CHAPTER-01

INTRODUCTION
1.1 ORIGIN OF THE REPORT

As a mandatory part of the MBA program, all the students of the faculty of Business Studies, Dhaka
University have to undergo a three month long internship program with an objective of gaining
practical knowledge about current business world. After this internship program, every studenthave
to submit an internship report mentioning their activities during the internship program.

I have started my internship at the National Bank Limited, Human Resource Department, Head
nd
Office, Dhaka, on 2 February 2014. At the end of the program I am submitting my internship
report focusing on the contribution of Export and import to the overall economy of our country
Bangladesh under the supervision of Prof. Shibli, Dean, Faculty of Business Studies,University of
Dhaka.

1.2 OBJECTIVE OF THE STUDY

The general objective of the study is to gather practical knowledge regarding banking system and
operation. The practical orientation gives as a chance to relate the two years long theoretical
learning of MBA Program with the practical experience. This consists the following:

To get an overall idea about the Foreign Exchange Business

To apply theoretical knowledge in the practical field.
To describe the organizational structure, management, background, function and objectives
of the bank and its contribution to the national economy.
To achieve overall understanding of NBL.
To analyze the financing systems of the bank to find out any contributing field.
To examine the export and import of the bank.
To acquire knowledge about the contribution of export and import to the country.

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 To evaluate the effect of foreign exchange income of NBL.
To understand the real management situation and try to recommend for improving existing
problems.

1.3 SCOPE OF THE STUDY

This study provides those scopes of knowing are the following:

History and performance of National Bank Limited (NBL).

Terms used in foreign exchange operation mainly export and import.
Foreign Exchange Operations of NBL.
Literature review.
Total concept of Foreign Exchange Operation mainly focusing on export and import.

1.4 METHODOLOGY OF THE STUDY

The report is prepared on the basic of Foreign Exchange mainly the export and import portion of
NBL. To conduct the overall study, at first I explored the sources of primary and secondary
information and data. Different files of the department and statement prepared by FED helped me to
prepare this report. I have interviewed the NBL officials for getting more information. To present
numerical data, I used the annual report of 2010/2011/2012 of National Bank Limited, Foreign
Exchange Branches. For preparing this report I have used some representation to find out different
types of analytical and interpretation.

1.5 SOURCES OF DATA

As mentioned earlier, mainly primary and secondary data has been used. Often the officials gave
some important information regarding the services of the Bank:

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1.5.1 PRIMARY DATA
Official records of NBL
Face to face conversation with the department Head
Personal Interview – Face-to-fate conversation and in depth interview with the respective
officers of the branch.
Personal observation – Observing the procedure of banking activities followed by each
department.
Daily diary.
Practical work exposures on different areas of the branch.

1.5.2 SECONDARY DATA

Monthly statement of NBL.

Annual report of NBL
Official files.
Selected books.
Other manual information.
Websites

1.6 LIMITATIONS OF THE STUDY

To provide current information and to make the report read-worthy, support from various sources is
essential. In spite of having my wholehearted effort, I could not collect some information required
at the time of the study. So this study is not free from the following limitation:

Due to unavailability of latest annual report (Annual report of 2010/2011/2012), I have to

prepare the report on the basis of annual report 2012. As a result, analysis, presentation of
data may not show the existing position or the present condition of National Bank Ltd.
For the whole internship I had only 12 weeks which were totally insufficient.
Foreign exchange division follows Uniform Customer and Practice for Documentary
Credits (UCPDC), but within this short period I was totally stunned to understand.

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Learning all the banking function within 12 weeks was really difficult.
Sometime the officers of National Bank Limited were very busy. For that reason the
personnel did not co-operate with me.
National Bank Limited did not give me any kind of monetary support for this internship
program.

Another limitation of this report is Bank’s policy of not disclosing some data and
information for obvious reason, which could be very much helpful.

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 CHAPTER-02
Overview of National Bank Limited
2.1 HISTORY AND HERITAGE

National Bank Limited has its prosperous past, glorious present, prospective future and under
processing projects and activities. Established as the first private sector bank fully owned by
Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with the
passage of time after facing many stress and strain. The members of the board of directors are
creative businessmen and leading industrialists of the country. To keep pace with time and in
harmony with national and international economic activities and for rendering all modern services,
NBL, as a financial institution, automated all its branches with computer networks in accordance
with the competitive commercial demand of time. Moreover, considering its forth-coming future,
the infrastructure of the Bank has been rearranging. The expectation of all class businessmen,
entrepreneurs and general public is much more to NBL. At present we have 154 branches under our
branch network. In addition, our effective and diversified approach to seize the market opportunities
is going on as continuous process to accommodate new customers by developing and expanding
rural, SME financing and offshore banking facilities.

The emergence of National Bank Limited in the private sector was an important event in the
Banking arena of Bangladesh. When the nation was in the grip of severe recession, the government
took the farsighted decision to allow the private sector to revive the economy of the country.
Several dynamic entrepreneurs came forward for establishing a bank with a motto to revitalize the
economy of the country.

National Bank Limited was born as the first hundred percent Bangladeshi owned Bank in the
private sector. From the very inception, it was the firm determination of National Bank Limited to
play a vital role in the national economy. We are determined to bring back the long forgotten taste of
banking services and flavors. We want to serve each one promptly and with a sense of dedication
and dignity. National Bank, has now acquired strength and expertise to support the banking needs of
the foreign investors. NBL stepped into a new arena of business and opened its Off Shore Banking
Unit at Mohakhali to serve the wage earners and the foreign investors better than before.

