2012

FOREIGN EXCHANGE MANAGEMENT OF JANATA BANK

LIMITED

Md. Moinul Haque

ID – 08.01.02.054
 Acknowledgement
At the very beginning I would like to express my deepest gratitude to the Almighty God for
giving me the strength and the composure to finish the task within scheduled time. I would like to
express my sincere gratitude and appreciation to my supervisor, Naznin Sultana Chaity, Assistant
Professor, School of Business, Ahsanullah University of Science and Technology; it would not
have been possible for me to complete this report without her help, advice and overall supervision.
Her constant encouragement and supervision throughout the period of this study have been greatest
inducement for me and directly contributed to the accomplishment of the task.

I am also thankful to Mr. Md Aminul Islam (General Manager), Janata Bank Limited, local
office, Dilkusha C/A, Dhaka-1000, for giving me the opportunity to conduct my internship. I am
also grateful to Md. Maniruzzaman (Deputy General Manager) and Bidhan Chandra Nath
(Assistant General Manager) of this branch who not only helped me a lot to complete my internship
report by providing various information of the bank but also shared their experience in banking
sector with me and advised me about career.

Finally, I would also like to thank the authority of School of Business of Ahsanullah
University of Science and Technology, Bangladesh for their kind cooperation.

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 Executive Summary
Today, necessity of a Bank as a financial institution is undeniable. Banks perform various
fundamental factions, which are directly or indirectly contributory towards economic and social
development of countries. A country is financially rich when it has modern financial institutions of
its own. These institutions play a vital role in the field of financial stability of a country. Especially
a country like Bangladesh, our agricultural, industrial and economic developments are very much
depending on smooth operation of Banks. So we must ensure the efficient and effective
performance of this sector.

Janata Bank Ltd is one of the leading commercial Bank of Bangladesh. The main intention
of the Bank is to provide all of banking services at the doorsteps of the people. The Bank also
participates in various social and development programs and takes part in implementation of
various policies and promises made by the Government.

The bank plays a pioneering role in managing foreign exchange transactions. With wide
network of branches at home and abroad, the bank maintains the largest volume of export-import
business including homebound remittances. For this reason, Foreign Exchange of the Bank is very
much essential.

This internship report is intended at providing a complete scenario to the areas of “Foreign
Exchange Activities” of Janata Bank Limited and a pinpoint analysis of the operations and
performances of the bank, also suggesting for possible way out of problems. The report is based on
primary and secondary data from different sources. In this report I have attempted to show the
involvement of JBL’s earnings considering export, import and remittance.

The report contains of the followings parts: Introduction of the Report, Profile of JBL, Operational
Procedure of the Foreign Exchange Division, Activities of Letter of Credit, Import Section, Export
section, Remittance Section, Findings & Analysis, Recommendation and conclusion.

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 TABLE OF CONTENTS
Serial No. Contents Page No.
Letter of Transmittal
Acknowledgement
Executive Summary
List of Acronyms
Chapter-1 Introduction of the Report
1.1 Introduction
1.2 Origin of the Report
1.3 Objectives of the Report
1.4 Scope of the Report
1.5 Methodology of the Report
1.6 Limitations of the Report
Chapter 2 Company Profile
2.1 Historical Background of the Organization
2.2 Corporate Profile of Janata Bank Limited – At a Glance
2.3 Organization Mission, Vision and Values
2.4 Corporate Slogan of Janata Bank Limited
2.5 Management Aspects of Janata Bank Ltd.
2.6 Management Organogram of Janata Bank Limited
Management Organogram of Janata Bank Limited, Local
2.7
office, Dilkusha C/A, Dhaka.
2.8 Purposes of Janata Bank Limited as a Commercial Bank
2.9 Functions of Janata Bank Limited as a Commercial bank
2.10 Service offerings/ Products of Janata Bank Ltd.
2.11 Number of Branches of Janata Bank Ltd.
Five years Comparative Financial and Operational
2.12
Performance of Janata Bank Ltd.
2.13 Corporate Social Responsibilities (CSR) of Janata Bank Ltd.
2.14 Reward and Recognition of Janata Bank Ltd.
2.15 Future Plans of the Organization
Chapter-3 Foreign Exchange Division
3.1 Preface of Foreign Exchange
3.2 Meaning of Foreign Exchange
3.3 Importance of Foreign Exchange
3.4 Activities of Foreign Exchange Division
3.5 Regulation for Foreign Exchange Division
Society for Worldwide Interbank Financial Telecommunication
3.6
(SWIFT)
3.7 How Foreign Exchange is being Controlled
3.8 Foreign Exchange Performance of JBL
3.9 Risk Management of Foreign Exchange Activities
Chapter-4 Activities of Letter of Credit (L/C)
4.1 Letter of Credit (L/C)
4.2 Types of Letter of Credit (L/C)
4.3 Letter of Credit Transaction

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 Serial No. Contents Page No.
4.4 Parties Involved in the L/C
4.5 Basic Procedures of Opening a L/C
4.6 L/C Application Form (L/CAF)
4.7 Letter of Credit Settlement
Chapter-5 Import Section
5.1 Meaning of Import
5.2 Import Department & Import Policy
5.3 Import Procedures
5.4 Import Mechanism
5.5 Types of Import
5.6 Goods are not Importable
5.7 Import Financing
5.8 Documents Receipt and Scrutiny
5.9 Import Performance of JBL from 2008-2010
Chapter-6 Export Section
6.1 Meaning of Export
6.2 Export Department
6.3 Documents Used In Export
6.4 Registration for the Exporter
6.5 Formalities and Procedures of Export L/C
6.6 Export Financing
6.7 Export Performance of JBL
Chapter-7 Remittance Section
7.1 Meaning of Remittance
7.2 Foreign Remittance
7.3 Remittance Services in Janata Bank Limited
7.4 Types of Remittance
7.5 Remittance Market in Bangladesh
7.6 Problems/Roadblocks in Current Remittance Process
7.7 Help Desk Related To Foreign Remittance Problem
7.8 Steps Taken For Remittance Process Improvement
7.9 Foreign Remittance Performance of JBL
Chapter-8 Findings and Analysis
8.1 SWOT Analysis
Comparison and Performance Evaluation of JBL with Other
8.2
Banks in Case of Profit
8.3 Import Performance of JBL Compare to National Import
Foreign Remittance Performance of JBL Compare to National
8.4
Foreign Remittance
8.5 Shortcomings of JBL from My Point of View
Chapter-9 Recommendation and Conclusion
9.1 Recommendation
9.2 Conclusion
Reference
Appendix

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 LIST OF FIGURES
Serial No. Contents Page No.
Figure 1 Values of Janata Bank Limited
Figure 2 Management Organogram of Janata Bank Ltd.
Management Organogram of JBL, Local Office, Dilkusha C/A,
Figure 3
Dhaka
Figure 4 Branches of JBL in Bangladesh
Figure 5 CSR Activities of Janata Bank Ltd.
Figure 6 Activities of Foreign Exchange Division
Figure 7 Structure of SWIFT
Figure 8 Letter of Credit Transaction Process
Figure 9 Types of Remittance
Figure 10 Modes of Inward Remittance
Figure 11 Modes of Outward Remittance
Figure 12 SWOT Analysis

LIST OF TABLE
Serial No. Contents Page No.
Table 1 Corporate Profile - at a Glance
Table 2 Number of JBL Branches
Table 3 Grade or Category Wise JBL Branches
Table 4 Five Years Comparative Financial and Operational Performance

LIST OF GRAPH
Serial No. Contents Page No.
Graph 1 Foreign Exchange Performance of JBL from 2009-2010
Graph 2 Import performance of JBL
Graph 3 Export performance of JBL
Graph 4 Foreign Remittance performance of JBL
Graph 5 Comparison of Profit Performance of the Above Banks
Graph 6 Profit Percentage from 2009-2010 of the Above Banks
Graph 7 Import Performance of JBL Compare to National Import
Graph 8 Contribution Percentage of JBL in National Import
Graph 9 Contribution of JBL in National Foreign Remittance
Graph 10 Contribution Percentage of JBL in National Foreign Remittance

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 List of Acronyms

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 Chapter 1
Introduction of the Report

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 1.1 INTRODUCTION

This report has a definite purpose to focus on the operations of “Foreign Exchange”
of Janata Bank Limited. Without any doubt foreign exchange catches the flash as it has great
importance in the balance of trade in economy. Banks plays a vital role in this discipline.

In the age of globalization, the importance of banking sector is beyond description.

Banking sector is going ahead with the improvement and invention of new services and offerings to
gather and retain more customers. Besides other banking activities “Foreign Exchange” has become
a vital part of a Banks daily activity to perform. Again, we know that foreign exchange activities
such as foreign remittance, export, import have a great impact on our national economy. Internship
in Janata Bank Ltd (Local Office, Dilkusha C/A, Dhaka) has brought me the opportunity to know
details about the activities of foreign exchange. At the very beginning of the internee period, I was
too much interested about Loan & Advance section of the Janata Bank Ltd but in a few days I
recognized that my branch deals with “foreign exchange” more than any other banking activities
including loans and advances. Working with foreign exchange department in daily Banking day
turns my attention from loans to foreign exchange which creates the background of the study.

1.2 ORIGIN OF THE REPORT

Although total B.B.A. program combines an excellent blend of theoretical and classroom
knowledge but aside this internship program facilitates a student to bring light on their theoretical
knowledge to apply this in practical ground.

This report has been prepared as an internship report which is a mandatory requirement
for successful completion of BBA program under Ahsanullah University of Science & Technology
and which aims to reflect the professional view of real world working experience and environment.
This internship report is required to submit after fulfilling 3 months of working experience in an
organization as a trainee. My report is on the foreign exchange activities of Janata Bank Limited.
In this part I have tried to see the things what are being done in this department of the branch. I
have also tried to present my personal observations from each department of this branch. I had an
opportunity to be acquainted with the practical banking prevailing in Local Office Dilkusha C/A.
The knowledge which has been acquired in my Internship Period, I have tried my level best to
show in this report.

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 1.3 OBJECTIVES OF THE REPORT

Broad Objectives
To fulfill the partial requirement of the internship program as a full credit subject of
the BBA program,
To analyze the foreign exchange activities of Janata Bank Ltd.,
To get an overall idea about the foreign exchange management of JBL,
To be become familiar with the foreign exchange management policy or process of
JBL in Bangladesh,
To apply theoretical knowledge in the practical field.

Specific Objectives
Draw a general picture of foreign exchange operations of JBL,
The contribution of JBL in national remittance,
To analyze the export and import procedure maintained by JBL,
To evaluate performance of the bank,
To analyze the barriers faced by the bank.

1.4 SCOPE OF THE REPORT

This study would focus on the following areas of Janata Bank Limited -

Actual Foreign Exchange management of Janata Bank Limited,

Overview the current procedure of export & import and remittance management,
Opening LC and maintenance of other formalities of foreign exchange,
Organizational structures and responsibilities of management,
Operations of guaranty in JBL.

Each of the above areas would be critically analyzed to determine the proper efficiency of Janata
Bank’s Foreign Exchange Management system.

1.5 METHODOLOGY OF THE STUDY

While conducting the study, sources were explored for primary information and
data. But hardly any updated data could be found. In the absence of updated information or data
dependence on secondary data has been inevitable. However, whenever possible primary data has
been used. Data were also collected by interviewing the responsible officers and from some
documents & statements printed by the Janata Bank Ltd. Janata Bank Ltd. also helped me in
collecting data providing books and Banks annual report.

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1.5.1 Study Design
This study is descriptive in nature and so was conducted using assessment of
different historical data along with other sources. This report is based mainly on observation that I
experienced during the internship period. Both qualitative and quantitative methods were applied
for preparing this report. The data were analyzed and presented by Microsoft excel and shows
percentage, graphical presentation and different types of charts. Best effort was given to analyze the
numerical findings.

