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Thursday 14 April 2016
Wednesday 12 February 2014
Practical Orientation in Bank
The report on
Practical Orientation in Bank
Table
of Contents
Contents
Part
Page
Letter of transmittal
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Acknowledgments
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List of Tables and List of
figures
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Executive Summary
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1
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Introduction
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1.1 Authorization of the report
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1.2 Objectives of the Study
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1.3 Coverage of the study
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1.4 Methodology of the Study
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1.5 Work schedule
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2
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Overview of the Bank and Branch
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2.1 History of ABBL
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2.2 Management & Organizational structure
of ABBL
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2.3
Capital Structure of ABBL
2.4
AB Bank Branches
2.5
Introducing the Branch
2.6
Organogram of Karwan Bazar Branch
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3
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Credit section
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3.1 Credit service department
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3.2 Loan administration department
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3.3
Loan recovery cell
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4
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Foreign exchange section
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4.1 L/C Import (Cash) Department
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4.2 L/C Back to Back Department
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4.3 EXPORT Department
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4.4 Foreign Remittance Department
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5
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General Banking Section
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5.1 Account opening department
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5.2 Local Remittance department
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5.4 Collection
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5.5 FCD-Clearing
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5.6 Financial Control
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5.7 Sanchaypatra & Wage Earner’s Bond
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6
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Performance Evaluation of ABBL
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6.1 Growth in Deposit
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6.2 Profit for the ABBL
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6.3 Reserve and Revenues
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6.4 Total Credit facilities
6.5
Total Assets
6.6 Growth in Import
6.7 Growth in Guarantee
6.8 Growth in Export
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List of Tables
Table No. Title Page No.
1.
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Table Showing Work Schedule of
Practical Orientation.
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2.
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Table Showing Interest for Credit
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3.
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Table Showing Interest rate for
BCD
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4.
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Table Showing Growth in Deposit
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5.
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Table Showing Profit Trend of the
ABBL
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6.
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Table Showing Reserve and Revenue
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7.
8.
9.
10.
11.
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Table Showing Total Credit
Facilities
Table Showing Growth in Assets
Table Showing Growth in Import
Table Showing Growth in Guarantee
Table Showing Growth in Export
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LIST OF FIGURES
Figure No. Title
Page No.
1. Organogram of ABBL
2. Management Hierarchy
3. Import Mechanism
4. Advising L/C
5. Issuance of Fresh Check Books
6.
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OBC Mechanism
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7.
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Growth in Deposit
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8.
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Profit Trend of ABBL
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9
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Volume of Credit
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10
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Total Assets
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11.
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Growth in Import
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12.
13.
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Growth in Guarantee
Growth in Export
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PART 1
INTRODUCTION
1.1 Authorization of study:
Banking system occupies an important place in a nation’s economy. A banking
institution is indispensable in a modern society. It plays a pivotal role in
the economic development of a country and forms the core of the money market in
an advanced country. In recent times the banking sector over the world has been
undergoing a lot of changes due to deregulation, technological innovation,
globalization etc. Bangladesh Bangladesh
As our program director directed us
to present the report in different way that will be based on the personal observations from every department. I have described every department by
following way:
(1) Understanding:
In this part I have tried to make
acquainted with every department of this branch.
(2) Things are done here
In this part I have tried to see the
things which are being done in each department of the branch.
(3) Personal observations:
In this part I have tried to
present my personal observations from each department of this branch.
I had an
opportunity to be acquainted with the practical banking prevail in a bank. The knowledge, which has been acquired in my
practical orientation
Period, I
have tried my level best to show in this report.
1.2 Objective of the study:
The main objective of the study is
to gather practical knowledge regarding banking system and operation. This
practical orientation gives us a chance to Co-ordinate out theoretical
knowledge with the practical experience. The following are of objective for
this practical orientation in bank:
(a)
To apply theoretical knowledge in the practical field.
(b)
To help the students in taking up professional courses
in the second year.
(c)
To have exposure to the functions of general banking
section.
(d)
To have exposure to the functions of credit section.
(e)
To have
exposure to the functions of foreign exchange section.
(f)
To observe the working environment in commercial
banks.
(g)
To study existing banker customer relationship.
1.3 Coverage of the study:
In this report, three major areas
in commercial banks have been covered which are:
(a)
General banking section.
(b)
Credit section.
(c)
Foreign exchange section
(d)
Ancillary services rendered.
1.4
Methodology of the study:
For smooth and accurate study every
one have to follow some rules & regulation. The study impute were collected
from two sources:
(a) Primary sources
(i)
Practical desk work
(ii)
Face to face conversation with the officer
(iii)
Direct observations
(iv)
Face to face conversation with the client
(b) Secondary sources
(i)
Annual report of ABBL
(ii)
Files & Folders
(iii)
Memos & Circulars
1.5 Work schedule
Department Rotation:
Name of the Department
|
From
|
To
|
Total
Days
|
|
04.10.2000
|
24.10.2000
|
22 days
|
|
25.10.2000
|
30.10.2000
|
6 days
|
|
31.10.2000
|
06.11.2000
|
7 days
|
|
07.11.2000
|
13.11.2000
|
7 days
|
|
14.11.2000
|
20.11.2000
|
7 days
|
|
21.11.2000
|
27.11.2000
|
7 days
|
|
28.11.2000
|
04.12.2000
|
7 days
|
|
05.12.2000
|
11.12.2000
|
7 days
|
|
12.12.2000
|
18.12.2000
|
8 days
|
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19.12.2000
|
21.12.2000
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3 days
|
Table-1:Work Schedule
Source: Suggested by Branch Manager
,ABBL, Karwan Bazar
PART 2
OVER
VIEW OF THE BANK AND BRANCH
2.1 History of ABBL
Government permitted private banks
to enter in to banking because of sustained poor performance by the banks of
nationalized sector. Arab Bangladesh bank limited (ABBL) is sailed as the
leading private commercial bank in the baking suture from its journey on April 12, 1982 with opening
of its first branch at Karwan Bazar in Dhaka .
It was the brainchild of group dynamic entrepreneurs of Bangladesh
2.2 Management & Organization of ABBL
The bank was incorporated on 31st December 1981 , under
the Companies Act (Act VII) of 1913 as a limited company having its Head Office
in Dhaka . The Bank started functioning from 12th April 1982 with the
approval of Bangladesh Bank under the guidelines, rules and regulations given
for scheduled commercial banks operating in Bangladesh
Bangladeshi General Public - 15%
Dubai Bank Limited, U.A.E. - 60%
2.3 Capital Structure of ABBL
The authorized share capital of
Arab Bangladesh Bank Ltd. was Tk. 282.34 million, divided into 2 million
ordinary shares of Tk. 100 each. The paid-up capital of the bank was Tk. 85
million, out of which, Tk. 80 million was provided by the sponsor directors. The
government of the Peoples Republic of Bangladesh subscribed Tk. 5 million (5%)
in the share capital of the Bank and has since nominated one director in the
board as per Article 95 of the Memorandum and Article of Association in 1983.
During 1984, issuing Public shares of Tk. 15 million raised the paid-up
capital. At present, the authorized capital has been raised to Tk. 100 crore
and paid up capital 37.26 crore.
In the paid
up capital A.B Bank, Dubai Bank Limited had the major share comprising 60% of total
share holdings. Dubai Bank Ltd. was the joint sponsor with the local four
entrepreneurs. In 1986, Dubai Bank Ltd. merged with the Union Bank of Middle
East (UBME) and subsequently Union Bank of Middle East (UBME) inherited the
shares. They continued as shareholders till early part of 1987 when they
decided to off-load their investment in Bangladesh
2.4 AB Bank Branches
·
Karwan Bazar
·
Motijheel
·
Bhairab Bazar
·
Narayanganj
·
North-South Road
·
Jinjira
·
Joypara
·
Bandura
·
Gulshan
·
Dhanmondi
·
Imamganj
·
New Elephant Road
·
Principal
·
Kakrail
·
Mohakhali
·
Nawabpur
·
Mirpur
·
BoardBazar
·
Uttara
·
Pagla
Total 19 Branches
SYLHET
·
Dargah Gate
·
Modhuban
·
Tajpur
·
Moulvibazar
·
Boroikandi
·
Sreemongal,
Total 6
Branches
KHULNA
·
Khulna
·
Jhikargachha
·
Noapara
·
Benapole
·
Satkhira
·
Jessore
·
Kushtia
Total 7 Branches
RAJSHAHI
·
Bogra
·
Rajshai
·
Chapai Nawabganj
·
Saidpur
·
Naogaon
·
Rangpur
BARISAL
·
Barisal
·
Jhalokathi
Total 2 Branches
Total 6 Branches
The foreign correspondent
relationship now stands with 289 offices of 134 foreign banks in 55 countries
as on 31st December 1998. Furthermore, AB Bank has opened an overseas branch in
Mumbai, India, Representative office in UK and Myanmar and a wholly owned
subsidiary company "AB International Finance Ltd." in Hong Kong.
2.5 Introducing the branch:
Arab Bangladesh Bank Karwan Bazar
Branch is one of the largest branches of ABBL is located in BSEC Bhaban, Karwan
Bazar C/A. It started its function in the year 1986.
Presently there are 52 employees in
this branch as of 20.09.1999 which includes
One SVP, 2 AVPs, 5 Chief officers,
7 Senior Officers, 18 Officers,9 Assistant Officers, One Trainee Officer,
One assistant and others are messengers,
tellers, typist and security guards.
2.6 Organogram of Karwan Bazar Branch:
.
KARWAN BAZAR BRANCH
----------------------------------------------------------------
G.B
CREDIT FOREIGN
EXCHANGE ACCOUNTS
 |
----------------------------------------------------------------
IMPORT EXPORT FOREIGN REMITTANCE
Figure-1
Source: Department Information,
ABBl, Karwan Bazar Branch, 2000
Management hierarchy:
 |
MANAGING DIRECTOR
MANAGING DIRECTOR
|
 |
Figure-2
Source: Department Information,
ABBl, Karwan Bazar Branch, 2000
PART
3
CREDIT SECTION
Lending of funds to the
constituents mainly traders, buying and industrial entrepreneurs, constitutes
the main buying of a banking company. The major portion of bank funds is
employed by way of loans and advances, which is the most profitable employment
of its funds. The major part of bank’s income is earned from interest and
discount on the funds so lent.
The buying of lending nevertheless
is not without certain inherent risk largely depending on the borrowed funds a
banker cannot afford to take under risk in lending. While lending his funds, a
banker, therefore, follows a very cautious policy and conducts his business on
the basis of the well-known principles of sound lending in order to minimize
the risk.
PRINCIPLES OF LENDING
The Principle of lending is a
collection of certain accepted time tested standards, which ensure the proper
use of loan fund in a profitable way and its timely recovery.
Different authors describe
different principles for sound lending.
ABBL follows the following five
principles in its lending activity.
1. Safety
2. Security
3. Liquidity
4. Adequate
yield
5. Diversity
1. Safety
Safety should get the prior
importance in the time of sanctioning the loan. At the time of maturity the
borrower may not will or may unable to pay the loan amount. So in the time of
sanctioning the loan adequate securities should be taken from the borrowers to
recover the loan. Banker should not sacrifice safety for profitability.
2. Liquidity
Banker should consider the
liquidity of the loan in time of sanctioning it. Liquidity is necessary to meet
the consumer need.
3. Security
Banker should be careful in the
selection of security to maintain the safety of the loan banker should properly
evaluate the proper value of the security. If the estimated value is less than
or equal to loan amount, the loan should be given against such securities. The
more the cash near item the good the security. In the time of valuing the
security the Banker should be more conservative.
4. Adequate Yield
As a commercial origination Banker
should consider the profitability. So banker should consider the interest rate
when go for lending. Always Banker should fix such an interest rate for it’s
lending which should be higher than its savings deposits interest rate. To
ensure this profitability Banker should consider the prospect of the project.
5. Diversity
Banker should minimize the fort
polio risk by putting its fund in the different fields. If Bank put its entire loan
able fund in one sector it will increase the risk. Banker should distribute its
loan able fund in different sectors. So if it faces any problem in any sector
it can be covered by the profit of another sector.
The following three departments are
under Karwan Bazar branch, Arab Bangladesh bank ltd.:
(i)
Credit service
(ii)
Loan administration
(iii)
Credit recovery cell
3.1 CREDIT SERVICE
3.1.1 UNDERSTANDING:
The job in this department starts
from the application made by the client, approve the same, which is disbursed
to customers. There are three employees one is chief officer, one is senior
officer and one is officer currently
Working over desks in this
department
3.1.2 THINGS ARE DONE HERE
The following things are done in
this department:
a.
Preparation of sanction letter as per Ho approval.
b.
Monitoring & follow-up of credit facilities
extended from this Br.
c.
Compliance of review of MSOCF, Client-wise Position,
LIM/TR.
d.
Reporting of daily task force & daily LDOs
position to H.O.
e.
Export L/C checking & preparation of credits Memos
relating to back-to-back l/ CS, monitoring Project loans of Garments Projects.
f.
Preparation of Statement and maintaining all records
of the credit extended under ADB Project.
g.
Preparation of Statements relating to NRIT A/C and
maintaining record of the Foreign Investments.
h.
Preparation for proposal of Project loan for boards
Approval.
i.
Monitoring of the Credit Facility Extended to garments
projects.
j.
Statement of Monthly Garments position, Interest
Subsidy, Forced loan etc.
k.
Monitoring of Foreign investments in capital market
through the branch.
l.
All works related to custodial service.
m.
All type of
correspondence related to credit Service Dept.
n.
Preparation of
Credit Memos for approval/renewal of the Credit facilities.
o.
Preparation of Credit Memos for the Credit facilities
under Cash L/C and IBP.
p.
Processing of Consumer Credit Loans & preparation
of all statements of the Consumer Credit Loans.
3.1.3 PERSONAL OBSERVATIONS:
I have observed the following
things:
3.1.3.1 Credit Facilities:
The credit section of ARAB
BANGLADESH BANK LTD. Karwan Bazar Branch provides two kinds of credit
facilities
i)
Funded Credit Facilities.
ii)
Non-Funded Credit Facilities.
(i) Funded Facilities:
These are facilities that are
associated with direct fund involvement.
These include:
a . Overdraft (OD)
b . Advance against work order
c . Advance against FDR/ Sanchay
patra.
d.
Loan against Trust Receipt. (LTR)
e .
Staff Loan
f . House Building loan
g . Time loan
h . Term Loan
i. Consumer
credit Scheme.
(ii) Non-Funded Facilities:
There is no direct monetary
involvement.
These include:
(a) Bank Guarantee.
(b) Letters of Credit.
