“Foreign Exchange Operation of First Security Islami Bank Ltd.

-A study on Agrabad Branch, Chittagong.

(THIS INTERNSHIP REPORT IS SUBMITTED FOR THE PARTIAL FULFILLMENT

OF THE BACHELOR OF SOCIAL SCIENCE IN ECONOMICS & BANKING)

PREPARED BY

Md. Fahad Mahmud

Metric No: EB171107

Internship Duration: 23th September 2021

Date of Submission: 15th July 2021

Department of Economics and Banking

Faculty of Social Science

International Islamic University Chittagong

1
 “Foreign Exchange Operation of First Security Islami Bank Ltd.”

-A study on Agrabad Branch, Chittagong.

(THIS INTERNSHIP REPORT IS SUBMITTED FOR THE PARTIAL FULFILLMENT

OF THE BACHELOR OF SOCIAL SCIENCE IN ECONOMICS BANKING)

PREPARED BY:

Md. Fahad Mahmud Supervised BY

Metric No. EB171107 Shah Asadullah Mohammed Zobair
Lecturer, DEB, IIUC
Program: BSS (Hon’s)in EB

Semester: Spring-2020

Internship Duration: 24th September 2020 – 21th December 2020

Date of Submission: 04th January, 2021

…….………………….

Signature of Supervisor

Department of Economics and Banking

Faculty of Social Science

International Islamic University

Chittagong

2
LETTER OF SUBMISSION

04 January, 2021

To

The Convener

Thesis & Internship Committee

Department of Economics & Banking

International Islamic University Chittagong

Subject: Submission of the Internship study.

Dear Sir,

This is a great pleasure for me to submit my internship study on Foreign Exchange Operation
of First Security Islami Bank Ltd. It was a golden opportunity for me to gain knowledge and
practical experiences regarding the procedures and functions while working at Agrabad Branch
of First Security Islami Bank Ltd.

So, I confidently believe that, these knowledge and experiences will help me in my professional
life. The analysis in the study is based on the data and information found during my internship
period. There are few limits due to lack of time and other reasons, but I have tried my best to
make it as correct as possible and I have tried my best together related information from all
available sources.

In this concern, I pray & hope that you would be kind enough to receive this study and oblige
thereby.

Sincerely Yours

………………………………

Md. Fahad Mahmud

BSS Program

ID-EB171107

Department of Economics & Banking

International Islamic University Chittagong

3
LETTER OF ACCEPTANCE

This is to certify that the internship study on “Foreign Exchange Operation of First Security
Islami Bank Ltd.” is prepared by Md. Fahad Mahmud, Metric ID NO: EB171107, Program:
BSS (HONS) in EB under my supervision. The data and findings presented in the study seem to
be authentic. Now, it has been approved for presentation in the internship defense.

I wish him every success in life.

……………………………..

Shah Asadullah Mohammed Zobair

Lecturer

Department of Economics & Banking

International Islamic University Chittagong

4
CERTIFICATE

5
DECLARATION

I hereby declared that the internship report on “Foreign exchange Operation” of First Security
Islami Bank, Agrabad Branch, Chittagong is Prepared by me after completion of three months’
work in First Security Islami Bank Limited.

I also would like to confirm that, the report is prepared exclusively for academic purpose not for
any other purposes.

.............................

(Md. Fahad Mahmud)

BSS Program

ID-EB171107

Department of Economics & Banking

International Islamic University Chittagong

6
 Acknowledgment
At the beginning, I would like to express my sincere gratitude to Almighty Allah, the most
merciful and beneficial for empowering me to prepare the report within the scheduled time.

I also want to thanks especially to my internship supervisor Shah Asadullah Mohammed Zobair,
Lecturer, DEB, International Islamic University for her inspiring guidelines, valuable suggestion,
constructive criticism and constant help throughout the work and in preparation of this report

I also express my warm gratitude and cordial thanks to the management and officials of First
Security Islami Bank Limited, Agrabad Branch who have given me the opportunity to work with
them and helped a lot by providing the information and enabling me to prepare this report. I have
received their generous help and support.

My gratitude goes completely to Kazi Mohammad Najam Uddin (Export officer of FSIBL). I am
also grateful to all staffs for their valuable co-operation, guidance, direction, and continuous
support throughout the internship period. I was closely attached with them during my internship
occupation.

Without their co-operation it would not be possible for me complete this report. They provided
valuable information to me.

Finally, I want to thank Jalal Ahmad (Op. Manager of the Branch), Tamijur Rahman Sikder
(Export In charge), MD. Hanif Uddin (Export l Officer), MD. Abu Bakkar (GB Officer), Ismat
Ara Hoque (GB Officer), and all the employees of First Security Islami Bank Ltd. Agrabad
Branch for their constant support, guidance and supervision for preparing the study and giving
me the practical knowledge about corporate life.

I would like to humble thanks to all of my family members who gave me physical, psychological
and economical supports to complete my BSS program. Inspire of sincere and denoted efforts,
there might be some mistakes in the study. I take the entire responsibility for such unintended
errors and omissions.

7
Abstract

This report shows the working background of "Foreign Exchange Activities of First Security
Islami Bank Limited". As an internship report for the BSS program. It will show that a private
owned company can count on the convenient, recognized and modern full-fledged administration
premises.

In the first chapter, details about the main, purpose, methodology of the report about First
Security Islami Bank Limited (FSIBL) are contained. This report is partly supplemented by the
BSS Program. The objective of the report is to determine the FSIBL's foreign currency activities.
Two types of information are used to prepare this report. They are primary and secondary.

The second chapter deals with the general description of the organization of First Security Islami
Bank Ltd. (FSIBL) History of First Security Islami Bank Limited, First Security Islami Bank
Limited Networks, FSIBL Mission, FSIBL Vision and Objective of the organization, Strategies
of First Security Islami Bank Limited, Deposit’s products etc.