1.5.2 Sources of data

Primary

a) Personal interview-Face –to-face conversation and in depth interview with the respective
officer of the bank.
b) Practical work exposures on different aspects of this field.
c) Relevant file study as provided by the concerned officers.

Secondary

i. Annual report of JBL,

ii. Relevant documents related to the study as provided by the officers,
iii. Periodicals published by Bangladesh Bank,
iv. Different publications and relevant circulars,
v. Official website of JBL,
vi. Manuals of JBL.

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 1.6 LIMITATIONS OF THE REPORT
There were some problems while conducting the study. A whole hearted effort was
applied to conduct the study and to bring a reliable and fruitful result. In spite of this, there exist
some limitations, which acted as a barrier to conduct the study. The limitations were:

Time limitation: It was one of the main constraints that affected covering all aspects of the study.
Very short time frame- the report had to be conducted in a short duration (3 months).

Lack of Secondary Information: The Foreign Exchange data of JBL is not much available over
the net. Secondary sources of information were not sufficient for the completion of the report.

Limitation of the Scope: Much confidential information was not disclosed by respective personnel
of the department. Such as -

 In many cases the relevant authorities are not helpful to provide information.
 The organization maintains strict confidentiality about their financial and other information.
 They are afraid of any type of information leakage to their competitors. So there was always
difficulty to have appropriate information from them.
 The main difficulty of the study was insufficiency of current information relevant to the
study.
 Consolidated data related to the study were not given due to time shortage.
 All required information was not available in any specific branch of the bank and there was
also limited opportunity to visit more than one branch.
 Duration of the study was too short to find out the exact calculation from the employee.
 Lack of sufficient books, papers and journals etc.
 Web site of the Organization is not up to date to gather valuable information.

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 Chapter 2
Company Profile

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2.1 HISTORICAL BACKGROUND OF THE ORGANIZATION
Janata Bank Limited is the 2nd largest state owned commercial bank in
Bangladesh. Immediately after the liberation of Bangladesh in 1971, the erstwhile United Bank
Limited and Union Bank Limited were renamed as Janata Bank. On 21 May, 2007 the bank has
been corporatized and renamed as Janata Bank Limited. Janata Bank Limited has an authorized
capital of Tk. 20000 million (approx US$ 283.33 million), paid up capital of Tk. 5000 million,
reserve of Tk.10823.01 million and retained surplus Tk.5167.18 million. The Bank has total assets
of Tk.345233.92 million as on 31st December 2010.
Janata Bank limited operates through 879 branches including 4 overseas branches at United
Arab Emirates. It is linked with 1202 foreign correspondents all over the world.
The Board of Directors is composed of 13(Thirteen) members headed by a Chairman. The
Directors are representatives from both public and private sectors.
Total number of employees 14989 (fourteen thousand nine hundred eighty nine) up to May
31, 2012.
The Bank is headed by the Chief Executive Officer & Managing Director, who is a reputed
banker.

2.2 CORPORATE PROFILE OF JANATA BANK LIMITED – AT A GLANCE

Name of the Company Janata Bank Limited

Chairman Dr. Abul Barkat
CEO & MD S.M Aminur Rahman
Legal Status Public Limited Company
Date of Incorporation 21 May, 2007
Registered Address Janata Bhaban, 110 Motijheel C/A, Dhaka-1000, Bangladesh.
Authorized Capital Tk.20000 million
Paid up Capital Tk.5000 million
Face value per share Tk. 100 per share
Shareholding Pattern 100% share owned by the Government of Bangladesh
Numbers of Branch-879
Numbers of Divisional Office-08
Domestic Network
Numbers of Area Office-15
Numbers of Regional Office-29
Overseas Network Numbers of Branch-4 ( all branches located in United Arab Emirates)
Numbers of Employees 14989
Numbers of correspondent 1202
Corporate Tax 42.50%
As Govt. Owned Bank “AAA” in long run & ST-1 in short run
Telex 675840 JBDBJ, 671288 JBHOBJ
Phone PABX: 9560000, 9566020, 9556245-49, 9565041-45, 9560027-30
Fax 88-02-9564644, 9560869
E-mail [email protected]
Website www.janatabank-bd.com
Swift Code JANB BD DH
Source: Janata Bank Annual report 2010 & www.janatabank-bd.com
Table 1: Corporate Profile - at a Glance

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 2.3 ORGANIZATION MISSION, VISION AND VALUES

2.3.1Mission
Janata Bank Limited will be an effective commercial bank by
maintaining a stable growth strategy, delivering high quality financial products,
providing excellent customer service through an experienced management
team and ensuring good corporate governance in every step of banking
network.

2.3.2Vision
To become the effective largest commercial bank in Bangladesh to
support socio-economic development of the country and to be a leading bank
in south Asia.

2.3.3Values
I. Professionalism,
II. Diversity,
III. Accountability,
IV. Integrity,
V. Dignity,
VI. Growth.

Figure 1: Values of Janata Bank Limited

2.4 CORPORATE SLOGAN OF JANATA BANK LIMITED

“A Committed Partner in Progress”

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 2.5 MANAGEMENT ASPECTS OF JANATA BANK LTD.

The Janata Bank Limited Management Team consists of a group of people and each them
comes with an international working background and is committed in leveraging their experience to
take Janata Bank Limited to greater heights by ensuring top line revenues with dynamic
capabilities.

Like any other business organization, all the major decisions in Janata Bank Limited are
made by the top management committee. The board mainly establishes the objectives and policies
of the bank.

There are three committees of the board for different purpose. They are:-

 Executive Committee,
 Audit Committee,
 Management Committee.

2.5.1 Executive Committee

This committee is consists of one Chairman, twelve directors, one CEO & MD and one
company secretary. The functional and responsibilities of this committee is to establish and
periodically review the bank’s overall credit and lending policies and procedures, development and
implement uniform and minimum acceptable credit standards for the bank, new credit proposal
assessment and approval etc.

2.5.2 Audit Committee

The main objective of this committee is to assist Board of Directors with regard to the audit
of financial reports, management reports by the external auditors, internal controls and internal
audits.

2.5.3 Management Committee

The main objective of this committee is to ensure business operations are in line with the
Bank’s policies, strategies and objectives, the bank has set up.

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 2.6 MANAGEMENT ORGANOGRAM OF JANATA BANK LIMITED

Chairman

Managing Director

Deputy Managing Director

General Manager

Deputy General Manager

Assistant General Manager

Manager

Senior Executive Officer

Executive Officer

Assistant Executive Officer

Support Staff
Figure 2: Management Organogram of Janata Bank Ltd.

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 2.7 MANAGEMENT ORGANOGRAM OF JBL LOCAL OFFICE, DILKUSHA C/A, DHAKA

General
Manager

Deputy
General
Manager

Assistant
General
Manager

Manager

Senior Executive Senior Executive

officer officer

Executive officer Executive officer Executive officer

Assistant Assistant Assistant Assistant

Executive officer Executive officer Executive officer Executive officer

Support Staff Support Staff Support Staff Support Staff Support Staff

Figure 3: Management Organogram of JBL, Local Office, Dilkusha C/A, Dhaka

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 2.8 PURPOSES OF JANATA BANK LIMITED AS A COMMERCIAL BANK
 Making profit
The first and foremost purpose of Janata Bank is to attain profit generally through collecting
deposits and lending this money to earn interest income or by making investment.

 Providing service and relation development

This bank increases the volume of financial transaction through the development of relation
with the clients.

 Collecting more deposit and money lending

As a commercial bank Janata Bank aims to collect as much as possible money from the
clients through different type of deposit.

 Increasing flow of money

Janata Bank in replace of currency uses different medium as cheque, bank draft, and pay
order, latter of credit when doing transaction. Thus it increases the actual flow of currency.

Janata Bank Limited also serves the following social purposes to their clients –

 Creating savings
Janata Bank Limited offers different kinds of Savings Account and thus simulates the
people to make savings.

 Formation of capital
The accumulation of savings enables Janata Bank to form capital.

 Ensuring safety
This bank has another purpose to ensure the safety of its client’s depository money.

 Investment and Industrialization

Janata Bank through short-term, intermediate-term and long-term investment simulates the
investment and industrialization in the country.

 Employment facility
Besides earning profit Janata Bank offers employment facility to the community people and
thus helps increase income.

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 2.9 FUCNTIONS OF JANATA BANK LIMITED AS A COMMERCIAL BANK

Collecting deposit,lending loan,

General Honoring cheque, Creation of
Function medium of exchange, discount-
ing bill, money transfer etc.

Creation of savings & formation

Development of capital, helps export & import
Function of Janata Function business, investment in develop-
ment sector, HR development etc
Bank Limited

Representative Receive & payment as the

representative of clients, selling
Function of shares & securities etc.

Service Transactions of foreign

currencies, information sharing,
Function consulting & others service
functions

2.10 SERVICE OFFERINGS/ PRODUCTS OF JANATA BANK LTD.

Janata Bank Ltd provides all commercial banking services to its clients focusing on the national
interest and sustainable growth. The major fields of its activities may be represented as below:

Deposit Products

 Current Deposit Account,

 Short Term Deposit,
 Savings Bank Deposit Account,
 Fixed Deposit,
 Foreign Currency Deposit,
 Monthly Savings Scheme,
 Janata Bank Double Deposit Scheme,
 Monthly Profit Based Savings Scheme,
 Janata Bank Savings Pension Scheme,
 Janata Bank Deposit Scheme,
 Education Deposit Scheme,

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  Medical Deposit Scheme,
 Janata Bank Monthly Savings Scheme,
 Janata Bank Special Deposit Scheme,
 Janata Bank School Banking Savings Karjakram.

Credits Products
 Term Loan,
 Trade Finance,
 Import Finance,
 Export Finance,
 SME Financing,
 Micro Credit,
 Agriculture & Rural Credit,
 Consumer Credit,
 Home loan,
 Loan for Merchant Banking.

E-Service
 Speedy Remittance Western Union Money Transfer,
 Automated Clearing,
 Internet Banking,
 ATM Banking.

ATM Operation
 Debit Card Operation,
 Salary Card.

Payments Made on Behalf of Government

 Payment of non- Govt. teacher’s salaries,
 Providing girl Students scholarship/stipend & Primary Student Stipend,
 Provides army pension,
 Payment of widows, divorcees and destitute women allowances,
 Old-age Allowances,
 Food procurement Bills
As per decision of the govt. 46 (Forty Six) branches of JBL (40 branches in Dhaka city, 1(one)
branch in Narayangonj city and 5(five) branches in Chittagong city) are involved to receive all
utility bills in a same station from January'04.

2.11 NUMBER OF BRANCHES OF JANATA BANK LTD.

Branches in Bangladesh 875

Rural Branches 490
Urban Branches 385
Overseas Branches 4
Total Branches 879
Table 2: Number of JBL Branches

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 SL Name No.
1 Local Office 1
2 Corporate -1 Branches 12
3 Corporate -2 Branches 41
4 Overseas Branches 4
5 Grade - 1 Branches 204
6 Grade - 2 Branches 209
7 Grade - 3 Branches 294
8 Grade - 4 Branches 107
Total 879
Source: Website of Janata Bank Ltd.

