University of Ctg

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Internship Report

Title:

Foreign Trade Affairs of National Credit & Commerce BankLimited

Report Submitted to:

Dr. Shanti Ranjan Das

Professor, Department of AccountingUniversity of ChittagongChittagong

Report Submitted by:

Mohammod Mahidur Rahman.Exam. Roll # 30

Class Roll # 11619MBA Session 1999-2000

Department Of AccountingUniversity of Chittagong

Chittagong


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Acknowledgment

Its an important aspect of MBA course in Chittagong University

that after the completion of final examination the students have

to attend any type of business enterprise which is calledInternship Programme, in order to achieve practical experience

about business operation and management. So the students get a

great chance to adjust the knowledge earned from the academic

curriculum with the actual situation of the real business. The

students are divided into various groups and a teacher is given

authority to supervise and guide each group. The whole

programme is planned and designed by the programme

instructor. The group instructor can guide the students to

accomplish the programme in a particular institution or thestudents can select their institution and get there to gain the

permission to complete the programme with the recommendation

letter issued by the programme instructor. The students have to

continue this programme for more than fifteen days and collect

actual data physically from the institution and prepare a report in

order to submit to the group instructor. The group instructor

checks the report and marks on it which is added with the total

marks of the students obtained in the MBA examination.

The programme helps the students many way to be acquaintedwith the real business world. This helps the students in the later

life to perform the business operations and manage the business

institutions efficiently and effectively. Thus the students can

commence their career in the institution where he or she deserves

the skills and interests. The students can perform this programme

in a group or individually in any organization. And also there are

many organizations that welcome the students as an internee.

Some institutions also remunerate the students to bear the

expenses during the time period of internship programme. And

after completion of the programme the organization issues a

certificate to the student with regard to his/ her behaviour and

performance during the internship programme that is important

for the students in building career in any progressive

organization.


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About This Report

In order to present the Internship Report to the group instructor of

our department I proceeded to the National Credit and Commerce

Bank Limited with the recommendation letter from the department.Gradually I obtained the permission from the Banks authority and

started the Internship Programme. During my internship

programme I attended the Bank regularly in the office time in

order to collect data and to observe the every day operating

systems of the bank. I have attended all every sections and desks of

the bank and collected information for preparing my report. The

important thing is that all of the officers of the bank were very

helpful to me and left no stones unturned to help me and to teach

me the process and systems of performing the operations and aboutthe treatment of the accounting transactions. The bank officers

showed me all the important aspects of the bank and gave me the

most apparent idea about the facts and facets. Though the officers

always remain in busy they did not forget to give their valuable

time for me. Though there are some limitations I faced during the

programme like the inability to take part practically in the banks

daily affairs, I gained an elaborate and apprehensive idea about the

banks operations that will help me to the highest degree in

working in any bank in my later life. So I can not but express mygratitude to the bank officers with whom I dealt during my

Internship Programme. I also suggest to the Banks authority to

make necessary arrangements so that the students can work

practically during the internship programme.


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Contents:

Chapter One: Introduction

Chapter Two: Accounts Analysis

Chapter Three: Advance

Chapter Four: Foreign Remittance- Money Gram

Chapter five: Foreign Exchange & Letter of Credit

Chapter Six: Performance of the Bank


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Legal status of and nature of the bank: National Credit and Commerce Bank Limited

was incorporated in Bangladesh as a banking company on under the Companies Act

1994, the principal place of business is the registered office at 7-8 Motijheel

commercial area. Dhaka 1000.It has 31 branches all over Bangladesh. It carries out all

banking activities through its branches in Bangladesh. The Bank is listed in the Dhakaand Chittagong Stock Exchange as a publicly quoted company for its shares.

Significant Accounting Policies:

Basis of accounting:The accompanying financial statement is prepared according to the Bank Companies

act 1991 and Bangladesh Accounting standards on a going concern basis under

historical cost convention.

Consolidation:A separate set of records for consolidating the statement of affairs and income and

expenditure statement of the branches were maintained at the head office of the bank

based on which these financial statements have been prepared.

Investment:

a) Investment in treasury bills is shown at face value, prize bond at cost price and

shares and debentures at cost or market price which ever is lower. Any shortfall in

market price against the cost price at shares and debentures is fully provided of t in the

accounts of the year of shortfall.

b) Interest on investment on government and other trust securities, debentures and

bonds, etc is accounted for as income on accrual basis.

c) Dividend in shares in listed companies have been accounted for on receipt basis, tax

deducted at source on adjusted as advance payment of tax with gross dividend income.