In Third chapter contains analysis of the report, which is the main part of the report, and
"Foreign exchange Activities of First Security Islami Bank Limited", Foreign Exchange,
historical overview of exchange rates system of Bangladesh, exchange of foreign exchange
activities, L/C Required documents, export department, import department, remittance
department and SWOT analysis.

In the fourth chapter, the results of analysis like findings, recommendations and conclusions that
are mainly obtained from the study of foreign exchange evaluation. I think the recommendation
will increase the performance of First Security Islami Bank Limited as well as increase their
customer base.

In the five chapter shows the references report, references books, website and other references.

8
9
EXECUTIVE SUMMARY

As a part of BSS program, it is required to have internship program with an organization for
three months. Therefore, I have completed my internship with FSIBL, Agrabad branch,
Chittagong and Prepared the report on “Foreign Exchange Operation” Of First Security Islami
Bank Ltd, Agrabad Branch, Chittagong. This report gives a clear idea about foreign exchange
department of the Bank.

First Security Islami Bank Limited (FSIBL) was established in 27 th September 1995 with the
objectives of achieving success in life here & hereafter following the way directed by the Holy
Quran. The whole working process of First Security Bank Limited, Agrabad Branch, is divided
into 3 sections-

(i) General Banking Section,

(ii) Investment Section, and
(iii) Foreign Exchange Section.

This report has been presented based on my practical observation and experience gathered from
the Branch and the focus is given on Foreign Exchange Section. This report contains four
chapters.

Chapter-1 Introduction of the study

Chapter-2 shows the background of the study.

Chapter-3 shows the overview of Foreign Exchange operation of FSIBL Financing.

Chapter-4 shows the Performance of Foreign Exchange operation of FSIBL.

Chapter-5 shows Findings, Recommendation and Conclusion.

The whole report is based on the Foreign Exchange performance of FSIBL. My overall
experience had been very attractive and I believe internship period at First Security Islami Bank
Limited will definitely help me a lot in building my future career.

10
11
 TABLE OF CONTENT

Particulars Page No.

Letter of Submission 03
Letter of Acceptance 04
Certificate 05
Declaration 06
Acknowledgment 07
Abstract 08
Executive Summary 09

Chapter 1: Introduction of the study

Particular Page No.

1.1 Introduction 15
1.2 Origin of the Report 15
1.3 Objectives of the Study 15
Chapter
One 1.4 Methodology 16
1.5 Scope of the Study 16
1.6 Limitations of the Study 17
1.7 Time schedule of the study 17

12
 Chapter 2: Overview of FSIBL

Particular Page No.

2.1 Historical Background of FSIBL 19

2.2 Objectives of FSIBL 19

2.3 Specific features of FSIBL 20

2.4 Financial Performance Of First Security Islami Bank Ltd 20

2.5 Vision Of FSIBL 20

Chapter 2.6 Mission of FSIBL 21

Two
2.7 Distribution of Branches 21

2.8 First Security Bank Deposit 21

2.9 Five Year Financial Highlight 23

2.10 Organogram of First Security Islami Bank Ltd 24

2.11 Departments 25

2.12 FSIBL at a Glance 26

2.13 Board of Directors 26

2.14 Corporate Social Responsibilities 27

13
 Chapter 3: Overview of Foreign Exchange Operation of FSIBL

Particular Page No.

3.1 Foreign Exchange 29

3.2 Foreign Trade 30
3.3 Functions of Foreign Exchange Department 30
3.4 Import 31
3.4.1 Requirements for Import 32
3.4.2 Parties of Letter of Credit 32
3.4.3 Presentation of the Documents 32
3.4.4 Import Mechanism 33
3.4.5 Source of Finance 33
3.4.6 Import Procedures 33
3.4.7 Procedures of Opening L/C to Import 34
3.5 Export 34
3.5.1 Export Procedure 35
3.5.2 Papers Requirement for new Export 36
3.5.3 Preparation of Exports Documents 36
Chapter 3.5.4 Export Financing of FSIBL 37
3.5.5 Back To Back Letter of Credit 37
Three
3.5.6 Features of Back To Back L/C 37
3.5.7 Documents Required for Opening a Back To Back L/C 38
3.5.8 Packing Credit 38
3.6 Remittance 39
3.6.1 Objectives of Foreign Remittance 39

3.6.2 Kinds Of Foreign Remittance 39

14
Chapter 4: Analysis of Foreign Exchange Operations Of FSIBL (Agrabad Branch)

Particular Page No.

4.1 Total Import Financing 42

4.2 Figure of Total Import Financing in Dollar 42

4.3 Total Import LC 43

4.4 Figure of total Import LC 43

Chapter 4.5 Total Export Financing 44

Four
4.6 Figure of Export Financing In Dollar 44

4.7 Total Export FBC 45

4.8 Total Remittance 45

4.9 Total Commission 45

4.10 Figure of Total Commission 46

Chapter 5: Findings, Recommendation, Conclusion & References

Particular Page No.

5.1 Findings 48

5.2 Recommendation 49
Chapter Five
5.3 Conclusion 49

5.4 References 50

15
Chapter One
Introduction of The Study

16
1.1 Introduction:

Bangladesh is one of the large Muslim countries in the world. The people of this country are
deeply committed to living in Islamic life on the basis of the principles of the holy Qur'an and
Sunnah. On June 18 , 1995, First Security Islami Bank was established, a true reflection of this
sincere desire of its people that began to come into effect from September 27, 1995. It is
committed to conduct banking and investment activities in all financial activities based on the
interest free profit and the fate of the loss. In this way the new horizons have been exposed in the
light of new negotiations and expecting the dream of long dream of Bangladesh for banking
transactions in accordance with Islam's prescribed rules.

With active support from the Islamic Development Bank (IDB) and other Islamic banks,
financial institutions and government agencies, First Security Islami Bank Limited has achieved
the unique position of a leading private commercial bank in Bangladesh. First Security Islami
Bank has made a positive contribution to the socio-economic development of the country with
182 branches of which 25 is AD throughout the country.

During the 3 months of First Security Islami Bank Limited experience, my experience has been
published in my internship report.