Table 3: Grade or Category Wise JBL

Branches

Figure 4: Branches of JBL in Bangladesh

2.12 FIVE YEARS COMPARATIVE FINANCIAL & OPERATIONAL PERFORMANCE

(TK In millions)
Particulars 2006 2007 2008 2009 2010
Authorized Capital 8,000 8,000 8,000 20,000 20,000
Paid up Capital 2,595 2,595 2,595 5,000 5,000
Reserve Fund 1,727 3,224 4,183 8,207 10,224
Deposits 182,947 198,636 221,336 246,175 286,567
Advance 138493 121200 144678 166359 225732
Investment 24,785 55,862 57,824 72,533 57,514
Revenue 16,272 18,522 20,922 24,074 30,614
Cost 12,059 13,559 13,919 15,496 18,577
Operating Profit 4,213 4,963 7,003 8,578 12,037
Provisions for Loan/Assets 10707 11698 9051 8748 8975
Net Profit - 1,681 3,145 2,982 4,907
Export 70,897 71,855 85,418 88,653 118,515
Import 128,809 84,065 129,413 118,525 183,744
Total Number of Employees 14,772 13,860 13,379 13,122 12,826
No. of foreign Correspondent 1,198 1,198 1,202 1,208 1,215
No. of Branches (including 4
848 848 849 851 861
foreign branches)
Source: Janata Bank Ltd, Annual Report-2010

Table 4: Five Years Comparative Financial and Operational Performance

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 2.13 CORPORATE SOCIAL RESPONSIBILITIES (CSR) OF JBL

Corporate social responsibility is a form of corporate self-regulation integrated into a business

model. The goal of CSR is to embrace responsibility for the company's actions and encourage a
positive impact through its activities on the environment, consumers, employees, communities,
stakeholders and all other members of the public sphere who may also be considered as
stakeholders.

As a state-owned bank, its goal is not only make profit, but also to serve people through our
Corporate Social Responsibilities (CSR) .The Bank has adequate scope to provide financial
assistance to the distressed and deprived people individually and through various organization –
towards human development. The Bank pursuing CSR activities with funds generated from profit.
The Bank disbursed Tk.61.29 million in 2010 as against allocated 70 million. CSR aims at
maximizing realization of human potentials and minimizing human deprivation.

CSR activities of Janata Bank Limited of 2010 are given below

Sales
Poverty reduction and
rehabilitation
7%
7% Health
25%
Knowledge building
16%
Disaster mitigation

25% Education
20%

Culture

Source: Janata Bank Ltd, Annual Report-2010

Figure 5: CSR Activities of Janata Bank Ltd.

2.14 REWARD AND RECOGNITION OF JANATA BANK LTD.

The bank has received “The banker Award” in 2003 & 2005, “Asian Banking Award” in
2004 & 2005, “The Best Bank Award” in 2006, 2007, 2008 & 2009 and in 2010 “Productive
Location Champion Award-2010” from Western Union for remarkable growth, extraordinary
performance, and maintaining international standard in the quality of services.

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Besides these very recently the bank has honored two national and international awards.
These are given below:

International Award-Asian Banking and Finance Wholesale Banking Awards 2012

Janata Bank Limited has been awarded with prestigious “Asian Banking and Finance Wholesale
Banking Awards 2012” by Singapore based renowned Asian Banking and Finance Magazine
(ABF) for the Bank's commendable performance in Trade Finance and Project Finance in 2011 in
Bangladesh. This is for the 4th time JBL received ABF hosted awards with the three of 2004, 2005
and 2009.

International Award-The Bank of the year-2011 in Bangladesh

Janata Bank Limited has been awarded “The Bank of the Year-2011in Bangladesh” by the London
based Financial Magazine the Banker of the Financial Times Group. This is for the sixth time the
bank has been awarded “The Bank of the Year”. Janata Bank Limited achieved remarkable
progress in the year 2010.

ICMAB Best Corporate Award-2011

Janata Bank Limited has been awarded 'ICMAB Best Corporate 1Award - 2011' by the Institute of
Cost and Management Accountants of Bangladesh. The Bank secured the first position among the
state owned Commercial Banks in Bangladesh.

2.15 FUTURE PLANS OF THE ORGANIZATION

Involvement in export activity largely by maintaining good communication with diverse

parties,
More facilities will be provided to the exporters on the basis of export priority and facilitate
them on the basis of performance,
Sufficient workforce has involved increasing export and import business, providing special
services and initiated different training program of officers has been started,
To take the competitive position charge, decrease commission and other facilities will
continue to complete the journey,
At least 238 branches will be computerized in FY2011,
Clearing house branches of Sylhet and Chittagong divisions have been connected With
BACH program at Dhaka. Clearing house of other divisions will be connected soon with
BACH in FY2011.

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 Chapter 3
Foreign Exchange Division

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 3.1 PREFACE OF FOREIGN EXCHANGE

Foreign exchange is an important and integral part of commercial banking. It is one of

the most important businesses carried out by the commercial bank. It is very much lucrative and
remunerative operation for the bank, if it is conducted systematically and methodically as per
norms. In order to conduct Foreign Exchange Activities systematically and methodically the
Foreign Exchange Regulation (FER) Act, 1947 enacted on the 11 March 1947 in the British- India
provides the legal basis for regulating receipts and payments and dealings in the foreign exchange
and securities. Basic regulations for conducting Foreign Exchange Operation are issued by the
Government as well as by the Bangladesh Bank in the form of Public notice, circulars, SROs etc.

3.2 MEANING OF FOREIGN EXCHANGE

Foreign Exchange means the exchange of currency in terms of goods includes all
deposits, credits, balance payable, drafts, T.Cs, bill of exchange, L/C etc. from one country to
another. Foreign exchange also refers to the global market where currencies are traded virtually
around-the-clock. The term foreign exchange is usually abbreviated as "forex" and occasionally as
"FX." Foreign exchange transactions encompass everything from the conversion of currencies by a
traveler at an airport kiosk to billion-dollar payments made by corporate giants and governments
for goods and services purchased overseas. Increasing globalization has led to a massive increase in
the number of foreign exchange transactions in recent decades. The global foreign exchange market
is by far the largest financial market, with average daily volumes in the trillions of dollars.

This is the most well-known and well-organized business uniform in world

business. All foreign exchange transactions in Bangladesh are subject to exchange control
regulation of Bangladesh Bank. Among all departments Foreign Exchange departments of Janata
Bank Ltd is one of the most important. The Bank is providing excellent services to the clientele in
foreign exchange and foreign trade operations through the above foreign correspondents.

3.3 IMPORTANCE OF FOREIGN EXCHANGE

No country is self-sufficient in this world. Everyone is, more or less dependent

on other, for goods or services. Say, Bangladesh has cheap manpower whereas Saudi Arabia has
cheap petroleum. So, Bangladesh is dependent on Saudi Arabia for petroleum and Saudi Arabia is
dependent on Bangladesh for cheap manpower. People of one country are going to abroad for
medical service, education etc. thus there is an exchange of foreign currency.

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There are also some necessities of foreign exchange which I showed in below-
 Foreign exchange reserves shows the financial strength and the stage of development of the
economy,
 The acceptance of currency at a predetermined rate makes the international trade easy,
 The foreign exchange ratio shows direct relationship between the prices of the commodities
in the national and international market,
 The foreign exchange balances of a country directly affect the rates of exchange. A hard
currency nation has stability in foreign exchange rate,
 The rising foreign exchange balances of a nation increases its credit worthless in the
international capital market.

3.4 ACTIVITIES OF FOREIGN EXCHANGE DIVISION

Activities of Foreign Exchange Division can be broadly divided into three parts. They are –

1. Export,
2. Import, Export
3. Remittance.

Activities of Foreign Import

Exchange Division

Remittance

Figure 6: Activities of Foreign Exchange Division

3.5 REGULATION FOR FOREIGN EXCHANGE DIVISION

Foreign Exchange transactions are being controlled by the following rules and regulations:
3.5.1 Local Regulation
Foreign Exchange act 1047,
Bangladesh bank issues Foreign Exchange Circular from time to time to control the export,
import and remittance operation,

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 Ministry of commerce issues export and import policies giving basic formalities for import
and export,
Sometimes CCI issues public notices for any kind of change in Foreign Exchange
transaction,
Bangladesh bank publishes two volumes in 1996. These comprise the complete instructions
to be followed by the authorized dealers in transactions related to Foreign Exchange.

3.5.2 International Regulation

International chambers of Commerce (ICC) is a worldwide non-governmental

organization of the thousands of companies. It was founded in 1919. ICC has been issued
some publication like UCPDC, URC and URR, UCP-600 etc, which are being followed by
all the member countries. There is also International Court of Arbitration to solve the
international business disputes,
Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the
issuance and use of letters of credit. The UCP is utilized by bankers and commercial parties
in more than 175 countries in trade finance. Some 11-15% of international trade utilizes
letters of credit, totaling over a trillion dollars (US) each year. The ICC has developed and
moulded the UCP by regular revisions, the current version being the UCP600. The result is
the most successful international attempt at unifying rules ever, as the UCP has substantially
universal effect. The latest revision was approved by the Banking Commission of the ICC at
its meeting in Paris on 25 October 2006. This latest version, called the UCP600, formally
commenced on 1 July 2007,
World Trade Organization (WTO) is another international trade organization established
in 1995. General Agreement on Tariff and Trade (GATT) was established in 1948, after
completion 8th round the organization has been abolished and replaced by WTO. This
organization has role in international trade, through its 124 member countries.

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 3.6 Society for Worldwide Interbank Financial Telecommunication (SWIFT)

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides

a network that enables financial institutions worldwide to send and receive information about
financial transactions in a secure, standardized and reliable environment. SWIFT also markets
software and services to financial institutions, much of it for use on the SWIFTNet Network, and
ISO 9362 bank identifier codes (BICs) are popularly known as "SWIFT codes".

The majority of international interbank messages use the SWIFT network. As of September
2010, SWIFT linked more than 9,000 financial institutions in 209 countries and territories, who
were exchanging an average of over 15 million messages per day (compared to an average of 2.4
million daily messages in 1995). SWIFT transports financial messages in a highly secure way but
does not hold accounts for its members and does not perform any form of clearing or settlement.

SWIFT does not facilitate funds transfer; rather, it sends payment orders, which must be
settled by correspondent accounts that the institutions have with each other. Each financial
institution, to exchange banking transactions, must have a banking relationship by either being a
bank or affiliating itself with one (or more) so as to enjoy those particular business features.

SWIFT is a cooperative society under Belgian law and it is owned by its member financial
institutions. It has offices around the world. SWIFT headquarters, designed by Ricardo Bofill Taller
de Arquitectura are in La Hulpe, Belgium, near Brussels.

SWIFT earn trust worthiness to financial institution because of their customers are
multilateral, customers need a trusted third party like SWIFT to provide secure, reliable and proven
messaging solutions. SWIFT’s offering is more compelling in terms of cost and risk than
alternatives, thanks to reusability of participants’ existing SWIFT infrastructures, value-added
services such as FIN Copy, and standard support services. SWIFT solutions for high-value
payment clearing systems support the messaging layer for payment transaction processing,
cash management, business administration functions, reporting and generic communication.

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3.6.1 The structure of SWIFT

Figure 7: Structure of SWIFT

3.6.2 The functions of SWIFT

Solutions for –
 For payments,
 Cash Reporting,
 Supporting your real-time account information needs,
 Payments and cash management.

Economic changes in the payments landscape have forced the banking community to find new
ways to reduce their operational costs, mitigate their liquidity risk and increase the revenue and
efficiency of their core payment products. Under the pressure of regulators, the cash management
service offering becomes more transparent to meet new customer expectations. While conforming
to regulation is a must, service quality becomes a key differentiator.

SWIFT has developed offerings in payments and cash management to help the banking community
meet these urgent challenges:

Enhance customer service

Automate exceptions and investigations in order to reduce enquiry turn-around time and to provide
transparency on enquiry status to your customers, provide a compelling value proposition for
corporate or person-to-person retail payments for immigrants (workers’ remittances) – including
mobile payments.

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Improve liquidity and risk management
Receive end-of-day as well as intra-day cash reports – information vital to get visibility on cash
positions across your organization and to improve liquidity management. In addition, SWIFT is
considering extending its value proposition to include liquidity risk management tools.

