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The report is prepared on the basis of 3 months practical experience at IFIC BANK of Bangladesh LTD. The internship program helped me to acquire lot knowledge about the practical situation of a financial institution. This program helped me to implement my theoretical knowledge in to practical and realistic work environment.
In the age of modern civilization, bank is playing vital role to keep to the economic development wheel moving. Bank provides means and mechanisms of transferring command over resources those who have an excess of income over expenditure to those who can make use of the same for adding to the volume of productive capital. There are a large number of small amount of savings who are generally reluctant to invest their surplus income because of their lack of adequate knowledge about complicated investment affairs. The bank provides them with the safety, liquidity, and profitability of savings. The savings bank use as their key of business. Investing the savings in higher degrees of return and maximize their profit in business.
IFIC BANK LTD is a scheduled commercial bank registered by the Bangladesh bank. IFIC BANK LTD follows the rules and regulations prescribed by the Bangladesh Bank. The functions of the bank cover a wide range of banking and functional activities to individuals, firms, corporate bodies and other multinational agencies.
CONTENTS
PARTICULARS: PAGE NO:
• Letter of transmittal 1
• Preface 2
• Acknowledgement 3
• Declaration 4
• Approval from supervisor 5
• Executive summary 6
CHAPTER-I: INTRODUCTION 9-10
o Origin of the report 9
o Objective of the report 9
o Methodology 9
o Scope of the report 10
o Time period of the study 10
o Limitation of the report 10
CHAPTER-II: AN OVERVIEW OF IFIC BANK 11-24
➢ Historical background of IFIC bank 11
➢ Mission of the bank 11
➢ Branches in Bangladesh 12
➢ Organizational structure 14
➢ The management process| 18
➢ International division 21
➢ Capital and resources 22
➢ Working Experience in IFIC Bank 23
➢ Description of my task area 24
CHAPTER III: GENERAL BANKING 25-44
1. Division of general Banking 25
I)Account opening section 25
➢ Different types of account 25
➢ Account Opening procedure 26
➢ Documents required for opening account 27
II) Different scheme 29
III) Cash department 40
IV) Remittance department 40
V) Clearing section 41
VI) Accounts section 42
VII) Several instruments of banking 43
VIII) Online transaction 44
IX) Lockers service 44
X) Foreign currency account 44
CHAPTER IV: LENDING ACTIVITIES OF IFIC BANK 45-48
o Different types lending principles 45
o Types of loans and advances 45
o Process of loan 47
o The revised rates of interest on lending 47
o Reason for loan default 48
CHAPTER-V: FOREIGN EXCHANGE ACTIVITIES 49-65
➢ Meaning of foreign trade 49
➢ Necessities of foreign trade 49
➢ The principal of comparative objective 49
➢ Foreign trade and Foreign exchange operation 50
➢ Major product /services provided by AD branches 51
➢ Deposit product in foreign currencies 52
➢ Mode of the foreign exchange 52
➢ Letter of credit 52
➢ Negotiation of export document 56
➢ Foreign remittance 56
➢ List of foreign exchange statement 57
➢ Regulatory body of foreign exchange 58
➢ SWIFT 59
➢ Problems of foreign trade 60
➢ List of Nostro account 63
CHAPTER VI: FINDINGS OF THE STUDY 66-67
1) General Banking department 66
2) Foreign exchange department 67
3) Credit operation department 67
CHAPTER VII: CONCLUSION AND RECOMMENDATION 68-70
• Recommendation 68
• Questioner part 69
INTRODUCTION
1. ORIGIN OF THE REPORT
This internship report is generated under the supervision of Mr. Iftekharul Alam, Lecturer of Business Administration department of Stamford University, Bangladesh. This internship report is required to fulfill award of MBA Degree. The topic of this report is ‘PEDFORMANCE EVALUATION OF IFIC BANK LIMITED A STUDY ON PALLABI BRANCH. ”The main objective of doing this report is to have a practical experience of the real life aspects of the Financial Institution that we have study in the classroom. To prepare this report I have selected and got opportunity to work as an internee in the reputed and well-known financial institution “IFIC Bank Ltd” at Pallabi Branch.
2. OBJECTIVE OF THE REPORT
THE MAIN OBJECTIVE OF THIS REPORT IS TO INTRODUCE MYSELF WITH THE OVERALL ACTIVITIES AND PERFORMANCE OF THE BANK AND TO GIVE MYSELF THE OPPORTUNITY TO USE THIS INFORMATION IN PREPARING A REPORT ON A FIRM.
THE OBJECTIVE OF THE STUDY MAY BE VIEWED AS: 1. GENERAL OBJECTIVE 2. SPECIFIC OBJECTIVE
General Objective
The general objective of the study is to prepare and submit a report on the topic “Overall Activities and Performance of IFIC Bank Ltd.”
Specific Objective
Identify the strategies for IFIC Bank Ltd. implementing in constant prosperity of the company.
Analyzing the performance trends of the fast growing banking corporation.
To find out the Management problems and solve the problems
To satisfy the shareholders by informing about the company.
To give some idea about its management and organization structure.
To develop our capabilities as an employee in realistic field of the job market.
3. METHODOLOGY
Data have been collected from both primary and secondary source.
Primary source
Register and file study from different department of the branch.
Computer data from accounts section of the branch.
Officer’s desk papers, vouchers etc.
Direct communication with the clients.
Secondary source:
Different papers of IFIC Bank Ltd.
Annual report of IFIC Bank Ltd.
Paper cutting and textbook.
4. SCOPE OF THE REPORT
The scope of the study may be stated as under:
The studywould help top management in planning and decision making.
The study would help management in identifying the key areas of weakness and strength.
The study would aware the top management to take corrective and appropriate measure timely to improve the company performance.
The study would also help the shareholders as a guide to company’s present and future position.
5. TIME PERIOD OF THE STUDY
On the first day the supervisor divided my whole study into three parts. As a result I could learn the whole Baking system as much as possible.
General banking division : 50 days
Foreign exchange division : 40 days
6. LIMITATION OF THE REPORT
Although I have obtained wholehearted co-operation from employees of IFIC Bank Limited, Pallabi Branch, they could not manage enough time to deal with my report. On the way of my study, I have faced the following problems that may be termed as the limitations! Short comings of the study.
Budgeted time for
the Study: The first obstruct is time itself Due to time limit, the scope and dimension of the study has been curtailed. IFIC Bank Limited is a big organization. It was very tough to deal with this bank within this short time. On the other hand due to short time I was unable to interview all the customers who have taken loan.
Data Insufficiency:
It was difficult to collect data from such a big organization. Because of some divisional and confidential problem, I could not get enough information.
AN OVERVIEW OF IFIC BANK
1. HISTORICAL BACKGROUND OF IFIC BANK
International Finance Investment and Commerce (IFIC) Bank Limited started banking operations on June 24, 1983. Prior to that it was set up in 1976 as a joint venture finance company at the instance of the Government of the People's Republic of Bangladesh. Government then held 49 percent shares while the sponsors and general public held the rest.
The objectives of the finance company were to establish joint venture Banks Finance Companies and affiliates abroad and to carry out normal functions of a finance company at home. When the Government decided to open up banking in the private sector in 1983, the above finance company was converted into a full-fledged commercial Bank. Along with this, the Government also allowed four other commercial Banks in the private sector. Subsequently, the Government denationalized two Banks, which were then fully Government-owned. While in all these Banks Government held nominal 5 percent shares, an exception was made in the case of this Bank. It retained 40 percent shares of the Bank.
The decision by the Government to retain 40 percent shares in IFIC Bank was in pursuance of the original objectives, namely, promotion of joint participation of Government and private sponsors to establish joint venture Banks, financial companies, branches and affiliates abroad.
2. MISSION OF IFIC BANK:
Our Mission is to provide service to our clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make our position unique in giving quality service to all institutions and individuals that we care for.
We are committed to the welfare and economic prosperity of the people and the community, for we drive from them our inspiration and drive for onward progress to prosperity.
We want to be the leader among banks in Bangladesh and make our indelible mark as an active partner in regional banking operating beyond the national boundary. In an intensely competitive and complex financial and business environment, we particularly focus on growth and profitability of all concerned.
3. BRANCHES IN BANGLADESH:
[pic]
BRANCHES IN DHAKA DIVISION
Federation Branch
Moulvibazar Branch
Dhanmondi Branch
Shantinagar Branch
Gulshan Branch
Pallabi Branch
Islampur Branch
Bangshal Branch
Elephant Road Branch
Naya Paltan Branch
Kawran Bazar Branch
Malibagh Branch
Narayanganj Branch
Netaiganj Branch
Konabari Branch
Muktarpur Branch
Narsingdi Branch
Ghorasal Branch
Madhabdi Branch
Bajitpur Branch
Mymensingh Branch
Faridpur Branch
Uttara Branch
Lalmatia Branch
Takerhat Branch
North Brooke Hall Road Branch
CHITTAGONG DIVISION
Agrabad Branch
Khatunganj Branch
Terri Bazar Branch
Sheikh. Market Branch
Hathazari Branch
Chawk Bazar Branch
Shah Amanat Market Branch
Sheikh Mujib Road Branch
Cox's Bazar Branch
Brahmanbaria Branch
Comilla Branch
Feni Branch
CompaniganjBranch
Agrabad Branch
Khatunganj Branch
Terri Bazar Branch
Sheikh. Market Branch
Hathazari Branch
Chawk Bazar Branch
Shah Amanat Market Branch
Sheikh Mujib Road Branch
Cox's Bazar Branch
Brahmanbaria Branch
Comilla Branch
Feni Branch
Companiganj Branch
KHULNA & BARISHAL DIVISION
Khulna Branch
Jessore Branch
Satkhira Branch
Noapara Branch
Kushtia Branch
Barisal Branch
Benapole Branch
Borabazar Branch
RAJSHAHI DIVISION
Rajshahi Branch
Naogaon Branch
Pabna Branch
Rangpur Branch
Dinajpur Branch
Bogra Branch
Capai Nawabganj Branch
SYLHET DIVISION
Sylhet Branch
Beani Bazar Branch
Tultikar Branch
Subid Bazar Branch
Moulvi Bazar Branch
Shreemongal Branch
Uposhohar Brach
4. ORGANIZATIONAL STRUCTURE:
|ELECTED`DIRECTORS |
|Representing 'A' Class Shareholders |
|01 |Mr. Manzurul Islam |Chairman |
|02 |Mr. Saiful Islam |Director |
|03 |Mr. Abul Matin Khan |Director |
|04 |Mr. Abdul Hamid Chowdhury |Director |
|05 |Mr. A. R. Malik |Director |
| |
|Nominated Directors |
|Representing 'B' Class Shareholders |
|(Government of Bangladesh) |
|06 |Mr. Mohammad Janibul Huq |Director |
|07 |Mr. ATM Ataur Rahman |Director |
|08 |Dr. Chowdhury Saleh Ahmed |Director |
|09 |Mr. Md. Mokhles ur Rahman |Director |
| |
| |
|10 |Mr. Mashiur Rahman |Managing Director |
EXECUTIVES OF THE BANK:
|Managing Director Mr. Mashiur Rahman |
|Deputy Managing Director Mohammad Abdullah |
| |
|Senior Executive Vice Presidents |
|01 |Dr. R.M. Debnath, Group Executive (Services - I) |
|02 |Mr. Mokhlessur Rahman Sharif, Group Executive (Services - III) |
|03 |Mr. Md. Farhatullah, Group Executive (Services - II) |
|04 |Mr. Mohammad Abdullah, Group Executive (Operations - II) |
|05 |Mr. Khundaker Mobarak Husain, Manager, Motijheel Branch |
|06 |Mr. Delwar Hossain, Group Executive (Operations - V) |
| |
|Executive Vice Presidents |
|01 |Mr. Md. Abdus Sattar Mia, Group Executive (Operations - III) |
|02 |Mr. Mohammed Ali Karim, Chief of the Chittagong Region |
|03 |Mr. Md Abdus Salam, Group Executive (Group General - I) |
|04 |Mr. Mosharraf Hossain |
|05 |Mr. A.K.M. Mozharul Hoque, Group Executive (Group General - II) |
|06 |Mr. Md. Ziaul Bari, In-Charge (Operations - I) |
|07 |Mr. Syed Zahidul Islam |
|08 |Mr. S.M. Abdul Hamid |
|09 |Mr. Mati-Ul-Hasan, Manager, Federation Branch |
|10 |Mrs. Zaitun Sayef, Manager, Agrabad Branch, Chittagong |
|11 |Mr. Sk. Rashid Ahmed, Manager, Dhanmondi Branch |
| |
|Senior Vice Presidents |
|01 |Mr. Manawar Hussain Chowdhury |
|02 |Mr. Md. Abul Hossain |
|03 |Mr. Md. Abu Tayeb |
|04 |Mr. Narayan Chandra Roy |
|05 |Mr. A.K.M. Shafiqul Alam |
|06 |Mr. Syed Abul Kalam Azad |
|07 |Mr. Fariduddin Al-Mahmud |
|08 |Mr. Md. Sharifur Rahman |
|09 |Mr. Tapan Kanti Sarkar |
|10 |Mr. Wakar Hasan |
|First Vice Presidents |
|01 |Mr. Abdus Salam Miah |
|02 |Mr. Md. Bader Kamal |
|03 |Mr. Md. Ruhul Amin |
|04 |Mr. Gopal Chandra Guha Roy |
|05 |Mr. Harun Ar Rashid, NIB(Lahore) |
|06 |Mr. Kazi Saifuddin Ahmed |
|07 |Mr. Md. Ataur Rahman |
| |
|Vice Presidents |
|01 |Mr. M. Haroun Al-Raschid |
|02 |Mr. Shahid Atiqul Islam |
|03 |Mr. A.M.M. Aminul Haque |
|04 |Mr. Ashrafur Rahman Khan |
|05 |Mr. Md. Nazrul Islam |
|06 |Mr. Md. Shahjahan Miah |
|07 |Mr. Jahir Uddin Ahmed |
|08 |Mr. Sajjad Zabir |
|09 |Mr. M. Shahed Shah Munna, General Manager, Oman International Exchange LLC |
|10 |Mr. Md. Mohidur Rahman |
|11 |Mr. Abu Nasser Al-Razi |
|12 |Mr. Shah Md. Moinuddin |
|13 |Mr. Md. Rafiqul Bari Chowdhury |
|14 |Mr. Mir Golam Mowla (Pinto) |
|15 |Mr. Md. Shahjahan Kabir |
FUNCTIONAL DIVISIONS AT HEAD OFFICE
Managing Director, ex-officio Director of the Board, is the Chief Executive Officer (CEO) of the Bank. Under direct control of the Managing Director is the Deputy Managing Director .
