Report on Prime Bank

CHAPTER-SIX SERVICES OFFERED BY FOREIGN EXCHANGE DIVISION 5. 1 message of unconnected Exchange extraneous Exchange means exchange outside(prenominal) currency between two countries. If we consider Foreign Exchange as a subject, then it means all kind of transactions colligate to foreign currency. In other wards foreign exchange deals with foreign financial transactions. H. E. Evitt defined Foreign Exchange as the means and methods by which rights to wealth expressed in call of the currency of one domain be converted into rights to wealth in terms of the currency of a nonher coun learn 5. 2-Activities of foreign exchangeThere are three kinds of foreign exchange transactions Import. trade. Remittance. 5. 3 Local Regulations for foreign exchange. Foreign exchange transactions are being controlled by the next rules & regulations ? Foreign Exchange regulation act 1947. ? Bangladesh lingo issues foreign exchange bill from term to time to control the export, moment & remitta nce business. ? Ministries of commerce issues export & instant policy giving basic designalities for import & export business. ? one-time(prenominal) CCI&E issues public notice for any kind of change in foreign exchange transaction. Bangladesh slang published two volumes in 1996. This is compilation of the book of instructions to be followed by the authorized dealers in transitions related to foreign exchange. 5. 4 Parties entangled in accusative accredit The parties are ? The Issuing desire, ? The Confirming situate, if any, and ? The Beneficiary. ? The Appli basist, ? The Advising situate, ? The nominative Paying/ Accepting imprecate, and ? The Transferring bevel, if any. i. Importer Buyer Who applies for theory the L/C. ii. Issuing Bank It is the aver which opens/issues a L/C on behalf of the importer. ii. Confirming Bank It is the bank, which adds its halt to the confidence and it is make at the request of event bank. Confirming bank may or may not be advis ing bank. iv. Advising / Notifying Bank is the bank through with(predicate) which the L/C is advised to the exporters. This bank is actually situated in exporters country. It may likewise assume the role of affirm and / or negotiating bank depending upon the causation of the reference work. v. Negotiating Bank is the bank, which negotiates the bill and contains the amount of the benefactive role.The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank. vi. Paying / Accepting Bank is the bank on which the bill volition be drawn (as per condition of the credit). Usually it is the issuing bank. vii. Reimbursing bank is the bank, which would reimburse the negotiating bank after larnting giftment instructions from issuing bank. 5. 5 IMPORT Under the import policy of Bangladesh the Importer has get the valid Import Registration shelter system (IRC) from the Chief Control of Import & Export (CCI&E). 5. 5. 1- Letter of creditLetter of Credit means any arrangement whereby a Bank (the issuing Bank) is connected (on behalf of the buyer/ applicator) to pay certain amount at the marketers disposal under some agreed conditions. 5. 5. 2 Types of accusative credit Documentary credit may be of three types. Revocable credit. Irrevocable credit. Add confirmed credit. Revocable credit This type of credit can be cancel or amended at any time by the issuing Bank without prior notice to the seller. It is not now in use. Irrevocable credit This type of credit cant be cancelled or amended by the issuing Bank without the agreement of parties concerned thereto.All the attri savee issued in our country are of irrevocable nature. Add confirmed credit When a third Bank provides guarantee to the beneficiary to make payment, if issuing Bank fail to make payment, the L/C is called confirmed L/C. In case of a confirmed L/C a third Bank adds their confirmation to the beneficiary, to make payment, in addition to tha t of issuing Bank. Confirmed L/C gives the beneficiary a double assurance of payment. 5. 5. 3 Special documentary credit. There are some other special documentary credits that are prone below Revolving credit. Transferable credit. subscribe- to- Back credit. Revolving credit Which provides for restoring the credit to the pilot burner amount after it has been utilized. Transferable credit If the word Transferable incorporated in an L/C, then the L/C is transferable. The first base beneficiary can transfer transferable L/C to second beneficiary. But second beneficiary cannot transfer it further to another beneficiary. Back-To- Back credit The Back To Back is a new credit open on the bases of an original credit in favor of other beneficiary under this concept the seller of the first credit offers it as security to the issuing Bank for the assurance of the second credit.The beneficiary of the pricker-to-back credit may be located inside or outside the original beneficiarys count ry. 5. 5. 