(i) Funded Facilities:
a .Overdraft (OD)
Overdraft is an arrangement where a
borrower is allowed to withdraw over and above his credit balance in current account
up to an agreed limit. The borrower is permitted to draw and repay any number o
times, provided the total amount overdrawn does not excel the agreed limit.
Overdraft facility is sanctioned against the primary security of hypothecation
of raw materials and or finished goods. The borrower by signing a letter of
hypothecation, duly stamped, creates a charge for an amount of debt but neither
the possession nor the ownership is passed on the bank. The borrower binds him
to give possession of the goods to the bank when called upon to do so.
Practically the bank has no security in this case except the charge documents.
Hence the bank insists on the borrower on furnishing some collateral
securities.
b . Advance against work order:- Advance is granted to a client
against the work order of Government Department, Corporation, Autonomous bodies
and reputed multinational/ private organization. The client’s managerial
capability, equity strength, nature of the scheduled work is judged to arrive
at a logical decision. Disbursement is made after completion of documentation
formalities. Besides usual charge documents a notarized irrevocable power of
attorney to collect the bills from the concerned authority and a letter from
the concerned authority confirming direct payment to the bank is also obtained.
The work is strictly monitored to review the progress at each interval.
c . Advance against DR/ Sanchay
patra:- Advance is granted to a client against the security of
Fixed Deposit Receipt and Sanchaypatra. Advance is granted to the person to
whom the instrument belongs. The instrument is to be discharged duly the
holder (or all of them if they are
more than one) on appropriate revenue.
The signature must tally with that on the bank’s recover. The discharged
instrument is surrendered to the bank along with a letter signed by holder/
holders authorizing the bank to appropriate the proceeds of the instrument on
due date towards the repayment of the advance. The Bank’s lien is prominently
noted on the face of the instrument under the signature of an authorized bank
official the instrument is issued by another branch of AB Bank or any branch of
some other bank, then the concerned branch is intimated to lien mark the
instrument. The rate of interest is 12% (against FDR) and 14% (against Sanchay
Patra). Margin kept is 20% (for instruments issued by other bank) and 15%
(instruments issued by AB Bank)
d. Loan against Trust Receipt (LTR):
Advance against a TR obtained from
the customer is allowed when the documents covering an import shipment are
given without payment. The customer holds the goods or their sale proceeds in
Trust for the bank until the LTR is fully paid off. TR is a document, which
creates the banker’s lien on the goods. The period of TR may be 30,45,60/90 days.
The sale proceeds of goods held in trust must be deposited to the bank by the
borrower irrespective of period of TR.
e. Staff Loan:
Bank official from senior officer
and above is eligible for this loan. The maximum amount disbursed is
Taka.50,000/- for a period of 2 years.
The rate of interest is 8% per annum.
f. House Building Loan:
This loan is provided against 100%
cash collateral. Besides, the land & building are also mortgaged with the
bank. Rate of interest is 16.5%.
g. Time Loan: This loan matures with in one year.
h. Term loan: These are loans with maturity period of 2 years or
above. These loans are repayable in installments.
i. Consumer Credit Scheme: This scheme
is aimed to attract consumers from the middle & upper middle class
population with limited income. The borrower should have an account (SB or CD)
with the bank. The bank finances maximum Taka. 5 lacs (for cars & Taka. 2
lacs (for other items). Minimum 25% of the purchase cost of the product is to
be deposited by the borrower with the bank as equity before the disbursement of
the loan. The rest 75% is to be kept as cash collateral (FDR, sanchay patra
etc.) with the bank. The purchased items are hypothecated with the bank. The
disbursement of the loan is effected by debiting time loan / term loan account
to be opened in the name of the borrower. Loan amount is disbursed through A/C
payee pay order / Demand Draft Directly to the seller after submission of indent, deposit of client equity & completion
of documentation formalities, Interest is 14% per quarter, 2% of loan amount is
taken as processing fees. The bank obtains post dated A/C payee checks drawn in
favor of the bank for the monthly installments covering the lending period from
the borrower & the loan amount is adjusted on the due date of installments.
(ii) Non-Funded Facilities:
a .Letters of credit:
Credit department sends proposal for L/C (cash
as well as back to back) to head office for approval. L/C is discussed in
detail under import section.
b . Letter of guarantee:
According to the Section 126 of
Contract Act, 1872, guarantee can be defined as a contract to perform the
promise or discharge of liability of a third person in case of his default. The
person who gives the guarantee is called the ‘surety’, the person in respect of
whose default the guarantee is given is called ‘the principal debtor’ and the
person to whom the guarantee is given is called the ‘creditor’. It is an
irrevocable undertaking to pay in case of a certain eventuality. The details
about guarantee are discussed later.
3.1.3.2 SELECTION OF THE BORROWER
In lending,
the most important step is the selection of the borrower. Due to the asymmetric
information and moral hazard, banks have to suffer a lot due to the classified
loans and advances, which weakens the financial soundness of the bank. If the
selection of borrower is correct, that is, the borrower is of good character,
capital and capacity or of reliability, resourceful and responsible; the bank
can easily get the return from the lending. Consequently, monitoring is made
much easier for the banker. From this point of view, ABBL follows the following
procedures,-
A.
Studying past track record: After getting an
application for a loan, an ABBL Official studies the past track record of the
applicant. Generally the study includes,-
1.
Account balances and the past transactions.
2.
Credit report from other banks.
3.
Information of the Industry by studying market
feasibility.
4.
Financial statements (balance sheet, cash flow
statement, and income statement). If the borrower is a sole- proprietor, then
the single entry accounting treatment is converted to double entry system.
B.
Report from Credit Information Bureau of Bangladesh
Bank if the amount is more than TK.10 lac.
C.
Borrower analysis: Borrower analysis is done from the
angle of 3-C (character, capital, capacity) or 3-R (reliability,
resourcefulness, responsibility). It follows that the bank forms a rational
judgment about the integrity of the borrower, which should be undoubted. The
human skill, conceptual skill, operational skill is qualitatively analyzed.
D.
Business analysis: Business analysis is done from two
angles-terms and conditions and collateral securities.
3.1.3.3 General
Procedures of Loans and Advance
The total process of proposal and sanction of
loan is a continuous process. In a particular stage the described loan is
sanctioned or rejected by the authority. The total process is given below.
Step -1: The client
applies for accretion amount of loan in prescribed form, which is available in
the branch office.
Step –2: Scrutiny
by an officer of loan proposal whether party has submitted the documents as per
circular.
Documents
required with loan application form:
1. Quotation /Indent letter (For import
goods)
2. No-objection certificate by the Chairman
of Union Council,
3. Trade license,
4. Trade Mark Registration
5. Income tax certificate
6. Import/Export Registration Certificate
7. License of Chief Inspector of Factories.
8. Certificate of Lease Financing Company
9. Life description of M.D and Directors
10. Memorandum of
meeting of Board of Directors about taking loan from the branch
11. Utility cost certificate approved by the
M.D
12. Building lay -out plan
13. Forecasted productions sales and profit
limit
14. 3 years projected balance sheet,
15. Cash flow at the end of the year
Step-3: Communicate with the party if there is any shortage of
documents and collect the required papers
Step -4: The branch manager or an officer then takes the
responsibility to visit and evaluate the concern
Step-5: A Credit
report is prepared on the borrower
Step-6: The concerning officer then wants '' non-incumbent
certificate'' from the bank lawyer.
Step-7: ends letters to different banks and financial
institutions for recommendations.
Step-8: Forwards
the documents to Head Office with proper recommendations.
Step -9: Functions
of Head Office.
1. They receive the application and give an
entry in the register
2. If the loan
amount is greater than one crore it is placed before Board of Director.
3. If the
committee accepts the loan then they sends letters to CIB and different banks.
4. Head Office's engineers and High
Officials visit the area
5. If they satisfied then it is placed for
a. Technical
Report to engineer
Technical
report covers
Location of the project
Description about land with value
Detail estimation of building /civil
worth
Cost of selected Machinery
Other fixed assets
Requirement of raw materials
Availability of Gas, electricity,
Water
Requirement of manpower
b. Financial
appraisals
Assessment
of loan amount Estimation of fixed cost of project
Working capital assessment
Sales and revenue estimation
Income statement examination
Replacement schedule
IRR calculation
Fund flow statements
Balance sheet preparation
Financial Analyst's report whether
the loans is viable or not.
c. Market
Analysis
Prevail market rate of product with
similar kind of products
Market competitions
Consumer of the product
6. Then the
proposal is sent to MCC and afterwards is placed in Board of Directors
7. Board of Directors finally sanctions the
loan
8 And is sent to branch office,
Step -10: The branch
then informs the party by letter,
Step -11: If the party accepts the terms and conditions of the
loan, then they are requested to complete documentation as per sanction letter.
Step -12: After
completion of documentation, the Bank disburses the loan amount.
REVISED
INTEREST ON LENDING EFFECTIVE FROM 1ST JANUARY, 1999
CATEGORY
|
NEW RATES EFFECTIVE FROM 1ST
APRIL 1998 UNTIL FURTHER INSTRUCTION.
|
1.
agriculture :
a.
Loan to primary producer
b.
Loan to Agricultural
Input Traders/Fertilizer Dealers/Distributors.
|
10% - 12%
13% - 14%
|
2.
Large & Medium Scale Industry
(Term Loan)
|
14.50% -
16.00%
|
3.
Working Capital :
a.
Jute
b.
Other than Jute
i. Large (40 crore & above)
ii. Medium & Small
|
12%
13% - 15%
14.50% -
16.50%
|
4.
Exports :
|
10%
10%
|
5.
Commercial Lending :
|
14%
15% - 16%
13% - 15%
|
6.
Small & Cottage Industry
(Term
Loan)
|
12%
|
7.
Others :
|
15% -
16%
14% -
16%
14% -
16%
12% -
14%
|
Table-2: Interest rate for credit
Source: Credit Department, ABBl,
Karwan Bazar Branch
3.2 LOAN ADMINISTRATION
3.2.1 UNDERSTANDINGS
The job of loan Administration
Department starts from the disbursement of credit facilities to the customers,
as they desired. There are 4 employees one is Senior Officer, two Officers and
one Asst. Officer in this department performs various jobs to disburse the
credit, to keeping the recovery records of credit extended to different types
of borrowers.
3.2.2 THINGS ARE DONE HERE
The following things are done in
this department:
a.
Bank Guarantee related all works.
b.
Preparation of MSOCF of the Branch.
c.
Preparation of Offering Sheet & Memo against Cash
Collateral Loans and advances.
d.
Preparation of statement of 1 crore and 10 crore &
above.
e.
Balancing of non-judicial & adhesive stamps.
f.
Loan documentation Scrutinizing and preparation of
related papers.
g.
Maintaining records and safety of all Loan
Documents/related papers along with the records of the Loan port Folio.
h.
Follow-up with Legal Advisor regarding legal matters
and other related works.
i.
Preparation of Tickets related to Loans and Advances.
j.
Execution of Registered Mortgage formalities with the
Sub-Registrar.
k.
Creation of first charge with the Registrar of jt.
Stock Co.
l.
Assist in Loan Administration Dept.
m.
Preparation of CL Returns.
n.
Preparation of CIB, SBS-3 and other monthly, quarterly
& yearly statements elating to Loans & Advances.
o.
Preparation of checklist and Offering Sheet.
p.
Maintaining records, Calculation and Treatment of
Interest Suspense for the past due accounts.
3.2.3 Personal observations:
I have observed the following things:
3.2.3.1 DOCUMENTATION:
Documentation can be described as the process or technique of
obtaining the relevant documents. In spite of the fact that banker lends credit
to a borrower after inquiring about the character, capacity and capital of the
borrower, he must obtain proper documents executed from the borrower to protect
him against willful defaults. Moreover, when money is lent against some
security of some assets, the document must be executed in order to give the
banker a legal and binding charge against those assets. Documents contain the
precise terms of granting loans and they serve as important evidence in the law
courts if the circumstances so desire. That’s why all approval procedure and
proper documentation shall be completed prior to the disbursement of the
facilities.
Charge documents as required by the different types of
advances are mentioned bellow:
A.
LOAN:
1.
D. P NOTE signed on revenue stamp (Annexure-4).
2.
Letter of arrangement. (Annexure-5).
3.
Letter of disbursement.
4.
Letter of partnership (partnership farm) or Board of
resolution (limited companies).
5.
Letter of pledge.
6.
Letter of hypothecation.
7.
Letter of lien and ownership / share transfer form (in
case of advance against share).
8.
Letter of lien for packing credit.
9.
Letter of lien (in case of advance against F D R)
10.
Letter of lien and transfer authority.(in case of
advance against P S P, B S P)
11.
Legal documents for mortgage of property (As draft by
legal adviser)
12.
Copy of sanction letter mentioning details of terms
and condition duly acknowledge by the borrower
13.
Trust receipt.
B.
OVERDRAFTS:
1.
D P Note.
2.
Letter of partnership.
3.
Letter of
arrangement.
4.
Letter of continuity. (Annexure-6).
5.
Letter of lien. (Annexure-7).
6.
Letter of lien and ownership /share transfer form (in
case of advance against share).
7.
Letter of lien and transfer authority.
8.
Legal documents for mortgage of property.
C.
CASH CREDIT:
1.
D P Note.
2.
Letter of partnership.(in case of partnership farm) or
Board of resolution (in
case of limited company)
3.
Letter of arrangement.
4.
Letter of continuity
5.
Letter of hypothecation [In case of cash credit
(Hypothecation)]
6.
Legal documents for mortgage of property
7.
Letter of pledge or Agreement of pledge.[In case of
cash credit (pledge)]
D.
BILLS PURCHASED:
1.
D P Note.
2.
Letter of partnership.(in case of partnership farm) or
Board of resolution
( in case of limited company)
3.
Letter of arrangement.
4.
Letter of acceptance, where it calls for acceptance by
the drawee.
5.
Letter of hypothecation of bill.
3.2.3.2 CREDIT DISBURSEMENT:
Having
completely and accurately prepare the necessary loan documents, the loan
officer ready to disburse the loan to the borrower’s loan account. After
disbursement, the loan needs to be monitored to ensure whether the terms and
conditions of the loan fulfilled by both bank and client or not.
3.2.3.3 CREDIT MONITORING, FOLLOW-UP AND SUPERVISION:
Credit
monitoring implies that the checking of the pattern of use of the disbursed
fund to ensure whether it is used for the right purpose or not. It includes a
reporting system and communication arrangement between the borrower and the
lending institution and within department, appraisal, disbursement, recoveries,
follow-up etc.
ABBL Officer checks on the
following points,
1.
The borrower’s behavior of turnover
2.