The operations and activities at the Head Office have been divided into twelve Groups; each headed by a Group Executive / In-Charge who reports directly to the Chief Executive. All Divisions at Head Office are required to report to the respective Group Executives.
Under Operations Group-I is General Credit Division, Project Finance Division & Lease Financing Wing.
Operations Group-II consists of four Divisions, namely, Overseas and International Banking Relations Department, Garments Department, Foreign Trade Department & Treasury Department. Internal Control & Compliance Division works under Operations Group-III.
Operations Group-IV comprises Central Accounts Division, General Banking Division and Establishment Division.
Operations Group-V consists of Recovery Division.
Besides six operational Groups, there are four Services Groups.
Services Group-I consists of Human Resources Division, Planning, Research & Statistics Division.
Services Group-II has Branch Expansion Division, Business Development Division, Marketing Division and Special Project Division. Law Division has been placed with Services Group-III.
IFIC is one of the pioneer private Bank in adopting IT from its inception during 1985. To expand computerization facilities to all the branches of our bank and to reach improved IT facilities to the bank's customer a new Group Services -IV has been formed headed by a very Senior Banker. IT Division is under this group. Recently two new Groups has been formed, namely, Group General - I & Group General - II.
Under Group General -I is MD's Secretariat and Vigilance Cell. Group General -II consists of Personnel & Administration Division and Secretary's Division.
WORK FORCE: Total manpower stood at 1,868 as on December 31, 2003. Out of them 1,266 were officers and 602 were non-officer employees. The number of female employees in the bank on the date was 238.
Following shows the growth of manpower over last five years.
|Year |Officer |Staff |Total |Female Officers & Staff |
|1999 |1,124 |535 |1,659 |176 |
|2000 |1,151 |549 |1,700 |188 |
|2001 |1,189 |548 |1,737 |200 |
|2002 |1,201 |554 |1,755 |213 |
|2003 |1,266 |602 |1,868 |238 |
5. THE MANAGEMENT PROCESS (Human Resources Development):
Human Resources Development (HRD) activities aim at fulfilling the bank's Mission. One of our four major missions is to: "Provide service to our clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make our position unique in giving quality service to all institutions and individuals that we care for."
Skilled and dedicated workforce with creative talents, innovative actions are not always readily available. Appreciating the scarcity of such manpower, the bank from the very beginning laid importance to HRD that conceptually includes activities like: pre-recruitment drill, recruitment, induction, training in the Academy, job rotation, placement & posting, reward and promotion. All these activities are planned by the bank in an integrated way aiming at manpower with required amount of technical, managerial, human and conceptual skills.
Management of IFIC Bank not only appreciates the need of skills required for day to day banking but also realizes the need for skills to meet the global & national financial and economic environments that are changing fast. Meeting the needs of new skills arising out of Financial Sector Reforms Programme (FSRP) is also a major concern of the management. The bank, therefore, set up a Division namely HRD Division under a separate Group called Services Group-I. The Academy of the bank works under this group. The other Division, which works under the Services Group-I, is Planning, Research & Statistics Division.
GROUP OPERATION-I
Operations-I, a group segment of Head Office operation of the Bank mainly handles General Advance/ Credit Portfolio, Project finance excluding Overseas Operations of the Bank and Lease Financing. The Group is headed by Senior Executives having commendable professional knowledge and experience supported by a talent pool of MBA's, Engineers, Economists, and Statisticians etc. with the blending of credit experience.
GROUP STRUCTURE:
A. Group Executive/In-Charge: Mr. Md. Ziaul Bari, Executive Vice President
B. Functional Structure :The Group Comprises of 3 Divisions as under:
i) General Credit Division
ii) Project Finance Division
iii) Lease Financing Division
C. Area of Operation:
i) General Credit Division
a) Sanction Department:
This department mainly handles Credit Portfolio of the Bank related to Working Capital and Trade Finance. Proposals of such nature are processed/ appraised and disposed of by this department. The department is manned by a group of professionals from respective discipline with commendable banking experience as well as exposure in modern concept and technology.
b) Credit Administration Department:
The function of this department is to monitor credit portfolio of the Bank through physical inspection of various periodical returns, Audit/Inspection Report etc. with a view to maintaining a healthy asset base of the Bank.
c) Credit Information & Returns Department:
This department deals in preparation of different periodical returns related to credit portfolio of the Bank for management information as well as for submission of information/data to Regulatory Body and various controlling agencies. The department also centrally handles all jobs relating to Loan Classification of the Bank.
d) Ancillary Functions:
The Group also handles various Loan Schemes for the employees of the Bank.
ii) Project Finance Division:
Project Finance Division is a shared resource center of the Bank which provides back office support to the branches - the marketing outlets of the Bank - in their endeavor to meet the credit needs of the corporate clients. The Division helps the corporate clients in their decision making for undertaking venture project or BMRE of the existing projects. It also assist them to structure their long term and short term finance and to raise fund from own source of the Bank or through syndication with other Banks.
In case of difficult business situation and unexpected low turnover vis-à-vis poor performance of the clients, the Division offers customized solution through business and financial restructuring.
The Division also provides counseling to the corporate clients for minimizing their business risks and optimizing growth in the context of rapid globalization. The Division so far financed 250 projects (New and BMRE) since 1996, major concentration being in textile sector - both export oriented and backward linkage units. Other mentionable sectors are Steel and Engineering, Cement, Real Estate, Consumer Products, Printing and Packaging, Hotels, Hospitals, Cold Storage etc.
iii) Lease Finance Division:
To assist bona-fide entrepreneurs acquire capital machinery and equipment increasing / up-grading productive capacity without trying up equity and to contribute to the industrial development of Bangladesh IFIC Bank Limited has introduced Lease Finance. For more please contact the Branches.
CONTACT PERSONS OF GROUP OPERATION-I
|Name |Designation |Phone Number |E-mail Number |Fax Number |
|Mr. Md. Ziaul Bari |Executive Vice President |9563020, 9562062 Ext.-111 |zbari@ |880-2-9562015 |
|Mr. Md. Bader Kamal |First Vice President |9563020 Ext.-174 |-- | |
|Mr. Gopal Chandra Guha |First Vice President |9563020 Ext.-170 |-- | |
|Roy | | | | |
|Mr. Shahjahan Kabir |Vice President |9570163 (Direct) |skabir@ | |
| | |9563020 Ext.-175 | | |
|Mr. Chowdhury Akhter Asif|First Assistant Vice |9553105 (Direct) |caasif@ | |
| |President |9563020 Ext.-177 | | |
Mirpur branch family:
Mr. Md.Abdur Rab - AVP & Manager
Mr. Md.Mamun-Al-Rashid - Senior Staff officer
Ms. Morzina Haque - Staff officer
Ms. Rina Khatun - Staff officer
Mr. Md. Shamsul Alam - Officer Grade-I
Mr. Ahmed Mustak - Officer Grade-II
Mr. Kamrun Nahar - Officer Grade-II
Mr. Md. Delwar Hossain - Officer Grade-II
Mr. Md. Abu Hena Kamal Pasha - Officer Grade-II
10. Ms. Sharmin Jahanh - Com. Officer
11. Ms. Israt Jahan - Com. Officer
12. Ms Marina Yasmin -Cash Officer
13. Mr. Md. Jakir Hossain - Cash Officer
14. Mr. Hasan Md. Kamruzzaman -Off/Asst
15. Mr. Md. Ohiduzzaman -S/Staff
16. Mr. Md. Zillur Rahman Gazi -S/Staff
17. Mr. Md.Nurul Hoque -Off/Attn
18. Mr. Md.Nazmul Shikder -Off/Attn
And others.
6. INTERNATIONAL DIVISION:
Back in 1976 IFIC Bank started it's journey as an investment company. Before being converted into a full fledged commercial bank, it started banking business by way of opening of letters of credit for import of goods and raw materials on behalf of its clients.
After starting operations as a commercial bank on June 24, 1983 side by side with the traditional products, it started providing all types of foreign exchange related services to its different category of clients. As such the need of establishment of a strong International Division was felt since the very inception of the Bank. The Division all along has been managed by executives and officers well conversant with foreign exchange related operations so that the branches dealing in foreign exchange related transactions could get all out support from Head Office.
Besides giving international trade related support to the branches the Division is responsible for maintenance of the nostro accounts, for investment of excess foreign exchange reserves, for ensuring proper compliance of the foreign exchange regulations by the branches dealing in foreign exchange business.
The International Division also acts as an intermediary between the branches and the foreign correspondents without whose assistance international transactions would be almost impossible. With a view to enhance the Bank's income the Division is entrusted with the development of different type of foreign exchange related products & services.
Presently, the Division is well equipped with Bankers and Senior Executives who are also well conversant with ICC 500 and other regulations in International Trade Practices and Bangladesh Bank Guidelines and Circulars issued from time to time for foreign exchange transactions.
Presently a Senior Executive Vice President heads the Division. The Division has also at it's disposal the vast experience of a Senior Vice President, a First Vice President and a Senior Assistant Vice President whose major portion of banking career covered general banking, credit and foreign trade related services either in IFIC Bank Ltd. or in their previous institutions.
IFIC's International Division is a strong component of it's backbone which at different times has aided in the vertical growth of the institution and with the help of a dedicated, qualified and experienced team of professionals posted there is still contributing positively towards that end.