1.2 Origin of the Report:

Economics & Banking Department of International Islamic University Chittagong require three-
month attachment with an organization followed by a report assigned by academic supervisor. I
took the opportunity to do my internship in First Security Islami Bank Limited, Agrabad Branch.
I am proud to work as an internee with First Security Islami Bank Ltd. and this experience will
surely help me in my future career. The advance working report has been prepared as a part of
internship program. Being as intern the main challenge was to translate the theoretical concept to
real life experience.

1.3 Objectives of the Study:

The objectives of this study are:

a) To know the overview of Foreign Exchange Operations of First Security Islami Bank
Ltd.
b) b) To analyses the performance of foreign exchange operations of First Security Islami
Bank Ltd., Agrabad Branch, Chattogram.

c) To recommend on the findings of the study.

17
d) To identify some problems regarding foreign exchange mechanism.

1.4 Methodology:

To make the report more significant and presentable, two sources of data and information have
been used extensively. These are Primary Data and Secondary Data and both of these primary
and secondary data sources were used to construct the report. Please note that most of the
information collected in secondary sources.

Primary Sources of Data:

 Direct Observation
 Face to face discussion with the officers and Clients.

Secondary Sources of Data:

 Annual report of First Security Islami Bank Ltd.

 Bangladesh Bank Periodical.
 Progress report of the Bank.
 Different publications regarding banking functions and foreign exchange operations.

1.5 Scope of the study:

During my internship program, I tried to gather information as much as possible from foreign
exchange department to illustrate a clear-cut image about the performance of the foreign
exchange of First Security Islami Bank Limited, Corporate Brach, Agrabad. To read the report
we will be able to know a clear image of the foreign exchange of First Security Islami Bank Ltd.
Here knowing the scope is available but time is very short. There are many things which is not
invented yet. So, there are many scopes for further internee like foreign exchange, general
banking, etc.

18
1.6 Limitations of the study:

To continue study in such huge area requires a big deal in time. As an intern, I had only three-
month time, which was not enough.

 Banks’s policy of not disclosing the data that are sensitive

 Information insufficiency.
 Getting Relevant papers and documents were strictly prohibited.
 Since the bank personals were very busy, they could provide me every little time.

1.7 Time schedule of the study

SL. No. Particular Duration

01 Data collection, analyzing and consolation with the supervisor 45 days
02 Data observation and separation 15 days
03 Data input to computer, processing and preparing the report 15 days
04 Make a output as book and shown the supervisor for correction 15 days
then submitted to him finally.
Total 03 months

19
Chapter Two
An Overview of First Security Islami Bank LTD.

2.1 Historical Background of FSIBL:

Islam gives us a complete lifestyle. The main goal of the life of Islam is to succeed both in our
mortal and immortal life. Therefore, in order to achieve our highest success in every aspect of
our life, we should follow the doctrine and lifestyle of the Prophet (sm) of al-Qur'an. First
Security Islami Bank started its journey in 1995 with the proposed policy and started a modern
banking system based on the Qur'an and Sunnah.

Following the guidance given by the Holy Qur'an and subsequently and later, in order to achieve
success, and as a public limited company of (FSIBL) First Security Islami Bank Limited, June

20
18, 1995 is registered. The inauguration ceremony was held on 27 September 1959. On 2019, the
authorized capital of the bank is 10,000 core and the paid-up capital is Tk7,072.044 million.

A group of established and devoted personalities of bangladesh, the bank's architects and
directors. Among them is a well-known Islamic scholar, economist, writer and former bureau
artist of Bangladesh. Alhajj Abdus Samad Labu, the founding chairman of the bank, helps his
progressive leadership and consistent encouragement to strengthen banks in the financial market.

A group of 26 dedicated and well-known Islamic personalities of Bangladesh are members of the
Executive Council of the Bank. They are well-known for their business acumen. First Security
Islami Bank Limited has 182 branches.

The knowledge and knowledge of Islamic Banker and Almighty Allah First Security Islami Bank
are the most advanced and advanced banks of Bangladesh.

2.2 Objectives of FSIBL:

First Security Islami Bank Limited is working with Islamic banking institutions to implement
Islamic economic and financial policies in the banking sector. The purpose of FSIBL is not only
profit but also good for the people and good achievement. The main goals of FSIBL are listed
below-

 To establish participatory banking instead of banking on debtor creditor relationship

 To invest through different modes permitted under Islamic Shariah
 To accepts deposits on profit loss sharing basis
 To establish as welfare-oriented banking system

 To extend co-operation to the poor, the helpless and the low-income group for their
economic growth for life time.
 To play a vital role in human development and employment generation
 To contribute towards balances growth and development of the country through
investment operations particularly in the less developed areas

 To contribute in achieving the ultimate goal of Islamic economic System.

 To conduct interest free banking.

2.3 Specific features of FSIBL:

 All activities are conducted in accordance with Islamic Shariah and interest-free systems.
 Different Sharia allegations of its investment policy under different methods It is believed
to provide dedicated services to clients drawn with the Islamic spirit of the Brotherhood,
Peace and Friendship.

21
  Bank is committed to establishing good-based banking system to meet the needs of low
income and indigenous needs.
 Through social liberation and equitable distribution of money, the bank only supports the
Islamic values of establishment of the financial system.

2.4 Financial Performance of First Security Islami Bank Ltd:

FSIBL currently has 182 branches of 2nd generation banks. In a short time, FSIBL has created
an image as a progressive and dynamic financial institution for itself and has achieved a
significant reputation in the banking sector of the country. Despite strict competition in the
banking

Sector, by 31 December, FSIBL has made significant improvements in overall business

performance, contributing to the integrity of the bank. By the end of the year, the number of
depositors stood at 508798 and the amount of money deposited was 2.88186.98 million. The
total number of investors was 67,177 million and their total investment was 77,714.95 million
rupees. In 2019, the bank earned Tk. 124.705 million and spent 7,706.391 million rupees. Before
the end of the year, the amount of profit was Tk4.759.458 million.

