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Chapter One

Orientation of the Report.

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Introduction

The word “Bank” refers to the financial institution deals with money. Commercial banks
are the primary contributor to the economy of the country. They are borrowing money from the locals and lending the same to the business as loans and advances. So the people and the government are very much dependent on these banks as the financial intermediary. Moreover, banks are profit -earning concern, as they collect deposits at the lowest possible cost and provide loans and advances at higher cost. The differences between two are the profit for the bank. Involvement of the banking sector in different financial events is increasing day by day. At the same time the banking process is becoming faster, easier and the banking arena is becoming wider. As the demand for better service increases, the banking organizations are coming with innovative ideas. In order to survive in the competitive field of the banking sector, all banking organizations are looking for better services and opportunities providing to their clients. As a result, it has become essential for every person to have some ideas on the bank and banking procedure.

Origin of the report
Reporting means the written presentation of the evidence and findings of a research. After completion of the internship program report submission is essential. The report is based on a topic that can satisfy both organization and my academic institution. Internship is the last part of my BBA course. Being a BBA student internship and report of internship submission is essential for me. Without completion of internship and report of internship, I can’t be able to complete my BBA course. This report is submitted to Prof. Md. Ashraf Hossain, Dean, School of Business. The University of Development Alternative after completion of the three months internship program in the SOCIAL ISLAMI Bank Limited (New Eskaton Brunch)

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I have assigned a topic “Foreign Exchange Operation of SOCIAL ISLAMI Bank Limited’’ and the authority of SOCIAL ISLAMI Bank gave me the opportunity to work at the principal Branch for three months on the topic. The main objective of practical orientation is to get a clear-cut idea about the foreign exchange operation of SOCIAL ISLAMI Bank. Along with the main objective other objectives of report are: 1. To apply theoretical knowledge with practical situation. 2. To understand the real management situation and to gather practical knowledge. 3. To familiar with banking environment, clients, working hours, values, conditions and other things related to bank. 4. To analyze the financing system of the bank and to have greater contribution towards country’s economy. 5. To identify problems faced by the customers and the bankers. 6. To evaluate whether the customer service provided by SOCIAL ISLAMI Bank is good enough for its congenial existence and growth. 7. To find out the growth rate of import and export.

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Scope of the report
There are certain boundaries to cover this report. To achieve the objectives of the report, i.e. through knowledge about the organizational functions and its management, it is not possible to cover each and every activities performed in the organization. The report has covered only the Foreign Exchange Operation performed by SOCIAL ISLAMI Bank.

Methodology
In this report both primary and secondary data are collected. Primary data are collected through face-to-face conversation with the bank officer and staff. And secondary data are collected from the published materials like Internet, annual report, branch report and foreign exchange related books.

Limitations of the report
This report has some limitations. These are given below: 1. Time constraint was a major drawback in this study. Three months time is not sufficient to cover such a wide area. 2. Another limitation of this report is the banking policy is not to disclose any information earlier, which will publish in future. For this reason I could not collect any data of 2008. 3. Foreign exchange related with currency exchange and foreign trade business, as currency exchange does not performed in this branch so I emphasis only on foreign trade. 4. Personnel of the bank are very busy.

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Chapter Two
About Social Islami Bank.

CHAPTER-II:
OVERVIEW OF SOCIAL ISLAMI BANK LTD.

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it is a Non-Formal Banking with the poor in non-corporate sector dealing with informal finance and credit package that empowers and humanizes real poor family and creates local income opportunities and discourage internal migration. Social Islami Bank Ltd. SIBL is beginning a new era of Islamic Banking having social. Social Islami Bank Limited is indeed a concept of 21st Century participatory three sector banking model in one: in the formal sector. (SIBL) become operational on 22 November. specially the founder Chairman P. such as. trading to transport. earn and live in a better society with greater security and peace at the operational level. It is an attractive concept of Islamic Banking with a unique human face approach to credit and banking based on interest free economic and financial transactions and income generating program for the millions of the urban and rural poor and a profitable investment option for the rich to invest. 6 .000 Waqf.55. it works as an Islamic Participatory Commercial Bank with human face approach to credit and banking on the basis of profit and loss sharing. who is an internationally reputed. Mosque properties in Bangladesh as well as Non-Muslim Trust properties. framing to fishing. Some renowned personalities and institutions are sponsors and directors of this bank. (SIBL) was incorporated on 5th July 1995 as a result of dedicated efforts of a group of established Bangladeshi entrepreneurs and internationally important personalities. committed basically to financing development and management of over 1. Non-formal and Voluntary sector. ethical and moral dimension in each of its activities ranging from credit to construction. it is a Development Bank intended to monetize the voluntary sector. formal. banking and financial activities as an integrated part of an Islamic code of life.1 An Overview of Social Islami Bank Ltd.2. and manufacturing to mining and so on. SIBL is operating three-sector banking. Targeting poverty. 1995 with a clear manifesto to demonstrate the operational meanings of participatory economy. Islamic thinker and professional Economist. History Social Islami Bank Ltd.

(SIBL) started its journey with a concept of 21st century Islamic Participatory three sector banking model:  Formal sector-commercial banking with latest technology.  Fast.  Introducing innovative Islamic Banking products.  Finally.3 Vision of Social Islami Bank Ltd. ’Reduction of poverty level’ is our vision. accurate and satisfactory customer services.  Non-formal sector-Family Empowerment Micro-Credit & Micro-Enterprise program and  Voluntary sector-Social Capital mobilization through CASH WAQF and others.  Providing support for social benefit organizations-by way of mobilizing funds and social services.2.  Empowering real poor families and create local income opportunities. 2.  Balance and sustainable growth strategy.  Optimum return on shareholders equity. (SIBL):  Social Islami Bank Ltd.  Attract and retain high quality Human Resources. which is a prime object as started in Memorandum of Association of the bank with the commitment ‘Working Together for a Caring Society’.4 Organogram 7 .2 Mission of Social Islami Bank Ltd. 2. (SIBL):  High quality financial services with the latest technology.

