Foreign Exchange Activities

8/20/2019 Foreign Exchange Activities

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EXECUTIVE SUMMARY

IFIC Bank Limited is a leading commercial bank in Banglades! It as a good re"#tation and

brand $al#e in te %inancial market! Te c#stomers are $er& m#c interested abo#t $ario#s

"rod#cts and ser$ices 'ic are "ro$ided b& IFIC Bank Limited!

First o% all( I made an o$er$ie' o% Foreign E)cange *e"artment o% IFIC Bank Limited( 'ere I

ad com"leted m& Internsi" +rogram! ,ere I tried to %oc#s te bank-s istor& o% organi.ation(

its mission( o'nersi" str#ct#re( management str#ct#re( cor"orate ob/ecti$e( risk management

/oint $ent#re abroad( tecnolog& and ,R*! Ten te ne)t "art o% tis re"ort described abo#t teForeign E)cange acti$ities o% IFIC Bank Limited tat incl#des Foreign E)cange *e"artment(

F#nction o% Foreign E)cange( Im"ort( E)"ort( Im"ort +roced#re( Letter o% credit! T&"e o% letter

o% credit( L0C o"ening "roced#re( Contents o% te Letter o% Credit( *oc#mentar& Letter o% Credit(L0C 1"ening o% IFIC( 1"en an L0C b& te Im"orter( Lodgment o% Im"ort Bill( +roced#re o%

Lodgment( Retirement o% *oc#ments( *is"osal o% IM+ Form( and Remittance section as 'ell!( I

a$e tried to so'n in tis re"ort o' dail& acti$ities are e)ec#ted and tings are getting done!

I also a$e identi%ied te Strengt( 2eakness( 1""ort#nities and Treats regarding ForeignE)cange section 'ic t#rned into "roblem identi%ication regarding tat "artic#lar section

"#tted some recommendation relating to tat "roblem in m& recommendation section( and %inall&

dra'n concl#sion a""endices and bibliogra"& as 'ell!

Introduction of the Study:

International Finance In$estment and Commerce Bank Limited 3IFIC Bank4 is a banking

com"an& incor"orated in te +eo"le-s Re"#blic o% Banglades 'it limited liabilit&! It 'as set #"

at te instance o% te 5o$ernment in 6789 as a /oint $ent#re bet'een te 5o$ernment o% Banglades and s"onsors in te "ri$ate sector 'it te ob/ecti$e o% 'orking as a %inancecom"an& 'itin te co#ntr& and setting #" /oint $ent#re banks0%inancial instit#tions abroad!

Te 5o$ernment eld :7 "er cent sares and te rest ;6 "er cent 'ere eld b& te s"onsors and

general "#blic! In 67<= 'en te 5o$ernment allo'ed banks in te "ri$ate sector( IFIC 'ascon$erted into a %#ll>%ledged commercial bank! Te 5o$ernment o% te +eo"le-s Re"#blic o%

Banglades no' olds =;? o% te sare ca"ital o% te Bank! Leading ind#strialists o% te co#ntr&

a$ing $ast e)"erience in te %ield o% trade and commerce o'n =:? o% te sare ca"ital and te

rest is eld b& te general "#blic!

5enerall& b& te 'ord @Bank 'e can easil& #nderstand tat te %inancial instit#tion deals 'itmone&! B#t tere are di%%erent t&"es o% banks like Central Banks( Commercial Banks! Sa$ings

Banks( In$estment Banks( Ind#strial Banks( Co>o"erati$e Banks( etc! B#t 'en #se te name

term @Bank 'ito#t an& "re%i)( or #ali%ication it re%ers to te Commercial banks! CommercialBanks are te "rimar& contrib#tor to te econom& o% a co#ntr&!

So 'e can sa& Commercial Banks are a "ro%it making instit#tion tat olds te de"osit o% te

indi$id#als D b#siness in cecking D sa$ing acco#nt and tan #ses tese %#nds to make loans!



For tese( "eo"le and go$ernment are $er& m#c de"endent on tese banks as te %inancial

intermediar&! As banks are "ro%it earning concern te& collect de"osit at te lo'est "ossible cost

and "ro$ide loans and ad$anced a iger cost! Te di%%erences bet'een t'o are te "ro%it %or te bank!

Banglades-s %inancial s&stem is smaller and less de$elo"ed tan in most co#ntries in So#t andEast Asia! *es"ite recent modest gains in %inancial de"t( te s&stem remains sallo'! Te

sector-s contrib#tion to 5*+ as remained static at t'o "ercent %or se$eral &ears! Alto#g ma/or "olic& re%orms a$e been #nder taken d#ring te "ast %e' &ears( incl#ding dereg#lation o%

interest rates( strengtening o% standard o% loan classi%ication and "ro$isioning( and elimination

o% Banglades Bank-s control o$er most %inancial transactions( te %inancial sector contin#es#nder de$elo"ed and ine%%icient and "oor %inancial later mediation "resents a signi%icant

disincenti$e to %aster economic gro't! Te banking sector is te main %orce 'ic kee" ealt&

atmos"ere %or mo$ing %or'ard te 'eels o% "rod#ction( trade and cons#m"tion b& gi$ingre#ired bank credits in te de$elo"ment "rocess!Te banking s&stem as 'ell as "#blic

commercial bank is an im"ortant %orce in te de$elo"ment "rocess o% Banglades 'ic kee"

ealt& atmos"ere %or mo$ing %or'ard te 'eels o% economic de$elo"ment b& s#""lied bank credit! o'( te "o"#lar notion is tat o#r banking sector is %acing serio#s "roblems d#e to non>

"er%orming loan! Es"eciall& te "#blic commercial banking sector is s#%%ering o% bank loan

de%a#lt "roblem! Conse#entl&( te most o% te "#blic banks are loosing teir income as 'ell as

gro't trend! In man& recent disc#ssions and ne's items( man& bankers researces( "lanners andre"orters arg#e tat te non>"er%orming loan is increasing beca#se most o% te bank borro'ers

a$e ca"t#red te enter banking sector o% Banglades directl& and indirectl& 'it bad intention

and

Banking sector is e)"anding its and in di%%erent e$ents e$er& da&! At te same time te banking "rocess is becoming %aster( easier( and te banking area becoming 'ider! As te demand %or

better ser$ice increases da& b& da&( te& are coming 'it di%%erent inno$ati$e ideas and "rod#cts!

In order to s#r$i$e in te com"etiti$e %ield o% te banking sector( all banking organi.ation arelooking %or better ser$ice o""ort#nit& to "ro$ide teir %ello' clients! As a res#lt( it as become

essential %or e$er& "erson to a$e some idea on te bank and banking "roced#re!

Te banking sector is te main %orce 'ic kee"s ealt& atmos"ere %or mo$ing %or'ard te

'eels o% "rod#ction( trade and cons#m"tion b& gi$ing re#ired bank credits in te de$elo"ment "rocess! Com"ared 'it oter banks( te +#blic Sector Commercial Banks being s#c an

im"ortant %orce in te de$elo"ment "rocess o% Banglades! Recentl&( tis sector %aces serio#s

crisis o% te #ge amo#nts o% non>"er%orming loan 'ic am"er te gro't trend and cr#s te

backbone o% o#r econom&!

Te "o"#lar notion is tat te main ca#se o% tis bad sit#ation is borro'ers- re"a&ment tendenc&(

#ge amo#nt o% go$ernment loan( corr#"tion in banking sector and oter socio>economic

"roblems! So( tis st#d& is a modest attem"t to %ind o#t te increasing de%a#lt "roblem o% bank loan D its e%%ect on "#blic sector commercial bank-s gro't as 'ell as o#r socio>economic

condition 'it some recommendations!



Origin of the Study:

Te internsi" "rogram o% BBA st#dents o% te *e"artment o% B#siness Administration( Fac#lt&

o% B#siness and Economics( *a%%odilInternationalUni$ersit& is an integral "art o% te BBAdegree! A%ter s#ccess%#ll& com"letion o% te internsi" "rogram( a st#dent m#st s#bmit te re"ort

on te assigned to"ic to te S#"er$isor and te *e"artment as 'ell! Tere are si) 394 credit o#rs%or tis internsi" re"ort o#t o% one #ndred and t'ent& si) 3694 credit o#rs in BBA "rogram!

Te "rogram is o% tree 3=4 monts d#ration! I 'as assigned to te IFIC Bank in a'ab"#r RoadBranc to com"lete tis internsi" "rogram! Te "eriod %or tis "rogram 'as o$ember (

GG7 to Febr#ar& <( G6G %or me! *#ring tis "eriod( I 'orked 'it em"lo&ees o% te branc in

Foreign E)cange *e"artment! Te Fac#lt& S#"er$isor o% te Internsi" "rogram as selectedtis to"ic! M& internsi" to"ic is “A Study On Foreign Exchange Activities in Nawabpur

Road ranch of IFI! an" #i$ited%&

Ob'ective of the Report:

Te st#d& is #ndertaken 'it te %ollo'ing ob/ecti$esH

To identi%& te %oreign e)cange acti$ities in a'ab"#r Road Branc o% IFIC Bank Limited!

