditors remains in office until the next Annual General Meeting.

15. Share Capital: The owners primary invested fund against shares in the company is known as the Share Capital .

a) Authorized Capital : Every company must mention in its Memorandum the limit of capital to be raised for the company . It is known as Authorized Capital.

b) Paid up Capital: Paid up Capital is the amount paid up on the shares issued/ allotted.

16. Share: Shares is the unit of capital measured by a sum of money. It is a movable property. It is issued in Scrip i.e. Share Certificate which contains certificate number , number of shares and the distinctive numbers. It is signed as required as per Articles and issued with Common Seal within 90( Ninety) days after allotment and within 90(Ninety ) days after the registration of transfer (Section-158).

17. Dividend: A company in its Annual General Meeting(AGM) may approve declaration of dividend out of profit of the company upon recommendation of the Board. Interim dividend may be paid. The Shareholders cannot declare larger dividend than what has been recommended by the Board. (Reg. 96-103).

18. Bonus Share/ Stock Dividend : The Company may capitalize its accumulate resources and profits by the issue of shares called bonus shares. It is issued to strengthen the capital base of the company. Bonus shares are issued in lieu of dividend . So, it may called Dividend in Kind or Stock Dividend .

19. Rights Share: Rights Share are those shares which are issued after the original issue of shares. Section-155 has authorized the Directors to issue rights share. It is issued to the existing shareholders under normal circumstances:

20. Common Seal: Common Seal is the signature of the Company. It is the name of the company engraved in legible characters embossed and mounted on a seal head. The common Seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the Board of Directors and in the presence of at least 2(two) Directors including the Managing Director or the Chief Executive by whatever name called and of the Secretary or such other person as the Directors may appoint for the purpose (Reg. 77 of Schedule I)

21. Important Books/ Registers maintained at the Registered Office:

a) Share Scrip Register;

b) Register of Members;

c) Index of Register of Members;

d) Annual List of Members and Summary Capital;

e) Minutes Book of :

i) Board Meeting;

ii) Annual General Meeting(AGM)

iii) Extra -ordinary General Meeting(EGM)

f) Proxy Register;

g) Attendance Register of Directors

h) Register of Particulars of contract where Directors are interested.

i) Register of Mortgage and Charge.

22. Time-table for submission of some of the important returns to the Registrar of Joint Stock Companies and Firms (RJSC) and issuance of some of the important notices.

SLParticulars Section numbersTime Limits

1. Copy of annual list of shareholders and summery of share capital 36 & 19021/30 days

2. Notice for refusal of transfer of shares 38(4)30 days

3. Notice for rectification of members register 4415 days

4. Notice for change in the structure of share capital5315 days

5. Notice for increase of share capital 5615 days

6. Notice for situation of Registered Office or any change therein 77(2)28 days

7. Statutory report signed by Directors/ Auditors83(6)Forthwith

8. Notice for General Meeting of Shareholders85(I)14 days

9. Return of special or extraordinary resolution8815 days

10. Consent of candidate for Directorship 93(2)30 days

11. Return for appointment / Change in Directorship 115(2)14 days

12. Copy of prospectus signed by Directors 138On or before publication

13. Return for allotment in cash151(1)(a)60 days

14. Three copies of audited and authenticated Balance Sheet and P &L A/C19030 days

15. Copy of BS and P & L A/C shareholders191(I)14 days

16. Intimation of appointment to auditors 210(1)7 days

17. Auditors intimation to the Registrar 210(2)30 days

18. Notice toGovt. if no auditor appointed at AGM210(5)7 days

19. Accounts of foreign companies (3 copies)380Annually

23. Some of the offences under Companies Act and penalty therefor:

SectionOffence OffenderMaximum Penalty

26(2)Default in providing to a member at his request copies of memorandum and articles Company and OfficersTk. 200/- for each offence

34(2) Default in keeping register of members and entering therein the required particulars Company and OfficersTk. 100/- per day during default

35(3)Default in keeping index of names of members Company and OfficersTk. 500/-

36(5)Default in filing with Registrar the annual list of members and summary of share capital Company and OfficersTk. 200/- per day during default