4 Operations of Documentary Letters of Credit The future(a) five major steps are involved in the operation of a documentary garner of credit ? Opening. ? Advising. ? Amendment. ? Presentation. ? Settlement. Opening of Letter of Credit Opening of letter of credit means, at the request of the applicant (importer) issuance of a L/C in favour of the beneficiary (exporter) by a Bank. The Bank, which open or issue L/C opening Bank or issuing Bank.L/C Advising Advising through a Bank is a proof of evident authenticity of the credit to the seller. The process of advising a credit consists of forwarding the original credit to the beneficiary to whom it is addressed. Before forwarding the advising Bank verify the signature (s) of the officer (s) of the issuing Bank & ensure that the terms & condition are not in violation of existing exchange control regulation & the other regulation relating to export. If credit is transmitted via telex, advising Bank will match the test used in t he telex.Amendment of Credit Parties involved in a L/C, particularly the seller and the buyer, cannot always satisfy the terms and conditions in full as expected due to some obvious and genuine reasons. In such(prenominal) a situation, the credit should be amended. Presentation of Document The seller being satisfied with the terms and conditions of the credit proceeds to dispatch the required goods the buyer and after that, has to march the documents evidencing dispatching of goods to the negotiating bank on or in advance the stipulated outcome date of the credit.After receiving the entire document, the negotiating bank then checks the documents against the credit. If the documents are found in order, the bank will pay, accept or negotiate to the issuing bank. The issuing bank also checks the documents and if they are found as per credit requirements, either effects payment, or reimburse in the pre-agreed manner. Lodgment If import documents found in order, it to be made entry in the bill register and necessary voucher to be passed, putting bill number on the documents, these processes is called lodgment of the bill. Since the documents stay at this stage for a temporary period i. . up to retirement of the documents, the process is called lodgment. Bank essential lodge the documents immediate after receipt of the dame, not exceeding seven (7) Banking days, following the day of receipt of the documents. Retirement of Import documents When the importer releases the import document from the Bank by acceptance/cash payment or under post import Bank finance it is known as retirement of the import document. Refusal Notice After examination, if the documents become discrepant, issuing Bank will through the refusal notice to the negotiating Bank with seven Banking days.Settlement Settlement means fulfilling the commitment of issuing Bank in regard to effecting payment subject to self-colored the credit terms fully. This settlement may be done three separate arran gements as stipulated in the credit. 5. 6 Import Financing The post import finance extends the import credit in the following forms ? PAD (Payment against documents). ? LTR (Loan against trust receipt). ? LIM (Loan against import merchandise) 5. 6. 1 Payment Against Document (PAD) PAD Loan is created upon lodgment of import documents.This Loan is created for 21 days -the time being the tolerance for taking documents for the importer. If after 21 days the documents are not taken by the importer, the Bank may sell the imported goods to recover the given amount. 5. 6. 2 Loan Against Trust Receipt (L. T. R) Under this, Loan is allowed only to first class importers. hither only on the basis of trust without paying the Bank anything or a partial amount, the importer takes the documents. Then importer is allowed 60-90 days time to make payment. 5. 6. 3. Loan Against merchandise Merchandise (LIM)Advance (Loan) against the security of merchandise imported through the Bank may be allowed eit her on pledge or hypothecation of goods, retaining margin inflict on their Landed Cost, depending on their categories and Credit Restriction imposed by the Bangladesh Bank. Bank shall also obtain a letter of undertaking and indemnity from the parties, before getting the goods cleared through LIM Account. 5. 7 Export Under the export policy of Bangladesh, the exporter has to get the valid export registration certificate (ERC) from chief restraint of export & import (CCI&E). The ERC is required to renew any year.The ERC number is to be incorporated on export Form & other paper connected with exports. 5. 7. 1-Receiving the letter of credit After getting contract for sale, exporter should ask the buyer for L/C clearly stating terms & condition of export & payment. 5. 7. 2 Procuring the materials After perspicacious that the L/C has opened in his favor, the next step for the exporter is to set more or less the task of procuring or manufacturing the contracted merchandise. If the ex porter has to procure the raw materials from another supplier (local or abroad) he has to open Back-to-Back L/C. 5. . 