Loans and advances:

a) Interest is calculated on a daily product basis but charged and accounted for

quarterly on accrual basis.

b) Loans and advances are stated at gross value, provision for loans and advances is

made on the basis of period end review by the management and of instructions

contained in Bangladesh Bank BCD Circular No, 34 of 16 November1994, BCD

Circular No12 of 4 September 1995, BRPD Circular No16 of 6 December 1998, andBRPD Circular No 9 of 14 may 2001.

Fixed assets and depreciation:

a) Fixed assets are stated at cost less accumulated depreciation

b) Depreciation is charged at the annual rates prescribed by Bangladesh Bank as noted

below on reducing balance methods with the exception of motor vehicles on which

straight line methods is applied:

Furniture and fixtures 10%-20%

Machinery and equipment 20%

Vehicles 20%


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c) Depreciation at applicable rates is charged on additions to fixed assets as well as on

sale of any item on the basis of number of days in use of the concerned asset.

Cash flow statement

Cash flow statements prepared principally in accordance with IAS 7. Cash flow

Statement and the cash flow from the operating activities have been presented underdirect method as prescribed by the securities and Exchange Rules 1987.

Exchange fluctuations and gains or losses thereon:

In conformance with instructions of Bangladesh Bank all gains or losses arising on

conversion of foreign currencies in hand into local currency due to re-fixation of

rate(s) are kept in equivalent Taka in separate fund account called exchange

equalization fund.

Foreign currency transactions:

Transactions in foreign currencies are converted into equivalents Taka currency using

the ruling exchange rates on the dates of such transaction. Assets and liabilities as at

year end in foreign currencies are translated into taka currency at the prevailing sellingand buying rates of the concerned foreign currencies of that day, the differences arising

from the conversion is charged / credited to the profit and loss Account.

Off balance sheet item:

Under general banking transactions liabilities against acceptance, endorsement and

other obligation and bills against which acceptance has been given claim exists there

against have been shown as off balance sheet item.

General

a) Figures in these financial statements have been expressed in Taka currency and

rounded off to the nearest integer.b) The expenses, irrespective of capital or revenue nature, accrued but not paid have

been provided for.

c) Previous years figures have been rearranged wherever considered necessary to

conform to current years presentation.


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National Credit and Commerce bank Limited serves people with four types of

Accounts. They are as follows:

1. Savings Account

2. Current Account3. Short term deposit Account

4. Fixed Account

Particulars of the above accounts are described in the following lines:

1. Savings Accounts:Savings accounts are the accounts where the clients can deposit any amount of money

any time in the office hours and can withdraw money twice in a week or more by

conversation. Here it is noticeable that the client can not withdraw more than taka

twenty thousand or 25% of the deposited money at a time without informing the bank

earlier.

The account holder is supplied a deposit book at the time of opening the account by

which the client can deposit money in the bank. The client is also supplied a cheque

book by which the client can withdraw money from the bank.

A percentage of interest is given to the account as guided by Bangladesh Bank. But if

the client withdraws more than taka twenty thousand at a time or more than 25% of the

balance without informing the bank earlier no interest is given on the rest of the

money.

2. Current Accounts:Current Accounts are accounts where the account holder can deposit and withdraw any

amount of money at any time. Also sometimes the client can overdraw money from the

bank. No interest is given to the account. A charge is taken against the overdrawn

money.

3. Short term deposit Accounts:Short term deposit accounts are accounts opened to deposit money for short time

particularly not more than three years time.

4. Fixed Accounts:Fixed accounts are accounts with a deposit of fixed amount of money for a fixed life

span particularly more than three years.

5. Special Savings Scheme:Special Savings Scheme is another form of earlier Deposit Pension Scheme. Here a

fixed amount of money is deposited each month for a specific number of years. After

the predetermined life of the account the account holder takes of the money along with

interest. And the lump sum of money to be paid to the client after the maturity is

predetermined.


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6. Secured Overdraft (SOD) Account:This is actually a loan account similar to the current accounts. By these types of

accounts the account holder is entitled to withdraw up to a limited amount of money as

loan from the bank any time and can deposit the money according to the clients

convenience. These accounts are to be renewed every year and interest to the

withdrawn money is charged after every four months.

