A WORKING REPORT ON FOREIGN EXCHANGE BANKING SERVICES: An Analysis

of

The BASIC Bank Limited

By

Ishrat Jabin ID 0730075

An Internship Report Presented in Partial Fulfillment Of the Requirements for the Degree Bachelor of Business Administration (BBA)

INDEPENDENT UNIVERSITY, BANGLADESH 8th December, 2011

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A WORKING REPORT ON FOREIGN EXCHANGE BANKING SERVICES: An Analysis

of

The BASIC Bank Limited

By

Ishrat Jabin ID 0730075

has been approved December, 2011

Shawgat S.Kutubi Lecturer,Finance School of Business

Independent University, Bangladesh

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Letter of Transmittal
November-27, 2011 Shawgat S.Kutubi Lecturer, Finance Independent University-Bangladesh

Sub: Submission of Internship Report

Dear Sir,

This is a great pleasure for me to submit the internship report, which is a partial requirement for the BBA program. I have prepared my internship report on Foreign Exchange Banking Service. I believe that the experience I acquired from this study will be an invaluable asset in my life. I have confidence that the internship program has increased both of my practical experience and theoretical knowledge to a great extent It has also to be mentioned that without your expert advice and cooperation it would not have been possible to complete this report. If you have any further enquiry concerning any additional information I would be very pleased to clarify that. So, I am fervently requesting and hope that you would be kind enough to accept my report and oblige thereby Sincerely Yours,

__________________ Ishrat Jabin ID: 0730075 BBA Major : Finance. Minor : HRM Independent University- Bangladesh (IUB).

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Acknowledgement
At the very beginning I would like to express my deepest gratitude to the almighty Allah for giving me the strength and the composure to finish the task within the scheduled time. Internship report is an essential part of BBA program as one can gather practical knowledge through this process.

This is high time to convey my special gratitude to my respected teacher and supervisor Ms. Shawgat S. Kutubi, Faculty of Business Administration ,Independent University-Bangladesh for her careful suggestions, guidance and support to complete this report.

Individual efforts alone can never contribute in totality to a successful completion of any venture. I would be fail in my duty if I did not state my gratitude and appreciate to the following individuals who have made valuable contribution toward this report.

I am very grateful to Mr. Golam Faruk Khan(GM & Branch Manager) Mr.Palash Das gupta(AGM) of BASIC Bank Bangladesh Limited, Dilkusha Branch for kindly accepting me for practical orientation program in his bank for which I get this opportunity to learn about foreign exchange and necessary things.

I would like to express my deep gratitude to Md. Muktear Foysal(Assistant Manager) and all of my senior colleagues of BASIC Bank Bangladesh Limited at Dilkusha Branch for there helping hand at the hour of my need. Their support gives me opportunities to use various documents during my internship period and their valuable suggestions, advices and extended helping have contributed most.

I am also very grateful to Mr.Raschid-ul-Islam(Deputy Manager), Md. Nurul Alam(Deputy Manager), Mrs.Sahana Akter(Deputy Manager), for their supporting role and all other employees of BASIC Bank Bangladesh Limited, Dilkusha Branch for their sincere cooperation, careful supervision and unparallel encouragement. 4|Page

Table of Content Chapters

2.1.6 Vision of BASIC

Content
1.1objective of the study 1.2 Scope of the report 5 1.3 Methodology of the report 1.4 Limitations of the study

Page No.
1 1

Chapter 1 Introduction

1 2

2.1 An overview of BASIC Bank ltd 2.1.1 Background of BASIC Bank ltd

3 3

2.1.2 BASIC Bank at a glance 2.1.3 Corporate Strategy

4 5 5 5 5 6 6 6

Chapter 2

2.1.4Organizational goals and objectives 2.1.5 Motto of BASIC Bank limited 2.1.6 Vision of BASIC Bank :

Organizational Profile

2.1.7 Mission of BASIC Bank 2.1.8 Technology of BASIC 2.1.9 Risk Management 2.2 Product and Services 2.2.1 Customer Services 2.3Financial performance

7 7 8-12

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3.1 Foreign Exchange Its meanings & Definition

13-14 15 15-16 16-17 18 19 20-23 23 23-24 25-26 26-29 29 30-31

13-14

Chapter 3 Foreign Exchange Banking Services

3.2 Export section 3.2.1:Export Procedure: 3.2.2:Export Financing 3.2.3:Risk of Export Financing 3.3 Import section 3.3.1 Import Procedures: 3.3.2 Import Financing 3.3.3 Risk of Import Financing 3.4 Major Discrepancies 3.5 Foreign Remittance section 3.6Appraisal of export &import business of Basic 3.7Performance Of Foreign Exchange business B

4.1 Findings 4.2 Possible Recommendation

32 33

Chapter 4

4.3 Conclusion

34

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Chapter :1 Introduction

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1.1 # OBJECTIVES OF THE STUDY:

(i) Main Objectives: The main objective of the study is to highlight on the major documents used by BASIC Bank Ltd. While dealings with foreign exchange banking to understand how the services are rendered. (ii) Specific Objectives: To identify the documents used in foreign trade of BASIC Bank Ltd. To appraise export, import & remittance of the same bank. To acquire knowledge and find the relationship between practical and theoretical background. To examine various factors and techniques used in foreign exchange operations.

1.2# SCOPE OF THE REPORT:

This report will cover Analysis of Foreign Exchange Banking Services of BASIC Bank Limited. It will give a wide view of the different stages of operational procedure of BASIC Bank Limited, starting from the Import, Export and Remittance with total Foreign Exchange Procedures.

1.3# METHODOLOGY OF THE STUDY:

a. Primary Data were collected by the following ways:

Direct communication with bank officials & clients; Exposure on different desk of the bank; Observing various organizational procedures.

b. The Main Secondary Sources from Which Data were Accumulated are as follows: Annual Report of BASIC Bank Ltd; Different publications regarding foreign exchange operation; From Newspapers and Internet. Different Official Records of BASIC Bank Limited.
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1.4# LIMITATIONS OF THE STUDY:

Despite all out co-ordination from the bank officials, I faced some limitations. The main problem I faced in preparing the paper was the inadequacy and lack of availability of required data. This report is an overall view of Foreign Exchange Operations of The BASIC Bank Ltd. But there is some limitation for preparing this report. These barriers, which hinder my work, are as follows:

Difficulty in accessing latest data of internal operations. Learning & gathering experience of all the banking functions was really tough. Another limitation of this report is Banks policy is not disclosing some data and information for obvious reason, which could be very much useful. Non-availability of some preceding and latest data in a systematic way.. I was placed to this department for only 3 months of time and working like a regular employee hindered the opportunity to put the better effort for the study. Since the bank personals were very busy, they could provide me very little time

With all of this limitation I tried my best to make this report as best as possible. So readers are requested to consider these limitations while reading and justifying any part of my study.
.