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2.2NBL AT A GLANCE
National Bank is the dynamic first generation bank established in 1983 focusing on technology and
service. The then President of the People's Republic of Bangladesh Justice AhsanuddinChowdhury
inaugurated the bank formally on March 28, 1983 but the first branch at 48, Dilkusha Commercial
Area, Dhaka started commercial operation on March 23, 1983. At present, NBL has been carrying
on business through its 176 branches and 16 SME branches spread all over the country. Since the
very beginning, the bank has exerted much emphasis on overseas operations and handled a sizable
quantum of home bound foreign remittance. It has drawing arrangements with 415 correspondents
in 75 countries of the world, as well as with 37 overseas Exchange Companies located in 13
countries. NBL was the first domestic bank to establish agency arrangements with the world famous
Bank.
NBL was also the first among domestic banks to introduce international Master Card in Bangladesh.
In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in its use
the latest information technology services of SWIFT and REUTERS. NBL has been continuing its
small credit programmers for disbursement of collateral free agricultural loans among the poor
farmers of Barendra area in Rajshahi district for improving their livelihood. National Bank, has now
acquired strength and expertise to support the banking needs of the foreign investors. NBL stepped
into a new arena of business and opened its Off Shore Banking Unit at MohakhaliBranch to serve
the wage earners and the foreign investors better than before.

Since its inception, the bank was aware of complying with Corporate Social Responsibility. In this
direction, we have remained associated with the development of education, healthcare and have
sponsored sporting and cultural activities. During times of natural disasters like floods, cyclones,
landslides, we have extended our hand to mitigate the sufferings of victims. It established the
National Bank Foundation in 1989 to remain involved with social welfare activities. The foundation
runs the NBL Public School & College at Moghbazar where present enrolment is 1140. Besides
awarding scholarship to the meritorious children of the employees, the bank has also extended
financial support for their education. It also provided financial assistance to the Asiatic Society of
Bangladesh at the time of their publication of Banglapedia and observance of 400 years of Dhaka
City.

NBL focused on all key areas covering capital adequacy, maintaining good asset quality, sound
management, satisfactory earning and liquidity. As a consequence, it was possible to a record
growth of 175.51 percent with Tk. 8,809.40 million pretax profits in the year under review over the
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preceding year. The net profit after tax and provision stood at Tk. 6,860.34 million which was Tk.
2,070.47 million in the previous year registering a 231.34 percent rise. The total deposits increased
to Tk. 102,471.83 million being 33.37 percent increase over the preceding year. Loans and advances
stood at Tk.92,003.56 million in the year under report which was Tk. 65,129.289 million
representing 41.26 percent rise over the preceding year. Foreign trade stood at Tk. 144,255.00
million in 2015 compared to Tk. 115,939.00 million, increased by 24.42 percent compared to that of
the previous year. During 2015, the bank handled inward remittance of Tk. 49,145.30 million, 10.73
percent higher than that of the previous year. Return on Equity (ROE) registered a 77.84 percent
rise over the preceding year. The bank has a strong team of highly qualified and experienced
professionals, together with an efficient Board of Directors who play a vital role in formulating and
implementing policies.

2.3MISSION AND VISION

Every men has mission and vision which they reach expected aim. As men or persons manage,
operate or maintain their company or business, also company or business has vision and mission.
By this vision and mission we can easily gain our dream or expected aim step by step.

2.4 NBL MISSION AND VISION

Vision
Ensuring highest standard of clientele services through best application of latest information
technology, making due contribution to the national economy and establishing ourselves firmly at
home and abroad as a front ranking bank of the country are our cherished vision.
Mission
Efforts for expansion of our activities at home and abroad by adding new dimensions to our banking
services are being continued unabated. Alongside, we are also putting highest priority in ensuring
transparency, account ability, improved clientele service as well as to our commitment to serve the
society through which we want to get closer and closer to the people of all strata. Winning an
everlasting seat in the hearts of the people as a caring companion in uplifting the national economic
standard through continuous up gradation and diversification of our clientele services in line with
national and international requirements is the desired goal we want to reach.

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2.5OBJECTIVES OF NBL

 Their objectives are to conduct transparent and high quality business operation
based on market mechanism within the legal and social framework.
 Their greatest concerns are to provide their customers continually efficient,
innovative and high quality products with excellent delivery system.
 Their motto is to generate profit with qualitative business as a sustainable ever-
growing organization and enhance fair returns to the shareholders.
 Be committed to the community as a corporate citizen and contribute towards the
progress of the nation
 Build a strong deposit base.
 Introduce new products & services and upgrade existing products & services at
comparatively low cost in order to assure quick respond to the changing demands in
the market
 Promote the well being of the employees and raise their morale
 Proper combination of loan and deposit
 Strengthen corporate identity and values
 Fulfillment of their responsibility to the government by paying taxes and abiding by
other rules
 Bring the entire system under a very advanced IT platform
 Socialize and present the bank to the community as a corporate partner
 Encouraging and motivating the new entrepreneurs to establish industries and
business in line with development of national economy.
 Enhancing savings tendency of the people by offering attractive and lucrative new
savings scheme.
 Financing the foreign trade of the country both Export and Import.
 Enhancing the mobilization of savings both from urban and rural area.