The information regarding the profitability,
liquidity, cashflow situation and trend in sales in maintaining various ratios.
The review
and classification of credit facilities starts at Credit Department of the
Branch with the Branch Manager and finally with Head office credit division
3.2.3.4 SECURITIES:
To make the
loan secured, charging sufficient security on the credit facilities is very
important. The banker cannot afford to take the risk of non-recovery of the
money lent. ABBL charges the following two types of security, -
1.
Primary security: These are the security
taken by the ownership of the items for which bank provides the facility.
2.
Collateral security: Collateral securities refer
to the securities deposited by the third party to secure the advance for the
borrower in narrow sense. In wider sense, it denotes any type of security on
which the bank has a personal right of action on the debtor in respect of the
advance.
3.2.3.5 Modes Of Charging
Security:
There are different modes of charging security
are exercised by the bank:
1.
PLEDGE: Pledge is the bailment of the goods
as security for payment of a debt or performance of a promise. A pledge may be
in respect of goods including stocks and share as well as documents of title to
goods such as railway receipt, bills of lading, dock warrants etc. duly
endorsed in bank’s favor.
2.
HYPOTHECATION: In case of hypothecation the
possession and the ownership of the goods both rest the borrower. The borrower
to the banker creates an equitable charge on the security. The borrower does
this by executing a document known as Agreement of Hypothecation in favor of
the lending bank.
3.
LIEN: Lien is the right of the banker to
retain the goods of the borrower until the loan is repaid. The bankers’ lien is
general lien. A banker can retain all securities in his possession till all
claims against the concern person are satisfied.
4.
MORTGAGE: According to section (58) of the
Transfer of Property Act, 1882 mortgage is the ‘’transfer of an interest in
specific immovable property for the purpose of securing the payment of money
advanced or to be advanced by way of loan, existing or future debt or the
performance of an engagement which may give rise to a pecuniary liability”. In
this case the mortgagor dose not transfer the ownership of the specific immovable
property to the mortgagee, only transfers some of his rights as an owner. The
banker exercises the equitable mortgage.
3.2.3.6 BANK GUARANTEE
As service to their customers,
bankers sometimes issue guarantees of various types on customer’s behalf to
third parties. By issuing guarantee Bank undertakes to pay the beneficiary
(named in the guarantee) the sum stated in the bank guarantee upon the
beneficiary’s first written demand without argument, without the beneficiary
needing to prove or to show grounds or reasons for his demand. When a customer
approaches for bank guarantee he has to fill up an application form. The Branch
sends guarantee proposal to Head Office proposing a margin. Head office after
careful study of proposal & up-to-date credit report of borrower sanctions
the issue of guarantee. Head office may increase the margin of guarantee.
Sometimes in case of credit worthy borrowers who need the bank guarantee
urgently the branch issues guarantee first & then sought the permission of
Head office. The branch also issues counter guarantee i.e. an additional
guarantee supporting a guarantee first & then sought the permission of Head
Office. The branch also issues counter guarantee i.e. an additional guarantee
supporting a guarantee issued by a foreign correspondent bank. Guarantee should
relate to the normal business of the customer.
At the time of issue of Bank guarantee
(i)
Customers liability A/C
------------------------------------------------------------ debit
Credit – Banks liability A/C
------------------------------------------------------------ credit
(ii) Customer A/C (Savings /
Current)
----------------------------------------- debit
Credit – Margin A/C
---------------------------------------------------------------------
credit
Credit- Commission A/C
------------------------------------------------------------- credit
Credit – Stamp A/C
------------------------------------------------------------------- credit
Credit – Other fees and charges
A/C ------------------------------------------------ credit
When the guarantee is returned duly
discharged by concerned authority, then:
(i) Banks liability A/C
-------------------------------------------------------------- debit
Customers liability A/C --------------------------------------------------
credit
(ii) Margin A/C
-----------------------------------------------------------------------------
debit
Credit – Customers A/C (Saving /
current)
---------------------------------------------- credit
3.2.3.7 CIB
Bangladesh Bank has established
within itself a Credit Information Bureau (CIB), which collects credit
information from the banks. Banks are required to furnish such information in
respect of credit limit of Tk. 50000 and over. They mention the Name of
facility, security and charge along with outstanding balance. After
consolidating such information in respect of each customer, the central bank
supplies to the total limits sanctioned to and the number of banks dealing with
a party. Thus the banks can find out if any of their customers is having
excessive borrowings from the banking system at any particular time.
3.2.3.8 Loan classification
(A)
classification scale
(i)unclassified
: Repayment
is regular
(ii) Substandard : Repayment
is irregular or stopped but has reasonable prospect of
improvement.
(iii) Bad/ Loss : Very
little chance of recovery.
(B) Classification Procedure:
Classification procedure for all
types of bank loans including industrial loans is governed by the guidelines
contained in BCD Circular No. 34 issued by Bangladesh Bank in 1989 and
subsequently revised partially through BCD Circular No. 12 issued in 1995.
According to the revised guidelines the loans are classified on the basis of
following objective and subjective criteria:
(C) Classification Criteria:
Overdue (OV): Term loans become
overdue wherever an installment is not received within 3 months of the normal
date of repayment for private sector loans and 6 months in case of public
sector loans. Continuous type of loans, if not renewed, becomes overdue on the
date of expiration of the loan. Classification status of a loan account is
determined on the basis of the length of overdue period as under:
(D) Length of Overdue:
(I) Length of Overdue Classification Status
(II) Less then 6 month Unclassified
(III) 6 months or more but less
than Substandard
12 months
(IV) 12 months or more but less
than Doubtful
24 months
(V) 24 months and above Loss
Required Payment: If a loan is renewed or rescheduled for at least 2
ties but is not overdue it can be classified if specified turnover repayment
has not been made.
Excess Drawing: A continuous loan will be classified “Substandard”
if its limit remains
overdrawn
for more than 50% for 45 days even if it is not classified on overdue basis.
Loans being classified
“substandard” on the basis of lack of turnover or excess drawing will shift to
“Doubtful” category after two years and to “Loss” after expiry of another two
years.
Legal Action: Loans in respect of which legal action has been
initiated will be classified as “ Doubtful” and on expiry of 5 years from the
date of initiation of legal action will be classified as “ Loss”
Qualitative Judgment: In
addition to the above mentioned objective criteria loans can also be classified
on the basis of qualitative judgment taking into consideration the factors such
as borrowers performance, available securities etc.
Provision:
Provision Base: balance outstanding
on the ledge minus interest suspense minus value of eligible securities
including 50% of the value of real estate, if any.
Rate of Provision: Provision to be applied on the provision base as
under-
(I) Unclassified 1%
(ii) Substandard 15%
(iii) Doubtful 50%
(iv) Bad Loss 100%
3.3 CREDIT RECOVERY CELL
3.3.1 UNDERSTANDING:
Loan recovery cell is very
important part in this credit section. Loan recovery refers recovery from past
dues made by the clients. This cell performs several functions to recover the
loan.
3.3.2 THINGS ARE DONE HERE
The following things are done in
this department:
a.
All correspondents related to past due papers.
b.
Preparation of the memos for rescheduling and
settlement of the past due accounts of the branch.
c.
Follow-up with the defaulter clients for early
recovery of the past due and no performing loans.
d.
Follow-up with legal adviser regarding legal matter
and other related works.
e.
Preparation of past due statements and follow-up of
the account.
3.3.3.1 legal framework for loan recovery:
After being
classified, if the borrower is disable to adjust the loan then the bank can
take the following legal actions by filing suit, -
1.
Filing certificate cases under Public Demand Recovery
Act-1913.
2.
Filing money suitcases under Artha Rin Adalat-1990.
3.
Filing Bankruptcy cases under Bankruptcy Act-1997.
4.
Filing cases under Negotiable Instrument Act-1881
section 138 to 141 for
insufficient fund.( In case of term loan)
3.3.3.2Some special techniques to recover the loan:
1. Moral persuasion
3.3.3.3Some problems of recovery:
1. Exemption of interest by govt./
bank.
2.
Exemption of loan including interest by govt.
3. Political pressure and
misunderstanding
PART 4
FOREIGN EXCHANGE
Modern banks facilitate trade and
commerce by rendering valuable services to the business community. Apart from
providing appropriate mechanism for making payments arising out of trade
transactions, the banks gear the machinery of commerce, specially in case of
international commerce, by acting as a useful link between the buyer and the
seller, who are often too far away from and too unfamiliar with each other.
According to foreign exchange regulation act 1947 “ Any thing that conveys the
right to wealth in another country is foreign exchange”.
Foreign exchange department plays
significant roles through providing different services for the customers.
Opening or issuing letters of credit is one of the important services provided
by the banks.
Letter of credit:
A letter of
credit is a letter issued by a bank (known as the opening or the issuing bank)
at the instance of its customer (known as the opener) addressed to a person
(beneficiary) undertaking that the bills drawn by the beneficiary will be duly
honored by it (opening bank) provided certain conditions mentioned in the
letter have been complied with.
The customary clauses contained in a L/C are the
following, -
(i) A clause authorizes the
beneficiary to draw bills of exchange up to a certain on the opener.
(ii) List of shipping documents,
which are to accompany the bills.
iii)
Description of the goods to be shipped.
(iv) An
undertaking by the opening bank that bills drawn in accordance with the
conditions will be duly honored.
(v)
Instructions to the negotiating bank for obtaining reimbursement of payments
under the credit.
Parties to a letter of credit: The parties to a L/C are, -
1.
Importer/buyer
2.
Opening bank/Issuing bank
3.
Exporter/Seller/Beneficiary
4.
Advising bank/Notifying bank
5.
Negotiating bank
6.
Confirming bank
7.
Paying/Reimbursing bank
The Advising Bank: It is the bank
in the exporter’s country (normally the exporter’s bank), which is usually the
foreign correspondent of importer’s bank through which the L/C is advised to
the supplier. If the intermediary bank simply advises/notifies the L/C to the
exporter without any obligation on its part, it is called “Advising Bank”.
The Confirming Bank: If the Advising Bank also adds its own undertaking
to honor the credit while advising the same to the beneficiary, he becomes the
Confirming Bank, in addition, becomes liable to pay for documents in conformity
with the L/C's terms and conditions.
The Negotiating Bank: The bank that negotiates the bill of exporter drawn
under the credit is known as Negotiating Bank. If the advising bank is also
authorized to negotiate the bill drawn by the exporter, he becomes the
Negotiating Bank.
The Accepting Bank: A Bank that accepts time or unasked drafts on behalf
of the importer is called an Accepting Bank. The Issuing Bank can also be the
Accepting Bank.
The Paying Bank & The Reimbursing Bank: If the Issuing Bank does not maintain any
account with a bank that will be negotiating documents under a L/C, then
arrangement is made to reimburse the negotiating Bank for the amount to be paid
under from some other bank with whom the Issuing Bank maintains his account.
The latter bank is known as Reimbursing bank. A letter of credit may be either.
In the Arab Bangladesh Bank Ltd.
Karwan Bazar Branch foreign exchange section performs various functions under
three departments:
(i) Import department
(ii) Export department
(iii) Foreign Remittance.
4.1 L/C IMPORT DEPARTMENT
4.1.1UNDERSTADING
IMPORT: Imports are foreign goods and services purchased by
consumers, firms & Governments in Bangladesh.
IMPORT
PROCEDURE: To import through BL, a customer requires-
(I)Bank
account
(ii) Import
Registration Certificate
(iii) Tax
Paying Identification Number
(iv)
Proforma Invoice Indent
(v)
Membership Certificate
(vi) LC
Application form duly attested
(vii) One
set of IMP Form
(viii)
Insurance Cover note with money receipt
(ix) Others
The import procedure can be shown by the following flow chart,-
IMPORT PROCEDURE:
 |
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Yes
|
|
|
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No Yes No
|
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|
|
|
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No Yes Yes No No
|
Figure-3: Import Mechanism
Source: L/C Import Department ,ABBL
,Karwan Bazar Branch
Import mechanism:
To import, a person should be
competent to be an ‘importer’. According to Import and Export Control Act,
1950, the Office Of Chief Controller Of Import and Export provides the
registration (IRC) to the importer. After obtaining this person has to secure a
letter of credit authorization (LCA) from Bangladesh Bank. And then a person
becomes a qualified importer. He is the person who requests or instructs the
opening bank to open an L/C. He is also called opener or applicant of the
credit.
There are one chief officer, one senior
officer, two officers, one probationary officer and trainee asst. Officer in
this department.
4.1.2THINGS ARE DONE HERE
The following things are done in
this department:
a.
Total supervision of Import Department (Back to
Back/Cash).
b.
Foreign Correspondence related to above.
c.
Payment of Back-to-Back L/C and endorsement of Export
L/C against payment.
d.
Follow-up of Back-to-Back overdue bill.
e.
Correspondence Regarding, Back-to-Back L/C and Cash
L/C.
f.
Maintenance of Due Date Diary.
g.
Maintenance & record of related L/C Documents.
h.
Audit Compliances.
i.
Matching of Bill of Entry with IMP, Follow-up of
pending Bill of Entry Quarterly Statement.
j.
Batch Checking.
k.
L/C opening/ Amendment (Back to Back L/C).
l.
Endorsement of Export L/C when opening.
m.
Batch checking.
n.
Balancing of L/C Contingent Liability 9Back to Back
L/C).
o.
Follow-up of Sub-Judaic bills and maintaining liaison
with Head Office and Foreign Correspondent.
p.
All correspondence related to Back-to-Back L/C both
with Head Office and Foreign Correspondent.
q.
Supervision of checking, Lodgment and retirement of
Import documents under Back-to-Back L/C.
r.
Issuance of Certificate and attestation of
papers/documents of garments clients as required by BGME, EPB & other
regulatory bodies.
s.
Checking, lodgment, retirement of Import documents
under Back-to-Back L/C.
t.
Issuance of Shipping Guarantee (Back to Back L/C).
u.
IMP Form Fill-up (Cash L/C).
v.
Inform negotiating Bank about maturity date of
Back-to-Back L/C.
w.
Quarterly statement for Bonded ware House.
x.
Balancing of Accepted Liability.
y.
Statement of outstanding accepted import bills under
Back-to-Back L/C.
z.
L/C opening and Amendment of Cash/ Inland L/C.
aa.
Maintenance and record of Pass Book and IRC.
bb. Maintenance
& Record of related L/C (s) & Documents.
cc.
Credit Report.
dd. Statement
of IRC Renewal fees to CCI&E.
ee.
Preparation of monthly foreign exchange business
position.
ff.
L/C Lodgment (Cash).
gg.
Checking of Cash L/C documents.
hh.
L/C
Retirement.
ii.