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Chapter :2 Organizational profile

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2.1:# AN OVERVIEW OF BASIC BANK LTD:

2.1.1 Background BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) registered under the Companies Act 1913 on the 2nd of August, 1988, started its operations from the 21st of January,1989. It is governed by the Banking Companies Act 1991. The Bank was established as the policy makers of the country felt the urgency for a bank in the private sector for financing small scale Industries (SSIs). At the outset, the Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The BCC Foundation being nonfunctional following the closure of the BCCI, the Government of Bangladesh took over 100 percent ownership of the bank on 4th June 1992 and became 100 percent owner of the bank. Adjudged as one of the soundest banks in the Bangladesh, BASIC Bank Limited is unique in its objectives. It is a blend of development and commercial banking functions. Steady growth in clientele base and their high retention rate since Bank's inception testify to the immense confidence they repose on its services. Diversified products in both liability and assets sides particularly a wide range of lending products related to development of small industries and micro enterprises, and commercial and trading activities attract entrepreneurs from varied economic fields. Along with promotion of products special importance is given to individual clients through providing personalized services. Reality is individuals matter in this Bank. This motto has been followed for development of clientele as well as human resources of the Bank.

Capital Position:
Authorized capital Paid up capital Tk. 2000.00 million Tk. 1964.65 million

Total Reserve and Surplus up to 31.12.2010 Tk. 2509.78 million

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2.1.2 BASIC Bank at a Glance Name Date of incorporation Date of inauguration BASIC Bank Limited August 2, 1988 of January 21, 1989

operation Registered office Bana Shilpa Bhaban 73, Motijeel Commercial Area Dhaka-1000, Bangladesh. Head Office Sena Kalyan Bhaban(6th floor) 195, , Motijeel Commercial Area Dhaka-1000, Bangladesh. Logo Name of the chairman of the Mr. Sheikh Abdul Hye Bacchu Board Name of Managing Director Number of Branches Services provided Mr. AKM. Sajedur Rahman 38 Deposit scheme, Credit facility and foreign exchange services Paid up capital Profit after tax and provision Ownership Banking software used Technology used Earnings per share E-Mail Website SWIFT Number of Authorized Dealer Taka 1964.65 million Taka 660.93 million Government of Bangladesh CASTLETM Member of SWIFT 33.64(2011) basicho@citechco.net www.basicbanklimited.com BKSIBDDH 15

Table: 1 At a glance of BASIC Bank limited

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2.1.3 Corporate Strategy: The corporate strategy of any organization plays a vital role on the companys performance and lead to the way of being in growth prospect of the company. The corporate strategy of Basic Bank is as follow Financing establishment of small units of industries and business and facilitates their growth. Steady and sustainable growth. Adaptation of new banking technology. Investment in a cautious way.

2.1.4 Organizational Goals and objectives: BASIC is unique in its objectives. It is a blend of development and Commercial Banks. To undertake project promotion to identify profitable areas of investment. To search for newer avenues for investment and develop new products to suit new needs. To expansion of the bank and increase the coverage along the whole country. To provide better service to the customer and lead as a better service provider bank in Bangladesh. To establish linkage with other institutions those are engaged in financing micro enterprises. To established linkage with other banks of Bangladesh and foreign banks.

2.1.5 Motto of BASIC Bank limited: Serving people for progress.

2.1.6 Vision of BASIC Bank : Provide the best banking services to all kinds of people and contribute for economic development of the country.

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2.1.7 Mission of BASIC Bank: To provide best development and commercial banking services to the common people of Bangladesh and provide special support to the small scale business enterprises.

2.1.8 Technology of BASIC BASIC bank has its own software developed in 1991. Local area network (LAN) has been installed in Head office and 15 branches of the bank. Wide area network (WAN) has been set up between Head office and branches using X.28 leased line of BTTB. As continuous up gradation of technology its Gulshan branch, Dhaka, Zindabazar branch, Sylhet, Rangpur Branch, Rajshahi branch has become online few days ago. 2.1.9 Risk Management In banking business, no reward can be expected without risk. Management of BASIC Bank has established a formal program for managing the business risk faced by the bank. BASIC bank is very much cautious about its investment. Every loan proposal is placed under careful scrutiny before approval. Board of Directors approval is necessary for the proposal of large amount of loans. Internal audit team and recovery team exercise close monitoring on every loan transaction. Management regularly reviews the banks overall assets and liabilities structure and makes necessary changes in the mix asset/liabilities of balance sheet. The Bank also has a liquidity policy to ensure financing flexibility to cope with unexpected future cash demand. The Bank takes necessary action to avoid foreign exchange risk which is called as exposure.

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2.2# PRODUCT AND SERVICES:

BASIC Bank ltd.(Dilkusha Branch)

Foreign Exchange Dept: Export Export Advising Back to Back L/C Packing credit(P/C) Export Bill Purchase Exp.Document Forwarding Export Incentives Realization(for Govt. Announced Product) Import Import Advising Import L/C opening

General Banking Dept Account Opening Savings Account opening Current Account opening Fixed Deposit Accounts Short Term Deposit A/C Issuance of P.O(Pay-Order) D.D(Demand Draft) T.T(Telegraph Transfer) M.T(Money Transfer)

Loan And Advanced Dept: Industrial credit Commercial credit Micro Credit Cash credit Loan General,Secured Overdraft(SOD)

2.2.1Customer Service: In this department, the customer service officer is the bank representative and is often the first person contract with clients. The main job of the customer service officer is to attend any concerns expressed by the clients. They are responsible for handling any quarries by the clients and also serve as initial interviewers and inform future clients of what kinds of accounts BASIC offers. They explain what accounts is available for what clients and what prerequisites are necessary for these accounts. BASIC has saving accounts, current accounts, fixed deposits, Short- term notice account, Bearer certificate of deposit accounts etc. The customer service department works closely with the Remittance and Bills department.