Increase operational efficiency and save costs

SWIFT’s single window allows you to rationalize your connectivity channels with:

Correspondent banks for clearing and settlement of domestic or foreign currency payments
using SWIFT’s payments clearing messaging services,
High value payments clearing and/or settlement systems operating on a real-time gross
settlement basis using SWIFT’s secure and reliable FIN domestic services for high value
payment market infrastructures,
Retail payments clearing systems using SWIFT’s cost efficient services for retail payments
market infrastructures: the services help to clear “batches” of payments prior to settlement
at discrete intervals, with or without netting.

3.7 HOW FOREIGN EXCHANGE IS BEING CONTROLLED

Foreign Exchange is being controlled by the following ways-

To stabilize the rate of exchange,

To protect domestic industries,
For proper implementation of plans,
To increase the bargaining strength,
To check over invoicing & Under invoicing,
To check the Blank marketing and smuggling,
For regulating the international movements of goods.

3.8 FOREIGN EXCHANGE PERFORMANCE OF JBL

1. Import: The Banks foreign exchange business relating to import was Tk.118525 million in
2009 and Tk. 183744 million in2010.
2. Export: The Banks foreign exchange business relating to export was Tk.88653 million in
2009 and Tk.118515 in 2010.
3. Foreign Remittance: The achievement JBL in attracting foreign remittance was Tk.56190
million in 2009 and Tk.52640 in 2010.

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 3.8.1 Foreign Exchange Performance of JBL from 2009-2010

(Figure in million TK)

Year
Particulars
2009 2010
Import 118525 183744
Export 88653 118515
Remittance 56190 52640

Foreign Exchange Performance of JBL from 2009-2010

200000

180000

160000

140000
Figure in million TK

120000

100000

80000

60000

40000

20000

0
2009 2010
Import 118525 183744
Export 88653 118515
Remittance 56190 52640

Source: Janata Bank Ltd, Annual Report-2010

Graph-1: Foreign Exchange Performance of JBL from 2009-2010

Explanation: The above graph shows the foreign exchange earnings regarding to import,
export and foreign remittance. In 2010 the import earnings was TK. 183744 million with
growth rate of 55.02%, export earnings was TK.118515 million with growth rate of 33.68%
and the foreign remittance earnings was TK. 52640 million with growth rate of (-)6.32%
compare to 2009.

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 3.9 RISK MANAGEMENT OF FOREIGN EXCHANGE ACTIVITIES

Foreign exchange risk is a risk that a bank may suffer losses as a result of adverse
movement in either spot or forward rate or combination of the two, in individual foreign currency.
This risk is associated with the transaction involved in import, export, remittance and foreign
currency in hand and bank.

To mitigate the risk involved in foreign exchange business, the foreign exchange dealing
operation in Janata Bank Limited is performed through Dealing Room(Front Office), Mid Office
and Back Office. The dealers manage market risk, avoid adverse exchange fluctuation, look for
better investment of funds, maintain sound liquidity and protect the Bank from any unforeseen loss
in the situation of any market volatility. The Mid Office and Back Office are assigned the
responsibility of related support functions. Dealing room is restricted for all excepting dealers and
authorized executives.

The dealing room is equipped with modern facilities i.e. Reuters’s information, SWIFT,
receptors monitor, telephone, voice recorder etc. Moreover stop/ loss limit, trading limit, overnight
limit is given by the concerned authorities. The daily blotter and mark to market revaluation report
is placed to management for their review.

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 Chapter 4
Activities of Letter of Credit (L/C)

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 4.1 LETTER OF CREDIT (L/C)

The English name “letter of credit” derives from the French word “accréditation” a
power to do something, which in turn derives from the Latin “accreditivus” meaning trust. This
applies to any defense relating to the underlying contract of sale. This is as long as the seller
performs their duties to an extent that meets the requirements contained in the letter of credit.

A letter of credit is a document that a financial institution or similar party issues to a seller
of goods or services which provides that the issuer will pay the seller for goods or services the
seller delivers to a third-party buyer. The issuer then seeks reimbursement from the buyer or from
the buyer's bank. The document serves essentially as a guarantee to the seller that it will be paid by
the issuer of the letter of credit regardless of whether the buyer ultimately fails to pay. In this way,
the risk that the buyer will fail to pay is transferred from the seller to the letter of credit's issuer.

L/C is called documentary letter of Credit because the undertaking of the issuing bank is
subject to presentation of some specified documents. The Uniform Customs & Practices for
Documentary Credit (UCPDC) published by International Chamber of Commerce (1993) Revision
Publication No. 500 defines Documentary Credit:

“Any arrangement however named or described whereby banks (the issuing bank) acting at
the request and on the instructions of a customer (the Applicant) or on its own behalf:

1. Is to make a payment or to the order of a third party (the beneficiary) or is to accept and pay bills
of exchange (Drafts) drawn by the beneficiary, or

2. Authorizes another bank to effect such payment or to accept and pay such bills of exchange
(Drafts)

3. Authorizes another bank to negotiate against stipulated documents provide that terms and
conditions are complied with.”

4.2 TYPES OF LETTER OF CREDIT (L/C)

Letter of Credit basically divided into two types –

1. Revocable L/C
A letter of credit that may be amended or canceled any time by the buyer (the account party)
without the approval of the seller (the beneficiary). Since it does not provide any protection to the
seller, it is rarely used. Some banks even refuse to issue such L/Cs because of the fear of getting
involved in the possible litigation between the buyer and the seller.

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2. Irrevocable L/C
Firm commitment by an issuing bank to pay an accepting bank a specified sum in a
specified currency, provided the conditions included in the L/C document are met within a
specified timeframe. This L/C cannot be canceled (or its terms amended) without the seller's
(beneficiary's) prior written approval, and comes usually as a confirmed irrevocable letter of credit.

Some other types of L/C are –

Confirmed L/C: A letter of credit that adds the endorsement of a seller's bank (the accepting-bank)
to that of the buyer's bank (the issuing bank). It provides the highest level of protection to the seller
because not only the L/C cannot be canceled (or its terms changed) unilaterally by the buyer (the
account party), but also both banks involved in the transaction guaranty its payment on its due
(maturity) date.

Transferable L/C: A letter of credit that permits the beneficiary of the letter to make some or all of
the credit available to another party, thereby creating a secondary beneficiary. The party that
initially accepts the transferable letter of credit from the bank is referred to as the first beneficiary.
The bank issuing the letter of credit must approve the transfer.

Revolving L/C: A single type of L/C that covers multiple-shipments over a long period. Instead of
arranging a new L/C for each separate shipment, the buyer establishes a L/C that revolves either in
value (a fixed amount is available which is replenished when exhausted) or in time (an amount is
available in fixed installments over a period such as week, month, or year).
Restricted L/C: A specific type of letter of credit where negotiations are restricted to the bank
chosen by the bank issuing credit.
Red Clause L/C: A specific type of letter of credit in which a buyer extends an unsecured loan to a
seller. Red Clause Letters of Credit permit documentary credit beneficiaries to receive funds for
any merchandise outlined in the letter of credit. These letters are commonly used by beneficiaries
who act as purchasing agents for buyers in another country.

Green Clause L/C: A condition in a guarantee document that allows a purchaser to receive
advances ahead of shipment against collateral property represented by warehouse receipts. Use of a
green clause letter of credit is often used in the agricultural business where a company can fund the
harvest of a new crop by pledging available stock as collateral.

Back-to-Back L/C: Two letters of credit (LCs) used together to help a seller finance the purchase
of equipment or services from a subcontractor. With the original LC from the buyer's bank in place,
the seller goes to his own bank and has a second LC issued, with the subcontractor as beneficiary.
The sub contractor is thus ensured of payment upon fulfilling the terms of the contract.

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 4.3 LETTER OF CREDIT TRANSACTION

Figure 8: Letter of Credit Transaction Process

4.4 PARTIES INVOLVED IN THE L/C

1. Importer/Applicant
Applicant who is referred to as account party is normally a buyer or customer of the goods,
who has to make payment to beneficiary. Simply the person applies for L/C is called importer.

2. Exporter (Beneficiary)
Beneficiary of the L/C is the party in whose favor the letter of credit is issued. Usually they
are the seller or exporter.

3. Issuing Bank
It is the bank which opens/issues a L/C on behalf of the Importer.

4. Confirming Bank
It is the bank, which adds its confirmation to the credit and it is done at the request of
issuing bank. Confirming bank may or may not be advising bank.

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5. Advising /Notifying Bank
It is the bank through which the L/C is advised to the exporters. This bank is actually
situated in exporter's country. It may also assume the role of confirming and or negotiating bank
depending upon the condition of the credit.

6. Negotiating Bank
It is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising
bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming
bank.

7. Accepting Bank
It is the bank on which the bill will be drawn (as per condition of the credit). Usually it is
the issuing bank.

8. Reimbursing Bank
It is the bank, which would reimburse the negotiating bank after getting payment
instructions from issuing bank.

4.5 BASIC PROCEDURES OF OPENING A L/C

In global business environment buyers and sellers are often unknown to each other. So
seller generally demands guarantee of payment for his exported goods. In this situation bank has an
important role. Bank gives export guarantee that it will pay for the goods on behalf of the buyer.
This guarantee is called “Letter of Credit” or L/C. Thus by letter of credit the contract between
importer and exporter find a legal sphere.

The letter of credit process has been standardized by a set of rules published by the
International Chamber of Commerce (ICC). These rules are called the Uniform Customers and
Practice for Documentary Credits (UCPDC) and are contained in ICC publication No.500. The
following is the basic set of steps used in L/C transaction. Specific L/C transaction follows
somewhat different procedures.

After the buyer and seller agree on the terms of sale, the buyer arranges for his bank to open
a L/C in favor of the seller,
The buyer issuing bank prepares the L/C, including all of the buyer’s instructions to the
seller concerning shipment and required documentation,
The buyer’s bank sends the L/C to seller’s advising bank,
The seller’s advising bank forwards the L/C to the seller,

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 The seller carefully reviews all conditions stipulated in the L/C. If the seller can not comply
with any of the provisions, it will asked the buyer to amend the L/C,
After final terms are agreed upon, the seller ships the goods to the appropriate port or
location,
After shipping the goods seller obtains the required documents,
The seller presents documents to its advising bank along with a draft for payment,
The seller’s advising bank reviews the documents. If they are in order, it will forward them
to the buyers issuing bank. If a confirmed L/C, the advising bank will pay the seller,
Once the buyer’s issuing bank receives and reviews the documents, if either pays if there
are no discrepancies or forwards the documents to the buyer if there are discrepancies
for its review and approval.

4.6 L/C APPLICATION FORM (L/CAF)

L/C Application Form is a sort of an agreement between customer and bank on the basis of
which letter of credit is opened. Bank provides a printed form for opening of L/C to the importer. A
special adhesive stamp of value Tk.200 is affixed on the form in accordance with Stamp Act
currently in force. While opening, the stamps are cancelled. Usually the importer expresses his
decision to open the L/C quoting the amount of margin in percentage. Usually the importer gives
the following information –

1. Full name and address of the importer,

2. Full name and address of the beneficiary,
3. Draft amount,
4. Availability of the credit by sight payment/ acceptance/ negotiation/ deferred payment,
5. Time bar within which the documents should be presented,
6. Sales type (CIF/FOB/C&F),
7. Brief specification of commodities, price, quantity, indent no. etc.,
8. Country of origin,
9. Bangladesh Bank registration no.,
10. Import License/LCAF no.,
11. IRC no.,
12. Account no.,
13. Documents no.,
14. Insurance Cover Note/Policy no., date, amount,
15. Name and address of Insurance Company,

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 16. Whether the partial shipment is allowed or not,
17. Whether the transshipment is allowed or not,
18. Last date of shipment,
19. Last date of negotiation,
20. Other terms and conditions (if any),
21. Whether the confirmation of the credit is requested by the beneficiary or not,
22. The L/C application must be completed/filled in properly and signed by the authorized
person of the importer before it is submitted to the issuing bank.