Procedures of Opining Accounts:

Almost all accounts belongbelongs to the same procedure of opening. Though the

procedure of pointing bank accounts are discussed below differently:

a) Individual Savings Account: the papers and formalities needed to open an individual

savings account is as follows:

i) The form as supplied by the bank is to be filled by the applicant. The signature and

account number is to be included in the accounts opening application. An introducer is

the person who has a account in the particular branch of the bank.iii) Nationality certificate is another important material needed at the time of opening

an account. The applicant also can show the passport to verify his/ her nationality.

iv) Finding all things favorable the bank officer gives a specimen signature card to be

signed dully. This specimen signature is essential to operate bank transactions later.

v) The transaction profile is a recent topic in the account opening. Here the applicant is

to mention the probable amount of annual transactions with the particular branch.

b) Joint Savings account: All other facts being the same in case of joint savings

account the joint specimen signature card is to be filled by the persons who will jointly

operate the account.c) Business Enterprise: when any account is to be opened in the name of any business

enterprise the seal of the enterprise is added in the specimen signature card and all the

account operations will require the seal along with the signature off the operators.

d) Company account: When any account is to be opened in the name of any company

the additional papers to be submitted are as fellows:

i)Article of association

ii) General Meeting agreement

iii) Joint specimen signature along with the operating seals.

e) Secured Overdraft Account: The opening procedure of secured overdraft account issame as the other account. The . the only exception is that here the obligation

oblicgation is deposited in the bank. Such as in the case of SOD-FO ( Secured

Overdraft on Financial Obligation) the financial papers for example fixedfixeds

deposit slip, government security etc, are given as lien in the bank. And in the case of

SOD- General the work order is givengiben in the bank as lien.


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Advance is one of the income earning and profitable sections of the bank. In this

section various product (services rendered to the client) are marketed. Some of the

banks product is described in the following lies:

1. Long Term Loans:

The bankrenders loans in long term basis the various fields such as:i) Small cottage industry: the bank issues loans for the establishment of small cottage

industries. These types of loans require no large amount of hypothesis.

ii) Large and medium scale industry: large or medium scale industries are also

financed by National Credit bank limited. These types of loans require a large amount

of hypothecation.

iii) Agriculture:National Credit and Commerce Bank Limitedallow loans in the

agriculture sector. Any farmer can proceed to the bank to buy agricultural machinery

by taking loans fromthe National Credit And Commerce Bank Limited.

Other advances:a. House building Loan

b. Transport Loan

c. Projects Loan

d. Demand Loan

e. Staff Loan

f. Executive car Loan

2) Small Loans:

Some of the small loans the bank issues are as follows:

a. Small business Loan

b. House Repairing/ Renovation Loanc. Personal Loan

d. Consumer finance scheme

e. Lease finance

f. Import finance

g. Export finance

h. FDBP & Bills Discounted, etc.

Criteria to sanction loans:

There are specific criteria to sanction loans to the clients so that the loans are hundred

percent recoverable along with interest and the money is utilized by the client in aprofitable venture. The following reports are analyzed:

Project feasibility report:

Project feasibility report is an important tool for appraising any loan for its

profitability. For example the officers cheqes the following facts:

1. Name Of The Project

2. Location Of The Proposal

3. Production Planning And Sales

4. Management


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5. Management

6. Status Of The Company

7. Type Of The Project

8. Cost Of The Project

9. Means Of The Project

10.Means Of The Finance11.Profitability Forecast

12.Debt Service Average Ratio

13.Employment Generation

14.Contribution To GDP

15.Break Even Point

16.Internal Rate Of Return

17.Benefit Cost Ratio

18.Conclusion And Recommendation

19. Management Aspect

20.Corporate Set Up21. Management Of The Company

22.Organogram

23.Technical Aspects

24.Marketing Aspects

25.Utilities

26.Economic Aspect

27.Implementation Schedule

28.Financial Evaluation


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Foreign remittance money gram:

Money Gram is the latest means of transferring money from one country to other

country. This money transfer service is provided by Money Gram Payment System,

Inc. through its network of Representatives. Customers may call the consumer toll free

number for he address and hours of Service Rep. locations in their area.

Procedure of money gram:

1. Send limits:

Maximum permissible amounts for single transfers and daily retransfer totals apply.

