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CHAPTER- ONE

INTRODUCTION

Islami Bank Bangladesh Limited.

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1.0 Background of the tud! This report was done as part of the requirement for successfu comp etion of the internship program! E"posure to the #usiness wor d and acquiring practica wor$ e"perience was the primar% o#&ecti'e of this assignment! ( was attached with ())* )an$ td! +or m% internship! The report focuses on "oreign e#change o$eration as ( was attached with that di'ision during the tenure of m% internship! The topic for this report was decided upon after appro'a #% m% facu t% ad'isor ,ohammad Ra$i# -ddin )hui%an ecturer of Northern -ni'ersit% )ang adesh! adesh 1.1 co$e of the tud! The scope of this paper is to discussion of 'arious aspects of +oreign e"change operation of ())*! +oreign e"change profi e of the se ected #an$s! +oreign e"change Remittance Procedure! (mport po ic%! E"port po ic% *etter of credit Ana %sis of the findings and recommendation!

1.% O&'ecti(es of the tud! The first o#&ecti'e of writing the report is fu fi ing the partia requirements of the ))A program! The main purpose of this stud% is to ha'e a #etter orientation on +oreign E"change #usiness performances of the #an$! (n this report. ( ha'e attempted to gi'e an o'er'iew of +oreign E"change Operation of (s ami )an$ )ang adesh *imited ! +o owing are the other o#&ecti'es To fami iar the histor% and operations of (s amic )an$ing in )ang adesh! To show o'era +oreign e"change proposa . appraisa procedures. documentation s%stem of ())* and Con'entiona )an$s! To show an o'er'iew of +oreign E"change Operation of ())*!

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To show the differences with con'entiona #an$ing regarding +oreign e"change aspects To identif% strength and wea$ness of +oreign e"change of ())*! 1.) *ethodolog! The stud% is performed #ased on the information e"tracted from different sources co ected #% using a specific methodo og%! +irst of a ( se ected the topic of the report then ( had to co ect information re ating to the topic #% primar% and secondar% sources and through persona inter'iew! After gathering the information ( had to determine the procedure of research and samp ing p ans! After gathering a the information ( required. ( ha'e come up with an e"pected resu t of the report! +o$ulation A the )ranches of ())* ocated in e'er%where in )ang adesh has #een ta$en into consideration as popu ation! am$le, (s ami )an$ )ang adesh *td. New mar$et )ranch! 1.-. ources of Information 0ource of data of this report can #e di'ided into two categories1 +rimar! ources, Practica e"perience of #an$ing! Training. wor$shop 2 seminar! Re ated fi es. #oo$s stud% pro'ided #% the officers concerned! econdar! ources, Research papers. training materia s. maga3ines! Annua Report .Audit Reports of ())* )an$ing re ated te"t #oo$s. Re e'ant #oo$s. Research papers. Newspapers and 4ourna s. ,anua s! C ass notes of ()TRA. 5e#site of ())*! 1.. Limitations of the tud! +rom the intention to ma$e the report rea istic and proper % accepted this report has #een conducted! Howe'er. man% pro# ems appeared in the wa% of conducting the stud%! 6uring the stud% it was not possi# e to 'isit the who e area co'ered #% the #an$ a though the financia statements and other information regarding the stud% ha'e #een considered! The stud% considers fo owing imitations1

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The stud% does not co'er critica ana %sis and imp ementations of comparati'e stud% in an intensi'e manner! 6uring m% internship program up to date information was not pu# ished! The time of this stud% was 'er% inadequate to o#tain depth $now edge in e'er% department! Another imitation of this report is )an$8s po ic% of not disc osing some data and information for o#'ious reason. which cou d #e 'er% much usefu ! This stud% comp ete % depended on officia records and annua reports! Confidentia it% of data was another important #arrier that was confronted during the conduct of this stud%! Rush hours and #usiness was another reason that acts as an o#stac e whi e gathering data *ac$ of proper $now edge a#out internship tit e!

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CHAPTER- T5O
AN O:ER:(E5 O+ (0*A,( )AN; )AN<*A6E0H *T6!

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Islami Bank Bangladesh Limited


%.0 /hat is Islamic Bank0 An (s amic )an$ is a financia #an$ing arena! The definition of (s amic )an$ as appro'ed the <enera 0ecretariat of the O(C is stated in the fo owing manner! >An (s amic )an$ is a financia institution whose status. ru es and procedures e"press % state its commitment to the princip e of (s amic 0hariah and to the #anning of the receipt and pa%ment of interest on an% of its operations!? According to (s amic )an$ing Act 1@A7 of ,a a%sia. >(s amic )an$ is a Compan% which carries on (s amic #an$ing #usiness! (s amic #an$ing #usiness means #an$ing #usiness whose aims and operations do not in'o 'e an% e ement which is not appro'ed #% the re igion of (s am!? %.1 /h! Islamic Bank0 The o#&ecti'e of (s amic #an$ing is not on % to earn profit. #ut to do good and we fare to the peop e! (s am upho ds the concept that mone%. income and propert% #e ong to A ah and this wea th is to #e used for the good of the societ% in genera and human #eing in particu ar! (s amic #an$s operate on (s amic princip es inc uding profit and oss sharing. strict % a'oiding interest. which is the root of a e"p oitation and is responsi# e for arge sca e inf ation and unemp o%ment! An (s amic #an$ is committed to tr% its #est to do awa% with disparit% and esta# ish &ustice in the econom%. trade. commerce and industr%. #ui d socio-economic infrastructure and emp o%ment opportunities! %.%.1 Introduction of IBBL. (s ami )an$ )ang adesh is one of the pioneer pri'ate commercia #an$ of )ang adesh! (t was incorporated on 17!B7!1@A7 as a pu# ic compan% with imited ia#i it% under compan% act. 1@17! The )an$ started its #usiness from 7B!B7!1@A7! ())* is #ased on (s amic 0haria8h! (t is the first (s amic )an$ in 0outheast Asia! Now. it is the eading pri'ate commercia )an$ in )ang adesh! ())* is committed to do its a acti'ities in interest free profit sharing #% comp %ing (s amic 0hari8ah! ())* through its stead% progress and ------------------------------------------------------------- ------------------------------------------- C | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL institution that operates with the o#&ecti'es of

imp ementing and materia i3ing the economic and financia princip es of (s am in the

continued success has. #% now. earned the reputation of #eing one of the eading pri'ate sector #an$s of the countr%! %.%.% *ission of IBBL To esta# ish (s amic #an$ing through the introduction of a we fare oriented #an$ing s%stem and a so ensure equit% and &ustice in the fie d of a economic acti'ities. achie'e #a ance growth and equita# e de'e opment through di'ersified in'estment operations particu ar % in the priorit% sectors and ess de'e oped areas of the countr%! To encourage socio-economic up ift and financia ser'ices to the ow income communit% particu ar % in the rura areas! %.%.) 1ision of IBBL The 'ision of ())* is to a wa%s stri'e superior financia performance. #e considered a eading (s amic )an$ #% reputation 2 performance! To esta# ish 2 maintain modern #an$ing techniques! To ensure soundness 2 de'e opment of financia s%stem #ased on (s amic princip es! To #ui dDup a strong 2 efficient organi3ation with high % moti'ated professiona s! To wor$ for the #enefit of peop e2 encourage sa'ings in the form of direct in'estment Ensuring sta#i it% in financia 2integrit%! %.%.- "unctions of IBBL The functions of (s ami )an$ )ang adesh *imited are as under1 To maintain a t%pes of deposit accounts! To ma$e in'estment! To conduct foreign e"change #usiness! To e"tend other #an$ing ser'ices! To conduct socia we fare acti'ities through (s ami )an$ +oundation! s%stem with accounta#i it%. transparenc%

%.%.. 2ims 3 O&'ecti(es ------------------------------------------------------------- ------------------------------------------- E | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

To conduct interest Dfree #an$ing To esta# ish participator% #an$ing instead of #an$ing on de#tor D creditor re ationship! To in'est on profit and ris$ sharing #asis! To accept deposits on ,udara#a 2 A -5adeah #asis! To esta# ish a we fare-oriented #an$ing s%stem! To e"tend co-operation to the poor. the he p ess and the ow-income group for their economic up iftment To p a% a 'ita ro e in human de'e opment and emp o%ment generation! To contri#ute in achie'ing the u timate goa of (s amic economic s%stem! A e'iating po'ert% through Fa$at and profit sharing micro-finance! %.%.4 Islamic Banking in Bangladesh (n August 1@E9. )ang adesh signed the Charter of (s amic 6e'e opment )an$ and committed itse f to reorgani3e its economic and financia s%stem in accordance with (s amic 0hariGah! Ear ier in No'em#er 1@AB. )ang adesh )an$. the Centra )an$ of the countr% sent a representati'e to stud% the wor$ing of se'era (s amic #an$s a#road! (n No'em#er 1@A/. a de egation of (6) 'isited )ang adesh and showed $een interest to participate in esta# ishing a &oint 'enture (s amic #and in the pri'ate sector! The% found a ot of wor$ had a read% #een done and (s amic #an$ing was in a read% form for immediate introduction! Two professiona #odies (s amic Economics Research )ureau H(ER)I and )ang adesh (s amic )an$ers8 Association H)()AI made significant contri#utions during the formati'e stage of (s amic #an$ in the countr%! At ast. the ong drawn strugg e to esta# ish an (s amic #an$ in )ang adesh come to a rea it% and (s ami )an$ )ang adesh *imited was esta# ished in ,arch 1@A7 in which 1@ )ang adeshi nationa s. 9 )ang adeshi institutions and 11 #an$s. financia institutions and go'ernment #odies of the ,idd e East and Europe inc uding (6) and two eminent persona ities of the ;ingdom of 0audi Ara#ia &oined hands to ma$e the dream a rea it%! *ater other se'en (s amic )an$s. different (s amic (nsurance Companies and +inancia (nstitutions were esta# ished in the countr%! %.%.5 Cor$orate Information, )1.1%.%006 ------------------------------------------------------------- ------------------------------------------- A | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

(s amic )an$ )ang adesh *imited is a mu tinationa 4oint :enture Pu# ic *imited Compan% engaged in commercia #an$ing #usiness #ased in (s amic 0hariGah with =E!7CJ foreign shareho ding ha'ing argest #ranch networ$ H/11 #runchesI among the pri'ate sector )an$s in )ang adesh! (t was esta# ished on the 17th march 1@A7 as first (s amic )an$ in the 0outh East Asia! Date of Incor$oration Inauguration of 1st Branch8 Local Office8 Dhaka. "ormal Inauguration 2uthori9ed Ca$ital +aid:u$ Ca$ital hare of Ca$ital, a;Local hareholders &;"oreign hareholders =>uit! ?ones Branches De$osits In(estments 1)th *arch 167) )0th *arch 167) 1%th 2ugust 167) Tk.108000.00 million Tk.-5.%.00 million -0.-%< .6..7< Tk.156)%.00 million 10 %11 Tk.16.5%0.00 million @2s on )1st Decem&erA07; Tk.%07-)0.00 million @2s on )1st Decem&erA07; Tk.)-%--0.00 million @2s on )1st Decem&erA07; )11)0 6%40 167. 167. 1676 1664 %000 %00) %4th No(em&er 1661 1%th Cune 1665 )0th No(em&er %00%6th Decem&er %00)1st 2ugust %005

"oreign =#change Business, Num&er of hareholders *an$oBer I+O Listed in Dhaka tock =#change 1st Rights hare issue %nd Rights hare issue )rd Rights hare issue -thRights hare issue O$ening of .0th Branch O$ening of 100th Branch O$ening of 1.0th Branch CoiningD2greement Bith CDBL IDB +resident (isit IBBL *udara&a +er$etual Bond %.th No(em&er %005 issue Inauguration of Broker Eouse 1st Canuar! %007 H0ource1 - Annua Report /BBAI

N!)- Annua Report /BB@ has not pu# ished in internship duration! ------------------------------------------------------------- ------------------------------------------- @ | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