4.7 LETTER OF CREDIT SETTLEMENT

Settlement means fulfilling the commitment of issuing bank in regard to effecting payment
subject to satisfying the credit terms. Settlement may be done under 3 (Three) separate
arrangements as stipulated in the Credit.

a) Settlement by Payment
Here the seller presents the documents to the nominated bank and bank scrutiny the
documents. If satisfies, the nominated bank makes payments to the beneficiary and incase this bank
is other than the issuing bank, then sends the documents to issuing bank and claim reimbursement
as per arrangement.

b) Settlement by Acceptance
Under this arrangement the seller submits the documents evidencing the shipment to the
accepting bank (nominated by the issuing bank for acceptance) accompanied by a draft and bank at
the specified tenor.
After being satisfied with the documents, the bank accepts the documents and the drafts and
if it is a bank other than issuing bank, then sends the documents to the issuing bank stating that it
has accepted the draft and at maturity the reimbursement will be obtained in the pre-agreed manner.

c) Settlement by Negotiation
This settlement proceeds with the submission of the documents by the seller to negotiating
bank. In a freely negotiable credit any bank can negotiate documents and if negotiation restricted
by the issuing bank, only nominated bank can negotiate the documents. After scrutinizing that the
documents meet the credit requirements, the bank can negotiate the documents and give the value
to beneficiary. The negotiation bank then sends the documents to the issuing bank. As, usual the
repayment will be obtained in the pre-agreed manner.

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 Chapter 5
Import Section

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 5.1 MEANING OF IMPORT

Simply import means purchase of goods or services from abroad. Again an import is any
goods or services brought into a country from another country in a fair and acceptable fashion,
typically for use in trade. It is a good that is brought in from another country for sale. Import goods
or services are provided to domestic consumers by foreign producers. An import in the receiving
country is an export to the sending country. Normally consumers, firms and Government
organizations import foreign goods or services to meet their various necessities. Main import items
are food item, edible oil, fertilizer, petroleum, machineries, chemicals, raw materials of industry,
cement clinkers etc.
Imports, along with exports, form the basis of international trade. Import of goods normally
requires involvement of the customs authorities in both the country of import and the country of
export and are often subject to import quotas, tariffs and trade agreements. When the "imports" are
the set of goods and services imported, "Imports" also means the economic value of all goods and
services that are imported. So, in brief, we can say that import is the flow of goods and services
purchased by local agent staying in the country from foreign agent staying abroad. The importers
are asked by their exporters to open Letter of Credits (L\C), so that their payment against goods is
more insured.

5.2 IMPORT DEPARTMENT & IMPORT POLICY

Bangladesh is one of the developing countries in the world. So, like other developing
countries Bangladesh Imports largely than it Exports. Imports of goods into the Bangladesh is
regulated by the Ministry of Commerce in the terms of the Import- Export Act, 2009-2012, various
Import policy orders and also public notices issued from time to time by the office of the Chief
Controller of Import and Export (CCI&E).

JBL’s foreign exchange business relating to import was Tk.183744 million at the ends of
December 2010.

Different import policy

 Import facility up to $2000 for actual user (for self-consumption not for sale) without
permission,
 Above $5000 approval of Chief Controller of Import and Export (CCI&E) is needed.

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Import facility on the basis of direct payment on foreign countries
 Import under L\C, L\C must be irrevocable. Import above $5000-L\C is required but in the
case of perishable items like food up to $7500 transported by road L\C is not required.
 Some other cases in which do not require L\C, are -

 Books, Magazines, Publications,

 Import up to $5000 in case of payment from Bangladesh,
 Import under Foreign Aid,
 Import of "International Chemical Conference" by the Pharmaceutical
Companies with prior approval Drug Administration,
 Government sector bodies can import without any license, permit &b IRC
(Import Registration Certificate).

5.3 IMPORT PROCEDURES

Authorized Dealer, banks are always committed to facilitate import of different goods into
Bangladesh from the foreign countries. Import Section, which is under Foreign Exchange
Department of a bank, is assigned to perform this job. And to serve its parties demand to import
goods, it always maintains required formalities that are collectively termed as “Import Procedure”.

1. At first, the importer must obtain Import Registration Certificate (IRC) from the
CCI&E submitting the following papers:

Up to date Trade License,

National and Asset Certificate,
Tax Identification Number (TIN),
In case of company, Memorandum & Articles of Association and Certificate of
Incorporation,
Bank Solvency Certificate etc.,
Required amount of registration fee.
2. Then the importer has to contact with the seller outside the country to obtain the Proforma
Invoice. Usually an indenter, local agent of the seller or foreign agent of the buyer makes
this communication. Beside these other sources are:

Trade fair,
Chamber of Commerce,
Foreign Missions in Bangladesh,
Journals etc.

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 3. When the importer accepts the Proforma Invoice, he/she makes a purchase contract with the
exporter detailing the terms and conditions of the import.
4. After making the purchase contract, importer settles the means of payment with the seller.
An import procedure differs with different means of payment. The possible means are Cash
in Advance, Open Account, Collection Method and Documentary Letter of Credit. In most
cases, the Documentary Letter of Credit in our country makes import payment. Purchase
Contract contains which payment procedure has to be applied.

5.4 IMPORT MECHANISM

To Import, a person should be competent to be importer. According to Import and Export

Control Act-2009-2012, the office of Chief Controller of the Import and Export (CCI&E), provides
the registration (IRC) to the importer. After obtaining thus person's has to secure a letter of Credit
authorization from Bangladesh bank. And then a person becomes a qualified importer. He is the
person who requires or instructs the opening bank to open a L\C. He is also called Opener or
Applicant of the credit.

5.5 TYPES OF IMPORT

Mainly there are two types of import:

1. Commercial Import,
2. Industrial import.

1. Commercial Import
Importer does commercial import only for trading purpose. These products are finished
goods. Such as rice, wheat, soybean oil etc.

2. Industrial import
Importer does industrial import for industrial use only. These products are raw materials and
capital machinery. Such as; raw cotton, Crude oil etc.

5.6 GOODS ARE NOT IMPORTABLE

The following types of goods are not importable –

Books, Newspaper, periodicals, documents and other papers, posters photographs, films,
gramophone records, audio and video cassette tapes etc containing matters likely to
outrange the religious feeling and beliefs of any class of the citizen of Bangladesh.

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 Maps, chart and geographical globes which indicate the territory of Bangladesh but do not
do so in accordance with the maps published by the department of survey, Government of
the people’s republic of Bangladesh.
Goods bearing any obscene picture, writing inscription or visible representation,
Horror comics, obscene and subversive literature including such pamphlets, posters,
newspapers, periodicals, photographs, films, gramophone records and audio and video
cassette tapes etc.
Unless otherwise specified in this order, old, second-hand and reconditioned goods, factory
rejects and goods of job-lot/stock-lot or secondary/sub-standard quality.
Reconditioned office equipment, photocopier, type-writer machine, telex, phone, fax,
Unless or otherwise specified in this order, all kinds of waste,
Goods (including their containers) bearing any words or inscriptions of a religious
connotation the use or disposal of which may injure the religious feelings and beliefs of any
class of the citizens of Bangladesh,
Import of live Swine and any item prepared from swine is banned.

5.7 IMPORT FINANCING

There is various method of Import Financing, which is regulated by legal framework and import
policy. These are –

1. Non-Funded Financing
2. Post import (funded) Financing

1. Non-Funded Financing
Letter of Credit constitutes the most important Non-Funded Financing in import trade.
There are a very common form of import financing because they provide a high degree of
protection for both buyer and seller.

2. Post import (funded) Financing

There are major three forms of funded post import financing offered by the banks.
These are given below-
a) Payment Against Documents (PAD)
b) Loan Against Imported Merchandise (LIM)
c) Loan Against Trust Receipt (LTR)

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a) Payment against Documents (PAD)
Payment made by the bank against lodgment of shipping documents of goods imported
through letter of credit falls under this types. When importer bank finds documents in order and if
there is any discrepancies have which is acceptable by the importer, import bill have to give to
foreign bank or exporter bank.

b) Loan against Imported Merchandise (LIM)

This is funded credit facility allowed for retirement of shipping documents and release of
goods imported through L/C taking effect control over the goods by pledge in god owns under
bank’s lock and key. This is a temporary advance connected with import which is known as post-
import finance and falls under the category “Commercial Lending”.

c) Loan against Trust Receipt (LTR)

JBL keeps security (such as –land, Building etc) against LTR. Party can replay LTR amount
partial. JBL maintains a different ledger account for LTR in which several information have such
as date, particular, debit and credit amount, initial, product name, interest amount, loan A/C no,
interest rate, mode of payment, expiry date and margin etc. LTR interest rate varies party to party.
LTR validity date may be 30 days/ 60 days/ 120 days, which depends on sanction of NBL head
office.
LTR interest rate = Days × Balance × Rate of interest / 360 days.

5.8 DOCUMENTS RECEIPT AND SCRUTINY

After opening the Letter of Credit the next step would be to await shipment followed by negotiation
of documents by a bank abroad.
However, generally the following documents are asked to send:

Bill of lading or Airway Bill or other evidence of shipment (e.g. Railway Receipt, Truck
Receipt, Barge Receipt)
Certificate of Origin
Commercial Invoice
Draft or bill of exchange
Inspection of Survey Certificate
Marine Insurance Policy
Packing List
Quality Control Certificate

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 5.9 IMPORT PERFORMANCE OF JBL FROM 2008-2010

Import performance of JBL

Achievement from Import
Year 2008 2009 2010
Import 129413 118525 183744

Import Performance of JBL

200000
180000
FIGURE IN MILLION TK

160000
140000
120000
100000
80000
60000
40000
20000
0
2008 2009 2010
Series 1 129413 118525 183744

Source: Janata Bank Ltd, Annual Report-2010

Graph 2: Import performance of JBL

Explanation: The graph shows that the import performance of JBL from 2008-2010. In this section
TK.10888 million decreased from 2008-2009 with a negative growth rate of -11% and
TK.65219 million increased from 2009-2010 with a growth rate of 55.02%.

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 Chapter 6
Export Section

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 6.1 MEANING OF EXPORT

The term export is derived from the conceptual meaning as to ship the goods and services
out of the port of a country. The seller of such goods and services is referred to as an "exporter"
who is based in the country of export whereas the overseas based buyer is referred to as an
"importer". In International Trade, "exports" refers to selling goods and services produced in the
home country to other markets. Any good or commodity, transported from one country to another
country in a legitimate fashion, typically for use in trade. Export goods or services are provided to
foreign consumers by domestic producers. Export of commercial quantities of goods normally
requires involvement of the customs authorities in both the country of export and the country of
import. Main export items are readymade garments, frozen fish, vegetables, tea, coffee, spices etc.

6.2 EXPORT DEPARTMENT

The export trade of the country is regulated by the Imports and Exports Act, 2009-2012.
There are a number of formalities, which an exporter has to fulfill before and after shipment of
goods. The exports from Bangladesh are subject to export trade control exercised by the Ministry
Of Commerce through Chief Controller of Imports and Exports (CCI & E). No exporter is allowed
to export any commodity permissible for export from Bangladesh unless he is registered with CCI
& E and holds valid Export Registration Certificate (ERC). The ERC is required to be renewed
every year. The ERC number is to be incorporated on EXP forms and other documents connected
with exports.

The major function of this section is comprises with purchases, collection & negotiate the
export bill, provide the exporter in financing and helps the exporter in different issues.