When required by law, transfers sent or received will be reported in accordance with

applicable laws and regulations.

2. Receive Information:

The client has to collect information about the currency transferred, amount and other

information. The information is transferred to the paying countrys client by thesending countrys client.

3. Identification:

The bank officer checks the information given by the receiving client with the original

information in the network. If the officer finds all the information correct, the officer

take steps to pay the currency.

4. Currency Exchange:

After checking the information the bank pays the client the amount transferred in cash

or in pay order.

5. Refund Information:

The sender can refund the amount by writing to MonyGram International Ltd. or byvisiting the service Rep. location where the transfer originated within thirty days of the

transfer request.

6. Validity Period:

The receive amount is valid up to forty five days of the initiation of the money.

7. Redirected Transfers:

If a transfer is received in a country and/or currency other than the one specified by the

sender, any difference between the fee applied to the transfer and the fee for a transfer

to the country in which the transfer is actually received will be deducted from or added

to the receive amount. The exchange rate applicable to a redirected transfer will by the

exchange rate set by Money Gram or its service Reps at the time of receipt of theredirected transfer.

8. Liability:

In no event shall Money Gram be liable for damages for delay, non delivery,

nonpayment or underpayment of this money transfer, whether due to the fault, error, or

omission of Money Gram

9. Data Protection


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Foreign exchange division is a separate part of the bank. This section is very important

for its role in the foreign trade and commerce. The tasks of this section are described

below:

Letter of credit (LC):

Every person who wants to import any sort of goods from foreign country needs a

Letter Of Credit. Any person having a current account in the bank can open an L.C. bydepositing the amount as needed for the import purpose.

Types of Letter of Credit:

LCs are of three types as described in the following lines:

1. Cash L.C:

2. Deferred L.C.

3. Sight L.C.

Procedures of opening an L.C. account:

The importer has to fill up the Letter of Credit Application Form appending thefollowing papers along with this:

1. Pro forma invoice

2. Insurance papers

3. VAT Registration Certificate

4. Tax Identification Certificate

5. Certificate of Origin

6. Shipping advice

After scrutinizing the above papers and if every papers is found okay, then an L.C.

account is opened.

Back to Back L.C.:

Back to Back L.C. are issued who imports goods for the purpose of exporting the

reprocessed products. All the procedure of opening LC account is the same with the

exception that here the LC from the second importer (master LC) is to be submitted.

Also no margin is maintained for opening back to back LC though this is issued for the

75% amount of the master LC.


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The documentation of L.C. is described in the following diagram:

Figure: Process of import and role of Banks.

Import Procedures:

1. Registration with CCI & E:

i. for engaging in international trade , every trader must be first

registered with the chief Controller of Import and Export,

ii. By paying specified registration fees and submitting necessary

paper to the CCI&E the trader will get IRC (import Registration

Certificate) . after obtaining IRC, the person is eligible to import,

2. Purchase contract between imnporters and exporters:

i. Now the importer has to contact with the seller outsider the country

to obtain the pro forma invoice or indent which describes goods.

ii. Indent is got through indenters (a local agent of the sellers)

iii. After the importer accept the preformed invoice, he makes a

purchase contract with the exporter declaring the terms and conditions of

the import,

iv. Imports procedure differs with different means of payment. In most

cases import payment is made by the documentary letter of credit (L.C.)

in our country.

3. Collection of LCA form:

Then the importer collects a Letter of credit Authorization (LCA) form from NCCBL,

Main Branch.

Issuing Bank

Importer

Or

Buyer

Exporter

Or

SellerSales Contract

Shipment

Presentation

Collection

Negotiation

Re-imbursement Bank

Advising Bank


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4. Opening a Letter of Credit (LC):

In international environment, buyers and sellers are often unknown to each other. So

lesser always seek guarantee for the payment for his goods exported. Here is the roe

of bank. Bank gives the export guarantee that it will pay for the goods on behalf of

the buyer, this guarantee is called Letter of Credit. Thus the contract between

importer and exporter is given a legal shape by the banker by its Letter of Credit.

i. Parties of L/C:

a) Importer seller who applies for opening an L/C

b) Issuing bank it is the bank which opens / Issues an L/C on behalf

of the importer.

c) Confirming bank- it is the bank, which adds its confirmation to the

credit and it, is done at the request of issuing bank. Confirming bank may

or may nit be advising bank.