3 -Back-to-Back L/C Back-to-Back L/C is one type of L/C, which is opened against lien on a valid export L/C. It is opened for inland & abroad as well. Bank will supply the following cover/documents for opening a Back-to-Back L/C ? L/C application form. ? LCA form. ? IMP form. ? Charge document papers. The above papers must be completed, filled & signed by the party thereto. The party will submit the entire filled document along with application in printed form of the designated Bank. Which is also an agreement between applicant & the Bank. Procuring the materialsAfter making the deal & on having the L/C opened in his favor, the next step for the exporter is to set about the task of procuring or manufacturing the contracted merchandise. 5. 8 Export Financing An exporter is one who exports the goods to another customer whether in domestic country or in abroad. In ex porting the stipulated goods he may require financing. So export financing may be required at two stages. Pre onus credit. Post shipment credit 5. 8. 1 Pre shipment credit Pre shipment credit is the credit, which is given to finance the export activities of an exporter for the actual shipment of goods.The purpose of each credit is to edge the working capital needs from the procuring of raw materials to the transportation of goods for the export the foreign country. Before sanctioning of that credit the Bank takes into consideration the credit worthiness, export deed of the exporters together worthiness all other information required for sanctioning the credit in accordance with the existing rules & regulations. Pre shipment credit takes the following forms ? Export cash credit (Hypothecation). ? Export cash credit (Pledge). ? Export packing credit. ? Back-to-Back letter of credit. Export cash credit (Hypothecation) Under this arrangement the Bank sanction the Loan to the first cl ass exporter because there is no security against this Loan. The letter of hypothecation creates a charge against the merchandise in favor of the Bank but neither the ownership not the possession is passed to it ( Export cash credit (Pledge) Under this arrangement the Bank advance Loan to exporter against pledge of raw materials or exportable goods. The exporter surrenders the physical possession of goods under Banks effective control till the payment of dues to the Bank as security.If the exporter does not able to pay the Loan the Bank can sell the exportable goods to recover the amount. ( Packing credit Under this arrangement credit facilities are extended against security of railway line receipt/Steamer receipt/Truck receipt/Vessel receipt, evidencing transportation of goods to the port for shipment of the goods in addition to the usual charge documents & lien of export letter of credit. This type of credit is sanctioned for transitional period from dispatch of goods to negotiati ons of export documents. It is mainly given for payment of factory salary & wages. ( Back to back letter of creditUnder this arrangement the Bank Finances export business by opening a letter of credit on behalf of the exporter who has reliable a letter of credit from the overseas buyer but not the actual manufacturer or producer of these exportable goods. Since the second letter of credit is opened on the strength of & backed by another letter of credit, it is called Back to back credit. The need for a back-to-back letter of credit arises because the beneficiary of the original letter of credit may entertain to procure the goods from actual producer who may not supply the goods unless the Bank guarantees its payment. . 8. 2- Post Shipment Credit There is a time gap between export of the goods and realization of the proceeds. So exporter may require finance in that period to continue his business. So Bank may finance against export documents ensuring the following 1. Export documen ts comply the credit terms. 2. Partys past performance is satisfactory. 3. Any other security in case of export under contract. 5. 9 Foreign Remittance Foreign remittance means remittance of foreign currencies from one place/ person to another place/person.In broad sense, foreign remittance includes all sale and purchase of foreign currencies on account of Import, Export, Travel and other purposes. However, specifically foreign remittance means sale & purchase of foreign currencies for the purposes other than export and import. PBL performs the remittance function with different countries. It maintains the foreign remittance in the following form Foreign Demand Draft. Inward Outward. 5. 9. 1 Foreign Demand Draft (FDD) A foreign demand draft is a negotiable actor issued by a Bank drawn on ther Bank with another country the instruction to pay a certain amount to the beneficiary on demand. Remittance through demand draft may be inward or outward. 5. 9. 2 Inward Remittance Inward rem ittance refers to the extent where the Bank makes payment to the client against foreign demand draft. Bank will make payment to the client by verifying the, test number, and signature of the authorized officer. deuce forms as prescribed by Bangladesh Bank are used for purchase of Foreign Currencies such as. EXP Form Remittances received against exports of goods from Bangladesh are done by form EXP.Form C Inward remittances equivalent to US$2000/- and above are done by Form C. However, declaration in Form C is not required in case of remittances by Bangladesh Nationals working abroad. 5. 9. 