The prime objective of NBL is to deliver a quality that demonstrates a true reflection of their vision
and mission Excellence in Banking. Improve the quality of lone and services, and diversify the
sources of revenue.

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  Focus on Current, Savings & Short Term Deposit Accounts to reverse the ratio
(30:80) with Fixed Deposit Receipt.
 Take immediate action required to reverse the rise of Cost of Fund.
 Increase fee based income: increase volume & fee of Letter of Credit & Guarantee,
increase export and exchange earnings.
 Reduce operating cost by at least 30%.
 Better customer service and expand their service whole home and abroad.

2.6ORGANIZATIONAL STRATEGY
As the financial services industry is a very competitive industry, the main strategy of NBL is the
organic growth – to build branches and strengthen their distribution network. They will continue to
invest and expand in Bangladesh as fast as local regulations allow.
The principal strategies are:

Strategy

People Attract, retain and reward top performers

Profitable growth Growing sales and increase the revenues

Execution Performing with skill and speed

Credit quality Maintaining credit quality and understand the role

in managing losses.

Customer Centered Always providing exceptional customer service

Ownership The performance and result should be owned

Efficiency Lowering the cost and wise use of resource

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2.7DIVISIONS OF NBL

1. Agriculture Credit Division.

2. Card Division
3. Board Secretariat
4. Credit Risk Management-1.
5. Credit Risk Management -2.
6. Credit Risk Management -3.
7. Credit Risk Management -4.
8. Credit Risk Management -5.
9. Credit Administration Division.
10. Law & Recovery Division.
11. Financial Administration Division.
12. General Banking Division.
13. Human Resources Division.
14. International Division.
15. Information System & Technology Division.
16. Internal Control&Compliance Division.
17. Marketing Division.
18. Merchant Banking Division.
19. Public Relations Department.
20. Anti Money Laundering Department.
21. System & Operations Division

2.8SERVICES OF NBL

We provide the following range of services:-

 Strategic planning and organizational development
 Faculty and departmental operational advice support and services
 Staff development
 Projects and information management

2.9MANAGEMENT HIERARCHY
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2.10FINANCIAL HIGHLIGHTS
Particulars 2015 2014
Paid-up Capital 17177.20 15615.64

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Total Capital Fund 24905.03 19190.79
Capital Surplus/deficit 5223.79 5137.42
Total Assets 281569.21 256537.46
Total Deposits 222112.91 203296.18
Total Loans and Advance 186179.45 172964.72
Total Contingent Liabilities and Commitments 51470.56 63525.84
Credit Deposit Ratio (in %) 83.82% 85.08%
Percentage of Classified Loans against Total Loans and Advances (in %) 6.99% 5.26%
Profit after Tax and Provision 3854.03 2660.29
Amount of Classified Loans during the year 3264.95 3642.57
Provision kept against classified Loans 1166.79 1086.08
Provision Surplus 325.41 268.79
Cost of Fund (in %) 8.80% 10.28%
Interest Earning Assets 140198.97 110401.84
Non-interest Earning Assets 28838.42 24330.47
Return on Investment (ROI) (in %) 12.00% 32.78%
Return on Assets (ROA) (in %) 1.43% 1.08%
Income from Investment 3320.22 6115.41
Earnings Per Share (Tk.) 2.24 1.70
Net Income Per Share (Tk.) 7.07 7.97
Price Earning Ratio (approximate) 9.45 24.03
Net Assets Value per shares (Tk.) 19.54 17.27
Net operating cash flow per share (Tk.) 8.88 7.90

2.11PROFILE OF NBL AT A GLANCE

Corporate Slogan A bank for performance with potential

Date of Incorporation 1983-03-22

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Inauguration of the first Branch March 28, 1983

Head Office 18,Dilkusha Commercial Area, Dhaka, Bangladesh

Official Logo

Chairman ZainulHaqueSikder

Managing Director AFM Shariful Islam

Number of Branches 191

Number of Employees 4266

Authorized Capital 17500

Paid up Capital 17177.20 million

Services provided Deposit Scheme, Credit Facility and Foreign Exchange Services

E-mail ho@nblbd.com

Website www.nblbd.com

2.12SWOT ANALYSIS OF NBL

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Strategic Director and the Challenges of the Bank
Although the immediate outlook for the local operating environment is expected to be turbulent, the
Bank intends to continue its growth momentum through the initiatives and strategic priorities set out
in the Corporate Plan. The Bank is well positioned to mitigate the risks posed by the potential
volatility of microeconomic conditions in the country. The Corporate Plan and the Budget is a
midterm plans, yet to being prepared annually covering a period of five years on a rolling basis.
This year the Bank prepared the plan for the period covering the year 2009-2010. The strategic
direction of the Bank is critically reviewed by the Management as well as by the Board at the time
of preparing and approving the Corporate Plan and the Budget. In keeping with the mission at
statement of the Bank, the strategic direction has been clearly identified and laid down in the
Corporate Plan. It detailed out SWOT analysis of the Corporate Banking, Personal Banking,
Treasury, Information Technology, Human Resources Management and Bangladesh Operations of
the Bank. Besides, it spells out Goals and Objectives of these main segments along with detailed
action plans with specific time frames to achieve them. The Corporate Plan and the Budget
incorporates highly ambitious targets for the planned period. Undoubtedly, the Corporate Plan and
the budget has immensely contributed in guiding the organization to its present level. Further, it has
contributed to building up the target driven culture the organization and leading to record
superlative performance and to maintain the pre-eminent position in the banking industry.