%.%.7 *em&ershi$ of Different Organi9ationDCham&er Local, )ang adesh (nstitution of )an$ ,anagement H)(),I The (nstitution of )an$ers )ang adesh H())I )ang adesh Association of )an$s H)A)I )ang adesh +oreign E"change 6ea ersK Association H)A+E6AI Centra 0hariah )oard for (s amic )an$s of )ang adesh (nternationa Cham#er of Commerce- )ang adesh

"oreign, (nternationa Association of (s amic )an$s H(A()I. 4eddah. ;!0!A! Accounting and Auditing Organi3ations for (s amic +inancia HAAO(+(I. ,anama. )ahrain! <enera Counci of (s amic )an$s 2 +inancia (nstitutions H<C()+(I. ,anama. )ahrain H())* is a mem#er of its E"ecuti'e Counci I 0ociet% for 5or dwide (nter-#an$ +inancia Te ecommunication H05(+TI! %.) /OT 2nal!sis of IBBL /OT 2nal!sis, 05OT Ana %sis is an important too for e'a uating the compan%8s 0trengths. 5ea$nesses. Opportunities and Threats! (t he ps the organi3ation to identif% how to e'a uate its performance and scan the macro en'ironment. which in turn wou d he p the organi3ation to na'igate in the tur#u ent ocean of competition! The 0O5T ana %ses of ())* are presented #e ow1 %.- trength, Adequate +inance1 (s ami )an$ )ang adesh *td! has adequate finance! That is wh% the% need not to #orrow mone% from )ang adesh )an$ or an% other #an$s! ,ore funds for (n'estment1 +or adequate financia a#i it% the% can pro'ide oan to the more in'estment c ients! -------------------------------------------------------------------------------------------------------- 1B | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL (nstitutions

Honest and Re ia# e Emp o%ees1 A of the emp o%ees of (s ami )an$ are honest and re ia# e! The% are a wa%s de'oted themse 'es to the wor$s for #etter customer ser'ice! The% ha'e no corruption report! (t has 'ast %ears of e"perience since its esta# ishment! ())* is on % the )an$ which is the pioneer of we fare #an$ing s%stem among a other financia and #an$ing organi3ation! At ())*. the top management is the dri'ing force and the thin$ tan$ of the organi3ation where po icies are crafted and often cascaded down! ())* pro'ides its customer e"ce ent and consistent qua it% in e'er% ser'ice! ())* is a financia % sound compan%! ())* uti i3es state-of-the art techno og% to ensure consistent qua it% and operation! ())* pro'ides its wor$s force an e"ce ent p ace to wor$! ())* has a read% achie'ed a good wi among the c ients! ())* has a research di'ision! %.. /eakness ())* ac$s we -trained human resource in some area! ())* ac$s aggressi'e ad'ertising The procedure of credit faci it% is to ong compare to other #an$s! Emp o%ees are not moti'ated in some areas! A#sence of structured mar$eting and credit po ic% *ac$ of coordination among the #ranches and Head Office!

%.4 O$$ortunities, Emergence of E-#an$ing wi open more scope for ())*! ())* can introduce more inno'ati'e and modern customer ser'ice! ,an% #ranches can #e open in remote ocation! ())* can recruit e"perienced. efficient and $now edgea# e wor$ force as it offers good wor$ing en'ironment! The successfu aunching and needs to an (s amic ,one% ,ar$et in the countr%! %.5 Threats,

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The wor dwide trend of mergers and acquisition in financia institutions is causing pro# em! +requent ta$a de'a uation and foreign e"change rate f uctuation is causing pro# em! *ots of new #an$s are coming in the scenario with new ser'ice! *oca competitors can capture huge mar$et share #% offering simi ar products! *ac$ of s$i personne #ecause of poor sa ar% structure rather than other pri'ate #an$s! -n$nown attitudes of the peop e a#out the (s amic )an$ing!

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CE2+T=R: TER==
INT=RN EI+ +O ITION 2ND DUTI=

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Islami Bank Bangladesh Limited.


).1 "irst da! at office, ( ha'e started m% internship program at (s ami )an$ )ang adesh *imited. NeB market Branch from 71st 4anuar% /B1B! +irst da% ( reached office at @!7B am! At first ( met with the #ranch manager ,d! 4a a uddin H:PI with m% conformation etter and he introduces me with the entire officer in the #ranch! After introducing he p aced me into +oreign E"change department in where a acti'ities inc uding *LC opening. Remittance etc! are done! At first da% ( wor$ed ti C!BB P,! ).% /orking hours, ( wor$ed there as i$e a permanent emp o%ee! E'er%one is supposed to #e in the office within 1B A,! ( ha'e to maintain the time ine! Though there is a sign out time #ut most of the emp o%ee wor$ed in office ti C!BB P,! ).) /orking en(ironment, Our #ranch ocated in front of 6ha$a Co ege it is a so #us% en'ironment in our #ranch! The wor$ en'ironment of the #ranch is so nice and fruitfu ! There are CB emp o%ees in the #ranch! A are so coorporati'e and he pfu ! ( had more opportunit% to earn a#out the #an$ing acti'ities in this #ranch! ).- Co& rotation, Our tota duration was di'ided into tota wor$ing da%s that came to a tota wor$ing da%s of / months! )% the rotationa % ( wor$ed e'er% sector in the #ranch! And the times were distri#uted in the fo owing manner1 De$artments IBTR2 Training session "oreign =#change *LC Opening HE"port 2 (mportI Remittance Feneral Banking In(estment Duration 1Eth 4anuar% to 7Bth 4anuar% /B1B! 71st 4anuar% to /Ath +e#ruar% /B1B! 71st 4anuar% to 17th +e#ruar% /B1B 19th +e#ruar% to /Ath +e#ruar% /B1B! 1st ,arch to Eth ,arch /B1B Ath ,arch to 1Cth ,arch /B1B!

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).. /orking acti(ities during m! internshi$ $eriod, The +o owing acti'ities were done #% me during m% internship period! )...1 "oreign e#change de$artment, ,% main focus was the foreign e"change department! (n this part ( was oo$ing after the foreign e"change re ated wor$! A wa%s ( tried to $eep me #us% with ,r! Ahmad - a Officer of +oreign E"change 6epartment and tried to oo$ carefu % what is doing and how! )asica % ( fo owed the dea ings re ated to the points #e ow1 *etter of Credit +orma ities. Hand ing of E"port 6ocument. Passing of different entries. Posting of 'ouchers! )...% 2ccount o$ening, At the #an$. account opening is the first and important for the #an$ authorities and c ient! ,ost of the customers who come first time to open an account are not aware a#out the proceduresM in that cases ( he ped them to open the account smooth %! (n this section ( was carefu a#out the fo owing ,ode of operation of different t%pes of accounts. ;NC and their forma ities for opening! )...) Che>ue &ook issue, ( a so wor$ in cheque #oo$ issue in front des$! After recei'ing the requisition we chee$ the signature and issue cheque #oo$! +or 1B ea'es #oo$ charge 1B ta$a. /B ea'e /B ta$a. =B ea'es =B ta$a! )ut in most recent the #ranch pro'ides micro cheque which is pro'iding #% the main #ranch according the ru es of )ang adesh #an$! Now for the e'er% ea'e the #an$ charges /!= t$! )...- Demand draft issue, )% the 66 an% person can send mone% from one #ranch to another #ranch of ())*! To send the mone% heLshe must fi up the ())* prescri#ed form of 66 and Paid

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chargeLcommission recei'e 66 # oc$! A the information of 66 is descri#e in the 66 form! ).... InBard and outBard che>ue clearing, After se'en da%s ( am wor$ing in c earing section! Here ( dea with two t%pes of c earing. (nward and outward c earing! The cheques of (s ami )an$ )ang adesh *td New ,ar$et )ranch which are deposit in other #an$. those cheques are come in our #ranch for co ection! 5e posted that cheque and de#it c ient8s account! ( a so return some cheque #ecause of insufficient fund. wrong entr%. signature differ and other reason! (n outward c earing we recei'ed others #an$. then we posted that cheque in the 0oftware which is pro'ided #% )ang adesh )an$! After that we send the soft cop% of posted cheque in )ang adesh )an$ for c earing )...4 Check the &alance and $ro(ide &ank statement 0ometimes man% customers came to $now their #a ance in their account! ( pro'ide their #a ance information to use the 0oftware! ( a so pro'ide the month % or si" month % #asis #an$ statements to the c ient #% using the software! ).4 Learning +oints, Two months internship is the partia fu fi ment of the course and a fie d of achie'ing some practica e"perience and com#ines that with academic $now edge! According % ( ha'e &oined in (s ami )an$ )ang adesh *imited at New ,ar$et )ranch! To sa% honest% it is a nice and d%namic )an$ in current #usiness wor d! The #an$ has commenda# e contri#ution to enrich m% $now edge and e"periences! At the time of wor$ing in the practica wor d ( ha'e found huge discrepancies #etween m% academic $now edge and practica situation! 6uring the internship period ( ha'e acti'e % attempted to attain some new aspects! )ut sometimes it was difficu t enough to perform in an appropriate manner due to ac$ of required assistance of the organi3ation authorit%! 6uring two months internship period ( ha'e earned ots of things! +ew of them are isted #e ow1 How to open an account! (ssuing chec$ #oo$ to account ho ders! Requirements to #ecome an account ho der! How to deposit the mone% into the #an$! Considera# e factors to in'est mone% in potentia sector! -------------------------------------------------------------------------------------------------------- 1C | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

Requirement for in'estment! )u%ing and se ing process of foreign currencies! How to opening *C. )ac$ to #ac$ *C! How to sue against detau ter! (ssuance of Credit card. promissor% notes! How to c ose an account! How to maintain office time i!e! 1B am to = pm! How to #eha'e with the customers! 5hat are the #asic reasons to dishonor a cheque! 5h% the Cheque are sometimes crossed!

5or$ing the two months as intern in ())* enriched m% $now edge and added some technica qua it% in m% e"perienceM though ( ha'e earned ots of things. the #an$ cou d not met what ( ha'e e"pected!

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CE2+T=R: "OUR
"OR=IFN =GCE2NF= O+=R2TION O" IBBL

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Islami Bank Bangladesh Limited.


9!1 "oreign =#change De$artment, +oreign E"change )usiness of ())* witnessed unprecedented cha enge in the %ear /BBA! The cha enge was particu ar % fe t in import #usiness in spite of starting the %ear with good promise and high growth! (mport #usiness maintained more than 1BBJ growth up to 4une /BBA main % due to high import of food grains. ferti i3ers etc! and price hi$e in some cases up to 9 HfourI times in the internationa mar$et! This high 'o ume of import #usiness resu ted in creation of higher 'o ume of in'estment in the form of specia imits in fa'or of different c ients! As a resu t. the import #usiness growth too$ dec ining path from @9J in 4u % to /7J in 6ecem#er /BBA o'er the corresponding period! E"port. Remittance and Treasur% #usiness howe'er maintained a stead% growth e"cept in the ast / HtwoI months were month to month growth fa considera# %! This was due to the financia turmoi in the -0A 2 E-! The% ha'e howe'er achie'ed the targets in those areas quite comforta# %! (n this paper. ( sha oo$ #ac$ at the ups and down in foreign e"change #usiness Himport.

e"port. remittance 2 +EO dea ingI of the #an$ in /BBA. pro&ect the prospects of the #usiness in the coming %ear and suggest specific agenda in order to o'ercome the hurd es and maintain a stead% growth of the #usiness in the New Near! -.% *eaning of "oreign =#change, +oreign E"change means currenc% 2 trade e"change sa% con'ersion of one to another! This is a part of economic 2 0cience! This is a #ig dea di'ided into different currencies instrument such as 6raft. Tra'e er Cheque. #i Currenc% into another currenc%! -.) "oreign =#change *arket +oreign E"change mar$et means the p aces where foreign currenc% is #ought 2 so d! (n this more that supp %. currenc% 'a ue! A ternate % fo owing are the features of foreign e"change mar$et1 )an$ 2 c ient! 6ifferent )an$s in the same foreign e"change mar$et! 6ifferent )an$ 2 0chedu e )an$ of the same countr%! -------------------------------------------------------------------------------------------------------- 1@ | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL of e"change #usiness inc uding se . purchasing of currenc% notes 2 TC etc! Currenc% E"change means the con'ersion of one

6ifferent Contro )an$!