3 Outward Remittance It refers to the extent where by the Bank issues foreign demand draft. The Bank charges TK. 300 per Demand Draft. Two forms are used for Outward remittance IMP Form All outward remittance on account of Imports is done by form IMP. T. M. Form For all other outward remittances form T. M. is used. 5. 9. 4 -Collection of foreign currency instrumentsTo collect proceed of Foreign I nstrument following procedures to be maintained 1. Receive instrument with deposit slip. 2. Affix crossing stamp of the Bank. 3. Entry in the register putting IBCA number. 4. Affix endorsement pay to the order of any Bank or trust company, prior endorsement guaranteed. 5. Instrument to be sent to adjacent correspondents. 5. 9. 5 Miscellaneous Services given by this Department Student Students who are desirous to study abroad can open file in the bank. By opening this file, bank assures the file cabinet remittance of funds in abroad for study. NRIT Non resident Investors Taka Account is an account by which Non-resident Bangladeshi can deposit foreign Account currency for investment in security of stock exchanges. For such accountholders, 5% of primary shares are reserved. F. C. Foreign Currency accounts are opened in the names of Bangladeshi nationals or persons of Bangladeshi origin Account working or self-employed in abroad and are maintained as long as the account holders desire. NFCD Stands for Non-resident Foreign Currency Deposit Eligible Persons may open such accounts even after their return to Bangladesh, within six months of their arrival. RFCD Stands for Resident Foreign Currency Accounts Persons commonly resident in Bangladesh may maintain foreign Accounts currency accounts with foreign exchange brought in at the time of their return to Bangladesh from visit abroad. Balance of such accounts is freely remittable to abroad. CHAPTER-SEVEN PROBLEMS & OPPORTUNITIES Problems and opportunities of prime bank limited are discussed through the sowt analysis which is given below SOWT Analysis By analysing the Banks performance, I get the following Strength opportunity, weakness and threat (SOWT). Strength It has well reputation in the market Not engaged in unfair business practice. Officers are highly educated. Executives are highly qualified and experienced. Bank has many attractive deposit schemes. Well-furnished and Air-conditioned Bank. Effi cient management practice in the Bank. Faster (T24) software program program is under implementation.In Singapore there is a PRIME EXCHANGE HOUSE. In CAMEL rating Bank achieved as No. 1 Bank. Percentage of uncollectible loss is very significant (prox. 2%) Membership with SWIFT. Good Banker-customer relationship. Weakness Deposit is lower than advance. Long-term credit is not sufficient. Small market shares in Banking-business. In present time Bank facing liquidity problem. Daily basis interest on deposit offered by other banks. Existing PCB software does not fulfill all requirement Opportunities Can increase the credit scheme. Can increase the advertising of the Bank. Private Banks becomes more reliable to local public. Govt. as banned some Jatiya Sanchaya patra. Threat There are many competitors in the market. Competitors have more deposit. Govt. imposes tax and VAT on profile. Govt. pressures to reduce interest rate. CHAPTER octonary CONCLUSION & RECOMMENDATION Conclusion Bank is the largest organization of mobilizing surplus domestic savings. Attractive nest egg Schemes are offered by PBL such as Contributory Savings Scheme, Monthly Benefit Deposit Scheme, Special Deposit Scheme, Education Savings Scheme, Fixed Deposit Scheme, eyeshade Bank Money Scheme, Prime Bank insure Fixed Deposit Scheme as well as different accounts to save money.Schemes are designed concentrating in different purposes to help the fixed income classify people to help in need. Bank-Officials are also whole-hearted and dedicated to serve their customer with utmost care. Credit Management policies and techniques used in PBL at present no doubt is comparable to international standards. The officials follow the policy very strictly. They are choosy and conservative in sanctioning loan. The proposal is thoroughly scrutinized by the loan sanctioning authority. The total function of the credit division is monitored periodically.The banks classified loan to the total Advance is very lo w. Management and others related to Prime Bank are trying to formulate new services and products. PBL always try to increase foreign exchange through import, export and remittance. This bank always conceives amicable behaviour with exporters and helps them in their business activities as a trustee friend. It encourage importer to import goods in legal procedure and provide financial assistance for doing business smoothly. This bank contribute to our economy in a great deal by transacting remittance from different countries.Keeping this thought in the managements mind they made different deed with several foreign banks in abroad to collect money from our service holders and remit it to our country through this bank. In Singapore bank open a PRIME EXCHANGE HOUSE to help our people who employed in that country. Recommendation