2.13 CORE VALUES

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NBL’s Core Values consists of 6 key elements. These values bind our people together with an
emphasis that our people are essential to everything being done in the Bank.

Continous self
improvement
Quality

Performance Driven

Core values

Team work

Open Communication

Integrety

Integrity
 NBL protects and safeguards all customer information.
 NBL treats everyone in an equitable and consistent manner.
 NBL creates an environment, which earns and maintains customer trust.

Open Communication
 NBL builds customer relationships based on integrity and respect.
 NBL offers a full line of products and excellent service.
 NBL is committed to the prosperity of the customers and shareholders.

Performance Driven
 In NBL, customers and employees and judged in terms of their performance.

Continuous Self Improvement

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  Continuous learning, self-challenge and strive make ways for self-improvement of
workforce at NBL.

Quality
 NBL offers hassle free better service timely.
 NBL builds-up quality assets in portfolio.

Teamwork
 Interaction, open communication and maintain a positive attitude reflect NBL’s
commitment to a supportive environment based on teamwork.

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 CHAPTER-03
FOREIGN EXCHANGE

3.1 MEANING OF FOREIGN EXCHANGE

Foreign Exchange means exchange foreign currency between two countries. If we consider
“Foreign Exchange” as a subject, then it means all kind of transactions related to foreign currency.
In other wards foreign exchange deals with foreign financial transactions.

H.E Evitt defined “Foreign Exchange” as the means and methods by which rights to wealth
expressed in the currency of one country are converted into right to wealth in terms of the currency
of another country.

3.2 REGULATORY REQUIREMENTS OF FOREIGN EXCHANGE

Any import and export of our country is regulated by different local and international laws and
regulatory bodies. The core guidelines under the preview of which import and export of our country
have to be performed are:

Import Policy
Export Policy
Guidelines for foreign exchange transection of Bangladesh Bank (Vol. 1 & 2)
Circular issued by Bangladesh Bank.
Circular issued by NBR.
Circular issued by CCI&E.
UCPDC (ICC publication no. 600) & ISBP, URC, URR.
Public Notice.
Ministry of Commerce
Circular.Other Authorization (i.e.
NBC Dept.)

Among the regulatory bodies, Chief Controller of Import and Export, Bangladesh Bank play major
role in monitoring and ensuring compliance of various regulations.

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3.3 WHY EXCHANGE IS TO BE CONTROLLED

Foreign Exchange is to be controlled for the following reason:

To stabilize the rate of exchange.

To protect domestic Industries.
For proper implementation of plans.
To increases the bargaining strength.
To check over invoicing & under invoicing.
To check the black marketing and smuggling.
For regulating the international movement of goods.

3.4 FUNCTIONS OF FOREIGN EXCHANGE DEPT

Foreign Exchange is mainly combination of three parts:

Foreign Remittance.
Export.
Import.

These three parts are most essential part of Foreign Exchange Operations of NBL at Foreign
Exchange Branch as well as other AD branches. Not only NBL but also all banks of Bangladesh
have to play these roles in Foreign Exchange Operation. I will discuss about these topics in later
chapters.
NBL & its Offshore Unit at a Glance in 2015
Taka in Million
Import Export Remittance
-14.40% -11.20% -3.84%
85,598m 67,889m 56,321m
2014: 99,994m 2014: 76,459m 2014: 58,351m

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 2011 2012 2013 2014 2015
Import 104,570.90 94,137.40 113,492.00 99,994.10 85,598.27
Export 60,893.90 69,062.90 75,912.41 76,459.20 67,888.84

Foreign Trade
The Bank took part in foreign trade business in a prudent manner by balancing the import and
export business to attain a consistent growth. The Bank put forth every possible attempt to expand
its external business by establishing LC, negotiation of export bill, realization of export
proceeds, foreign remittance etc.

Import
The Bank opened a total 25,407 LCs amounting to USD 1,092.90 million for facilitating
import trade in 2015 which was USD 1,286.00 million in 2014. The main commodities
were capital machinery, raw cotton, scrap vessels, rice, wheat, edible oil, petroleum
products, yarn, fabrics, garment accessories and other permissible consumer items.

Export
The Bank has been handling the export business giving due importance since its
inception. In 2015 it handled 25,672 export documents valuing USD 878.35 million
which was USD 988.82 million in 2014. Export finances were extended mainly to readymade
garments, knitwear, frozen food and fish, tanned leather, handicraft, tea, jute goods etc.

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 Year 2011 2012 2013 2014 2014
Remittance 54,469.40 66,513.90 58,224.10 58,351.40 56,321.08

By now, the bank made drawing arrangements with 52 exchange companies located in
17 countries including Kuwait, Qatar, Bahrain, Saudi Arabia, the UAE, Switzerland, the UK,
Italy, Canada, the USA, Greece, Jordan etc, and established fully owned subsidiaries in Singapore,
Malaysia, Maldives, USA, Greece and partially (25% equity) owned Exchange Company in
Oman.
In 2015, foreign remittance brought through the channels of National Bank Limited was
USD 722.07 million, out of which 51.53% is made through NBL’s subsidiaries as detailed
hereunder.