LCA Issue.
jj.
BLC Statement.
kk. Differed
Payment (Cash).
ll.
Follow-up of outstanding BLC.
mm.
Correspondent (Cash L/C).
nn. Proof Sheet
of LC Margin and Contingent Liability (Cash L/C ).
oo. Issuance of
shipping guarantee (cash) IMP forms fill-up (cash).
4.1.3 Personal observations:
I have observed the following
things:
4.1.3.1 L.C Opening
If an importer wants to import some
goods from outside the country, at first he has to apply to a bank for opening
a L/C. Letter of Credit (L/C) is a written undertaking of a bank written to the
seller and issued at the request of the buyer to pay at site or a determinable
future date. According to Import Policy unless otherwise specified, all import
is to be made by opening irrevocable letter of credit (amendment or
cancellation with the agreement of the opening bank, advising bank, beneficiary
and importer). L/c can be opened against Proforma invoice if the exporter has
no agent and L/C can be opened against Indent if the foreign supplier has
indenting agent.
(a)
Documents Require
for Open a L/C :
For opening
letter of credit an importer is required to have some documents, which are to
be submitted to the L/C issuing or popularly known as opening bank.
·
A valid Import Register Certificate
·
Membership Certificate from the registered local
Chamber of Commerce and Industry or valid trade license.
·
Tax Identification Number.
·
Letter of Credit Authorization form.
·
Insurance cover note for L/C amount.
·
Indents for goods issued by indenter or Proforma
Invoice issue by foreign supplier.
·
Charge Documents duly signed.
·
IMP form duly signed.
·
The opener has to have a current account with the
bank.
(b)
Procedure
involved in L/C opening:
There are few steps involved in L/C
opening process.
i.
At first the L/C opener is required to fill up the
prescribed application form for requesting to open a L/C for him.
ii.
After receiving the application form with other
required documents submitted by the opener they are to be thoroughly
scrutinized. The points, which shall be scrutinized, are described bellow.
·
The amount and description of goods in the application
relevant with the indent or Proforma invoice or import contract.
·
The amount is covered by the insurance amount.
·
The item is not a banned one.
·
The indent produced has the Import Registration
Certificate number and the indenter’s
registration number. The indent has indenting agent’s signature and
importer’s signature.
·
Whether transshipment and partial shipment is allowed.
iii.
If all the documents along with the application are in
order, the financial position and credit worthiness of the importer, market
demand of the good will is assessed. Margin for letter of credit will also be
determined. The rate of margin depends on the financial condition of the
banker, Importers previous performance, status of relationship with the
importer, nature of goods etc. This margin is to be retained from the importer
either in cash or debiting the importers current account with the bank. The
importer is also required to pay the other concerning charge like foreign
corresponding charge, telex charge if any, handling charge, and commission etc.
iv.
After all these steps letter of credit is opened and
forwarded to the advising bank.
(c)
Accounting
Procedure Involved in L/C opening
There are two, one is L/C opening
and another is liability register, which includes liability amount, Margin,
Foreign correspondent etc. While opening L/C there are few accounting entries.
·
For Margin importer account with bank is debited and
Margin A/C is credited.
·
For contingent liability (L/C amount) Customer’s
liability on L/C cash is debited and Banker’s liability on cash is credited.
·
For other charges customer’s current account is
debited and commission/C, income A/C, Foreign correspondent charge A/C and
other related A/C is credited.
4.1.3.2Advising a letter of credit:
The advising or notifying
bank is the bank through which the L/C is advised to the exporter. It is a bank
situated in the exporting country and it may be a branch of the opening bank.
It becomes customary to advise a credit to the beneficiary through an advising
bank. Advising depicts the proof of authenticity of the credit to the seller.
The opening bank has a
corresponding relationship
or arrangement throughout the world by which the L/C is advised. Actually the
advising bank does not take any liability if otherwise not requested.
|
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APPLICATION
|
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ISSUE L/C ADVISE &CONFIRM Figure-4:
Advising L/C
Figere-4: Advising L/C
Source: Key Note Papers of Seminar
on Banking Techniques ,organized by ICC
4.1.3.3Adding confirmation:
The confirming bank does adding confirmation.
Confirming bank is a bank, which adds its confirmation to the credit, and it is
done at the request of the issuing bank. The confirming bank may or may not be
the advising bank. The advising usually does not it if there is not a prior
arrangement with the issuing bank. By being involved as a confirming agent the
advising bank undertakes to negotiate beneficiary’s bill without recourse to
him.
4.1.3.4L/C Transmitting
Letter of
credit can be transmitted to the advising bank through three methods. They are
in Telex, Courier or SWIFT (Society for Worldwide Interbank Financial
Transaction). L/C is send to advising bank in three copies. The advising bank
authenticates the original copy of L/C and delivers it to the exporter. The
duplicate copy is kept with the advising bank.
4.1.3.5Negotiating
The beneficiary (exporter)
receives the letter of credit from advising bank. After proper shipment of
goods as per terms and conditions of the L/C, required documents like
Commercial Invoice, Bill of Lading, and Bill of Exchange are presented to the
negotiating bank by the beneficiary for negotiation. If the documents are in
order as per L/C then the negotiating bank negotiates the drafts making payment
to the beneficiary. Then the negotiating bank forwards the drafts along with
the shipping documents to the L/C opening bank. The negotiating bank reimburses
the amount paid against the draft from reimbursement bank (authorized by
opening bank) by debiting Nostro A/C of the opening bank. Negotiating banks have
the option the to send the drafts and documents to the opening bank for
collection.
4.1.3.6Amendment
After opening of L/C sometime
alteration to the original terms and conditions become necessary. These
amendments involve changes in (i) unit price (ii) extension of validity o the
L/C (iii) documentary requirements etc. such amendments can be affected only if
all the concerned parties agree i.e. the beneficiary, the importer, the issuing
bank and the advising bank.
For any amendment the importer must
request the issuing bank in writing duly supported by revised indent/ Proforma
invoice. The issuing bank then advises the required amendment to the advising
bank. L/C amendment commission including postage is charged to the clients A/C.
4.1.3.7Lodgment
The opening bank receives
import bills, which have been negotiated. After receiving the documents, they
are to be thoroughly scrutinized before lodgment.
(a)
Scrutiny of
the documents
First of
all it must be ensured that
·
Full set of documents as mentioned in the L/C has been
received.
·
Documents have been negotiated within the negotiation
period.
·
The Bill of Lading/Air-Way Bill/ Railway receipt is
not dated later than the last date of shipment mentioned in the L/C.
The L/C has
not been amended or subjected to any special instructions, which might alter
the value of L/C.
Import
bills include following documents, which are to be scrutinized.
i.
Bill of Exchange
ii.
Commercial Invoice
iii.
Bill of Lading
iv.
Certificate of Origin
v.
Others
(i)Bill of Exchange.
·
It has to be verified that the bill of exchange has
been properly drawn and signed by the beneficiary according to the terms and
conditions of L/C.
·
The amount in the Bill is identical with that
mentioned in the invoice.
·
The amount drawn does not exceed the amount mentioned
in the L/C.
·
The amount in words and figures should be same.
·
The bill of exchange should be properly endorsed.
ii.
Commercial
Invoice
·
It has to be verified that the commercial invoice has
been properly drawn and signed by the beneficiary according to the terms and conditions
of L/C.
·
The beneficiary should properly invoice the
merchandise.
·
The merchandise is invoiced to the importer on whose
account the L/C is opened.
·
The description of merchandise and the unit price
correspond with that given in the L/C.
·
The import license or IRC number of the importer,
indenters registration number and number of Letter of Credit Authorization
number are incorporated in the Invoice.
iii. Bill of Lading
First of all it has to be
cleared that the Bill of Lading is showing “Shipped on Board” and it has to be
properly endorsed to the bank.
·
The B/L should include the description of the
merchandise according to invoice.
·
The port of shipment and destination, date of shipment
and the name of the consignee are in agreement with those mentioned in the L/C.
·
The shipping company or their authorized agents
properly sign the B/L.
·
The date on the B/L is not ‘stale’ which means it is
not dated in unreasonably long time prior to negotiation.
iv Certificate of Origin
·
The Merchandise described in the Certificate is in
accordance with the L/C.
v.
Others
There are some other
documents, which are also attached, with the shipping documents like packing
list, pre-shipment inspection certificate etc. These documents are also
verified carefully before lodgment.
(b)
Steps
involved in Lodgment
When the scrutiny of import
bills is over the steps should be taken for lodgment.
·
At first all the particulars of the documents are
entered in the PAD (Payment Against Document) register and PAD No. Seal is
given on all the copies of the received documents.
·
Convert the foreign currency into Bangladeshi
currency.
·
Reverse the contingent liability and entry in the
liability register.
·
Prepare lodgment voucher.
·
Prepare other voucher.
·
Send IBCA to the head office.
·
Make intimation to the importer.
(c)
Accounting
effect
i.
For reversing contingent liability contra voucher is
debited by Banker’s Liability A/C and credited with Customer’s Liability A/C.
ii.
For PAD, income on exchange there are few credit
vouchers and one debit voucher. In the debit voucher the debit head is PAD and
income and head office is credited. In the credit vouchers the opposite of
these entry is made.
iii.
4.1.3.8 Retirement
The importer receives the
intimation and gives necessary instruction to the bank for retirement of the import
bills or for the disposal of the shipping document to clear the imported goods
from the customs authority. The importer may instruct the bank to retire the
documents by debiting his account with the bank or may ask for LTR *(Loan
Against Trust Receipt). Following steps are to be taken for retirement of
documents.
(a) Steps involved in retirement
·
Calculation of interest if any.
·
Calculation of other charges.
·
Passing vouchers.
·
Entry in the register.
·
Endorsement in the Bill of Lading or other transport
document and in the Bill of Exchange.
(b) Accounting
effect
The Customer’s account and
Margin on L/C is debited and PAD and Head office and other income A/C are
credited. In case of LTR the LTR A/C is Debited instead of the PAD A/C.
4.2 L/C BACK TO BACK DEPARTMENT
4.2.1Back-to-Back L/C
Back to Back letter of credit may
be fined as a credit which is opened at the instruction and request of the
beneficiary of the original Export L/C on the basis of strength of that L/C.
Ready-made garment industries and specialized textile units are allowed the
facility of importing fabrics and other materials needed for manufacture of
garments/ specialized textiles against back to back L/C arrangement.
Back-to-Back L/C is of two types.
(i)Foreign back letter of credit.
(ii)Inland back-to-back letter of
credit.
A back-to-back L/C is opened
against an irrevocable L/C opened bank having reasonable period of validity to
cover shipment of merchandise after completion of validity to cover shipment of
merchandise after completion of the manufacturing process. The export L/C is
lien marked with the back-to-back L/C issuing branch. import L/C is opened on
usance basis covering usance of not more than 180 days. The import L/C is
opened for 75% of the value of Export L/C. The payment is normally made form
the proceeds of export bills negotiated after shipment.
4.2.2Procedure for opening back-to-back L/C:
The following papers / documents
are required to be submitted by the exporter to the bank for opening foreign
back-to-back L/C.
i)
L/C Authorization forms duly filled and signed.
ii)
Indent/ pro forma invoice
iii)
Imp-form.
Along with the above papers /
documents, original export L/C is to be submitted by the exporter. On receipt
of these documents the bank scrutinizes the terms and conditions of the export
L/C. After getting approval from head office through Credit Section, The
particulars of the L/C are entered in the L/C opening register.
4.3 EXPORT
DEPARTMENT
4.3.1
UNDERSTANDING
The goods and services sold
by Bangladesh to foreign households, businessmen and Government are called
export. The export trade of the country is regulated by the Imports and Exports
(control) Act, 1950. 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.
There are one chief officer, one
senior officer, one officer and one probationary officer working in this
department.
4.3.2 THINGS ARE DONE HERE
The following things are done in
this department:
a.
Scrutiny of Export Shipping Documents.
b.
Follow-up for realization of Export Proceeds.
c.
All Correspondence relating to Export Department.
d.
Compliance of Audit & Inspection.
e.
Advising of Export L/Cs to the beneficiary.
f.
Authentication of L/C and Amendments from other
Correspondent Bank.
g.
Transfer of Export L/C to the 2nd
Beneficiary & issuance of notice of transfer to L/C issuing Bank.
h.
Recording of Export L/C particulars in Export L/C
Transfer Register.
i.
Realization of transfer changes.
j.
Issuance of precedes realization certificates.
k.
And other works as & when directed by the manager
and Sub-Manager.
l.
Certificate of EXP Forms.
m.
Posting of Tickets.
n.
Lodgment of Export Bills (FBP, FDBC, IBP & IBC).
o.
Preparation of tickets elating to negotiation of
documents.
p.
Negotiation of Inland Bills.
q.
Maintenance of all records related to FBP, FDBC and
Inland Bills.
r.
Balancing of FBP, FDBC, and IPB & A/R Export A/Cs.
s.
Preparation of statement and all returns to Bangladesh
Bank and Head Office (Weekly/ Monthly/ quarterly).
4.3.3 Personal observations:
I have observed the following
things:
4.3.3.1EXPORT BILL SCRUTINY: scrutinizes the export bill on
the following points, -
A. General:
1. Late
shipment
2. late
presentation
3. L/C expired
4. L/C
overdrawn
5. Partial
shipment or transshipment beyond L/C terms.
B.Bill Of Exchange:
1. Amount of
bill differs with Invoice
2. Not drawn
on L/C issuing bank
3. not signed
4. Tenor of
B/E not identical with L/C
5. Full set
not submitted
6. Invoice:
7. Not issued
by the beneficiary
8. Not signed
by the beneficiary
9. Not made
out in the name of the Applicant
10.
Description, Price, quantity, sales terms of the goods
not correspond to the credit
11.
Not marked one fold as original
12.
Shipping marks differs with B/L & packing list
C.Packing List:
1. Gross
weight, net weight & measurement, number of cartoons/ packages differs with
B/L.
2. Not marked
one fold as original
3. Not signed
by the beneficiary
4. Shipping
marks differs with B/L
D.
Bill of Lading/Air Way Bill :
1. Full set of
bill not submitted
2. B/L is not
drawn or endorsed to the Order Of Eastern Bank Ltd.
3. “Shipping
on Board”, “Freight Prepaid” or “Freight Collect” etc. notations are not marked
on the B/L
4. B/L not indicate
the name and capacity of the party i.e. carrier or master, on whose behalf the
agent is signing the B/L.
5. Shipped on
Board Notation not showing name of pre-carriage vessel/ intended vessel.
