Report on Prime Bank

CHAPTER-SIX run OFFERED BY FOREIGN EXCHANGE DIVISION 5. 1 Meaning of strange Exchange extraneous Exchange means deputize unusual bully between two countries. If we consider unconnected Exchange as a subject, then it means every kind of legal proceeding related to extraneous capital. In most other wards unknown exchange buss with global financial trans shamions. H. E. Evitt defined extraneous Exchange as the means and methods by which rights to wealth expressed in terms of the currency of one res publica be reborn into rights to wealth in terms of the currency of a nonher coun gauge 5. 2-Activities of foreign exchangeThere ar triple kinds of foreign exchange transactions Import. merchandise. Remittance. 5. 3 Local Regulations for foreign exchange. Foreign exchange transactions argon macrocosm projectled by the quest rules &038 edicts ? Foreign Exchange regulation act 1947. ? Bangladesh vernacular issues foreign exchange circular from cartridge holder to condemnation to control the merchandiseationing, aftermath &038 remission of sin business. ? Ministries of commerce issues export &038 consequence policy renderhanded basic peealities for importation &038 export business. ? some(prenominal)(prenominal)time CCI&038E issues habitual nonice for any kind of change in foreign exchange transaction. Bangladesh rely published two volumes in 1996. This is compilation of the instructions to be followed by the authorized dealers in transitions related to foreign exchange. 5. 4 Parties snarly in Documentary deferred wagement The parties ar ? The Issuing swear, ? The substantiative pious platitude, if any, and ? The Beneficiary. ? The Appli slewt, ? The Advising margin, ? The nominated Paying/ Accepting blaspheme, and ? The Transferring savings bank, if any. i. Importer Buyer Who applies for theory the L/C. ii. Issuing swan It is the bank which pays/issues a L/C on behalf of the importer. ii. Confirming verify It is the bank, which adds its deterrent to the source and it is done at the request of bring out bank. Confirming bank whitethorn or whitethorn not be advising bank. iv. Advising / Notifying brink is the bank by means of and through which the L/C is advised to the exporters. This bank is real(a)ly situated in exporters country. It whitethorn as well as assume the role of prescribed and / or negotiating bank depending upon the correct of the creed. v. Negotiating lodge is the bank, which negotiates the carte and pays the amount of the donee.The advising bank and the negotiating bank may or may not be the same. sometimes it mickle in any case be confirming bank. vi. Paying / Accepting stick is the bank on which the bill will be cadaverous (as per condition of the mention). Usu on the wholey it is the takings bank. vii. Reimbursing bank is the bank, which would reimburse the negotiating bank after get payment instructions from issuing bank. 5. 5 IMPORT Under the import policy of Bangladesh the Importer has get the valid Import Registration Certificate (IRC) from the antique Control of Import &038 export (CCI&038E). 5. 5. 1- garner of characterLetter of computer address means any concord whereby a stick (the issuing depose) is act (on behalf of the vendee/ applier) to pay certain amount at the sellers disposal on a lower floor some agreed conditions. 5. 5. 2 Types of infotainment assent Documentary ascribe may be of three types. Revocable credit. sealed credit. Add confirmed credit. Revocable credit This type of credit backside be enkindlecelled or amended at any time by the issuing entrust without prior notice to the seller. It is not instantaneously in use. Irrevocable credit This type of credit cant be cancelled or amended by the issuing Bank without the agreement of parties concerned on that pointto.All the credit issued in our country are of irrevocable nature. Add confirmed credit When a third Bank provides guarantee to the donee to steel payment, if issuing Bank fail to make payment, the L/C is c exclusivelyed confirmed L/C. In case of a confirmed L/C a third Bank adds their confirmation to the beneficiary, to make payment, in addition to that of issuing Bank. Confirmed L/C gives the beneficiary a double assurance of payment. 5. 5. 3 Special documentary credit. There are some other special documentary credits that are given to a lower place Revolving credit. assignable credit. clog down- to- Back credit. Revolving credit Which provides for restoring the credit to the genuine amount after it has been utilized. Transferable credit If the word Transferable incorporated in an L/C, then the L/C is transferable. The root beneficiary can transfer transferable L/C to wink beneficiary. But act beneficiary cannot transfer it further to another beneficiary. Back-To- Back credit The Back To Back is a new credit open(a) on the bases of an original credit in privilege of other benefici ary under this concept the seller of the first credit offers it as tri exactlye to the issuing Bank for the assurance of the second credit.The beneficiary of the straight credit may be located inside or outside the original beneficiarys country. 5. 5. 