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2.3# FINANCIAL PERFORMANCE:

Total Asset(Million Taka)

70,000.00 60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 0.00 2006 2007 2008 2009 2010 Total Asset(Million Taka)

Figure:1 Total Asset

2.3.1: Property and Assets: At the end of the year 2010, total assets of the bank stood at Taka 61,569.39 million against Taka 45,308.31 million in previous year registering an increase by 35.89%. This increase of assets caused by mobilization of additional deposits to meet the growing demand of investments to clients with economically viable projects. As expected, loans and advances comprised the largest share in the assets portfolio of the Bank constituting 75.27 percent. Investment and Cash were the second and third largest constituents being 10.84 percent and 4.99 percent of the assets portfolio respectively. Money at call and short notice were 0.41 percent of total assets

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7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00 2006 2007

Income(Million Taka)

Income(Million Taka)

2008

2009

2010

Year Income(million taka)

2006 2,870.32

2007 3,549.51

2008 5,060.29

2009 5,162.30

2010 6,120.53

Figure :2 Income

2.3.2: Income: The Banks total income was Taka 6,120.53 million in 2010 compared to Taka 5,162.30 million in 2009. Interest income from loans and advances increased to Taka 4,337.04 million in 2010 from Taka 3,877.17 million in 2009. Average yield on lending was 11.10%. Income on investment increased to Taka 651.52 million in 2010 against Taka 761.82 million in 2009 while other operating income and profit from sale of shares increased to Taka 476.67 million in 2010 against 68.09 million in 2009. Decrease of investment income registered due to lower yield on Government Treasury Bond. The amount of commission was Taka 655.30 million in 2010 compared to Taka 455.22 million of previous year.

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Expenses(Million Taka)
4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00 1,500.00 1,000.00 500.00 0.00 2006 2007 2008 2009 2010 Expenses(Million Taka)

Year Expenses(million taka)

2006 1,858.69

2007 2,458.41

2008 3,526.35

2009 3,593.96

2010 4,403.49

Figure: 3 Expense

2.3.3: Expenses: The total expenditure was Taka 4,403.49 million in 2010 compared to Taka 3,593.95 million in 2009. Total expenditure increased due to increase of interest expenditure and new pay scale allowed to the employees of the Bank. Higher Interest expenses were resulting from increased interest expenses for fixed deposit, borrowings. Besides, rent, electricity and insurance, stationary, printing and advertising contributed to such increase. Hiring of space for Savar branch and Tungipara Branch etc also contributed to increase of rent expenditure

2.3.4: Cash in hand and balance with Bangladesh bank and its Agent: The amount of cash in hand and balance with Bangladesh bank and its agent increased to Taka 3,057.37 million in 2010 from 2,424.89 million in 2009 registering an increase of 26.08%. The increase was due to increased requirement for maintaining Cash Reserve Ratio (CRR) resulted from increase of deposit in 2010 than that of 2009 and increased CRR requirement by
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Bangladesh Bank from 5.00% to 5.50% in May 2010 and to 6.00% in December 2010. CRR was maintained adequately. 2.3.5: Balance with Other Banks and Financial Institutions: The balance with other banks and financial institutions decreased by 55.51% to Taka 2,627.44 million from Taka 5,906.18 million in previous year. Such decrease is the resultant effect of increase of Loans and Advances, which also directly contributed to the decrease of term placement with other banks and financial institutions. Keeping banks deposit with other banks without investment was discouraged by the regulatory authority. So the step was executed to reduce balance with other banks and investing more fund in normal banking activity in accordance with the observations and recommendations of the Central Bank. 2.3.6: Investment: Investment at the end of 2010 was Taka 6,676.43 million, compared to Taka 6,338.73 million in previous year; making a growth of 5.33 % over last year. The investment was increased due to investment of more funds in Treasury bond to meet SLR requirement. Investment was concentrated in long term approved securities such as Government Treasury bond. During the year 2010 Treasury bond had the largest share (97.46%) in the investment portfolio. Debentures, shares in listed and unlisted companies and prize bond altogether constituted 2.54 percent. 2.3.7: Fixed assets and other assets: At the end of 2010 the fixed assets increased to Taka 283.12 million from Taka 232.66 million in 2009 with a growth of 21.66 percent increase and Other assets increased to Taka 2,315.51 million from Taka 964.33 million in the previous year. Fixed assets include vehicles, equipment and computer, furniture and fixtures and leased assets. On the other hand, other assets included interest receivable from term placement, advance against acquisition of premises under construction for Head Office, Main Branch and proposed Banani Branch, advance income tax, stock of stationery, security deposits, sundry debtors, deferred tax and suspense account. 2.3.8:Loans and Advances: Loans and advances consist of industrial loans, commercial loans, micro credit, Small Enterprise Financing, Loan for women entrepreneurs, Agro based industry financing, Agricultural loan and bills etc. which increased by 58.37 percent to Taka 46341.51 million in 2010 compared to Taka 29,261.53 million in 2009. This increase resulted from expansion of our business in response to the growth of national economy.

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2.3.9: Shareholders Equity : Shareholders equity of the Bank would increase by Taka 550.48 million to Taka 4,474.45 million in 2010 from Taka 3,923.95 million in 2009 registering a sustainable growth rate of 14.03 percent. . 2.3.10 Export/Import: The Bank handled total import business of Taka 42,205.80 million and export business of Taka 23,998.47 million in 2010 compared to Tk. 33,976.60 million and Taka 19,887.70 million in 2009. Major items of exports were ready made knit & woven garments, sweater, jute & jute products, leather and leather goods, handicrafts, potatos etc. Items of import included mainly industrial raw materials, garments accessories, capital machinery, raw cotton, electronic consumer goods, chemicals, tires and tubes, reconditioned vehicles, bicycle spare parts, food items such as rice, wheat, maize, garlic, onion, sugar, chilly and other essential commodities.

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Chapter :3 Foreign Exchange Banking services of BASIC Bank ltd.

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3.1#FOREIGN EXCHANGE ITS MEANING AND DEFINITION:

Foreign exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country. Foreign exchange is the means and methods by which rights to wealth in a countrys currency are converted into rights to wealth in another countries currency. In banks when we talk of foreign exchange, we refer to the general mechanism by which a bank converts currency of one country into that of another. Banks play a very important role in effecting Foreign Exchange Transaction of a country. Mainly transaction with overseas countries in respect of imports, exports and Foreign Remittance come under the preview of foreign exchange transactions. Banks are the vital sector by which such transactions are effected/settled. Central Bank records all sorts of foreign exchange transaction and therefore, transaction effected by the Banks and other authorized quarters are to be reported regularly (Daily, Fortnightly, Monthly, Quarterly, Yearly etc) to Bangladesh Bank by the foreign exchange department of every Banks. Foreign Exchange Department plays a vital role to earn the Banks maximum profit. This department is classified according to their activities. The foreign exchange department consists of three sections, these are as follows:

Foreign Exchange

Import Section

Export section

Remittance Section

Figure:4

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Foreign Exchange

Export

Import

Remittance

1.Export L/C scrutiny. 2.BTB L/C opening 3.Acceptance of BTB L/C 4.Payment of BTB L/C 5.Export bill negotiation & repatriation of export proceed. 6.Statement,Returns &correspondence related to export.