A person desire to export should make application to obtain ERC (Export Registration
Certificate) from CCI&E then the person should step in to a bank along with ERC to obtain export
operation from the Bank.

Government of Bangladesh gives many facilities for the exporters. Such as-
Income tax exemption for export earning: Under the income tax law other than the owners
of factories not registered in Bangladeshi, all exporters will get 50% exemptions in their
income taxes.
Exemption in insurance premium.
Bond facilities for export oriented industries.
Facilities for duty free import of capital machineries for export - oriented industries.

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 The export-oriented industries will get the advantage of importing 10 percent spare parts of
their capital machineries without duty in every two years.
Providing alternative facilities to export-oriented local textiles and RMG other than duty-
bond or duty-draw-back.
Tax holiday.
Duty-draw-back scheme.

6.3 DOCUMENTS USED IN EXPORT

When a firm sells its goods abroad, it must arrange for each export shipment to be
accompanied by various documents. Depending on the country to which the goods are being sent,
these documents will vary. But for exporting we can divide those documents in two types-

 Substantive Documents
 Auxiliary Documents

6.3.1 Substantive Documents

Substantive Documents are given below:

 Draft or bill of exchange

Bill of exchange is an instrument in writing containing an unconditional order or at a fixed
determinable future time a certain sum of money only to, or to the order of a certain person
or to the bearer of the instrument.
 Commercial Invoice
Commercial Invoice is the export firm's invoice, addressed to the foreign importer
describing the goods shipped and the total price that it must pay. However, some countries
require the commercial invoice to be prepared on their own forms. Such forms are called
customs invoices.
 Bill of lading or Airway Bill
Bill of Lading is a document supplied to the exporter by the shipping company that is
transporting the goods to their foreign destination, listing, item by item, the goods being
shipped. It serves three basic purposes:
a) To acknowledge receipt by the carrier of the exporter's goods.
b) To indicate the carrier's contractual obligation to transport the goods to their
destination in exchange for payment.
c) To record transfer of title from the seller to the buyer when payment for the goods
takes place. Airlines use what is called an Air Waybill.

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6.3.2 Auxiliary Documents
Auxiliary Documents are given below:

 Cargo manifest or packing list

When quantities, weights or contents of the various packing cases in an export shipment
vary, it is usual to prepare a separate list for each case indicating its contents, weight and
measurements.
 Certificate of Origin
Certificate of Origin is a document, which indicates the country in which the goods were
produced, is required whenever preferential duties are claimed. Sometime, consular
legalization of the document is necessary. Also, certification of the document by a Chamber
of Commerce is required.
 Quality control certificate
While exporting products for which quality control certificate is obligatory, the exporter
will have to submit, to the Customs Authorities, a quality control certificate issued by the
appropriate authority.
 Consular Invoice
Some country required consular invoice. Countries that require a consular invoice also
require a commercial invoice as additional proof of the details of the export shipment.
 Certificate of free sale
This certificate required for pharmaceuticals and certain chemicals entering a number of
countries.
 Export Declaration Forms
It is usually necessary for the exporter wishing to ship goods abroad, to fill out a form called
an Export Declaration. The document is also used for statistical purposes so that
government authorities know exactly what has been exported from the country in each
month and year and to which country.

6.4 REGISTRATION FOR THE EXPORTER

In the export policy of Bangladesh any one cannot export goods in abroad. To export goods
an exporter needs a valid Export Registration Certificate from the Chief Controller of Import and
Export (CCI&E). Exporters find an Export Registration Certificate (ERC) number which is
incorporate on Export form and papers connected for obtaining Export Registration Certificate-

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  National ID card
 Memorandum and Article of Association and Certificate of Incorporation in case of limited
company
 Trade license
 Bank Certificate
 Assets certificate
 Income Tax certificate etc.

6.5 FORMALITIES AND PROCEDURES OF EXPORT L/C

The formalities and procedure of export L/C‟s are as follows:

Obtaining exports LC
To get export LC form exporter issued by the importer.
Submission of export documents
Exporter has to submit all necessary documents to the collecting bank after shipment.
Checking of export documents
After getting the documents banker used to check the documents as per LC terms.
Negotiation of export documents
If the hank accepts the document and pays the value draft to the exporter and forward the
document to issuing bank that is called a negotiating bank. If the bank does buy the LC then
the bank normally acts as collecting bank.
Realization of proceeds
This is the period when the issuing bank has realized the payment.
Reporting to the Bangladesh bank
As per instruction by Bangladesh Bank the bank has to report to respective department of
Bangladesh bank by mentioning latest payment.
Issue to proceeds realization certificate (PRC)
Bank has to issue precede realization certificate of export LC to the supplier/exporter for
getting cash assistance.

6.6 EXPORT FINANCING

To meet up the cost of goods to be exported, the exporter may require Bank finance. Besides, he
may require finance for go down rent, freight etc. Even after shipment of the goods, exporter may
require Bank finance to meet-up his expenditure up o repatriation of the export proceeds. There are
two type of export finance:

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Ahsanullah University of Science & Technology
  Pre-shipment finance
 Post -shipment finance

6.6.1 Pre-shipment finance

Pre Shipment Finance is issued by a financial institution when the seller wants the payment of the
goods before shipment. The main objectives behind pre-shipment finance or pre export finance are
to enable exporter to:

 Procure raw materials.

 Carry out manufacturing process.
 Ship the goods to the buyers.
 Meet other financial cost of the business.

Types of Pre Shipment Finance

a) Packing Credit,
b) Advance against Cheques/Draft received as Advance Payments
c) Back to back L/C

a) Packing Credit
Packing Credit is any loan or advance granted or any other credit provided by a bank to an
exporter for financing the purchase, processing, manufacturing or packing of goods prior to
shipment, on the basis of letter of credit opened in his favor or in favor of some other person, by an
overseas buyer or a confirmed and irrevocable order for the export of goods from the producing
country or any other evidence of an order for export from that country having been placed on the
exporter or some other person, unless lodgment of export orders or letter of credit with the bank has
been waived.
b) Advance against Cheques/Draft received as Advance Payments
Where exporters receive direct payments from abroad by means of cheques/drafts etc. the
bank may grant export credit at confessional rate to the exporters of goods track record, till the time
of realization of the proceeds of the cheque or draft etc. The Banks however, must satisfy
themselves that the proceeds are against an export order.
c) Back to back L/C
Back-to-back L/C means one credit backs another credit. It is new credit in favor of another
beneficiary. Besides, the normal formalities and requirements (for L/C opening) the following
formalities and documents are also required for opening back-to-back L/C:

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 1) Master L/C
2) Valid bonded ware house license
3) Quota allocation for quota items
4) ERC in addition to IRC
5) Indemnity
6) No objection from previous banker (if any)
7) Factory inspection certificate
8) BGMEA Membership

Vouchers and accounting treatments are the same normal L/C opening except margin. In this case,
no margin is taken by the bank. After lodgment, maturity date of the import bill is intimated to
foreign bank as per L/C terms.

Establishing Back to Back L/C

How whole process works are given below:
Issue of original L/C
In documentary credit operations buyer (i.e. the applicant) arranges to establish the (original)
credit through a bank (the issuing bank or the opener) in favor of the seller (the beneficiary).
Issue of Back-to-Back L/C
A back-to-back credit is established when the seller-cum-original-beneficiary, after receiving
the notification about the issue of the original credit, arranges for a second, stand-alone credit
to be established in favor of the (actual) supplier or manufacturer of goods or raw materials.
No formal connection between the two L/C
Please be careful to note that there is no legal or formal connection between the original, L/C
and the Back-to-Back Credit. Each credit stands on its own merit.
Back-to-Back L/C can be opened as a chain
If there are several middlemen (or any manufacturers who must again procure input materials
from other manufacturers), each may use the credit in his favor as security for the credit that he
has to open in favor of his supplier in the chain of contracts, until first buyer in the chain has
effectively opened a credit in favor of original supplier.

6.6.2 Post -shipment finance

Post shipment finance is a kind of loan provided by a financial institution to an exporter or

seller against a shipment that has already been made. This type of export finance is granted from
the date of extending the credit after shipment of the goods to the realization date of the exporter
proceeds. Exporters don't wait for the importer to deposit the funds.

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Basic Features
The features of post-shipment finance are:

Post-shipment finance is meant to finance export sales receivable after the date of shipment
of goods to the date of realization of exports proceeds. In cases of deemed exports, it is
extended to finance receivable against supplies made to designated agencies.
A post-shipment finance is provided against evidence of shipment of goods or supplies
made to the importer or seller or any other designated agency.
Post-shipment finance can be secured or unsecured. Since the finance is extended against
evidence of export shipment and bank obtains the documents of title of goods, the finance is
normally self-liquidating.
Post-shipment finance can be of short terms or long term, depending on the payment terms
offered by the exporter to the overseas importer.

In case of cash exports, the maximum period allowed for realization of exports proceeds is
six months from the date of shipment. Concessive rate of interest is available for a highest period of
180days, opening from the date of surrender of documents. Usually, the documents need to be
submitted within 21days from the date of shipment.

Financing for Various Types of Export Buyer's Credit

Post-shipment finance can be provided for three types of export

Physical exports: Finance is provided to the actual exporter or to the exporter in whose
name the trade documents are transferred.
Deemed export: Finance is provided to the supplier of the goods which are supplied to the
designated agencies.
Capital goods and project exports: Finance is sometimes extended in the name of
overseas buyer. The disbursal of money is directly made to the domestic exporter.

Types of Post Shipment Finance

The post shipment finance can be classified as:

a) Export Bills purchased/discounted

b) Export Bills negotiated
c) Advance against export bills sent on collection basis
d) Advance against export on consignment basis
e) Advance against undrawn balance on exports
f) Advance against claims of Duty Drawback

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a) Export Bills purchased/discounted
Export bills (Non L/C Bills) is used in terms of sale contract/ order may be discounted or
purchased by the banks. It is used in indisputable international trade transactions and the proper
limit has to be sanctioned to the exporter for purchase of export bill facility.

b) Export Bills negotiated

The risk of payment is less under the LC, as the issuing bank makes sure the payment. The
risk is further reduced, if a bank guarantees the payments by confirming the LC.

However, this arises two major risk factors for the banks:

i. The risk of nonperformance by the exporter, when he is unable to meet his terms and
conditions. In this case, the issuing banks do not honor the letter of credit.
ii. The bank also faces the documentary risk where the issuing bank refuses to honors its
commitment.

c) Advance against export bills sent on collection basis

Bills can only be sent on collection basis, if the bills drawn under L/C have some
discrepancies. Sometimes exporter requests the bill to be sent on the collection basis, anticipating
the strengthening of foreign currency. Banks may allow advance against these collection bills to an
exporter with a confessional rates of interest depending upon the transit period in case of DP Bills.

d) Advance against export on consignment basis

Bank may choose to finance when the goods are exported on consignment basis at the risk
of the exporter for sale and eventual payment of sale proceeds to him by the consignee. However,
in this case bank instructs the overseas bank to deliver the document only against trust
receipt/undertaking to deliver the sale proceeds by specified date, which should be within the
prescribed date.
e) Advance against undrawn balance on exports
It is a very common practice in export to leave small part undrawn for payment after
adjustment due to difference in rates, weight, quality etc. Banks do finance against the undrawn
balance, if undrawn balance is in conformity with the normal level of balance left undrawn in the
particular line of export, subject to a maximum of 10 percent of the export value.

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f) Advance against claims of Duty Drawback
Duty Drawback is a type of discount given to the exporter in his own country. This discount
is given only, if the in-house cost of production is higher in relation to international price. This type
of financial support helps the exporter to fight successfully in the international markets. In such a
situation, banks grants advances to exporters at lower rate of interest for a maximum period of 90
days. These are granted only if other types of export finance are also extended to the exporter by
the same bank.