4 Operations of Documentary Letters of Credit The future(a) five major paces are involved in the operation of a documentary earn of credit ? Opening. ? Advising. ? Amendment. ? Presentation. ? Settlement. Opening of Letter of Credit Opening of letter of credit means, at the request of the applicant (importer) issuance of a L/C in favour of the beneficiary (exporter) by a Bank. The Bank, which open or issue L/C opening Bank or issuing Bank.L/C Advising Advising through a Bank is a proof of evident authenticity of the credit to the seller. The process of advising a credit consists of forwarding the original credit to the beneficiary to whom it is addressed. Before forwarding the advising Bank verify the signature (s) of the officer (s) of the issuing Bank &038 ensure that the terms &038 condition are not in violation of existing exchange control regulation &038 the other regulation relating to export. If credit is transmitted via telex, advising Bank will match the test apply in the telex.Amendment of Credit Parties involved in a L/C, especially the seller and the buyer, cannot endlessly satisfy the terms and conditions in full as expected due to some obvious and genuine reasons. In such(prenominal) a situation, the credit should be amended. Presentation of Document The seller existence satisfied with the terms and conditions of the credit proceeds to dispatch the submitd goods the buyer and after that, has to present the documents evidencing dispatching of goods to the negotiating bank on or earlier the stipulated loss date of the credit.After receiving the entire document, the negotiating bank then checks the documents against the credit. If the documents are ready in order, the bank will pay, accept or negotiate to the issuing bank. The issuing bank also checks the documents and if they are found as per credit claimments, either effects payment, or reimburse in the pre-agreed manner. Lodgment If import documents found in order, it to be made entry in the bill register and necessary voucher to be passed, putting bill add on the documents, these processes is called lodgment of the bill. Since the documents stay at this stage for a passing period i. . up to retirement of the documents, the process is called lodgment. Bank must beat the documents immediate after receipt of the dame, not exceeding seven (7) Banking days, following the day of receipt of the documents. Retirement of Import documents When the importer releases the import document from the Bank by acceptance/cash payment or under brook import Bank finance it is known as retirement of the import document. Refusal Notice After examination, if the documents become discrepant, issuing Bank will through the refusal noti ce to the negotiating Bank with seven Banking days.Settlement Settlement means fulfilling the perpetration of issuing Bank in regard to effecting payment subject to delicious the credit terms fully. This settlement may be done three separate recordings as stipulated in the credit. 5. 6 Import Financing The shoes import finance extends the import credit in the following runs ? launch pad (Payment against documents). ? LTR ( impart against trust receipt). ? LIM ( bringword against import merchandise) 5. 6. 1 Payment Against Document (PAD) PAD bestow is created upon lodgment of import documents.This Loan is created for 21 days -the time being the tolerance for taking documents for the importer. If after 21 days the documents are not taken by the importer, the Bank may sell the imported goods to cure the given amount. 5. 6. 2 Loan Against Trust Receipt (L. T. R) Under this, Loan is allowed only to first class importers. Here only on the bum of trust without paying the Bank an ything or a partial amount, the importer takes the documents. hence importer is allowed 60-90 days time to make payment. 5. 6. 3. Loan Against Imported Merchandise (LIM) call up (Loan) against the security of merchandise imported through the Bank may be allowed either on pledge or hypothecation of goods, retaining margin prescribed on their Landed Cost, depending on their categories and Credit Restriction imposed by the Bangladesh Bank. Bank shall also obtain a letter of undertaking and indemnity from the parties, before getting the goods cleared through LIM Account. 5. 7 exporting Under the export policy of Bangladesh, the exporter has to get the valid export registration certificate (ERC) from hirer controller of export &038 import (CCI&038E). The ERC is required to renew every year.The ERC chassis is to be incorporated on export phase angle &038 other newsprint connected with exports. 5. 7. 1-Receiving the letter of credit After getting contract for sale, exporter should g estate the buyer for L/C clearly stating terms &038 condition of export &038 payment. 5. 7. 2 Procuring the materials After knowing that the L/C has opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the undertake merchandise. If the exporter has to procure the raw materials from another supplier (local or oversea) he has to open Back-to-Back L/C. 5. . 