56(3)Default in filing with Registrar notice of increase of share capital or member Company and OfficersTk. 200/- per day during default

66(2)Default in embodying the minute of reduction of capital in copy of memorandum issued after its registration. Company and OfficersTk. 100/- for each copy

71(5)Default in forwarding to Registrar of copy of order passed by the Court under Section 71 Company and OfficersTk. 200/-

80(2)Default in publishing subscribed and paid-up capital in notice etc. where authorized capital is mentioned Company and OfficersTk. 5000/-

82Default in holding general meeting within time specified in Sub-Section(I) of Section 81 Company and OfficersTk. 10,000/- and Tk. 250/- per day following first day

83(11)Default in holding statutory meeting and forwarding statutory report to members and to Registrar Directors or other OfficersTk. 5000/-

88(4) & (6)Default in filing special or extra-ordinary resolution with Registrar Company and OfficersTk. 100/- per day during default

89(6)Refusing inspection of minute book of general meetings or failure to furnish copy of minutes to a member Company and OfficersTk. 100/- and Tk. 100 per day during default

97(2)Acting as Director by unqualified person after 60 days or shorter period fixed by the articles Unqualified Director Tk. 200/- per day

138(6)Issuing prospectus without filing a copy with Registrar Company and person so issuing Tk. 5,000/-

139(I)Issuing prospectus which does not comply with sections 136 or 137Person responsible for issuing itDo

141(5)For falsification in statement in lieu of prospectus One who authorized it to be filled2 years imprisonment or fine of Tk. 5000/- or both

158(2)Default in having ready within 90 days , certificates of shares, debentures and debenture stock allotted or transferred Company and OfficersTk. 500/- per day during default

183(5)Default in presenting balance sheet and P & L A/C in AGM within 9 months of B/S dateDirectorsTk. 5,000/- for each offence

190(3)Default in filing with Registrar a copy of authenticated Balance Sheet and P & L Account Company and OfficersTk. 100/- per day during default

24. Company Secretary: Company Secretary is a vital position to administer corporate affairs. Metaphorically speaking the Company Secretary is a constitutional position because his appointment is backed by a Boards resolution. Normally, he takes oath of office. He works under constant pressure and in a most demanding situation . He should have a very good command both in English and Bengali. His sharp communication skill is a vital need. He has to know the law and the practices of corporate functions. He should be a man of integrity with a reservoir of working habits. Among others the main functions are:

a) Acts as the bridge between the Board and the Management of the Bank.

b) Calls Board Meeting, Annual General Meeting(AGM), Extra-Ordinary General Meeting(EGM) by order the Chairman / Board of Directors complying with the requirement of law.

c) Makes sure that required quorum is present before business is transacted at the meetings.

d) Witness and records proceeding of a meeting.

e) Writes Minutes of the meetings timely and correctly.

f) Maintains strict secrecy of the affairs of the Board.

g) Submits returns to regulatory authorities timely.

h) Maintains statutory registers.

i) Looks after legal affairs of the company .

j) Ensures safe custody of Common Seal, Original documents and blank share certificates.

k) Writes Directors Report for Annual Report.

l) Meets quarries of the Directors or the Board.

m) Meets Shareholders requirements/ queries .

n) Maintains list of Directors who will retire by rotation in AGM( Section 91)

o) When a causal vacancy in the Board is being filled, he ensures that legal requirement is fulfilled (Section 91(1)(C).

p) After every AGM the Secretary submits the following to the Registrar of Joint Stock Companies and Firms

i. Particulars of Directors( Section 115).

ii. 3 copies of the Annual Report containing Balance Sheet, Profit & Loss Account of the Company (Section 190)

iii. List of Shareholders, Directors, Manager, Managing Agent and Auditors

iv. A return of Share Capital

v. Consent of Directors to act as such( Section 93)

vi. Takes permission of Bangladesh Bank for appointment of Auditors ( Section 39 of the Bank Companies Act 1991)

vii. Issues letter of appointment to the External Auditors

viii. Issues Dividend warrant if Dividend is approved by the Shareholders.