-.- O(erall +rocess of "oreign =#change Business, *i$e a modern #an$s. ())* a so operates in the area of the foreign e"change #usiness! (n this perspecti'e. ())* performs the fo owing tas$s1 Opening etter of credit H*LCI against commission for importing industria . agricu tura and other permissi# e items under (s amic 0hariah and (mport po ic%! Opening etter of credit on the princip e of ,udara#a sa e. on the princip e of ,ushara$a sa e and under wage earner scheme! Hand ing of e"port L import document! Negotiation of e"port L import document when discrepanc% occurs! +inancing in import under ,P( H,udara#a Post (mportI! +inancing to e"port on profit or oss sharing! Hand ing (nward and Outward remittance!

())* is p a%ing a 'er% important ro e in the foreign E"change #usiness of the countr%! The foreign trade hand e #% the #an$ ma% #e c assified as under1 1! (mport )usiness /! E"port )usiness 7! +oreign Remittance! Letter of Credit 3 its Classification, The first thing that is required to run foreign e"change #usiness is etter of credit! A etter of Credit is a conditiona underta$ing of pa%ment #% the issuing #an$ to the #eneficiar%! As per -CP6C. there are two t%pes of *LCs1 Re'oca# e (rre'oca# e Parties to an *LC!1 (ssuing )an$L(mporter8s )an$LApp icant8s )an$! 0upp ierL)eneficiar%LE"porter! Confirming )an$ Hif an%I Documents re>uired for o$ening LDC, )ranch wi supp % the fo owing paperLdocuments to the c ient #efore opening of the *LC1

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*LC app ication form *CA +orm (,P +orm Agreements Has app ica# eI Charge documents etc! The a#o'e papers must #e comp eted and fi ed in and signed #% the part% and 'erified #% the #ranch! 2$$lication for LDCH At first the interested parties app % for opening *LC a ong with the required papers and documents! anctioning LDC, -pon receipt of the app ication. dea ing officer wi fo owing1 5hether the c ient has 'a id imit! 5hether the proposa is within the imit or within the power of )ranch incum#ent! The item to #e imported is permissi# e! 5hether Credit Report of the supp ier o#tained as per instructions of the <uide ines! ,ar$et Report of the goods! Competiti'e price of the goods The indent #ears the (ndent Registration Certificate H(RCI num#er 2 )ang adesh )an$ permission of the (ndenter! The indent #ears the signature of Agent 2 (mporter! initiate office note co'ering the

On #eing satisfied. )ranch wi issue a etter of credit on #eha f of the importer and send the same to the #eneficiar% through an% of our Correspondent #an$s! O&taining credit re$ort of the u$$lierD Beneficiar!,

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The A6 shou d o#tain confidentia report of the 0upp iersL)eneficiaries from their #ranches or correspondents a#road or in their discretion satisf% them-se 'es as to the standing. means #% consu ting standard #oo$s of reference issued #% (nternationa Credit Agencies!

2d(ising 3 Dis$osal of LDC co$ies, *LCs shou d norma % #e t%ped in )an$8s printed format in manifo ds The Origina *LC is to #e sent to the ad'ising )an$ for #eneficiar% 2 / cop% to the a#o'e #an$ at the same time for their own purpose. 7 cop% for importer. 9 cop% for reim#ursing #an$ = 2 C
th th th rd th th th nd

cop% for office cop% of the #an$. E cop% for ()5!.A cop% for CC( 2 E 2 @ cop% for )ang adesh )an$!

Cash securit! for LDC, Cash 0ecurit% is to #e o#tained #efore opening of the *LC from the c ient as per sanction of the *LC or as per requirement of )ang adesh )an$ 2 that shou d #e posted under the heading 0undr% deposit H0ecurit% *LC CashI 2 recorded in the 0ecurit% 6eposit Register part% wise as we as *LC wise! Reali9ation of Bank charges, A6 wi rea i3e commission 2 )an$ charges at the time of Opening *LC as per Head Office circu ar!

*aintenance of LDC O$ening Register, Particu ars of the *LC to #e recorded in the *LC opening register H)-=CI putting *LC num#ers chrono ogica %!

2mendment of LDC, After opening of *LC amendments ma% #e effected on % if a the parties concerned are agreea# e i!e! the #eneficiar%. the importer. the issuing #an$! +or an% amendment. the importer must request the opening #an$ in writing du % supported #% re'ised indentLproforma in'oice etc! where necessar%! -------------------------------------------------------------------------------------------------------- // | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

-.. na$ hot of O(erall +erformance of "oreign =#change Business of IBBL The two decades of foreign e"change #usiness of the #an$ has #een a success stor%! )% now. (s ami )an$ has esta# ished itse f as one of the eading #an$s of the countr% in foreign e"change #usiness! As the #an$ continues to co'er different mi estones in its success &ourne%. tota foreign e"change #usiness of the #an$ stood at TA;A =@@.7EB!==mi ion at the end of /BBE. with a share of =B!9EJ in (mport. /9!9@J in e"port and /=!B/J in remittance maintaining a good #a ance #etween inf ow and outf ow of foreign currenc% for the countr%! The #an$ made / nd highest contri#ution in the countries import and remittance with 1BJ and /BJ share respecti'e % whi e in e"port the #an$8s contri#ution was the highest among the Pri'ate Commercia )an$s HPC)I with a share of around 1BJ! The #an$ has #een p a%ing a 'ita ro e in industria i3ation of the countr% and earning 'a ua# e foreign e"change for the countr% from e"port and remittance ser'ices! The ta# e #e ow shows the picture of foreign e"change #usiness of the #an$ in the ast /= %ears with growth trendTa&le, "oreign =#change Business of IBBL, Near 1@A 7 1@A 9 1@A = 1@A C 1@A E 1@A A 1@A @ 1@@ B 1@@ 1 1@@ / 1@@ 7 1@@ (mport E"port Remittance +ig! in ,i ion Ta$a Tota +! E" )usiness 1B!AB 17C@!1B 1E7C!AB 7=@=!E9 7@E9!/9 99@B!9B =A9B!7B EA9=!@B 11@A9!@A 1=E==!@1 1CA=C!A= /=7=C!A= <rowth Rate /EJ 1BEJ 11J 17J 7BJ 79J =7J 71J EJ =BJ

1B!AB AC1!CB @E@!9/ 1ABB!C1 1=EA!9= /B1=!7B 77@9!@B 7@1E!EB C/B9!/E AEEA!=1 AC1/!EB 19C/7!97

C7!EB /C=!BB C//!9/ @E1!1= 179@!EB 1=97!AB /=AA!7B 7@CC!=A 9@9A!A1 =A91!C9 EE@B!9/

997!AB 9@/!7A 11E/!E1 19/9!C9 11/=!9B @B1!CB 177@!@B 1A19!17 /B/A!=@ /9B/!=1 /@97!BB

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9 1@@ = 1@@ C 1@@ E 1@@ A 1@@ @ /BB B /BB 1 /BB / /BB 7 /BB 9 /BB = /BB C /BB E /BB A

/1/1A!7A 1EAE9!AB 1E7EB!BB /B/7A!7B /B7@C!BB /=7/E!BB /=.@BE!BB 77.EAA!BB 9C./7E!BB =@.AB9!BB E9.=/=!BB @C.AEB!BB 1.7E.BAC!B B 1.CA.7/@!B B

11B1=!E= 11ECC!9B 199C@!9B 19A@9!7B 19E@A!BB 1CAA@!BB 1C.BA/!B B 1C.CE7!B B /1.E7A!B B /@.1=1!B B 7C.1C@!B B =1.177!B B CC.C@B!B B @7.=BB!B B

/99E!/1 77/A!7B 9ABC!BB C7CB!CB A91=!BB EC99!BB @.AE@!BB 19.CEB!BB 1C.CCA!BB /7.CC@!BB 7C.@9A!BB =7.A1@!BB A9.1/7!BB 1.9B.9/B!B B

79CA1!79 7/@C@!=B 7CC9=!9B 919@7!/B 97CB@!BB 9@ACB!BB =1.ACA!BB C=.171!BB A9!C97!BB 11/.C/9!BB 19E.C9/!BB /B1.A//!BB /.AE.A@@!B B 7.@=.1@7!B B

7EJ -=J 11J 17J =J 19J 9J! /CJ 7BJ 77J 71J 7EJ 97J /EJ

-.4 +erformance of "oreign =#change Business in %007 /BBA has #een a 'er% cha enging %ear for ())* in respect of foreign e"change #usiness! A though we made a good start in the #eginning of the %ear and made good progress up to the 1st ha f of the %ear. we had to curtai the growth due to the compe ing situation of #ringing down the in'estments in ine with the capita position of the #an$! The financia crisis in the -0A 2 Europe a so p a%ed its ro e! E"port 2 Remittance #usiness were unaffected throughout the %ear e"cept in the ast / months! Our 0ummari3ed performance in +!EO )usiness is shown as under1

H,i ion T$!I )usiness Achie'ement /BBA Target Achie'emen J t of <rowth )usiness p an /BB@ Target Amount J of

achie'ement

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(mport E"port Remittance

1@@.BBB @7.=BB 1/C.=BB

1CA.7/@ @7.@/B 19B.9/B

A=J 1BBJ 111J

/7J 91J CEJ

/991BB 171=BB /11BBB

growth 9=J 9BJ =BJ

(n /BBA our mar$et share stood at 1B!/=J. @!=CJ 2 /7!BEJ in import. e"port 2 remittance respecti'e % whi e in /BBE it was 1B!A7J. E!A/J 2 1A!=@J! The success is due to the re ent ess efforts of the #ranch managers and their teams! -.-.1 I*+ORT BU IN= (mport #usiness in'o 'es transactions in foreign e"change! )% foreign e"change we genera % mean foreign currenc% i$e -0 6o ar notes. <reat )ritain Pound etc! )an$ notes or what we common % ca foreign currenc% notes howe'er. do not p a% an% significant ro e in sett ement of internationa transactions! The term foreign e"change is used in #roader sense as a process of con'ersion of one currenc% into another! +oreign E"change and +oreign Trade is a part of economic scienceM it dea s with the means and method #% which rights to wea th in one countr%Ks currenc% are con'erted into those of another countr%!

As our )an$ is an (s ami )an$. we ha'e to a#ide #% the princip es of (s amic 0hariah! Our #ranches ha'e to fo ow the interna circu ars of the #an$ in respect of import #usiness and this guide#oo$! A of our A6 )ranches are instructed to fo ow this guide #oo$ at the time of foreign e"change dea ings! An% su#sequent amendment. modification. addition of foreign e"change circu ars issued #% )ang adesh )an$ and our Head Office a so to #e fo owed #% the A6 )ranches! -.-.% Re>uirement for Im$ort,

Feneral Instructions on Im$ort, -n ess otherwise specified. an% (tem. which does not a$$ear either in negati(e or in restricted list of (mport Po ic% Order H(POI. sha #e free % importa# e!

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-n ess otherwise specified. (temHsI inc uded in negati(e list cannot #e imported! An% (tem inc uded in restricted list sha #e importa# e on % on fu fi ment of the conditions specified #% the competent authorit% HCC(2EI against the item! <oods from countries &anned #% (PO or goods originating from those countries sha not #e importa# e! <oods sha not a so #e importa# e in the f ag 'esse s of those countries! +re:shi$ment ins$ection HCR+I is mandator% for import of an% item other than e"port oriented 2 Ta" free items! -.-.) Registration of Im$orters 3 $rocurement of Im$ort Registration Certificate @IRC;, (n terms of the (mporters. E"porters. and (ndenters8 HRegistrationI order- 1@A1. no person can import goods into )ang adesh un ess he is registered with the CC(2E or otherwise e"empted from the pro'ision of the said order! )efore an% *etter of Credit H*CI is opened or remittance made for imports into )ang adesh. A6 #ranch shou d 'erif% that the importer is registered with the CC(2E or otherwise e"empted from such registration! The A6 #ranch shou d ensure that the registration num#er of the importer is in'aria# % furnished on the (,P form! 5here the importer is e"empted from such registration. a suita# e mention of this fact shou d #e made on the (,P form!