d) Advising /Notifying bank: it is the bank through which the L/C is

advised to the exporter. This bank is actually situated in exporterscountry; it may also assume the role of confirming and / or negotiating

bank depending upon the condition of the credit.

e) Negotiating Bank- it is the bank, which negotiates the bill and pays

the amount of the beneficiary. The advising bank and the negotiating bank

may or may nit be the same. Sometimes it can also be confirming bank.

f) Paying / Accepting Bank-it is the bank on which the bill will be

drawn (as per condition of the credit). Usually it is the issuing bank.

g) Reimbursing bank- it is the bank which would reimburse the

negotiating bank after getting payment instructions from issuing bank.

ii. Application for the L/C:

Before opining L/C, importer applies for L/C. to have an import L/C limit, and

importer submits an application to NCCBL furnishing the following information:

a) Full Particulars of bank account maintained with NCCBL

b) Nature of Business

c) Required Amount

d) Payment Terms and Conditions

e) Goods to be importedf) Offered Security

g) Repayment Schedule

A credit Officer scrutinizes this application and accordingly prepared a proposal (CLP)

and forwards it to the Head Office Credit Committee (HOCC), the Committee, if

satisfied, sanctions the limit and returns back to the branch. Thus the importer is

entitled for the limit.


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iii. The L/C Application:

After getting the importer applies to the bank to open a letter of credit on behalf of him

with required papers.

a. Documentary Credit Application Form

b. NCCBL provides a printed form for opening of L/C to theimporter , this form is known as Credit Application form. A special

adhesive stamp is affixed on the form. While opening , the stamp is

cancelled. Usually the importer expresses his desire to open the L/C

quoting the amount of margin in percentage.

c. Pro forma invoice- it states description of the goods including

quantity, unit price, etc.

d. The insurance cover note- the name of issuing compan6 and the

insurance number are to be mentioned on it.

e. The Form- IMP

f. Tax Information Certificate.g. Forqwa4ding fore Pre shipment Inspection (PSI)

(Importer sends forwarding letter to exporter for pre-shipment inspection. But all

types of goods do not require PSI)

5. Scrutinizing of the L/C Application:

The NCCBL Official scrutinizes the application in the following manner:

a. The terms and conditions of the L/C must be complied with UCPDC 500 and

Exchange Control & Import Trade Regulation

b. Eligibility of the goods to be importedc. The L/C is must not be issued in favor of the importer

d. Radioactivity report in case of food item,

e. Survey report of certificate in case of old machinery

f. Carrying vessel is nit of Israel or of Serbia- Montenegro

g. Certificates declaring that the item is in operation but more than 5 years in case

of car.

Accounting treatment of in case of L/C Opening:

Now if the Officer thinks fit the application to open an L/C , the following entries are

given to realize the L/C commission , charges, postage, L/C margin, etc.Clients Account Dr.

Sundry deposit margin on L/C Account Cr.

Income A/C Commission Cr.

Sundry deposit margin foreign currency clearing (FCC) A/C Cr.

VAT (15% on commission) on L/C A/C Cr.

Income A/C (Postage/ Telex) Cr.


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After that, L/C number and the above entries are given tin the L/C registers. The contra

entries stating the liability of the bank and the client are as follows:

Customers Liability Dr.Bankers Liability Cr.

6. Transmission of L/C to Beneficiary through Advising Bank:

Then the transmission of L/C is done through tested telex or fax to advise the L/C to

the advising bank. The advising bank verifies the authenticity of the L/C, NCCBL has

corresponding relationship or arrangement throughout the world by which the L/C is

advised. Actually the advising bank does nit take any liability if otherwise not

requested.

7. Amendment of the Letter of Credit:

When the parties involved in a L/C especially the seller want to change the terms and

conditions due to some obvious and genuine reasons t he credit should be amended.

NCCBL transmits the amendment by tested telex to the advising bank. Amended

service charge and telex charge is debited from the party account accordingly.

According to articles 5 of UCPDC 500 amendment must be complete and precise.

8. Presentation of the Documents:

a. The seller being satisfied with the terms and the conditions of the credit makes

shipment of the goods as per L/C terms.

b. After making the shipment of the goods in favor of the goods in favor of theimporter the exporter submits the documents to then negotiating bank.

c. After receiving the entire documents .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 NCCBL.

d. Branch &Bank received seal to be affixed on the forwarding schedule.

e. The Bill of Exchange & Transport documents must immediately be crossed to

protect loss or fraudulent.