7. Capital and Resources
CAPITAL & RESERVES
The bank started with an authorized capital of Tk.100.00 million in 1983. Paid-up capital was then Tk.71.50 million only. Over the last Twenty One years, the authorized & paid-up capital has increased substantially. Authorized capital was Tk.500.00 million and the paid-up capital stood at Tk.406.39 million as on December 31, 2004.
The Bank has built up a strong reserve base over the years. In last twenty one years its reserves and surplus have increased significantly. This consistent policy of building up reserves has enabled the bank to maintain a better capital adequacy ratio as compared to others.
With the active support and guidance from the Government, the bank has been showing a steady and improved performance. In its twenty One years of operations, the bank has earned the status of a leading bank in terms of both business and goodwill.
Starting with a modest deposit of only Tk.863.40 million in 1983 the bank has closed its business with Tk.20, 774.49 million of deposit as on December 31,2004. The annual growth rate has mostly been higher compared to both banking sector growth and individual growth rates achieved by others.
As against a profit of Tk.21.94 million in 1984, the bank earned a record profit of Tk.700.25 million for the year ended on December 31, 2004.
FINANCIAL HIGHLIGHTS OF THE BANK
(Figure in Million)
|PARTICULARS |2004 |2003 |2002 |
| |
GENERAL BANKING
This report is prepared on the basis of 3 months practical experience at IFIC BANK of Bangladesh LTD. The internship program helped me to acquire lot of knowledge about the practical situation of a financial institution. During my internship I have learned many things. In this section I would like to explain my assign part that is “Performance Evaluation of IFIC Bank Ltd a Study of Pallabi Br.”. Following are the research findings have been discussed elaborately.
o General Banking,
o Lending Activities
o Foreign Trade Operation.
Although my assign task was “Performance Evaluation of IFIC Bank Ltd a Study of Pallabi Br” but I got opportunity to work all departments. After doing my internship it clear that how can a bank work and what are the activities of a Bank.
1. DIVISION OF GENERAL BANKING
General banking department is the heart of all banking activities. This is the busiest and important department of a branch, because funds are mobilized, cash transactions are made; clearing, remittance and accounting activities are done here.
Since bank is confined to provide the services everyday, general banking is also known as ‘retail banking’. In IFIC Bank LTD, the following departments are under general banking section:
i) Account Opening Section
ii) Deposit Section
iii) Cash Section
iv) Remittance Section
v) Clearing Section
vi) Accounts Section
i). Account Opening Section:
a) Different Types of Accounts
Account opening is the gateway for clients to enter into business with bank. It is the foundation of banker customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account. A customer can open different types of accounts through this department. Such as:
▪ Current Deposit.
▪ Savings Account.
▪ Short Term Deposit (STD)
➢ Current Account
Current account is purely a demand deposit account. There is no restriction on withdrawing money from the account. It is basically justified when funds are to be collected and money is to be paid at frequent interval.
Some Important Points are as follows-
a) Minimum opening deposit of TK.1000/- is required;
There is no withdrawal limit.
No interest is given upon the deposited money;
Minimum Tk.1000 balance must always maintain all the time;
Savings Account
This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a month. Heavy withdrawals are permitted only against prior notice. Some Important Points are as follows-
Minimum opening deposit of Tk.5000 is required;
1. Minimum Tk.1000 balance must always maintain all the time;
1. Withdrawal amount should not be more than 1/4th of the total balance at a time and limit twice in a month.
1. If withdrawal amount exceed 1/4th of the total balance at a time no interest is given upon the deposited money for that month.
Short Term Deposit (STD)
Normally various big companies, organizations, Government Departments keep money in STD account. Frequent withdrawal is discouraged and requires prior notice. The deposit should be kept for at least seven days to get interest. The interest offered for STD is less than that of savings deposit. Interest is calculated based on daily minimum product and paid two times in a year. Interest rate is 6.00%.
b) Account Opening Procedure
|Step 1 |The account should be properly introduced by Any one of the following: |
| | |
| |An existing Current Account holder of the Bank. |
| |Officials of the Bank not below the rank of an Assistant officer. |
| |A respectable person of the locality well known to the Manager/Sub-Manager of the Branch concerned. |
| | |
| | |
|C |Receiving filled up application in bank’s prescribed form mentioning what type of account is desired to be opened |
|Step 3 | |
| |The form is filled up by the applicant himself / herself |
| |Two copies of passport size photographs from individual are taken, in case of firms photographs of all partners are |
| |taken |
| |Applicants must submit required documents |
| |Application must sign specimen signature sheet and give mandate |
| |Introducer’s signature and accounts number – verified by legal officer |
|Step 4 |Authorized Officer accepts the application |
|Step 5 |Minimum balance is deposited – only cash is accepted |
|Step 6 |Account is opened and a Cheques book and pay-in-slip book is given |
c) Documents Required for Opening Account
Individual / Joint Account
Introduction of the account.
Two photographs of the signatories duly attested by the introducer.
Identity (copy of passport / Employer’s certificate/A certificate issued by ward commissioner or Chairman of any respectable persons who is acceptable to the bank regarding identification & Nationality of the person concerned).
Joint Declaration Form (For joint a/c only)
Trade License
Tin Number (if possible).
Employee’s history.
A transaction profile
Proprietorship account
Introduction of the account.
Two photographs of the signatories duly attested by the introducer.
Valid copy of Trade License.
Rubber stamp.
TIN number (if possible).
Identity (Copy of passport/ Employer’s certificate/ a certificate issued by ward commissioner or Chairman of any respectable persons who is acceptable to the bank regarding identification & Nationality of the person concerned).
Trade License
Limited company
1. Introduction of the account.
2. Two photographs of the signatories duly attested by the Introducer.
3. Valid copy of Trade License.
4. Board resolution of opening A/C duly certified by the Chairman/Managing Director.
5. Certificate of Incorporation.
6. Article of Association
7. Memorandum of Association.
8. All information Stated in individuals A/c
9. Trade License
10. Certificate of Commencement (In case of Public limited company).
11. List of directors along with designation & specimen signature.
12. Rubber Stamp (Seal with designation of each person)
13. Certificate of registration (In case of Insurance Company – Obtained from department of Insurance from the Peoples Republic of BD).
Club / Societies Account
Introduction of the account.
Two photographs of the Signatories duly attested by the introducer.
Bio data of office bears
Bye laws or constitution
Board Resolution for Opening A/C duly certified by President/ Secretary.
List of Existing Managing Committee.
Registration (if any).
Rubber Stamp.
Permission letter from Bureau of N.G.O. (In case of N.G.O. A/C).
All information Stated in individuals A/c
Closing of an account
The closing of an account may happen,
If the customer is desirous to close the account,
If the IFIC Bank finds that the account is inoperative for a long duration.
If the court of IFIC Bank issues garnishee order.
A customer may close his/her account any time by submitting an application to the branch. The customer should be asked to draw the final check for the amount standing to the credit of his/her account less the amount of closing an other incidental charge and surrender the unused check leaves. The account should be debited for the account closing charge etc. and the authorized officer of the bank should destroy unused check. In case of joint account the application for closing the account should be signed by the joint account holder. The fee for closing of an account is Tk.50.
2. DIFFERENT Scheme:
A. Pension saving Scheme (A monthly savings scheme) (PSS):
|1. Name of the Scheme |:Pension Saving Scheme |
|2. Delivery Points |: 62 Branches |
|3. Highlight of the product |: |
|Duration of the Account |: 5 (five) Years & 10 (ten) Years |
|Monthly Installments |: Tk.500 or Tk.1000 or Tk.2000 |
|Payment After Maturity |: |
| |PAYMENT AFTER MATURITY |
| |5 YEARS |10 YEARS |
|INSTALLMENT |WITHOUT BONUS |
|Selection Criteria / Who Can apply |A Self employed person of fixed income $ a confirmed or permanent service holder. |
|Products Eligible for Finance |Vehicles, Domestic Appliance, Office Equipment, Entertainment, Medical Expenses, Intangibles, etc. |
| | |
|Limit Range |Tk. 15,000 to Tk. 7,00,000 |
|Repayment |By 12, 24, 36 or 48 equated monthly installments (EMI) depending on the loan amount. |
|Interest Rate / Fees |Interest: |
| |@ 16.00% P.A. without any tangible security and |
| |@ 14.50% P.A. where the loan is 100% secured with 20% margin against lien of FDR, MIS, PSS, Savings Certificates|
| |issued from any Bank & Financial Institution. |
| |Service Charge: |
| |For 1 - 2 Years term - 2% of the Loan amount (min. Tk. 500/-) |
| |For 3 Years term - 3% of the Loan amount |
| |For 4 Years term - 4% of the Loan amount. |
|Down Payment / Equity Contribution |Minimum 20% of the invoice value of the Consumer Products. |
| |For Vehicles: 30% to 40% in Cash / Financial instruments. |
RATES OF DEPOSIT SCHEMES:
|Deposit Schemes |Deposit Rates |
|Savings (SB) |6.00% |
|Special Term Deposit (STD) |2.50%-6.00% |
|Fixed Deposit |Rate of Interest |
|One Month-Three Months |6.50% - 7.50% |
|Three Months-Six Months |10.00% |
|Six Month-One Year |10.50% |
|One year& above |11.00% |
C. SAVING DEPOSIT ACCOUNT
Saving Accounts are designed especially for the group who have tendency to save. They have been paid a fixed interest on their savings. There are two types of savings account in this bank.
Individual savings account
Joint saving accounts
The depositor is obligated to maintain a balance of at least Tk. 2,000 for the sake of earning interest. One limitation considering the savings deposit account is depositors can draw only twice a week if they want to get interest on the deposited money. If a depositor draws more than twice a week s/he will not receive any interest for that month. The interest rate for this account is 6 %.
D. SHORT TERM DEPOSIT
This account is same as current account. The basic difference between short-term deposit and Current account is that
LESS THAN TK.1.00 CRORE 2.50%
TK.1.00 CRORE &ABOVE BUT LESS THAN TK.5.00 CRORE 5.00%
TK.5.00CRORE &ABOVE BUT LESS THAN TK.10.00 CRORE 5.50%
ABOVETK.10.00 CRORE 6.00%
BANK TO BANK 2.50%
AND NO INTEREST IS GIVEN TO THE CURRENT ACCOUNT DEPOSITOR’S .WITHDRAWALS REQUIRE A PRIOR NOTICE OF SEVEN DAYS.
E. FIXED DEPOSIT
Fixed deposit is the amount deposited by the customer for a fixed period of time. The time limit is given in fixed deposit receipt. Depositors have to withdraw the interest after maturity date. If the depositors intend to withdraw the interest earning before expiration of the maturity date the bank is not bound to pay the interest.