CHAIRMAN BOARD OF DIRECTORS MANAGING DIRETOR ADDITIONAL MANAGING DIRECTOR DEPUTY MANAGING DIRECTOR EXECUTIVE VICE PRESIDENT SENIOR VICE PRESIDENT VICE PRESIDENT SENIOR ASST.5 Functions of SIBL Information & Communication Technology Department 8 . OFFICER EXECUTIVE OFFICER OFFICER TRAINEE OFFICER JUNIOR OFFICER ASSISTANT OFFICER TRAINEE ASSISTANT OFFICER Diagram: Organizational Structure of SIBL 2. VICE PRESIDENT ASSISTANT VICE PRESIDENT SENIOR PRINCIPAL OFFICER SENIOR EXV.

The delegation offered then different advice and indications.6 Exchange of views In view to enhance Islamic Banking activities a delegation of the Board is visiting the member banks for two years and exchanging views with the higher authorities of banks. Planning & Research Department Internal Control & Compliance Division Investment Risk Management Department 2.7 Approval of Inter-Islamic Bank Money Market regulation To solve the liquidity scarcity no Islamic bank can borrow money from call Money Market became of Interest connection. 2. 9 . So the board approved "Inter-Islamic Bank Money Market regulation" so that Islamic Banks can deal each other to solve the scarcity of liquidity and excess liquidity accordingly of Shariah.Financial Administration Department International Department General Services Department Managing Director's Secretariat Business Development & Marketing Department Audit & Inspection Department Chairman's Secretariat Share Department Board Secretariat Human Resources Department Shariah Board Secretariat SIBL Training Institute Non Formal & Voluntary Banking Department Law & Recovery Department Board Audit Cell MIS.

8 Key functions of the SOCIAL ISLAMI Bank Ltd Like other commercial Banks SOCIAL ISLAMI Bank performs all traditional Banking business including introduction of a wide range of caving and credit products. The other functions are as follows:  Receiving deposit  Granting investment  Creation of deposit by investment  Transfer of money  Discounting of bill of exchange  Investment in profitable sectors  Export and Import.9 Performance of the Bank at a Glance 10 . But the SOCIAL ISLAMI Bank emphasizes its functions in export and import trade handling and financing of export oriented industries will enhance wealth.2. helps formation of capital and reduces in the balance of payment of the country. quotes more employment’s opportunities. retail banking and professional management. 2.

00 87.30 117.09 3503.38 81.Sl.67 4623. So improvement 11 . Particulars Authorized Capital Paid-up Capital Reserve Fund Deposits Investment (General) Investment (Shares & Bonds) Foreign Exchange Business a) Import Business b) Export Business c) Remittance 2007 350. of Foreign Correspondent Number of Employees Number of Branches Return on Assets 2.90 2604.09 3503. No 01.13 223.58 101.87 93.44% 2009 100.18% 246 1020 32 1. 02.00 4143.10 2241.58 91. 09.46 34. 11. 04.20 3128. 07.13 223.51 4949.20 3264.97% 222 934 28 1.00 171. 12.38 137.24 2678. they want it 100% defect free.73% 2008 100. 06.38 137. the bank believes.18% 246 1020 32 1.11 Customer Service and Automation “To err is human and forgiveness divine” is a Proverb.51 4949. the customers will not accept.65% 2010 350. Because for a service the pay for. 03.31 83.87 93.60 163.73% 08. 10.00 2831.33 9617. 05.33 9617.30 4931.46 34.78 35.82 1933.20 154.90 57.67 4623.84 11.20 3264.00 62.00 2691 81.97% 200 768 28 3. Operating Profit Loan as a % of total Deposit No.73 1907.50 22. 13.30 7294.

the Bank’s future plan is to equity all the units of the Bank with modern technology.of the customer service should always be their motto. it has a plan to install ATM at Suitable place in Dhaka and other cities of the country. Telex. To operate in the globalize environment. Altered expectoration of the customers has shifted the focus from resource base productivity to value base productivity. E-mail and soon they will start centralized online computer network. 2. For the service of its Customers round the clock. Fax.12 Product & Services: Deposit Al-Wadia Current Deposit Sorborno Rekha term Deposit Mudaraba Term Deposit Scheme Mudaraba Mellinor Deposit Mudaraba Pension Deposit Sonali Din Deposit Scheme Mudaraba Savings Scheme Super Savings Steady Money Multiplus Savings 12 . they already started online service.

arranging forward exchange coverage. pre-shipment and postshipment finance. issue.80 19260. During the year of 2007 bank open 16339-import letter of credit and the import value stood at 26781. collection of bills.70 4199. advice and confirmation of documentary credit.80 million with a growth of 39.05% comparison with previous year. negotiation and purchase of export bills.50 8519. ■ Import Business: Import business is considered as an important segment of Foreign exchange business.10 13152. discounting bill of exchange.Investment / Finance Corporate Finance Industrial Finance Project Finance Syndicate Investment Mode of Investment Murabaha Bai Muazzal Izara Bil Baia Wazirat Bil Wakala Quard Local Documentary Bill Purchased Foreign Documentary Bill Purchased ■ Foreign Exchange Business: International trade constitutes the main stream of business activities of SOCIAL ISLAMI Bank. It offers a full range of trade financial services namely.70 13 . Year 2010 2009 2008 2007 2006 Amount (Million) 26781. and outward remittance etc.

7 0 2006 2007 2008 2009 26781. Current Year = 26781.Figure: import business Figure Import 30000 Figure in Million 25000 20000 15000 10000 5000 4199. Po = Base Year. Now.5 8519. R = Growth rate.70 26781.8 19260.80 = 4199.80.1 13152.7 East 2010 Year ■ Growth rate of import Here the formula is Pt = Po × (1 + r ) n Here Pt = Current Year. Base Year = 4199.70 × (1 + r) 5 14 .