NCCBL checks the documents. Usually the documents are:

a. Invoice

b. Bill of lading

c. Certificate of origin

d. Packing list

e. Weight list

f. Shopping advice

g. non negotiable copy of bill of lading

h. bill of exchange

i. pre-shipment inspection report

j. shipment certificate


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9. Examination of shipping documents:

One of the basic principles of documentary credit is that all parties deal with

documentary credit so that all parties deal with document and not with goods (Articles

6 of UCPDC-500). That is why the documents should be scrutinized properly. If any

discrepancy in the documents is found .that is to be informed to the p[arty. A checklist

must be followed for examining the documents.Then the following things can happen:

a. Discrepancy found but the importer accepts then the bank will lodge the

documents.

b. Discrepancy found and importer nit agreed to accept- Issuing bank would

intimate negotiating bank for revised document or return the documents to the

negotiating bank for necessary action. Here issuing bank is not bound to pay

because the documents send by exporter is not in accordance with the terms of

L/C.

c. documents are found exactly but importer is not willing to retire the

documents- in this case bank is obligated to pay the price of exported goods.Since importer did not pay for bill of exchange, this payment by bank is one

kind of credit to the importer and this credit in banking is known as FORCED

PAD.

d. everything is O.K. but importer fails to clear goods from the port and request

bank to clear- in this case banks clear the goods and takes delivery of the same

by paying customs duty and sales tax etc. so, this expenditure is debited to the

importers account and in banking it is called LIM.

10. Lodgment of documents:

Lodgment of document means retirement of funds. Usually payment is made withinseven days after the documents have been recievb4ed. If the payment becomes

deferred, the negotiating bank may claim interest for making delay. Lodgment

constitutes the followings:

a. Requisition for the foreign currency: For arranging necessary fund for payment,

a requisition is sent to the International Department.

b. Preparing sale memo: a sale memo is made at B.C. rate to the customer. As the

T.T. & O.D. rate is paid to the ID, the difference between these toe rate is

exchange trading. Finally, and inter Branch Exchange Trading Credit Advice is

sent to ID.

c. Creation of PAD liability: NCCBL lodges the converted the bill amount at BC(Bills of Collection) rate prevailing on the date of lodgment to PAD A/C and

IBETCA prepared at the converted bill amount at T.T cleat rate is sent to ID.

PAD A/C should be adjusted within 21 days.


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Accounting procedure for Lodgment:

PAD A/c Dr.

(Converted the bill amount at BC Rate)

Head Office A/c. Cr.

(Converted bill amount at TT clear rate)

Income A/C profit on exchange Cr.

(Difference between B.C. & T.T. clear rate)

Reversal entries:

Bankers Liability Dr.

Customers Liability Cr.

(When lodgment is given)

d. Payment instruction: Payment instruction is govern to the reimbursement bank

to debit the issuing banks. NOSTRO A/C to make payment to the negotiating

bank.

e. Payment Intimation to the Negotiating bank: An Intimation is sent to negotiating

bank ensuing that payment has been made.

Accounting treatment:

Here the telex charge, service charge, and interest (if ant) is debited to the PAD

A/C.

PAD A/C Dr.

Income A/C Cr.

(Service charge & Telex charge)

Shipping documents is then stamped with PAD Number & entered in the PAD

Register

f. Intimation to the applicant:

As soon as above formalities are completed the importers are served with PAD bill

intimations for retirement of concerned import document.

A letter of intimation regarding receipt of the documents should be sent to the

applicant with a request to fake delivery of the documents on settlement of all dues

against it.

11. Retirement of documents:

On intimation the importer approaches with a letter for retirement of the document

against full payment with up to dater interest and charges payable. Bank prepares

cots memo in pointed form on account of the concerned party giving details head

of charges payable.

Accounting treatment:

Sundry deposit L/C Margin A/C Dr.

PAD A/C Cr.

(Margin amount transferred to PAD A/C)


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Customer A/C Dr.

PAD A/C Cr.

Income A/C- Interest on PAD Cr.

(Customers account debited for the remaining amount)

As far the vouchers are passed and necessary entries are given in PAD Ledger

endorsement are made under tow authorized signature of the bank officers (PAD

Holder). Then the documents are delivered to the importers.