Interest Rate of FDR
|FDR (Tenure 1 - 3 months): | |
|Less than Tk. 1.00crore |6.50% |
|Tk. 1.00 crore and above |7.50% |
|FDR (Tenure 3 month & above but less than 6 months): |10.00% |
|FDR (Tenure 3 month & above but less than 1 year): |10.50% |
|FDR (Tenure 1 year) |11.00% |
F. Monthly Income Scheme (MIS)
|1. Name of the Scheme |: Monthly Income Scheme |
|2. Delivery Points |: 62 Branches |
|3. Highlight of the product: |
|Duration of the Account |: 5 Years (Deposited principal amount will be returned on maturity) |
|Amount to be Deposited |: Tk. 50000/- and its multiple |
|Payment After Maturity |: Tk. 450/- and its multiple |
|Procedures for paying monthly income: The payment of monthly income will start from the subsequent month after a clear minimum gap of 1 (one) |
|month from the date of deposit. If an account is opened on 7th of any month, monthly income will be paid on 7th of the subsequent month. |
|The account holder will receive monthly income in any SB/CD account of same name maintained with the branch. In case, the account holder does not|
|have any SB/CD account with the Branch, he/she/they will have to open a SB/CD account for receiving the monthly income. The minimum balance |
|requirement will be waived for these types of accounts for a new customer. However, a minimum initial deposit of Tk.500/- will have to be |
|deposited. This procedure will eliminate the hassle of coming to the Bank Branch for taking interest every month. |
|Eligibility for Monthly Income Scheme: |
|A person of 18 years of age and above having a sound mind will be eligible to open an account in his/her own name. A person can open more than |
|one account in his/her/their name in the same Branch or any Branch of the Bank. |
G. Death Risk Benefit Scheme (DRBS)
|1. Name of the Scheme |: Death Risk Benefit Scheme |
|2. Delivery Points |: 62 Branches |
|3. Basic Features of Scheme |: |
|IFIC Bank's Death Risk Benefit Scheme offers its Savings Bank Account holders' interest on savings, a lump sum amount and some peace of mind - |
|three in one benefits at no extra cost! |
|Benefits of Scheme |
|Death Risk benefits in lump sum amount to nominee(s)/heir(s) on the death of an account holder. |
|Eligibility Criteria |
|Account must be maintained for a period of minimum one-year before the death of the account holder. |
|At the time of death, the customer must have been within the age group of 18 to 50 years. |
|The account must have been opened with a minimum deposit of Tk. 5000 in case of new accounts. (Since 1-8-97). |
|Average balance of Tk. 10,000/- minimum must be maintained within one-year period prior to the death of the Account Holder. |
|Extent of Benefit |
|50% of the average balances of the account for one-year period prior to the death of the account holder or Tk. 100,000 whichever is lower. |
|Account balance exceeding Tk. 10, 00,000/- will not be taken into consideration while calculating average balance for one year for the purpose of |
|Death Risk Benefit. |
H. Tele Link/Tele Banking
|1. Name of the Scheme: Tele Link or Tele Banking |
|2. Delivery Points: Gulshan, Federation, Dhanmondi, Motijheel Branches |
|3. Basic Features of the Product: |
|Phone Banking is a fast convenient and easy to use service that will complement one's lifestyle and keep one in complete control of his banking. One |
|can access all the Telelink services at any time, day or night, from anywhere. It is far more convenient than traditional banking.Telelink is really |
|simple to use. One can just dial our phone number from anywhere and an automated computerized voice response will guide him step by steps through his |
|transactions. |
|Confidentiality: |
|A customer is given a 6 digit Registration Number when he applies for Telelink that will ensure total confidentiality of his account information. When|
|the customer chooses to obtain specific information about his account, he will have to use his Registration Number and the confidential Personal |
|Identification Number (PIN) by pressing the number keys on his phone. |
|Banking Services Supported by Telelink: |
|A. Transactions Relating to transfer of funds from one account to another |
|B. Inquiries relating to |
|account balances |
|transaction details |
|exchange rates |
|interest rate information |
|products and services remittances |
|C. Requests for |
|balance certificates |
|account statement |
|7-days withdrawal notice on accounts |
|cheque books/pay order/drafts |
|renewing or opening of fixed deposits |
|assistance for opening other accounts |
|In addition, the service can also deal with lost cheque books and credit cards, change of address and stopping of payment. |
|Fees: |
|We are not charging any fees for this technical service but the facility has been offered to Saving Bank customers with a minimum balance of Tk. |
|50,000/-, to Current Deposit Account customers and STD customers with a minimum balance of Tk.100, 000/-. |
I. Computerized Services:
Tele Banking (Computerized Phone Banking) - Our Bank has implemented Computerized Phone Banking technology in 4 Branches (i.e. Motijheel, Federation, Dhanmondi & Gulshan).
SWIFT Network - Presently our International Division of Head Office is operating their Foreign Trade related transaction through SWIFT Network.
Electronic Mail - Six main Branches (i.e. Motijheel, Federation, Gulshan, Dhanmondi, Narayanganj & Agrabad) are using Email facility for international and internal correspondence. In future all AD Branches will be brought under Email facility.
Home Banking - Our Bank is currently engaged in implementing this new service for Bank's high net-worth selected business clients.
J. Computerized System:
Computerized Branches - 62 out of 62 (i.e. 100%) Branches are computerized throughout the country.
Local Area Network - Forty One main Branches are operating under Local Area Network (LAN) environment and rest of the Branches are running standalone basis.
Banking Software - Currently 41 LAN Branches are using BexiBank 4000+, an integrated Banking Software and rest of the 21 Branches are using BexiBank 3000+ for their daily Banking Transaction.
Operating System - Most of our Branches, which are using BexiBank 3000+, are operating their Computer System in DOS operating system. Branches, which are operating in LAN environment, are using Windows 2000, Windows NT or Novell NetWare operating system.
Central Backup System - Presently Information Technology & Computer Division of Head Office is maintaining an Offline Central Backup System for all the Computerized Branches and Divisions of Head Office of our Bank.
Computer Inventory Database Program (CIDP) – Information Technology & Computer Division of Head Office is maintaining a Database Program for monitoring & supervising the total Computer Hardware & Software position of the Bank
FUTURE COMPUTERIZATION EXPANTION PLAN
Future plan in IT sector of IFIC Bank Ltd. is given below.
Inter Branch Connectivity - Our major plan in the IT sector is to ensure Inter Branch Connectivity of selected major Branches (i.e. Motijheel, Federation, Dhanmondi, Gulshan, Moulvi Bazar, Narayanganj & Agrabad) under Wide Area Network (WAN) facility to offer our customers "Any Branch Banking" facility.
Credit Card - In future (i.e. by 2003) our Bank will introduce Credit Card facility, which is under active consideration.
Metropolitan Area Network/Head Office Computerization – Network implementation among Divisions (i.e. Special Project Division, Credit Division, ID Division & Central Accounts Division etc.) of Head Office is in under consideration.
E-Banking - To provide our valued client faster and quick Banking facility from any of our branches.
Mobile Networking - Our major plan in the IT sector is to Communicate in our 56(Fifty Six) Branches through Grameen Phone Mobile Networking.
CONTACT PERSONS OF IT
List of Contact Persons at Information Technology & Computer Division of Head Office
|Name |Designation |Key Working Area |Contact Number |Email |
|Mr. M. A. Matin |Senior Vice President|Overall Supervision of All IT |9563739, 9563020 |mamatin@ |
| |& IT |Related Affairs |Ext. 248 | |
| |Consultant | |Fax:880-2-9550753 | |
|Mr. Tapan Kanti Sarkar|Senior Vice President|Overall Supervision of All IT |9570338, 9563020 |tksarkar@ |
| |& Head of IT |Related Affairs |Ext. 249 | |
| | | |Fax:880-2-9550753 | |
|Mr. A. J. Kamrul Ahmed|Staff Officer |Network Support,Computer Hardware |9570831,9563020 |jkahmed@ |
| | |Support & Maintenance |Ext. 245 | |
| | | |Fax:880-2-9550753 | |
|Mr. Md. Rezaur Rahman |Staff Officer |ATM Operations |9570333,9563020 |carddivision@ |
| | | |Ext. 246 | |
| | | |Fax:880-2-9550753 | |
|Mr. Md. Shawkat Habib |Officer Grade - I |Banking Software Support, |9570831, 9563020 |shawkat@ |
| | |Development & Implementation, Web |Ext. 245 | |
| | |Page design, Development & |Fax:880-2-9550753 | |
| | |Maintenance, Procurement of IT | | |
| | |Related Works | | |
|Mr. Jalilur Rahman |Officer Grade-I |Procurement of IT Related Works & |9570831, 9563020 |jrahman@ |
| | |Banking Software Support |Ext. 247 | |
| | | |Fax: | |
| | | |880-2-9550753 | |
|Mr. Syed Miraz Momin |Probationary Officer |Procurement of IT Related Works |9570831,9563020 |miraz@ |
| | | |Ext. 247 | |
| | | |Fax:880-2-9550753 | |
|Mr. Kazi Salahuddin |Technical Support |Banking Software Support |9570831,9563020 |ksalahuddin@ |
| |Officer | |Ext. 247 | |
| | | |Fax:880-2-9550753 | |
|Mrs. Syeda Tanjina |Technical Support |Banking Software Support & Help |9570831,9563020 |tanjina@ |
|Begum |Officer |Desk Support |Ext. 247 | |
| |(OG-II) | |Fax:880-2-9550753 | |
|Mr. Mirza Raqibul |Officer Grade-II |ATM Operations |9570333,9563020 |carddivision@ |
|Hasan | | |Ext. 246,Fax:880-2-9550753 | |
|Mr. Md. Saidur Rahman |Officer Grade-II |Hardware & Network Related |9570831, 9563020 |javed@ |
|Javed | |Troubleshooting |Ext. 247 | |
| | | |Fax:880-2-9550753 | |
|Mr. Md. Kamrul Hasan |Officer Grade-II |Hardware & Network Related |9570831, 9563020 |hasan@ |
| | |Troubleshooting & Help Desk Support|Ext. 247 | |
| | | |Fax:880-2-9550753 | |
|Mrs. Salina Akter |Officer Grade-II |Procurement of IT Related Works & |9570831, 9563020 |-- |
| | |Help Desk Support |Ext. 247 | |
| | | |Fax:880-2-9550753 | |
III). CASH DEPARTMENT
All sorts of transaction considering cash are taken in to care in the cash department. Cash is deposited in the name of concern in the Bank and disbursed to the client by this department.
The functions of a cash department are described below:
|Cash Payment |Cash payment is made only against cheque |
| |THIS IS THE UNIQUE FUNCTION OF THE BANKING SYSTEM WHICH IS KNOWN AS “PAYMENT ON DEMAND” |
| |IT MAKES PAYMENT ONLY AGAINST ITS PRINTED VALID CHEQUE |
|CASH RECEIPT |IT RECEIVES DEPOSITS FROM THE DEPOSITORS IN FORM OF CASH |
| |SO IT IS THE “MOBILIZATION UNIT” OF THE BANKING SYSTEM |
| |IT COLLECTS MONEY ONLY ITS RECEIPTS FORMS |
TABLE: FUNCTION OF CASH DEPARTMENT
IV. REMITTENCE DEPERTMENT
Remittance is another significant part of the general Banking. The bank receives and transfers various types of bills through the remittance within the country. The bank charges commission on the basis of bill amount
TYPES OF REMITTENCE
1. Between banks and non banks customer
2. Between banks in the same country
3. Between banks in the different centers.
4. Between banks and central bank in the same country
5. Between central bank of different customers.
V.CLEARING SECTION
The amount of Cheques, Pay Order (P.O), and Demand Draft (D.D) Collection from other banks on behalf of its customer is a basic function of a Clearing Department.
Clearing:
Clearing is a system by which a bank can collect customers fund from one bank to another through clearing house.
Clearing House:
Clearing House is a place where the representatives of different banks get together to receive and deliver Cheques with another banks.
Normally, Bangladesh Bank performs the Clearing House in Dhaka, Chittagong, Rajshahi, Khulna & Bogra. Where there is no branch of Bangladesh Bank, Sonali bank arranges this function.
Member of Clearing House:
IFIC Bank limited is a scheduled Bank. According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks which are the member of the clearinghouse are called as Scheduled Banks. The scheduled banks clear the cheque drawn upon one another through the clearinghouse.
TYPES OF CLEARING:
← Outward Clearing: When the Branches of a Bank receive cheques from its customers drawn on the other Banks within the local clearing zone for collection through Clearing House, it is Outward Clearing.
← Inward Clearing: When the Banks receive cheque drawn on them from other Banks in the Clearing House, it is Inward Clearing.
Types of clearing house: There are two type of clearing house:
1. Normal Clearing House
2. Same Day Clearing House
1. Normal Clearing House
← 1st house: 1st house normally stands at 10 a.m. to 11a.m
← 2nd house: 2nd house normally stands after 3 p.m. and it is known as return house.
← Same Day Clearing House
← 1st house: 1st house normally stands at 11 a.m. to 12 p.m
← 2nd house: 2nd house normally stands after 2 p.m. and it is known as return house.