25. Corporate Governance: To run a company smoothly, Corporate governance plays a pivotal role. Organizations are open system that needs careful management. Banks should pursue the principles of openness , disclosure and compliance to regulatory authorities , transparency in performance , integrity in dealings , ethics in banking and accountability to the shareholders in corporate governance. Siphoning off Bank loan popularly known as loan default culture has retarded growth of the individual Bank and the national economy as well . Bankers should be pledge-bound to keep the system free from the clutches of loan default culture and work with devotion & professionalism.

A Bank must ensure orderly relations between clearly defined functions of the Board of Directors and the Management. Their role remain sharply bifurcated as per Bangladesh Bank guidelines. The Board formulates policies and frame procedures . The management implements them and acts within norms. The management enjoys full independence in managing the banking industry especially its credit portfolio without any undue influence from outside. It however, works in a routinized, efficient, suitable and dynamic way to foster progress, promote general welfare of the society and infuses its people to serve the nation.

In corporate governance, we should strictly comply with the requirement of The Companies Act 1994, Bank Companies Act , 1991, Rules and Regulations and guidelines of Bangladesh Bank, Securities and Exchange Commission and other Regulatory authority to follow compliance culture.

All these would ensure better management of shareholders as well as depositors money paving the way of a financial & monitory system and a sustainable economic growth of Bangladesh .

Subject/Topicgvwbjvwis cwZiva AvBb, 2012

HR-TDC

Name & Effective:

Name: Bank Company Act 1991 (Act No. 14 of 1991) Effective : 24th day of February, 1991. The Act has

-8 Parts (Chapters)

-123 Sections

-2 Schedules

Bank Company Act Overview of Part I Part I is the PRELIMINARY Chapter of the law containing 6 Sections (Sections 1-6) Section 2: Application of other laws not barred. Section 3: Limited application of this Act to co-operative banks & other financial InstitutionsFor institution engaged in deposit Collection from other than memberes, banks Subsidiary's shall fall under the purview of section 44 & 45 of BCA

i.e. Inspection & giving Direction Section 4: Power to suspend operation of this Act:- On a representation made by BB, Govt. may suspend operation of all or any of the provisions of this Act in relation to any specified banking company. Deleted in the BCA-2013 Section 5: Definitions: approved securities" "company" "demand liabilities" Secured and unsecured loan or advance scheduled bank" Debtor / Creditor "banking company "Private company" as in the Companies Act "Bangladesh Bank" as in BB order"Banking Company" Section 5 (Y) of Banking Company Act 1991 has defined Bank Company (including new banks and specialized banks) as a company that carries out

Banking Business in Bangladesh. Where-

-Banking Business [Section 5 (Z)] means collecting deposits from the public for the

purpose of lending or investment.

5 cc : Defaulter borrower: Overdue for more than 180 days. 20% equity in other Company.Bank Company Act Overview of Chapter II Chapter II contains 44 sections (Section 7 through 50) describes the provisions about the functions of the bank company Section 7: Functions of Commercial Bank. In addition to the bank business mentioned in section 5 (Z), Commercial Banks perform many other functions: Some functions as mentioned in section 7 are as under- To receive deposits

To make advance / investment against or without collaterals

To sale, purchase or transact gold, silver and other metal coins To form capital through accumulation of scattered small savings

To collect savings

To issue guarantees

To make investment

To discount Bills

To transfer money

To collect funds and makes payments for the clients

To sale and purchase of share and securities

To make payments for utility charges on behalf of the client

To receives rent, dividend, premium etc.

To work as trustee

To receive bonds or other valuables on deposit or for safe custody

To make Correspondent Banking Arrangement with overseas banks

Places Fcy funds with correspondents abroad for settlement of transactions

To issue Letters of Credit Letters of Credit

Other import trade related functions

Export trade related functions

To work as representative of central bank

Outward remittance for travel, training, education, treatment etc. Inward remittance

Other foreign exchange related functions such as

Issuing travelers' cheque, Credit Cards

To accept of Bill of exchange and make payment

To make forward booking on behalf of the importer for preventing them from exchange loss

To make payment against foreign liability of customers

To sale and purchase of foreign currency

maintain FC accounts of customers

social welfare functions & functions related to the welfare of the employees/ retired employees Underwriting

Disclosure functions

Advising the clients

Fund Management

Higher purchase & Leasing

Income sharing

Syndication, arrangement of funds

Any other function approved by the Government through gadget notificationSome other provisions of Chapter II Section 12- Restrictions on removal of records and documents: Cannot be removed to a place outside Bangladesh, without the prior permission in writing of BB. Section 13- To be determined by BB on the basis of RWA. At present, Tk. 400 crore as Capital and Reserve or 9% of RWA, whichever is higher (10% from 1 July, 2011)-Foreign banks are required to maintain the capital in the form of cash ( Fcy or in local currency) with BB or in approved securities duly marked lien with BB.