To identi%& "roblems related to Foreign E)cange acti$ities o% IFIC Bank( a'ab"#r Road

Branc!

To recommend "ossible sol#tions o% te "roblems tose are identi%ied at te time o% doing

internsi"!

To identi%& te strengts and 'eaknesses in$ol$ed 'it te %oreign e)cange acti$ities in

a'ab"#r Road Branc o% IFIC Bank Limited!

To gater some "ractical kno'ledge tat 'ill be el"%#l %or m& %#t#re career gro't!

#i$itations of the Study:

Te st#d& as been cond#cted to make an in$estigation o% te bank-s state o% a%%airs o% %oreign

trade( and to identi%& some "roblem 'ere created tat ma& be termed as limitations o% te st#d&!Tese are as %ollo'sH

It 'as $er& di%%ic#lt to collect te in%ormation %rom $ario#s "ersonnel %or tere time constraint!

In man& cases( #" to date in%ormation is not "#blised!

Rele$ant "a"ers and doc#ments 'ere not a$ailable s#%%icientl&!

As i% IFIC Bank is a "ri$ate Bank te& are conser$ati$e in s#""l&ing abo#t teir data! As ares#lt it 'as not "ossible %or me to get all te data re#ired!



Te de"artment all "eo"le al'a&s remain b#s& d#e to ea$& "ress#re o% 'ork so tat te& co#ld

not s"are s#%%icient time!

(ethodo)ogy of the Study:

Tis re"ort as been "re"ared on te basis o% e)"erience gatered d#ring te "eriod o% internsi"!Te o$erall "rocess o% metodolog& is gi$en belo' in te %orm o% a %lo' cart diagramH

*ata !o))ection (ethods:

In%ormation #sed in tis re"ort as been collected %rom bot "rimar& and secondar& so#rces!+rimar& data 'ere collected mainl& tro#g "ersonal obser$ation o% te a""ro$al "rocess and

monitoring tecni#es( in%ormal inter$ie's o% e)ec#ti$es( o%%icers and em"lo&ees o% IFIC Bank!

Ma)im#m in%ormation 'ere collected %rom te secondar& so#rces( 'ic incl#de books( "#blications( reading materials and $ario#s circ#lars and ann#al re"orts "#blised b& IFIC Bank!

Sources of *ata:



Bot "rimar& and secondar& so#rces o% data are #sed to com"lete tis st#d&! Tese t'o so#rces

are e)"lained belo'H

+ri$ary sources:

In%ormal inter$ie's o% em"lo&ees in Foreign E)cange *i$ision!

Face to Face Con$ersation 'it te clients

+ersonal obser$ation

+ractical *esk 'ork

*isc#ssion session

Secondary sources:

Files and doc#ments o% te Branc!

Ann#l re"ort o% IFIC Bank Ltd GG<!

*i%%erent "a"er o% IFIC Bank Ltd!

*i%%erent books and "eriodicals related to %oreign E)cange!

Banking Jo#rnals

1%%icial 2ebsite

*ata Ana)ysis:

Tis is a descri"ti$e re"ort aimed at de"icting te %oreign e)cange acti$ities in a'ab"#r Road

Branc o% IFIC Bank Limited! Te data0in%ormation gatered %rom bot "rimar& and secondso#rces 'ere arranged to get a clear "ict#re abo#t te %oreign e)cange acti$ities in a'ab"#r

Road Branc o% IFIC Bank Limited! Te st#d& incl#des bot #alitati$e and #antities anal&sis

o% te a'ab"#r Road Branc o% IFIC Bank Limited %oreign acti$ities s#c as a""raisal criteria( "rocess( metods( g#idelines etc! Based on te obser$ational in%ormation( I tried to e$al#ate and

anal&.e te "roblems in$ol$ed 'it te %oreign e)cange acti$ities in a'ab"#r Road Branc o%

IFIC Bank Limited!

,istorica) ac"ground of IFI! an" #i$ited:

International Finance In$estment and Commerce Bank Limited 3IFIC Bank4 is a banking

com"an& incor"orated in te +eo"le-s Re"#blic o% Banglades 'it limited liabilit&! It 'as set #"

at te instance o% te 5o$ernment in 6789 as a /oint $ent#re bet'een te 5o$ernment o%

Banglades and s"onsors in te "ri$ate sector 'it te ob/ecti$e o% 'orking as a %inance



com"an& 'itin te co#ntr& and setting #" /oint $ent#re banks0%inancial instit#tions abroad! Te

5o$ernment eld :7 "er cent sares and te rest ;6 "er cent 'ere eld b& te s"onsors and

general "#blic! In 67<= 'en te 5o$ernment allo'ed banks in te "ri$ate sector( IFIC 'ascon$erted into a %#ll>%ledged commercial bank! Te 5o$ernment o% te +eo"le-s Re"#blic o%

Banglades no' olds =;? o% te sare ca"ital o% te Bank! Leading ind#strialists o% te co#ntr&

a$ing $ast e)"erience in te %ield o% trade and commerce o'n =:? o% te sare ca"ital and terest is eld b& te general "#blic!

(ission State$ent of IFI! an":

Te mission o% IFIC Bank Ltd is to "ro$ide ser$ice to o#r clients 'it te el" o% a skilled and

dedicated 'ork%orce 'ose creati$e talents( inno$ati$e actions and com"etiti$e edge make o#r "osition #ni#e in gi$ing #alit& ser$ice to all instit#tions and indi$id#als tat 'e care %or!

Te Bank a#torit& is committed to te 'el%are and economic "ros"erit& o% te "eo"le and te

comm#nit&( %or 'e dri$e %rom tem o#r ins"iration and dri$e %or on'ard "rogress to "ros"erit&!

Te Bank 'ant to be te leader among banks in Banglades and make o#r indelible mark as an

acti$e "artner in regional banking o"erating be&ond te national bo#ndar&

To set ig standards o% integrit& and bring total satis%action to teir clients( sareolders and

em"lo&ees!

To become te most so#gt a%ter bank in te co#ntr&( rendering tecnolog& dri$en inno$ati$e

ser$ices b& teir dedicated team o% "ro%essionals!

Ownership Structure:

Te go$ernment o% te "eo"le re"#blic o% Banglades no' olds =;? o% sare ca"ital o% te

bank! Leading ind#strialists o% te co#ntr& a$ing $ast e)"erience in te %ield o% trade and

commerce o'n =:? o% te sare ca"ital and te rest is eld b& te general "#blic!

!apita) and Reserves:

IFIC bank as been consistentl& maintaining te @Ca"ital Ade#ac& Ratio( as "rescribed b&Banglades Bank! Tis as been made "ossible b& a "olic& o% b#ilding #" bot ca"ital and

reser$es! It started 'it an a#tori.ed and "aid #" ca"ital o% TK! 6GG million and TK! 9=!G

million res"ecti$el& in 67<=! A#tori.ed and "aid #" ca"ital increased to TK! ;GG million and

TK! :G9!=7 million res"ecti$el& in GG;! In addition to "aid #" ca"ital( te bank as b#ilt #" astrong reser$e base o$er te &ears! As against TK! 6!G million onl& in 67<=( reser$es and

s#r"l#s increased to TK! <G7!6G million in GG:! Besides( te bank ad 6? 5eneral reser$e'ort TK! =7=!=6 million as on *ECEMBER =6( GG;!

(anage$ent Structure:



Te tirteen members o% te Board o% *irectors are res"onsible %or te strategic "lanning and

o$erall "olic& g#idelines o% te Bank! F#rter( tere is an E)ec#ti$e Committee o% te Board to

dis"ose o% #rgent b#siness "ro"osals!Besides( tere is an A#dit Committee in te Board to o$ersee com"liance o% ma/or reg#lator& and

o"erational iss#es!

Te CE1 and Managing *irector( *e"#t& Managing *irector and ,ead o% *i$isions areres"onsible %or acie$ing b#siness goals and o$erseeing te da& to da& o"eration!

Te CE1 and Managing *irectors are assisted b& a Senior Management 5ro#" consisting o%

*e"#t& Managing *irector and ,ead o% *i$isions 'o s#"er$ise o"eration o% $ario#s *i$isionscentrall& and co>ordinates o"eration o% brances!

Ke& iss#es are managed b& a Management Committee eaded b& te CE1 and Managing

*irector! Tis %acilitates ra"id decisions!

!orporate Ob'ectives:

IFIC Bank-s ob/ecti$es are re%lected in te %ollo'ing areasH

,igl& "ersonali.ed ser$ice!