Who will deposit cheque for Clearing: Only the regular customers i.e. who have Savings, Current, STD & Loan Account in the bank can deposit cheque for collection of fund through clearing house.
Precaution at the time of cheque receiving for Clearing, Collection of LBC, OBC & Transfer:
1. Name of the account holder same in the cheque & deposit slip.
2. Amount in The cheque & deposit slip must be same in words & in figure
3. Date in the cheque may be on or before (but not more than six months back) clearing house date.
4. Bank & Branch name of the cheque, its number & date in the Deposit slip.
5. Cheque must be signed.
6. Signature for confirmation of date, amount in words / in figure Cutting
7. Multilatilation of cheque.
8. Cheque should be crossed (not for bearer cheque).
9. Account number is in the deposit sleep must be clear.
10. Depositor’s signature in the deposit sleep.
Return house:
Return House means 2nd house where the representatives of the Bank meet after 3 p.m. to receive and deliver dishonored chouse which placed in the 1st Clearing House.
VI. ACCOUNTS SECTION:
The characteristics of the saving accounts and current accounts are more or less same without few exceptions. In case of savings account, around 6% interest is given to the depositors whereas in case of current account no interest is given. Some sorts of freedom are offered to the current account maintaining depositors that are mentioned here in after.
1. Depositors can withdraw their deposits any time in the working days; that is there is no time restriction.
2. No restriction in maintaining deposits.
VII. SEVERAL INSTRUMENTS:
The main instruments used by the IFIC Bank of remittance of funds are
1. PO (pay Order)
2. DD (Demand Draft)
3. TT (Telegraphic Transfer)
a) PO (Pay Order)
Pay orders are the safest way of making payments, as they are drawn on the bank issuing them. So there is no scope of forgery. A pay order is issued only within the members of the Bangladesh bank clearing house (Dhaka Metro). It can be issued in favor of a customer holding an account, by debiting his account and crediting bills payable liability A/C. The account payees submit the pay order in their specific banks. The banks then send the pay order to the clearinghouse where these are received by the respecting issuing banks. The issuing banks verify the pay order, which are then send back to the respecting banks and payment made by debiting the payable account.
IFIC Bank charges different amount of commission on the basis of Payment Order amount. The bank charges for pay order are given in the following chart:
|Total amount of PO |Commission |Vat |
|Up to Tk. 1,000.00 |Tk. 10.00 |Tk 2.00 |
|Tk. 10,001.00 -Tk. 1,00,000.00 |Tk.25.00 |Tk. 4.00 |
|Tk.1,00,001.00-Tk.5,00,000.00 |Tk. 50.00 |Tk. 8.00 |
|Tk. 5, 00, 001. 00 and Above |Tk. 100.00 |Tk. 15.00 |
b)DD (Demand Draft)
A Demand Draft (DD) is an instrument containing an order by the issuing branch upon another branch known as drawee branch, to pay a certain sum of money to the payee.
Commission for Demand Draft (DD) is 0.1% of the principal amount and Vat .15% of the commission amount and telex charge is Tk. 30.00.
c) TT (Telegraphic Transfer)
Issuing branch requests another branch to pay specified money to the specific payee on demand by Telegraph /Telephone
Commission for Demand Draft (DD) is 0.1% of the principal amount and Vat .15% of the commission amount and telex charge is Tk. 30.00.
So the basic three types of local remittances are discussed below:
| POINTS |PAY ORDER |DEMAND DRAFT |TT |
|EXPLANATION |PAY ORDER GIVES THE PAYEE THE |DEMAND DRAFT IS AN ORDER OF ISSUING BANK ON|ISSUING BRANCH REQUESTS ANOTHER BRANCH |
| |RIGHT TO CLAIM PAYMENT FROM |ANOTHER BRANCH OF THE SAME BANK TO PAY |TO PAY SPECIFIED MONEY TO THE SPECIFIC |
| |THE ISSUING BANK |SPECIFIED SUM OF MONEY TO PAYEE ON DEMAND. |PAYEE ON DEMAND BYTELEPHONE |
|PAYMENT FROM |PAYMENT FROM ISSUING BRANCH |PAYMENT FROM ORDERED BRANCH |PAYMENT FROM ORDERED BRANCH |
| |ONLY | | |
|GENERALLY USED TO REMIT |WITHIN THE CLEARINGHOUSE |OUTSIDE THE CLEARINGHOUSE AREA OF ISSUING |ANYWHERE IN THE COUNTRY |
|FUND |AREA OF ISSUING BRANCH. |BRANCH. PAYEE CAN ALSO BE THE PURCHASER. | |
|PAYMENT PROCESS OF THE |PAYMENT IS MADE THROUGH |1. CONFIRM THAT THE DD IS NOT FORGED ONE. |1.CONFIRM ISSUING BRANCH |
|PAYING BANK |CLEARING |2.CONFIRM WITH SENT ADVICE |2.CONFIRM PAYEE A/C |
| | |3.CHECK THE ‘TEST CODE’ |3.CONFIRM AMOUNT |
| | |4.MAKE PAYMENT |4.MAKE PAYMENT |
| | | |5.RECEIVE ADVICE |
|CHARGE |ONLY COMMISSION |COMMISSION + TELEX CHARGE |COMMISSION + |
| | | |TELEPHONE |
VIII. ONLINE TRANSECTION
Clients of any branch of IFIC Bank can draw money nom any branch of IFIC. This is a superior service for the client’s of IFIC Bank than others.
IX. LOCKERS SERVCE
The locker service of IFIC allows customers to keep their jewelries and other valuables in a safe and secure place. It is given so strict privacy that even bank officials are not permitted to know what item the customer is putting inside the locker. Clients must maintain a current or savings account with the bank.
X. FOREIGN CURRENCY ACCOUNT
In this case that is remitted from overseas will remain in same foreign currency Generally IFIC Bank Ltd. opens dollar account.
|CHAPTER FOUR |
LENDING ACTIVITIES
1. There are different types of lending principles:
o Safety
o Liquidity
o Security
o Diversiy
1. Safety: Safety should get the prior importance in the time of sanctioning the loan. At the time of maturity the borrowers may not will or May unable to pay the loan amount. Therefore in the time of sanctioning the loan securities should be taken from the borrowers to recover the loan, Bankers should not scarify safety for profitability.
IFIC BANK LTD. Exercises the lending function only when it is safe. Safety depends upon.
The security offered by the borrower and
The repaying capacity and willingness of the debtor to repay the loan with interest
2. Liquidity: Banker should consider the liquidity of the loan in time of sanctioning it. Liquidity is necessary to meet the consumer need.
3. Security: Banker should be careful in the selection of security to maintain the safety of the loan. Banker should proper value of the security. If the estimated value is less than or equal to loan amount. The loan should be giver against such securities
4. Diversity: Banker should minimize the portfolio risk by putting its fund in the different fields. If Bank put its entire loan able fund in one sector it will increase the risk. Banker should distribute its loan able fund in different sectors. Sp if it faces any problem in any sector it can be covered by the profit of another sector.
2. Different types of loans and advances that IFIC Bank offers:
1. Secured Overdraft (SOD)
2. Agriculture
3. Term Loan
4. Loans to manufacturing units
o Loan( General)
o Foreign Documentary Bill purchase(FDBP)
o Local documentary Bill Purchase (LDBP)
Etc.
Some of them are discuss as below---
Secured Overdraft (SOD):
It is a continuous advance facility. By this agreement the Bankers allows his customer to overdraft his current account up to his credit limits sanctioned by the bank. The interest is charged on the amount which he withdraws. Not on the sanctioned amount .IFIC Bank sanctions SOD against different security
.House building loan (general):
Loan allowed to individual enterprise construction of house (residential or commercial) fall under this of advance. The amount is repayable by monthly installment within a specified period, advance is known as loan (HBFC-STAFF)
House building loans (Staff):
Loan allowed to the bank employees for purchase/construction of house shall be known as Staff Loan (HBFC - STAFF)
Term loan:
IFIC Bank considers the loans, which are sanctioned for more than one year as term loan, under this facility; an enterprise is financed from the starting to its finishing, i.e. from installation to its production.
Loan (general):
Short terms and long-term loans allowed to individual /firms/ industries for a specific purpose but a definite period and generally repayable b y the installments fall under this head.
a. Large and medium scale Industries
b. Small and Cottage industries, very often financing for agriculture and others also included here.
Foreign Documentary Bill purchased (FDBP):
Payment made to a customer through purchase / negotiation of a foreign documentary bills falls under this head. This temporary advance is advance is adjustable from the proceeds of the shipping /export documents, it falls under the category “Export Credit’’
Local Documentary Bill Purchased (LDBP):
Payment made against documents representing sell of goods to local export oriented industries, which are denominated in local currency / foreign currency falls under this head. This bill of exchange is held as the primary security. The client submits the usance bill and the bank discounts it. This temporary liability is adjusted from the proceeds of the bills etc.
3. Process of loans:
|Heads |Characteristics |
|Application |Applicant applies for the loan in the prescribed form bank describing the types and purpose of loan |
|Sanction |1.Collecting credit information about the applicant to determine the credit worthiness of the borrower |
| |2.Source of information : personal Investigation , Confidential report from other bank |
| |Head office /Branch /Chamber of commerce |
| |3.CIB report from central Bank |
| |a. Evaluation of compliance with its lending policy |
| |b. Evaluating the proposed security |
| |4.LRA is must for the loan exceeding one crore as ordered by Bangladesh |
| |5.If everything is in accordance the loan is sanctioned |
|Documentation |Then bank prepare a loan proposal which contains terms and conditions of loan for approval of H,O or |
| |Management |
| |Takes the necessary papers and signature s from borrowers |
|Disbursement |A loan account is opened ,where customer A/C ……….Dr |
| |Respective loan A/C …………Cr |
4. The revised rates of interest on Lending:
| Categories of Lendings |Revised Rate(Mid rate) |
|Agriculture |11.00% |
|Large & Medium Industry (Terms Loan) |14.50% |
|Working Capital Industries | |
|a)Jute Mills |14.50% |
|b)Other Manufacturing Industries |14.50% |
|Exports: | |
|a)Jute & Jute Goods Exports |7.00% |
|b)Readymade Garments |7.00% |
|c)Leather Goods |7.00% |
|d)Frozen Foods & Agricultural Products |7.00% |
|e)Potato Export |7.00% |
|f) Other Export |7.00% |
|Commercial Lending’s : | |
|a)Jute Trading |14.00% |
|b) Other Internal Trading |14.50% |
|c) Services Establishment |14.50% |
|d) Import Finance |14.50% |
|Housing: | |
|a)Urban Housing(both commercial& residence) |15.00% |
|b)Rural Housing |13.50% |
|Small Scale Industry (Term Loan) |14.50% |
|Other: | |
|a)Bill purchase(clean) |15.00% |
|b) Inland Documentary Bill Purchased(IDBP) |14.50% |
|c)Transport Loan etc. |14.50% |
|Sick Management |Sick operation |
|Integrity |Efficient machinarys |
|Financial /Marketing knowledge |Skilled labour /Supervision |
|Technical knowledge/Experience |Good Labour relation |
|Judgment |Utilities of raw materials |
|Sick market |Sick Finance |
|Freedom |Working capital |
|Growth |Repayment period |
|Stability |Flexible rate of interest |
|Sick product |Assets maching to liabilities |
|Quality |Collaterals |
|Competitiveness |Capital market |
|Demand |Other reasons |
|Durability |Reputation |
| |Analysis of Balance Sheet |
| |Lending risk analysis |
5. Reasons for loan default:
|CHAPTER FIVE |
FOREIGN TRADE
1. MEANING OF FOREIGN TRADE
Foreign trade implies the transaction of goods, services and ideas from one country of the world to another country. And the medium of exchange for transacting these goods or services is known as Foreign Exchange (Currency of different countries that allow one country to settle amounts owed to other countries).
2. necessities OF FOREIGN TRADE
Diversity in Natural Resources:
Trade may take place because of the diversity in productive possibilities among countries. For example one country may be blessed with a supply of petroleum, while another may have a large amount of fertile land.