Section 14- a : Restriction on purchase of Shares : Maximum 10.00% i.e. Individually,Jointly or Co, Section 14-b : Substantial number of Share Holding is discouraged: Substantial means: beyond 5% Section 15 : Election of New Directors : BB to extend approval for appointment &removal Directors & CEO(MD) & two tiers below him Qualification prescribed. Section 24- Reserve Fund: Every banking company incorporated in Bangladesh shall create a reserve fund & will transfer at least 20% of its profit to the this fund if this fund including amount in the share premium account is less than its paid-up capital Section 25: cash reserve:- Determined as % of total demand and time liability, % is to be determined by BB. BB can impose penalty in case of failure. Section 15 /9 : Numbers of Directors: Min/Max : (07) /20 Independent Directors: 3 if the number is max: 20 ID No. 2 if strength is less than 20. ID approval to be given by BSEC. Section 15 AA: Term of Office of Director: Maximum two (02) terms of three (03) year each. Then gap of one term to be eligible for reelection 15-b : Role of the Board: Responsible for all activities of the bank. 15-c: Internal Audit & Control: Independent of Management, Can discuss but report to Chairman, Audit Com., can not be part of any agreement or transaction of BC.

Section 17: Vacation of the office of Director: For default and subsequent vacation of the Office , can not be a Director within one year. Can not sell or transfer his shares upon receiving Notice under Section 17. Decision can not be challenged other than the Court having jurisdiction i.e. High Court. Section 18: Provisions concerning transaction with Directors, Officers & Employees: Directors shall not take any financial or other benefit than the attending Board Meetings Fee only. Directors and MD along with two tiers below him shall furnish yearly disclosures regarding his interest in business. Disclosure before the Board Meetings for Directors: Suspension of one year if fails to comply. Section 23: Restriction on appointment of Common Directors: One FI at a time. However, can remain Director of Insurance Company for two terms(6 yrs) but not beyond after commencement of the ACT Section : 24 .Statuary Reserve: Paid Up Capital, as directed time to time. Section : 25 : Cash Reserve as directed from time to time. Section 26: Subsidiary Company:- Purpose for which Subsidiary Company may be formed have been described. 26 - a: Holding of Share Company of another Company by a BC: 5% of T. paid Up capital equivalent. Not more than 10% of the concerned Company Total 25% in three years of Tier Capital -1 In case of banking group, shall be directed by BB Section 26 C: Transaction with Bank related person Prior approval of the Board and maximum 10% of Tier Capital -1 Board shall be responsible for violations and has to be adjusted immediately . Provision is exempted for BC incorporated outside Bangladesh having one or more branch. Section 26-D : Loan limit for bank employee to be determined by BB. Section 27: No banking company shall make any loans or advances on the security of its own shares. All other restrictions have been described here. Section 27-A: Restriction on Directors of Debtor Bank. One step higher I/o Board for NOC. Section 27KAKA: Every Banking Company or FIs will send the list of defaulter to BB from time to time Section 28: Restrictions on the respite of loans: No banking company shall, without the prior approval of BB , grant respite of loans taken from it by any of its directors, and his family members. All other restrictions have been detailed in this section Section 28KA: To avoid legal complications in retaining the claims of the banks over the written off loans, section 28 ka has been incorporated in 2001 Section 33: SLR:- Determined as % of total demand and time liability, % is to be determined by BB. BB can impose penalty in case of failure. Section 35- Unclaimed assets and valuables remaining unclaimed for last 10 years, will be deposited to BB

Section 38: Accounts and balance sheet Bank Companies shall prepare a balance sheet and profit and loss account & financial statement as on the last working day of each year Section 39: Audit- Profit and loss account and financial statement of a banking company shall be audited in accordance with the balance sheet prepared under section 38 by CA firm declared eligible by BB. Section 44 of Banking Companies Act 1991 empowers Bangladesh Bank to examine the books of accounts and related documents / records of the banks Section 45: Power of the Bangladesh Bank to give directionsBank Company Act Overview of Part III Part III contains 6 sections (Section 51 through 56) Describes the provisions about Illegal banking.