C#stomer>dri$en %oc#s!

Total commitment to #alit&!

Contrib#tion in te econom&!

#alit& o% #man reso#rces!

Commitment to its clients at eac le$el!

Te com"an& belie$es tat comm#nication 'it( and %eedbacks %rom its clients el" it acie$e itsgoal o% "ro$iding 'orld>class "rod#ct and ser$ices! IFIC Bank reg#larl& cond#cts client

satis%action s#r$e&s and make immediate accommodations and ad/#stments 'ere needed! It also

constantl& monitors its standards( and stri$es to meet clients- re#irements!

Ris" (anage$ent:

In $ie' o% te global recognition to'ards need o% an e%%ecti$e risk management and control

s&stems in %inancial sector( IFIC Bank being cogni.ant o% te im"ortance o% te s#b/ect( as

"re"ared and im"lemented te %ollo'ing "olic& g#idelines on Risk ManagementH

Credit Risk Management

Asset Liabilit& Management

Foreign E)cange Risk Management



Internal Control D Com"liance

+re$ention o% Mone& La#ndering

-echno)ogy:

Since te beginning o% its /o#rne& as a commercial bank in 67<=( IFIC Bank as been gi$inggreat em"asis on te ado"tion o% modern tecnolog&! It became te "ioneer in te %ield o%

a#tomation b& introd#cing com"#teri.ed branc banking rigt in te same &ear! S#bse#entl&( all

te brances 'ere bro#gt #nder similar a#tomated "lat%orms 'it #"graded so%t'are

a""lications to o%%er all te critical banking %eat#res! At "resent all 89 domestic brances are%#ll& com"#teri.ed #nder net'orked en$ironment!

Te Bank as taken #" a ne' "ro/ect 'it MISYS International Banking S&stem Inc! 3UK4 to

%#rter #"grade its banking o"eration to state>o%>art 'orld class on>line banking sol#tions to

"ro$ide %aster and e$en more con$enient centrali.ed ser$ices to te clients

Besides( te Bank is also o"erating %#ll& on>line A#tomated Teller Macine 3ATM4 ser$ices

#nder te banner >Cas at a n#mber o% locations in *aka and Cittagong! Te ATM %acilities

are a$ailable to te c#stomers at >Cas boot

Since te im"ortance o% 2eb "resence in te Internet is absol#tel& critical( IFIC 2eb Site'''!i%icbankbd!com as long been la#nced %or te con$enience o% te c#stomers( 'ere all te

acti$ities and in%ormation are constantl& being "osted and #"dated! A Central Mailing S&stem is

o"erational at te ,ead 1%%ice to let te c#stomers a$e direct electronic access to te selectedsta%%!

,u$an Resources *ivision .,R*/:

,#man Reso#rces *e$elo"ment is %oc#sed on recr#itment and in>o#se training %or bot on te

/ob and o%% te /ob Bank sta%% members tro#g te Bank-s Academ&! IFIC Bank Academ& te

oldest instit#tion in te "ri$ate sector 'as concei$ed o% as an in>o#se training center to takecare o% te training needs o% te Bank internall&!

Academ& is %#ll& e#i""ed 'it a "ro%essional librar&( modern training aids and "ro%essional

%ac#lt&! Librar& as abo#t :7:6 books on banking( economics( acco#nting( management(

marketing and oter related s#b/ects!

Main training acti$ities consist o% in>de"t %o#ndation "rograms %or entr& le$el ManagementTrainees! S"eciali.ed training "rograms in te areas like general banking( ad$ance( %oreign

e)cange( marketing and acco#nts etc! are also organi.ed b& te Academ& de"ending on need!

Fre#entl& o#treac "rograms are organi.ed to meet demand %or ne' and s"eciali.ed skills!

*#ring its = &ears o% e)istence( Academ& not onl& cond#cted co#rses( 'orkso"s and seminars

as re#ired b& te Bank( b#t it also organi.ed training "rograms %or te Bank o% Maldi$es( e"al



Banglades Bank Limited and 1man International E)cange LLC! In addition( Academ& as

also te credit o% organi.ing s&stem o% Bank o% Maldi$es!

In addition to cond#cting co#rses internall&( Te Academ& also selects candidates %or nominationto $ario#s co#rses cond#cted b& disting#ised training organi.ations in te co#ntr& incl#ding

BangladesBankTrainingAcadem& and Banglades Instit#te o% Bank Management!

Te Academ& also re>designs its co#rses( "rograms etc( reg#larl& to meet te re#irement o% ne'

skills arising o#t o% $ario#s directi$es( g#idelines o% te Central Bank and signi%icant canges inte banking sector %rom time to time!

*efinition of Foreign Exchange:

Foreign E)cange is a "rocess 'ic is con$erted one national c#rrenc& into anoter and

trans%erred mone& %rom one co#ntr& to anoter co#ntr&!

Foreign E)cange *e"t! is te international de"t! Banglades bank iss#es license to sced#led banks to deal 'it %oreign e)cange! Tese banks are kno'n as A#tori.ed *ealers! I% te

branc is a#tori.ed dealer in %oreign e)cange market( it can remit %oreign e)cange %rom local

co#ntr& to %oreign co#ntries! So IFIC Bank( a'ab"#r Road Branc is an a#tori.ed dealer!

According to Mr! ,! E! E$itt! Foreign E)cange is tat section o% economic science 'ic deals'it te means and metod b& 'ic rigt to 'ealt in one co#ntr&-s c#rrenc& are con$erted into

rigts to 'ealt in terms o% anoter co#ntr&-s c#rrenc&! It in$ol$ed te in$estigation o% te

metod b& 'ic te c#rrenc& o% one co#ntr& is e)canged %or tat o% anoter( te ca#ses 'icrented s#c e)cange necessar& te %orms 'ic e)cange ma& take and te ratio or e#i$alent

$al#es at 'ic s#c e)canges are e%%ected! Foreign e)cange is te rate o% e)cange in te

bot co#ntr&-s c#rrenc&!

Foreign -rade and Foreign Exchange:

International trade re%ers to trade bet'een te residents o% t'o di%%erent co#ntries!Eac co#ntr& %#nctions as a so$ereign State 'it its set o% reg#lations and c#rrenc&! Te

di%%erence in te national o% te e)"orter and te im"orter "resents certain "ec#liar "roblems in

te cond#ct o% international trade and settlement o% te transactions arising tere %rom! Im"ortantamong s#c "roblems areH

.a/ *i%%erent co#ntries a$e di%%erent monetar& #nits

.b/ Restrictions im"osed b& co#ntries on im"ort and e)"ort o% goods

.c/ Restrictions im"osed b& nations on "a&ment %rom and into teir co#ntries

Foreign Exchange *epart$ent:



Foreign E)cange *e"artment is international de"artment o% Bank! It deals globall&! It %acilities

international trade tro#g its $ario#s modes o% ser$ices! It bridge bet'een im"orters and

e)"orters! I% te branc is a#tori.ed dealer in %oreign e)cange market( it can remit %oreigne)cange %rom local co#ntr& to %oreign co#ntr&! Tis de"artment mainl& deals in %oreign

c#rrenc&! Tis is '& tis de"artment is called %oreign e)cange de"artment!

+rincip)es of Foreign Exchange:

Te %ollo'ing "rinci"les are in$ol$ed in Foreign e)cangeHi/ Te entire s&stem

ii/ te media #sed

iii/ te monetar& #nit!

0%1%2% Function of Foreign Exchange:



Te Bank actions as a media %or te s&stem o% %oreign e)cange "olic&! For tis reason( te

em"lo&ee 'o is related o% te bank to %oreign e)cange( s"eciall& %oreign b#siness so#ld a$e

kno'ledge o% tese %ollo'ing %#nctions H>

64 Rate o% e)cange!

ii4 ,o' te rate o% e)cange 'orks!iii4 For'ard and s"ot rate!

i$4 Metods o% #oting e)cange rate!$4 +remi#m and disco#nt!

$i4 Risk o% e)cange rate!

$ii4 Ca#ses o% e)cange rate!$iii4 E)cange control!

i)4 Con$ertibilit&!

)4 E)cange "osition!)i4 Inter$ention mone&!

)ii4 Foreign e)cange transaction!

)iii4 Foreign e)cange trading!)i$4 E)"ort and im"ort letter o% credit!

)$4 on>commercial letter o% trade!

)$i4 Financing o% %oreign trade!

)$ii4 at#re and %#nction o% %oreign e)cange market!

I$port

2en goods and ser$ices are bro#gt %rom te co#ntr& %or te %#l%illment o% te c#stomer needs

or teir o'n needs is called im"ort D 'o is in$ol$ing in tis "roced#re Is called im"orter!