The bank endorses the documents in following manner:

Document

Bill of Exchange

Commercial Invoices

Bill of Lading, Airway Bill, Truck, Chalan

LCA

Endorsement

Receives payment for NCC Bank Limited

Invoice value certifies & remitted for NCCBank Limited

Deliver/ Pay to the order of M/S...., for

NCC Bank Limited

For NCC Bank Limited

Then importer releases the importers goods from the port authority with the help of the

clearing and forwarding agents C&F agent clears the ports and hands over the goods to

the importers.After completion of all official requirements C&F agent submits the bill of entry of the

banks.

The bill of Entry is wanted from the party for maintaining the evidence as the goods

has been arrived.

12. Shipping Guarantee:

When goods arrive prior to arrival of documents- this happens mostly in cases of air

shipment, shipment by truck from Land or shipment by post parcel. In such cases bank

endorses non negotiable shopping documents for clearance of the goods submit to

scrutiny and the documents being in order and settlement of the bank dues against therelative bills.


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0

2000

4000

6000

8000

10000

12000

14000

1998 1999 2000 2001 2002

The bank could sustain its strong image in the mind of the customers and shareholders

as a leading financial institution despite serious competition from both local and

foreign Banks operating in the country. Its operating profit of Tk. 597.50 million is a

clear evidence of the statement, which is 5.07% higher than that of previous year.

The performance of the bank in various sectors is stated below:Reserve fund &other reserves:

The Reserve fund of the bank increased to Tk, 388.01 million in 2002 as against Tk.

353.58 million of previous year, increase being 9.74%.

This years figure excludes Tk. 65 million of Share Fluctuation Reserve.

Deposit:

Deposit of the bank at the end of the year was Tk. 16,062.35 million registering an

increase of 25.25% over previous years figure, which was tk. 12,824.71 million. A

number of welfare oriented deposit Schemes introduced by the Bank received

tremendous response from the small depositors.

Figure: Deposit Growth (1998-2002)

Credit:

In lime with the policy guidelines issued by the ventral bank from time to time, the

bank formulates its own credit Policy keeping it flexible to accommodate changes that

are taking place. The Bank has a diversified portfolio consisting of both traditional and

non conventional ones. Several Small Credit Schemes are on the offer, which received

remarkable response from the customers and also helped the Bank to expand its

customer base. The Bank is also considering to engage in syndication with other Banks

for allowing large loans covering Bangladesh Banks rules and regulations.

Figure: Advance growth (1998-2002)

0

5000

10000

15000

20000

1998 1999 2000 2001 2002


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0

500

1000

1500

2000

1998 1999 2000 2001 2002

During the year Banks total advance stood at Tk. 13147.42 million which was 21.87%

higher than that of the pervious years figure of Tk. 10788.61 million, the ration of

deposit and advances was 1:0.82 in 2002.

Recovery of Non Performing Loans:Special stress has been given to realize/ regularize non-performing loans during the

year 2002 and achievement in this regard is commendable. The ratio of classified

loams reduced to 9.39% from precious years 9.89 owning to continuous moini8toring,

follow up and negotiation. Recovery efforts have been intensified by reorganizing the

concerned department at Head Office by increasing strength. Responsible officers at

branch level were also assigned to monitor development closely in this regard.

Investments:

The volume of investment as on 31st December 2002 stood at Tk. 2909.15 million

against Tk. 1756.89 million of previous year registering an increase of 65.59%.

Composition of investment was as under.

Figure: investments (1998-2002)

i. Treasury bills Tk. 2720.00 million

ii. Debenture Tk. 42.43 million

iii. Ordinary shares Tk. 144.14 millioniv. Prize Bonds Tk. 2.58 million

Foreign Exchange Business:

The role of foreign exchange trade was vital as before during the year under review

which contributed largely to the profitability of the Bank. The bank has already

established as wide network of correspondents around the word.


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0

2000

4000

6000

8000

1000012000

14000

1998 1999 2000 2001 2002

Import

Export

0

5000

10000

15000

20000

1998 1998 1999 2000 2001 2002

total asse ts

The volume of import business handled by the bank during 2002 was tk.13579.50

million which was Tk. 13754.00 million in 2001. Total export business was 4559.00

million compared tit k. 4504.00 million of the preceding year.