Section 51: BB is empowered to call for certain information it feels that banking is done violating the provision of section 33 (1) Section 52: BB is empowered to make appropriate public announcements for violation of section 33(1) Section 54: Disposal etc. of cash deposits and assets of bank company / person about whom announcement has been made:- to be deposited to a new bank.Bank Company Act Overview of part IV Chapter IV contains Section 57 Prohibition of Undertaking certain activities: A person is subject to imprisonment of not more than two years or a fine of not more than twenty thousand Taka or both if he

-obstructs any person from lawful entering or leaving into or from banking business place or from banking business,

-holds violent demonstration in baking business place or obstructs transactions

-Act in any manner to undermine the

confidence of the depositorsBank Company Act Overview of Part V

Chapter V contains 6 sections (Section 58 - 63) Acquisition of the undertakings of banking companies. Power of the Govt. BB to make scheme. Compensation to be given to the Shareholders of the acquired bank Constitution of Tribunal The Tribunal to have power of Civil Court. Procedure of the TribunalChapter-vi (section 64-77) Suspension of business and winding up of banking companies . Court liquidator Appointment of BB as liquidator . Application of the Companies to the Liquidators Restriction on the stay of Proceedings. Notices to the preferential claimants. Preferential payment to depositors. Restriction on Voluntary liquidation Restriction on Compromise with the Creditors.Chapter-vii (sec 78-100) Chapter VII of the Act describes the provisions about speedy disposal of winding up procedure. Power of High Court Division to decide on claims. Transfer of Pending suits. List of Debtors. Documents of banking company to be evidence. Examination of Directors and Audit of accounts. Special provision for delinquents directors. Duties of the Director/Officials to assist in realization. Punishment for cause of Winding Up. Public Cross Examination. Appeals. Enforcement of decisions Chapter VIII (Sec-101-123) Miscellaneous provisions: Disposal of various claims: Nomination by depositor(s)for payment of money kept in deposit account or in safe custody.

-Punishments for violation of the Acts.

i.e. Banking without license

Power of BB to take punitive measures etc.

Chairman, Directors Auditors, Liquidators, Managers & Other Officials under the category of Public Servants.

Special Provision for Private Banks.

Penalties: Banking Business without license

False Information disclosure

Violation of Laws (credit)

NOC from BB. Change of Name,

Alteration of M & AA

Exchange of information

-Power to make rules.

Govt. Power of Exemption in certain Cases.

-Protection of action taken in good faith

Schedules First Schedule:

- As per provision of Section 38, formats of balance sheet, off balance sheet items, Profit & loss account, cash flow statement, statement of change in capital & statement of liquidity position have been provided in the first schedule

Second Schedule:

-As per provision of Section 81 (2) policy for the preparation of list of debtors has been provided in the second schedule

Subject/TopicBangladesh Automated Clearing House (BACH), BEFTN, ALTITUDE and RTGS

Md. Shah Alam Howlader, VP & Head of CCC & IT Operations, Head Office

Subject: Important Aspects of BACH, ALTITUDE & Prevention of Cheque Fraud

This synopsis contains three sections i.e.

1. Bangladesh Automated Cheque Processing System (BACPS)

2. Bangladesh Electronic Fund Transfer (BEFTN) 3. Internet Banking ALTITUDE. BACH at a glance: BACH is the interbank clearing system that electronically clears and settles payment Instructions either of clearing instruments or of fund transfer instructions. It carries out two main components: BACPS & BEFTN.Definition of BACPS:

Bangladesh Automated Cheque Processing System(BACPS): BACPS means a facility provided by Central Bank of Bangladesh namely Bangladesh Bank that clears cheques and approved payment items for Banking Financial Companies. It covers two types of Clearing:

Outward Clearing

Inward Clearing

When a particular bank receives instrument from its client drawn on other banks under BACPS and collect through it, is considered as Outward Clearing for the respective bank, whereas if a bank receives instrument through BACPS from other bank for payment is called Inward Clearing.