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 CHAPTER-04
DOCUMENTS USED IN FOREIGN EXCHANGE
4.1 LETTER OF CREDIT (L/C)

It is the most important and commonly used in connection with foreign trade. Letter of Credit is an
undertaking by a banker of the importer to the exporter, to the effect that the amount of the L/C will
be duly paid. The banker on behalf of the importer issues the L/C in favor of the exporter
(beneficiary) and forwards the same to the exporter to the effect that the bill drawn by him shall be
duly accepted and paid. It creates confidence in the mind of the exporter so far as payment of the
bill is concerned. It is also facilitate the exporter to get the benefit of the bill before the date if
maturity.

4.2 BILL OF EXCHANGE

A bill of exchange is an instrument in writing, containing an unconditional order, signed by the

maker, directing a certain person to pay on demand or on fixed or determinable future time a certain
sum of money only to or to the order of a certain person or to the bearer of the instrument. From the
definition- we get the features of bill of exchange. In generally there are three parties like- Drawer:
The person who prepares the bill; Drawee: The person who is ordered for the payment in future
specified time; Payee: The person who is the amount of bill receiver as per the order of the drawer
to the drawee.

4.3 BILL OF LADING

A bill of lading is a document that is usually stipulated in a credit when the goods are dispatched by
sea. It is evidence of a contract of carriage, is a receipt for the goods and is a document of title to the
goods. It also constitutes a document that is or may be needed to support insurance claim. The detail
on the bill of lading should include:

A description of the goods in general terms not inconsistent with that in the credit.
Identifying marks and number (if any).
The name of the carrying vessel.
Evidence that the goods have been loaded on
broad.The port of shipment & discharge.

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 The name of shipper, consignee and name & address of notifying party.
The number of original bills of lading issued.
The date of issuance.

A bill of lading specifically stating that goods are loaded for ultimate destination specifically
mentioned in the credit.

4.4 COMMERCIAL INVOICE

A commercial invoice is the accounting document by which the seller charges the goods to the
buyers. A commercial invoice normally including the flowing information:

Date
Name & address of buyer & seller.
Order or contract number, quantity & description of the goods, unit price and the total
price.Weight of the goods, number of packages and shipping market & number.
Terms of delivery &
payment.Shipment details.

4.5 CERTIFICATE OF ORIGIN OF GOODS

A certificate of origin is a signed statement providing evidence of the origin of the goods.

4.6 INSPECTION CERTIFICATE

This is usually issued by an independent inspection company located in the exporting country
certifying or describing the quality, specification or other aspects of the goods, as called for in the
contract and/or the letter of credit. The buyer who also indicates the type of inspection usually
nominates company he/she wish the company to undertake.

4.7 INSURANCE POLICY OR CERTIFICATE

The insurance certificate document must.

Be that specified the credit.
Cover the risks specified in the credit.
Be consistent with the other documents in its identification of the voyage and description of
the goods.

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 Unless otherwise specified in the credit:
Be a document issued/ or signed by an insurance company or its agent or by
underwriters.
Be dated on or before the date of shipment as evidenced by the shipping documents
or establish that cover is effective at the latest from such date of shipment.
Be for an amount at least equal to the GIF value of the goods and in the currency of
the credit.

4.8 PROFORMA INVOICE OR INDENT

Seller’s made quotation or agreement between seller and buyer. In this the seller declared the rate,
quantity, manufacturing & other information about goods and that accepted by buyer.

4.9 G.S.P. CERTIFICATE (GENERALIZED SYSTEM OF PREFERENCE)

When tariff concession is sought from those developed countries providing preferential treatment to
exporters of the developing counties, a GSP certificate should be obtained from the EPB. In GSP
scheme the tariff providing country is payer country & tariff consumer or receiver country. Up to
the period there are 16 developing countries under this scheme facility. From Bangladesh export
development burro the industrialists may get necessary information & practical procedure.

4.10 PACKING LIST

Here the detailed descriptions of goods packed in cases are written. Such as total quantity in lot, per
packet, total weight of the shipment, per packet etc. are written.

4.11 DOCUMENTARY CREDIT

In simple terms a documentary credit is conditional bank undertaking of payment. Expressed more
fully, it is written undertaking by a bank (Issuing Bank) given to the seller (Beneficiary) at the
request and in accordance with the instructions of the buyer (Applicant) to effect payment (i.e. by
making a payment or by accepting or negotiating bills of exchange) up to a stated sum of money,
within a prescribed time limit & against stipulated documents.

These stipulated documents are likely to include those required those required for commercial
invoice, certificate of origin, insurance policy or certificate and bill of lading or combined transport
document.

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There are various types of documentary credits. A revocable credit can be amended or cancelled at
any time without prior warning or notification to the seller.

An irrevocable credit can be amended or cancelled only with the agreement of all parties. As there
are often two banks involved the issuing bank & the advising bank, the buyer can ask or an
irrevocable credit to be confirmed irrevocable credit.

There are four types of documentary credits according to payment methods:

Sight credit.
Acceptance credit.
Cash credit.
Deferred payment credit.

Documentary letter of credit:

The documentary Letter of Credit is an arrangement whereby bank (Issuing Bank) acting at the
request of customer (Applicant of the Letter Credit):

To make payment to or to the order of other person (the beneficiary) or to pay accept or
negotiate Bill of Exchange (Drafts) drawn by the beneficiary.
Authorizes such payment to be made or such drafts to be paid, accepted or negotiated by
another bank against stipulated documents, provided the terms & conditions of the Letter of
Credit are complied with.