6. Shipped on
Board Notation not showing port of loading and vessel name (In case B/L indicates a place of receipt or taking in
charge different from the port of lading)
7. Short
Form B/L
8. Charter
party B/L
9. Description
of goods in B/L not agree with that of Invoice, B/E & P/L
10.
Alterations in B/L not authenticated.
11.
Loaded on deck
12.
B/L bearing clauses or notations expressly declaring
defective condition of the goods and / or the packages.
E. Others:
1. Non-Negotiable
documents not forwarded to buyers or forwarded beyond L/C terms.
2. Inadequate
number of Invoice, Packing List & Others
submitted.
3. Short
shipment certificate not submitted.
EXPORT FINANCE
(I) Pre-shipment credit:
Pre-shipment credit usually takes
the following forms
i)
Overdraft against hypothecation of exportable
commodities.
ii)
Overdraft against Trust Receipt (T.R)
iii)
Packing Credit. (P.C)
(i) O/D (Hypothecation):
Under this arrangement, limit is
sanctioned against hypothecation of raw materials / finished goods meant for
export. The exporter creating a charge in favor of the bank on the goods
hypothecated signs a letter of hypothecation. Possessions ownership and control
of goods remain with borrower. Bank sometimes takes collateral security in the
form of land and building.
(ii) O/D against (T.R)
Under this arrangement the exporter
is required to execute a Trust Receipt in favor of the bank undertaking hold
the goods or rate proceeds there of in trust on behalf of the bank till the
loan is liquidated. This type of credit facility is granted to very trustworthy
customer whose integrity is beyond doubt.
(iii) Packing Credit: -
Packing credit limit is sanctioned
to the exporter against the security of Railway Receipt, Truck, and Receipt
etc. in addition to the usual charge documents and the original export letter
of credit. This type of credit is given for transit period staring from
dispatch of the goods to the port till the negotiation / purchase of export
bills, to enable the exporter to finance purchase of further goods for export.
(ii) Post shipment Credit: -
Post shipment credit refers to
credit facilities extended to export after actual shipment of goods against
shipping documents. It is usually provided in the following ways.
i)
Bill negotiation / purchase.
ii)
Bill for collection
(i) Bill negotiation / purchase
The most usual method of
financing exporters at the post-shipment stage is negotiation of documents
under L/C. Here the bank acts as negotiating bank. After the shipment of the
goods, the exporter submits the relative documents to the branch for
negotiation. The documents generally include a) Bill of Exchange b) Bill of
lading c) Insurance policy d) Invoice e) Certificate of origin. f) Inspection
Certificate g) packing lit h) Any other documents specially mentioned in the
letter of credit. The documents are to submit within the period mentioned in
the l/C. After approval of negotiation of the bill the full particulars of the
documents are entered into the Foreign bill Purchased (F.B.P) register. The
documents are sent to the L/C opening branch with a forwarding letter and the
branch claim reimbursement from the issuing bank or from the reimbursing bank,
giving clear instructions to credit the proceeds of the bill to the ABLE head
office Nostro A/C maintained with the named correspondent bank abroad under
telex intimation tot he Principal branch and Head Office (International
Division).
On negotiation/ Purchase of the
export bills, the exporter is paid the value of the bill (converted into
Bangladesh Taka at the ruling bill buying rates). The branch completes the
duplicate copy of EXP form and forwards the same to Exchange Control Department
(E.C.D) of Bangladesh Bank.
(ii) Documents on collection basis:
The documents, which are not negotiable by the branch due to
some discrepancies, are sent to L/C opening bank on collection basis. The bank
mentions the discrepancies on their forwarding schedule. On receiving the
documents, the L/C opening bank will further scrutinize the document with the
L/C and inform the importer regarding discrepancies found in the documents. If
these are acceptable to the importer and or permissible with the exiting
Exchange control regulation, the documents will be lodged and L/C opening bank
will send the payment instruction to the collection bank.
4.4 FOREIGN REMITTANCE DEPARTMENT
4.4.1 UNDERSTANDING:
ARAB BANGLADESH LTD. Karwan Bazar Branch
is an authorized dealer of foreign exchange. There dealing in foreign exchange
involves buying and selling of foreign exchange covering inward remittances
received from abroad and outward remittances sent abroad.
4.4.2 THINGS ARE DONE HERE
The following things are done in
this department:
a.
Overall supervision of Foreign Remtt. Deptt.
b.
Correspondence to Nostro Account.
c.
Foreign TT payment & Purchase of F. Drafts, Chouse
& preparations of F.B.P.
d.
Checking of all Batches.
e.
Assist in preparation of IBCA/IBDA etc.
f.
Trading Blotter.
g.
Compliance of Audit & Inspection.
h.
Issuance of outward TT & FDD.
i.
Issuance of PRC
j.
Statement & all related works regarding deposit of
Bangladesh Bank.
k.
Foreign Collection, Bangladesh Bank Clearing Cheque
Collection, which comes from all branch of ABBL.
l.
Withdrawal from F.C.A/C.
m.
Encashment of TCs & Cash Dollar and Sterling
Pound.
n.
Deduction of Tax and VAT.
o.
Preparation of related statements including
convertible Taka Accounts.
p.
Preparation of IBCA & IBDA and Balancing of
Collection and other special assignment as desired by Department In charge.
q.
Issuance of TC & Cash Dollar, Correspondence with
different Bank/Institution related to TC/Dollar.
r.
Student Case handling & preparation of related
statements (Head Office and Bangladesh Bank).
s.
Balancing of Account Statements.
t.
Batch posting and all related statements.
4.4.3 Personal observations:
I have observed the following
things:
Inward Foreign Remittance: Inward remittance covers purchase
of foreign currency in the form of foreign T.T, D.D, and bills, T.C.s etc. sent
from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange
is to be reported to Exchange control Department of Bangladesh bank on Form-C.
Outward Foreign Remittance: outward remittance covers sales
of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc.
as well as sell of foreign exchange under L/C and against import bills retired.
Sale of foreign exchange is reported to Exchange control Department of
Bangladesh Bank on form T/M.
Foreign exchange means foreign
currency and includes all deposits, credits and balances payable in foreign
currency s well as foreign currency instruments such a Drafts, T.C.s Bills of
Exchange and Letters of Credit Payable in any Foreign Currency. All foreign
Exchange transactions in Bangladesh are subject to exchange control regulation
of Bangladesh Bank.
4.4.3.1Foreign Remittance Department deals with the following
instruments.
(A) Travelers Check (TC)
(B) Foreign demand draft (FDD)
(C) Telegraphic Transfer (T.T)
(A) Travelers Cheque.
Traveler’s cheque is a very
popular method of foreign remittance. It is usually used by the travelers who
are willing to remit fund to the place where they are going to visit and encash
it from there. Traveler’s cheque is a substitute for cash and it is the safest
method of transferring fund.
(a)
Issue of
Travelers cheque
i.
Requirements
There are some requirements,
which are to be fulfilled by the Travelers cheque purchaser.
·
Passport holder himself has to be present to issue
Travelers cheque.
·
The passport must be a valid one.
·
Air ticket has to be confirmed.
ii.
Steps involved in issue of Travelers cheque
·
After verifying all these documents the customer is
asked to fill up prescribed application form.
·
In the application the customer states the amount he
is willing to endorse and it is be verified that his required amount is within
the stipulated amount.
·
Then the customer pays cash or by debiting his account
the Travelers cheque is issued.
·
Endorsement is given on the passport and on the
ticket. Customer fill up the Travel & Miscellaneous form.
·
Purchase Application Form is prepared and handed over
to the purchaser along with the Travelers cheque.
·
Entry given in three registers, Foreign Currency issue
register, Travelers cheque on hand register and Foreign Currency in hand
register
(b)
Payment of
Travelers cheque
When a customer wants to
encase his Travelers cheque he has to show his passport and it is to be
verified from the passport that he has traveled outside the country.
·
Then the Travelers cheque will have to be scrutinized
very strictly.
·
If every thing in the Travelers cheque is in order
then the customer will be asked to give his signature on the place of “Counter
signature”.
·
If the signature agrees with the one in the place of
“The signature of the holder” then the payment will be made through giving cash
to the customer or crediting his account.
·
Travelers cheque will be crossed and endorsement given
on the back of the received travelers cheque.
(B) Foreign Demand Draft
Foreign Demand Draft (FDD)
is popularly used for educational purpose in our country. It is used for other
commercial purposes also.
(a)
Issue of
FDD
The relevant papers which
establish that the issuing bank requires the purpose of issuing the FDD. The
procedure concerning issue of FDD is same as issue of Travelers cheque except
that the customer is not required to submit his passport.
(b)
Payment of
FDD
After receiving the FDD for
payment there are few steps, which are to be followed.
·
At first the FDD is to be crossed.
·
Serial number is given.
·
Forwarding letter to the bank with which the bank has
agreement.
·
Party is given the cash or his account is credited.
4.4.3.2Endorsement of Cash: Cash foreign currency can also be
remitted through endorsement in the passport. In case of endorsing cash on
passport the requirements are same as in case of issue of Travelers check.
PART 5
GENERAL BANKING SECTION
All business concerns earn a profit
through selling either a product or a service. A bank does not produce any tangible
product to sell but does offer a variety of financial services to its
customers. In ABBL Karwan Bazar branch, the following departments are under
general banking section:
(a)
Account opening department
(b)
Local remittance department.
(c)
Cash department.
(d)
Clearing department.
(e)
Collection department.
(f)
Financial Control department.
(g)
Sanchay patras and wage earners bonds department.
5.1Account opening department:
5.1.1Understanding:
The relationship between a banker
and his customer begins with the opening of an account by the former in the
name of the latter. Initially all the accounts are opened with a deposit of
money by the customer and hence these accounts are called deposits accounts.
Banker solicits deposits from the members of the public belonging to different
walks of life, engaged in numerous economic activities and having different
financial status. There is one officer performing various functions in this
department.
5.1.2 Things Are Done Here
The following things done in this
department:
(i) Accepting of deposit
(ii) Opening of account
(iii) Check book issue
(iv) Transfer of account
(v) Closing of account
5.1.3 PERSONAL OBSERVATIONS
Personal observations from this
department:
5.1.3.1Accepting of deposits:
In this branch the various types of
accounts are offered to various customers, which are grouped in to:
A.
Demand deposit account.
B.
Time deposit account.
A. Demand deposit account:
The amount in accounts are payable
on demand so it is called demand deposit account. The following accounts are
under demand deposit accounts:
(a)
Current account.
(b)
Savings account.
(c)
Special Notice time deposit (STD).
(d)
Resident foreign currency deposit account (RFCD).
(e)
(i) Foreign currency account in dollar (FCAD).
(ii)
Foreign currency account in pound sterling (FCAP).
(a)
Current account.
This type of account is opened by
both individuals and business concerns. Frequent transactions (deposits as well
as withdrawal) are allowed in this type of account. A current a/c holder can
draw checks on his account for any amount for any numbers of times in a day as
the balance in his account permits. This account provides no interest. The
minimum balance to be maintained is Tk. 5000. No new account can be opened with
a check.
(b)
Savings
account:
Individuals for savings purposes
open this type of account. Current Interest rate of these accounts is 8% per
annum. A minimum balance of Tk. 200 is required to be maintained in a SB
account interest on SB account is calculated and accrued monthly and credited
to the account half yearly. Interest calculation is made for each month on the
basis of the lowest balance at credit of an account in that month. A depositor
can withdraw from his SB account not more than twice a week up to an amount not
exceeding 25% of the balance in the account.
(c)
Special
Notice time deposit (STD):
The deposits in this account are
withdrawal on prior notice varying from 7 to 29 days and 30 days or more. The
interest is paid on the balance of the account. Current interest rate is 6.50%
per annum.
(d) Resident foreign currency deposit account (RFCD):
A Bangladeshi National can deposit
foreign currency (dollar and pound sterling) within 6 month of returning from
abroad provided the foreign exchange- (i) Is not a receipt against export of
goods or services from Bangladesh, (ii) Is not a commission due from abroad
arising from business deal in Bangladesh.
The balance in the account is
withdrawal only when the account holder goes abroad. He can endorse the amount
in his passport. Normally bank does not give any interest on this a/c.
(d)
(i) Foreign
currency a/c in dollar (FCAD).
(ii) Foreign currency a/c in pound sterling (FCAP).
Bangladeshi nationals working and
earning abroad other than from Bangladesh sources can open a foreign currency
a/c under this scheme after giving declaration regarding his claim. The a/c
holder selects a nominee who will operate the a/c on his behalf and fills in a
nomination form. The a/c holder is also required to submit photocopies of
passport, work permit /contract. As this is a current a/c no interest is paid.
B. Time deposit account:
The amount in this a/c is payable
only after stipulated time. The following a/cs are under time deposit a/c:
(a)
Fixed deposit account.
(b)
Bearer certificate of deposits (BCD).
(c)
Non-resident foreign currency deposit.
(a)
Fixed
deposit account:
These are deposit, which are made
with the bank for a fixed period specified in advance. The band need not
maintain each reserve against these deposits and therefore, bank gives high
rate of interest on such deposits. A FDR is issued to the depositor acknowledging
receipt of the sum of money mentioned therein. It also contains the rate of
interest and the date on which the deposit will fall due for payment.
REVISED INTEREST RATES ON DEPOSITS
W.E.F. 01.01.1999:
Type of deposit
|
Old Rates Effective from 1st
April,1998
|
New Rate effective from 1st
January 1999 until further instruction.
|
A. Savings Deposit
|
8.004
|
8.004
|
B. Special Notice Deposit (STD)
|
6.504
|
6.504
|
C. Fixed Deposit :
a.
3(three)
Month
b.
6(Six)
Month
c. 1(One) Year
d.2(Tow) &
3(Three)
Year
|
8.754
9.004
9.504
9.754
|
9.004
9.254
10.004
10.254
|
Table-3: Interest Rate on Deposit
Source: FCD Manual, ABBl, Karwan
Bazar Branch
Accounting Entries;
On issue of FDR
(i) Clients Account
-------------------------------------- Debit
Time Deposit-
F.D.R.------------------------------------ Credit
On payment at maturity
(i) Time deposit-FDR
----------------------------------------- Debit
Clients Account -------------------------------------------- Credit
For Interest
Monthly Accrual
(i) Interest Expense-
F.D.R.----------------------------------- Debit
Accrued interest Payable – FDR
------------------------- Credit
On maturity
(i) Accrued Interest payable-
F.D.R. ------------------------ Debit
Clients Account. ------------------------------------------
Credit
(ii) Tellers each
------------------------------------------------- Debit
Bearer Certificate of
Deposit---------------------------------- Credit
(iii) Other Asset- prepaid Interest
– BCD ------------------- Debit other liability- Interest payable –BCD
------------------------ Credit
Monthly Amortization.