Advantages of i$porters:

a4 Abi)ity: Te letter o% credit enables te im"orter o% "#rcase materials 'ito#t making %#llad$ance "a&ment!

b4 Assurance: I% te im"orter task certain sa%e g#ards( like calling %or "acking list(

In$oice ate! Te #alit& and #antit& o% te goods consigned is ass#red!

c4 3ithout pay$ent: +rided te b#&er as b#&ing credit 'it te "rime bank e ma& get goods

released b& te bank #nder tr#st 3e!s( LTR(LIM etc4 i!e! 'ito#t "a&ment and "a& %or ten on

sale!

Export

2en good and ser$ices are bro#gt %rom &o#r co#ntr& to oter co#ntries %or te %#l%illment o%

teir c#stomer needs teir o'n needs is called e)"ort D 'o is in$ol$ing in tis "roced#re is

called e)"orter!



Advantages of Exporter:

a4 4nderta"ing: A s#"erior #ndertaking o% te bank #nder te latter o% credit ass#res te

im"orter ten 'en te doc#ments are tendered as "er te t#rns o% te credit "a&ment 'o#ld bemade to im!

b4 !ontro))ingH Te e)"orter is absol$ed o% te boteration o% kno'ing in details te

e)canges control reg#lations o% te im"orter co#ntr& and is also increased to some e)tent

against carges in s#c reg#lation

I$port +rocedure:

Im"ort section o% an& Bank deals 'it L0C o"ening and "ost im"ort %inancing i!e! LIM D LTR!

o' te "roced#re %rom o"ening L0C to disb#rsement against L0C is gi$en belo'!

*efinition of #5!:

1n beal% o% te im"orter i% te Bank #ndertakes to make "a&ment to te %oreign bank is kno'n

as doc#mentar& credit or letter o% credit

A letter o% credit is an instr#ment iss#ed b& a bank to a c#stomer "lacing at te letters dis"osal

s#c agreed s#ms in %oreign c#rrenc& as sti"#lated! An im"orter is a co#ntr& re#ests is bank to

o"en a credit in %oreign c#rrenc& in %a$or o% is e)"orter at a bank in te letters co#ntr&! Te

letter o% credit is iss#ed against "a&ment o% amo#nt b& te im"orter or against satis%actor&sec#rit&! Te L0C a#tori.es te e)"orter to dra' a dra%t #nder is terms and sell to a s"eci%ied

bank in is co#ntr&! ,e as to and o$er to te bank( 'ill te Bill o% e)cange( si""ing

doc#ments and s#c oter "a"ers as ma& be agree #"on bet'een te e)"orter and te im"orter!

Te e)"orter is ass#red o% is "a&ment beca#se o% te credit 'ile te im"orter is "rotected beca#se doc#ments in res"ect o% e)"ort o% goods a$e to be deli$ered b& te e)"orter to te

"a&ing bank be%ore te "a&ment is made!

A letter o% credit 3L0C4 ma& be t'o %orms! Tese as belo'H

i/ Re$ocable letter o% credit!

ii/ Irre$ocable letter o% credit!

.i/ Revocab)e #5!: I% an& letter o% credit can be amendment or cange o% an& cla#se or canceled

b& consent o% te e)"orter and im"orter is kno'n as re$ocable letter o% credit!

A re$ocable letter o% credit can be amended or canceled b& te iss#ing bank at an& time 'ito#t "rior notice to te bene%iciar&! It does not constit#te a legall& binding #ndertaking b& te bank to

make "a&ment! Re$ocation is "ossible onl& #ntil te doc#ments a$e been onored b& teiss#ing bank or its corres"ondent! T#s a re$ocable credit does not #s#all& "ro$ide ade#ate

sec#rit& %or te bene%iciar&!

.ii/ Irrevocab)e #5!: I% an& letter o% credit can not be canged or amendment 'ito#t te

consent o% te im"orter and e)"orter is kno'n as irre$ocable letter o% credit!



Irre$ocable credit constit#tions a %irm #ndertaking b& te iss#ing bank to make "a&ment! It

tere%ore( gi$es te bene%iciar& a ig degree o% ass#rance tat e 'ill "aid to is goods or

ser$ices "ro$ide e com"lies 'it terms o% te credit!

-ypes of #etter of !redit:

Letters o% Credit are classi%ied into $ario#s t&"es according to te metod o% settlement

em"lo&ed! All credits m#st clearl& indicate in ma/or categories!

i4 Sigt "a&ment credit!

ii4 *e%erred "a&ment credit!iii4 Acce"tance credit!

IV4 egotiation credit!

$4 Red close credit!VI4 Re$ol$ing credit!

$ii4 Stand b& credit!

$iii4 Trans%erable credit!

.i/ Sight pay$ent credit: Te most commonl& #sed credits are sigt "a&ment credits! Tese "ro$ide %or "a&ment to be made to te bene%iciar& immodestl& a%ter "resentation o% te sti"#lated

doc#ments on te condition tat te terms o% te credit a$e been com"lied 'it! Te banks are

allo'ed reasonable time to e)amine te doc#ments!

.ii/ *eferred pay$ent credit: Under a de%erred "a&ment credit te bene%iciar& does not recei$e "a&ment 'en is "resents te doc#ments b#t at a later date s"eci%ied in te credit! 1n

"resenting te re#ired doc#ments( e recei$ed te a#tori.ed banks 'ritten #ndertaking to make

"a&ment o% mat#rit&! In tis 'a& te im"orter gains "ossession o% te doc#ments be%ore being

debited %or te amo#nt in$ol$ed!

In terms o% its economic e%%ect a deterred "a&ment credit is e#i$alent to an acce"tance credit(

e)ce"t tat tere is no bill o% e)cange and tere%ore no "ossibilit& o% obtaining mone&

immediatel& tro#g a descant transaction! In certain circ#mstances( o' e$er( te banks "a&ment #ndertaking can be #sed as collateral %or an ad$ance( to#g s#c as ad$ance 'ill

normall& onl& be a$ailable %orm te iss#ing or con%irming bank! A disco#ntable bill o%%ers 'ider

sco"e!

.iii/ Acceptance !redit: 2it an acce"tance credit "a&ment is made in te %orm o% a tern bill o% e)cange dra'n on te b#&er( te iss#ing Bank or te "endent bank! 1nce e as %#l%illed te

credit re#irements( te bene%iciar& can demand tat te bill o% e)cange be acce"ted andret#rned to im! T#s te acce"ted bill takes te "lace o% a cas "a&ment!

Te bene%iciar& can "resent te accented bill to is o'n bank %or "a&ment at mat#rit& or %or disco#nting( de"ending on 'eter or not e 'ants cas immediatel&! For sim"licities sake te

bene%iciar& #s#all& gi$es on instr#ction tat te acce"ted bill so#ld be le%t in te sa%ekee"ing o%

one o% te banks in$ol$ed #ntil it mat#res! Bill o% e)cange dra'n #nder acce"tances credit#s#all& as a term o% 9G>6<G da&s!



Te "#r"ose o% an acce"tance is to gi$e te im"orter time to make "a&ment! It e sells te goods

be%ore "a&ments %all d#e( e can #se te "roceeds to meet te bill o% E)cange in tis 'a&( e

does not a$e to borro' mone& to %inance te transaction!

.vi/Negotiation credit: egotiation means te "#rcase and sale o% bill o% e)cange or oter

marketable instr#ments! A negotiation credit is a commercial letter o% credit o"ened b& teiss#ing bank in te c#rrenc& o% its o'n co#ntr& and addressed directl& to te bene%iciar&! Te

letter is #s#all& deli$ered to te addressee b& a corres"ondent bank! Tis credit is sometimes alsoas ,and on credit!

Te letter o% credit em"o'ers te bene%iciar& to dra' a bill o% e)cange on te #sing bank( on

an& oter named dra'er or on te a""licant %or te credit! Te bene%iciar& can "resent tis bill toa bank %or negotiation( togeter 'it te original letter o% credit and te doc#ments sti"#lated

terein!

+a&ment o% te bill o% e)cange is g#aranteed b& te iss#ing bank on te condition tat te

doc#ments "resented b& te bene%iciar& are in order! Te most common %orm o% negotiationcredit "ermits negotiation b& an& bank! In rare case te coice is limited to s"eci%ied banks!

.iv/ Red c)ause credit: In te case o% a red cla#ses credit( te seller can obtain an ad$ance %or an

agreed amo#nt %rom te corres"ondent bank( goods tat are going to be deli$ered #nder te

doc#mentar& credit! 1n recei$ing te ad$ances( te bene%iciar& m#st gi$e a recei"t and "ro$ide a'ritten #ndertaking to "resent te re#ired doc#ments be%ore te credit e)"ires!