2007 against Tk.45 r = 45% ■ Export Business: The growth of export business has significantly been increased by 48. It stood at 22418.30 7442.45 − 1 r = .(1 + r ) 5 = 26781.60 million of the previous year.80 (1 + r ) 5 4199.38) 5 (1 + r ) = 1.40 15124.40 millions as of December 31.20 2797. Year 2010 2009 2008 2007 2006 Table: Export Business Amount (Million) 22418.15124.44 r = 1.38 1 (1 + r ) = ( 6.60 10088.22%.70 = 6.30 15 .

52 r = 52% 16 .6 10088.01) 5 (1 + r ) = 1. Po = Base Year.4 (1 + r ) 5 2797.4= 2797. Base Year = 2797. Now. R = Growth rate.3 × (1 + r) 5 (1 + r ) 5 = 22418.01 1 (1 + r ) = ( 8.4.25000 20000 22418.52 r = 1.4 15124.3 22418.3 = 8.52 − 1 r = .3 2003 2004 2005 2006 2007 East Figure in Million 15000 10000 5000 0 Year ■ Growth rate of export: Here the formula is Pt = Po × (1 + r ) n Here Pt = Current Year.3 7442. Current Year = 22418.2 2797.

■ Finance/Loans Offered by SOCIAL ISLAMI Bank           Corporate Finance Industrial Finance Lease Finance Hire Purchase Finance Commercial Loans Project Finance Syndicate Loans Retail Loans Mortgage Loans Loan against Share and Securities ■ Savings Scheme Offered by SOCIAL ISLAMI Bank        Monthly Savings Scheme (Money Grower) Monthly Income Scheme (Steady Money) Double the deposit in 6 years (Super Savings) 10 years deposit-more than triple (Multi plus Savings) Education Savings Scheme Smart Saver. About Principal Branch: Principal Branch is the 1st Branch the cooperation of head Office Management the business and other activities are growing gradually. Hajj Deposit. Performance at a glance of SOCIAL ISLAMI Bank (Pricipal Branch) 17 .

) Particulars Total Deposits Bills payable Total Advance/Investment Profit/Loss Cash in Hand Balance Held with Sonali Bank Balance Held with Sonali Bank Prize Bond Total Import Total Export Total Remittance (Local) 2009 587793753 1939679 379057627 8114302 5214408 23955593 10499479 9000 696109000 113154000 869427433 2010 382406420 3391637 197376922 3760132 2572846 1857752 18057372 Nil 509776000 39020000 1066164318 18 .(Amount in TK.

Chapter Three Foreign Exchange Operation of Social Islami Bank 19 .

to encourage the authorized dealers to buy and sell other currencies in the inter bank market. According to this law. L/C bill of exchange drawn in local currency but payable in foreign currency. under the provision of F. remittances and opening of foreign currency account under various classifications. TC. FC accounts can be opened without initial deposits. 1994 This act regulates the exchange of foreign currencies. rates of exchange. Act 1947.” Foreign Exchange Regulation Act. Controls the financial aspects.3.” Bangladesh Bank order 1972. with import policy orders & public notice issued from time to time by CCI & E.Bangladesh Foreign Exchange Dealers Association has been formed and a “Code of Conduct” for treasure operations and inter bank foreign exchange market has been formulated.E. methods of remittances against imports.1 Definition of Foreign Exchange  “Foreign exchange means foreign currency and includes all deposits. Introduction: Import of goods into Bangladesh is regulated by the ministry of commerce in terms of the Import & Export control Act 1950. ■ Foreign Exchange Regulation Act. The entire remittance from abroad is free from income tax. It also follows the guidance of Foreign Exchange circular of Bangladesh Bank. Bangladesh bank has stopped sales and purchases with authorized dealers of any currency other than US dollar. 20 . and bears no interest and both the account holder and the nominee can operate the account.R. It also states the documents required for the opening of such account. accept made or issued under clause 13 of section 16 of the Bangladesh bank order 1972 all deposits and credits and balances travelers cheque letter of credit and bill of exchange expressed or drawn in Bangladesh currency but payable in the foreign currency. L/c opening and operational procedure Import 1. such as payments for imports. 47 sec-2  “Foreign exchange means foreign currency and includes any instrument drawn. credits and balance of payable in foreign currency as well as Draft.

ii. 21 . They may import beyond USD 5000/.Those who Import the goods for their Industrial Consumption is called Industrial Importer. c.with the permission from CCI & E. b.Uniform Customs & Practice for Documentary Credit (UCPDC) issued by International Chamber of Commerce is another Guideline for Import. 3. Exporters and Indenter (Registration order 1981) no person can import goods into Bangladesh unless registered with the CCI & E or exempted from the provision of the said order. a. 3. All AD Branches shall have to comply the instructions of Head Office and principle of Islamic Shariah for importation of goods into Bangladesh.Those who import the goods to sell-out the same to the market for earning profit is called commercial importer. For import up to USD 5000/. Commercial Importer: . For above USD 5000/. Classification of Importers: a. Industrial Importer: .needs no permission. Cash foreign exchange. Sources of finance and items permissible for import against: i. Personal user needs no registration.They need no registration from CCI & E.permission has to be taken from CCI & E. Personal Importer (User): . Definition of Import: Import may be defined as bringing of visible item to the country from abroad through letter of credit or the Authorization form (LCAF) paying foreign Currency to that of exporting country. Registration of Importer: In terms of the Importers. Foreign aids/Credits/grants/barter and under 2.

Persons Exempted from Registration: a) Government Departments. i. Import Formalities & Procedures: Letter of credit: Credit means any arrangement. Import may be done without Letter of Credit (L/C) against LCAF up to a certain amount. c) Recognized Educational Institutions. a) The AD branches should open L/C only on behalf of their own customers who maintain A/Cs with them and are known to be participating in Trade. Bank Solvency Certificate iv. Capital machineries & spare parts for new industry. b) Local Authorities and Statutory bodies. 22 . Income tax paid certificate vi. g. f) Reading materials or medicine imported for personal use within permissible limit given in the policy in force. Nationality Certificate ii. Trade License v. Any other documents required by CCI & E 4. d) Hospitals. however named or described. which does not involve remittance of foreign exchange. But in general import must be done through L/C to be issued by an AD Bank. fixed by the CCI & E from time to time. e) Imports of goods. The interested persons/institutions submit application to the CCI & E along-with the following papers for registration as Importer. that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation. Certificates from the Chamber of Commerce & Industry/Registered Trade Association iii.