1.L/C opening 2.Documents checking. 3.L/C payment 4.Statement,Returns & related to import.

1.Inward & Outward Remittance. 2. Statement, Returns &correspondence related to Remittance.

1. L/C advising & Transfer 2. Cash Incentive

1. Overall supervision of Local bill negotiation 2. Purchase of Local Bill. 3. Adjustment of Local Bill.

Figure:5: Foreign Exchange Market Operations

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3.2 # EXPORT SECTION :

Foreign Exchange Regulation Act, 1947 nobody can export by post and otherwise than by post any goods either directly or indirectly to any place outside Bangladesh, unless a declaration is furnished by the exporter to the collector of customs or to such other person as the Bangladesh Bank (BB) may specify in this behalf that foreign exchange representing the full export value of the goods has been or will be disposed of in a manner and within a period specified by BB. Export financing can play a vital role in the development process of Bangladesh. With earning on export we can meet our import bills. The export trade is always encouraged because the major portion of foreign exchange earning is derived from export. Because of shortage of adequate capital exporters have to come in contact with commercial bank and financial institution to get finance from them. BASIC bank Limited as a stateowned scheduled bank provides certain facilities to the exporters to boost up export earnings. The traditional & non-traditional sectors in which BASIC Bank Limited provides exportfinancing facilities are as follows: Ready Made Garments in all sorts. Jute manufactures Fish & Prawns. Hides, Skins & Leather. Tea Fertilizer etc. 3.2.1:Export Procedure: Scrutiny and negotiation of export bill Bank deals with documents not with goods. The bankers are to ascertain that the documents are strictly as per terms of L/C. Before negotiation of the export Bill the bankers are to scrutinize and examine each and every documents with care. Negligence on that part of the bankers may result in non repatriation or delay in realization of export proceeds are incorrect documents may put the importers abroad into unnecessary troubles. The scrutiny of the Bill of Exchange (Draft) and other related documents should ensure that. The documents are presented for negotiation before the expiry of the relative credit. The amount does not exceed the amount available under the credit. All the documents stipulated in the L/C are submitted. The corrections and alteration are properly authenticated in all documents.

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Export documents checking: i. General verification:

a) L/C restricted or not b) Exporter submitted documents before expiry date of the credit. c) Shortage of documents etc. ii. Particular verification:

a) Each and every document should be verified with the L/C. iii. Cross verification:

a) Verified one documents to another. While checking the export documents following things must be taken in consideration.

L/C terms: Each and every clause in the L/C must be complied with meticulously and ensure the following: i. That the documents are not state. ii. That the documents are negotiated within the L/C validity, it a credit expire on a recognized bank holiday its life is automatically become valid up to the next works day. iii. That the documents value does not exceeds the L/C value. Draft/Bill of Exchange Draft is too examined as under. i. Draft must be dated. ii. It must be made out in the name of the beneficiarys bank or to be endorsed to the bank. iii. The negotiating bank must verity the signature of the drawer. iv. Amount must be similar with the invoice amount. v. It must be marked as drawn under L/C No. dated. issued by.Bank. Presentation of export documents for negotiation: After shipment, exporter submits the following documents to BASIC Bank for negotiation.

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a. b. c. d. e. f. g. h. i. j. 3.2.2:Export Financing

Bill of Exchange or Draft; Bill of Lading Invoice Insurance Policy/Certificate Certificate of origin Inspection Certificate Consular Invoice Packing List Quality Control Certificate G.S.P certificate

An export is who exports the goods to another customer whether in domestic country or in abroad. In exporting the stipulated goods he may require financing. So export financing may be required at two stages. Pre shipment credit Post shipment credit

Pre shipment credit: Pre shipment credit is the credit, which is given to finance the export activities of an exporter for the actual shipment of goods. The purpose of each credit is to meet the working capital needs from the procuring of raw materials to the transportation of goods for the export the foreign country. Before sanctioning of that credit the Bank takes into consideration the credit worthiness, export performance of the exporters together worthiness all other information required for sanctioning the credit in accordance with the existing rules & regulations. Post shipment credit There is a time gap between export of the goods and realization of the proceeds. So exporter may require finance in that period to continue his business. So Bank may finance against export documents ensuring the following:

Export documents comply with the credit terms

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Partys past performance is satisfactory Any other security in case of exporting under contract

3.2.3:Risk of Export Financing While there are many advantages to exporting it is not without risk. In deed there are often factors present in international market, which make foreign exchange substantially more risky than domestic ones, including the credit risk of non-payment or non-acceptance of the merchandise by the buyer. For international sales, these risks are far more pronounced than they are domestically. For these reasons BASIC Bank Ltd also accompanied with elements of uncertainty some which are as follows: 3.2.3.1 Commercial risk Insolvency of overseas buyer, which result in non-realization of export proceeds. Failure of the buyer to retire credit already accepted by him / her in case of askance bill within stipulated period. Willful negligence of the importer to accept of pay bill or to accept goods for no fault of the exporter.

3.2.3.2 Political risk Imposition of restrictions on remittance on any government action in the buyer's country which may block or delay payment. Imposition of trade embargo or blockade against any country. New import restriction on the buyer or cancellation of the license. Additional handling transport or insurance charges due to interruption or

diversion of voyage, which cannot be recovered from buyer. Bankrupt or closure of a bank or stoppage of operation of a bank may hamper repatriation of exports proceeds of letters of credit opened by such a bank.
Any other cause of loss occurring outside the exporter's country beyond the control of

importer or exporter

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3.3 # IMPORT SECTION:

Imports are foreign goods and services purchased by consumers, firms & Governments in Bangladesh. To import, a person should be competent to be a importer. According to Import and Export Control Act, 1950, the Office Of Chief Controller Of Import and Export provides the registration (IRC) to the importer. Import financing sectors of BASIC Bank Ltd. BASIC Bank Limited is one of the financers of import business in our country. In extend credit, grant and other facilities BASIC Bank Ltd finance to the following sectors: Machinery & transport equipment. Petroleum & petroleum products Textile, yarn, fabrics, article & related products Chemicals Bicycle parts Iron & steels Cereal & cereal preparations Dairy products & eggs Other including loans & grants.