Differences in Tastes:
A second reason for trade lies in preference, Even if the conditions of production were identical in all regions, countries might engage in trade if their tastes for goods were different.
Differences in Costs:
The most important reason for trade is differences some counties in production costs. For example, manufacturing processes enjoys economies of scale; that is they tend to have lower average costs of productions as the volume of output expands.
3. THE PRINCIPAL OF COMPARATIVE OBJECTIVE
It is only common sense that countries will produce and export goods for which they are uniquely qualified. But there is a deeper principle underlying all trade. The principal of comparative holds that a country can benefit from trade even if it is absolutely more efficient (or absolutely lees efficient) then other countries in the production of every good.
The Principle of comparative advantage holds that each country will benefit if it specializes in the production and export of those goods that it can produce at relatively low cost. Conversely, each Country will benefit if it imports those goods that it produces at relatively high cost. This simple principal provides the unshakeable basis for international trade. No country is self sufficient. One country has to depend on other countries for various reasons. One country may have a sound structure in one sector while its other sectors are not so well structured. As a result naturally it has to depend on another country to minimize these lacking of those sectors. On the other hand according to Ricardo's comparative analysis theory. If a country is good at various sectors then it will continue its operations in its best sector, while for other sectors it will depend on others. When countries concentrate on their areas of comparative advantage under tree trade each country is better off. The underlying assumption here is that countries can concentrate properly in a specified area. As a result efficiency in production will increase. Product quality will increase while the price is lower. Countries will be able to market their products at a lower price. The surplus production will be sold outside of the county which known as export. By doing so countries will earn foreign currency. Again by spending those currencies they will buy the required goods from other countries for them that are known as import. The whole transaction is known as Foreign Trade and through the exchange of foreign currency the transaction ends up. Foreign trade is divided into import, export and remittance.
4. FOREIGN TRADE AND FOREIGN EXCHANGE OPERATION
a) Authorized Dealer or AD Holder Bank
As per section 2 of Foreign Exchange Regulation Act 1947, Authorized Dealers means a person, for the time being authorized under section 3 to deal in Foreign exchange. In other words Authorized Dealers means a Bank, Authorized by Bangladesh Bank to deal in Foreign under FER Act 1947.
b) License for Authorized Dealer
To get a License for Authorized Dealer, a Bank will apply the General Manager, Foreign Exchange Policy Department of Bangladesh Bank, Head Office, Dhaka complying following conditions-
1. The Bank must have adequate manpower trained in Foreign Exchange.
1. Prospect to attract reasonable volume of Foreign exchange business in desire location.
2. The Bank meticulously complies with the instruction of Bangladesh Bank.
3. The Bank will commit to deal in Foreign exchange with in the limit and will submit periodical returns as instructed by Bangladesh Bank.
c) Functions of authorized Dealers
Authorized dealer can handle all kinds of Foreign exchange instruction as per FER Act 1947 under the instruction of Bangladesh Bank. Following are the main function of an Authorized Dealer
o Exchange of Foreign Currencies.
o To make arrangement with Foreign Correspondent.
o Buying & Selling Foreign Currencies
o Handling inward & outward Remittance.
o Opening of L/C Settlement of payment.
o Investment in Foreign Trade.
o Opening and Maintenance of Accounts with foreign Banks under intimation of Bangladesh Bank.
o Export documents handling.
5. MAJOR PRODUCTS / SERVICES PROVIDED BY AUTHORIZED DEALER (AD) BRANCHES:
FOREIGN TRADE:
For Importers:
Opening letters of credit
Providing necessary financing facilities to the importers
For Exporters:
Advising of Export Letters of Credit
Confirmation of Export Letters of Credit
Providing collection services of export bills
Negotiation Export documents
Providing Export financing facilities
Issuing of Foreign guarantees favoring beneficiaries within Bangladesh and overseas beneficiaries
Remittance:
Outward remittance by telegraphic transfers and payment of inward telegraphic transfers.
Issuance of demand drafts(AUD,CAD,EURO,US$ and GBP)
Handling of students file of the students going abroad for educational purpose (AUD, CAD, EURO, USD, GBP).
Issuance of AMEX and THOMAS COOK BRAND Travelers Cheques (in US$).
Issuance of Foreign Currencies (in US$ and GBP).
Providing different types of Treasury Functions for Corporate Clients.
Issuance of Wes Earners Development Bond for expatriate Bangladeshis.
6. DEPOSIT PRODUCTS IN FOREIGN CURRENCIES:
IFIC offers following wonderful opportunities to build savings and investment in foreign currencies in US$ and GBP at attractive rates:
Foreign Currency Account (FCAD, FCAP): Foreign Currency Account by (a) Bangladesh nationals residing abroad (b) Foreign nationals residing abroad or in Bangladesh and also foreign firms registered abroad and operating in Bangladesh or abroad (c) Foreign missions and their expatriate employees bringing foreign exchange by inward remittance.
Resident Foreign Currency Deposit (RFCD): Foreign Currency Account for Bangladesh residents bringing foreign exchange at the time of return from travel abroad.
Non-Resident Foreign Currency Deposit (NFCD): Interest bearing Foreign Currency term Deposit Account for Bangladesh nationals living abroad.
Foreign nationals, companies / firms incorporated / registered abroad & A-type (100 % foreign owned) industrial units in EPZ in Bangladesh may also open NFCD A/C.
7. MODES OF THE FOREIGN EXCHANGE
Foreign exchange is the means and methods by which rights to wealth in a country’s currency are converted into rights to wealth in another country’s currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country into that of another. Foreign Exchange Department (FED) is the international department Bangladesh Bank issues license to scheduled banks to deal with foreign exchange. These banks are known as Authorized Dealers. If the branch is authorized dealer in foreign exchange market, it can remit foreign exchange from local country to foreign countries. So IFIC Bank, Principal branch is an authorized dealer. There are three kinds of foreign exchange transaction:
• IMPORT 2. EXPORT 3. FOREIGN REMITTANCE
8. LETTER OF CREDIT
A letter of credit is a letter issued by a bank (know as the opening or the issuing bank) at the instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain conditions mentioned in the letter gave been complied with.
REQUIREMENTS OF OPENNING L\C
In order to export any goods or service to overseas, the exporter should have attested the photocopies if the following documents with the up to date export registration certificate (ERC).
a. Bill of exchange.
b. Commercial invoice/Pro-forma invoice.
c. Certificate of origin.
d. Delivery Chelan
e. Undertaking
f. Packing list.
g. Insurance coverage.
h. Beneficiary certificate where the exporter tells about the goods he/she wants to export.
i. Beneficiary fax (Confirmation of sending goods to the importer).
If the bank authority satisfies with all the information provided by the exporter, steps are taken to smooth out the process of export regarding collection of money or opening back to back L/C.
Thorough checking of Foreign Export L/C
At the very first stage, L/C should be thoroughly checked by keeping a close look on the following terms:
1. Whether the L/C is revocable or irrevocable?
2. Whether the L/C is freely advised or restricted?
3. Whether negotiation of the L/C is restricted or not?
4. Whether payment clause or reimbursement clause is favorable?
5. Whether L/C expiry and shipment date is favorable?
6. Amendment clause is incorporated with recourse or without recourse?
ADVISING OF OPENING L\C
The second step is to advise (forward) the L/C to the beneficiary. Charges are deducted from the client accounts in this purpose.
TRANSFER OF EXPORT L\C
An export may be transferred from the beneficiary to other party or parties; if the term transferable is incorporated on the L\C. Bank will arrange the transfer process. Beneficiary will endorse the Mother L\C to the other party; the party will then independently submit the L\C in his favorable Bank.
BACK TO BACK L\C
It is simply issued to the clients against an import L/C. Back-to-Back mechanism involves two separate L/C. One is master Export L/C and another is Back-to-Back L/C. On the strength of Master Export L/C bank issues bank to Back L/C. Back-to-Back L/C is commonly known as Buying L/C. On the contrary, Master Export L/C is known as Selling L/C.
Features of Back to Back L/C
1. An Import L/C to procure goods /raw materials for further processing.
2. It is opened based on Export L/C.
3. It is a kind of Export Finance.
4. Export L/C is at Sight but back to Back L/C is at Usance.
5. No margin is required to open Back to back L/C
6. Application is registered with CCI&E
7. Applicant has bonded warehouse license.
8. L/C value shall not exceed the admissible percentage of net FOB value of relative Master L/C.
9. Usance period will be up to 180 days.
10. Here L/C issued against the lien of export L/C.
11. Arrangements are such that export L/C matures first then out of this export profit, import L/C is paid out.
DOCUMENTS REQUIRED FOR OPENING A BACK TO BACK L\C
In IFIC Bank Principal Branch, following papers/ 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. Pro-forma invoice or indent
5. Insurance Cover Note with money receipt
6. IMP Form duly signed
In addition to the above documents, the followings are also required to export oriented garment industries while requesting for opening a back-to-back L/C –
1. Textile Permission
2. Valid Bonded Warehouse License
3. Quota Allocation Letter issued by the Export Promotion Bureau (EPB) in favor of the applicant for quota items.
BILL OF REGISTER
After the arrival of documents related with Back to Back L/C, an entry should have to be given in the Bills of Registers are listed below:
1. Date received
2. B/E no.
3. L/C no.
4. L/A no.
5. Received from
6. Drawn on
7. Amount (Foreign currency I Rate)
8. Taka equivalent
9. Draft (Tenor- due date)
10. No. of documents (Draft-invoice-B/Ls--Others)
11. Steamer
12. Date goods cleared
13. Special instruction from sender
14. Date realized
15. Remarks-further recoveries etc.
16. Remarks- Disposal
17. Initials
18. Remarks
PAYMENT OF BACK TO BACK L\C
In case back to back as 60-90-120-180 days of maturity period, deferred payment is made. Payment is given after realizing export proceeds from the L/C issuing bank.
L/C under EDF
a) Exporter development Fund is created by Bangladesh Bank to give encourages to the exporter in Bangladesh.
1. Generally Back-to-Back L/C is Usance L/C that is here bill of exchange is payable after some maturity date say 90 or 120 days after the date of acceptance/negotiation. But some foreign seller may require sight payment. Here import L/C matures first. In that case Bangladesh Bank gives the fund to the bank to pay the price of imported goods in favor of the local purchaser of raw materials. When export proceeds come, first Bangladesh Bank loan to the importer is adjusted and remaining part goes to the importer of raw
ACCEPTANCE OF BACK TO BACK L\C
After receiving of the documents normally the negotiating issuing Bank send an acceptance of back to back L/C specifying the date when they will pay the amount of the related L/C.
9. NEGOTIATION OF EXPORT DOCUMENT
The most common method of financing exporters is negotiation of documents under L/C. It is a post-shipment credit. Here the bank acts as a negotiating bank. After the shipment of the goods, the exporter submits the relative documents to the branch for negotiation. The documents are to submit within the period mentioned in the L/C. after approval of negotiation of the bill the full particulars of the documents are branch with a forwarding letter. The branch claim reimbursement from the issuing bank or from the reimbursing bank, giving clear instructions to credit the proceeds of the bill to the IFIC Bank head office NOSTRO A/C maintained with the named correspondent bank abroad under telex intimation to the Principal branch and Head Office (International Division).
Negotiation stands for payment of value to the exporter against the documents stipulated in the L\C. If documents are in order, IFIC Bank purchases (negotiates) the same on the basis of banker- customer relationship. This is known as Foreign Documentary Bill Purchase (FDBP).
If the bank is not satisfied with the documents submitted to IFIC Bank gives the exporter reasonable time to remove the discrepancies or sends the documents to L/C opening bank for collection. This is known as Foreign Documentary Bill for Collection (FDBC) entered into the Foreign bill Purchased (F.B.P) register. The documents are sent to the L/C opening.
10. FOREIGN REMITTANCE
This bank is authorized dealer to deal in foreign exchange business. As an authorized dealer, a bank must provide some services to the clients regarding foreign exchange and this department provides these services.