The CC(2E authorit% recei'es app ications from the persons or institutions that are interested to #ecome importer! These persons are gi'en (mport Registration Certificate H(RCI if the% fu fi the criteria 2 su#mit app ication to the CC(2E a ong with papers required #% the CC(2E as under1 Nationa it% Certificate! Certificate from the Cham#er of Commerce 2 (ndustr%LRegistered Trade Association )an$ 0o 'enc% Certificate Trade *icense

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(ncome ta" paid Certificate HT(N Num#er An% other documents required #% CC(2E! -.-.- Im$ort "ormalities 3 +rocedures 2$$lication for Im$ort, : A 'a id importer wi an *LC1 *LC App ication form du % signed #% the importer with adhesi'e 0tamp Hthe stamp 'a ue ma% increase or decrease as per po ic% of the <o't!I! (ndentLpro forma (n'oice! (nsurance Co'er Note *CA+ du % fi ed in 2 0igned #% the importer ,em#ership Certificate from Cham#er of CommerceLTrade Association! Ta" pa%ment dec aration Charge documents such as ,ushara$aL,ura#ahaL)ai-,ua33a Agreement (,P 2 T, form HTra'e 2 ,isce aneous +ormI! (RC. Pass )oo$. Trade icense. ,em#ership Certificate from the Cham#er of Commerce or their recogni3ed Laffi iated #od% in case of new customers! :AT registration Certificate E"port *LC in case of )ac$ to )ac$ *LC An% other paperLdocument that ma% deem necessar%! LC 2uthori9ation "orm The A6s are authori3ed to issue K*etter of Credit Authori3ation +ormsK H*CA+sI in conformit% with the (PO a owing imports into )ang adesh! *CA+s or import permits or c earance permits are not required for imports #% the ,inistries and go'ernment departments! The *CA+s a'ai a# e with the A6s. are issued in sets of = copies each! Of these. the one mar$ed P+or E"change Contro PurposeP shou d #e used for opening *C and for effecting remittances! The A6s shou d #e 'er% carefu a#out comp iance with the su#mit the fo owing paperLdocuments to his )an$ to open

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instructions of the (mport Po ic% Order H(POI and re e'ant Pu# ic Notices in the issuance of *CA+s!

2uthenticationDRegistration of LC2", 5hen the importer su#mits *CA+ H*etter of Credit Authori3ation +ormI with other papers to the )an$ to open *LC. )an$ wi authenticate the *CA+. confirming the fo owing1 (RC. renewa fee paid! (tem to #e imported is e igi# e as per import po ic% Lpass )oo$! *CA+ is du % fi ed in and signed #% the importer! )an$ wi endorse the 'a ue with particu ars and equi'a ent Ta$a on the #ac$ of e"change contro cop% of *CA+ =ndorsement on LC2 "orms At the time of opening of *LC against a *CA form. fu particu ars shou d #e endorsed on the #ac$ of the E"change Contro cop% of the re ati'e *CA+ form under stamp and signature of the authori3ed officia of the #ranch! The amount of Ta$a equi'a ent of the *LC amount shou d #e shown after con'erting the +!C! amount into ta$a at the ru ing rate of e"change!

1alidit! of LC2 for shi$ment -n ess otherwise specified shipment of goods sha #e made within se'enteen months in the case of machiner% and spare parts and nine months in the case of a other items from the date of issuance of *CA +orm #% #an$ or registration of *!C Authori3ation +orm with )ang adesh )an$ Registration unit as the case ma% #e!

Lodgment of Im$orts Bills, -pon receipt of import documents it must #e chec$ed with *LC carefu % and if it is found in order. entr% to #e made in the )i Register 2 necessar% 'oucher to #e passed putting )i num#er on the documents! This process is ca ed odgment! 6ocuments must #e odged immediate % after receipt of the same! crutin!D checking of Im$ort Bills, -------------------------------------------------------------------------------------------------------- /A | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

6ocuments norma % consist of D +inancia document i!e! #i of E"changeL6raft! Commercia documents i!e! in'oice. pac$ing ist. (nspection Certificate. Certificate of Origin. E"port *icense. etc! Transport documents i!e! )i of ading. Air 5a% #i . Truc$ receipt. Rai wa% receipt 2 Posta receipt and (nsurance documents. (nsurance ad'ice etc! Other documents Intimation to the Im$orter, -pon receipt of the shipping documents. (mporter is to #e ad'ised with fu particu ars of the date of odgment with request to retire the document! Refusa of documents #% nominated #an$ L confirming #an$ L issuing #an$1 (t ma% refuse to honor or negotiate! (t is the so e &udgment of the issuing #an$ approach the app icant for wai'er of the discrepancies HArtic e D1C!#I Discre$anc! Notice, 5hen Nominated )an$L Confirming )an$L (ssuing decides to refuse to honor or to negotiate it must gi'e a sing e notice to the presenter within = #an$ing da%s fo owing the date of its recei'e!! Retirements of Im$ort Bills, Then the% retire the import #i according to the ru es and regu ations of the #an$! Reali9ation of Bank dues, At the time of retirement. )an$ wi rea i3e a dues 2 charges from the c ient as per Head Office circu ar! =ndorsement of Im$ort Documents 3 Deli(er! of hi$$ing Documents, After rea i3ing a charges 2 dues from the c ient. )an$ wi endorse the documents fa'oring C2+ agent L c ient. 2 hand-o'er the shipping documents +a!ment of Im$ort Duties8 12T etc. @In case of *+I; At the time of ta$ing de i'er% of goods from the port. custom duties. :AT. Port Charges etc! wi #e paid #% the *LC opening )an$ through C2+ Agent! +or re easing goods

through port #ranch. the% wi issue ()6A for required amount and after recei'ing the

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()6A. *LC issuing #ranch wi respond the same #% de#iting importersLc ients in'estment Account! Prior instructions a ong with documents are to #e sent to c earing HPortI )ranch 2$$ro(ed methods of $a!ments, *etter of Credit ma% #e esta# ished pro'iding for pa%ment to the #eneficiar% ocated either in the countr% of origin of goods or in the countr% of shipment of goods! *etter of Credit ma% a so #e esta# ished pro'iding for pa%ment to the #eneficiar% in a third countr%. not #eing the countr% of origin of goods or the countr% of shipment. pro'ided the Authori3ed 6ea ers are satisfied that the pa%ment to the #eneficiar% in a third countr% does not in'o 'e an% e"tra e"penditure! *etters of Credit esta# ished as per the three a#o'e shou d pro'ide for pa%ment in an% of the fo owing manners1 (n an% free % con'erti# e currenc% i$e -!0! 6o ar. E-RO. Pound 0ter ing. 4apanese Nen etc! (n oca currenc% of the countr% of the #eneficiar% or in the currenc% of the countr% of originLshipment of goods. or (n TA;A for credit to the non-resident #an$ account of the countr% of the #eneficiar% or of the countr% of originLshipment of goods! +or imports from the countries who are mem#ers of Asian C earing -nion HA!C!-I D in Asian ,onitor% -nion HA,-I. )ang adesh TA;A or in the currenc% of the supp ier! (t is a so not permissi# e to esta# ish *LC pro'iding for a ternate countries of origin of goods un ess prior appro'a of the )ang adesh )an$ is o#tained! Pa%ments for imports under 'arious commodit% e"change agreements wi go'erned #% the instructions issued #% the )ang adesh )an$ from time to time! 4.4.5 Import & Export Business under Islamic Framework The #an$ing s%stem aiming to achie'e the goa of (s amic econom% through setting a we designed (s amic ,onitor% s%stem! Regarding use of mone% or e"change of currencies -------------------------------------------------------------------------------------------------------- 7B | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL #e

(s am has its c ear-cut instructions through some distincti'e guide ines! A'oiding interest HRi#aI. restricting e"p oitation 2 specu ation etc! are the ma&or guide ines in this e"change process! 0o (s amic )an$ing s%stem is doing #an$ing #usiness under (s amic guide ines! 0o. what are the guide ines of (s am for +oreign E"change )usiness or how +oreign E"change )usiness is done under (s amic #an$ing s%stemQ -.-.4 "inancing "oreign Trade, (n modern #an$ing +oreign Trade is ta$en into a shape where customers are pro'ided with 'arious products and ser'ices. #% the #an$! The% get financia assistance at a stages of their (mport 2 E"port trade from #an$! A most a such faci ities can #e pro'ided under (s amic mode! The genera princip es in financing import and e"port #usiness are e imination and a'oiding of interest in a operation! The different (s amic modes are as under1 ource of "inance for Im$orts, Cash D a! Cash foreign e"change H#a ance of foreign e"change reser'e with )ang adesh )an$I #! +oreign currenc% account maintained #% )ang adeshi nationa s wor$ing L i'ing a#road! E"terna source HCommodit% Aid! *oan. Credit or <rantI Commodit% e"change - )arter and 0pecia Trading Arrangement H0TAI1 Commercia importers and industria consumers ma% uti i3e their respecti'e shares under )arter L 0TA as notified! (mport under the 0pecia Trading Arrangements H0TAI which are or were conducted with prior appro'a L permission of the <o'ernment sha #e su#&ect to the specific procedures aid down #% the go'ernment in this respect! The pro'ision of this paragraph wi remain effecti'e on % up to the time of comp etion of on-going agreements! -.-.5 Im$ort "inance ,ain % three t%pes of import are done purpose wise! (mport of trading item for u timate user or consumer! (mport of Raw materia s or industria item for further processing or further production -------------------------------------------------------------------------------------------------------- 71 | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

(mport of Capita ,achiner% 2 Capita (tem! (n a t%pes of import usua % the importer ta$e #an$ finance! -nder (s amic modes. finance can a so #e made for the first two t%pes under )ai-,ura#aha 2 )ai-,ua&&a mode and for the 7rd t%pe under Hire-Purchase under 0hir$atu ,e $ HHP0,I mode! (mport finance can a so ma$e under )ai-0a am or ,ushara$a or ,udara#a modes! (s ami )an$s ha'e to perform its a transactions re ated to import 2 e"port #% a#iding the Nationa and (nternationa ru esLregu ations in addition to its own ru esLregu ationsLguide ines etc! )ai-,ura#aha means P0a e on agreed upon profitP and in case of import we can do the same practice! As per the procedure )an$ purchase goods from foreign supp ier and sa e to the importerLc ient! As per internationa #an$ing practice and as per -CP6C goods consigned to the opening #an$ i!e! the owner of goods is #an$ ti transfer the ownership #% endorsement on the #ac$ of )i of *acing H)L*I or other transport document! A so as per -CP6C pa%ment c aim #% the supp ier of the goods to the *LC opening #an$ through drawing #i of e"change on )an$! As per (s amic )an$ing practice import finance under )ai-,ura#aha is made under sing e dea co'ering the in'estment at *LC stage. )i s stage. and post import stage as under1 ,ura#aha (mport *LC ,ura#aha (mport )i s ,ura#aha post (mport I*+ORT UND=R B2I:*U2CC2L (t is a Contract #etween a )u%er and a 0e er under which the se er se s certain specific goods Hpermissi# e under 0hariah and aw of the andI to the #u%er at an agreed fi"ed price pa%a# e at a certain fi"ed future date in ump sum or within a fi"ed period #% insta ment! I*+ORT UND=R EIR= +URCE2 = UND=R EIRI2TUL *=LI @E+ *; +or import of machiner% and other dura# e and reusa# e item import is made under HP0, mode! HP0, is a mechanism as com#ination of three s%stems name %- (3arah. 0hir$at and )ai-HPurchase and 0a eI )an$ and c ient import the item &oint % sharing mone% as per

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agreement i!e! 0hir$at )an$ gi'es ease of their portion at an agreed rent! )an$ 0a e their portion of the propert% gradua % #% recei'ing periodica pa%ment from the c ient!