Procedure of documentary credit:

Figure 04: Procedure of Documentary Credit

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Details of the Diagram:

The byer & the seller conclude a sales contract providing for payment by documentary
credit.
The buyer instructs his/her bank i.e. issuing bank to issue a credit in favor of the seller i.e.
beneficiary.
The issuing bank asks another bank, usually in the country of the seller, to advice or
confirms the credit.
The advising or confirming bank informs the seller that the credit has been issued.
As early as possible the seller receives the credit & is satisfied that he/she can meet its terms
& conditions, he/she is in a position to load the goods and dispatch them.
The seller then sends the documents evidencing the shipment to the bank where the credit is
available in bank. This may be the issuing bank, or the confirming bank, or any bank named
in the credit as the paying, accepting or negotiation bank, or it may be the advising bank or
any bank willing to negotiate under the credit.
The bank checks the documents against the credit. If the document needs the requirement of
the credit, the bank will pay, accept, or negotiate according to the terms of the credit. In case
of a credit available by negotiation, the issuing bank or the confirming bank will negotiate
without recourse
The bank if other than the issuing bank sends the documents to the issuing bank.
The issuing bank checks the documents and if they meet the credit requirements either.
Effects payment in according with the terms of the credit, either to the seller if he/she has
sent the documents directly to the issuing bank or to the bank that has made funds available
to him in anticipation.
Reimburses in the pre-agreed manner the confirming bank or any bank that has paid,
accepted or negotiated under the credit.
When the document have been checked by the issuing bank and found to meet the credit
requirements, they are released to the buyer upon payment of the amount due, or upon other
terms agreed between him/her and the issuing bank.
The buyers sends the transport document to the carrier who will them proceed to deliver the
good.

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 CHAPTER-05

IMPORT
5.1 MEANING OF IMPORT

A good or service brought into one country from another countryin a fair and acceptable fashion,
typically for use in trade is import. Imported Goods or services introduce domestic consumers to
newer thinks by foreign producers.

Companies usually import goods and services to supply to the domestic market at a cheaper price
and provide goods that are superior compared to goods manufactured in the domestic market.

5.2 WHO IS AN IMPORTER?

The person who deals in import business obtaining import Registration Certificate (IRC) in terms of
importers, exporters and indenters (Registration) order – 1981 from the CCI&E submitting the
following papers is treated as importer.

i. Valid Trade License.

ii. National ID card.
iii. Asset Certificate.
iv. VAT Registration Certificate.
v. Bank Solvency Certificate.
vi. Trade Association Certificate.
vii. Certificate of Incorporation.
viii. Memorandum & Articles of Association.

5.3 TYPES OF IMPORT

There are two types of import-

a. Commercial Import.
b. Industrial Import.

Commercial Import:Importer does commercial import only for trading purpose. These
productsare finished goods. Such as; rice, wheat, soybean oil etc.

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Industrial Import:Importer does industrial import for industrial use only. These products are
rawmaterials and capital machinery. Such as; raw cotton, crude oil etc.

5.4 NAME OF SOME IMPORTERS

Name Name
Everwin Chemicals Ltd Fujita Corporation
M/S Nourish Poultry &Hatchary Ltd Imperial Dye Cam Company Ltd.
Nourish Grand Parents Ltd Saka International
Tokeo Enterprise M/S The IbnSina Trust
SatataShomvar Samin Enterprise
A.J Enterprise M.H. Enterprise
M/S UniqMarbel&Grnite Ltd. Tausif International
K.N Enterprise Tokeo Enterprise
Al Amin Agency M/S A.H Corporation
Table 04: Name of Some Importers (Source: Elephant Road Branch)

5.5NAME OF SOME IMPORTED ITEMS

Name Name
Rice Drugs & Medicine
Wheat Coals
Sugar Cements
Milk Food Scrape vessel
Refined Oil Paper
Crude Oil Raw cotton
Dry Fruits Textile Fabries
Pulses Chemical products
Onions Capital Machinery
Ginger Others Machinery
Motor Vehicles Computer &accessories

Table 05: Name of Some Imported items (Source: Elephant Road Branch)

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5.6LAST 5 YEARS IMPORT BUSINESS OF NBL

Year 2011 2012 2013 2014 2015

Import (TK In Millions) 104570.90 94137.40 113492.00 99994.10 85598.27
Table 06: Years Import Business of NBL (source: NBL Annual Report 2015)

Import
120000

100000

80000 Import
Year
60000

40000

20000

0
1 2 3 4 5

Figure 05: Trend Line for Import

Analysis: Import trade finance of NBL has been decreased to TK. 85598.27 million in the year
2015 compared to TK. 99994.10 million in the year 2014. The main commodities were scrap
vessels, rice, wheat, edible oil, capital machinery, petroleum products, Fabrics and other consumer
items. The Bank opened a total 25,407 LCs amounting to USD 1,092.90 million for
facilitating import trade in 2015 which was USD 1,286.00 million in 2014. The main
commodities were capital machinery, raw cotton, scrap vessels, rice, wheat, edible oil,
petroleum products, yarn, fabrics, garment accessories and other permissible consumer items.