BASIC Bank checks the documents. The usual documents are,i. Invoice ii. Bill of lading iii. Certificate of origin iv. Packing list v. Weight list vi. Shipping advice vii. Non-negotiable copy of bill of lading

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viii. Bill of exchange ix. Pre-shipment inspection report x. Shipment certificate 3.3.1 Import Procedures: 1. Registration with CCI&E a. For engaging in international trade, every trader must be first registered with the Chief Controller of Import and Export. b. By paying specified registration fees and submitting necessary papers 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 importers and exporter: a. Now the importer has to contact with the seller outside the country to obtain the proforma invoice / indent which describes goods. b. c. Indent is got through indenters a local agent of the sellers. After the importer accept the preformed invoice, he makes a purchase contract with the exporter declaring the terms and conditions of the import. d. Import 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 BASIC Bank, Dilkusha Branch. 4. Opening a Letter of Credit (L/C) In international environment, buyers and sellers are often unknown to each other. So seller always seek guarantee for the payment for his goods exported. Here is the role of bank. Bank gives 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.

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Parties to Letter of Credit 1. Importer ( Buyer)/ Applicant 2. The issuing Bank (Opening Bank) 3. The Advising Bank ( Notifying Bank) 4. Exporter /Seller ( Beneficiary) 5. Confirming Bank 6. Negotiating Bank 7. The paying/Reimbursing? Accepting/Remitting Bank Applicant: The person/Body who requests the bank (opening bank) to issue the letter of credit. As per instruction and on behalf of applicant, the bank opens L/C in line with the terms and condition of the seller contract between the buyer and the seller. Opening /Issuing Bank: The Bank which open /issue letter of credit on behalf of the applicant/importer. Issuing bank obligation is to make payment against presentation of documents drawn strictly as per terms of the L/C. Advising /Notifying Bank: The Bank through which the L/C is advised / forward to the beneficiary (exporter). The responsibility of advising bank is to communicate the L/C to the beneficiary after checking the authority of the credit. It acts as an agent of the issuing bank without having any engagement on their part. Beneficiary: Beneficiary of the L/C is the party in whose favor the letter of credit is issued. Usually they are the seller or exporter. Confirming Bank: The Bank which under instruction the letter of credit adds confirmation of making payment in addition to the issuing Bank. It is done at the request of the issuing having arrangement with

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them. This confirmation constitutes a definite undertaking on the part of confirming bank in addition to that of issuing bank. Negotiating Bank: Negotiating Bank is the bank, which negotiates the bill and pays the amount of the beneficiary. The advising bank and the negotiating bank may or may not be the same. Sometimes it can also be confirming bank. Reimbursing/Paying Bank: The Bank nominated in the letter of credit by the issuing bank to make payment stipulated in the document, complying with reimbursing bank. Application For L/C limit: Before opening L/C, importer applies for L/C limit. To have an import L/C limit, an importer submits an application to the Department of BASIC Bank Limited furnishing the following information, Full particulars of bank account maintained with BASIC Bank Shanti Nagar branch. Nature of business Required amount of limit Payment terms and conditions Goods to be imported Offered security Repayment schedule

A credit Officer scrutinizes this application and accordingly prepares 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. 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. i. Documentary Credit Application Form:
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BASIC Bank provides a printed form for opening of L/C to the importer. 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. ii. iii. Proforma Invoice: It states description of the goods including quantity, unit price etc. The insurance cover note: The name of issuing company and the insurance number are to be mentioned on it. iv. v. vi. vii. The Letter of credit authorization (LCA) form: LCA form should be duly attested. The Form-IMP. Tax Information Certificate Forwarding for Pre-Shipment Inspection (PSI): Importer sends forwarding letter to exporter for Pre-Shipment Inspection. But all types of goods do not require PSI. Examination of shipping documents: One of the basic principles of documentary credit is that all parties deal with document and not with goods (Articles 6 of UCPDC-600). That is why the documents should be scrutinized properly. If any discrepancy in the documents is found, that is to be informed to the party. A checklist may be followed for examining the documents. 3.3.2 Import Financing The post import finance extends the import credit in the following forms: PAD (Payment against documents) LTR (Loan against trust receipt) LIM (Loan against imported merchandise) 3.3.3 Risk of Import Financing In international trade transaction takes place between buyers and sellers living in different socioeconomic and political environments. There may be abrupt changes in socio-economic or political situation in the buyer's country or in the seller's country. Even the exchange value of currencies of the
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two countries had gone so much down that they were not acceptable or exchangeable in international market. More over the importer or the exporter may not be able to comply with the terms of credit for some reasons. Therefore, risk inherent in all credits. The bank has to consider following risk in financing the import procedure:3.3.3.1 Commercial risk Violation of the requirement of letter of credit authorization or letter of credit: Shipment effected before authentication of the letter of credit authorization from by the nominated bank and registration with the Bangladesh bank, whenever necessary and before opening of letter of credit or after expiry of the validity of the letter of credit authorization or letter of credit shall be treated as import in contravention of this order. Letter of credit authorization obtained in the basis of false or incorrect particulars or by adopting any fraudulent means shall be treated as invalid and void. Import against indent and Performa invoice: Letter of credit may be opened against and indent issued by a local registered indenter or against a Performa invoice issued by a foreign manufacturer or seller or supplier.

3.3.3.2 Political risk In addition to the credit and commercial risk we have outlined, international transaction such as import financing take on the whole new dimensions of political risk. They are as follows: Sudden outbreak of war, revolution, coups or civil disobedience in the seller's country. Imposition of restriction on remittance. Imposition of trade embargo.

3.3.3.3 Informational risk There may be informational risk inherent in import financing on the importer because of shortage of required information. So it is much harder to judge the financial strength, reputation and integrity of a seller or buyer who is thousands of miles away and belongs to a different culture.

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3.4# Major Discrepancies:

GENERAL 1. 2. 3. 4. Late shipment Late presentation L/C expired L/C over-drawn

BILL OF EXCHANGE (B/E) 1. 2. 3. 4. Amount of B/E differ with invoice. Not drawn on L/C issuing Bank. Not signed Full set not submitted.

COMMERCIAL INVOICE (C/I) 1. Not issued by the Beneficiary. 2. Not signed by the Beneficiary. 3. Not made out in the name of the Applicant. 4. Description, Price, quantity, seals terms of the goods not corresponds to the Credit. 5. Not marked one fold as Original. 6. Shipping Mark differs with B/L & Packing List.

PACKING LIST 1. Gross Wt., Net Wt. & Measurement, Number of Cartoons/ Packages differ with B/L. 2. Not market one fold as Original. 3. Not signed by the Beneficiary. 4. Shipping marks differ with B/L.