Both the clearing include;

High Value : Clearing instruments consist of an amount of Taka Five Lac and above

Regular Value : Clearing instruments consist of an amount of Taka one and above

Clearing charges:

High Value

RangeTotal chargeBangldesh Bank Prime Bank Ltd.

Tk.5,00,000/- & aboveTk.60/-Tk.50/-Tk.10/-

Regular Value

RangeTotal chargeBangldesh Bank Prime Bank Ltd.

Tk.1/- to below Tk.50,000/- N/AN/AN/A

Tk.50,000/- to below Tk.5,00,000/- Tk.10/-Tk.8/-Tk.2/-

Tk.5,00,000/- & above Tk.25/-Tk.20/-Tk.5/-

Process flow:

Several steps comprise to complete Outward Clearing Processing System:

Step 1: Receiving Instruments from the customer with deposit account number on the over of the instruments as per Bangladesh Bank Instruction and put crossing and endorsing it.

Step 2: Scanning instruments by a scanner with MICR line.

Step 3: Making all the data entries by Designated Officer (Maker)

Step 4: Checking all the data entries by Designated Officer (Checker- other than Maker).

Step 5: Creating a XML (Extensible Markup Language) file of batch for sending Bangladesh Bank through PBM (Participating Bank Module) Server of our Bank.

Step 6: Sending XML files to respective Banks by Bangladesh Bank.

Step 7: Receiving the image & data and subsequently debited clients accounts by clearing process system of Respective Bank.

Step 8: Generating the outward clearing feed (Branch wise) and upload data to T24 System.

Step 9: Branch users process the outward clearing feed to credit the amount to the customers account.

Process flow of Outward clearing

Scan

Data entry into BACPS System

Honor

Dishonor

BB receives and sends XML files to

Receiving and Originating Bank respectively

Several steps comprise to complete Inward clearing Processing System:

Step 1: Downloading Inward processing report form clearing process system (CPS)

Step 2: Debiting instruments of Clients account from T24 (Core Banking) by designated officer (in putter).

Step 3: Verifying signature with Specimen Signature card and authorizing the entries (authorizer)

Step 4: Sending Return (dishonored) instrument to Bangladesh Bank through PBM server.

Process flow of inward clearing:

Accounting procedure:

Accounting procedure for Outward clearing

Debit: Clearing Adjusting account (BACPS)

Credit: Customer account

Accounting Procedure of Inward Clearing:

Debit: Customer account

Credit: Clearing Adjusting account (BACPS)

Accounting procedure for outward return

Debit: Customer account

Credit: Clearing Adjusting account (BACPS)

Accounting procedure for Inward return

When an instrument dishonored in any reasons then we send return report Bangladesh Bank through PBM server.

Time schedule for clearing:

Clearing TypesCut off Time

PresentmentReturn(Dishonor)Settlement

Regular Value12:30 PM5:00 PM5:15PM

High Value12:00AM3:00PM3:15PM

MICR Cheque specimen:

Cheque Information Captured by Machine

Cheque No. RoutingNumberCheque Account Number Transaction CodeAmount Sequence Number(Back side of instrument)

9474080 2152742470001511432201 11210273882 00000001 250910

N.B: MICR means Magnetic Ink Character Recognition which contains four parts of my-ker line

1. Cheque serial number: 07 Characters

2. Routing number: 09 Characters

3. Account number: 13 Characters

4. Transaction code: 02 Characters

Role of the participants:

There are two parties related to this process:

Operator of BACH- Bangladesh Bank acts as the operator and also as the participant

Participants of BACH- All the commercial banks those have membership of the clearing house

Regarding the functionality the role of the participants can be divided into two:

1. Presenting Bank / Collecting Bank : 2.Paying Bank:

Types of Cheque Fraud:

Cheque fraud by stealing and en-cashing,

Fraud by alteration in important areas of cheque,

Fraud by duplicate printing of cheque,

Fraud by duplicate presentment.