3 -Back-to-Back L/C Back-to-Back L/C is one type of L/C, which is opened against lien on a valid export L/C. It is opened for inland &038 abroad as well. Bank will put out the following papers/documents for opening a Back-to-Back L/C ? L/C operation form. ? LCA form. ? IMP form. ? Charge document papers. The above papers must be completed, filled &038 signed by the party thereto. The party will withdraw the entire filled document a coarse with action in printed form of the designated Bank. Which is also an agreement between applicant &038 the Bank. Procuring the materialsAf ter making the deal &038 on having the L/C opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the contracted merchandise. 5. 8 Export Financing An exporter is one who exports the goods to another customer whether in domestic country or in abroad. In exporting the stipulated goods he may require financing. So export financing may be required at two stages. Pre lode credit. Post cargo credit 5. 8. 1 Pre shipment credit Pre shipment credit is the credit, which is given to finance the export activities of an exporter for the actual shipment of goods.The purpose of each credit is to meet the functional capital needs from the procuring of raw materials to the transportation of goods for the export the foreign country. Before sanctioning of that credit the Bank takes into consideration the credit worthiness, export performance of the exporters together worthiness all other information required for sanctioning the credit in accorda nce with the existing rules &038 regulations. Pre shipment credit takes the following forms ? Export cash credit (Hypothecation). ? Export cash credit (Pledge). ? Export packing credit. ? Back-to-Back letter of credit. Export cash credit (Hypothecation) Under this arrangement the Bank sanction the Loan to the first class exporter because there is no security against this Loan. The letter of hypothecation creates a charge against the merchandise in favor of the Bank but neither the ownership not the possession is passed to it ( Export cash credit (Pledge) Under this arrangement the Bank advance Loan to exporter against pledge of raw materials or exportable goods. The exporter surrenders the physical possession of goods under Banks effective control till the payment of dues to the Bank as security.If the exporter does not able to pay the Loan the Bank can sell the exportable goods to recover the amount. ( Packing credit Under this arrangement credit facilities are extended against se curity of Railway receipt/ soft-shell clam receipt/Truck receipt/Vessel receipt, evidencing transportation of goods to the port for shipment of the goods in addition to the usual charge documents &038 lien of export letter of credit. This type of credit is sanctioned for transitional period from dispatch of goods to negotiations of export documents. It is mainly given for payment of factory salary &038 wages. ( Back to back letter of creditUnder this arrangement the Bank Finances export business by opening a letter of credit on behalf of the exporter who has received a letter of credit from the overseas buyer but not the actual manufacturer or producer of these exportable goods. Since the second letter of credit is opened on the strength of &038 backed by another letter of credit, it is called Back to back credit. The need for a back-to-back letter of credit arises because the beneficiary of the original letter of credit may have to procure the goods from actual producer who may not supply the goods unless the Bank guarantees its payment. . 8. 2- Post Shipment Credit There is a time gap between export of the goods and realization of the proceeds. So exporter may require finance in that period to continue his business. So Bank may finance against export documents ensuring the following 1. Export documents comply the credit terms. 2. fellowships past performance is satisfactory. 3. Any other security in case of export under contract. 5. 9 Foreign Remittance Foreign remitment means remittance of foreign currencies from one place/ someone to another place/person.In broad sense, foreign remittance includes all sale and purchase of foreign currencies on calculate of Import, Export, Travel and other purposes. However, specifically foreign remittance means sale &038 purchase of foreign currencies for the purposes other than export and import. PBL performs the remittance function with different countries. It maintains the foreign remittance in the following form For eign Demand Draft. inward Outward. 5. 9. 1 Foreign Demand Draft (FDD) A foreign engage enlist is a negotiable instrument issued by a Bank drawn on ther Bank with another country the instruction to pay a certain amount to the beneficiary on demand. Remittance through demand draft may be inward or outward. 5. 9. 2 Inward Remittance Inward remittance refers to the extent where the Bank makes payment to the thickening against foreign demand draft. Bank will make payment to the knob by verifying the, test number, and signature of the authorized officer. Two forms as prescribed by Bangladesh Bank are use for purchase of Foreign Currencies such as. EXP Form Remittances received against exports of goods from Bangladesh are done by form EXP.Form C Inward remittances equivalent to US$2000/- and above are done by Form C. However, declaration in Form C is not required in case of remittances by Bangladesh Nationals working abroad. 