BILL OF LADING/ AIRWAY BILL ETC (TRANSPORT DOCUMENTS 1. Full set of B/L not submitted. 2. B/L is not drawn or endorsed to the Order of BASIC BANK LTD.
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3. Shipped on Board, Freight Prepaid or Freight Collect etc. notations are not marked on the B/L. 4. B/L not indicate the name and the capacity of the party i.e. carrier or master, on whose behalf the agent is signing the B/L. 5. Shipped on Board Notation not showing name of Pre-carriage vessel/intended vessel. 6. Shipped on Board Notation not showing port of loading and vessel name (In case B/L indicates a place of receipt or taking in charge different from the port of loading.) 7. Short Form B/L

3.5# FOREIGN REMITTANCE SECTION:

The basic function of this department are outward and inward remittance of foreign exchange from one country to another country. In the process of providing this remittance service, it sells and buys foreign currency. The conversion of one currency into another takes place at an agreed rate of exchange, in where the banker quotes, one for buying and another for selling. In such transactions the foreign currencies are like any other commodities offered for sales and purchase, the cost (convention value) being paid by the buyer in home currency, the legal tender. Workings of this department:

Overall supervision of Foreign Remit. Dept. Foreign TT payment & Purchase of F. Drafts, preparations of F.B.P. (Foreign Bill Purchased).

Issuance of outward TT & FDR Issuance of proceed responding certificate (PRC). Foreign Collection, Bangladesh Bank Clearing Check Collection, which comes from all branch of BASIC Bank Limited.

Encashment of T.C. & Cash Dollar and Sterling Pound. Deduction of Tax and VAT. On behalf of Bangladesh Bank. Preparation of related statements including convertible Taka Accounts. Preparation of IBCA & IBDA and Balancing of Collection and other special assignment as desired by Department in charge.

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Balancing of Account Statements. Statement of all related works submitted to Bangladesh Bank.

Inward Foreign Remittance: Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, T.C. and bills etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C. Outward Foreign Remittance: Outward remittance covers sales of foreign currency through issuing foreign T .T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired. Sale of foreign exchange is reported to Exchange control Department of Bangladesh Bank on form T/M. Foreign exchange means foreign currency and includes all deposits, credits and balances payable in foreign currency as well as foreign currency instruments such as Drafts, T.C.s, bill of exchange, and Letters of Credit Payable in any Foreign Currency. All foreign exchange transactions in Bangladesh are subject to exchange control regulation of Bangladesh Bank.

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Foreign Remittance Department deals with the following instruments:

Cash Remittance (Dollar Pound) / Sell

Bank sells Dollar/Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank publication of Convertibility of Taka for Currency

Transactions in Bangladesh. Bank can purchase dollar from resident and non Purchase resident Bangladeshi and Foreigner. Most dollars purchased comes from realization of Export Bill of Exchange.

Telex Transfer

Outward TT

It remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account. It also makes payment according to telegraphic message of its foreign correspondence bank from the corresponding VOSTRO Account.

Incoming TT

Foreign Demand Draft

Bank issue Demand Draft in favor of purchaser or any other according to instruction of purchaser. The payee can collect it for the drawee bank in which the Issuing bank of Demand Draft holds its NOSTRO Account. Bank also makes payment on DD drawn on this bank by its foreign correspondence bank through the VOSTRO Account. The procedure concerning issue of FDD is same as issue of Travelers check except that the customer is not

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required to submit his passport. Following steps to be followed in payment of FDD:

At first the FDD is to be crossed. Serial number is given. Forwarding letter to the bank with which the bank has agreement.

Foreign Demand Draft

Party is given the cash or his account is credited.

3.6# APPRAISAL OF EXPORT & IMPORT BUSINESS OF BASIC BANK LTD:

BASIC Bank's expertise in International Banking has a record of in-house growth over more than one decade. With limited network of branches at home and also a few correspondent banks worldwide it is handling the export-import business including homebound remittances. The following graph shows year-wise export-import business of BASIC Bank Limited. Though both export and import are increasing day-by-day, imports exceed exports which ultimately drastically hit the countrys negative Balance of Trade.

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50000 40000 30000 20000 10000 0 2010 2009 2008 2007 2006 Import(Million Taka) Export(Million Taka)

Figure: 6:Export Import position

3.7 #PERFORMANCE OF FOREIGN EXCHANGE BUSINESS OF BASIC BANK LTD:

The following table shows year-wise performance of foreign exchange operations consisting item-wised income generating avenues. All the figures show positive growth which generally signals foreign exchange business as a profitable business in Bangladesh. Within all the income avenues, income from exchange gain shows highest figure in taka value. Growth rate here was 48.92%. Income from Letter of Credit and Letter of Guarantee were the second and the third largest among the income avenues respectively.

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Income from foreign exchange business of BASIC Bank limited Particulars Foreign bill Purchased Local bill Purchased Remittance Letter of Guarantee Letter of Credit Bills for Collection Acceptance Export bill 2007 628,965 9041451 8280081 39869621 106869561 10792897 10792897 570415 2008 1,118,585 7791613 8698956 3831037 146230971 15230622 14049618 1629488 5422296 2009 1059225 8574134 7458290 24250749 132433042 13919101 10595355 2011099 3360362 2010 1601656 5540246 6981465 31097957 165695180 7981691 48111472 4896568 15774585

Miscellaneous(includes 6491052 commission on sale of PSP,TC (A) Total 191,235,959

238482524 250704092

203661357 251562290

287080821 368223009

(B) Exchange gain 222845221 (Profit on exchange trading) Total (A)+(B) 414081179 Table:2

489186616

455223647

655303829

Source: BASIC Bank limited, Dilkusha Branch.

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Chapter :4 Findings, Recommendation Conclusion.

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4.1#FINDINGS:
The findings Obtained from the study of foreign exchange operations of BASIC Bank Ltd are follows: As a state-owned scheduled bank, BASIC Bank Ltd. is playing an important role toward the growth and economic development of Bangladesh. To meet the challenges in the banking industry & to help employees to adapt the changes & new working condition, training is essential but no such training center has yet been established in BASIC Bank. Moreover, training is given to employees is not adequate.

Besides, SWIFT is being used in some Branches and the head office of the bank for trade finance-related operations like documentary credit, documentary collections, fund transfer, guarantee, etc. with optimum security. BASIC bank provide assistance in relation with foreign exchange to the small scale industries entrepreneur. Small entrepreneur has not to keep higher margin regarding opening a L/C. As a result, their services are diversified in to the small scale portfolios.

The officers are very helpful to the business man. Some of our business men do not know exactly the procedures of opening L/C. The officers of Basic Bank help them properly to execute their business. In foreign exchange department it is required to communicate with foreign banks and International Division of Basic Bank frequently and quickly. To make the process easily modern communication media for example e-mail, Fax, Internet etc. should be used. But the bank has not so much practice of using these media

Modern technical equipment such as computer is not sufficient in foreign exchange department. As a result the exchange process makes delay and it is also complicated.