Fraud Cycle: To complete the fraud cycle fraud stars do the following: Go to bank as walking customer for issuing P.O of low value and deposit the cheque to another bank after altering the cheque.

Collect cheques from brokerage house of low value and deposit the cheque to bank after altering the cheque.

Bank customer (in most cases proprietorship or contactor firm) issue one PO for tender purpose and print multiple copy of the same and then submit them with different bid document.

After encashment of the fraud cheque, withdraw money from the account within short span through cash counter/ ATM machine.

After completing the fraud cycle, fraud stars stop using that bank account and target another bank for next fraud.

How to protect fraud & forgery:

Deploy well trained personnel in account opening desk and ensure the integrity of our customer.

Verify all the information that our customer provided to us during account opening. And also verify the address detail of the customer at a fixed interval.

Set an alert in the transactions of new account holders.

Unsure printing of all clearing instrument (cheque, PO, DD etc) with eraseable UV ink features throughout the item leaving minimal space.

Use UV ink Detector machine in cheque receiving counter.

Discurrage duplicate issuance of PO and DD and follow the right procedure for duplicate issuance (ie, copy GD report, indemnity taking, delay in issuance etc.)

Discourage issuance of PO to walking customer.

Take Positive Pay Instruction for Tk.100,000.00 & above for all clearing instruments.

Do not make payment to duplicate items and those items which you have not issued in your system.

Keep the deposited cheque in safe custody, the already collected cheue should also be preserved in right and secured manner.

Objectives of BACPS: BACPS brings a dramatic change in payment system. The Prime objective works behind the implementation of BACPS are as follows.

To obtain faster clearing cycle of payment instruments

To eliminate the need to physically transport the cheques to the paying Branch.

To obtain cost savings in terms of transportation and storage of physical cheques

To acheve optimal customer satisfaction

To achieve better operational efficiency

Benefits of BACPS: BACPS payment processing system for the country bringing in several benefits at various levels:

i. National: At a country and national level by allowing only images to be exchanged between commercial Banks and the central Banks, BACPS will make the Inter-Bank payment processing system faster, more efficient and secured. With the fully automated system, clearing up to the most remote Branches may be processed within a much shorter time. The speed and reliability of the system will both smoothen the clearing processes amongst Commercial Banks as well as encourage nationals to use formal channels for local money transfer.

ii. Bank: Commercial Banks will be able to offer much prompter and efficient services to its wide customer base using cheques. With no physical travel of cheques and completely automated and secured processing, cheque related transactions will be faster and more reliable. Examples of benefits:

Elimination of lost or misplaced cheques

Elimination of mail and handling delays

Reduced possibility of fraudulence

Reduced paper consumption

Reduced operational cost

Enhancement of productivity of Bank officials

iii. Customers: The biggest beneficiary will perhaps be the customers who can now deposit or receive cheques and convert them to fund for their use much faster and in a completely secured manner. Account holders not interested to send local remittances to remote areas through banking channels will now be encouraged to send money in from of clearing cheques without hesitation. Examples of benefits:

Better customer service through quicker settlement

Immediate availability of funds

Present status of BACH service in our Bank: We have trained all the Branches officers of our Bank as well as made an awareness program for the Branch Managers & Operation Managers. We also open BACH facility for the Branches including SME after training the officer and now BACH facility is carried on in all Branches of Prime Bank Limited.

Legal & Regulatory Framework:

Bangladesh Bank has published Bangladesh Payment and Settlement Systems Regulations (BPSSR), 2009 on 27 April 2009 as a legal and regulatory support to such electronic exchange of images of paper items and electronic transfer of funds.

Currently The Payment Systems Act has been drafted and waiting for enactment.

Besides

Bangladesh Automated Cheque Processing Systems (BACPS) Operating Rules and Procedures' has been published.

Bangladesh Electronic Fund Transfer Network (BEFTN) Operating Rules has already been published.

Definition of Bangladesh Electronic Fund Transfer (BEFTN):

Bangladesh Electronic Fund Transfer (BEFTN) means electronic payments and collection system that moving funds between different accounts in the different banks operated by Bangladesh Bank through originating bank and receiving bank.