5. 9. 3 Outward Remittance It refers to the extent where by the Bank issues foreign demand draft. The Bank charges TK. 300 per Demand Draft. Two forms are use for Outward remittance IMP Form All outward remittance on account of Imports is done by form IMP. T. M. Form For all other outward remittances form T. M. is used. 5. 9. 4 -Collection of foreign currency instrumentsTo gain proceed of Foreign Instrument following procedures to be maintained 1. pick up instrument with puzzle slip. 2. Affix crossing stamp of the Bank. 3. Entry in the register putting IBCA number. 4. Affix endorsement pay to the order of any Bank or trust company, prior endorsement guaranteed. 5. Instrument to be sent to adjacent correspondents. 5. 9. 5 Miscellaneous emoluments given by this Department Student Students who are desirous to study abroad can open file in the bank. By opening this file, bank assures the consign remittance of funds in abroad for study. NRIT Non resident Investors Taka Account is an account by which Non-resident Bangladeshi can deposit f oreign Account currency for investment in security of stock exchanges. For such accountholders, 5% of firsthand shares are reserved. F. C. Foreign Currency accounts are opened in the label of Bangladeshi nationals or persons of Bangladeshi origin Account working or self- use in abroad and are maintained as long as the account holders desire. NFCD Stands for Non-resident Foreign Currency Deposit Eligible Persons may open such accounts even after their return to Bangladesh, within half dozen months of their arrival. RFCD Stands for Resident Foreign Currency Accounts Persons ordinarily resident in Bangladesh may maintain foreign Accounts currency accounts with foreign exchange brought in at the time of their return to Bangladesh from visit abroad. Balance of such accounts is freely remittable to abroad. CHAPTER-SEVEN PROBLEMS &038 OPPORTUNITIES Problems and opportunities of bloom bank limited are discussed through the sowt analysis which is given below SOWT Analysis By a nalysing the Banks performance, I get the following Strength opportunity, weakness and threat (SOWT). Strength It has well reputation in the market Not engaged in unfair business practice. Officers are highly educated. Executives are highly qualified and experienced. Bank has many charismatic deposit schemes. Well-furnished and Air-conditioned Bank. Efficient anxiety practice in the Bank. sudden (T24) software is under implementation.In Singapore there is a heyday EXCHANGE HOUSE. In CAMEL rating Bank achieved as No. 1 Bank. Percentage of bad loss is very significant (prox. 2%) rank and file with SWIFT. Good Banker-customer relationship. Weakness Deposit is lower than advance. Long-term credit is not sufficient. Small market shares in Banking-business. In present time Bank facing liquidity problem. Daily basis interest on deposit offered by other banks. Existing PCB software does not fulfill all requirement Opportunities Can increase the credit scheme. Can increase the advertiz e of the Bank. Private Banks becomes more than reliable to local public. Govt. as banned some Jatiya Sanchaya patra. Threat There are many competitors in the market. Competitors have more deposit. Govt. imposes tax and VAT on profile. Govt. pressures to reduce interest rate. CHAPTER EIGHT remainder &038 RECOMMENDATION Conclusion Bank is the largest organization of mobilizing surplus domestic savings. captivating nest egg Schemes are offered by PBL such as Contributory savings Scheme, Monthly Benefit Deposit Scheme, Special Deposit Scheme, Education Savings Scheme, Fixed Deposit Scheme, Prime Bank Money Scheme, Prime Bank Insured Fixed Deposit Scheme as well as different accounts to save money.Schemes are designed concentrating in different purposes to sustain the fixed income group people to help in need. Bank-Officials are also whole-hearted and dedicated to serve their customer with utmost care. Credit Management policies and techniques used in PBL at present no doubt is comp arable to international standards. The officials follow the policy very strictly. They are choosy and conservative in sanctioning loan. The proposal is thoroughly scrutinized by the loan sanctioning authority. The nub function of the credit division is monitored periodically.The banks classified loan to the total Advance is very low. Management and others related to Prime Bank are trying to formulate new redevelopments and products. PBL perpetually try to increase foreign exchange through import, export and remittance. This bank always conceives amicable behaviour with exporters and helps them in their business activities as a regent friend. It encourage importer to import goods in legal procedure and provide financial assistance for doing business smoothly. This bank contribute to our economy in a great deal by transacting remittance from different countries.Keeping this archetype in the managements mind they made different exploit with several foreign banks in abroad to colle ct money from our service holders and remit it to our country through this bank. In Singapore bank open a PRIME EXCHANGE HOUSE to help our people who employed in that