(i) Interest Expense – BCD
---------------------------------- Debit
Other Asset- Prepaid Interest – BCD.---------------------- Credit
On payment at maturity
(i) Other liability- Interest
payable- BCD ------------------ Debit
BCD -------------------------------------------------------- Debit
Tellers
cash--------------------------------------------------- Credit.
(b)
Bearer
certificate of deposit (BCD):
Bank also receives fund from the
general public against BCD, Which are issued for a fixed maturity tern of 3
months, 6 months and 1 year for a face value of Tk. 25,000, Tk. 50,000, Tk.
75,000, and Tk. 1,00000. For deposit of amount exceeding Tk. 1 lac, the face
value will be increased in multiples of Tk. 25,000 each. Rate of interest on
BCD is determined on the date of issue of BCD based on demand and supply of
funds in the money market, but in no case interest should be allowed exceeding
the prescribed rate applicable for fixed deposit of different tenor.
(c)
Non
resident foreign currency deposit (NFCD):
Non-resident foreign currency
deposits are term deposits maturing after 1 month, 3 months, 6 months, and one
year. This a/c’s can be opened either in US dollar or pound sterling. No
interest is paid in case of premature encashment. The interest rate is fixed as
per London inter bank offer rate (LIBOR), Provided by head office. The a/c is
closed within one year from the date of return of the a/c holder to Bangladesh
for taking up permanent resident.
BCD RATES EFFECTIVE FROM JANUARRY, 1999.
Year
|
Months
|
3 Month
|
||||
Face Value
|
Rate
|
Amount to be received
|
Rate
|
Amount to be received
|
Rate
|
Amount to be received
|
Taka
|
%
|
Taka
|
%
|
Taka
|
%
|
Taka
|
1.00.000
|
10.000110
|
90.909/-
|
9.250986
|
95.579/-
|
8.997955
|
97.800/-
|
75.000
|
9.999707
|
68.182/-
|
9.248797
|
71.685/-
|
8.997955
|
73.350
|
50.000
|
9.998900
|
45.455/-
|
9.248797
|
47.790/-
|
8.997955
|
48.900/-
|
25.000
|
10.001320
|
22.727/-
|
9.248797
|
23.895/-
|
8.997955
|
24.450/-
|
Table 3-Interest on BCD
Source: Local Remittance
Department, ABBL, Karwan Bazar Branch
5.1.3.2Opening of account
A. Account
opening procedure
a. Any one of the following should properly
introduce the account:
i. An existing Current Account holder of
the Bank,
ii.
Officials of the Bank not below
the rank of an Assistant officer.
iii. A respectable person of the locality well
known to the Manager/Sub-Manager of the Branch concerned.
b. The
type of account, the prospective Customer wishes to open should be ascertain.
Highlight the main features of the account obtained necessary papers prescribed
for opening of the particular type of account including two copies passport
size photo of the account holder duly attested by the Introducer and verified
by the Authorized officer of the Bank.
c. Supply
a set of printed forms required for opening the account, which will normally
include.
i. Advise of new Account
ii.
Specimen Signature Cards
iii. Account Agreement
v. Deposit slip Book
vi. Check Book Requisition slips.
d. Request the customer to carefully
read and fill up the printed
Forms supplied to him.
e.
Signature of the customer on the reverse of the
signature card. Any special instructions with regard to operation of the
account should be noted on the relevant signature card boldly duly
authenticated by the a/c holder should be obtained.
f. The required Account Number for the
new Account from the Account Opening Register should be obtained.
g. Obtain the signature and a/c number
of the Introducer on the advice of new accountant the place meant for the
purpose and gets the signature properly verified by an Authorized official of
the Bank.
h.
The Deposit slip properly filled in and signed by the
customer in duplicate should be collected.
Then the new a/c number should be written at the appropriate place of
the Deposit slip and mark new Account on both the copies of the deposit slip
and request the customer to deposit the money at the Teller's counter.
i.
Place the signature cards, Advice of new account, a
copy of Deposit slip, photographs and other necessary papers/documents etc. in
a file and obtain approval of the Authorized officer for opening the new
account on all relevant papers while giving approval for opening an account the
Authorized official should be satisfied about the bonafide of the Introducer,
keeping in view the operations of his account.
j. Get each signature of the
Customer/Introducer on the Advice of New A/c and on the signature cards
admitted by the authorized official of the Bank using a small rubber stamp. The
Authorized officer on the advice of new A/c and on the specimen signature cards
should also attest the signature of the new a/c holder.
k. After approval of the opening of the
a/c, get the Checkbook requisition slip signed by the customer. Debit the
customer's Account for the amount of Exercise duty payable for the checkbook.
l. Deliver the checkbook to the customer
after properly marking the Account
number name and place of the branch on each leaf of the checkbook.
m. On completion of account opening open a
file for the new a/c holder and file all relevant papers forms etc. Signature
cards, copies of Advice, Deposit slip Debit ticket etc. is distributed to
concerned departments.
B. Classification of customers
a)
Individual (personal)
b)
Proprietorship (Sole traders)
c)
Partnership firms (Registered or
Unregistered)
d)
Joint stock Companies (Private
Limited companies/Public ltd.) f)
Public Sector Corporations
g) Municipalities/Municipal
Corporations /Local Bodies etc.
h) Clubs/Societies/Associations/Schools/Colleges/
Universities etc.
i)
Executors/Administrators
j)
Trustees
k)
Illiterate persons
l) Constituted Attorney
m)
Wage Earners.
C. Document required for
opening new accounts
A. Documents
Common for all types of Accounts & Customers:
1.
Advise of New Account (in
duplicate)
2.
Specimen signature cards (in
duplicate)
3.
Account Opening Agreement Form.
4.
Photographs of Account Holders (in
duplicate)
5.
Deposit Slips Book.
6. ChequeBook Requisition slips.
7. Letter
of mandate authorizing another person/s to operate the A/c on behalf of the
Account holder, where necessary.
B. Additional
document / forms are to be obtained for opening some special accounts.
1. Joint Accounts of two or
more persons:
(I) Mandate
for Operation of Accounts:
A clear authority signed by all the
joint A/C holders containing instructions as to who will operate the account
and how the account is to be operated should be obtained. The mandate should
mention the name of the persons authorized to draw check. In case of death
/insanity/insolvency of one or more of the joint a/c holders, the authority
will cease to operate.
2. Executor:
i. Probate: From a court of law along with a certified
copy of the will duly attested by a notary public.
ii.
A mandate in case there is more than one Executor,
signed by all the executors, as to how the a/c will be operated.
3. Administrator:
i.
Letter of Administration from a court of Law along
with a certified copy duly attested by a Notary Public appointing him as an
Administrator of the Estate of the deceased. The operation of the a/c is to be
allowed as per instructions of the letter of administration.
4. Proprietorship Firm.
i.
Declaration of Proprietorship
ii.
Trade License from Municipality.
iii. Account Agreement Form
iv. Mandate
if operation by third party is to be allowed.
5. Partnership Firm:
i. Photocopy of partnership deed
registered with Registrar of Firm duly attested by Notary Public.
ii Photocopy of Registration Certificate
duly attested by Notary Public in case of a Registered Firm.
iii. Letter of Partnership duly signed by all
the partners, in case of non-Registered Firm.
iv. Resolution
signed by all the partners to open the a/c.
v. Mandate
as to operation of the a/c.
vi. Account
Agreement Form
vii.
Trade License from Municipality.
6. Private limited Joint
Stock Company.
i. Memorandum of Association and Articles
of Association duly certified by chairman or secretary.
ii. Resolution of the Board duly certified
by chairman /Secretary authorizing to open the a/c with the Bank and naming the
persons who will operate the a/c, as per provisions of Articles of Association.
iii. Corporate
Agreement Form.
iv. Certificate
of Incorporation duly certified by Chairman/Secretary.
v. List
of Directors duly certified by Chairman/Secretary.
7. Public limited joint Stock
company.
i. Memorandum
and Articles of Association duly certified by chairman /secretary.
ii. Certificate of Incorporation duly certified by
chairman /Secretary.
iii.
Resolution of the Board duly certified by
Chairman/Secretary authorizing to open the a/c with the Bank and naming the
persons who will operate the a/c as per provisions of Articles of Association.
iv. Corporate
Agreement Forms
v. Certificate
of commencement of business
vi . List
of Directors duly certified by Chairman /Secretary.
8. Clubs/Societies/Trustee/Associations/Non-trading
Institutions etc.
9. Municipal Corporation
/Local Bodies:
i. Copy of the Municipal Act/charter duly
certified by the chairman /Administrator.
ii. Resolution of Municipal committee
authorizing the opening of the a/c in the Bank and naming the persons who will
operate the a/c duly certified by the chairman/Administrator.
iii.
Accounts of constituted Attorney: Certified copy power
of Attorney duly verified with the original by the concerned Bank official
under seal and signature.
5.1.3.3 Issue Of Check Book
(A) Issue of fresh checkbook
Fresh checkbook is issued to the
account holder only against requisition on the prescribed requisition slip
attached with the checkbook issued earlier, after proper verification of the
signature of the account holder personally or to his duly authorized
representative against proper acknowledgment.
Issuance of Fresh checkbook
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Figure-5: Issuance of fresh Check
Book
Source: Account Opening Department,
ABBL, Karwan Bazar Branch
B. Issue of Duplicate checkbook:
Duplicate checkbook in lieu of lost
one should be issued only when an A/C holder personally approaches the Bank
with an application Letter of Indemnity in the prescribed Proforma agreeing to
indemnify the Bank for the lost checkbook. Fresh check Book in lieu of lost one
should be issued after verification of the signature of the Account holder from
the Specimen signature card and on
realization of required Excise duty only with prior approval of manager of the
branch. Check series number of the new checkbook should be recorded in ledger
card signature card as usual. Series number of lost checkbook should be
recorded in the stop payment register and caution should be exercised to guard
against fraudulent payment.
5.1.3.4 Account Transfer:
The customer submits an application
mentioning the name of the branch to which he wants the account to be
transferred. His signature cards, advice of new account and all relevant
documents are sent to that branch through registered post with acknowledgment
the balance standing at credit in customers account is sent to the other branch
through Inter Branch Credit Advice (IBCA).
5.1.3.5Closing of account
Upon the request of a customer an account can
be closed. After receiving an application from the customer to close an
Account, the following procedure is followed by a banker. The customer should
be asked to draw the final cheque for the amount standing to the credit of his
a/c less the amount of closing and other incidental charges and surrender the
unused cheque leaves. The a/c should be debited for the account closing charges
etc. and an authorized officer of the Bank should destroy unused cheque leaves.
In case of joint a/c the
application for closing the a/c should be signed by all the joint holders.
5.2 LOCAL REMITTANCE DEPARTMENT
5.2.1 UNDERSTANDING:
ABBL has its branches spread
throughout the country and therefore, it serves as best mediums for remittance
of funds from one place to another. This service is available to both customers
and non-customers of the bank. There are four employees including one officer,
three assistant officers in this department.
5.2.2 THINGS ARE DONE HERE
The Following things are done in
this department:
(a)
Issuing & Payment of Demand Draft.
(b)
All related correspondence with other Branches & Banks
(c)
Compliance of Audit & Inspection
(d)
Balance of L.D. payable & L.D. Paid with advice
(e)
Attached to Sanchaya Patra and Wage Earners
Development Bonds.
(f)
Payment of Incoming TT.
(g)
Issuing, encashment of Pay Order and maintenance of
record and proof sheet.
(h)
Issuing and encashment of all kinds of Sanchaya Patras
and wage Earners Development Bond.
(i)
All related statements & correspondences with
Bangladesh Bank & other Branches.
(j)
Issuance of Local Drafts
(k)
Issuing and encashment of BCD.
(l)
All related correspondences.
(m)
Issuing of Outgoing TT.
(n)
Issuance of Local Drafts.
(o)
Issuance of T.T. ICA. IBCA & IBDA.
5.2.3 PERSONAL OBSERVATIONS
Personal observations from this
department:
5.2.3.1 Remittance of funds:
Any one of the following methods
may make remittance of funds from one place to another.
1. Telegraphic
Transfer (T.T)
2. Local
Draft (L.D)
3. Pay
order (p/o)
(1) Telegraphic Transfer (T.T)
It is an order from the Issuing
branch to the Drawee Bank /Branch for payment of a certain sum of money to the
beneficiary. Telex/ Telegram sends the payment instruction and funds are paid
to the beneficiary through his account
maintained with the Drawee branch or through a pay order if no a/c is
maintained with the drawee branch.
a. T.T issue process:
1. The Applicant fill up the relevant part
of the prescribed Application form in triplicate duly signs the same and gives
it to the Remittance Department.
2. Remittance Department will fill up the
commission part meant for Bank's use and request the Applicant to deposit
necessary cash or check at the Teller's Counter.
3. The Teller after processing the
Application form, Cash or check will validate the Application form .The first
copy is treated as Debit Ticket while the second copy is treated as Credit
Ticket and sent to Remittance Department for further processing. The third copy
is handed over to the applicant as customer’s copy.
4. Remittance Department will prepare the
Telex/Telegram in appropriate form, sign it and send it to the telex
Operator/Dispatch Department for transmission of the message.
5. Remittance
Department will prepare the necessary advice
6. Debit Advice is sent to the client if
client’s a/c is debited for the amount of T.T
7. Debit
ticket is used to debit the client's account if necessary.
8. T.T
Confirmation Advice is sent to the Drawee Branch.
9. Credit Ticket (2nd copy of the
Application Form) is used to credit the ABBL General Accounts.
b. Accounting entry:
Dr. Cash
/client's A/C
Cr. ABBL
General A/C
Cr. Communication.
Cr. Commission.
c. Payment of T. T’s:
1. On receipt of T.T payment Instructions
the following entries are passed by the Drawee branch if the T.T is found to be
correct on verification of Test Number.
i.
Dr. ABBL General A/c
Cr.
Remittance Awaiting Disposal- T.T Payable A/c
ii.
Dr. Remittances Awaiting Disposal
-T.T Payable A/c
Cr.
client's Account /P.O. A/C.
In case the beneficiary does not
maintain any a/c with the Drawee branch a P.O is issued in favor of the payee
and sent to his banker/local address as the case may be.
2. Every
branch maintains a prescribed T.T. Payable Register. All the particulars of
T.Ts are to be properly recorded in this Register duly authenticated. A
separate type of T.T confirmatory advice is sent to the Drawee branch on the
same day. On receipt of the T.T Confirmatory advice/ confirmation copy of
Telegram from the Issuing branch, the particulars of the T.T are verified with reference
to particulars already recorded in the T.T payable Register.