History of BEFTN:

*** Special committee of paperless Entries was formed in 1970 in the USA.

** The first Automated Clearing House Association was formed in 1972.

* In 1974 National Automated Clearing House Association was formed.

Features of EFT:

End to end electronic

EFT operates on customer instructions.

EFT transaction may both be debit or credit.

Can accommodate transactions countrywide

Participants in BEFTN:

a) Originator (Customer)

b) Originating Bank (OB)

c) Bangladesh Electronic Funds Transfer Network (BEFTN)d) Receiving Bank (RB)

e) Receiver(Beneficiary)

BEFTN Transactions:There are two types of transactions in BEFTN

1. Credit

2. Debit

All the transactions in BEFTN are free of charge as per Bangladesh Bank rules.

Application of BEFTN Transaction:

There are four types of BEFTN application:

1. PPD (Prearranged Payment and Deposit)

2. CTX (Corporate Trade Exchange)

3. CCD (Corporate Credit or Debit)

4. CIE (Consumer Initiated Entry)

Legal Framework:

The EFT process operates from beginning to end through a series of legal agreement. The participating Banks have signed agreement with Bangladesh Bank which bound them to EFT Rules. Before any transaction is initiated, the Originator and Originating Bank execute an agreement, which among other things; bind the Originator to the EFT Rules.

Benefits of BEFTN:

There are many Benefits of BEFTN transactions, such as

Reduce printing and administrative cost. Eliminations of lost and stole instruments Reduce clearing cost Reduce risk and fraud Increase the efficiency and productivity of the overall payment process Save time Simplify reconciliations User friendly and easy to use Controlled by the bank Secured Faster payment Easy payments and convenientPresent BEFTN service provided by Prime Bank Limited: Centralized Clearing Cell & Internet Banking operations manages BACH(BACPS & BEFTN) operation with key features of reducing operational cost better dispute settlement which lessens risk & reduces costs, enabling opportunity for CFRC, CARD, Share Division, Branches & Trade Service Department(TSD) for their service delivery.

Upcoming project: An upcoming project is going to be implemented for all scheduled Banks in co-operation with World Bank Technical Assistance & Financial Assistance of Asian Development Bank (ADB) namely RTGS. RTGS means Real Time Gross Settlement which will settle funds in real time in gross basis.Features of RTGS: Transaction in local currency

Transaction in foreign currency (Multiple)

Cross currency trading

Transaction of Govt. securities

Trading of Foreign Currencies

Internet Banking ALTITIDE:

What is Internet Banking?

Internet banking can be defined as a facility provided by banking and financial institutions that enable the user to execute Bank related transactions through Internet. In other way, Internet Banking is the process of using Internet to obtain account status information or carry out transactions on an account with a financial institution. Internet Banking allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution.

Features of Internet Banking service ALTITIDE:

At present, ALTITUDE provides 24/7 Internet Banking support for the following features and in future we are gradually enhancing the range of services provided by Altitude:-

Real-Time Fund Transfer between Own Accounts of Prime Bank

Real-Time Intra-Bank Fund Transfer to Third Party Beneficiary Accounts

Fastest Inter Bank Fund Transfer Through BEFTN

Credit Card Bill Payment of Prime Bank

Credit Card Bill Payment of Other Banks

Cheque Book Requisition

Balance Enquiry

FDR & Deposit Scheme Information

Loan Information

Transaction Search

View Statement

Statement Download

Mobile Airtime Rechargethrough Internet Banking ALTITUDE

WiMAX Rechargethrough Internet Banking ALTITUDE

Security features of Internet Banking service ALTITIDE:

We would like to ensure our valued Customers about its security. ALTITIDE is highly secured which has been acknowledged and certified by VeriSign the World most renowned Certificate Authority (CA). Another security is using at ALTITUDE named Two-Factor Authentication (2FA), a Fool-Proof security on the transactions. Two-Factor Authentication (2FA) is an approach which requires the presentation of two authentication factors:

i. Something the user knows (Login ID/Password): A user will need the Internet Banking Login ID and Password to login to the application.

ii. Something the user has (Mobile SIM): When the user i

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