Figure: Import/ Export (1998-2002)

Foreign inward remittance channeled through Banks unique product Money Gram andarrangement made with Placids, New York increased to Tk. 1455.90 million from Tk.

318.00 million of the previous year, increase being 358%. Banks membership with

SWIFT has also contributed in expediting foreign trade.

Figure: Total Assets

Treasury:

The bank is playing bath in local money market and foreign currency through its

dealing room at Beak Office since 1999. The bank secured substantial amount of

business during the year through treasury dealings.

Capital Market Operation:

Being member of Dhaka Stock Exchange, the bank as usual participated in the day to

day trading and earned a sizeable income. Activities the Stock Market will be

invigorated to grab sizeable business in this field.


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Operational result:

The operational Profit of the bank during 2002 was Tk, 597.50 million against Tk.

568.65 million of 2001, growth being 5.07%, earning of such magnitude was possibledue to good advance, efficient management of fund and effective supervision of loan

and advances disbursed. Return on Assets (ROA) was 1.14%which may be considered

satisfactory.

Out of operational profit, provisions were made for Tk. 213.53 million and Tk. 1.86

million respectively against Bon-performing/ Bad Loans and others. Net Profit thus

stood at Tk. 385.38 million.

Dividend:

The Board of detectors has been pleased to recommend 15% bonus Share for the

shareholders for the year 2002.

Administration of National Credit & Commerce Bank

Human Resources Development:

Acknowledging the importance of quality & efficient manpower, the bank has

undertaken programme to train its employees of all strata at its own Training Institute.

A highly experienced person was appointed as director (training) of the institute in the

year 2001 with the task of formulating various training modules. Steps are being takento shift the Institute to separate premises for facilitating training activities. Side by

side, both inland and foreign training were also imparted during the year as usual.

A highly experienced, well educated and motivate workforce is playing vital role

towards growth of the bank who deserve appreciation.

The number of Executives & Officers as on 31 st December 2002 was 605 as against

545 as on 31st December 2001.

Automation and IT:

Computerization of the Branches and Head Office as well is underway with a view to

providing quality and prompt service to the customers , the Bank is going to startonline: Banking initially at Dhaka very soon and on the basis of its performance go

for complete ON line operation.

ATM Service and Credit Card:

The bank is a member of ATM Network along with other Seven Banks which enabled

the Bank to extend modern Banking facility to the customers allowing 24 hours access

to any ATM dispenser situated at Dhaka, Sylhet and Chittagong.


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Letter of Guarantee

LETER OF credit

Total Advances

The Network will be expanded phase by phase in other parts of the country. The Bank

has already obtained principal membership of MasterCard & Visa credit card which

will be introduced in its product line shortly.

Network of Branches:

The Bank opened two new branches during the year under preview raising the number

or branches to 31; besides, one collection booth is also in operation at Uttara ModelTown.

Auditors:

The Banks Books of Accounts as on 31st December 2002 were audited by M/S B.

Alam & co., Chartered Accountants.

As per norms of Bangladesh Bank, M/S b. Alam & Co. will not be eligible for re-

appointment as external Auditors because of their completion of three years term.

Therefore, new external auditors have to be appointed for the year2003.

Prospects:

In the face of fierce competition from the other players of the market and strict policies

being introduced by the Government and Bangladesh Bank, the bank is continuouslylooking for ways to enhance profitability Bank thereby ensuring continuous growth.

Figure: Funded and Contingent Assets-2002

With this end in view, introduction of some new Credit and Deposit products is under

active consideration of the Management, we will soon see the result of in this regard.

More branches will be opened, which will expand our network and increase volume of

business. All possible steps will be taken to rationalize expenditures on vacuous heads.

Conclusion: I must appreciate the authority and the officers of the National Credit &Commerce Bank Limited for their helpful activities towards me during the internship

Programme. All and every officers of the bank tried their best to satisfy my

inquisitiveness about the functions and affairs of the bank and make me understand. So

I am very obliged to the National Credit & Commerce Bank Limited and its employees

with whom I dealt during my Internship Programme.


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Bibliography:

1. Annual Report of the National Credit & Commerce Bank Limited- 2002.

2. Customer Credit Service Bulletin of National Credit & Commerce Bank

Limited.

3. Bulletin about the Products of the Bank.

4. Banking Orders and regulations of Bangladesh Bank about various affairs of the

Banks.

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