I*+ORT UND=R *U E2R2I2. ,ushara$a is the mode of in'estment where the equit% participation of #oth the #an$ and c ient is essentia ! (n this case un i$e )ai-mechanism no sa e price is fi"ed! The profit earned is shared #etween the #an$ and the c ients at agreed ratio! (n case of an% genuine oss arises then it wi a so #e shared #etween the #an$ and the c ient as per equit% ratio! I*+ORT UND=R *UD2R2B2 5hen the capita userLentrepreneur has no capita and the capita ho der has got no direct participation in the #usiness. then such t%pe of #usiness is ca ing ,udara#a! (n case of import #an$ ma% finance under ,udara#a mode pa%ing fu cost of imported goods! (n such case #an$ ma% super'ise the uti i3ation of Capita . its return and operation process in'o 'ed! C ient is under o# igation to maintain a documentation and record of sa e and purchase of goods! Profit wi #e shared as per agreed ratio. and oss wi #e #eard if genuine #% the #an$!

-.-.7 Im$ort under Back to Back LDC,


)ac$-to-)ac$ *LC is a *LC #ac$ed #% another *LC i!e! this t%pe of import *LC is opened against ien of E"port *LCL,other *LCL,aster *LC! Classification of BB LDC, +oreign )) *LC! (n and )) *LC! +rocedure of o$ening of BB LDC, 6ocuments to #e o#tained from the c ient Preparation of Credit report on the c ient1 Preparation of )) *LC proposa 1 Num#ering of *LC in the *LC opening Register Transmission of *LC1 6isposa of *LC copies

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Rea i3ation of )an$ Charges *odgment of )) )i s Con'e%ing of Acceptance Pa%mentL sett ement of )) )i s! Rea i3ation of )an$ dues and charges! Co ectionL 0u#mission of )i of Entries 2 ,atching thereof

4.10 A Comparative analysis of Import Business of IBBL


(f we ana %3e the scenario of /BBA in which the import #usiness was conducted. we find the fo owings1 High growth up to June, 00!" The target growth for /BBA in import #usiness was 9=J! 5ith the high growth of import in the first four month of /BBA H1CEJ. 197J. 17=J. 1E7JI from 4anuar% to Apri in indi'idua months which continued up to 4u % in aggregate figures too due to high 'o ume of imports of ferti i3ers. food items. industria raw materia s etc!. it was presumed that we wou d #e a# e to achie'e the target-growth quite comforta# %! The figures ma% #e seen from Ta# e1 (mport
Com$arison of Im$ort, month to month %005 3 %007
Jan 08 Feb 08 Mar 08 Apr 08

/=BBB /BBBB ,i ion T$! 1=BBB 1BBBB =BBB B

May 07 May 08

Oct

Jun 07 Jun 08

Aug 07 Aug 08

Jul 07 Jul 08

Feb 07

Mar 07

Apr 07

Sep Sep

Nov

Jan 07

4an /BBE /BBA <rowth in J E/7= 1@7B= 1CEJ

+e# E=7E 1A77E 1BABB 197J

,ar EA11 1A7E1 1B=CB 17=J

Apr ACB/ /79@B 19AAA 1E7J

,a% 1B11/ 19=11 97@@ 99J

4un @C79 17E1@ 9BA= 9/J

4u 1BECB 1B=E9 -1AC -/J

Aug 1//A1 1BAB9 -19EE -1/J

0ep 11/BC 1B=97 -CC7 -CJ

Oct 1E.9E= E9/@ -1BB9C -=EJ

Oct

No' 1CA@A @91B -E9AA -99J

Nov

6ec 1E=7= 1B/1E -E71A -9/J

<rowth in amount 1/BEB

#a$le" Import

-...1 =G+ORT BU

IN=

E"port )usiness occupies a 'er% important position in the )a ance of Trade and )a ance of pa%ment of the countr%! E"port occupies an important position in the foreign e"change #usiness portfo io of the #an$! (n hand ing e"port #usiness. certain Acts. guide ines. 2 regu ations ha'e to #e fo owed such as the E"port Trade Contro Regu ation Act. -------------------------------------------------------------------------------------------------------- 79 | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

Dec

Dec

<uide ines for +oreign E"change Transactions pu# ished #% )ang adesh )an$ and E"port Po ic% issued #% ,inistr% of Commerce from time to time! At the same time. as a 0hariah #ased )an$. our e"port #usiness shou d comp % with the pro'isionsL princip es of (s amic 0hariah! (f an% of the pro'isions of this guide#oo$ contradicts in an% wa% the go'ernment ru e or accepted internationa #an$ing practice in that case the go'ernment ru e or the internationa #an$ing practice H(0)PI wi reign on this #oo$! An% su#sequent not co'ered in this #oo$ must a so #e fo owed! (f an% area of foreign e"change #usiness is not co'ered in this #oo$ in that case the pre'ai ing ru es of )ang adesh )an$ and internationa norms ha'e to #e fo owed!

Definition and Classification of =#$ort, )% e"port we genera % mean se ing of 'isi# e and in'isi# e goods and ser'ices outside the countr% against etter of credit. firm contract or Ad'ance pa%ment! )esides. oca supp ies against *etter of Credit Lcontract through #an$ing channe are a so deemed as e"port! Howe'er the oca e"port does not need to #e reported to )ang adesh )an$ in the schedu es! T!$es of =#$ort, E"port must #e e"ecuted under the fo owing pa%mentLsett ement s%stem E"port against *LC or firm contract E"port against Ad'ance pa%ment E"port under consignment #asis -...% =#$ort stage @+rocedure to &e folloBed for handling foreign e#$ort &usiness;, Certification of =G+ "orms (n order to a'oid an% oss of foreign e"change of the countr%. #ranch sha not certif% an% EOP form un ess the% ha'e satisfied themse 'es with regard to the fo owing1 Arrangements ha'e #een made for rea i3ation of e"port proceeds within the prescri#ed period! Arrangements ha'e #een made for receipt of tit e to goods i$e )i of *ading. Airwa% )i etc! #% the #ranch on shipment of the under %ing goods! -------------------------------------------------------------------------------------------------------- 7= | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

The EOP +orm has #een signed either #% the e"porter or his authori3ed representati'e! +orma ities for Negotiation H+)NILCo ection of Pa%ment H+)CI after e"ecution of e"port #% the e"porter!

u&mission of =#$ort DocumentDBill &! the e#$orter E"port #i is a set of documents prepared #% the e"porterL#eneficiar% after e"ecution of e"port as per requirement of e"port *LCL0a e Contract for recei'ing pa%ment! The e"porter wi su#mit the documents to the nominated #an$ a ong with the 6up icate. Trip icate and the Ruadrup icate copies of the EOP forms! E"port #i ma% consist of1 +inancia document i!e! )i of E"changeL6raft. Commercia documents i!e! (n'oice. pac$ing ist. (nspection Certificate. Certificate of Origin. E"port *icense. etc Transport documents i!e! )i of ading. Air wa% #i . Truc$ receipt Rai wa% receipt 2 Posta receipt and (nsurance documents! An% other document stipu ated in the Credit! crutin! D=#amination of documents Checking of 2mendment of the LDC, The fo owing points shou d #e considered1 5hether amendmentHsI. if an%. ha'e #een accepted or re&ected #% the concerned parties1 The #eneficiar% or other parties ma% ha'e to #e contacted for the matter! The same ma% a so #e determined #% an e"amination of the documents!

Bill of e#changeD Draft, The fo owing points shou d #e considered1 (t is drawn under the correct etter of credit!

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Appears to #e drawn and signed #% the #eneficiar% (f the documents are under a transfer. drawn #% the second #eneficiar%! Tenor is in accordance with the terms of the credit! (s correct % endorsed. Hif necessar%I! Amount in words is e"act % equa to amount in figures. and #oth amounts indicate the currenc%. as stipu ated in the etter of credit! 6rawee is as required in the etter of credit! Amount does not e"ceed the #a ance of the etter of credit or the amount permissi# e under the etter of credit! Amount agrees with that of the in'oice. un ess otherwise stipu ated in the credit! 6oes not appear to ha'e #een a tered. #ut if so. that a terations ha'e #een authenticated! Contains an% c ause required in the etter of credit!

Checking of other documents, Other documents ha'e to #e chec$ed as per (nternationa standard #an$ing practice out ined in the atest (!C!C Pu# ication No! =BB on -niform Customs 2 Practice for 6ocumentar% Credits! (n addition. the (nternationa 0tandard )an$ing Practice H(0)PI for the e"amination of documents under 6ocumentar% Credits. (CC Pu# ication No! C9= shou d a so #e fo owed! Recording of LDC $articulars, +u particu ars of the *LC to #e entered in the *LC Ad'ising Register )-EA a otting

separate seria num#er for each *LC in the Register! The same seria num#er has to #e noted on the top eft-hand corner of the printed *LC ad'ising form or on the origina *LC itse f as the case ma% #e! (f we are not requested #% the (ssuing #an$ to add our confirmation the *LC. we must not add our confirmation! (n such cases. the matter shou d #e e"p icit % noted for the #eneficiar% #% incorporating the fo owing c ause in our ad'ising etter andLor in the #od% of the *LC ad'ising format as the case ma% #e1 J ince Be ha(e not &een re>uested &! the

-------------------------------------------------------------------------------------------------------- 7E | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

o$ening &ank to confirm the LDC8 this ad(ice con(e!s no engagement or res$onsi&ilit! on our $artA. NegotiationD+urchase of documents As per Art No! 1B H#I ii of -CP6C-=BB. Negotiation means the gi'ing of 'a ue for 6raft andLor documents #% the #an$ authori3ed to negotiate! After scrutin% of documents. if it is found in order. #an$ ma% negotiate the documents! And office note shou d #e initiated note for ta$ing decision negotiation 2 dis#ursement of fund! Negotiation under Reser(e )an$ ma% negotiate documents under reser'e if not prohi#ited in the *Lc and as$ for wai'ing of discrepancies from the *LC opening )an$LApp icant! +urchase against indemnit! or ending on collection, (f the documents are not in order HdiscrepantI. #an$ ma% purchase the documents against indemnit% depending on the past performance of the c ient or send the documents on co ection #asis ending of documents to the LDC o$ening &ank for $a!ment, +re$aration of forBarding schedule, After negotiation Lreceipt of the documents. the documents are to #e sent for pa%ment or on co ection #asis! +or this purpose a forwarding schedu e H+-1/EI as to #e prepared! 0pecific instruction regarding ALC Num#er and )an$ name where pa%ment to #e remitted #% the pa%ing #an$ has to #e mentioned! Two authori3ed officers must sign on the +orwarding 0chedu e! =ndorsement of documents 6ocuments shou d #e endorsedM especia % #i of E"change HdraftI and fu set )i of *ading in fa'or of *LC opening )an$ or as per instruction in the Credit! Dis$atch of documents, After proper endorsement and forwarding schedu e du % fi ed in. the e"port documents are to #e dispatched to the *!C! issuing )an$ or as per instruction of the credit through #an$s en istedLnominated courierLe"press mai ser'ice! LedgerDRegisterD"ile maintenance

-------------------------------------------------------------------------------------------------------- 7A | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