2.5 Vision of FSIBL:

 To ensure justice and equity in the economy, as well as to work based on Islamic
principles of trading.

 Keep a significant contribution to the advancement of Islamic banking in Bangladesh and

to improve the national economy.

 Improve banker customer relationship by improving Customer service.

 Develop technology and policy and policy integration now to develop and innovate
products / services.

2.6 Mission of FSIBL:

 Steady & competitive return on shareholders’ equity.

 Innovative banking at a competitive price.
 Attract and retain quality human resources.
 Extending commitment to the growth of national economy.
 Involving more in Micro and SME financing.
22
  Achieving the satisfaction of Almighty Allah both here & hereafter
 Proliferation of Shariah Based Banking practices.
 Quality financial services adopting the latest technology.
 Fast and efficient customer service.
 Maintaining high standard of business ethics.
 Balanced growth.

2.7 Distribution of Branches:

Division No. of Branches

Dhaka Division 56
Chittagong Division 48
Sylhet Division 20
Khulna Division 10
Rajshahi Division 26
Barisal Division 13
Rangpur Division 01
Mymensingh Division 01
Total 175

2.8 First Security Bank Deposit:

 Al Wadiah Current Deposit (CD)

 Mudaraba Saving Notice Deposit (SND)
 Murabaha Saving Deposit (MSD)
 Mudaraba Term Deposit (MTDR)
 Monthly Profit Based Term Deposit (PTD)
 Monthly Installment Based Term Deposit (ITD)
 First Security Monthly Hajj Deposit (MHD)
 First Security Termed Hajj Deposit (THD)
 Monthly Installment Based Marriage Savings Investment Scheme (MIS)
 First Security Saving Bond (ASB)
 Foreign Currency Deposit (FCD)
 Pension Deposit Scheme (PDS)
 Cash Waqf Deposit Scheme (CWD)
 Mudaraba Aman Deposit Scheme (LDS)
 Mudaraba Ahsan Deposit Scheme (MSPDS)
 Mudaraba Ahsan plus Deposit Scheme (KDS)
 Mudaraba Somriddhi Deposit Scheme (DBDS)
 Mudaraba Excellent Benefit Deposit Scheme (TBDS

23
2.10 Organo gram of First Security Islami Bank Ltd:

24
2.11 Departments:

First Security Islami Bank, Agrabad Branch generally provides its services to customers through
three (3) main departments:

2.12 FSIBL at a Glance:

Islam provides us a complete lifestyle. Main objectives of Islamic lifestyle is to be successful

both in our mortal and immortal life. Therefore, in every aspect of our life was should follow the
doctrine if Al-Quran and lifestyle of Hazrat Muhammad (Sm.) for our supreme success. First
Security Islami Bank started its journey in 1995 with the said principles in mind and to introduce
a modern banking system based on Al-Quran and Sunnah.

25
A group of establish, dedicated and pious personalities of Bangladesh are the architects and
directors of the Bank. Among them a noted Islamic scholar, economist, writer and bureaucrat of
Bangladesh government Md. Saiful Alom is the founder chairman of the bank. His progressive
leadership and continuous inspiration provided a boost for the bank in getting a foothold in the
financial market of Bangladesh.

A group of 20 dedicated and noted Islamic personalities of Bangladesh are the member of Board
of Directors of the bank. They are also noted for their business acumen. First Security Islami
Bank Limited has 182 branches (up to December 2019) and a total of 3682 employees (up to
December 2018). Its authorized capital is taka 15000 million and the paid-up capital is taka
10440.22 million as on 31 December 2018.

Wisdom of the directors, Islamic bankers and the wish of Almighty Allah make First Security
Islami Bank Ltd. most modern and a leading bank in Bangladesh.

2.13 Board of Directors:

The board of directors is the supreme authority of the Bank. They are all liable to take major
decisions of the organization. The name and position of the board of directors of First Security
Islami Bank are described in bellow:

Name Position
Alhajj Abdus Samad Chairman
Alhajj Mohammad Abdus Salam Vice Chairman
Alhajj Nazmul Ahsan Khaled Director
Alhajj Abdul Malek Mollah Director
Alhajj Md. Enayet Ullah Vice Chairman, Executive Committee
Jb. Badiur Rahman Chairman, Risk Management Committee
Alhajj Ahmedul Hoque Director
Alhajj Abu Naser Md. Yeahea Director
Alhajj Niaz Ahmed Director
Alhajj Mohammed Emadur Rahman Director
Alhajj Kandaker Mesbah uddin Ahmmed Director
Alhajj Mohammed Harron Director
Alhajj Liakat Ali Chowdhury Director
Alhajj Salim Rahman Chairman, Executive Committee
Alhajj Md. Anowar Hoassain Director
Alhajj Md. Harun-Ar-Rashid Khan Nominee Director
Jb. Md. Rafiqul Islam Director
Alhajj Md. Amir Uddin Independent Director
Jb. M. Kamal Uddin Chowdhury Independent Director
Jb. Mahbubul Alam Independent Director & Chairman,
Board Audit Committee
Farman R Chowdhury Managing Director
2.14 Corporate Social Responsibilities:

26
First Security Islami Bank Foundation:

The Bank has a Foundation launching philanthropic activities. First Security Islamic
International School & College and First Security Islami Bank Library are two wings for
launching philanthropic activities.

First Security Islamic International School & College:

First Security Islamic International School & College has been established by the First Security
Bank Foundation with a view to building next generation according to the ideals of peace and
equality of Islam and to establishing banking and other aspects of life in the way of Islam. The
prime aim of this Islamic International School & College is to contribute towards building
human resource and in the broader sense to ensure human welfare. With the view First Security
Islami Bank Foundation has established First Security Islamic International School & College at
Dhanmondhi in 1998. Such institution up to O level of kind is for the first time in Bangladesh.