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5.7 GOODS ARE NOT IMPORTABLE

The following types of goods are not importable-

Books, Newspaper, periodicals, documents and other papers, posters photographs, films,
gramophone records, audio and video cassette tapes etc. containing matters likely to
outrange the religious feeling and beliefs of any class of the citizen of Bangladesh.
Unless otherwise specified in this order, old, second-hand and recondition goods, factory
reject add goods of job-lot or stock-lot of secondary or substandard quality.
Maps, chart and geographical globes which indicate the territory of Bangladesh but do not
do so in accordance with the maps published by the department of survey, Government of
the people’s republic of Bangladesh.
Horror comics, obscene and subversive literature including such pamphlets, posters,
newspaper, periodicals, photographs, films, gramophone records audio and video cassette
tapes etc.
Reconditioned office equipment,photocopier, type writer machine, telex, phone, computer
and fax.
Unless or otherwise specified in this order, all kinds of waste.
Goods hearing words or inscriptions of a religious connotation the use or disposal of which
may injure the religious feeling and beliefs of any class of the citizen of Bangladesh.
Goods bearing any obscene picture, writing inscription or visible representation.

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 CHAPTER-06

EXPORT
6.1 MEANING OF EXPORT

Export means lawfully carrying out of anything from one country to another country. It is the process of
selling goods and services to the other countries. That means, Export means flow of goods and services
produced within Bangladesh but purchased by economic agent (individuals, firms & government) of
other countries. Creation of wealth in any country depends on the expansion of production and increasing
participation in international trade. Bangladesh exports a large quantity of goods and services to foreign
households. Readymade textile garments, Jute, Jute-made products, frozen shrimps, tea are the main
goods that Bangladeshi exporters export to foreign countries. Garments sector is the largest sector that
exports the lion share of the country's export. Bangladesh exports most of its readymade garments
products to U.S.A and European Community (EC) countries.

Export L/C operation is just reverse of the import L/C operation. For exporting goods by the local
exporter, bank may act as advising banks and collecting bank (negotiable bank) for the exporter.
Export policies formulated by the Ministry of Commerce.

No person can export anything from Bangladesh, unless he is registered with the CCI & E, under
the Registration order (Importer & Exporter) 1952. To become an Exporter an ERC (Exchange
Registration Certificate) have to be obtained from CCI& E.

6.2 EXPORT PROCEDURE

The import and export trade in our country are regulated by the Import and Export (Control) Act,
1950. Under the export policy of Bangladesh no person can export anything from Bangladesh
unless he gets valid Export registration Certificate (ERC) from Chief Controller of Import & Export
(CCI&E). The ERC is required to renew every year. The ERC number is to incorporate on EXP
forms and other papers connected with exports. So to serve its client’s demand to export goods,
NBL always maintains required formalities that are collectively termed as the Export Procedure.

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 Exporter:Obtaining Export Registration Certificate (ERC) from CCI&E

Exporter: Securing export order from buyer or through agent, receiving L/C from
buyer’sbank through an advising bank in Bangladesh

Bank:Certification of Export form by authorized dealer

Shipment of goods

Preparation of export documents by negotiating bank

Scrutinizing export documents by negotiating bank

Ask exporter to remove

Are the
document in
order?

Negotiate documents

Dispatch documents for collection with Reimbursing Bank

Retire FDBP

Figure 06: Export procedure at a glance

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6.3 NAME OF SOME EXPORTERS

Name
M/S Versatile Apparel Limited

M/S Jakir Composite Miles Limited

M/S Sarah Composite Miles

M/S Nice & Rich Creation
Table 07: Name of Some Exporters (Source: Elephant Road Branch)

6.4 NAME OF SOME EXPORTED ITEMS

Name of commodity
Jute goods
Chemical
Tea
Leather
Fish and shrimp
News print
Fertilizer

Table 08: Name of Some Exported items (Source: Elephant Road Branch)
6.5 LAST 5 YEARS EXPORT BUSINESS OF NBL

Year 2011 2012 2013 2014 2015

Export (TK In millions) 60,893.90 69,062.90 75,912.41 76,459.20 67,888.84
Table 9: 5 Years Export Business of NBL (source: NBL Annual Report 2015)

Export
80000
70000
60000
50000 Year
Export
40000
30000
20000
10000
0
1 2 3 4 5

Figure 07: Trend Line for Export

Analysis: The Bank has been handling the export business giving due importance since
its inception. In 2015 it handled 25,672 export documents valuing USD 878.35 million
which was USD 988.82 million in 2014. Export finances were extended mainly to readymade
garments, knitwear, frozen food and fish, tanned leather, handicraft, tea, jute goods etc.
 CHAPTER-07

FOREIGN REMITTAANCE OF NBL

7.1 MEANING OF REMITTAANCE

The word “Remittance” originates from the word “remit” which means to transmit fund. In banking
terminology, the word remittance means “transfer of fund one place to another”. When money
transferred from one country to another is called “Foreign Remittance”. That means foreign
remittance is the transfer of foreign currency from one country to another country.

7.2 TYPES OF ACCOUNT FOR FOREIGN REMITTANCE

NOSTRO A/C
When a Bank maintains a Foreign Currency account with a foreign Bank abroad the account
is called NOSTRO account. NOSTRO account means “our Account with you”.
Example:

If National Bank Limited maintains a US Dollar account with American Express Bank, New
York, then it is a NOSTRO account of NBL.

VOSTRO A/C
When foreign bank maintains a convertible taka account with a Bangladeshi bank or with its
branch in Bangladesh, the taka account is called VOSTRO account. VOSTRO account
means “your account with us”.