Sight L/C and usance or deferred L/C. In consideration of source of payment there are mainly two types of L/C. 5.b) It is not permissible to open L/C for imports in favour of a beneficiary in countries from where imports are banned. Concern party’s to an L/C i) ii) iii) iv) Importer / Applicant / Buyer Exporter / Beneficiary / Supplier Issuing Bank / Opening Bank Advising Bank / Notifying Bank 23 . c) L/Cs covering imports against valid LCA form are required to be opened within the period prescribed by the CCI & E in the Import Policy order or through Public Notice issued from time to time. BOI (Industries). d) Under the existing instructions issued by Board of Investment (BOI). L/Cs for import of merchandise by the Investors are required to be opened within Six months from the date of receipt of permission letter issued by the Director General. Types of L/Cs are: i) ii) iii) iv) v) Irrevocable Revocable Confirmed Transferable Back to Back 6. If a third bank adds their undertaking for payment in addition to the undertaking of issuing bank then the L/C is called Add Confirmed L/C. Letter of Credit & its Classification: A Letter of Credit is a conditional undertaking of payment by the issuing bank to the beneficiary. Govt. of Bangladesh.

150/Indent / proforma invoice Insurance cover note with money receipt LCAF duly filled in & Signed by the importer Membership Certificate from Chamber of Commerce/Trade Association TIN Certificate and up to date Tax payment declaration Charge documents. if any. with adhesive Stamp for Tk. 24 b) The following issues are to be checked carefully: . i) ii) iii) iv) v) vi) vii) viii) ix) x) xi) xii) xiii) xiv) xv) xvi) i) ii) iii) iv) v) vi) L/C Application form duly signed by the importer. Application for Import: a) A valid importer will submit the following paper/documents to his bank for opening L/C. Checking of L/C application and verification of the signature of the importer. Goods must be importable and permissible by the import policy against Proforma Invoice/Indent.v) vi) vii) Negotiating Bank Reimbursement Bank Confirming Bank 7. In case of Indent. Proforma Invoice/Indent must be accepted by the Importer. Bangladesh Bank permission for indenting should be obtained. including Musharaka / Murabaha agreement IMP IRC VAT Certificate Trade license Memorandum & Articles of Association Partnership Deed Resolution of the Board Photograph Others. Checking of IMP Form and verification of signature of the Importer. Checking of the renewal of IRC and its permissible limit.

iv) H.S. confirming the following:i) IRC is valid.2. iii) LCAF is duly filled in & signed by the importer.vii) viii) ix) x) xi) Proper H. The branch is required to keep proper records of the stocks and issuance of each set of LCA form. Credit report of the supplier should be obtained prior to opening L/C for Indent Tk. d) Distribution of LCAF: Original Duplicate Triplicate Quadruplicate Quintuplicate Last copy Exchange Control copy Custom purpose copy CCI & E’s office Statistical copy Registration Unit of Bangladesh Bank Office copy of the Bank e) Sanctioning for opening L/C: Upon receipt of the application dealing officer will issue office note stating the following: 25 . should be incorporated in LCAF.5.S. LCAFs remain valid for remittance for 09 (Nine) months in case of commercial items and 17 (Seventeen) months in case of capital machineries & spares. Price and market demand of the goods must be verified.Code No. Insurance Policy should cover all the required clauses and premium paid certificate/money receipt should be submitted along with the policy.00 lac & above and for Proforma Invoice Tk.00 lac and above. Code to be inserted into LCAF The LCA forms are required to be properly filled in and duly signed by the importer in presence of concerned official of the branch. Business experience of the Importer should be counted. renewal fee paid (if required) ii) Item to be imported is eligible as per import policy/Pass Book. Bank will Authenticate the LCAF. c) Authentication/Registration of LCAF: When the importer submits LCAF (Letter of Credit Authorisation Form) with other papers to the bank to open L/C.

Permission from Ministry of Commerce in case of CIF value.against indents issued by the local agents of the suppliers. Description of goods with quantity & unit price must be quoted in the L/C. 200. The following necessary clauses should be incorporated in the L/C at the time of issuance of L/C: i) ii) iii) iv) v) vi) vii) viii) ix) x) xi) Name & address of the applicant & Beneficiary. through an Agent/Correspondent bank in supplier’s country. 500. e. Amount of L/C in word & figure. Market Report of the goods to be obtained.a. 26 . If the bank satisfies then it will issue a letter of credit on behalf of the importer. Validity of the L/C with place of expiry ( presentation /Negotiation period) Negotiation (restricted/freely). Tenor (sight/deferred) Shipment date.against proforma invoices issued directly by foreign suppliers and Tk. h. Whether the proposal is within the limit or within the power of Branch incumbent c. Whether the client has valid Head Office Sanctioned limit b. to the beneficiary. f. g. L/C may be sent by Airmail duly signed by Authorised officials or by Telex authenticated by test number or SWIFT. Reimbursement/Payment clause. The item to be imported is permissible d.000/. Competitive price of goods to be taken. Insurance clause. The indent bears the IRC number & registration number of Indenter. i. Bill of Lading /AWB/TR must be consigned to the order of L/C issuing Bank. TIN of applicant.000/. Whether credit report of the supplier obtained if the value of the credit exceeds Tk. The indent bears the signature of Agent & Importer.