First Security Islami Bank Library:

Library is the carrier & reservoir of knowledge. First Security Islamic Bank has shown that other
than generation profit, it can also contribute significantly in the field of providing good source of
knowledge by establishing a public library at 32, Topkhana Road, Chittagong Bhaban (1 st floor),
Dhaka, thus strengthening social development. It is situated is a sound, healthy surrounding. It
harbors 23,000 books of reference for the researches, students, professionals, bankers,
physicians, engineers, politicians, writers or journalists, even for the kids. It is open to all from
the year 2000 and well located & accessible to everybody. It procured some exceptional
collection of books on religion, economics, banking, computer science, business administration,
sociology, English & Arabic language and juvenile literature in Bangla, English, Urdu & Arabic,
which are very rare.

Chapter Three

Overview of Foreign Exchange

Operations Of

27
FSIBL

3.1 Foreign Exchange:

Foreign exchange is the conversion of one country's currency into another. Every country has
certain natural advantages and disadvantages in producing certain commodities while they have
some natural disadvantages as well in other areas. As a result we find that some countries need to
import certain commodities while others need to export their surpluses. Foreign trade brings the
fruits of the earth to the homes of the humblest among the countries. These transactions are the
basis upon which international trade is made. As more than one currency is involved in foreign
trade, it gives rise to exchange of currencies which is known as Foreign Exchange.

As per Foreign Exchange Act., foreign exchange means and includes all deposits, credits and
balances payable in foreign currency as well as foreign currency instruments such as drafts, TCs,
Bill of Exchange, Promissory Notes and Letters of Credit payable in any foreign currency. This
definition implies that all business activities relating to Import, Export, Outward & Inward
Remittances, buying & selling of foreign commissions, etc. come under the purview of foreign
exchange business.

Foreign exchange can simply be defined as a process of conversion of one national currency into
another and of transferring money from one country into another.

28
3.2 Foreign Trade:

Foreign Trade is one of the pioneer business activities of the bank conducted by and routed
through the international Division. International Division of FSIBL has been function
successfully having a good number of skilled officials headed by senior Vice President who has
a long experience in this business line.

In order to accelerate the Foreign Exchange business of the bank, man power of this Division has
been using their all efforts in establishing Correspondent Banking Relationship with world
reputed bank, in hunting corporate clients to boost up Import & Export business by rendering
their best and skilled services.

International Division has been giving utmost importance to the functioning of treasury operation
i. e. dealing as it has always been considered as an important avenue for generating income of
the bank. Besides, ID has continuing its utmost efforts to establish the remittance arrangements
with the world-renowned companies to bring the wage earners remittance from the Bangladeshi
nationals in a abroad to contribute in widening the national revenue of the country for increasing
remittances. As a result significant result has been made in the Foreign Trade.

3.3 Functions of Foreign Exchange Department:

Imports:

 Opening of letter of credit (L/C)

 Advance bills
 Bills for collection
 Import loan and guarantees

Export:

 Pre Shipment advances

29
  Purchase of foreign bills
 Negotiating of foreign bills
 Export guarantees
 Advising/ confirming letters – letter of credit
 Advance for deferred payment exports
 Advance against bills for collection

Remittances:

 Issue of DD, MT, TT, etc.

 Payment of DD, MT, TT etc.
 Issue and enhancement of travelers check
 Sale and enhancement foreign currency note and Nonresident accounts

Dealings:

o Rate computation
o Maintenance of foreign currency account
o Forward contracts
o Exchange position and cover operations

Most Commonly Used Documents in Foreign Exchange

o Documentary letter of credit

o Bill of exchange
o Bill of Landing
o Commercial Invoice
o Certificate of origin of goods
o Inspection certificate
o Packing List
o Insurance certificate
o Pro-forma invoice/ indent
o Master receipt
o GSP certificate

3.4 Import:

Imports of goods into Bangladesh is regulated by the ministry of commerce and industry in terms
of the Import and Export (Control) Act, 1950, with import policy orders issued by annually, and
Import Registration Certificate (IRC) and Public Notices issued from time to time by the office
of the Chief Controller of Import and Export (CCI & E).

30
Through the process of import some energetic but which are inadequate in our country products
are imported to meet the local needs of the people. FSIBL also plays an important role of
importing goods.

To obtain Import Registration Certificate (IRC) the following certificates are required:

 Trade License
 Income tax clearance certificate
 National certificate
 Banks solvency certificate
 Asset certificate
 Registration partnership deed (if any)
 Memorandum and article of association
 Certificate of incorporation (if any)
 Rent of the business premises

3.4.1 Requirements for Import:

To import through First Security Bank Limited a customer / client requires-

 Bank account
 Import Registration Certificate (IRC)
 Taxpaying Identification Number (TIN)
 Pro-forma invoice/ indent (PI)
 Membership certificate
 L/C application form duly attested
 Insurance cover note with money receipt
 Others

3.4.2 Parties of Letter of Credit:

Letter of Credit:

A letter of Credit (foreign) is a written undertaking given by a bank on behalf of its Customer
(importer) to pay up to Certain amount to a supplier (Exporter) of another country within
prescribed time limit, on fulfillment of the terms and conditions stipulated in the credit.

a. The importer who request his bank to issue a L\C.

b. The exporter to whom payment guarantee is given through L\C.

c. The bank issuing L\C on the instruction of the applicant.

d. The bank (exporter’s country), which verifies the L\C received from the issuing bank and
forward it to the exporter.

31
 e. Any bank prepared to do so may take responsibility for payment and becomes nominated
bank.

f. Confirming bank.

3.4.3 Presentation of the Documents:

The seller being satisfied with the terms and the conditions of the credit proceeds to dispatch the
required goods to the buyer and after that has to present the documents evidencing dispatching of
goods to the negotiating bank. After receiving all the documents the negotiation bank then
checks the documents against the credit. The documents are:

 Bill of Lading
 Certificate of Deposit
 Packing List.
 Weight List.
 Shipping Advice.
 Non-negotiable copy of bill of lading
 Bill of Exchange
 Pre-Shipment inspection report
 Shipment Certificate

3.4.4 Import Mechanism:

To import, a person should be competent to be and importer’. According to Import and Export
(Control) Act, 1950, the officer of Chief Controller of Import and Export provides the
registration (IRC) to the importer. After obtaining this, the person has to secure a letter of credit
authorization (LCA) from Bangladesh Bank. And then a person becomes a qualified importer.
He requests or instructs the opening bank to open an L/C.