The Confirmatory advises are kept
attached with the relative Ticket No further responding entry is required to be
passed on receipt of such confirmation copy.
On payment of T.T the particulars
are to be incorporated in the Extracts of Responding Debit entries as usual and
sent to HORC.
(2) Local Draft (D.D)
Local Draft is an instrument
containing an order of the Issuing branch upon another branch known as Drawee
branch, for payment of a certain sum of money to the payee or to his order on
demand by the beneficiary presenting the draft itself.
a. Process of Issuing a
Local Draft.
1. Get
the Application form properly filled up and signed by the applicant.
2. Complete the lower portion of the
Application Form meant for Bank's use.
3. Calculate the total Taka amount payable
including Bank's commission /charges etc.
4. If a cheque is presented for the payment
of the L.D officer should get the check duly passed for payment by the competent
authority and record the particulars of L.D on the back of the cheque.
5. If the purchaser desires his account
with the branch to be debited for the amount of L.D the officer should get the
A/C. holder’s signature verified properly, from signature card on record of the
branch and debit client's a/c for the total amount including commission/
charges etc.
6. If cash deposit is desired, request the
purchaser to deposit the money at the Teller’s Counter.
7. The Teller, after processing the
Application Form, Cash or Cheque, will validate the Application form.
8.
The first copy of the Application form is treated as
Debit Ticket while the second copy is treated as Credit Ticket and sent to
Remittance Department for further processing. The third copy is handed over to
the Applicant as customer's copy.
9.
Each branch maintains a running control serial number
of their own for issuance of L. D. on each Drawee branch. This control serial
number should be introduced at the beginning of each year, which will continue
till the end of the year.
b. L.D Issue Register:
The Remittance Department maintains
prescribed L.D Issue Register. All the required particulars of all L. Ds issued
should be entered in that Register duly authenticated. Separate folios are opened for each Drawee
Branch. While issuing local Drafts of
TK.50, 000/- and above, branches
shall put a test number in RED INK on the upper portion of the drafts so that
the Drawee branch can immediately make payment of the L.D on presentation after
getting the Test agreed, if otherwise found in order.
c. Issue of Duplicate Draft
Duplicate L.D should not normally
be issued unless thoroughly satisfactory evidence is produced regarding loss of
a draft. If the L.D is reported lost/stolen, a duplicate draft may be issued by
the Issuing branch on receipt of a written request from the purchase.
Before issuing a duplicate L.D the branch should observe the following:
1. Verify the Purchase’s signature on the
request letter from the signature appearing on the original application form.
2. Immediately issue a stop payment
instruction to the Drawee branch under advice to Head Office and obtain
confirmation of non-payment of the L.D in acquisition.
3. After the Drawee branch has acknowledged
the stop payment order and confirmed that the local draft in acquisition
remains unpaid at their end, the Issuing branch should obtain an Indemnity Bond
on stamped paper /letter of indemnity as per prescribed format from the
purchase duly signed by him. The branch will thereafter write to head office,
for their approval to issue a Duplicate draft.
4. The Head Office on receipt of request
from the issuing branch will immediately issue a caution circular to all the
branches regarding the loss of the local draft asking them to record stop payment.
5. The Head Office will thereafter issue
clearance to the Issuing branch for issuing a Duplicate draft in lieu of
original reported lost.
6. On receipt of clearance from Head
Office, the issuing branch will issue a completely fresh draft marking clearly
the words duplicate issued in lieu of original draft
no............................................ Dated ... ... ... .. , in bold
letters on the top of the front page of the draft. The printed serial number on
the Draft should not however be struck off. Intimation should be given to the
drawee branch furnishing full particulars of the Duplicate draft. In case of
issue of duplicate foreign draft (F.D.D) the Reconciliation Department, Head
Office (HORC) should also be informed.
7. The particulars of the duplicate draft
must resemble those of the original draft in all respects that is all the
particulars to the duplicate draft must be identical with those in the original
draft. No further IBCA is to be issued for the duplicate draft.
8.
Prescribed duplicate issuance charge is to be
recovered for issuing the duplicate draft and credited to Income A/c.
d. Cancellation of Local
draft
The following procedure should be
followed for cancellation of a L.D:
1. The purchase should submit a written
request for cancellation of the L.D attaching therewith the original L.D.
2. The signature of the purchase will have
to be verified from the original application form on record.
3. Manager /Sub -Manager's prior permission
is to be obtained before refunding the amount on cancellation.
4. Prescribed cancellation charge is to be
recovered from the applicant and only the amount of the draft less cancellation
charge should be refunded. Commission/Postage etc. charge recovered for issuing
the L.D should not be refunded.
5. The L.D should be affixed with a stamp
Cancelled under proper authentication and the authorized officer's signature on
the L.D should also be cancelled with Red in but in no case should be torn. The
cancelled L.D should then be kept with the relevant Ticket.
6. The original entries are to be reversed
giving proper narration. An IBDA for the cancelled L.D should be issued on the
Drawee branch.
7.
Cancellation of the L.D should also be recorded in the
L.D Issue Register.
e. Payment of L.D
1. On receipt of Credit Advice (IBCA) from
the Issuing branch the following responding entries are then be passed by the
Drawee branch.
Dr. ABBL
General A/c Branch
Cr.
Remittance Awaiting Disposal L.D payable A/c
Extracts of
Responding entries are to be sent to HORC on the same day.
2. When a L.D is presented for payment at
the paying branch its details are to be carefully examined with references to
the following points
a. Whether
the draft is drawn on their branch.
b. Whether the draft is crossed or not
Amount of a crossed draft is not paid in cash to the payee but to be paid to
his account with a bank.
c. Two authorized officials of the Issuing
branch must have signed draft. Their signatures are to be verified from
specimen signature book let to be sure that the draft is genuine. The verifier
should put his initials in red ink against the authorized signatures in the
draft.
d. Endorsement on the back of the draft
must be regular in case the draft is presented through clearing.
e. The amount of the draft should not exceed
the amount protect graphed /written in red ink on the top of the draft.
f. The
payee is to be properly identified in case of cash payment.
g.
The particulars of the draft i.e. the draft number
date amount and the name of payee, should be verified from the L.D payable
Register.
3. On payment the L.D is affixed with the
branches Paid stamp and signatures there on are cancelled with red ink. The
date of payment is recorded in the L.D payable
Register necessary accounting
entries are also passed and recorded in the books of Accounts.
Accounting entries
With IBCA:
Dr. Remittance Awaiting Disposal
L.D payable a/c
Cr. client's Account/Teller's Cash.
Without IBCA
A. Dr.
L.D paid without Advice a/c
Cr.
Client's a/c/Teller's Cash.
B. After
receiving the IBCA
i.
Dr. ABBL General A/c
Cr. Remittances Awaiting Disposal - L.D payable
A/c
ii. Dr.
Remittances Awaiting Disposal - L.D payable A/c
Cr. L.D Paid without Advice A/c.
g. Stop payment of L.D
As the Issuing branch issues the
draft, the payee or purchaser of the draft cannot give stop payment
instructions to the Drawee branch. If a paying branch receives a y request from
the payee/endorsee or the purchaser of a draft for stopping payment of the
draft, it will ask them to approach the issuing branch for the purpose. The
paying branch should however exercise necessary precaution in this regard. Only
the Issuing branch can issue instructions for stop payment of draft under
special circumstances. However, if a stop payment order is received from a
court of law the same should be carried out. If a draft on which stop payment
order has been issued buy account is presented for payment the same should be
returned unpaid with the answer court prohibited payment quoting court order
number and date.
h. Cancellation of L.D
Only the
purchaser can request the Issuing branch for cancellation of a L.D. The drawee
branch cannot cancel a L.D. The Drawee branch can accept cancellation
instructions only from the Issuing branch, when the Issuing branch the relative
entry in the ABBL general a/c is reversed cancels a draft and IBDA is issued on
the Drawee branch. On receipt of the advice of cancellation through IBDA from
the Issuing branch , the Drawee branch should reverse the original liability
entries on the strength of the IBDA and record suitable remarks in the L.D
payable Register/ related IBCA of the draft.
(3) Pay order
a. Pay order issue process
For issuing a pay order the client
is to submit an Application to the Remittance Department in the prescribed form
(in triplicate) properly filled up and duly signed by applicant. The processing
of the pay order Application form, deposit of cash/cheque at the Teller's
counter and finally issuing an order etc, are similar to those of processing of
L.D. Application.
As in case of L.D each branch
should use a running control serial number of their own for issuance of a pay
order. This control serial number should be introduced at the beginning of each
year, which will continue till the end of the year. A fresh number should be
introduced at the beginning of the next calendar year and so on.
b. Charges
For issuing each pay Order
commission at the rate prescribed by Head Office is realized from the client
and credited to Income A/c as usual.
c. Entries
Dr. Teller's Cash /Client's a/c
------------------------------------------------------------ debit
Cr. pay Order a/c.
---------------------------------------------------------------------- credit
Cr. commission a/c. ---------------------------------------------------------------------
credit
d. Refund of pay Order
The following procedure should be followed for
refund of pay order by cancellation
1. The purchase should submit a written
request for refund of pay order by cancellation attaching therewith the
original pay order.
2. The signature of the purchaser will have
to be verified from the original application form on record.
3. Manager/ Sub-manager's prior permission
is to be obtained before refunding the amount of pay order cancellation.
4. Prescribed cancellation charge is to be
recovered from the applicant and only the amount of the pay order less
cancellation charge should be refunded. Commission recorded for issuing the pay
order should not be refunded.
5. The pay order should be affixed with a
stamp ''cancelled'' under proper authentication and the authorized officer's
signature of the pay order should also be cancelled with RED ink but in no case
should be torn. The cancelled pay order should be kept with the relevant
Ticket.
6. The
original entries are to be reversed with proper narrations
8.
Cancellation of the pay Order should also be recorded
in the pay order Issue Register.
5.3 CASH
DEPARTMENT
5.3.1 UNDERSTANDING:
The cash department deals with all
types of negotiable instruments, cash, and other instruments and treated as a
sensitive section of the bank. There are one senior officer, three officers and
Teller in this department.
5.3.2 THINGS ARE DONE HERE
The following things are done in
this department:
(a) Shall be responsible for all
Cash & Cash Items related matters including record keeping of the
information’s received regarding cash remittances
(b) Shall supervise the Cash
Remittance under direct guidance of Sub-Manager
(c) Shall be responsible for any
receipts and payments as per circular issued from time to time.
(d) Keeping liaison with the
Bangladesh Bank, Cash department.
5.3.3 PERSONAL OBSERVATIONS
I have observed the following
things:
A. Cash Payment
Cash payment of different
instruments is made in the cash section. Procedure of cash payment against
cheque is discussed under elaborately.
Cash payment of cheque
Cash payment of cheque includes few
steps.
l First of all the client comes to the counter with the check
and give it to the officer in charge there. The officer checks whether there
are two signatures on the back of the cheque and checks his balance in the
computer. After that the officer will give it to the cash in charge.
l Then the cash in charge verifies the signature from the
signature card and permits the officer in computer to debit the client’s
account by giving posting. A posted seal with teller number is given.
l Then the cheque is given to the teller person and he after
checking everything asks the drawer to give another signature on the back of
the cheque.
l If the signature matches with the one given previously then
the teller will make payment keeping the paying cheque with him while writing
the denomination on the back of the cheque.
l Cash paid seal is given on the cheque and make entry in the
payment register.
There are few things that shall be
scrutinized and checked before making payments.
i.
Name of the drawer
ii.
Account number
iii.
Specimen signature
iv. The
validity of the cheque and make it sure that it is not post dated or undated.
v. The amount in words and figures are same.
B. Cash Balance calculation
The officer in charge of cash
section does this calculation and then manager or authorized officer will check
the balance and sign in the cash balance book.
The balance is maintained in the balance book. Opening balance of
current day is the closing balance of the previous day. Total receive of the
current day is added with the opening balance and total payment is deducted for
calculating the closing Balance or cash balance.
C. Receipt of check, draft, pay
order for clearing and collection:
If an instrument (check, draft,
pay-order) drawn on a bank located with in the clearing house is deposited then
the Teller uses the seal “ Received for clearing “ and provides special
endorsement so that no bank other than ABBL, Principal branch can en cash the
instrument.
If an instrument (Check, draft,
pay-order) drawn one bank located outside the learning house is deposited, the
Teller uses the seal “ Received for collection”.
5.4
CLEARING DEPARTMENT
5.4.1 UNDERSTANDING
According to the Article 37(2) of Bangladesh
Bank Order, 1972,the banks, which are the member of the clearinghouse, are
called as Scheduled Banks. The scheduled banks clear the chouse drawn upon one
another through the clearinghouse. This is an arrangement by the central bank
where everyday the representative of the member banks gathers to clear the
chouse. Banks for credit of the proceeds to the customers’ accounts accept
Chouse and other similar instruments. The bank receives many such instruments
during the day from account holders. Many of these instruments are drawn
payable at other banks. If they were to be presented at the drawee banks to
collect the proceeds, it would be necessary to employ many messengers for the
purpose. Similarly, there would be many chouse drawn on this the messengers of
other banks would present bank and them at the counter. The whole process of
collection and payment would involve considerable labor, delay, risk and
expenditure.
All the labor. Risk, delay and
expenditure are substantially reduced, by the representatives of all the banks
meeting at a specified time, for exchanging the instruments and arriving at the
net position regarding receipt or payment. The place where the banks meet and
settle their dues is called the Clearinghouse.
5.4.2 THINGS ARE DONE HERE
The following things are done in
this department
(a) Preparation of Clearing Outward
and Inward Lodgment and record maintenance of the same.
(b) Batch posting as and when
required.
5.4.3 PERSONAL OBSERVATIONS
Following thins are observed in the
period of Practical Orientation in this department:
The clearinghouse sits for twice in
a working day. The members submit the climbable checks in the respective desk
of the banks and vice versa. So, instruments are exchanged over there.
On receipt of instruments, the same
is endorsed here. Then clearing section will sent IBDA to head Office for
clearing purpose and on receipt of IBCA from Head Office amount is credited to
customers account and vice versa. If the instrument is return then the same is
given back to the customer.
Accounting Entries:
For inward instruments:
Customer A/C
----------------------------------Debit
ABBL General A/C ----------------------------Credit
Incase of return:
ABBL General A/C
----------------------------- Debit
Customers A/C
-----------------------------------Credit
For Outward instruments:
ABBL General A/C
------------------------------ Debit
Customers A/C ------------------------------------
Credit.
In case of return:
Customer A/C
---------------------------------------Debit
ABBL General
A/C------------------------------ Credit.