E"port #i wise entr% shou d #e made in the e"port #i register H)-@7I! The +)N 'oucher to #e posted in the +)N edger H)-E@ #i wise and part% wiseI! The #i wise fi e shou d #e maintained proper % for record and fo ow up! Documentation, )ranch wi o#tain usua charge documents from the e"porter! 0pecia % the <enera (ndemnit% from the c ient! )ranch ma% a so o#tain specific indemnit% from the e"porter against discrepanc% HiesI in the e"port #i ! Dis$osal of Du$licate =G+ form, )an$ wi forward the dup icate of the EOP form to the nearest contro ing office of )ang adesh )an$ within 19 da%s of shipment! "olloB u$Dcorres$ondence, After dispatch of the documents #ranch wi ma$e proper fo ow up and ma$e necessar% correspondences to rea i3eLrepatriate the proceeds in time! )ranch wi ta$e up the case with the *LC opening )an$ if the documents are in order! #ranch wi ta$e up the matter with the e"porter if the #i was purchased under indemnit% and pa%ment refused #% the *LC opening #an$! Correspondence wi continue ti repatriation of the proceeds! As per )ang adesh )an$ +oreign E"change <uide ines. proceeds shou d #e repatriated within 1/B da%s of e"port! (f the proceeds are not repatriated within the prescri#ed period. A6 shou d report that to )ang adesh )an$! 2ccounting for reali9ation, -pon receipt of confirmation from the correspondent8s *oca Rep! Office or from our Head Office of pa%ment of #i amount #% the pa%ing #an$ in the NO0TRO ALC. the fo owing 'oucherLentries has to #e passed for ad&ustment of the (n'estment ALC1 6r! () <enera ALc Head Office. ()5 H#% ,id rateI Cr! +oreign )i s Purchased L Negotiated H+)PL+)NI ALc Cr! E"change ALc! Cr! (n'estment (ncome ALc H+)PL+)NI Issuance of +RC, HProceeds Rea i3ation CertificateI The e"porterLc ient ma% app % for PRC HProceeds Rea i3ation CertificateI in writing in their etterhead pad stating detai ed information such as D HiI E"port *LC num#er. HiiI -------------------------------------------------------------------------------------------------------- 7@ | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

(n'oice 'a ue. HiiiI Rea i3ed 'a ue. Hi'I 6ate of rea i3ation! (f satisfied on chec$ing. PRC ma% #e issued! +a!ment of local agent commission. At the time of negotiation. the amount of commission pa%a# e to the #u%ing houseL oca agent shou d #e $ept in the margina deposit account H-nder Reser'eI. at the rate mentioned in the transfer etterLcondition! After rea i3ation of e"ports proceeds. oca agent commission is to #e paid against app ication of the e"porterHsI! 5here the proceeds are recei'ed after co ection. the oca agent commission is to #e paid direct % #% de#iting () <enera ALC as per transfer instructions mentioned on the re'erse of the e"port *LC and as per request of the e"porter! Dis$osal of Tri$licate 3 Kuadru$licate of =G+ "orm The Trip icate cop% of the EOP form shou d #e reported to )ang adesh )an$ after rea i3ation of proceeds in the month fo owing the month of rea i3ation through schedu e A-1LB1! The quadrup icate shou d #e $ept as office cop% for record

-...) =#$ort "inance E"port means f ow of goods and ser'ices produced within )ang adesh #ut purchased #% economic agent Hindi'idua s. firms 2 go'ernmentI of other countries! (n other words in case of e"ports products so d outside the countr%! 0o getting pa%ment against such sa e usua % require different time span depending on the terms of sa e contract or re ati'e pa%ment terms of e"port *LC! (n 'iew of a#o'e e"porter require immediate fund and other financia faci ities to e"ecute their e"port order! (t is the #an$ who e"tends such faci ities as needed #% the e"porter! And faci itating e"port #% financing e"porter at different stages is now important part of #an$8s acti'ities!

=#$orter re>uires financial assistance at tBo stages namel! 1! Pre-shipment stage 2

-------------------------------------------------------------------------------------------------------- 9B | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

/!

PostDshipment stage

o8 e#$ort finance is classified into tBo categories 1! /! Pre-0hipment finance Post-0hipment finance

6ifferent (s amic modes are there for financing e"port at two different stages as mentioned a#o'e!

-...- +re: hi$ment "inance under Islamic *odes,


Bank facilitiesD in(estments at $re:shi$ment stage, At pre-shipment stage e"porter ma% require funded or non-funded in'estmentLfaci it% and ma% approachLpropose for such in'estment! The e"porter ma% a so app % for post shipment in'estment after e"ecution of e"port! The non-funded faci it% inc udes )ac$-to-)ac$ *LC faci it%Lguarantee for import Lprocurement of raw materia s for production of finished goods Hout ined in (mport chapterI! The funded (n'estment is required to procure finished goods. processingLproduction of finished goods and meeting other wor$ing capita needs!

The funded in'estment need of the c ient ma% #e met app %ing a num#er of modes! ,ura#aha or #ai-,ua&&a He"portI ma% #e app ied in case of commercia items! (n case of industria items especia % for R,< sector. )ai-0a am (n'estment mode is to #e app ied

The non-funded faci ities are to #e rendered as per <uide ines of )ang adesh )an$! The +unded (n'estments of )ai-0a am. )ai - ,ura#aha and )ai ,ua33a are to #e rendered as per respecti'e manua HsI of the )an$! Pre-shipment finance as the name suggest. gi'en to finance the acti'ities of an e"porter prior to the actua shipment of goods for e"port! The purpose of such finance is to meet 5or$ing Capita fo owing purposes! +inance for oca procurement of goods! needs starting from the point of purchasing raw materia s to transportation of goods for e"port to foreign countr%! Pre-shipment finance is gi'en for the

-------------------------------------------------------------------------------------------------------- 91 | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

Procuring and processing of goods Pac$ing 2 transportation of goods Pa%ment of (nsurance premium Pa%ment of uti it% #i Pa%ment of wages and sa ar% +reight charge! Pre-shipment finance can #e made under (s amic mode as fo ows!

+ost hi$ment "inance Post shipment finance is made #% the #an$ after shipment of the good #% the e"porter! E"porter madeLarranged a document as per the requirement of the *LC terms or as per contract terms. then su#mit to their #an$ H())* in case of our e"porter c ientI! -pon su#mission of the documents #an$ pro'ide finance under the fo owing modes1 Bai:as:sarf )an$ purchase the foreign currenc% 'a ue of the documents under )ai-As-0arf1 +oreign 6ocumentar% )i H+6)I! )ai-As-0arf is a trading mechanism where the #an$ #u% foreign currenc% from the c ient at an agreed rate! (n case of )ai-As-0arf1 +6) #an$ purchase the 'a ue of the e"port documents e"pressed in +oreign Currenc% and paid equi'a ent ta$a in fa'or of the c ient! The c ient wi get net amount after ad&ustment of their respecti'e ia#i ities. if an%! After rea i3ation of documents 'a ue from the issuing #an$Limporters #an$ a#road the +6) ia#i it% wi #e ad&usted and #an$ wi earn e"change income from it! *usharaka Documentar! Bills @*DB; Inland, (n order to a'oid the ris$ associated with the +oreign Currenc% Positions against purchase of (n and E"port )i s and at the same time to meet the finance need of the 'a ued c ients. -------------------------------------------------------------------------------------------------------- 9/ | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

(s ami )an$ )ang adesh *td! introduced ,ushara$a mode of finance in p ace of (n and )i s Purchased H()PI as Post shipment finance! The new in'estment mode wi #e tit ed >,ushara$a 6ocumentar% )i s H,6)I in and?! 2$$rehension of fall of e#$ort orders, (t was apprehended that orders wi fa due to the financia crisis and c osure of different chain stores in -0A 2 Europe which ta$e the ma&or share of e"ports from )ang adesh! (t is of course a #it ear % to comment conc usi'e % in that wa% as the figures are %et to arri'e! On the other side. it is reported that due to high production cost in China. a good portion of the ow end orders are coming to )ang adesh which wi compensate the fa of orders in other R,< items!

,uch wi depend on success of the #ai out efforts 2 the economic reco'er% p an that is #eing ta$en in the -0A and European -nion! And a so on the a#i it% of the )ang adesh8s e"port to attract ow end orders at a comparati'e % ow cost that china and other competing countr%!

these things com#ined. it cannot #e said that e'er%thing wou d #e positi'e in the

coming %ear! ( propose as under1 Dealing Bith Discre$ant documents Discre$ancies, An% de'iations or apses of the documents with the *LC terms. the app ica# e pro'isions of these ru es and internationa #an$ing practice to #e treated as discrepanc% crutin! of hi$$ing Documents8 handling of discre$ant documents &oth Im$ort 3 =#$ort related. As per Artic e = of -CP-CBB )an$s dea with documents and not with goods. ser'ices or performance to which the documents ma% re ate! Documents as $er UC+ Commercia (n'oice Transport 6ocument H)L*. A5). TR 2 RR etc!I (nsurance documents )i of e"change Hif *LC a'ai a# e #% AcceptanceI!

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Other 6ocuments HAs per requirement of the CreditI

Other Documents These are the other documents1 Certificate of origin Pac$ing *ist (nspection certificate 0hipping Ad'ice Carrier Certificate Radio Acti'it% measurement Certificate! P%thosanitar% Certificate +umigation Certificate 5eight CertificateL ist )eneficiar% Certificate Ana %sis Certificate and others Com$l!ing $resentation As per -CP documents ma% #e treated comp %ing presentation if document fu fi the fo owing1 (n accordance with the terms and conditions of the credit! The app ica# e pro'isions of the -CP (nternationa standard #an$ing practice H(0)P-CA1I ,ust not conf ict with other documents or credit

=#amination of Documents, )an$ has to e"amine L scrutini3e the documents with reasona# e care whether the documents comp ied with the terms and conditions of the re ated *LC and internationa standard #an$ing practice as we as -CP! )an$s shou d e"amine a presentation on the #asis of the documents a one to determine whether or not the documents appear on their face to constitute a comp %ing presentation. as out ined in Artic e 19 HaI of -CPCBB! E"amination of draft E"amination of (n'oice -------------------------------------------------------------------------------------------------------- 99 | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

(nsurance1 E"amination of )L*. A5). TR. Rai 5a% Receipt 2 Post parce receipt Certificate of origin1 (t shou d #e signed. dated and proper % tit ed! (t shou d #e issued #% the competent authorit% as ca ed #% the terms of credit! (t certifies the countr% of origin and must indicate that the origin of the goods is from the countr% as ca ed #% the *LC! 6escription of merchandise in the certificate shou d #e the same as that gi'en in the in'oice. Pac$ing *ist1 5eight certificate L ist (nspection certificate (t is proper % tit ed. signed and dated! =#amination of other documents, ,oreo'er. there weight ist. inspection certificate. certificate of measurement. qua it% certificate. chemica ana %sis etc! 5hich are often required as per contract! Each of these documents shou d descri#e the goods in'oiced as per *LC terms! These must #e signed and authenticated #% the appropriate authorit%! These certificates are usua % dated #efore date of shipment! Common discre$ancies found in shi$$ing documents General: a! *ate shipment effected #! *ate presentation of documents c! Ear % shipment i!e! shipment made prior to issuance of *LC or time stipu ated in *LC d! *LC e"pired e! *LC o'erdrawn f! Partia shipment or transshipment effected in contrar% to *LC terms!

-------------------------------------------------------------------------------------------------------- 9= | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

Bill of e#change In(oice Packing list Bill of lading, Others, i! Non-negotia# e documents not forwarded as per *LC terms! ii! (nadequate num#er of in'oice. pac$ing ist. )L* etc! su#mitted! iii! 0hort shipment certificate not su#mitted i'! Certificate of origin differs with *LC terms! '! 0hipping Compan% Certificate regarding ownership of 'esse not issued 'i! *CA +orm. (RC. H0 Code and E"port *LC num#er are not mentioned in a documents as per *LC terms! Reali9ation formalities of e#$ort $roceeds of &ills Bith discre$ancies 6iscrepant e"port documents ma% #e sent to the *LC opening #an$ on co ection #asis for rea i3ation of e"port proceeds thereof 6iscrepant e"port documents ma% #e sett ed upon negotiation of he se er and #u%er 6iscrepant e"port documents ma% #e sett ed on discount upon negotiation #etween the e"porter and importer with prior permission of )ang adesh )an$ earching of $ros$ecti(e neB &u!ers at the im$orters countr! a&road for selling out the consignment if the issuing #an$ refuse to accept discrepancies and so refused #% the importer! At ast if other wise an% dispute arise such cases of dispute s sha ha'e to #e sett ed upon appointing a so icitor in terms of -CP-CBB!