3.4.5 Source of Finance:

Import may be allowed under the following sources of finance:

(a) Cash-

i. Cash foreign exchange (balance of the foreign exchange reserve of Bangladesh Bank);

ii. Foreign currency accounts maintained by Bangladeshi Nationals living abroad.

(b) External economic aid.

(c) Commodity exchange.

3.4.6 Import Procedures:

32
An importer is required to have the following to import through FSIBL-

i. Applicant has to apply for opening L/C by a prescribed form.

ii. Applicant has to submit the Letter of Intent or Letter of Pro-forma Invoice.

iii. Applicant has to submit IRC (Indenters Registration Certificate). It is a certificate being
renewed every year. This certificate is necessary if the contract is made between the
buyers and the agents of the sellers. IRC is of two types – COM and IND. COM is given
for commerce purpose and IND is given for industrial purpose.

iv. Applicant has to submit LCAF (Letter of Credit Authorization Form).

v. Applicant has to submit insurance document.

vi. Applicant has to prepare FORM-IMP.

vii. Recently, there has been made a provision to give a certificate named TIN (Tax Payers
Identification Number). Taxation department issues this certificate.

viii. Then after proper scrutiny bank will open an L/C.

3.4.7 Procedures of Opening L/C to Import:

To open an L/C, the requirements of an importer are:

a. He must have an account in FSIBL

b. He must have Importers Registration Certificate (IRC).

c. Report on past performance with other bank. FSIBL collects this report from Bangladesh
Bank.

d. CIB (Credit Information Bureau) report from Bangladesh Bank.

e. A proposal approved by the meeting of executive committee of the bank. It is necessary

only when the L/C amount is small or there is no limit.

f. If the L/C amount is large or there is a limit, then an approval from Bangladesh Bank is
needed. Usually this approval is needed for amount more than one core.

3.5 EXPORT:

Export refers to a product or service produced in one country but sold to a buyer abroad.

Again, an export in international trade is a good or service produced in one country that is sold
into another country. The seller of such goods and services is an exporter; the foreign buyer is an

33
importer. Export of goods often requires the involvement of customers authorities. From the
buyer's point of view an export is an import. The merchandise and services sold by Bangladesh
to foreign families, agents and Government are called export. The export exchange of the nation
is directed by the Imports and Exports (control) Act, 1950.

3.5.1 EXPORT PROCEDURE:

a. Entering into an Export contract

b. Export Pricing and Costing

Entering into an Export contract:

In order to avoid disagreements, it is necessary to enter into an export contract with the overseas
buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive
but in precise terms, all relevant and important conditions of the trade deal. There should not be
any uncertainty regarding the exact specifications of goods and terms of sale including export
price, mode of payment, storage and distribution methods, type of packaging, port of shipment,
delivery schedule etc. The different aspects of an export contract are enumerated as under-

 Product, Standards and Specifications

 Quantity
 Inspection
 Total Value of Contract
 Terms of Delivery
 Taxes, Duties and Charges
 Period of Delivery/Shipment
 Packing, Labeling and Marking
 Terms of Payment– Amount/Mode & Currency
 Discounts and Commissions
 Licenses and Permits
 Insurance
 Documentary Requirements
 Guarantee
 Remedies

Export Pricing and Costing:

Export pricing should be differentiated from export costing. Price is what we offer to the
customer. Cost is the price that we pay for the product. Price includes our profit margin cost
includes only expenses we have acquired. Export pricing is the most important tool for
promoting sales and facing international competition. Prices will be determined by the following
factors:

34
  Range of products offered
 Prompt deliveries and continuity in supply
 After-sales service in products like machine tools, consumer durables
 Product differentiation and brand image
 Frequency of purchase
 Presumed relationship between quality and price
 Specialty value goods and gift items
 Credit offered
 Preference for products originating from a particular source
 Aggressive marketing and sales promotion
 Prompt acceptance and settlement of claims
 Unique value goods and gift items

3.5.2 Papers Requirement for new Export:

Exporter is allowed to export any commodity permissible for export from Bangladesh unless he
is registered with CCI & E and holds valid Export Registration Certificate (ERC).following
papers are required when opening export L/C:

 Export Realization Certificate (ERC).

 Trade License.
 Membership Certificate Form Chamber/ EPB.
 Account To Be Maintained With Bank.
 Export L/C Contract.
 EXP Form Certified.
 TIN Certificate.
 VAT Certificate.
 Memorandum and Article of Association of the Company.
 Confident Credit Report Obtained of the Importer.
 Registered Partnership Deed In Case of Partnership Concern.

3.5.3 Preparation of Exports Documents:

 Bill of exchange or Draft.

 Bill of lading.
 Invoice.
 Insurance Policy/ Certificate.
 Certificate of Origin.
 Inspection Certificate.
 Consular Invoice.

35
  Packing List.
 Quality Control Certificate.
 GSP Certificate.
 Photocopy-sanitary Certificate

3.5.4 Export Financing Of FSIBL:

Export plays a dominant role in the economy of our country. In the export trade, exporter needs
the finance at different stage right from the stages he gets an export order to supply the goods
from an overseas buyer. The finance is required for procuring, processing, manufacturing,
assembling and packing the goods for export in the pre-shipment stage. After shipment is made,
exporters sometimes will have to give credit to the importer for an agreed period and he has to
wait for the value till the expiry of credit period. Even if no credit is allowed to the importer, the
capital of the exporter is blocked documents reach the importer, he makes the payment and the
amount is collected by the exporter’s bank. Thus the post-shipment credit is required during the
intervening period between the shipments of goods until receipt of payment there against.
Therefore, there are two stages of export financing:

o Pre-shipment finance.
o Post-shipment finance.