CO. Customer’s liability for L/C (Cash) (Foreign/Local) Cr Bankers Liability for L/C (Cash) (Foreign/Local) b) Realisation of Margin & Charges Dr. Income A/C – Commission on L/C (Cash) Cr. Tk. Tk. Tk. Party’s A/C Cr. f) Issuing Bank will pass the following voucher at the time of opening Cash L/C: a) Passing of Contra Liability Voucher: Dr. and other Necessary papers/documents/certificate as per import policy/customers’ requirement should be incorporated in the L/C. Cr.xii) xiii) xiv) PSI clause should be incorporated in the L/C for Taxable items and as per Import Policy/SRO. Upon receipt of Import documents issuing Bank will scrutinize import documents with reasonable care to ascertain whether or not they appear on their face to be in compliance in terms and conditions of the L/C & inform to the importer to release the documents if it is OK. 27 . Tk. Packing list. scrutiny. Requirement of the Invoice. Without/with confirmation of ad confirming bank. The L/C should be advised /Transmitted through the Correspondent bank of the L/C issuing Bank or to beneficiary’s bank subject to UCPDC-600 ICC Publication-2007. Lodgment & Retirement of import document: Advising Bank will advise the L/C to the beneficiary. Tk. Negotiating Bank then will send the Export document to the issuing Bank. Sundry Deposit A/C –Margin on L/C (Cash) Cr. xv) xvi) xvii) Charges on account of beneficiary/applicant should be mentioned. g) Receiving. Income A/C –SWIFT/Telex/Courier Service etc. Tk. Proper Income term should be incorporated in the L/C. Stamp if any Tk. Then beneficiary will export the goods and submit the Export documents to the negotiating Bank. Others.

In case of discrepant documents. L/C expired. price. discrepancy notice must be intimated to the negotiating bank within stipulated time (5 banking days) and as well as to the importer for waiver of the discrepancy. Not made out in the name of the applicant. L/C over drawn. Partial or transshipment effected in the contrary to the L/C terms. Bank will hold the documents at negotiating bank’s risk asking their disposal instruction mentioning UCPDC article reference. 28 Bill of Exchange: Invoice: . and quantity not correspond with the L/C.The payment should be made on due time to the negotiating bank as per their instruction by debiting PAD/MBE and PAD/MBE to be adjusted within stipulated time by debiting importer’s CD A/C or LIM(MPI) A/C or TR A/C g) Detailed scrutiny of document: The AD Branch will carefully look into the following main points of each of the documents keeping in view the terms of L/C and it is observed that the following are the common discrepancies of the documents: General: i) ii) iii) iv) v) vi) i) ii) iii) iv) v) i) ii) iii) iv) Late shipment effected. documents should be lodged and for of issuance bill maturity date to be conveyed to the Negotiating Bank . Not issued by the beneficiary. Not drawn on L/C issuing Bank Tenor of bill of exchange not identical with L/C. In case of clean documents or after acceptance/waiver of the discrepancy by the importer. Shipment made prior to issuance of L/C or time stipulated in the L/C. The amount drawn does exceed the amount available under the credit. Late presentation of documents. Description of goods. Not Properly drawn and signed by the beneficiary as per L/C term Amount of bill of exchange differs with that of Invoice. Not signed by the beneficiary.

number of cartons/packages differ with those of B/L. Freight Prepaid. Not signed by the beneficiary. The bill of lading is stale. Not marked “Original”. Full set of B/L not submitted. B/L does not indicate the name of carrier or master or on whose behalf the agent is signing the B/L. 29 . Pre-shipment inspection certificate Certificate to the effect that shipment/Transshipment has not been made on the port of a country expressly prohibited in the L/C.. Description of goods in B/L does not agree with that of invoice. B/L not drawn or endorsed to the order of issuing bank/Negotiating bank. Name and address of the notify party not mentioned. Short Form. Charter party B/L.. “Shipped on Board”. etc notifications are not marked. are correctly incorporated in the invoice.Net wt & measurement. Packing List: i) ii) iii) i) ii) iii) iv) v) vi) vii) viii) ix) Gross wt. Bill of Lading/AWB: Other Documents: i) ii) iii) iv) Weight list Certificate of Origin.v) vi) Required number of invoice is not submitted the relevant LCA form number. IRC number of importer along-with the Registration number of Indenter with Bangladesh Bank. Loaded on deck.

Types of Export: Export must be done as under: a.Opening of BB L/C & Acceptance of import documents Submission & Negotiation of Export Documents EXPORT & BBL/C 1. Export against advance payment c. All AD Branches shall have to comply the instructions of Head Office and principle of Islamic Shariah for importation of goods into Bangladesh. 2. To overcome the situation government has taken various steps to promote the export. Introduction: There is an un-favourable Trade Balance in our economy due to higher import & lower export. Export against L/C or firm contract b. Definition of Export: As a banker we may define export as sending of visible and invisible things outside the country for sale through letter of credit or against firm contract in exchange of Foreign Exchange. Uniform Customs & Practice for Documentary Credit (UCPDC) issued by International Chamber of Commerce is another Guideline for Import. 30 . 3. In handling export business we must follow the Export Trade Control regulation and Export policy issued by Ministry of Commerce from time to time. Export under consignment basis The exporter must obtain Export Registration Certificate (ERC) from the CCI & E except the following institutions: i. Government Departments.

150/ii) Indent / proforma invoice iii) Insurance cover note with money receipt iv) LCAF duly filled in & Signed by the importer v) TIN Certificate and up to date Tax payment declaration vi) Charge documents. Opening of BBL/C: a) A valid importer will submit the following paper/documents to his bank for opening L/C. Hospitals. iii. iv. 4. Statutory bodies or local authorities. including Musharaka / Murabaha agreement vii) Membership Certificate of BGMEA/BKMEA/BTMA /related others viii) IMP ix) IRC x) Trade license xi) CIB xii) BOI Registration xiii) ERC xiv) EPB enrolment xv) Bond License xvi) Balance sheet xvii) License from Inspectorate of factories xviii)Fire License xix) Factory Insurance (Fire Insurance with Bank Clause) xx) Disclaimer Agreement (Incase of Rented House) xxi) List of Machinery xxii) Memorandum & Articles of Association xxiii)Partnership Deed 31 . i) L/C Application form duly signed by the importer.ii. with adhesive Stamp for Tk. Recognized educational institutions.