5.5
COLLECTION DEPARTMENT
5.5.1 UNDERSTANDING
Checks, drafts etc. are
drown on bank located outside clearing house are sent for collection. Principal
Branch collects its client’s above-mentioned instruments from other branches of
ABBL and branches other than ABBL. In case of out ward bills for collection
customers account is credited after finishing the collection processor. And in
case of in ward bills customers account is debited for this purpose. So it
place dual role as follows:
i)
Collecting Banker
ii)
Paying Banker.
There is one Officer working over
desk in this department.
5.5.2 THINGS ARE DONE HERE
(a)
Preparing of Outward and Inward Collection Item.
(b)
Inter-Branch Transfer.
(c)
Batch posting and checking as and when required.
(d)
Other works as and when require.
5.5.3 Personal Observations:
Observations over the desk are
given below:
Collection is done when
(i) Paying Bank is located out side Dhaka
City.
(ii) Paying Bank is other branches
of ABBL situated inside Dhaka City.
(i)
Paying Bank
is outside Dhaka City :
Collection department of Principal Branch,
ABBL sends outward bills for collection (OBC) to the concerned paying bank to
get inter Bank Credit Advice (IBCA) from paying Bank. If the paying bank
dishonors the instrument, the same is returned to principal Branch.
(ii)
The Paying
Bank of their own branches inside Dhaka City:
Collection Department sends transfer delivery
item to other branches of same bank situated inside Dhaka City. Upon receiving
IBCA customer’s a/c is credited.
Procedures for outward bills for collection:
 |
|
|
Figure-6:
OBC Mechanism
Source: Clearing Department, ABBL, Karwan
Bazar Branch
Commission for collection:
Up to 1 lac
--------------------------------------------- 0.15%
Above 1 lac---------------------------------------------
0.10%
Above 5lac
----------------------------------------------0.05%
Maximum charge is Tk. 1200 and
minimum charge is Tk.10.
Accounting Entries:
As collecting Bank:
Customers
A/C-------------------------------------------Debit
ABBL General A/C
------------------------------------Credit
As Paying Bank:
ABBL General A/C
--------------------------------------- Credit
Customers A/C
---------------------------------------------- Debit
Collection with other Banks
situated outside Dhaka City.
As collecting Bank:
Deposit awaiting disposal (DAD)
-------------------------Debit.
ABBL General A/C
----------------------------------------- Credit
As Paying Bank:
ABBL General A/C
----------------------------------------- Debit
Customers A/C
------------------------------------------ Credit.
5.6 FINANCIAL CONTROL DEPARTMENT
5.6.1 Understanding:
Financial control department is
called as the above center of the bank. In banking business, transaction are
done every day is their transaction are to be recorded properly and
systematically as the banks deal with the depositors money. Any deviation in
proper recording many hamper public confidence and bank has to suffer a lot
otherwise. Improper recording of transaction will lead to the mismatch in the
debit side and the credit side. To avoid these mishaps, the bank provides a
separate department, whose function is to check the mistake in passing voucher
on wrong entries or fraud or forgery. This department is called Financial
Control Department. In this branch there are one Chief Officer, two Assistant
Officers in this department.
5.6.2 THINGS ARE DONE HERE.
a.
Overall supervision of FCD.
b.
Passing all Expenses Vouchers.
c.
Maintenance of client’s account statements including
Balance Confirmation Certificate.
d.
Branch’s PD&US.
e.
Dealing with the public issue of Shares including
Lottery Tickets.
f.
Other works as & when required.
g.
Compliance of Audit & Inspection and consolidation
of Audit report & timely Submission.
h.
Preparation of AD-1, AW-1.
i.
Maintenance of Personnel Files, up dating of leaves
records.
j.
Maintenance of Salary Cards.
k.
Staff Training Record and Cards.
l.
Monthly Progress Report of Prob. Officer and Trainee
Asstt. Officer.
m.
Maintenance of ABBL, Dividend warrants Record.
n.
Preparation of deals Extract.
o.
Checking of Transaction List.
p.
Checking of Vouchers & maintenance of related
Registrar.
q.
Filling and distribution of daily Computer Reports.
r.
Preparation of months, quarterly, half-yearly Account
Statements.
s.
Monthly amortization voucher preparing/posting/checking
and responding Inter-Branch Entries.
t.
Preparation of Salary.
u.
Depreciation Record in Assets Cards.
v.
Petty Cash.
w.
Transfer Items.
5.6.3 PERSONAL OBSERVATIONS
The bank
has to prepare some internal statements as well as some statutory statements
which to be submitted to the central bank. Accounts Department prepares these
statements also. The department has to submit some statements to the Head
office, which is also consolidated by the Head Office later on. The tasks of
the department may be seen in two different angles:
A. Daily Task: The routine daily tasks of the
Accounts Department are as follows, -
1.
Recording the transactions in the cashbook.
2.
Recording the transactions in general and subsidiary
ledger.
3.
Preparing the daily position of the branch comprising
of deposit and cash.
4.
Preparing the daily Statement of Affairs showing all
the assets and liability of the branch as per General Ledger and Subsidiary
Ledger separately.
5.
Making payment of all the expenses of the branch.
6.
Recording inters branch fund transfer and providing
accounting treatment in this regard.
7.
Checking whether all the vouchers are correctly passed
to ensure the conformity with the ‘Activity Report’; if otherwise making it
correct by calling the respective official to rectify the voucher.
8.
Recording of the vouchers in the Voucher Register.
9.
Packing of the correct vouchers according to the debit
voucher and the credit voucher.
B . Periodical Task: The routine periodical tasks performed by the
department are as follows,-
1.Preparing the monthly salary
statements for the employees.
2.Publishing the basic data
of the branch.
3.Preparing the weekly
position for the branch which is sent to the Head Office to maintain Cash
Reserve Requirement (C.R.R)
4 . Preparing the monthly
position for the branch which is sent to the Head Office to maintain Statutory
Liquidity Requirement (S.L.R)
5. Preparing the weekly
position for the branch comprising of the break up of sector wise deposit,
credit etc.
6.Preparing the weekly
position for the branch comprising of denomination wise statement of cash in
tills.
Preparing the budget for the
branch by fixing the target regarding profit and deposit so as to take
necessary steps to generate and mobilize deposit.
7. Preparing an ‘Extract’
which is a summary of all the transactions of the Head Office account with the
branch to reconcile all the transactions held among the accounts of all the
branches.
Extract:
The
following things are done in this part of FCD:
(i)
Preparation of extract,
(ii)
Checking of transaction list,
(iii)
Checking of voucher and Maintenance of related
register.
Preparing an ‘Extract’ which
is summary of all the transaction of the Head Office A/C with the branch to reconcile all the transactions held among the
accounts of all the branches through inter-branch and credit advise (IBCA) and inter-branch debit
advise (IBDA).
Extract is done by following :
(iv)
Originating (Influence of IBCA/IBDA)
(v)
Responding (Receiving of IBCA/IBDA)
Following entries are made:
IBDA
While Originating
ABBL General Account
----------------------------- Debit
Branch A/C
--------------------------------------------Credit.
While responding:
Branch A/C
---------------------------------------------Debit
ABBL A/C
------------------------------------- credit
IBCA
While Originating
Branch A/C ------------------------------------------------Debit
ABBL General A/C
---------------------------------------Credit.
While responding
ABBL General
A/C------------------------------------------Debit.
Branch A/C
--------------------------------------------------- Credit.
5.7 SHANCHAY PATRA AND WAGE EARNERS
BONDS
5.7.1 Understanding:
ABBL Principal branch sales
shanchay patra and wage earners bonds as its ancillary services rendered to
customers on behalf of govt. Through Bangladesh bank. Shanchay patra is issued
by Jatio Shanchay Bureau guided by Bangladesh bank and Ministry of finance of
People’s Republic of Bangladesh issues wage earners bonds (WEB). WEB’s are only
for the welfare of wage earners that are Bangladeshi national working out side
Bangladesh. This branch gets 1 % commission on this. There are two persons one
is senior officer dealing with WEB’s and other person is officer dealing with
shanchay patra.
5.7.2 Things are done here:
The following things are done in
this department:
(iv)
Selling of shanchay patra and wage earners bonds.
(v)
Making payment on maturity.
(vi)
Responding to Bangladesh bank.
(vii)
Calculation of interest.
(viii)
Accounting.
5.7.3 Personal observations:
Personal observations from two
desks one is for shanchay patra and other is for wage earners bonds in this
department are given below:
A. Shanchay patra.
Shanchay patras is received from
Bangladesh bank (BB). People purchasing these bonds by depositing money in this
branch and payment are made on maturity to customers from this branch only.
Every transaction is reported to Bangladesh bank. In case of issuance, report
to be reached to BB within 48 hours, otherwise penalty is imposed. Money is
realized from BB after making payment to customer.
There is various type of shanchay
patras is sold here. They are as follows:
(i) 8 years defense Savings certificate:
Interest rate:
After 1 year 10.75% and per year 1%
interest increases and on maturity 17.75%.
Denomination: (Tk.)
500, 1000, 10000, 50000, 100000,
200000.
(ii) 5 Years Bangladesh Shanchay patras :
Interest rate:
After one year 10.50% and 1%
increases every year. On maturity 14.50%.
Denomination: (Tk.) 500, 1000,
10000, 25000, 50000.
(iii) 5 years investment scheme on half yearly rest.
Interest rate:
13.50% (fixed)
Denomination: (Tk.) 100000, 200000,
500000.
(iv) 5 years family savings certificate scheme:
Interest rate: 13.20% (fixed)
Denomination: (Tk.) 10000, 50000,
100000, 200000, 500000.
(v) 3 years investment scheme on quarterly rest:
Interest
rate 13.50% (fixed)
B. Wage Earners bonds:
Only wage earners bonds that are
Bangladeshi national staying out side Bangladesh is entitled for this bonds
through FC a/c. Bonds are received from Bangladesh bank. Bonds are sold to
customer in this branch and payment on maturity also made here. Every
transaction is reported to BB. In case of issuing bonds, report to be reached
to BB within 4 days otherwise penalty is imposed. Money is realized from BB
after making payment to customers.
Interest rate: 12% and on maturity interest is compounded half
yearly basis.
Denomination: (Tk)
25000, 50000, 100000.
PART-6
PERFORMANCE OF KARWAN BAZAR BRANCH
6.1 GROWTH IN DEPOSIT
YEAR
|
AMOUNT
(TK.IN
MILLION)
|
1994
|
9438.04
|
1995
|
9863.93
|
1996
|
9710.51
|
1997
|
10506.56
|
1998
|
11716.21
|
Table-4:
Growth in Deposit Source:
Annual Report, 1998,ABBL
Figure7:
Growth in Deposit Source:
Annual Report, 1998,ABBL
6.2 PROFIT OF ABBL
YEAR
|
AMOUNT
(TK.IN
MILLION)
|
1994
|
329.87
|
1995
|
381.90
|
1996
|
470.89
|
1997
|
460.65
|
1998
|
288.44
|
Table-5: Profit of ABBL
Source:
Source: Annual Report, 1998,ABBL
 |
Figure-8: Growth in Profit
Source:
Source: Annual Report, 1998,ABBL
6.3 GROWTH IN RESERVE AND REVENUE
YEAR
|
AMOUNT
(TK. IN
MILLION)
|
1994
|
188.19
|
1995
|
202.48
|
1996
|
239.64
|
1997
|
286.28
|
1998
|
315.73
|
Table-6:
Reserve & Revenue
Source:
Source: Annual Report, 1998,ABBL
Figure-9:
Growth in Reserve & Revenue
Source:
Source: Annual Report, 1998,ABBL
6.4 TOTAL CREDIT
YEAR
|
TOTAL
LDOs
|
1994
|
6245.19
|
1995
|
6735.21
|
1996
|
6700.86
|
1997
|
6741.88
|
1998
|
7807.24
|
Table-7:
Total Credit
Source:
Source: Annual Report, 1998,ABBL
Figure10:
Total Credit
Source:
Source: Annual Report, 1998,ABBL
6.5 GROWTH IN ASSETS
YEAR
|
AMOUNT
(TK. IN
MILLION)
|
1994
|
10284.55
|
1995
|
10284.12
|
1996
|
11235.17
|
1997
|
12620.78
|
1998
|
13435.35
|
Table-8: Growth in Assets
Source: Source: Annual Report, 1998,ABBL
 |
Figure11:Growth in Assets
Source: Source: Annual Report,
1998,ABBL
6.6 GROWTH IN IMPORT
YEAR
|
AMOUNT
(TK. IN MILLION)
|
1994
|
8275.78
|
1995
|
8573.00
|
1996
|
7645.80
|
1997
|
9114.90
|
1998
|
10000.70
|
Table-9:
Growth in Import
Source:
Source: Annual Report, 1998,ABBL
Figure-12:
Growth in Import
Source:
Source: Annual Report, 1998,ABBL
6.7 GROWTH IN LETTER OF GUARANTEE
YEAR
|
AMOUNT
(TK. IN
MILLION)
|
1994
|
1288.23
|
1995
|
922.66
|
1996
|
539.20
|
1997
|
873.00
|
1998
|
939.00
|
Table-10:
Growth in Guarantee
Source:
Source: Annual Report, 1998,ABBL
Figure-13:
Growth in Guarantee
Source:
Source: Annual Report, 1998,ABBL
6.8 GROWTH IN EXPORT
YEAR
|
AMOUNT
(TK. IN
MILLION)
|
1994
|
5144.49
|
1995
|
4344.26
|
1996
|
4488.90
|
1997
|
5181.39
|
1998
|
6079.80
|
Table-11:
Growth in Export
Source: Annual Report, 1998,ABBL
Figure-14:
Growth in Export
Source:
Source: Annual Report, 1998,ABBL
BIBLIOGRAPHY
Shaikat,
Tanvir; Daily Notebook, written during the orientation program. AB
Bank, Working Manual for different department. Awasthi
G D; Trade Payments- Commentary, Cases
& Text Import
Policy, 1997-2002, published by Ministry of Commerce, Bangladesh
Secretariat, Dhaka. P.N.Vershney
Banking
Law and Practice, sultan Chand and sons, 15th edition,
New Delhi,1993. Gordon and K. Natarajan, Banking theory, Law and Practice, 6th edition, Himalaya
Publishing House, New Delhi, 1996. M. Abul
Bashar Bhuiya, Bangladesh Laws on banks
and banking, 2nd edition, M/S Tawakkal Press, Dhaka, 1996. Maheshwari,
S.N, Banking Law & Practice,
Kalyani Publishers, India, 1979 Gupta,
S.B. Monetary Economics: Institutions,
Theory & Policy, S. Chand & Company Ltd. New Delhi, 1995
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