The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In the process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place an agreed rate of exchange, which the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like any other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender.
Remittance procedures of foreign currency
There are two types of remittance:
▪ Inward remittance
▪ Outward remittance.
1. Inward Foreign Remittance:
Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, and bills, T.C. etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C.
2. Outward Foreign Remittance:
Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired.
11. LIST OF FOREIGN EXCHANGE STATEMENT
Following are the main statements of an Authorized Dealers:
Daily Statements:
▪ Daily position of foreign currency in hand.
▪ Daily position currency under WES.O.
▪ Daily L\C opening report.
▪ Daily position of rice imported.
Weekly Statements:
• Weekly statement of L/C opening, out-standing & settlement position of rice, wheat & fertilizer.
• Weekly statement of L/C under WES/SEM.
Monthly statements:
• Statement of Foreign Exchange income analysis.
• Statement of receipt & payment against Export, Import &: invisible under cash transaction.
• Statement of out-standing liability under import L/C against cash/WES/SEM.
• Statement of out-standing liability under Import Bills against/Cash WES/SEM.
• Commodity wise monthly payment schedule in respect of UC established in cash under WES/SEM.
• Opening L/C position statement of commercial goods.
• Statement of Foreign currency in hand.
• Statement of out-standing payment commitments abroad.
• Statement of Export operation.
• L\C opened by privet companies for Import of Fertilizer.
• Statement of FCS-7&EFCS-8.
• Monthly Returns (S-1,2,4 & 6)
• Monthly income position of Banks earned from L/C Commission. Statement of renewal of IRC.
Quarterly Statements:
o Statement of Non-receipt of import documents within due time.
o Statement of particulars of Export bills out-standing beyond the prescribed period of realization.
Statement of foreign currency invested in private sector.
12. REGULATORY BODY OF FOREIGN EXCHANGE
Our foreign Exchange transactions are being controlled by the following local regulations.
Foreign Exchange Regulation Act:
Foreign Exchange Regulation FER Act 1947 enacted on 11th March 1947 in the then British India provides the legal basis for regulating the Foreign Exchange. This Act was adopted in Pakistan ad lastly in Bangladesh.
Guidelines for Foreign exchange Transaction:
This Publication issued by Bangladesh Bank in the year 1996 in two volumes. This is compilation of the instructions to be followed by the Authorized Dealers in Transitions relating to Foreign Exchange.
F.E Circular:
Bangladesh Bank issue F.E circulars from time to time control the Export, Import Business and Remittance to control the Foreign Exchange.
Export-Import Policy:
Ministry of Commerce issue Export Policy and import Policy giving basic formalities for Import and Export.
Policy Notice: Sometimes CCI&E issues public notice for any kind of change in foreign Transaction.
Instruction from Different Ministry:
Different Ministry of the Govt. sometimes instructs the Authorized Dealer directly or through Bangladesh Bank to follow something required for the Government.
ICC:
International Chamber of Commerce is a world wide Non-Governmental Organization of thousand of companies. It was founded in 1919. ICC National committees throughout the World present, ICC views to their Governments and alert headquarters to national business concerns. ICC has issued some publications like-
• UCPDC-500
• URC
• URR
This is being following by all the member countries. There is also an international Court of Arbitration to solve the international business disputes.
WTO:
World Trade Organization is another International Trade Organization established on 1st January 1995. GATT (General Agreement on Tariff & Trade) was established on 01.01.1948. After completion of its 8th round, the organization has been abolished & replaced by WTO. This organization has vital role in international Trade, through its 124 member countries.
13. SWIFT
SWIFT the Society for World Wide inter-Bank Financial Telecommunication is the Bank owned co-operative serving the financial community worldwide. The SWIFT Transport Network (STN) is a dedicated global network for secure communication between SWIFT Customer. Swift supports the financial data communication and processing needs of financial institution, through a range of financial messaging service and value-added processing. As well as, access through the STN and interface and application software. In short, SWIFT is a pioneer in the automation of the global financial industry.
In 1973 SWIFT was founded by 239 Banks in 15 countries having its headquarter in La-Hulpe, Belgium with the mission to standardize and automate international payment messaging for the benefit of Banks throughout the world In 1977 the first message was sent and 513 Banks in 15 countries joined SWIFT as its member. Now over 7000 financial institutions around 192 countries use SWIFT everyday.
Objectives of SWIFT:
Security at SWIFT meets 4 objectives:
➢ Confidentiality: Information is only disclosed to authorize person at authorized location.
➢ Integrity: Information can be relied upon to be complete accurate and unchanged.
➢ Availability: Information and associate service is accessible and usable when needed.
➢ Accountability: Every individual authorize to use the system is accountable.
Process: (The system architecture comprises 3 levels)
o Customer interface-the link to SWIFT at the customer level.
o Communication Network-a web of international telecommunication links.
o Message Processing System - Servers are central to the data processing system. They route message. Check the integrity of the contents and monitor the network.
Categories of messages:
System messages.
Customer payme
Financial institut
Foreign Exchange.
Collections & Ca
Securities Mark
Precious Metals &.
Documentary
Travelers Cash
System messages
14. PROBLEMS OF FOREIGN TRADE
Regarding foreign trade operation in Bangladesh there are some problem which is discussed in below.
Since Foreign Trade indicates exchange of goods and services between two countries, so it should occur in a smooth and balanced way. Otherwise the balance of trade position of a country will be hampered. Again if the amount of importation exceeds the amount of export then this particular country will be converted into a trading nation. Bangladesh is now standing in front of such a problem. If don’t move to industrialization we will not be able to overcome the problem of unemployment we are suffering now. An industrialized nation can utilize its total manpower effectively while a trading nation can't because it acts only as a middleman, not involves in the total production process. Industrialization will help us to promote our export base and to earn foreign currency.
Bangladesh is a hugely populated country, so we an abundant supply of manpower. In this age of automation, not manpower but skilled manpower is needed who are able to cope with. The productivity of age-old machines are not enough compared with the automated one. If our industry base were capital oriented instead of labor oriented we would be able to produce more quality product within a short period of time. Sufficient supply of capital will ensure the set up of industrialization. This is very much needed now a day to complete. While others are using automated machineries how long can we expect to go only with our manpower?
When an importer imports certain commodities from another country, he has to undergo various sequential steps; otherwise he would not be able to import the desired goods from the particular country. It's a time consuming as well as cost oriented matter. The importer adds this value of time and cost into his production cost, so the product price increases. While on the other hand, if a person can import the same goods illegal1y from another country it would easier for him to market those products. No doubt cheaper products win create a demand in the market than the legally imported products.
If the foreign exchange earnings yield from diversified fields then it would be easier to minimize risk resulting from one uncertain field. But in Bangladesh we are earning foreign exchange only from a limited number of sectors. Only RMG contributes almost 75% of the total foreign exchange earnings, through in this sector also we are not involved from the root of production process, we just problem the task of tailoring. So the foreign export base should be decorated in such a way so that all sectors of the economy can contribute significantly.
In this sector Bangladesh has the limitation of skilled manpower, which can understand and handle the foreign exchanges well. Performing the foreign exchange activities is a very tough job because it involves proper communication with the client, various Banks of the country as well as outside of the country. A single error may cost you thousands of dollars. This is a unique sector. The Banker has to well aware of the various trades, import and export policies of the government. He also has to aware of the exiting foreign exchange rate and the bilateral relationship between Bangladesh and other relevant countries. So the Banker should be well trained and groomed to cope with this situation.
From the geographical view point Bangladesh is not located in such a place to trade vigorously. We have encompassed by India from three sides. India has developed a strong industry base than us. They can produce the same quality of goods at a cheaper price compared to us. Now we declare our market as an open market, the Indian goods will cover our market. People will prefer these goods because their lower price and consequently demand for our local products will diminish. Entrepreneurs will loss their interest in establishing local industries because of the lower demand. So there will be a multiplier effect, in the absence of industries unemployment crisis will increase and so on.
Sufficient supply of raw materials we use in the production process. If we have the local raw materials we use in the production process. If we had the local raw materials we would be able to use them in the production process. But unfortunately we have to have to import the raw materials required in various production process. As a result Production cost increases, and consumers have to spend more to avail that particular Product. On the other hand, we can think in another way, if the local raw materials were available we would be able to export goods at a lower price than the competitions. Then certainly our exported goods would have a higher demand in the international market and consequently we would be able to earn foreign Currencies.
Policy and structure are an integral part of any kind of operations. It will suggest us how to perform the operation. But if the policy continues to change frequency it is not easy to plan and to perform also. This is the main problem of our country particularly the political parties. With the changes of Government new policies are formed, which is very difficult to cope with. It is hard for the business organizations and businessmen to settle themselves. They are always deviated from the old track, and have to run after the new track. So to keep in mind the interest of the country, there should be such a steady policy that is helpful for all.
Whenever an importer comes to the Bank to issue a LC in his favor, he has to deposit a certain amount (Known as margin say %) of the total LC value. After receiving of the export documents from the exporter the importer pays the rest (80%) of the amount. But up to this time this 20% amount is kept by the without giving any return to the importer, so it is a loss for the client. He can invest this money anywhere else and could earn some return. The importer adds this loss with his production cost, so the product price goes up that has to borne the ultimate consumer.
Balance of payment indicates the total flow of money into and out of a country. Balance of payment is divided into Current Account (import, export, remittance, bilateral trade, urn-lateral trade etc.) and Capital Account (gift, donation, foreign direct investment). It's a problem for our country that yet we have not been able to make the Current Account fully convertible. Since we are talking about open market economy so the account should be fully convertible. Through initially we had to go to Bangladesh Bank for kind of foreign exchange transaction, but after the partial conversion of Current the situation has relaxed or improved to some extent.
After 2005 there will be no quota facility. Bangladesh has to then produce quality goods at a lower price to survive in the local market. We have to plan and work hard to improve our backward otherwise it would and work hard to improve our backward linkage facilities otherwise it would be too much difficult to compete.