Te ad$ance is "aid b& te corres"ondent bank( b#t it is te #sing bank tat ass#mes liabilit&! I%

te sellers does not "resent te re#ired doc#ments in time and %ails to re%#nd te ad$ance( te

corres"ondent bank debits te iss#ing bank 'it te amo#nt o% te ad$ance "l#s interest! Te

iss#ing bank( in t#rn( as re$eres to te a""licant( 'o tere%ore bears te risk %or te ad$anceand te interest acc#rsed!

Te cla#se "ermitting te corres"ondent bank to make an ad$ance #sed to be 'ritten on red in

ome te name red cla#se credit!

.v/ Revo)ving !redit: Re$ol$ing credit can be #sed 'en goods are to be deli$ered in

installment at s"eci%ied inter$als! Te amo#nt a$ailable at an& one time is e#i$alent to te $al#e

o% one "artial deli$er&!

A re$ol$ing credit can be c#m#lati$e or non>c#m#lati$e means tat amo#nt %rom #n#sed or

incom"letel& #sed "ortions can be carried %or'ard to s#bse#ent "eriod! I% a credit is non>c#m#lati$e( "ortions not #sed in te "rescribing "eriod case to be a$ailable!

.vi/ Stand by credit: Stand b& credit is enco#ntered "rinci"all& in te US! Under te la's o%

most US states( banks are "roibited %rom iss#ing reg#lar #arantines( so credits are #sedinstead! In E#ro"e( too te #se o% tis t&"e o% credit is increasing b& $irt#e o% teir doc#mentar&

credit( stand>b& credit are go$erned b& te UC+! ,o'e$er( teir %#nction is tat o% a grantee!



Te t&"es o% "a&ment and "er%ormance tat can be g#aranteed b& stand>b& credits incl#de te

%ollo'ingH

+a&ment o% tori#m bill o% e)cange Re"a&ment o% bank ad$ance

+a&ment o% goods deli$ered! *eli$er& o% goods in accordance 'ets contract and

E)ec#tion o% constr#ction contracts( s#""l& and install contracts!

In order to en%orce "a&ment b& te bank( te bene%iciar& merel& "resents a declaration stating

tat te a""licant %or te credit as %ailed to meet is contract#al obligation! Tis declaration ma&

a$e to be accom"anied b& oter doc#ments!

.vii/ -ransferab)e credit: trans%erable credits are "artic#larl& 'ell ada"ted to te re#irementso% international trade! A trader 'o recei$es "a&ment %rom a b#&er in te %orm o% a trans%erable

doc#mentar& credit can #se tat credit to "a& is o'n s#""lier! Tis enables im to carr& o#t te

transaction 'it onl& a limited and la& o% is o'n %#nds!

Te b#&er s#""lies %or an irreco$erable credit iss#ed in te traders %a$ors! Te iss#ing bank m#ste)"ressl& designate te credit as trans%erable!

As soon as te trader recei$es te con%irmation o% credit e can re#est te bank to trans%er te

credit to is s#""lier! Te bank is #nder no obligation to a%%ect te trans%er e)ce"t in so %ar as itas e)"ressl& consented to do so!

Te costs o% te trans%er are #s#all& carged to te trader and te trans%erring bank is entitled to

delete tem in ad$ance!

+rocedure of the Opening the #5!:

Te im"orter a%ter recei$ing te +er%orma in$oice %rom te e)"orter( b& a""l&ing %or te iss#e o% a doc#mentar& credit( te im"orter re#est is Bank to make a "romise o% "a&ment to te

s#""lier! 1b$io#sl&( te bank 'ill onl& agree to tis re#est i% it can rel& on reimb#rsement b&

te a""licant! As a r#le acce"ted as te sole sec#rit& %or te credit "artic#larl& i% te& are not tesort o% commodit& tat can be traded on an organi.ed market( s#c an arrangement 'o#ld

in$ol$e te bank in e)cessi$e risk o#tside its s"ecialist %ield! Te a""licant m#st tere%ore a$e

ade#ate %#nds in te bank acco#nt or a credit line s#%%icient to co$er te re#ired amo#nt!

Banks deal in doc#ments and not in goods! 1nce te bank as iss#ed te credits its obligation to

"a& is conditional on te "resentation o% te sti"#lated doc#ments 'it in te "rescribed timelimit! Te a""licant cannot "re$ent a bank %rom onoring te doc#ments on te gro#nds tat te

bene%iciar& as not deli$ered goods on redder reiss#es as contracted!

Te im"orter s#bmits te %ollo'ing doc#ments be%ore o"ening o% te L0CH

a% Ta) Identi%ication #mber 3TI4

b% Valid Trade License!

c% Im"ort Registration Certi%icate 3IRC4



Te Bank 'ill s#""l& te %ollo'ing doc#ments be%ore o"ening o% te L0CH

a% LCA %orm!

b% A""lication and Agreement %orm!

c% IM+ %orm

d% ecessar& carge doc#ments %or doc#mentation!

Te abo$e doc#ments 0 "a"ers m#st be com"leted d#l& signed and %illed in b& te "art&

according to te instr#ction o% te banker!

*ocu$entary #etter of !redit .I$port5Export *ocu$entation/:

*oc#mentar& letter o% credit is s#c kinds o% commercial letter 'ic a Bank iss#e on beal% o%

%oreign seller 3e)"orter4 according to te direction o% te 3im"orters4 "#rcasers! Te doc#mentsso'n #nder are kno'n as e)"ort doc#ments %orm te im"orter-s side! Tese areH>

.i/ i)) of exchange: Te bill o% e)cange is tat "artic#lar instr#ment tro#g 'ic "a&ment is

e%%ected in trade deals internal and international! Te "a&ment %or te goods is recei$ed b& teseller tro#g te medi#m o% a bill o% e)cange dra'n on te b#&er %or te amo#nt de"ending onte contract! It is a negotiable instr#ment! Tere are %i$e main "arties in$ol$ed in a bill o%

e)cange! Te& areH>

3a4 *ra'er

3b4 *ra'er 3c4 +a&ee



3d4 Endorser

3e4 Endorsee

.ii/ i)) of )ading: A bill lading is a doc#ment o% title to goods entitling te older to recei$e tegoods as bene%iciar& or endorsee and it is 'it te el" o% tis doc#ment on recei"t %rom te

e)"orter tat te im"orter takes "ossession o% te goods %rom te carr&ing $essel at te "ort o% destination!

.iii/ Airway bi)) 5 Rai)way receipt: 2en goods to be trans"orted are small in b#lk or re#irings"eed& deli$er& or tose are "erisable in nat#re on te deal is in bet'een te neigboring

co#ntries ten mode o% trans"orts oter tan si""ing ma& be resorted to %ar te carriage o% te

goods Air'a&s bill 0 Rail'a& recei"t take "lace o% Bill o% lading de"ending on te nat#re o% tecarrier!

.iv/ !o$$ercia) invoice: It is te seller-s bill %or te mercandise! It contains a descri"tion o%

goods( te "rice "er #nit at a "artic#lar location( total $al#e o% te goods( "acking s"eci%ications(

terms o% sale( letter o% credit( bill o% lading n#mber etc! Tere is no standard %orm %ar acommercial in$oice! Eac e)"orter designs is o'n commercial in$oice %orm! Te in$oice is

made o#t b& te seller #nder is signat#re in te name o% te b#&er and m#st be s#bmitted in a

set o% at least = co"ies! Its main "#r"ose is to ceck 'eter te a""ro"riate goods a$e been

si""ed and also tat teir #nit "rice( total $al#e( marking on te "ackage etc! are consistent 'ittose gi$en in oter doc#ments!

.v/ Insurance po)icy: In te international trade ins#rance "olic& is a m#st to co$er te risk o%

loss on consignments 'ile te& are on seas( roads( and air'a&s! Te ins#rance is teres"onsibilit& o% te b#&ers 3consignee4 #nder FAS( F1B and CDF contracts and o% te seller

3consignor4 #nder CIF contract! Te "olic& m#st be o% te t&"e as s"eci%ied in te relati$e

contract 0 credit! Te "olic& 'o#ld be %or te $al#e o% CIF "rice "l#s 6G 3ten4 "ercent to co$er tee)"enses and tat is re#ired to be obtained in te same c#rrenc& as tat o% te credit and datednot later tan te date o% si"ment 'it claimsN being "a&able at te destination! It m#st be

"ro"erl& stam"ed! Like a bill lading it m#st be negotiable and be endorsed 'ere it is "a&able to

order!

.vi/ !ertificate of origin: Tis is a certi%icate iss#ed b& a recogni.ed a#torit& in e)"ortingco#ntr& certi%&ing te co#ntr& o% origin o% te goods! It is #s#all& b& te Cambers o% commerce!