Pre-shipment Finance:

The exporters may obtain facilities during pre-shipment stage in the following ways:

 Back to Back Latter of credit.

 Packing credit.

3.5.5 Back to Back Letter Of Credit:

Bangladesh is developing country. After receiving an order from the importer, very frequently
exporters face problems of scarcity of raw materials because some raw materials are not
available in the country. These have to be collected from in a foreign country. In that case,
exporters give lien of export L\C to the bank as scarcity and open and against it for importing
raw materials. This L\C is called Back to Back L\C. In back to back L\C, sometimes there is a
provision in the export L\C that the importer can use the certain period of the exporter L\C
amount for importing accessories that are necessary for the making of the product.

3.5.6 Features of Back-to-Back L/C:

Back to back L\C has some feature which is given below:

36
  An import L\C to procure goods\raw materials for further processing.
 It is opened based on export L\C.
 It is a kind of export finance.
 No margin is required to open back to back L\C.
 The application is registered with CCIE
 Application has bonded warehouse license.
 L\C value shall not be exceeding the admissible percentage of net FOB value of relative
Master L\C.
 Use period will be up to 180 days.

3.5.7 Documents Required for Opening a Back-to-back L/C :

The Documents are required for opening a back-to-back L/C:

1. Master L/C.

2. Valid Import Registration Certificate (IRC) and Export Registration Certificate (ERC).

3. L/C Application and LCAF duly filled in and signed.

4. Preform Invoice or Indent.

5. Insurance Cover Note with money receipt.

6. IMP Form duly signed.

3.5.8 Packing credit (PC):

Packing credit means any loan or advance granted or any other credit provided by a Bank to an
exporter for financing the purchase, processing, manufacturing or packing of goods prior to
working capital expenses towards rendering of services on the basis of letter of credit opened in
his favor by an importer.

Post-shipment Finance :

Post-shipment credit is given to the exporters by FSIBL after the actual shipment of goods. The
necessity for post shipment finance arises because the exporters who have shipped goods have to
wait for a long time for receiving payment from the overseas buyer, The period of waiting
depends on the terms of payment. The exporters need fund to carry on normal export activities.
Finance is required for these activities. FSIBL generally finance exporters at post shipment stage
on verification of the credit worthiness and financial soundness of both buyer and the seller.

37
3.6 REMITTANCE:

Foreign Remittance:

Foreign Remittance alludes to the exchange of reserve starting with one nation then onto the next
either through the workplace channel i.e. managing an account channel, post office or the casual
channel. In Bangladesh still casual market is assuming a huge part. Notwithstanding, we might
constrain our discourse inside the official channel. Foreign Exchange profit is imperative for the
nation as important foreign trade is engaged with the exchange system. From the year 1990,
money related advancement has been originated which is as yet going on. Because of
advancement, confinements on outside settlement progress toward becoming simplicity
Bangladeshi Taka, is convertible for current sum exchanges on March 24, 1994 with the view to
accomplish better conversion scale administration framework.

3.6.1 Objectives of foreign remittance:

Various objectives play behind performing different activities in foreign remittance section.
These are as follows:

 Quickly money transfer to long distance to give.

 To give payment inward bills.
 To help the customers to transfer money in different form.
 Issuance of TC, Cash Dollar/Pound.
 Issuance of FDD, FTT and buying, installment of the same.
 To collect payment through outward bills.
 Preparation of all related articulation, Voucher and posting

3.6.2 Kinds of Foreign Remittance:

38
Inward Foreign Remittance:

Internal remittance covers buy of foreign money as foreign T.T. DD, and bills and so forth
sent from to another country supporting a recipient in Bangladesh. Buy of foreign trade is to
be accounted for to Trade control Division of Bangladesh Rely upon Followings are the
Internal foreign Settlement:

 Foreign Transmitted Exchange Payable.

 Foreign Request Draft Payable.
 Voyagers Check Payable.
 Encashment of foreign monetary forms supported in the visa.
 Buy of Foreign Monetary forms.

Outward Foreign Settlement:

Outward settlement covers offers of foreign money through issuing foreign T.T. Drafts and
so on and in addition offer of foreign trade. Offer of foreign trade is accounted for to Outstrip
expectations control Branch of Bangladesh flank on shape T/M. Settlements issued to foreign
relates to satisfy its client need are the Outward Foreign Settlement. It includes the
accompanying:

I. Foreign Request Draft Issued.

II. Explorers Check Issued.

III. Foreign Transmitted Exchange.

IV. Underwriting of Foreign Monetary standards in visa.

V. Offer of Foreign Monetary standards.

39
Chapter Four

Analysis of Foreign Exchange

Operations Of FSIBL

(Agrabad Brach)

40
4.1 Total Import Financing:

Year 2015 2016 2017 2018 2019 Mean Minimum Maximum

BDT 702 496 901 1230 1516 3632.2 496 1516

(TK)
Core
Dollar $8.89 $6.2 $10.79 $14.64 $17.83 44.08 $6.2 $17.83

4.2 Figure of Total Import Financing in (Dollar) :

20
18
16
14
12
10
08
06
04
02
00

2015 2016 2017 2018 2019

Explanation:

From the above figure we can see that, in the year of 2014 to 2015 the import business of FSIBL
is increasing but 2016 unexpectedly it is decreased. And last two years (2018 & 2019) the import
financing becomes fluctuating on bank performance .On the basis last three years will increase.