-...- 2 Com$arati(e anal!sis of =#$ort Business of IBBL


(f we ana %3e the scenario of /BBA in which the e"port #usiness was conducted. we find the fo owings1

tead! FroBth,
-------------------------------------------------------------------------------------------------------- 9C | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

E"port #usiness achie'ed 1B1J of the target and maintained a stead% growth a o'er the %ear i!e! more than 91J up to 6ecem#er /BBA as against target growth of 9BJ!
Com$arison of =#$ort, at the end of each month cumulati(e of %005 3 %007
,i ion T$! 1BBBBB ABBBB CBBBB 9BBBB /BBBB BE B BA BEBA BA BE BA BE BA BE BA BE BA BE BA BE BA BE BA BE BA BE BA BE

4an /BBE /BBA <rowth in amount <rowth in J 9=/C EE7B 7/B9 E1J

up to +e# 1B19@ 19@/9 9EE= 9EJ

up to ,ar 1=AB7 /77E/ E=C@ 9AJ

up to Apr /BCC= 71/@7 1BC/A =1J

up to ,a% /=E1E 7A77@ 1/C// 9@J

up to 4un 71B71 9C=C1 1==7B =BJ

up to 4u 7C=71 ===A/ 1@B=1 =/J

up to Aug 9/B1E C7E/1 /1EB9 =/J

up to 0ep 9E717 E/9EE /=1C9 =7J

up to Oct =/A/A EA=/9 /=C@C 9@J

up to No' =@EB1 AC.9@9 /CE@7 9=J

up to 6ec CCC@B @7.@/B /E/7B 91J

Ta&le , =#$ort:1

-------------------------------------------------------------------------------------------------------- 9E | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

-.4.1 "OR=IFN R=*ITT2NC= +oreign Remittance. main % 5age Earners8 Remittance #% )ang adeshi E"patriates p a%s a 'ita ro e on o'era econom% of the countr% particu ar % on the +oreign E"change Reser'e position! +oreign remittance a so has its impact on the )a ance of Trade and )a ance of Pa%ment of the countr%! ,one% coming in and going out in #etween countries ma% #e regarded as Remittance! +oreign Remittance1 Remittances coming in and going out in #etween foreign countries are ca ed +oreign Remittance88! (n other words GRemittance8 means sendingL transferring of fund through a )an$ from one p ace to another. which ma% #e within the countr% or #etween two countries!

T!$es:of Remittance, aI (nward Remittance #I Outward Remittance )oth ma% #e 'isi# e or in'isi# e -.4.% InBard Remittance ,one% or remittance coming in is ca ed (nward Remittance :arious purposes of remittance aI +ami % maintenance #I (ndenting commission cI 6onation dI <ift eI +oreign (n'estment fI E"port proceeds. etc! *ode of Remittance -------------------------------------------------------------------------------------------------------- 9A | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

i! T!T! S ii! 6!6 S iii! ,!T! S i'! T!C! S :! P!O! S 'i! Cheques! 'ii! Notes and Coins!

Te egraphic Transfer 6emand 6raft ,ai Transfer Tra'e ers8 Cheque Pa%ment Order!

-.4.) *aintenance of InBard remittance registers @"BCD"CD+DTT; On receipt of the remittance or an% instrument. entr% to #e made in (nward remittance register mentioning seria no. date. name of #eneficiar%. issuing )an$. Name of 6rawee. Amount etc! Procedure for pa%ment of (nward remittance To ma$e pa%ment. the fo owing points are to #e o#ser'ed1 "or Demand Draft, 6!6! must #e origina ! Name of )an$. Name of #ranch. date. Name and ALc num#er of the pa%eeL #eneficiar%. amount in word and figure must #e mentioned! The 6!6! must #e as per prescri#ed format or specimen cop% supp ied ear ier Hif an%I #% the correspondent! The amount is perforated! Pa%ment is not stopped! 6raft is not reported ost :erification of drawers signature Confirmation HTe e"I from the issuing )an$. if the amount e"ceeds imit as per agreement made ear ier (ndemnit% )ond to #e ta$en for +C6P! Telegra$hic Transfer, The ,essage must #e in origina ! (t must #e authenticated under test or 05(+T message with ,AC trai er! Credit confirmation to #e ta$en from ()5. HO! -------------------------------------------------------------------------------------------------------- 9@ | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL the

T!T! must contain the name of #an$. Name of #ranch. Name and ALc num#er of the #eneficiar%! (f the a#o'e point are in order pa%ment ma% #e made to the #eneficiar% as soon as possi# e! (n case of E"press Remittance 0cheme with A Ra&hi )an$ing and (n'estment Corporation. ;!0!A!. *oca Office is to ensure the pa%ment within the fo owing time frame as per Head Office. (6 Circu ar No!C dated //!=!@=! i! Capita Area D /9 hours iii! Other town DE/ hours -.4.- OutBard Remittance ,one% or Remittance going out is ca ed outward remittance! Outward remittance ma% #e made #% TT. 66. ,T. and TC etc! pa%ment of import #i s are a so treated as outward remittance Purpose of outward remittance Tra'e LTourL:isit! Education! 0eminarL5or$shop! +ees +ami % maintenance! Remittance #% +oreign shipping ines. Air ines. Courier ser'ices! 6i'idendLgain of foreign compan%! Ha&&! 0a aries and sa'ings #% e"patriates! (mport Pa%ments! E"penses of Offices opened a#road! Remittance of Ro%a t% and technica fees! Operating e"penses of )ang adesh shipping Corp! 2 )ang adesh )iman! Remittances against e"port c aims! 0u#scription to foreign media ser'ices! Ad'ertisement! )an$ charges! Etc ii! ,a&or cities D9A hours i'! Remote Areas-1/B hours

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Travel
a; "or +ri(ate Tra(el,

Pri'ate Tra'e quota entit ement of )ang adesh is nationa s Tota -06!7BBB per Ca endar %ear for 'isit to countries other than 0AARC Hi!e! (ndia. Pa$istan. 0ri-*an$a. Nepa . )hutan. ,a di'es and ,%anmarI!Ruota for 0AARC countries and ,%anmar is -06!1BBB per ca endar %ear for Tra'e #% Air and -06! =BB for tra'e #% and! At a time )an$ can issue fu amount of a#o'e quota if required! Cash do ar ma% #e issued ma"imum -06! CBB per passport per tra'e ! HThis quota ma% #e changed #% )ang adesh )an$I The amounts of tra'e quota mentioned a#o'e are prescri#ed for adu ts on %! The minors Hi!e! #e ow 1/ %earsI are e igi# e for =BJ of the annua cei ings of adu ts! )onafied requirements #e%ond these imits ma% a so #e a owed with the permission of )ang adesh )an$! #I Business Tra(el, @"or Im$orters 3 *anufacturers;1 0u#&ect to an annua upper imit of -06! =BBB. (mporters are entit ed to #usiness tra'e quotas T 1J of their imports sett ed during the pre'ious financia %ear! 0u#&ect to an annua upper imit of -06! =BBB. non e"porting producers are entit ed to #usiness tra'e quotas T1J of their turno'er of the proceeding financia %ear as dec ared in their ta" returns! c; "or =#$orters, d; New E"porter1 New e"porters are entit ed to a quota for -06! CBBB against recommendation etter from EP) annua %! O d e"porterKs can use +CA6 EOP retention quota ALc as per their requirement!

"or foreign nationals, The A6s ma% issue foreign currenc% TCs to foreigners without an% imit and foreign currenc% notes up to -06 7BB or equi'a ent per person against surrendered of equi'a ent amounts in +oreign Currencies!

=ducation,

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+oreign E"change ma% #e remitted for studies a#road #% )ang adesh Nationa s in a regu ar courses H0u#&ect to #eing consistent with the Education po ic% of the )an$ <o't!I in recogni3ed institutions! Authori3ed dea er #ranches ha'e to open fi e for indi'idua student!

Kuota for medical Treatment, +oreign currenc% up to -0U1BBBBL- or equi'a ent ma% #e re eased #% the A6 on the #asis of the recommendation of the medica )oard set up #% the Hea th 6irectorate and the cost estimate of the foreign medica institution! App ication for re ease of e"change e"ceeding -0U!1B.BBBL- shou d #e forwarded a ong with supporting documents to )ang adesh )an$ for Prior appro'a !

Releasing foreign e#change as "ees, The A6s ma% re ease foreign e"change towards remittance of mem#ership fees of foreign professiona and scientific institutions and fees for app ication. registration. admission. e"amination HTOE+*. 0AT etc!I in connection with admission into foreign educationa institutions on the #asis of written app ication supported #% demand notice L etter from the concerned foreign institution showing the amount to #e remitted!

"amil! maintenance Kuota, Outward remittance ma% #e made #% )ang adesh Nationa s-to fami % mem#ers L dependent parents. spouses and chi dren i'ing a#road with the permission from )ang adesh )an$! A certificate issued #% re e'ant )ang adesh em#ass% regarding the #eneficiar%. e"tent of (ncome a#road a ong with the em#assies recommendation as required for this purposes!

+oreign nationa s who are resident in )ang adesh and who ha'e income in )ang adesh are permitted to ma$e month % remittances to the countr% of their domici e out of their current sa'ings up to =BJ of their income to co'er their commitments a#road!

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"oreign shi$$ing lines D 2ir linesDCourier ser(ices Com$an!1 These companies ma% remit their income after ad&ustment of the amount spent for oca dis#ursement and ta" pa%a# e! 6etai s as per <uide ines for +oreign E"change Transactions!

Di(idendD gain of "oreign com$anies D hare holders1 6i'idend L profits L gains ma% #e remitted a#road to the owner L share ho ders without prior appro'a of )ang adesh )an$! 6etai s as per <uide ines for +oreign E"change Transactions!

Ea'', The <o'ernment of )ang adesh announces each %ear the sca eL imit at which foreign e"change ma% #e issued to intending pi grims for performing Ha&&! Re ease of foreign e"change for this purpose shou d #e made as per instructions to #e issued for this purpose #% )ang adesh )an$ each %ear!

Remittance of salaries and sa(ings &! the e#$atriates1 E"patriates wor$ing in )ang adesh with the appro'a of the <o'ernment ma% remit through an Authori3ed 6ea er HA6I =BJ of sa ar% and 1BBJ of ea'e sa ar% as actua sa'ings and admissi# e pension #enefits! No prior )ang adesh )an$ appro'a is necessar% for such remittances!

=#$enses of Offices o$ened a&road Remittance of up to -0U! 7B.BBBL- or equi'a ent ma% #e made annua % to meet current e"penses of such offices opened a#road #% a Commercia or industria concern! 0uch remittance ma% on % #e made in the names of concerned offices L 0u#sidiar% companies a#road!

Remittance of ro!alt! and technical fees1

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No prior permission of the )ang adesh )an$ or )O( is required #% the enterprises for entering into agreement in'o 'ing remittance of ro%a t%. the technica $now how or technica assistance fees! Operationa ser'ices fees. mar$eting commission etc! if the tota fees and other e"penses connected with techno og% transfer do not e"ceed the fo owing imits1 +or new pro&ects. not e"ceeding CJ of the cost of (mported ,achineries! +or ongoing concerns not e"ceeding CJ of the pre'ious %ears sa es as dec ared in the income ta" return Operating e"penses of )ang adesh shipping corporation and )ang adesh )iman are a owed to ma$e remittances to meet #onafide dis#ursements in foreign ports L foreign stations without appro'a of )ang adesh )an$! 6etai s as per <uide ines for +oreign E"change Transactions! Remittance against e#$ort claims1 The A6s ma% remit e"port c aims not e"ceeding 1BJ of the repatriated e"port proceeds on the fo owing accounts1 0hort weight c aimM Rua it% C aimM Part 0hipment! 6etai s as per <uide ines for +oreign E"change Transactions

u&scri$tion to foreign media ser(ices, On app ications from the oca newspapers! A6s ma% remit foreign e"change towards cost of su#scription of news items features artic es of foreign news agencies! Remittance shou d #e made on the #asis of HiI contracts entered into #etween the app icant and the foreign news agenc% and HiiI NOC of the ,inistr% of information! A6s ma% remit a#road costs L fees on account of their own su#scription of foreign media ser'ices such as Router monitor ser'ice without prior )ang adesh )an$8s appro'a !