ICC Publication-2007. xxviii) Amount of L/C in word & figure. In case of Indent. presentation period and validity of the export L/C with place of expiry. Proforma Invoice/Indent must be accepted by the Importer. Negotiation(restricted/freely). authenticated properly. if any. Goods must be importable and permissible by the import policy against Proforma Invoice/Indent.Code No. xxiv) L/C must be subject to UCPDC-600.S. xviii) Proper H. Business experience of the Importer should be counted. 32 . xxvii) Reimbursement/Payment clause. c) Upon receipt of an Export L/C from the exporter the Bankers should check the following before permission of execution of export order or to open BBL/C xxiii) Status of the issuing Bank of the Export L/C. Credit report of the supplier should be obtained prior to opening L/C for Indent Tk. Price and market demand of the goods must be verified.5. Checking of the renewal of IRC and its permissible limit. Insurance Policy should cover all the required clauses and premium paid certificate/money receipt should be submitted along with the policy. Bangladesh Bank permission for indenting should be obtained.shipment date. Checking of IMP Form and verification of signature of the Importer.00 lac and above.2. xxvi) Tenor (sight/deferred). should be incorporated in LCAF. b) The following issues are to be checked carefully: xii) xiii) xiv) xv) xvi) xvii) xix) xx) xxi) xxii) Checking of L/C application and verification of the signature of the importer.00 lac & above and for Proforma Invoice Tk. xxv) Whether the L/C is advised.xxiv) Resolution of the Board xxv) Photograph xxvi) Export L/C xxvii) NOC from previous Bankers and others.

xxx) Bill of Lading must be consigned to the order of Negotiating Bank in Bangladesh and AWB consigned to the L/C issuing Bank. through an Agent/Correspondent bank in supplier’s country. to the beneficiary.xxix) Description of goods with quantity & unit price must be quoted in the L/C. d. xxxix) Other clause & condition of the L/C whether can be complied or not as per rule of the state of the country. xxxv) BB L/C must not exceed the admissible percentage of net FOB value of the relative Export L/c (Net FOB=Total L/C value-freight charge-insurance costforeign commission). The following necessary clauses should be incorporated in the L/c at the time of issuance of L/C: i) ii) iii) Name & address of the applicant & Beneficiary Tenor (sight/deferred). If the bank satisfies then it will issue a letter of credit on behalf of the importer. L/C may be sent by Airmail duly signed by Authorised officials or by Telex authenticated by test number or SWIFT. xxxvi) BBL/C shall be opened on up to 180 days deferred basis and interest shall not exceed LIBOR or equivalent to the rate of the currency of the country. xxxvii) No BBL/C will be opened under Proceeds Realization Clause without prior approval from Bangladesh Bank. xxxi) Insurance clause must be in L/C. xxxii) Incoterm. xxxviii) No BBL/C will be opened against Export L/c received under Barter/STA without prior approval from Bangladesh Bank. Shipment date 33 . xxxiii) Foreign commission .if any within 5% xxxiv) Export L/C should have validity period adequate to cover the time needed for importation of raw material.

Income A/C –SWIFT/Telex/Courier Service etc. Bill of Lading /AWB/TR must be consigned to the order of L/C issuing Bank.iv) v) vi) vii) viii) ix) x) xi) xii) xiii) Validity of the L/C with place of expiry ( presentation /Negotiation period) Negotiation(restricted/freely). xiv) xv) xvi) Charges on account of beneficiary/applicant should be mentioned. Sundry Deposit A/C –Margin on L/C (Cash) Cr. Tk. Proper Incoterm should be incorporated in the L/C. Packing list. Tk. The L/C should be advised /Transmitted through the Correspondent bank of the L/C issuing Bank or to beneficiary’s bank subject to UCPDC-600 ICC Publication-2007. Requirement of the Invoice. and other Necessary papers/documents/certificate as per import policy/customers’ requirement should be incorporated in the L/C. Tk Tk 34 . Income A/C – Commission on L/C (Cash) Cr. Insurance clause. Description of goods with quantity & unit price must be quoted in the L/C. Reimbursement/Payment clause. Customers liability for L/C (Cash) (Foreign/Local) Cr. Bankers Liability for L/C (Cash) (Foreign/Local) b) Realisation of Margin & Charges Dr. Amount of L/C in word & figure. Party’s A/C Cr. e. Tk. A clause containing “The L/C is issued under bonded warehouse license system” should be incorporated in the L/C. Tk. Issuing Bank will pass the following voucher at the time of opening BBL/C: a) Passing of Contra Liability Voucher: Dr. Without/with confirmation of ad confirming bank. CO.

35 . Stamp if any Tk. Others.Cr.

b. No person can export any goods from Bangladesh unless he is duly registered as an exporter with the CCI & E. c. Bank will hold the documents at negotiating bank’s risk asking their disposal instruction mentioning UCPDC article reference. documents should be lodged and for of issuance bill maturity date to be conveyed to the Negotiating Bank . whether accompanied or unaccompanied of travelers. In case of clean documents or after acceptance/waiver of the discrepancy by the importer. Upon receipt of an Export L/C the banker should advise the same to the beneficiary or Beneficiary’s bank on satisfaction of the apparent authenticity of the export L/C. Advising of Export L/C: The bank may issue a credit through SWIFT or by airmail. General Formalities of Export: i. except in the following cases such as: a. Gift packets valued less than Tk. All export must be declared on the EXP form which consists of 4(four) copies. Negotiating Bank then will send the Export document to the issuing Bank. Personal effects. In case of discrepant documents. scrutiny.f) Receiving. Lodgment & Retirement of import document: Advising Bank will advise the L/C to the beneficiary. discrepancy notice must be intimated to the negotiating bank within stipulated time (5 banking days) and as well as to the importer for waiver of the discrepancy.50/- a.The payment should be made on due time to the negotiating bank as per their instruction by debiting FC held A/C (Export proceeds) or by debiting Forced Loan A/C 5. 36 . Bona fide trade samples up to the value prescribed in the Export Policy in force. ii. Then beneficiary will export the goods and submit the Export documents to the negotiating Bank. Upon receipt of Import documents issuing Bank will scrutinize import documents with reasonable care to ascertain whether or not they appear on their face to be in compliance in terms and conditions of the L/C & inform to the importer to release the documents if it is OK.