.vii/ +ac"ing )ist : Te e)"orter m#st "re"are an acc#rate "acking list so'ing item b& item( te

contents o% te consignment to enable te recei$er o% te si"ment to ceck te contents o% te

goods( n#mber and marks o% te "ackage( #alit&( "er "ackage net 'eigt( gross 'eigt(meas#rement etc!

.viii/ 3ight$an and (easure$ent: Iss#ed b& recogni.ed a#torit& 3like cambers o%

commerce and ind#str&4 in e)"orting co#ntr& certi%&ing correct 'eigtiest and meas#rement o% te goods e)"orted!



.ix/ i)) of entry: A bill o% entr& is a doc#ment 'ic contains te "artic#lars o% te im"orted

goods as 'ell as te amo#nt o% c#stoms d#t& "a&able!

#5! Opening of IFI!:

Toda& IFIC is one o% te leading and most s#ccess%#l Banking enter"rises in te co#ntr&! It "a&sa great role in te econom& o% te co#ntr&! B& e)"ort>im"ort b#siness te Bank "la& a great role

to te econom& o% Banglades! IFIC is one o% te greatest banks in e)"ort>im"ort b#siness!

Foreign trade "la&s a $ital role in te economic ad$ancement "rocess o% a nation! So te trend o%

co#ntr&-s %oreign trade( i!e! im"ort D e)"ort is o% a great concern to te go$ernment o% a co#ntr&!Fl#ct#ation in te "arameters o% %oreign trade immediatel& brings abo#t some im"act on te total

econom&! As s#c te nat#re( trend and te $ol#me o% %oreign trade are re#ired to kee" "eace

'it te national economic needs and ob/ecti$e! Tere ma& be some areas 'ere em"asis is to be gi$en 'ile tere ma& be oters 'ic deser$e restrictions or disco#ragement! Moreo$er te

items o% im"ort D e)"ort $al#e and $ol#me o% te same( te corres"onding time "eriod( so#rces

o% %#nd %ar "a&ment and recei"t( all tese %actors are to be considered $er& care%#ll& %or makingnecessar& ad/#stment to matc 'it te national economic "olicies as 'ell as acie$e balanced

economic gro't tro#g te Inter"ol ic& and Inter"ol ic& co>ordination!

International trade "olic& relates to commercial "olic& 'ic as t'o main com"onents o%

Im"ort "olic& relates to commercial "olic& 'ic as t'o main com"onents o% Im"ort "olic& andE)"ort "olic&! 2it a $ie' to acie$ing %a$orable balance o% "a&ment "osition as 'ell as to

enco#raging or 'ell to enco#raging or 'ell reg#lated and need based %oreign trade o% te

co#ntr&( te go$ernment %orm#lates te national commercial "olic& i!e! im"ort and e)"ort "olic&%or a certain "eriod considering all te %a$orable D #n%a$orable as"ects o% te nation-s "re$io#s

trade "er%ormance as 'ell as te %#t#re re#irement and "ros"ects!

As te "olic& matter and te o"erational o% im"ort D e)"ort trade are #ite di%%erent( t'o

se"arate "olicies %or im"ort D e)"ort trade are %orm#lated b& te go$ernment! Im"ort "olic&re%ers to go$ernment "olicies acco#nt %or a "artic#lar %iscal "eriod en$isaging te allocation o%

%#nd a$ailable %rom $ario#s so#rces %or im"ort o% certain #antit& o% certain goods! Te main

"#r"ose o% te "olic& is to conser$e scare %oreign e)cange D to ens#re its #tili.ation %or te

im"ort o% goods and ser$ices 'ic a$e national "riorit&! Te selected "ersons on instit#tionstose 'o a$e got $alid Im"ort Registration Certi%icate 3IRC4 %orm te Cie% Controller o%

Im"ort and E)"ort 3CCI D E4 can im"ort and te& are kno'n as im"orters!

Tese im"orters can im"ort goods as entitled in eac &ear as "er im"ort "olic& b& o"ening letter

o% credit 3L0C4 tro#g bank i!e! A#tori.ed *ealer 3A!*4! A#tori.ed *ealer means te brances o% commercial banks( tose 'o are a#tori.ed 0 licensed b& te Banglades Bank to

deal in %oreign E)cange! Letter o% Credit ma& be de%ined as te letter as te letter o% #ndertaking

or letter o% g#arantee iss#ed b& te L0C o"ening bank on beal% o% te im"orter s#bmits all tedoc#ments as mentioned in te L0C s#bmits all te doc#ments as mentioned in te L0C 'itin te

time sced#le to is bank i!e! e)"orters bank!



Be%ore o"ening L0C in %a$ors o% te e)"orter te entitlement o% te im"orter 3total amo#nt in taka

e can im"ort as "er im"ort "olic&4 to be registered 'it Banglades Bank! For tis "#r"ose te

im"orter is to a""l& tro#g L0C! A#tori.ation %orm 3LC A %orm4! Tis is a set in #int#"licateand te a#tori.ed dealer 'ill iss#e LCA %orm to te indi$id#al im"orter at teir re#est! A%ter

%illed #" and signed #" te a""ro"riate col#mn o% te LCA %rom( te im"orter 'ill s#bmit it to

A#tori.ed *ealer 'o interns %or'ard te same to Banglades Bank %or registration 'ere %#ndis "#rcased %rom Banglades Bank! A%ter registration Banglades Bank %or'ard te 6st and nd

co"& o% LCA %orm to te A#tori.ed *ealer( =rd and :t co"& to CCI D E and kee" te ;t co"&

as teir o%%ice co"&! 6st co"& o% LCA is kno'n as E)cange Control co"& against 'icA#tori.ed *ealer can o"en L0C at te re#est o% te im"orter! nd Co"& is kno'n as c#stom

"#r"ose co"& 'ic 'ill be anded o$er to te im"orter 'o 'ill clear te goods %rom te "ort

on its arri$al tro#g tis c#stom "#r"ose co"& o% LCA along 'it oter si""ing doc#ments!

Open an #5! by the I$porter:

o' te im"orter 'ill come to isBank 'it a re#est to o"en an L0C along 'it te %ollo'ing

doc#ments 0 "a"ersH>

a4 L0C a""lication and agreement Form 3Bank-s "rescribed a""lication %orm4 'it adesi$e

stam" o% Tk! 6;G 3Fle)ible4 OFrom J#ne =rd 677<P

b4 Indent 0 +er%orma In$oice 0 Contract = co"ies!

c4 Ins#rance co$er note 'it "remi#m "aid recei"t!

d4 IM+ %rom one set d#l& signed b& te im"orter!

e4 An& oter doc#ments i% necessar&!

A#tori.ed *ealer 'ill scr#tini.e te doc#ments and o"en te L0C in %a$or o% te e)"orter b&

con$erting te Banglades Taka into %oreign c#rrenc& at te e)isting B!C selling rate o%

e)cange! Care m#st be taken so tat te limit o% Banglades Taka is not e)ceeded in an& 'a&!Te %oreign c#rrenc& $al#e o% te L0C m#st corres"ond te e#i$alent amo#nt o% Banglades

Taka i% LCA registered 'it Banglades Bank!

Te A#tori.ed 1%%icial o% te A#tori.ed *ealer 'ill ceck te L0C $er& care%#ll& and signed

te same /ointl& and %or'ard te 6st and nd co"& to teir %oreign corres"ondent sit#ated at tenearest "lace o% te e)"orter! T#s Bank is kno'n as Ad$ising Bank! 1n recei"t o% te L0C te

Ad$ising Bank a%ter $eri%ication o% te d#"licate co"& at teir end!

1n getting te L0C te e)"orter "re"ares te goods and si" te same as "er instr#ction o% teL0C and obtain a Bill or Lading %rom te si""ing A#torit&! Te e)"orter 'ill "re"are bill o%

e)cange( In$oice and oter doc#ments as s"eci%ied in te L0C and s#bmits te same along 'it

te original co"& L0C to is bank 'itin te time mentioned in te L0C! Te Bank 'it 'om te

e)"orter s#bmits te doc#ments is kno'n as egotiating Bank as tis negotiates te doc#mentsi!e! make "a&ment to te e)"orters!



Te negotiating bank 'ill scr#tini.e te doc#ments 'it terms and conditions o% te L0C $er&

care%#ll&! I% e$er& ting is in order te bank 'ill make "a&ment o% te amo#nt o% L0C to e)"orter

in teir local c#rrenc& b& debiting to teir o'n acco#nt! S#bse#entl& te negotiating bank 'illclaim te L0C 'it 'om te ,ead 1%%ice o% L0C o"ening bank maintained %oreign c#rrenc&

amo#nt!