Prime Bank Ltd. is one of the most potential Banks in the banking sector. It has a large portfolio with huge assets to meet up its liabilities and the management of this bank is equipped with the expert bankers and managers in all level of management. So it is not an easy job to find out the drawbacks of this branch.I would rather feel like producing my personal opinion about the ongoing practices in Motijheel Branch. For the improvement of the service the following measures should be taken ? Providing more industrial loans It seemed to me that the bank having a large amount of deposit is not encouraging the large scale producers that much of long term industrial loans to accelerate the economy as well as to help the economy to resolve unemployment problem. ? ascertain Proper Division of manpower In The Desk There is lack of division of manpower in the branch. Therefore every body has to handle every type of banking services.This decreases the level of performance of the personnel, though it reduces monotonousness. But lack of division of manpower hampers the discipline of working environment. So customers are to wait for some time for the desired service, which is contrary to the Bakings objective. ? Development of Human Resources Human resource is another sector for the branch to be developed urgently. Human resources, in the branch, need to be equipped with adequate banking knowledge. Majority of the human resources must be having basic knowledge regarding money, banking, finance and accounting.Without proper knowledge in these subjects, efficacy cannot be optimised. Bank can arrange training program on these subjects. ? Ensure Proper Maintenance of Files Prime Bank Ltd. gives personalized services. All the officers have to give concentration to the customers, while doing this they cannot properly maintain the customer files. In many cases, application forms are not properly filled up and documents are not properly filed. Every staff should try to reduce these irregularities. ? Ensure Proper Maintenance of Office Premises Motijheel Br. is supposed to be very light and clean and well decorated.But sometimes it lo ses its glamour. The facility staffs are not regular in their duties and files and papers are kept here and there by the officers during the busy hour. This habit must be changed. Moreover, the sitting arrangement is very insufficient comparing with the number of customers. So Motijheel Br. Of PBL must pay assistance to this issue. ? Ensure Proper Communication System and Maintenance of Machineries Most of the time the branchs computers remain out of order and it is also true for the photocopiers. Attention should be given on proper maintenance of phone, computer, fax machine and photocopier. Ensure Sufficient Forms and Brochures There are always shortages of application forms, brochures, etc. in the branch. These Forms and Brochures must be maintained in sufficient quantity. Otherwise, customer service will be hampered ? Offer Some Loan and Deposit Scheme Exclusively for The gift Customers All the lending and savings packages offered to the Premium customers are same as offered t o the general customers, excepting the waiver of service charges for Premium Ones. Prime Bank Limited should try to introduce more attractive lending and savings scheme to its Premium customers to create more business for the Bank.The Bank can pay more attention to this segment of customers, as it is the most solvent group from which income can be generated if the package is designed properly. ? Implement T24 software more quickly Banks implementation of T24 software and data migration activities should continue more quickly because day to day overhead cost increases for that purpose. ? More Gifts and Discounts for The Marginal Customers Premium Customer should be offered occasional gifts and discounts, which can make the Premium Service more attractive and keep consumer delight.The interest rates on several loan and deposit schemes should be differentiated for the Premium customers Reference By Peter Rose. By L. R. Chowdhury. Consultation with the Following Persons ? Iftekher Uddin , SAVP and In-Charge of superior general Banking Division Motijheel Br. PBL. ? Mohammad Faruq, SAVP and In-Charge of Foreign Exchange Division. Motijheel Br. PBL. ? A. K. M. Jan-e ALAM,AVP and In-Charge of Credit Division Motijheel Br. PBL. ? Hafizur Rahman Mollik, FAVP supervisor of L/C opening. Motijheel Br. PBL. ? Afzalun-Nnhar,FAVP. General Banking Division,Motijheel Br. PBL. Arif Hasan Khan, EO, Credit Division, motijheel Br. PBL. ? Mohammad Abdul Matin Principal Officer, Credit division, Head office ,PBL. ? Masum Mahmud Baqui, Principal Officer, Corporate Banking, Head Office, PBL. ? Fahmida Sultana, Officer General Banking Division, Motijheel Br. PBL. ? MD. Rashedul Hasan Khan, Joiner Officer, General Banking Division. Motijheel Br. PBL. ? Khaleda Farhana, Jonier Officer, General Banking Division Motijheel Br. PBL. ? Zahid Hasan Junior Officer Accounts Section Motijheel Branch PBL. Issuing Bank (Bangladesh) Advising Bank (India) Reimbursing Bank (Japan) Negotiating Bank (I ndia)