Documentation & filing process of foreign exchange operation is not so easier. it waste valuable time along with not cost effective. . Letter of Credit (L/C) opening system for the importer is not so much easier. For processing of L/C document, it requires huge amount of time & money as well.
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4.2#POSSIBLE RECOMMENDATION:
As an internee of BASIC Bank Ltd, I have some recommendations which are: The branch need to set up well designed IT section by using more update technology and information Adequate training is essential for the efficient foreign trade management. Letter of Credit (L/C) opening system for the exporter should be easier. The Branch should move to the fully automated banking system. For customer's convenience, Management of BASIC Bank Ltd. needs to focus on branch expansion policy and should provide more personnel to deliver faster services to the customers. The Bank should develop an effective database needed for analyzing Foreign Exchange Business

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4.3#Conclusions
The Banking arena in recent time is one of the most competitive business fields in Bangladesh. As Bangladesh is a developing country, a strong banking sector can change the socio economic structure of the country. So we can say, the whole economy of the country in linked up with its banking system. BASIC Bank Ltd. is a state-owned scheduled Bank as well as a potential and promising bank in the banking sector in Bangladesh. All the brunches of BASIC Bank ltd are authorized dealer of Foreign Exchange Business. The authorized dealer motivates the importer to import raw materials, fabrics, frozen fish, jute items, electronics goods, accessories, chemicals, vegetable etc. The import or export is motivated by the BASIC Bank ltd to the foreign exchange business particularly to open the letter of credit .A letter of credit offer advantages both to the importer and exporter. BASIC Bank Ltd playing a vital role in financing import and exports of the country. Without Banks co-operation it is not possible to run any business or production activity in this age. Exports and import need finance in various stages of their activities. Export and Import financing are letter of credit (L/C), Payment Against Documents(PAD),Loan Against Imported Merchandise(LIM),etc .All these facilities are provided by BASIC Bank Ltd. For these purpose Banks consider the borrowers business standing, integrity, liability with the banks term and conditions of the L/C. There is lots of Risk involved in foreign business .So the BASIC Bank Ltd has to clearly justify the customers from a neutral point and gather the current information about the market.

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Appendix

Financial Performance:
Progress at a glance (2006-2010): Year 2010 2009 2000.00 1,455.30 2468.65 3923.95 232.65 45308.31 34,501.69 2,875.16 29,261.53 12,244.91 2008 2000.00 1309.77 1672.82 2982.59 228.36 46660.03 38,368.23 1,708.40 27,269.13 15,659.03 2007 2000.00 1247.40 1349.17 2596.58 196.11 38773.91 31,947.98 1,385.81 22,263.35 13,560.92 2006 (Million Taka) 2000.00 945.00 1294.00 2239.00 154.52 29417.09 24,084.65 830.06 19,000.00 8,212.23

From the Balance Sheet Authorized Capital 2000.00 Paid-up Capital Reserve and Surplus Shareholders' Equity Fixed Assets Total Assets Deposits Long- term Debt Loans and Advances Placement & Investment 1,964.65 2509.78 4474.43 283.12 61569.38 49,259.60 2,718.46 46,341.51 9,294.02

From the Income statement Gross Income 6,120.53 Gross Expenditure 4,403.49 Profit before Tax 1,717.05 Profit after Tax 660.93 Tax Paid 4,948.64 (cumulative) Others Import Business 4,2205.90 Export Business 23,998.80 No of branches 34 No of employees 964

5,162.30 3,593.96 1,568.34 648.85 4,225.37

5,060.29 3,526.35 1,533.94 549.86 3,538.01

3,549.51 2,458.41 1,091.10 282.96 2,790.98

(Million Taka) 2,870.32 1,858.69 1,011.62 554.14 2,245.16

33,976.60 19,887.70 32 776

27,359.77 22,270.87 31 735

(Million Taka) 21,266.57 17,804.27 16,794.96 15,463.74 30 28 721 651

Table: 2 Financial performance

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Balance Sheet 2005

Property and Assets Cash Balance with other banks and financial Institutions Money at call and short notice Investment Government Others

2006

2007

(Million Taka) 2008 2009 2010

1,134.50 1,522.87 2,125.01 2,641.00 2,424.89 3,075.37 4,126.27 4,191.36 6,937.53 8,485.18 5,906.17 2,627.44 1,570.00 750.00 1,320.00 1,480.00 180.0 250.00

4,486.54 3,241.86 5,271.30 5,598.82 6,239.23 6,506.73 54.00 29.00 32.00 89.00 99.49 169.70 4,540.55 3,270.86 5,303.30 5,687.82 6,338.72 6,676.43

Loans and advances Loans ,cash credit, overdrafts etc. Bills discounted and Purchased 13,759.0 17,075.5 20,047.9 24,344.7 27,226.4 4,325.75 5 9 2 3 8 1,580.29 1,924.40 2,215.42 2,924.39 2,035.05 3,083.98
15,339.3 18,999.9 22,263.3 27,269.1 29,261.5 46,341.5 5 9 4 2 3 1

Fixed Assets Other Assets Grand Total

135.78 289.91

154.52 498.74

196.10 579.14

228.36 859.83

232.65

283.11

964.32 2,315.50

27,136.3 29,388.3 38,724.5 46,651.5 45,308.3 61,569.3 7 4 1 3 1 8

Capital and Liabilities Liabilities Borrowings from other banking companies, agents etc. Bills Payable Deposit and other Accounts Current Accounts and contingency accounts etc. Saving Bank deposits Fixed deposits 937.51 179.75 830.06 1,385.81 1,708.40 2,875.15 2,718.46 239.25 290.75 328.49 341.50 597.01

1,890.61 2,370.44 2,867.19 2,544.51 2,504.61 4,887.14 793.43 1,007.79 886.30 955.50 1,165.84 1,328.22 19,461.7 20,467.1 27,903.7 34,539.7 30,489.7 42,447.2 8 6 2 2 3 1
22,325.5 23,845.3 31,657.2 38,039.7 34,160.1 49,259.6 8 9 1 3 8 0

Other Liabilities Total Liabilities

2,147.13 2,263.37 2,843.53 3,592.29 4,007.50 5,116.88

25,410.2 27,178.0 36,177.3 43,668.9 41,384.3 57,094.9 3 7 0 3 6 5

Capital/ Shareholders' equity Paid up Capital Statutory Reserve Other Reserves

810.00 681.13 40.00

945.00 1,247.40 1,309.77 1,455.30 1,964.65 883.45 1,045.08 1,295.26 1,559.65 1,824.69 40.00 40.00 40.00 365.55 255.09