6.7 EXPORT PERFORMANCE OF JBL

(Figure in million TK)

Achievement from Export

Year 2008 2009 2010
Export 85418 88653 118515

EXPORT PERFORMANCE OF JBL 2008-2010

120000

100000
Figure in million

80000

60000

40000

20000

0
2008 2009 2010
Export 85418 88653 118515

Source: Janata Bank Ltd, Annual Report-2010

Graph 3: Export performance of JBL

Explanation: The graph shows that the Export performance of JBL from 2008-2010. In this
section TK.3235 million increased from 2008-2009 with growth rate 3.78% and TK.29862
million increased from 2009-2010 with growth rate 33.68%.

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Ahsanullah University of Science & Technology
 7.1 MEANING OF REMITTANCE

The word ‘Remittance’ originates from the word ‘remit’ which means to transmit money. In
banking terminology the word ‘remittance’ means transfer of fund one place to another. When
money transferred from one country to another is called ‘Foreign Remittance’.

Simply we cans say that, remittance is a transfer of money by a foreign worker to his or her
home country. Remittances contribute to economic growth and to the livelihoods of people
worldwide. Moreover, remittance transfers can also promote access to financial services for the
sender and recipient, thereby increasing financial and social inclusion. Remittances also foster, in
the receiving countries, a further economic dependence on the global economy instead of building
sustainable, local economies.

7.2 FOREIGN REMITTANCE

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 services;
it sells and buys foreign currency. The conversion of one currency into another takes place at an
agreed rate of exchange in where 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.

7.3 REMITTANCE SERVICES IN JANATA BANK LIMITED

As Janata Bank limited has a wide network operates 879 branches in national and
international territory, remittance services are available at all branches and foreign remittances may
be sent to any branch by the remitters favoring their beneficiaries.

Janata Bank Limited has correspondent banking relationship with all major banks &
exchange houses located in almost all the cities. Expatriate Bangladeshis may send their hard
earned foreign currencies through those banks & exchange houses or may contact any renowned
banks nearby (where they reside/work) to send their money to their dear ones in Bangladesh.

Recently Janata Bank Ltd. has launched its Speedy Foreign Remittance Payment System
which enables beneficiaries to receive their money within shortest possible time. The beneficiary
also gets information of remittance through automated SMS. It’s a secured, easy, cost effective and
speedy way of remittance for the remitter.

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 Janata bank Ltd. has signed an agreement with Western Union Network to facilitate wide
range of remittance of the globe. Both the organizations make it possible to receive the money from
about 300,000 locations of 200 countries instantly with prevailing mutual mechanism and
workforce.

7.3.1 Janata Bank Ltd deals with foreign remittance activities on behalf other money
transfer company

 Western Union Network

 IME Spot Cash
 Placid Express Spot Cash
 Xpress money etc.

7.4 TYPES OF REMITTANCE

Inward
Inland Remittance
Remittance
Outward
Remittance Remittance
Activities
Inward
Foreign Remittance
Remittance
Outward
Remittance

Figure 9: Types of Remittance

7.4.1 Inward Remittances

The term inward remittances include not only remittances by TT, MT, Drafts etc. but also
purchases of bills, purchases of drafts under traveler’s letter of credit and purchases of traveler’s
cheques. Foreign currency notes against which payment is made to the beneficiary also a part of
inward remittances. Thus the following are the Modes of inward remittances:

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Modes of Inward Remittance
Demand Draft (DD)
Mail Transfers ( MT)
Telegraphic Transfer (TT)
Pay Order (PO)
Travelers Cheque ( TC)

Demand Draft (DD)

This is an instrument through which
customers money is remitted to another
person/Firm/organization in outstation (outside
the clearing house area) form a branch of one
Bank to an outstation branch of the same Bank
or to a branch of another Bank (with prior
arrangement between that Banks with the
issuing branch).

Figure 10: Modes of Inward Remittance

Mail Transfers (MT)

Mail Transfer is an instrument issued by a remitting bank to the paying bank advising in
writing to make payment of certain amount to specific beneficiary.

Telegraphic Transfer (TT)

A Telegraphic Transfer is a method of remittance, which is effected by the banker through
a coded telegram attested by secret cheek signal, on receipt of which, the paying office pay the
amount to the payee by crediting his account.

Pay Order (PO)

A pay order is a written under, issued by a branch of the Bank, to pay a certain sum of
money to a specific person or a bank. It may be said as to be a banker's cheque as it is issued by a
bank and payable by itself.

Travelers Cheque (TC)

It is an instrument issued by the Banks/Company’s payable to the purchaser on presentation.

7.4.2 Outward Remittance

Remittance from our country to foreign countries is called outward foreign remittance. But
Outward Foreign Remittance is highly restricted by the Bangladesh Government. Only some
especial branches can send money from Bangladesh to abroad under Bangladesh Banks rolls &
regulation.

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In Janata Bank Ltd. following branches are only responsible and involve with outward foreign
remittance activities:
 Local Office Dhaka.
 Foreign Exchange Branch, Bitul-Mukaram Dhaka.
 Janata Bhabon Corporate Dhaka.

Mode of outward remittance

Demand Draft (DD)

Mail Transfers ( MT)
Telegraphic Transfer (TT)
Pay Order (PO)
Travelers Cheque ( TC)
Foreign currency notes.

Figure 11: Modes of Outward Remittance

7.5 REMITTANCE MARKET IN BANGLADESH

The remittance market of Bangladesh has been showing a steady growth in terms of
incoming remittance volume. Considering the current macro-economic indicators it seems that this
growth run will continue in the coming years. Central Bank predicts that our annual incoming
foreign remittance will touch $10 billion in the next 3 years. The reasons for such robust growth
can be summarized as:

Stable macro-economic indicators including GDP growth,

Steady growth in manpower export specially in the middle east,
Substantial devaluation of the local currency,
Rapid urbanization,
Development of new remittance corridors in Australia and part of Europe and Africa,
Increased focus of Central Bank and the Government to channel funds through formal
channels,
Increased competition among financial institution to grab market share,

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 Aggressive marketing policy adopted by Banks to increase their share of wallet,
Expansion of branch network of various commercial banks,
MFIs involvement in channeling remittance funds in remote areas,
Participation in the UN peace keeping missions,
Anti-Money Laundering rules and regulations came in force.

7.6 PROBLEMS/ROADBLOCKS IN CURRENT REMITTANCE PROCESS

The major roadblocks of a smooth and efficient payment of foreign remittances are as follows:

Poor infrastructure in rural and semi-urban economy,

Inadequate reach of private commercial banks within the country,
Massive information asymmetry in the market,
Active “Hundi” market,
Inefficiency of financial institutions,
Poorly regulated exchange houses,
Low literacy rate in the country,
Uneven competition among financial institutions,
Lack of investment in IT backbone development for market efficiency,
Absence of a strong central payment gateway for Straight Though Processing (STP) of
payment services

7.7 HELP DESK RELATED TO FOREIGN REMITTANCE PROBLEM

To resolve the foreign remittance related problem/complain/enquiry, Janata Bank Limited

has a 'Complain cell' at its Overseas Banking Division, Head Office, Dhaka. All Concerned are
requested to contact at the following address to resolve any problem related to foreign Remittance.

7.8 STEPS TAKEN FOR REMITTANCE PROCESS IMPROVEMENT

Government as well as private sector has undertaken various strategies to make

remittance transfer easier and hassle free. Now, the Nationalized Commercial Banks (NCBs) have
some overseas branches/remittance wings for transferring remittances successfully.

Recently, illegal transfer of money slid down drastically, as Bangladesh Bank (BB) has
stepped up monitoring of such transactions at home. BB so far gave license to 660 exchange houses
to set up offices abroad to facilitate remittance. Local banks are now able to deliver money to
recipients.

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 7.9 FOREIGN REMITTANCE PERFORMANCE OF JBL
(Figure in million TK)
Achievement from Foreign Remittance
Year 2008 2009 2010
Foreign Remittance 45924 56190 52640

FOREIGN REMITTANCE PERFORMANCE OF JBL

60000

50000
Figure in million

40000

30000

20000

10000

0
2008 2009 2010
Foreign Remittance 45924 56190 52640

Source: Janata Bank Ltd, Annual Report-2010

Graph 4: Foreign Remittance performance of JBL

Explanation
The graph shows that the foreign remittance performance of JBL from 2008-2010. In this
section TK.10266 million increased from 2008-2009 with a growth rate of 22.35% and TK.3350
million decreased from 2009-2010 with a negative growth rate of (-) 6.32%.

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 8.1 SWOT ANALYSIS

At the corporate level, the strategy management process of as organization involves the
environmental. This environmental scanning is done both on the internal environment: Strength and
Weaknesses and external environment: opportunities and threats of the organization.

In internal environment strengths are those factor that influence the organization to do better
are weaknesses are those factors that lack the organization form its optimum performance. On the
other hand external environment at analysis shows the opportunities or scope of development and
external coming there at for the business.

After doing my report on the foreign exchange service of the JBL, I have found both better
performance in some sectors of the bank and also weak services as well that occur lacking to do
better.

SWOT stands for:

S = Strengths

W = Weaknesses

O = Opportunities

T = Threats

Figure 12: SWOT Analysis

Objective of SWOT analysis

 To asses overall strong competitive position,

 To decide whether to continue current strategy or not,
 To determine possible course of actions,
 Development of functional strategy.

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Strengths
Second largest bank of the country.
Wide network of 879 branches including four overseas branches.
Healthy correspondent relationships with foreign banks.
Linked with most number of foreign correspondents.
Strong financial position and sustainable growth.
Largest portfolio among public banks.
Hold a sound reputation in the banking industries.
Well-connected distribution channel from head office to all branches.
Provide a record business in international trade and remittance.
Membership with SWIFT
According to the CAMELS rating Janata Bank Ltd. is one of the top public banks of
Bangladesh. This rating is based on Capital Adequacy, Asset Quality, Management,
Earnings, Liquidity and Sensitivity to market Risk of the bank. Bangladesh Bank monitors
these parameters and publishes the ranking.
Sound Import and Export operation.
In 2010, Janata Bank Ltd. has gone through an agreement with Western Union Money
Transfer to provide quick and more authentic remittance service to its clients.
As Govt. Owned Bank “AAA” in long run & ST-1 in short run.

Weaknesses
In Foreign Exchange Division the bank still uses lots of register for maintaining its foreign
exchange transactions. It is time consuming and there are lots of chances for making
mistakes.
Lack of formal promotional activity in this sector.
Service environment is not so much good for customers.
Shortage of trained manpower and logistic support.
There is no help centre for the customers for their problems and inquiry.
Foreign exchange operations of JBL are less dynamic.
Technology is used by a small number of workers which cost more times.
Lack of online banking service in all over the Bangladesh.
Do not introduce different types of smart card for the customers for different purposes.
Lack of ATM Booths from where customer can withdraw their money.
The important thing is that the bank has no clear strategic plan. The path of the future
should be determined with a strong feasible strategic plan.

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Opportunities
The bank will come under complete computerization very soon.
The bank is going to launch new software to run banking transactions faster and smooth.
The bank tries to cope with the newer trends of foreign exchange as soon as possible.
JBL should approach more attractive facilities with clear go ahead.
Expanding the areas of loan disbursement.
Business expansions in the capital market.
Online banking should be introduced fluently in all branches to compete with multinational
banks.

JBL should intensify personal banking in order to attract foreign wage earners making
inward remittance through JBL.
New investment sector is booming rapidly. JBL should identified those untapped areas of
business and invest in those sector such as Gas plant, ship breaking etc.