country. Recommendation Prime Bank Ltd. is one of the most potential Banks in the banking sector. It has a large portfolio with huge assets to meet up its liabilities and the management of this bank is equipped with the expert bankers and managers in all level of management. So it is not an easy job to find out the drawbacks of this branch.I would instead feel like producing my personal opinion about the ongoing practices in Motijheel Branch. For the improvement of the service the following measures should be taken ? Providing more industrial loans It seemed to me that the bank having a large amount of deposit is not support the large scale producers that much of long term industrial loans to hurry the economy as well as to help the economy to break up unemployment problem. ? Ensure prim Division of manpower In T he Desk There is pretermit of division of manpower in the branch. Therefore every body has to plow every type of banking services.This decreases the level of performance of the personnel, though it reduces monotonousness. But insufficiency of division of manpower hampers the discipline of working environment. So customers are to anticipate for some time for the desired service, which is contrary to the Bakings objective. ? ontogeny of Human Resources Human resource is another sector for the branch to be developed urgently. Human resources, in the branch, need to be equipped with passable banking knowledge. Majority of the human resources must be having basic knowledge regarding money, banking, finance and accounting.Without proper knowledge in these subjects, efficiency cannot be optimised. Bank can arrange training program on these subjects. ? Ensure Proper upkeep of Files Prime Bank Ltd. gives personalized services. All the officers have to give submergence to the customer s, while doing this they cannot properly maintain the customer files. In many cases, application forms are not properly filled up and documents are not properly filed. Every staff should try to reduce these irregularities. ? Ensure Proper Maintenance of Office Premises Motijheel Br. is supposed to be very clear and clean and well decorated.But sometimes it loses its glamour. The facility staffs are not regular in their duties and files and papers are kept here and there by the officers during the busy hour. This habit must be changed. Moreover, the sitting arrangement is very insufficient comparing with the number of customers. So Motijheel Br. Of PBL must pay attending to this issue. ? Ensure Proper Communication System and Maintenance of Machineries approximately of the time the branchs computers remain out of order and it is also true for the photocopiers. Attention should be given on proper sustenance of phone, computer, fax machine and photocopier. Ensure Sufficient Forms a nd Brochures There are always shortages of application forms, brochures, etc. in the branch. These Forms and Brochures must be maintained in sufficient quantity. Otherwise, customer service will be hampered ? Offer Some Loan and Deposit Scheme Exclusively for The bountifulness Customers All the modify and savings packages offered to the Premium customers are same as offered to the general customers, excepting the press release of service charges for Premium Ones. Prime Bank Limited should try to show more attractive lending and savings scheme to its Premium customers to create more business for the Bank.The Bank can pay more attention to this segment of customers, as it is the most solvent group from which income can be generated if the package is designed properly. ? Implement T24 software more quickly Banks implementation of T24 software and data migration activities should continue more quickly because day to day overhead cost increases for that purpose. ? More Gifts and Dis counts for The Marginal Customers Premium Customer should be offered occasional gifts and discounts, which can make the Premium Service more attractive and keep consumer delight.The interest rates on several loan and deposit schemes should be differentiated for the Premium customers Reference By Peter Rose. By L. R. Chowdhury. Consultation with the Following Persons ? Iftekher Uddin, SAVP and In-Charge of familiar Banking Division Motijheel Br. PBL. ? Mohammad Faruq, SAVP and In-Charge of Foreign Exchange Division. Motijheel Br. PBL. ? A. K. M. Jan-e ALAM,AVP and In-Charge of Credit Division Motijheel Br. PBL. ? Hafizur Rahman Mollik, FAVP Supervisor of L/C opening. Motijheel Br. PBL. ? Afzalun-Nnhar,FAVP. General Banking Division,Motijheel Br. PBL. Arif Hasan Khan, EO, Credit Division, motijheel Br. PBL. ? Mohammad Abdul Matin Principal Officer, Credit division, Head office ,PBL. ? Masum Mahmud Baqui, Principal Officer, bodily Banking, Head Office, PBL. ? Fahmida Sultana, Officer General Banking Division, Motijheel Br. PBL. ? MD. Rashedul Hasan Khan, Joiner Officer, General Banking Division. Motijheel Br. PBL. ? Khaleda Farhana, Jonier Officer, General Banking Division Motijheel Br. PBL. ? Zahid Hasan younger Officer Accounts Section Motijheel Branch PBL. &8212&8212&8212&8212&8212&8212&8212 Issuing Bank (Bangladesh) Advising Bank (India) Reimbursing Bank (Japan) Negotiating Bank (India)