15. LIST OF NOSTRO ACCOUNT
|SI. No. |NAME OF THE BANK |ACCOUNT NUMBER& SWIFT ID |
|01. |Citibank N.A, Suit No. 3000, 3800 Citibank Center, Global Trade Services,2nd |003615-1783 |
| |floor,1Building F6700 Citicorp Drive. Tampa. FL 33619, New York, USA |CITIUS33 |
| |Tel:(1-813)66450841,T1x:669720,Fax:(1-813)66450 99 | |
|02. |Maslareq Bank psc, Norman D'Curz, Senior Relationship Manager, 255 FifthAver.t1K; New York.|70119908 |
| |NY 10016, U.S.A Tel:212-540918, 824-2834. TIx:239881 MSHQ NY, Fax: 212-540918119 |MSHQUS33 |
|03. |Standard Chartered Bank. One Madison Avenue, 3rd Floor,New York" NY 10010-3603 |3582-048957-001 |
| |Td:12126670700 (Main Exchange Number) Fax:12126670172, TIx: (023)420117, 62621 |SCBLUS33 |
|04. |The Bank of Tokyo- Mitsubishi Ltd. 1251 Avenue of the Americas. NewYork. NY-I 0020-1104, |0065551012 |
| |U.SA Tel:1-212-782-4000,Fax:1-212-782-6414TIx:23 211315, 222967, 222968 |BOTKUS33 |
|05. |American Express Bank Ltd.,American Express Tower, 200 Ve5SI? OJ Stets. New York, NY 10285,|739755 |
| |U.SA Tel: 212-640-3836, Fax: 212-640-4222 |AEIBUS33 |
|06. |Standard Chartered Bank RTBS" 201F New London Bridge House. 25 London Bridge Stets. London |01-7083394-01 |
| |SEI 9TN,'fix:(051)88951.Tel:(0171)2807500,4577500, Fax: (0171) 280615On609n636 |SCBLGB2L |
|07. |The Bank of Nova Scotia 44, king Street West. Toronto, Ontario, CANADA. M5HlHl. Tel : |527120027413 |
| |416-866-6161, Fax :416-866-3750 TIx:WUI6719400 |NOSCCATT |
|08. |Hypo Vereins Bank, F AM lIS AM Eisb8d14, 80538 Mnnchen, GERMANY |69105530 HYVEDEMM |
|09. |Commerzbank AG,ZTB BOCM 10, 60261 Fnmkfurt AM Main,GERMANY Tel:49691362290,Fax:4969 |400870152600 EUR |
| |3623900, |COBADEFF |
|10. |Union De Banques Arabes: Et Fnac: aises (U.B.A.F) Sumitomo JimbodJo Bldg., SthFloO£, 3-25, |10281570001000 |
| |Kanda Tnnbocho, Chiyoda-Ku. Tokyo, 101-0051, JAPAN. Tlx' J2566O UBAF, Tel |Offishore Invest. A/C |
| |fI.03-3263-8821/4, Fax fI. 03-3263-8820 |no.10281570-096-00-0 |
| | |UBAFJPJX |
|11. |American Express Bank Ltd.8-12, Slu"balmen I-Chome.Mioa1D-Kn,Tok}'o 105.0011,JAPAN.Tel: |313000832 |
| |(OS1)35470-6501,Fax:35470-651I,Tlx:124984AMEXBANKJ |AEIBJPJX |
|12. |Habib Bank A G Zwida Weinbergstmsse 59, PO Box 4931 8022 Zurich, Switzerland.Tel:0126945 |1-1-1-20110-1-124701 |
| |00,Fax:0126945 35,TIx:815 IS] bhzz cb |HSZUCHZZ |
|13. |Union Bank of Switzerland AG POBox.CH-8098,Zmich,S_ Tel:OI2341111 |230-75605.05A |
|14. |Citibank N.A.Mr.Vgay Acbhpal,Bombay Mutual Building_Floor! 293, Dr D.N Road Fort Mmnbai |11440002 |
| |400001.JNDJA Tel:022-2844555S1I600-22-5555, |CITINBX |
| |Fax:022-28443266177TIx:1171339,1171342,E-mail:citiserrice. fudia@ | |
|15. |Standard Chartered Bank. 14, Ncbgi Sobash Rood. K.o1kata- 700001, |322-0-513033-3 |
| |India.Tel#221-2175,Fax'221-0745, Telex'08720557, SCBCOMRS 20557 |SCBLINBB |
|16. |Arab Bangladesh Bank Ltd., Mumbai Brach, Liberty Building. 41-42, Sir Vttbaldas Thac: |300119 |
| |kcrscy Marg. New Marine Lines, Mmnbai-400 020, INDIA. Tlx : OJ 1-82233 ABBL IN, Fax :0091 |ABBLINBB |
| |22 2005391 | |
|17. |American Express Bank Limited, 21, RemmJta Basu Samni. (Old Court House Stn:et) P.O Box |412800726 |
| |2311, Kolkata 700 001, INDIA. Td: (91) 33243-0233, TIx: 0217574 AMID{ IN. Fax: (91) |AEIBINDXCAL |
| |33-248-8896 | |
|18. |The HoDg Kong & ShaDghai BanIdng CorpontioD Limited, 52-60, MoO Rood, Fort, Mmnbai400 001. |HSBCINBB |
| |INDIA. Td: 91-22-268-1175 Fax : +273-4338 |019-134980-650 |
|19. |ICICI Bank 1Jmited, ICICI Bank Towers. BandIa-KmJa CompJe:! r. Mumbai 400 051. Tel:91-22 |000406000235 |
| |2653 1414, Fax : 91-22 2653 1122 |ICICINBB |
|20. |But ofBlmtau. Plmentsholing Main Bnmch, P.O. Box No. 75, Biwtan |34016 |
|21. |NDLC-lFIC Bant Ltd. Karadri. 99 PandO Plam, IT ClmndrigarRoad,_PAKlSTAN.TIx:202781F1C PI{,|5538000096 |
| |Fax: 92-21-2414061 | |
|22. |UDio.a Bank of PaJdstaD. Colombo (Farmed.r _ CIIIoIIIbo) Anauda W. A tuhJnJla.. |UNBLLKLC |
| |Cotmtry.Manager;POBox304.No:245._1R MIffatlTa, ColomlJo 7. SRlLANKA. Tel:94-15-331 848. Fax|78001313 |
| |: 94-75-331849, | |
|23. |Nepal Bangladesh Bank Ltd., Main Branch. PO Box, 9062 BijuIi Bazar, New Baneshwoc, |011121D |
| |Katmandu, NEPAL. Td:490195, Fax:977-l-490824, TIx: NP 2841 NBBANK |NPBBNPKA |
|CHAPTER SIX |
FINDINGS OF THE STUDY
Every student have some specific finding, my report is not exception to this, In my study I want to show overview of IFIC Bank and the condition of Banking sector of Bangladesh and also try to evaluate the performance of IFIC Bank, In this study I had found that overall performance of IFIC Bank is significance, IFIC Bank has a strong growing financial based in Bangladesh,
. In a globalize world of to day “It is the survival of the fittest “. Being aware of this, IFIC Bank is fully prepared to face the same well prepared well ahead. The economic scenario to the country is predicted going to be brighter in the days to come.
Banking industry in Bangladesh is now on right track, the banks are gradually contributing their mite for the growth and development of the country, and the credit for this squarely goes to Bangladesh Bank, Bangladesh Bank initiated various measures and closely monitored the same for proper implementation. This has brought discipline in the industry, Its position intern of capital .deposit cash position .investment ,advance ,total asset ,net profit ,etc is always showing an trend ,In this Internship period I had also found its sound management that is efficient regarding both financial and operational management , I also have found some area where the bank still got the scope to improve their performance, Some specific findings are mentioned as below:
General Banking Department:
1. In general banking department they follow the traditional banking system the entire general banking procedures are not fully computerized. Therefore some procedures take long time to perform.
2. There is no computerizing system in account opening procedures. That’s why the service is not as prompt as the customer demand.
3. Lack of variety service is also a drawback of the general banking area of the IFIC Bank Ltd. The bank is only providing some traditional limited services to its client consequently the bank falling behind in competition.
4. This bank did not able to open online banking system for its customer; it is only open for its employee
5. In case of opening an account, some big parties are come to open account in reference with the high official of the bank, They do not submit all papers to opening an account and in future they do not feel any urge to submit those papers but already they becomes account holder, I think that in this types of ease the authority is violating the rules.
Foreign Exchange Department:
1. In the foreign exchange department, it is communicating with foreign bank frequently and quickly .To make this process easily modern communication media such as e-mail, Fax , Internet etc, although this banking is using this process but they are not too much active and communicative.
2. The bank may give better service to its customer if all of its department are computerized and incorporate under local area network.
Credit Operation Department:
1. Credit operation department takes a longer time to process a loan because the process of sanctioning of loan done manually.
2. Credit information Bureau report is nor readily available for Bangladesh Bank
3. Bank should provided advance towards the true entrepreneurs with considering conventional system of security collateral.
CONCLUSION AND RECOMMENDATION
I spent only a few weeks to have a practical experience about the performance of banks (which is a vast topic for analysis), which is not enough to have an in-depth knowledge about it. On the basis of my short observation, I recommend following possible changes to have the maximum benefit from the system.
IFIC BANK OF BANGLADESH LTD. IS MORE CAPABLE OF CONTRIBUTION TOWARDS ECONOMIC DEVELOPMENT AS COMPARED THEIR WITH CONVENTIONAL BANKS, BY DINT OF COMMANDING MOST OF THEIR FUNDS AS INVESTMENT ACCOUNTS WHICH ARE INVEST IN EMPLOYMENT AND ALSO IN EXPORT AND IMPORT BUSINESS. IT MAY BE EXPECTED THAT BY ESTABLISHING A NETWORK OVER THE COUNTRY AND BY INCREASING RESOURCES THIS BANK WILL BE ABLE TO PLAY A CONSIDERABLE ROLE IN THE PORTFOLIO OF DEVELOPMENT OF FINANCING. THE WHOLE BANKING SECTOR OF BANGLADESH IS FACING A GREAT CHALLENGES AND COMPETITION DUE TO CONTINUOUS FOREIGN INVESTMENT IN THIS SECTOR. IFIC BANK IS FACING SERVE COMPETITION FROM THE OTHER KEY PLAYERS, ESPECIALLY, EXCELLENT BANKS BY OFFERING SIMILAR AND BETTER PLAYING SERVICES. THE IFIC BANK IS A PROMISING COMMERCIAL BANK IN BANGLADESH IN THIS COMPETITIVE MARKET IFIC BANK HAS TO COMPETE NOT ONLY WITH THE OTHER COMMERCIAL BANKS BUT ALSO WITH THE PUBLIC BANKS. I THINK THIS REPORT MAY SHOW A GUIDELINE FOR IFIC BANK FOR ITS FUTURE PLANNING AND FOR ITS SUCCESSFUL OPERATION TO ACHIEVE ITS GOAL IN THE ENVIRONMENT OF THE COMPETITIVE ENVIRONMENT PREVAILING IN THE COUNTRY NOW.
RECOMMENDATION
IFIC Bank should try to develop the process of providing services. To get a perfect process of delivering services, the customers should be asked. In the recent study customers put emphasis mostly on one-stop customer service. The other suggestions are as follows:
o Personal relationship should be build with the big customers/depositors. They can be sent different gift items like calendar, diary etc. on different occasions like Eid, New Year etc.
o The decoration of Local Office is very poor. The customer's attitude toward the decoration is highly negative.
o Customers satisfied with the price charged, but they have not too much awareness about the price charged. Customer’s awareness should be build over pricing strategy.
o Local Office should take more bills that will develop the awareness of customer.
An exploratory research should be conducted to find out the other elements that have impact over the efficacy of customer service.
o The office layout should be designed in a way so that, there is no chance of confusing customer. The cash receive section will be totally separated from the cash paying section
o Some offices are decorated in a much unstructured way. All the offices should be decorated with the help of interior design Company, so that maximum efficacy of service can be provided.
o Customers are the hearts of the organization. They should provide more space in the office and if possible, they should have some entertainment facility. For example: A television with some dynamic channels like discovery, animal planet, national geography etc. As a result they will be more patient while the service has been processed.
o The employee of the different branch should be trained continuously.
o As because bank is a financial institution, the IFIC should recruit more persons, having commerce backgrounds.
o Each branch should be decorated with Electronic Display Board, which will show that which table is performing what function and now that is serving. The branches should be decorated with proper Sound System facility, which will be helpful to communicate with the customer more easily. This system will decrease the confuse ness of the customer, which ultimately will increase the efficacy of customer service.
o The employees of the cash counter are the persons who are having direct contact with the customer. So, these employees should be more smart and active.
o Foreign Exchange is the most profitable department of each branch. So, IFIC should think about opening more branches internationally, mostly where they have enough operations. It will facilitate the foreign trade. As a result, efficacy at the foreign trade will be increased.
o IFIC should establish security camera in its each branch. Establishing security camera will increase the security of a branch.
QUESTIONEER PART:
1. Origin of the report.
2. How much time has taken during the internship?
3. What are the limitations of the report?
4. How can a Bank maintain its management?
5. Did IFIC Bank practice human resource practice?
6. How can IFIC Bank recruit the employee?
7. Did IFIC Bank have any organizations philosophy?
8. What is the mode of the IFIC Bank?
9. Mention the different service that the IFIC Bank provides.
10. How many branches IFIC Bank has?
11. How can a customer open an account?
12. Mention the different scheme that IFIC Bank provides.
13. Write short notes: current a/c, short term deposit a/c, fixed a/c
14. Mentioned different types of remittance.
15. What are the meaning of foreign trade and necessities of foreign trade?
16. Discuss categories of foreign trade.
17. Describe foreign trade and foreign exchange operation.
18. How customers can open an L/C.
19. Describe the procedure of opening an L/C.
20. Describe the problem during the foreign trade.
21. Show the overall activities of IFIC Bank.
THANKS
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C H A P T E R ONE
CHAPTER TWO
C H A P T E R SEVEN
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