Threats
Upcoming banks.
Overall liquidity crisis in money market.
Frequent fluctuation of domestic currency worth against US Dollar.
The laws and customs related to the foreign exchange are changing very rapidly.
As country’s export is RMG sector depended, reduce in RMG export has affected foreign
exchange department of the Bank.
Political crisis and decaying country image as exporter.
The scenario of International Business is quite dynamic. Newer trends are taking place time
to time. This may create a tension between exporters-importers and the bankers.

8.2 COMPARISON AND PERFORMANCE EVALUATION OF JBL WITH

OTHER BANKS IN CASE OF PROFIT
The study is an attempt to the in-depth analysis of Janata Bank Ltd that helps to identify the real
scenario of the bank and finally makes a recommendation and conclusion as well on the basis of
different dimension.

Comparison with Agrani Bank Ltd and Rupali bank Ltd

In this section I would like to compare Janata Bank Ltd with two other renowned public banks -
Agrani Bank Ltd and Rupali bank Ltd to measure the profit performance. Comparisons are given
below:

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8.2.1 Comparison of profit performance of Janata, Agrani and Rupali Bank Ltd
(Figures in million TK)
Year
Name of Banks
2009 2010
Janata Bank Ltd 2784.78 4911.64
Agrani Bank Ltd 1355.52 3516.77
Rupali Bank Ltd 1668.49 600.29

Profit Performance

5000

4500

4000

3500
Figure in million

3000
Janata Bank Ltd
2500
Agrani Bank Ltd

2000 Rupali Bank Ltd

1500

1000

500

0
2009 2010
Year

Source: Annual Report-2010 of above Bank

Graph 5: Comparison of profit performance of the above Banks

Explanation: From the above graph we see that the profit performance of Janata Bank Ltd, Agrani
Bank Ltd and Rupali Bank Ltd. Among the three banks JBL achieved the highest profit in 2009 &
2010. It is a positive sign for JBL.

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8.2.2 Increase or (Decrease) of profit percentage from 2009-2010 of Janata, Agrani and
Rupali Bank Ltd.

Name of Banks Profit Percentage of the Bank

Janata Bank Ltd 76.37%
Agrani Bank Ltd 159.44%
Rupali Bank Ltd - 64.02%

Profit Percentage

200.00%

150.00%

100.00%
Janata Bank Ltd
Agrani Bank Ltd
50.00% Rupali Bank Ltd

0.00%
Profit percentage

-50.00%

-100.00%

Source: Annual Report-2010 of above Bank

Graph 6: Profit Percentage from 2009-2010 of the Above Banks

Explanation: The graph above shows that the profit percentage of the three banks from 2009-
2010. The growth of JBL was 76.37%, Agrani Bank Ltd was 159.44% and Rupali Bank Ltd was -
64.02%. Among them JBL secured second position.

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 8.3 IMPORT PERFORMANCE OF JBL COMPARE TO NATIONAL IMPORT

Year National Import Import of JBL Contribution (%)

2007 1272210 84065 6.60%
2008 1635050 129413 7.91%
2009 1844000 118525 6.42%
2010 2115000 183744 8.68%

(Figures in million TK)

2500000

2000000

1500000

National Import
1000000
Import of JBL

500000

0
2007
2008
2009
2010

Source: Source: Janata Bank Ltd, Annual Report-2010

Graph 7: Import Performance of JBL Compare to National Import

Explanation: The graph presents the data of national import as well as import of JBL. In2007 the
national import was TK.1272210 million whereas the import was TK.84065 million. In 2008 the
national import was TK.1635050 million whereas the import was TK.129413million. In 2009 the
national import was TK.1844000 million whereas the import was TK.118525 million and 2010 the
national import was TK.2115000 million whereas the import was TK.183744 million.

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8.3.1 Contribution Percentage of JBL in National Import

Year Contribution (%)

2007 6.60%
2008 7.91%
2009 6.42%
2010 8.68%

Contribution Percentage

9.00%

8.00%

7.00%

6.00%
Percentage

5.00%

4.00% Contribution

3.00%

2.00%

1.00%

0.00%
2007 2008 2009 2010
Year

Source: Source: Janata Bank Ltd, Annual Report-2010

Graph 8: Contribution Percentage of JBL in National Import

Explanation: The graph shows the data of percentage contribution of JBL to national import. In
2007, 2008, 2009 and 2010 the percentage was respectively 6.60%, 7.91%, 6.42% and 8.68%. But
here we notice that the percentage of 2010 was highest among the previous years, which is good for
JBL.

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 8.4 FOREIGN REMITTANCE PERFORMANCE OF JBL COMPARE TO
NATIONAL FOREIGN REMITTANCE

(Figures in million TK)

National Foreign Foreign Remittance
Year Contribution (%)
Remittance of JBL
2007 451890 36788 8.14%
2008 616442 45924 7.44%
2009 738773 56190 7.60%
2010 802270 52640 6.50%

FOREIGN REMITTANCE PERFORMANCE

900000
800000
700000
600000
500000
400000
300000
200000
100000
0
2007 2008 2009 2010

National Foreign Remittance Foreign Remittance of JBL

Source: Source: Janata Bank Ltd, Annual Report-2010

Graph 9: Contribution of JBL in National Foreign Remittance

Explanation: The graph presents the data of national remittance as well as remittance of JBL. In
2007 the national remittance was TK.451890 million whereas the remittance wasTK.36788 million.
In 2008 the national remittance was TK.616442 million whereas the remittance was TK.45924
million. In 2009 the national remittance was TK.738773 million whereas the remittance was
TK.56190 million and 2010 the national remittance was TK.802270 million whereas the remittance
was TK.52640 million.

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8.4.1 Contribution Percentage of JBL in National Foreign Remittance

Year Contribution (%) in NFR

2007 8.14
2008 7.44
2009 7.60
2010 6.50

Contribution (%) in NFR

9
8
7
6
5
4
3
2
1
0
2007 2008 2009 2010

Contribution (%) in NFR

Source: Source: Janata Bank Ltd, Annual Report-2010

Graph 10: Contribution Percentage of JBL in National Foreign Remittance

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 8.5 SHORTCOMINGS OF JBL FROM MY POINT OF VIEW

The bank has many more positive sides. Besides this, there are also some shortcomings and
subsequently recommendations are given below to smooth the banking operation.

Followings are the shortcomings

Lack of Modern Banking facilities

Absence of On-line Banking Services
Lack of Promotional Activities
Absence of Information Booth
Lack of Spread out Mechanism
Poor Web site
Insufficient ATM Booth
Lack of Smart Cards Facilities
Delay in service
Poor Customer relationship
Lack of Efficient Manpower
Absence of Advanced MIS
Lack of Innovative Banking Products
Foreign Exchange Operations is not updated
Lack of training program
Investment Sector

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 9.1 RECOMMENDATION

1. Apply Modern Banking System

Computerized banking system and latest communication device are the most important
elements for banking sector. So, for the sound and stable banking operation especially foreign
exchange operations, JBL has no alternatives but the modernization.

2. Provide On-line Banking Services

The bank should go for mass on-line banking to meet the demand of the present situation.

3. Decorate Working Environment

Interior decoration should be introduced for client’s comfort. Should be used environment
friendly equipment for decoration and kept enough space for client’s to get their service.

4. Enhance Promotional Activities

The management should give more emphasis on the advertisement of the bank about their
operations.

5. Set up Information Booth

The bank should set up query desk/information booth for better customer services.

6. Spread out Mechanism

The spread out mechanism of the bank should be faster and progressive as well.

7. Develop Web site of the Bank

The web-site of JBL is not updated. Only a few number of information are given in the site
but some necessary information should be given their such as, how to open an account, what are the
interest rates of different accounts, information about different products and services.

8. Launching ATM Booth

To survive in the cut throat competition, JBL must step into launching more ATM booth.

9. Introduce Smart Cards

JBL should offer international credit card, because in modern world the use of increasing
paper currencies is decreasing.

10. Deliver Faster Service

It is noted that “delay in service” is one of the problems faced by the clients. Attempts
should be made to straighten the banking procedure.

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11. Improvement of HRM Department
Human resource is another sector for the Foreign Exchange department to be developed
urgently. This department needs to be equipped with adequate computer based skilled person, so
that they can work faster and efficiency can be optimized.

12. Recruitment of Efficient Manpower

Efficient manpower should be recruited with having strong academic background of the
related subjects.

13. Arrange Training Program

The bank should try to arrange more training programs for their officials. Quality training
will help the officials to enrich them with more recent knowledge of International Trade Financing.

14. Introduce Advanced MIS

Bank can introduce more advanced MIS to mobilize its day to day activities. It will help the
employees to do their works more quickly and at the same time maintaining their quality of work.

15. Clear Mission and Vision

Employees should be properly learnt about the mission and vision of JBL, thus will
implement their job in that way.

16. Enhancement of Remuneration

Proper incentive system should be introduced to motivate bank employees for rendering
better services.

17. Offer Various Banking Products

More products of varied interests should be introduced for the diversified client group.

18. Steps to Recover Default Loans

Effective and efficient initiatives are necessary to recover the default loans.

19. Incentives Package for Exporter

Attractive incentive packages for the exporter will help to increase the export and
accordingly it will diminish the balance of payment gap of JBL.

20. Provide Updated foreign market Information

Bank should provide foreign market reports up to date, which will enable the exporter to
evaluate the demand for their products in foreign countries.

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21. Improve Foreign Exchange Operations
Foreign exchange operations of the bank are less dynamic and more time consuming. So,
JBL should take some initiative to remove the obstacles.

22. Enhance the Network of Personal Banking

JBL should explore the possibility of widening its personal banking network in other
countries to tap the inward remittance coming from those countries especially in Middle East
countries where from inward remittances come to Bangladesh in plenty.

23. Enhance Liquidity

For security of loan and advances JBL should priority for movable and liquid assets.

24. Observe Borrower’s financial condition

The Bank should carefully observe the financial condition and repayment history of the
borrower.

25. Involvement of Various Social Programs

To enhance the image of the bank through social responsibility, the bank should engage
itself to various social programs like scholarship to poor but meritorious students, Campaign
against dowry and other social curse.

26. Search New Investment Sector

New investment sector is booming rapidly. JBL should identified those untapped areas of
business and invest.

I believe that these steps will be helpful to improve the performance of Janata Bank Limited
in the banking sector of Bangladesh.

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 9.2 CONCLUSION

Proper financial system of a country can contribute towards the development of that
country’s economy. In our country, banks have a leading power to its financial system. Banking
sector of Bangladesh consists of several nationalized and private banks. They are doing their
activities and highly contribute to the national economy. Among them Janata Bank Limited also
makes significant contribution to the economy.

With a bulk of qualified and experienced human resource, Janata Bank Ltd can exploit any
opportunity in banking sector. It is pioneer in introducing many new products and services in the
banking sector of the country. Moreover, in the overall-banking sector, it is unmatched with any
other banks because of its wide spread branch networking throughout the country. The bank is
performing general banking, Loan-advance, foreign exchange activities etc, as a result they are
mobilizing the money and do well for the economy.

Foreign Exchange Division is crucial for any bank. A bank’s performance largely depends
on this division. Foreign Exchange activities have an equal significance to economic growth and
development of the country. During my internship in this branch I have found its Foreign Exchange
department to be very efficient; therefore this department plays a major role in the overall
efficiency & reputation of the Bank as a whole. As being the top class bank of Bangladesh
(according to the CAMELS rating), it has a good reputation and faith to exporters, importers
of Bangladesh. So through this division the banks are contributing to the interest of the country.
Although they have some limitations in their services, they are doing tremendous job for the
economy. If they can reduce their limitation and introduce new ideas, they can do better in the
banking sector of Bangladesh.

Finally, I would say that this internship at JBL has increased my practical knowledge of
Business Administration and make my BBA education more complete and applied. In this report I
got the opportunity to apply various tools and concepts that I learned in my BBA courses.

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