Confirming the following. 37 . Distribution of EXP form: Original: Duplicate: Triplicate: From custom Authority to Bangladesh Bank (FEPD) after shipment of the goods. There is a time gap between export of the goods and realization of the proceeds. Negotiation/Collection of Documents After shipment of the goods the exporter shall submit export documents to Authorized Dealer for negotiation of the same or to send the same on collection basis. From Negotiation Bank to Bangladesh Bank after realization of the proceeds of the export bill (with monthly return supported by schedule “A”).An Exporter can receive an Export L/C from any bank and submit the same to the Negotiating Bank b. So exporter may require finance in that period to continue his business. d. iii) Arrangements have been made for receipt by Authorised Dealers of documents of title to goods. From Negotiating Bank to Bangladesh Bank after negotiation along-with one copy of invoice within 14 days from the date of shipment. Quadruplicate: Retained by the negotiating Bank as an office copy. ii) Bona fides of the importer/consignees abroad. bank may purchase/negotiate the export documents. Issuance of EXP: Full particulars of the EXP form should be entered in the Export Register Bank will certify EXP form only after confirming:i) Arrangements made for realization of Export proceeds. iv)The EXP have been signed by the exporter c.

Not made out in the name of the applicant. Any other security in case of export under contract e. price. are correctly incorporated in the invoice. 2. Not drawn on L/C issuing Bank Tenor of bill of exchange not identical with L/C.1. Party’s past performance is satisfactory. Partial or transshipment effected in the contrary to the L/C terms. IRC number of importer along-with the Registration number of Indenter with Bangladesh Bank. Not signed by the beneficiary. Scrutiny of Export Documents: The AD Branch will carefully look into the following main points of each of the documents keeping in view the terms of L/C and it is observed that the following are the common discrepancies of the documents: General: vii) viii) ix) x) xi) xii) vi) vii) viii) ix) x) Late shipment effected. Buyer is bonafide. L/C expired. L/C over drawn. Bill of Exchange: Invoice: vii) viii) ix) x) xi) xii) Not issued by the beneficiary. Shipment made prior to issuance of L/C or time stipulated in the L/C. Export documents comply the credit terms. The amount drawn does exceed the amount available under the credit. 38 . and quantity not correspond with the L/C. Description of goods. Required number of invoice is not submitted the relevant LCA form number. Not Properly drawn and signed by the beneficiary as per L/C term Amount of bill of exchange differs with that of Invoice. Late presentation of documents. 3. 4.

Not signed by the beneficiary.Net wt & measurement. Pre-shipment inspection certificate Certificate to the effect that shipment/Transshipment has not been made on the port of a country Expressly prohibited in the L/C. Bill of Lading/AWB: xviii) The bill of lading is stale. Name and address of the notify party not mentioned. number of cartons/packages differ with those of B/L. Freight Prepaid.. 39 . etc notifications are not marked. B/L does not indicate the name of carrier or master or on whose behalf the agent is signing the B/L. Loaded on deck. Full set of B/L not submitted.Packing List: v) vi) vii) x) xi) xii) xiii) xiv) xv) xvi) xvii) Gross wt . Short Form. B/L not drawn or endorsed to the order of issuing bank/Negotiating bank. Charter party B/L. Other Documents: i) ii) iii) viii) Weight list Certificate of Origin. Description of goods in B/L does not agree with that of invoice. 1) Payment is given to the customer on either by collection basis or by purchasing the documents. “Shipped on Board”. Not marked “Original”.

Chapter Four Remittance 40 .

1997. The amount released must not exceed the Authorized limit. etc. monthly or quarterly must be strictly adhered. All remittances from Bangladesh to a foreign country or local currency credited to on resident Taka accounts of foreign banks or convertible Taka account constitutes out ward remittances of foreign exchange. once forms have been approved by or on behalf of the Bangladesh Bank. Permits issued (where applicable) by the Bangladesh Bank must be utilized within the period of its validity indicated in the permits.T.1 OUTWARD REMITTANCES Most outward remittance is approved by the Ads. they should also maintain proper records for submission of returns to Bangladesh Bank as also for the letters inspection from time to time. 41 .2 Inward remittance The term inward remittance includes not only remittances by T. It is most important that. purchase of Travelers cheque. if any given in the permits with regard to the amounts to be released periodically e. the instructions. but also purchase of bills. In case of remittance received in advance for exports the AD should obtain a signed declaration from the beneficiary on the back of the “Advance Receipt Voucher” certifying the purpose of remittance. on behalf of the Bangladesh Bank following declaration of Taka as convertible for current account payments from March. draft. Remittance receives against export should be certified and reported on EXP forms. Inward remittance covers purchase of foreign currency sent from abroad favouring a beneficiary bank in Bangladesh.g. the ADs carry out the transactions only on behalf of the original applications for which the forms were approved. ADs must exercise greatest caution to ensure that foreign currencies remitted or released by them are used only for the purpose for which they are released. 4. Only a few remittances of special nature require Bangladesh Bank’s prior approval.4. Also.

1 S W O T Analysis of SOCIAL ISLAMI Bank Ltd.Chapter Five S W O T Analysis of SOCIAL ISLAMI Bank Ltd 5. 42 .

finance and banking at home & abroad. The bank actually not has any long term strategies whether it wants to focus on retail banking or become a corporate bank. interactive and informal. communicate between the superior and the employees. Lakiotullah work as the managing director of bank management team. The working environment is very friendly. 43 . the advisor of the bank is a reputed senior chartered accountant 30 years vast experience in accounts. And there are no hidden barriers or boundaries while. SOCIAL ISLAMI bank has already achieved a high growth rate accompanied by an impressive profit growth rate in 2001. opportunities and threats. Md. SOCIAL ISLAMI bank has an interactive corporate culture.SWOT analysis is the detailed study of an organizations exposure and potential analysis is the detailed study of an organizations exposure and potential in perspective of its strength. The bank has already shown a tremendous growth in the profit and deposits sector. audits. weakness. Md. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in competition to their competitors.3 Weakness The important weakness is that the bank has no clear mission statement and strategic plan. Mr. 5. Alamgir Kabir. The board of directors headed by its chairman Mr. 5. This corporate culture provided as a great motivation factor among the employees. Nazrul Islam is a skilled person in the business world. SOCIAL ISLAMI bank ltd has provided its banking service with a top leadership and management position.2 Strength SOCIAL ISLAMI bank ltd has already established a favorable reputation in the banking industry of the country. The number of deposits and the loans and advances are also increasing rapidly. The path of the future should be determined with a strong feasible strategic plan.