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Surplus in Profit and Loss Account Total Shareholders' equity Total capital and liabilities

195.00

129.47

370.54

304.51

543.44

429.98

1,726.13 1,052.92 2,596.58 2,982.59 3,923.95 4,474.43 27,136.3 28,230.9 38,773.9 46,651.5 45,308.3 61,569.3 7 9 0 3 1 8

Source: http://www.basicbanklimited.com/Balance_She et.php

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BASIC Bank Limited Schedule of Charges Related to Foreign Exchange

February-2010 Item 1 Letter of Credit (a) L/C opening commission at sight i) 0.40% Per Quarter (b) L/C opening Commission under Aid/Loan/Grant/Barter/Credit other than Deferred (c) Usance Back to Back L/C opening Commission i) 0.40% Per Quarter ii) Minimum Tk 500 i) 0.40% Per Quarter ii) Minimum Tk 1000 i) 0.40% Per Quarter ii) Minimum Tk 1000 (d) L/C opening Commission under Deferred payment (e) L/C's at 100% Cash Margin i) 0.25% Per Quarter (f) Acceptance commission under deferred payment i) 0.50% Per Quarter ii) Minimum Tk 750 i) 0.25% Per Quarter i) 0.40% Per Quarter and 0.20% for local acceptance ii) Minimum Tk 750 Mailing Charge 2 If L/Cs are transmitted by (a) Registered mail (b)Courier Service At actual At actual SWIFT Charge 3 (a) If L/C is transmitted by full text SWIFT At actual Amount/Rate

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Amendment of L/C 4 (a) If Amendment includes increase of value or extension of time (b) Other Amendments (c) Amendment of L/C by mail (d) Amendment of L/C by courier service (e) If Amendment of L/C transmitted by SWIFT Same as L/C opening Commission

Tk 750 Tk 750 + Mail Cost At Actual Tk 750 + Courier Cost At Actual Tk 750 + SWIFT Charge At Actual

Foreign Correspondence Charges 5 (i) On beneficiaries account No charge. In case of nonpayment of charge by the beneficiary, actual charge to be realized from the importer At actual

(ii) Foreign correspondent charges for negotiation and reimbursement 6 Charges for handling discrepant import documents Inquiry Fees relating to L/C s

$50 for foreign document, Tk 500 for local document At actual

Collection of credit report on the beneficiary of LCs Interest on PAD

At actual plus +SWIFT Charge At Actual

Interest rate applicable for commercial lending/ as per sanction

Import Transactions 10 a) IMP b) LCA Tk 100 per set Tk 150 per set

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c) L/C application form

Tk 300 (Plus cost of adhesive , stamp in addition to above charges) Export Transactions

11 a) Negotiation/Collection commission for export bills b) Advising L/Cs (both foreign & local) to local beneficiary c) Advising amendment of L/Cs(local & foreign) d)Transfer of export L/C (per endorsement/transfer) e) Adding of confirmation to L/Cs advised by BASIC f) Overdue interest on FBP or LBP

0.15%

Tk 750 (Negotiable by Head Office)

Tk 750 (Negotiable by Head Office)

Tk 750

At Actual

Int to be recovered beyond 21 days against sight bills and beyond usance period against usance bill @ commercial interest rate as per schedule of interest/ Bangladesh Bank Directives/Sanction Advice

g) Mailing on export document by post h) Mailing of export document by courier i) SWIFT charges for sending payment instruction or reimbursement

At Actual At actual At actual

Export Transaction 12 a) Issuance of "EXP" Form Tk 100 per set

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b) Issuance of PRC c) Issuance of any other certificate d) Cash incentive document processing charge

Tk 500 or negotiable by HO management Tk 500 0.20% on disbursed amount, Min Tk 500/Bangladesh Bank Directives

Foreign Bank Guarantee 13 a) Issuance of Foreign Guarantee 0.50% per Qtr + Commission and charges of foreign correspondents + SWIFT charges At Actual 0.50% per Qtr/Negotiable with Counterpart + SWIFT charge At Actual Tk 1000

b) Issuance of Counter Guarantee

c) Issuance of shipping guarantee in absence of original import document provided 100% margin in cash is built

Foreign Remittances (Inward) At actual as per foreign Bank's charge 14 a) Collection of foreign currency plus Draft/Cheque/TC drawn on Banks outside postage/courier charges Bangladesh Foreign Remittances (Outward) 15 a) Issuance of TC Ruling TT/OD selling rate plus 1% commission Ruling TT,OD Selling Rate Ruling AT TT, OD Selling Rate

b) Issuance of cash(FC) c) Issuance of FDD

d) Cancellation of FDD/Cheque drawn on Tk 300 per instrument plus SWIFT Bangladesh Bank charge/Postage f) Issuance of TT abroad TT,OD Selling Rate + SWIFT Charge At Actual Student (Studying Abroad) 16 a) File opening and handling charge For SAARC Country :Tk 1500

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For Other than SAARC Country :Tk 2500 Others 17 a) FC DD on Bangladesh Bank b) Issuance of counter FC draft in favor of local bank c) Disposal of remitted fund on A/C of home remittance Tk 300 per instance Minimum USD 50 and Maximum USD 100

a) In local areas charges of PO & postage b) Other areas charges of DD/TT plus postage/SWIFT c) Same charges through IBCA also

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Experience of Internship
Now a days, education is not just limited to books and classrooms. In todays world, education is the tool to understand the real world and apply knowledge for the betterment of the society as well as business. From education the theoretical knowledge is obtained from courses of study, which is only the half way of the subject matter. Practical knowledge has no alternative. Internship Program brings a student closer to the real life situation and thereby helps to launch a career with some prior experience. I have prepared this report on BASIC Bank Limited (Dilkusha Branch) and their modern banking operation with foreign exchange procedure where I have worked from 20th September, 2011. During my internship I have gathered lots of experience. I was placed foreign exchange department for only 3 months of time and working like a regular employee. I have to say, I was surprised to learn about all the different areas that the Bank is involved in and how the Bank affects our daily lives. When I worked as an internee I was treated by them as an paid employee of this bank and learned how to work as an employee, time maintenance, behavior with other colleague, how to deal with customer. Moreover, I also felt safe and secure, as the BASIC Bank had comfortable place for me. I wish to thank the BASIC Bank Ltd for giving me this opportunity. I have learned an abundant amount of information, and I have grown both personally and professionally.

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References:
Annual Report of BASIC Bank limited 2007,2008,2009,2010 International trade payment and finance,2007,Tanweer Mehdi, Dr shah Md.Ahsan Habib. Khan A R, Bank Management: A Fund Emphasis, Ruby, first edition, 2008 www.basicbanklimited.com

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