Tis is kno'n as Reimb#rsing Bank! Reimb#rsing Bank 'ill make "a&ment to te negotiating

bank b& debit to L0C o"ening Bank-s ,ead 1%%ice A0C! Sim#ltaneo#sl& te negotiating bank 'ill%or'ard all te doc#ments s#bmitted b& te e)"orter to te L0C o"ening bank as "er instr#ction

o% te L0C! Te date o% %or'arding letter o% negotiating bank so#ld be date o% negotiation o%

doc#ments!

1n recei"t o% te si""ing doc#ments %rom te negotiating bank( te L0C o"ening bank 'ill

care%#ll& scr#tini.e te doc#ments 'it terms and conditions o% te relati$e L0C! I% tere is no

discre"anc&( te doc#ments 'ill be lodged! Lodgment o% doc#ments means te entr& o% te

"artic#lars o% te doc#ments in te Register and "re"aration o% $o#cers b& con$erting te

%oreign c#rrenc& amo#nt into Banglades Taka as te e)cange rate "re$ailing on tat date! Tisamo#nt is d#e to te im"orter! Te im"orter 'ill be asked to take deli$er& doc#ments b& making

"a&ment o% te bill amo#nt e)cl#ding te margin de"osited at te time o% o"ening L0C! +a&mento% bill amo#nt and to take deli$er& o% doc#ments b& te im"orters is kno'n as Retirement o%

Im"ort Bills!

A%ter taking deli$er& o% doc#ments %rom te L0C o"ening bank( te im"orter 'ill clear te goods

'ic as alread& been arri$ed or d#e to arri$e %rom te c#stoms a#torit& on s#bmission o% tese doc#ments along 'it te c#stom "#r"ose co"& o% LCA From!

*efinition of #I(:

Im"ort Finance "la&s $ital role in a co#ntr&-s %oreign trade b#siness! Im"ort o% goods and ser$ice

are needed no onl& %or e)"ort "rod#ction b#t also to s#""l& domestic ind#str& 'it te necessar&in"#ts 'ic are not locall& a$ailable or a$ailable at #neconomic cost and are needed %or

e)"ansion and de$elo"ment!

Loan Against Im"orted Mercandise 3LIM4 is a %acilit& "ro$ided b& te Bank to te im"orters

'o are in sortage o% %#nd to retire te im"ort bills and t#s to clear te goods %rom te "osta#torit&! In oter 'orks it ma& be re%erred as an ad$ance against mercandise!

!ASES OF #I( A!!O4-N

LIM Acco#nts ma& be created in te %ollo'ing t'o casesH>

a4 LIM Acco#nt on im"orter-s re#est!

b4 Forced LIM Acco#nt!

a/ #I( Account in i$porter6s re7uest



A%ter lodgment o% doc#ments( te im"orters concerned to be intimated %or earl& retirement o% te

doc#ments b& "a&ing o#tstanding bill amo#nt incl#ding oter carge! I% te im"orter is not in a

"osition to retire te bill o#t o% is o'n so#rces at tat moment ma& re#est te bank to clear tegoods b& creating LIM Acco#nt! 1n recei"t o% te im"orter re#est te o%%icial o% te im"ort bills

section 'ill "re"are an o%%ice note b& calc#lating te total landed cost o% te consignment! To

ascertain te landed cost te %ollo'ing "oints to be considered!

E%%orts so#ld be taken so tat at least G? to =G? margin o% te landed cost ma& reali.e %romte im"orter! Reali.ation o% margin 'ill de"end on te banker c#stomer relationsi" and also on

te marketabilit& o% te goods!

-he fo))owing charge docu$ents have to execute by the i$porter:8

i4 *+ ote 3*emand +romissor& note4!ii4 Letter o% Arrangement!

iii4 Letter o% *isb#rsement!

i$4 Letter o% "ledge!$4 An& oter doc#ment o% necessar&!

Te brances Manager are not em"o'ered to sanction te LIM A0Cs in %a$or o% te im"orters %or

clearance te goods 'ito#t obtaining te a""ro$al %rom ,ead 1%%ice!

1n getting a""ro$al %rom ,ead 1%%ice on te 1%%ice ote te branc 'ill send te doc#ments to

te "ort cit& branc b& indorsing te bill o% lading in %a$or o% tem 'it certi%ication o% in$oice%or clearance te goods tro#g im"orters nominated as 'ell as Bank-s a""ro$al C D F agent! In

te %or'arding letter clear instr#ctions to be gi$en %or dis"atcing te goods eiter b& train or b&

tr#ck d#l& ins#red Branc Managers 'ill a$e to take "rior a""ro$al %rom International *i$ision(

,ead 1%%ice to create LIM Acco#nt in %a$or o% im"orters! Be%ore sending te doc#ments to te "ort cit& branc and #nder taking on "rescribed %rom 'it s"ecial adesi$e stam" o% Tk! <G0>

3Fle)ible4 regarding te sti"#lated "eriod sanctioned to te im"orter to be obtained!

Te %ollo'ing acco#nting entries and $o#cers are generall& to be "assed in te set o% Retirement Vo#cers on te same da& at te brancH>

*r! C#stomer A0C

*r! LIM

Cr! IBTA 0 +a& order Cr! +A*

Te "artic#lars o% LIM A0C m#st be entered and $o#cer to be "osted in te LIM Register!

A%ter clearance( te goods so#ld be stared eiter in Bank-s go do'n or in im"orter-s go do'n

#nder bank-s lock and ke& and te "artic#lars o% goods to be entered in te s"ace "ro$ided in teLIM Register! At te same time iss#ance o% goods co$ering %ire and oter risk to be made! 5o

do'n sta%% salar&( go do'n rent 3i% te goods stored at te Bank-s go do'n4 and oter



miscellaneo#s carges in connection 'it te LIM A0C 'ill be "aid b& debit to "art&-s LIM A0C

#nder ad$ice to te im"orter!

Financia) +erfor$ance of the IFI! ban":

Te bank as 'ide net'ork o% corres"ondents o$er te 'orld( 'ic enables it to "roc#re good b#siness d#ring te &ear! Te $ol#me o% im"ort andle b& te bank d#ring te &ear GG< 'as

TK! 68;9G million!

Te table 91 so's te amo#nt o% Im"ort o% IFIC Bank Ltd! *#ring GG: to GG<! In Million Tk!

ear A$ount of I$port

;990 1;<=9%<

;99< 1<>?9%=

;99= 1?>@9%;<

;99@ ;2>@?%2<

;99> 22=<0%><

Average ;11@1%11

Exp)anation: From te abo$e table it indicates tat te amo#nt o% Im"ort %rom GG: to GG< is

contin#o#sl& increasing to all te &ears o% st#d&! In GG:( te amo#nt Im"ort is TK! 6;9G!;onl& and te last &ear in GG<( te amo#nt o% im"ort is ==9;:!<; 'ic are iger! And te

a$erage amo#nt o% im"ort is TK! 6686!66 onl&!

Tis can be gra"icall& so'n as belo'H



Re$ittance:

Inward and outward foreign re$ittance:

Te Foreign Remittance de"artment o% IFIC a'ab"#r Road Branc is e#i""ed 'it a n#mber

o% %oreign remittance %acilities! Follo'ing are te t&"es o% %oreign remittance %acilities o%%ered b&

IFIC a'ab"#r Road Branc!

Iss#ance o% Foreign *emand *ra%t 3F!*!*4

Iss#ance o% tra$elers Ce#e 3T!C4

Iss#ance o% %oreign T!T 3Telegra"ic Trans%er4

*isb#rsement o% te cas o% incoming F!T!T!



+a&ment 1rder 3+14

MAIL Trans%er 3MT4

S3O- Ana)ysis:

E$er& organi.ation is com"osed o% some internal strengts and 'eaknesses and also as somee)ternal o""ort#nities and treats in its 'ole li%e c&cle! Te %ollo'ing 'ill brie%l& introd#ce te

c#stomer to te IFIC Bank internal strengts and 'eaknesses( and e)ternal o""ort#nities and

treats( 'ic is gi$en belo' some strengts and 'eaknesses and also o""ort#nities and treatsH

Strengths:

Superior ua)ity: IFIC Bank "ro$ides its c#stomers e)cellent #alit& o% ser$ice! It gi$es te%irst "riorit& to c#stomer satis%action!

*yna$is$: IFIC Bank dra's its strengt %rom te ada"tabilit& and d&namism it "ossesses! Itas #ickl& ada"ted to 'orld class standard in terms o% banking ser$ices! IFIC Bank as also

ada"ted state o% te art tecnolog& to connect 'it te 'orld %or better comm#nication tointegrate %acilities!

Financia) Strength: IFIC Bank is a %inall& so#nd com"an& backed b& te #ge reso#rce! As

res#lt c#stomers %eel com%ortable in dealing 'it te com"an&!