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A6s ma% without prior )ang adesh )an$ appro'a effect remittance towards cost of ad'ertisement of )ang adeshi products in mass media a#road! Remittance app ications from the companies L firms in )ang adesh shou d #e supported #% the in'oice from the foreign mass media concerned. and the app icant wi ha'e to su#mit cop% of the preser'e the in'oiceM

ad'ertisement within one month of its issuance! The A6 sha

app ication and ad'ertisement cop% for post facto chec$ing #% inspection officia s of )ang adesh )an$!

Bank Charges and undries The A6s ma% affect remittances towards sett ement of dues to foreign #an$s of #an$ charges! Cost of ca# es 2 others incidenta charges arising in their norma course of the #usiness without prior )ang adesh )an$ appro'a ! A such remittances shou d #e reported to the )ang adesh )an$ on +orms T, a ong with appropriate return! Taking out D &ringing in of Bangladesh T2I2 (ncoming L outgoing passengers ma% #ring in L ta$e out up to Ta$a =BB per person in )ang adesh currenc%! (n a a#o'e cases for outward remittance T!,! form to #e o#tained and to #e reported to )ang adesh )an$ on month % #asis!

N.B. The quotas L cei ing for our ward remittances are su#&ect to changeLre'ision for which atest circu ars amendments must #e fo owed! haring of "TT8 "DD and $ot Cash in our foreign remittance &usiness, 0pot cash product has re'ea ed re'o utionar% potentia s in foreign remittance #usiness! 0o. huge num#er of remittance shifted from 6emand 6raft arrangement to E ectronic +und Transfer HE+TI arrangement! Out of E+T. 0pot Cash faci it% ga'e a new dimensions to remittance ser'ices! Peop e can recei'e mone% without ha'ing an% account in the #ranch! ,ore o'er possi#i it% of fraudu ent pa%ment of 6emand 6raft has #een minimi3ed owing to introduction of spot cash! Thus the #ranches ha'e #een #eing gradua % re ie'ed of the ris$ of fraudu ent pa%ment of +66 as it reduced! )ut iquidit% position of the #ranch requires to #e increased to render #etter spot cash ser'ices! -------------------------------------------------------------------------------------------------------- == | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

-.4.. 2 Com$arati(e 2nal!sis of "oreign Remittances of IBBL


Ana %3ing the scenario of /BBA in which the remittance #usiness was conducted. we find the fo owings1

Food groBth,
Remittance increased in /BBA on an a'erage more than ABJ upo 0eptem#er compared to corresponding period /BBE! The figures ma% #e seen from Ta# e1 Remittance! Reason for increasing remittance is e"pansion of networ$ #% esta# ishment of remittance arrangement with < o#a 5e#-#ased Remittance (nstitutions. )an$s and E"change Houses in -!0!A. ,a a%sia. 0ingapore. ;!0!A. Oman. )ahrain. -AE. ;uwait etc and 6e'e opment of 0er'ice. 6e'e opment of Automation inc uding on ine faci it%!
,i ion T$!

Com$arison of Remittance, at the end of each month cumulati(e of %005 3 %007


1=BBBB 1BBBBB =BBBB B BA BE BA BE BA BE BE BA BE BE BA BE BA BE BA BA BE BE BA

BA

BE BA

BE

BA

4an /BBE /BBA <rowth in amount <rowth in J =1/B 1B97E =71E 1B9J

up to +e# 1BC@1 /B1=9 @9C7 A@J

up to ,ar 1CC7E 7//1= 1==EA @9J

up to Apr /717@ 97=/B /B7A1 AAJ

up to ,a% /@E/B =9//E /9=BE A/J

up to 4un 7C=1/ CC777 /@A/1 A/J

up to 4u 97E97 E@/B9 7=9C1 A1J

up to Aug =B7=B @1=C= 91/1= A/J

up to 0ep =A7B= 9C9@9 ABJ

up to Oct CCBE@ 9@=7B E=J

up to No' E9A9= =7ABE E/J

up to 6ec A9197 =C/EE CEJ

1B9E@@ 11=CB@ 1/AC=/ 19B9/B

Ta&le, Remittance

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CHAPTER- +(:E
CONCLU ION 2ND R=CO**=NDATIONS

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Islami Bank Bangladesh Limited


..1 Recommendation, To ensure #etter customer ser'ices coping with the growth of o'era #usiness of the )ranch additiona space ma% $ind % #e a ocated immediate % for the #ranch! )usiness 6iscretionar% power ma% #e re'ised! E"penditure cei ing ma% #e re'ised considering the grade of the )ranch! E'ening #an$ing a owance ma% #e increased! Automation of +oreign E"change portfo io! Re'ision of +oreign E"change re ated charges! Arrangement of month % Lquarter % training courses Lwor$shops for the c ients se ected #% the )ranches in order to promote (n'estment c ients of the desired e'e ! -------------------------------------------------------------------------------------------------------- =A | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

Effecti'e human resources shou d #e p aced at e'er% department of ())* for more speed% and smooth #an$ing operation! 5omen emp o%ee shou d #e increase more in order to dea women entrepreneurs for create demand for in'estment! The )an$ shou d dis#urse tota in'ested mone% at once to the c ients to achie'e fu #enefits of in'ested mone%! To create s%ndicate #an$ing s%stem for foreign e"change #usiness 6ecision ma$ing process shou d #e free of am#iguit% and #e time conscious Ensure reasona# e spread and return on assets! )ui d good 'a ue for sponsors and shareho ders! +ormu ation of Recruitment L remuneration po ic% shou d #e outstanding! 'er% successfu and competiti'e in their customer ser'ice. #an$ing operation. management process. record $eeping and o'era acti'ities of #an$ing! The )an$ shou d go aggressi'e ad'ertising and promotiona acti'ities to get a #road geographic co'erage! To fu fi the 'ision of Pmass #an$ingP this )an$ shou d grants in'estment

E'entua %. it shou d #e mentioned that ())* is sti

portfo io to new entrepreneurs Lnew #usinessmen new companies etc! To remo'e image pro# em. ())* shou d ta$e 'arious ad'ertisement programs! *iterature on (s amic capita mar$et ma% #e preser'ed at ()TRA i#rar%! (nc usion of more su#&ects #ased on the Ruran and 0unnah in the Training courses of the (s ami )an$ Training 2 Research Academ% in order to de'e op human resources ha'ing mora %! ())* shou d initiates different in'estment modes according to changing Ldi'erse needs of c ients #% conducting huge Research and stud%! ())* shou d introduce update techno og% to render competiti'e #an$ing ser'ice. aunching AT,. 05(+T and on ine #an$ing s%stem in a of its #ranches!

..% Conclusion ())* is tr%ing to de'e op #an$ing sector through we fare and ser'icing to the peop e! (s ami econom% and #an$ing are #ound together! ())* has emerged facing the man% o#stac es %et! This #an$ is tr%ing to operate their acti'ities according to (s am!

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,ost of the peop e in our countr% ha'e a #ad impression a#out ())*8s operations regarding indirect generation of interest. which means no difference #etween in'estments of ())* oanLcreditLad'ance of con'entiona #an$s for this reason! The% are not much interested to in'estment with ())* #ecause ma&orit% of our peop e ha'e no proper $now edge a#out the acti'ities of (s ami #an$ing as we as its in'estment mechanisms! ())* through its stead% progress and continuous success has. #% how. earned the reputation of #eing one of the eading pri'ate sector #an$s of the countr%! The #an$ has shown stead% progress in this important sector! ())*8s capita adequac%. deposits. reser'es. earning per share. e"port. import and remittances are increasing da% #% da%! 0o. no dou#t ())* is a growing profita# e financia institution! (nterest free #an$ing s%stem is no more a concept! (t is now a Rea it%. a d%namic s%stem. em#od%ing a set of superior #an$ing mechanism! ,ore than 7BB (s amic #an$ and financia institutions are operating in different Countries throughout the wor d with a mar$ed success from this inception in our countr% in 1@A7! ())* has #een operating with rea and confidence in corporation with other con'entiona #an$s! )ringing a new concept in such #usiness sector. which is growing too rapid % in the wor d. is ra % #o d step! As a arge (s amic commercia #an$. (s amic #an$ too$ 'arious steps to create emp o%ment and socio-economic de'e opment for the poor through (s amic shariah as we as to create an o'era c imate for the introduction of arge sca e (s amic #an$ing en'ironment in )ang adesh! The significant growing of ())* has encouraged the traditiona #an$s to open (s amic #an$ing window. i$e DH0)C. 6ha$a )an$ *td!. Prime )an$ *td!. The cit% )an$ *td! Though ())* has reached the top position among the PC)s in our countr%. it has to more concentrate its customers8 ser'ice to sur'i'e in the ong run #% facing the competitors8 strong strategies in #an$ing era! (n m% stud% ( ha'e found that ())* has reached this position #% its commitment. peop e8s o'e and dedicated human resources! (s ami )an$ has #een shown its superiorit% in a $inds of #an$ing operations in our countr%! The competent management of ())* shou d come forward to ta$e pragmatic strategic decision i$e Deas% procurement. one stop ser'ice. and time sa'ings customers8 ser'ice with sufficient ogistics supports for the future #etterment of the )an$!

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To conc ude we must sa% that. (s ami #an$ )ang adesh *imited H())*I has immense potentia in )ang adesh! (t can p a% 'ita ro e in #ringing re'o utionar% changes in our ife with #oth materia and mora wor d and in indi'idua and co ecti'e e'e !

BIBLIOFR2+EL

Books, ;han 4#!,d!Omar +aru$ H/BB7I >Foreign Exchange Mechanism-Import?. 6th =dition. pu# ished #% ,inistr% of Commerce! ;han 4#!,d!Omar +aru$ H/BB7I >Foreign Exchange Mechanism-Export?. 6th =dition. pu# ished #% ,inistr% of Commerce! Hasan , ;a#ir H/BB7I >Te"t Book on Islamic Banking?. (s ami Economics Research )ureau. 6ha$a! -------------------------------------------------------------------------------------------------------- C1 | Page AN OVERVIEW ON FOREIGN EXCHANGE OPERATION OF IBBL

;hondo$er ,d! A#du ,a3id >An overview on Foreign Exchange Operations of IBBL ?. (s ami Economics Research )ureau. 6ha$a! Internet, http1LLwww! (s ami )an$ )ang adesh *td!com!#d.accessed on 1ELB1L/B1B to /CLB9L/B1B HTime1 5hene'er data are neededI! http1LLwww! (s ami )an$ )ang adesh *td!#d. 'ision 2 mission !asp !accessed 1ELB1L/B1B to /CLB9L/B1B HTime1 5hene'er data are neededI! http1LLwww!+oregin e"change operation!#d!Com on 1ELB1L/B1B to /CLB9L/B1B HTime1 5hene'er data are neededI http1LLwww!()TR!#d!com on 1ELB1L/B1B to /CLB9L/B1BHTime1 5hene'er data are neededI! http1LLwww!(s ami )an$ )ang adesh *td#an$!pic!com on 1ELB1L/B1B to /CLB9L/B1B HTime1 5hene'er data are neededI! 2nnual Re$ortsD+ros$ectus, >Annua Report /BBA. (s ami )an$ )ang adesh *td? pu# ished #% (s ami )an$ )ang adesh imited. /BBA! >Annua Report /BBE. (s ami )an$ )ang adesh *td? pu# ished #% (s ami )an$ )ang adesh imited. /BBE! >(s ami )an$ /= %ears of Progress? pu# ished #% (s ami )an$ )ang adesh imited Prospectus of (s ami )an$ )ang adesh imited! Printing 2 )rochures of (s ami )an$ )ang adesh imited!

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