SOCIAL ISLAMI bank can introduce special corporate scheme for the corporate customer or officer who have an income level higher from the service holder. A large of number of private banks are coming into the market in the recent time. At the same time. SOCIAL ISLAMI bank has to expand their business portfolio. In this competitive market SOCIAL ISLAMI bank must expand its product line to enhance its sustainable competitive advantage.The bank failed to provide a strong quality-recruitment in the lower and some mid level position. they can introduce the ATM to compete with the local and the foreign bank. Prime bank or Dutch Bangla bank etc. The bulk of our population is middle class. 5. doctors etc. 44 . So a wide variety of retail lending products has a very large and easily pregnable market. they can introduce scheme or loan for various service holders. such as engineers. And the scheme should be separate according to the professions. The poor service quality has become a major problem for the bank. The management can consider options of starting merchant banking or diversify into leasing and insurance sector. Opportunity in the retail banking lies in the fact that the country’s increased population is gradually learning to adopt consumer finance. lawyers.4 Opportunity In order to reduce the business risk. Different types of retail lending products have great appeal to this class. But the bank has to compete with the Multinational Bank located here. The quality of the service at SOCIAL ISLAMI bank is higher than the NCC bank. In the product line. They can introduce Credit card and Debit card system for their potential customer. In addition to these things. As a result the services of the bank seem to be dues in the present days.

5. private banks posse’s enormous threats to SOCIAL ISLAMI bank ltd. Because of defaulter risk leads the organization towards to bankruptcy. SOCIAL ISLAMI bank has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem if not elimination. The low compensation packages of the employees from the mid level to lower level to position threats the employee motivation. As a result good quality employees leave the organization as a whole. 45 . The default risks of all terms of loan have to be minimizing in order to sustain in the financial market. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against at on slough of foreign banks.5 Threats All sustain multinational banks and upcoming foreign.

Chapter Six Findings and Recommendations of SOCIAL ISLAMI Bank ltd. 46 .

Aktaruzzaman vice president of the Human Resources Division. This practical orientation program. However. Kamrul Hassan Senior Lecturer who guided me with his kind help in completing my internship program in SOCIAL ISLAMI BANK. Though all departments and sections are covered in the internship program. SOCIAL ISLAMI Bank considers about the repayment by the customers as a result bad debt for loan and advances of SOCIAL ISLAMI Bank is very few compare to others. Comparing practical knowledge with theoretical involves identification of weakness identified. has been arranged for gaining knowledge of practical banking and to compare this practical knowledge with theoretical knowledge. especially Md. For this reason Bank should select customer very carefully. In the conclusion. Bank does not consider the highest rate of interest in the time of sanction loan only. it is not possible to go to the depth of each activities of branch because of time limitation. almost all the desks have been observed more or less. During the three months Practical orientation program at Principal Branch. I want to give thinks to the SOCIAL ISLAMI Bank Head office authority. 47 . I want to express my deepest respect and thanks to my Guide teacher.Conclusion The success of the Bank Depends on the Utilization of its fund. in first. I give special thanks to all the officials of SOCIAL ISLAMI Bank Pricipal Branch who helped me a lot amount my practical exposure in the Bank. highest effort has been given to achieve the objectives the internship program. Recovery of loan and advances of the SOCIAL ISLAMI Bank is good.

Web site (www. Principles of Marketing (Millennium Editor) Philip Kottler. Bangladesh bank exchange control manual.Social Islami -bd.Social Islami bankbd.google. Dhaka Web site (www. Articles of SOCIAL ISLAMI Bank.com). Web site (www.com). Prospectus of SOCIAL ISLAMI Bank Several Newsletters From SOCIAL ISLAMI Bank. 48 .com).۩ BIBLIOGRAPHY & REFERENCES           Annual Report of SOCIAL ISLAMI Bank Limited Different type of brochures of SOCIAL ISLAMI Bank.

۩ ACRONYMS ■ A/C ■ B/L ■ BB ■ BIC ■ BR ■C&F ■ CC ■ CFR ■ CRF ■ DD ■ EDF ■ EPB ■ EPZ ■ ERC ■ EXP ■ FC ■ FDD ■ FDR ■ FOB ■ IBCT ■ IMP ■ IRC ■ L/C ■ LCAF ■ LIM ■ LTR Account Bill of Lading Bangladesh Bank Bank Identifier Code Branch Clearing & Forwarding Cash Credit Cost & Freight Clean Report Findings Demand Draft Export Development Fund Export Promotion Bureau Export Processing Zone Export Registration Certificate Export Form Foreign Currency Foreign Demand Draft Fixed Deposit Receipt Free On Board Inter Branch Credit Transaction Import Form Import Registration Certificate Letter of Credit Letter of Credit Authorization Form Loan against Imported Merchandise Loan against Trust Receipt 49 ■ CCI & E Chief Controller of Import & Export .

■ OBC ■ PAD ■ PO ■ PSI ■ STD ■ SOD ■ SWIFT ■ TC ■ TIN ■ TR Outward bills for collection Payment against Document Payment Order Pre Shipment Inspection Short Term Deposit Secured Overdraft Society for Worldwide Inter Bank Financial Telecommunication Travelers Cheque Trade Identification Number Trust Receipt Documentary Credit ■ UCPDC Uniform Custom & Practice for ----------------------------- 50 .