41
4.3 Total Import LC:

Year 2015 2016 2017 2018 2019 Mean Minimum Maximum

LC 1318 1095 1292 1683 1833 5754 1095 1833

4.4 Figure of Total Import LC :

2000
1800
1600
1400
1200
1000
800
600
400
200

2015 2016 2017 2018 2019

Explanation: Import LC 2015 is increase but 2016 import LC is decrease. Again 2017, 2018,
2019 are increase. Highest total FBC in 2019

42
4.5 Total Export Financing:

Year 2015 2016 2017 2018 2019 Mean Minimum Maximum

BDT 370 234 262 403 472 1363 262 472

(TK)
Core
Dollar $4.77 $3.00 $3.31 $4.88 $5.68 $17.09 $3.00 $5.68

4.6 Figure of Export Financing in (Dollar):

5.68

4.88

4.77

3.31

3.00

0.00
2015 2016 2017 2018 2019

Explanation:

Here we can see from the figure above that, in the year of 2018 to 2019 the export business
of FSIBL is increasing but middle two year (2016 & 2017) unexpectedly decreased. This is
spicy bad position for FSIBL. And last year the export of FSIBL Agrabad branch was
increase and highest in 2019. This is again good sign for FSIBL. On the basis last four year
average.

43
4.7 Total Export FBC:

Year 2015 2016 2017 2018 2019 Mean Minimum Maximum

FBC 728 491 670 955 995 3043 491 995

Explanation: Total Export FBC of FSIBL 2015 is increasing but 2016 is decrease. 2017 total
export FBC also decrease.2018 and 2019 FBC are equal.

4.8 Total Remittance:

Year 2015 2016 2017 2018 2019 Mean Minimum Maximum

Total 19.52 36.61 49.32 74.04 10.15 181.52 10.15 74.04

Remittance
(million)

Explanation:

From the above figure we can see that, the Remittance of FSIBL is increasing gradually. The
remittance of FSIBL Agrabad branch was highest in 2018. The remittance decreased in 201
compared to 2018.

4.9 Total Commission:

Year 2015 2016 2017 2018 2019 Mean Minimu Maximu

m m

Total 1402.0 1019.2 1800.8 2459.7 2705.9 7223.0 1019.22 2705.98

Commissio 8 2 2 5 8 6
n
(million)

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4.10 Figure of Total Commission:

2705.98

2459.75

1800.82

1019.22

1402.08

0000.00
2015 2016 2017 2018
2019

Explanation: From the above figure we can see that, in the year of 2015 total commission of
FSIBL is unexpectedly it is decreased. And last three years (2017, 2018 & 2019) total
commission are also increase.

45
Chapter Five

Findings, Recommendations,

Conclusions

&

References

5.1 Findings:

The following topics have been found after reading as a learner for First Security Islami Bank
Limited.

a) In Foreign Business of First Security Islami Bank Limited. I found individual section for every
department like L/C opening section, Back to Back L/C section, and document accepts section,
Payment of Document Section, Foreign Remittance. Export and also import

b) At the theoretical framework chapter, it is reviewed that foreign exchange business is highly
dependent on the world economic position. Any change in the world economic position will
affect the business.

c) Due to imbalance in world economy and Bangladesh economy the import financing in 2016
decreased. From 2017 the import financing of FSIBL (Agrabad) Branch has been increasing.

d) Due to imbalance in world economy and Bangladesh economy the import LC count in 2016
decreased. From 2017 the import LC count of FSIBL (Agrabad) Branch has been increasing
gradually.

e) Due to imbalance in world economy and Bangladesh economy the Export financing in 2016
decreased. From 2017 the Export financing of FSIBL (Agrabad) Branch has been increasing
progressively.

46
f) Due to imbalance in world economy and Bangladesh economy the Export FBC count
decreased in 2016. In 2017 the total Export FBC counts increase slightly. But in 2018 and 2019
the Export FBC count are almost equal.

g) From 2015-2018 the total remittance had been increasing. Due to COVID-19 pandemic
situation the total remittance decreased sharply.

h) The total commission of FSIBL (Agrabad) Branch has been increasing. The total commission
figure is in great position.

47
5.2 Recommendations:

a) The Bank must improve its research center and training center to enrich the knowledge on
Customs and Uniform Practice for Certification of Documentation.

b) The administration should place more emphasis on the bank's advertising in various electronic
and print media. The main objective of advertising should be, above all, to make people know
and understand that the bank is universal and that anyone can entree it.

c) To eliminate the risk of foreign currency, the bank must be an Expect who understands the
future economic situation and can take initiative based on forecasting. Again the bank can be
successful in the economy if it can holder the situation effectively.

d) I recommend that the bank will improve the management of the international department,
which is responsible for managing the risks related to the exchange rate. Banks will have to
maintain a correspondence with banking, which will deal with currency transactions and resolve
their payments.

e) The internal decoration must be introduced for the comfort of the client.

5.3. Conclusion:

First Security Islami Bank limited is a leading Private Islami bank in Bangladesh with greater
customer bases that are trustworthy, faithful, worthy towards the bank. The service provided by
the young energetic officials of the First Security Islami Bank Limited is very satisfactory. To
keep peace with the current market and demand, FSIBL is following several strategies and new
initiatives, offering new products and services to the customers according to shariah. The banks
maintain well-structured communication from upper level to lower level. To prepare my
internship report, I think I can gather more information and get a better experience in work in
Foreign Exchange department.

Presently FSIBL is being preserved as one of the potential banks in other privet banks in
Bangladesh. FSIBL is very concern about their customer care. The transaction is doing very
smoothly and interest rate is also good. The bank is doing its best to provide better Import,
Export and in remittance services in last five years. The amount of Import and remittance
increased which is a good sign for FSIBL Agrabad Branch. Finally, I can say FSIBL activates
very well day by day.

48
5.4 References:

Reports:

a) Annual Report of FSIBL Ltd. 2015-2019

b) Daily Affair report of First Security Islami Bank Ltd.

c) Other Data Collect to the FSIBL Bank (Agrabad Branch)

Reference Books:

 International Finance, Jeff Madura, 9th Ed.

Website:

 www.al-arafahbank.com
 www.bangladesh-bank.org
 www.google.com

Other References:

 Daily Statement of FSIBL

 Monthly Reports
 Statement of Affairs
 Foreign Exchange Instructions
 Guidelines for Foreign Exchange Transaction
 Practical participation of FSIBL

49