Efficient (anage$ent: All te le$els o% te management o% IFIC Bank are solel& directed tomaintain a c#lt#re o% te betterment o% te #alit& o% te ser$ice and de$elo"ment o% a cor"orate

brand image in te market tro#g organi.ation 'ide term a""roac and o"en comm#nication

s&stem!

State of the Art -echno)ogy: IFIC Bank #tili.es state>o%>te>art tecnolog& to ens#reconsistent #alit& and o"eration! Te cor"orate o%%ice is e#i""ed 'it S2IFT 3S2IFT is a

banking so%t'are( #sed b& IFIC Bank4! All oter brances are also e#i""ed 'it S2IFT s&stem!

Experts: Te ke& contrib#ting %actor beind te s#ccess o% te IFIC Bank is its em"lo&ee( 'o

is igl& trained and most com"etent in teir o'n %ield! Bank Asia "ro$ides teir em"lo&eestraining bot in>o#se and o#t side /ob!

In8,ouse 4ti)ity: IFIC Bank is %ree %rom de"endence on e$er disr#"ti$e "o'er s#""l& o% o#r

"#blic so#rces! Te com"an& generates te re#ired "o'er tro#g generator %ed on diesel!2ater generation is done b& dee" t#be 'ells on site and in ab#ndance!

Exce))ent 3or"ing Environ$ent: IFIC Bank "ro$ides its 'ork%orce an e)cellent "lace to

'ork in! Total com"le) as been centrall& air conditioned! Te interior decoration 'as done

e)#isitel& 'it coice o% sooting colors and blend o% artistic tat is com"arable to an& o$erseas bank!



3ea"nesses:

#i$ited 3or"force: IFIC Bank as limited #man reso#rces com"ared to its %inancial

acti$ities! Tere are not man& "eo"le to "er%orm most o% te tasks! As a res#lt man& o% teem"lo&ees are b#rdened 'it e)tra 'orkloads and 'ork late o#rs 'it o#t an& o$ertime

%acilities! Tis migt ca#se ig em"lo&ee t#rno$er tat 'ill "ro$e to be too costl& to a$oid!

+rob)e$ in *e)ivery: Fe' o% te IFIC Bank "rod#cts o%%ered to its clients like @+ersonal Credit

3+C4 is l&ing idle d#e to "ro"er marketing initiati$e %rom te management! Tese "rod#cts caneasil& be made a$ailable in attracti$e 'a&s to increases its client base as 'ell as its de"osit stat#s!

Opportunities:

Bovern$ent Support: 5o$ernment o% Banglades as rendered its %#ll s#""ort to te banking

sector %or a so#nd %inancial stat#s o% te co#ntr&( as it as become one o% te $ital so#rces o%

em"lo&ment in te co#ntr& no'! S#c go$ernment concern 'ill %acilitate and s#""ort te long>

term $ision o% IFIC Bank!

Eva)uation of E8an"ing: Emergence o% e>banking 'ill o"en more sco"e %or Bank Asia to

reac te clients not onl& in Banglades b#t also in te global banking arena! Alto#g te bank as alread& entered te 'orld o% e>banking b#t &et to "ro$ide %#ll electronic banking %acilities to

its c#stomer! A "ro"er blend o% Banking and in%ormation tecnolog& migt gi$e te bank

le$erage to its com"etitors! e$erteless tere are am"le o""ort#nities %or IFIC Bank to go %or

"rod#ct inno$ation in line 'it te modern da& need! Te bank as &et to de$elo" credit card%acilit&( lease %inancing and mercant banking!

-hreats:

(erger and Ac7uisition: Te 'orld'ide trend o% merging and ac#isition in %inancial

instit#tion is ca#sing concentration! Te ind#str& and com"etitors are increasing in "o'er teir res"ecti$e areas!

+oor -e)eco$$unication Infrastructure: As "re$io#sl& mentioned( te 'orld is ad$ancing e>

tecnolog& $er& ra"idl&! To#g IFIC Bank as taken e%%ort to /oin te stream o% in%ormation

tecnolog&( it is not "ossible to com"lete te mission d#e to "oor tecnolog& and in%rastr#ct#reo% o#r co#ntr&!

Fre7uent !urrency *eva)uation: Fre#ent de$al#ation o% Taka e)cange rate %l#ct#ations and

"artic#larl& So#t>East Asian c#rrenc& crisis ad$ersel& a%%ects te b#siness globall&!

E$ergence of !o$petitors: *#e to ig c#stomer demand( more and more %inancialinstit#tions are being introd#ced in te co#ntr&! Tere are alread& ; banks o% $ario#s t&"es are

o"erating in te co#ntr&! Man& banks are entering te market 'it ne' and l#crati$e "rod#cts!

Te market %or banking ind#str& is no' a b#&er dominated market! Unless IFIC Bank can come

#" 'it attracti$e %inancial "rod#cts in te market( it 'ill a$e to %ace stee" com"etition in teda&s to come!



Findings of the Study:

IFIC Bank is one o% te %irst time establised bank in Banglades! IFIC Bank as been s#%%ering

a %e' "roblems! Based on te setting ob/ecti$es and disc#ssion o% te st#d&( te %indings o% test#d& are gi$en belo'H

Modern tecni#e e#i"ment s#c com"#ter is not s#%%icient in Foreign E)cange

de"artment! As a res#lt some "rocess takes a long time to "er%orm( 'en it is need!

Em"lo&ees are e)"osed to c#stomer e)cessi$el& 'ic is an obstacle in s&stematic and "rom"t

ser$ice!

1n line banking does not a""ear in all o% te braces!

In a'ab"#r branc( tere are se$eral em"lo&ees tose are not eno#g to "er%orm te dail&

banking acti$ities!

Sometimes te clients are disco#rages to o"en ne' L0C beca#se o% te sortages o% te

necessar& doc#ment to o"en L0C!

Te Foreign E)cange *e"artment o% a Banks is strongl& reg#lated b& te central bank o%

Banglades b#t d#e to lack o% kno'ledge or e)"erience o% te em"lo&ees te r#les are not al'a&s

maintained strictl&!

To o"en a ne' L0C( Bank takes long time %or a""ro$al %or a ne' c#stomer as i% te bank sent it%or a""ro$al to te ,ead o%%ice!

Some em"lo&ee in Foreign E)cange section mo$es %rom one desk to anoter desk d#e to lack o% banking kno'ledge!

!onc)usion:

Modern Commercial Banking is e)acting b#siness! Te re'ard are modest( te "enalties %or badlooking are enormo#s! And Commercial banks are great monetar& instit#tions( im"ortant to te

general 'el%are o% te econom& more tan an& oter %inancial instit#tion! It as a $astl& sobering

and e)acting res"onsibilit&!

IFIC Bank Limited 3IFIC4 "la&ing a $ital role in %inancing im"ort and e)"orts o% te co#ntr&!

2ito#t Bank-s co>o"eration( it is not "ossible to r#n an& b#siness or "rod#ction acti$it& in tisage! E)"orts and im"ort need %inance in $ario#s stages o% teir acti$ities! E)"ort and im"ort

%inancing are letter o% credit 3L0C4( "a&ment against doc#ments 3+A*4( loan against im"ortedmercandise 3LIM4 etc! All tese %acilities are "ro$ided b& IFIC! For tis "#r"ose Bank-s

consider te borro'er-s b#siness standing( integrit&( liabilit& 'it te bank term and conditions

o% te L0C! Tere is lot o% risks in$ol$ed in %oreign b#siness! So( te IFIC Bank Limited 3IFIC4as to clearl& /#sti%& te c#stomers %rom a ne#tral "oint and gater te c#rrent in%ormation abo#t

te market!



RecommendationsH

To get com"etiti$e ad$antage and to deli$er better #alit& ser$ice to its c#stomer( te to"

management o% IFIC Bank so#ld tr& to ada"t some im"ortant ser$ices! 1n te basis o% te%indings o% te st#d&( some recommendations are gi$en belo'H

Bank so#ld %ollo' easiest 'a& o% L0C "roced#re( as i% ne' clients can easil& doing tis

b#siness! And also #ick r#n tis "rocess!

Some Em"lo&ees a$e lack o% Banking and com"#ter kno'ledge to "er%orm dail& banking

o"eration( Bank so#ld arrange training "rogram to de$elo" teir skill!

Bank so#ld %ollo' te r#les and reg#lation o% te central bank in eac ste"!

Te n#mber o% com"#ter is not s#%%icient( es"eciall& e$er& desk need one com"#ter!

Foreign e)cange de"artment so#ld be %#ll& com"#teri.ed in e$er& branc so tat tee)cange "rocess 'o#ld be con$enient %or bot te bankers and te

clients!

1nline Banking so#ld "ro$ide #ick ser$ices to te c#stomers!

In a'ab"#r branc( bank so#ld increase te em"lo&ees so tat te& can ser$e teir c#stomers

"ro"erl&!

Foreign Exchange Activities

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