Example:

If American Express Bank and New York maintains taka account with the help of NBL then
that taka account is a VOSTRO account for NBL.

What is the Nostro account for a bank in a particular country is a Vostro account for the bank abroad
maintaining the account thus the account of NBL with Standard Charted Bank, New York, regarded
as its Nostro account held with Standard Charted Bank, New York. While Standard Charted Bank,
New York, regards it as its Vostro account held for NBL.
 LORO A/C
When two Banks maintain two NOSTRO accounts with a same foreign Bank in abroad, then
one Bank’s NOSTRO account is Loro account for another Bank. Loro account means “their
account with you”. Account maintained by third party is known as Loro account

Example:

NBL &Agrani Bank both maintains a NOSTRO account No 1 & 2 respectively with
American Express Bank New York. Then NOSTRO account 1 & 2 are LORO account for
each other.

7.3 PROCESS OF FOREIGN REMITTANCE

Fund transfer from one country to another country goes through a process which is known as
remitting process. National Bank Limited has 175 domestic branches. The bank has “Nostro
Account” with a foreign bank Standard Charted Bank, New York. Bangladeshi expatriates are
sending foreign remittances to their local beneficiary, through that account.

Now, the Bangladeshi expatriates will contact with Standard Charted Bank to remit fund
to Bangladesh.
Then Standard Charted Bank will credit the “NOSTRO A/C” of NBL and send the
message through SWIFT.
Next the local bank’s Head Office international division will receive telex message and
the TFMD will record the advice and generate the advice letter to the respective branch
of the bank.
The branch will first decode the test, verify signature and check the account number and
name of the beneficiary.
After full satisfaction, the branch transfers the amount to the account of the beneficiary
and intimates the beneficiary accordingly.
But sometimes the complexity arises, if the foreign Bank has no “NOSTRO A/C” in
which country where the expatriates want to remit fund. Then the Foreign Bank has to
take help of a third bank who has “NOSTRO A/C” with intended Bank.
 National Bank Standard Chartered
Limited Bank,NY

Beneficiary
Remitter

7.4 BANKS WITH NOSTRO ACCOUNT

In order to meet the customer needs for International Trade, the Bank has developed a wide network
with more than 580 Banks all over the world. Some Banks with NOSTRO A/C are:

Standard Chartered Bank, New York, USA.

Mashreq Bank PSC, New York, USA.
ICICI Bank Limited, Hongkong.
Commerz Bank, AG
Habib Bank, AG Zurich.
Korea Exchange Bank Limited.
Sonali Bank UK(USD).
UBAF, Singapur.
7.5 TYPES OF FOREIGN REMITTANCE

Foreign remittance is two types:

• Inward Foreign Remittance.

• Outward Foreign Remittance.

Foreign
Remittance

Inward Outward
Foreign Foreign
Remittance Remittance

7.6 INWARD FOREIGN REMITTANCE

Inward Foreign Remittance means Remittance received from foreign countries from abroad. To the
bankers or ADs inward remittance means purchase of foreign currency by authorized dealers. In
other words remittance coming into our country from other countries by the remitter by way of
permissible banking channel is called ‘Inward Foreign Remittance’ i.e. beneficiaries point of view it
is inward foreign remittance. On the other hand remitter’s point of view it is called outward Foreign
Remittance.

Ways of Inward Foreign Remittance:

Spot Cash.
FTT
FDD
TC
Spot cash:

Only from Foreign Exchange House Spot Cash can be send to

Bank. No need to have account receiver.
Photocopy of NID or student ID and PIN code are must for receiving money.
Service charge is gained by Bank.

FTT:

From Bank remitter can send fund to beneficiary.

Here account is must for beneficiary. Because fund is credited to beneficiary’s account.
Then beneficiary can withdraw money as his/her necessity.
Here the Foreign Bank credit the NOSTRO account of NBL.
In case of outward remittance it is vice versa.

FDD:

It is instrument.
Here instrument is given to the concern Bank from which it is taken.
Here purpose may be many such as, payment to anybody, for Business issue, may be
travelling etc.
It is collection basis that means Banks normally takes 3 to 4 days for payment.
After giving payment NOSTRO account is debited.
In case of NBL there must have two officers signature in this instrument.
In case of outward remittance it is vice versa.

TC:

It is an instrument.
Here the format of intermediary Bank is used.
Normally American Express Travelers Cheque or Standard chartered TC is used.
That means here standard format is used.
It is on cash basis. That means after taking the TC the fund is readily available.
In case of outward remittance it is vice versa.
7.7 OUTWARD REMITTANCE

Remittance from our country to foreign countries is called outward foreign remittance. On the other
word, sales of foreign currency by the authorized dealer or formal channels may be addressed as
outward remittance. . The remitter has to deposit money along with the application contains name
and address of the payee name of the currency etc. All outward remittances must cover the
transactions approved by the Bangladesh Bank. The authorized dealers must utmost caution to
ensure that foreign currencies remitted or released by them are used only for the purposes for which
they are released. Outward remittance may be made by appropriate method to the country to which
remittance is authorized.

Purposes of Outward Remittance:

1. Travel
2. Medical treatment
3. Educational purpose.
4. Attending seminar etc.

Ways of outward Foreign Remittance:

FDD
FTT
TC
7.8 LAST 5 YEARS FOREIGN REMITTANCE OF NBL

Year 2011 2012 2013 2014 2015

Foreign
Remittance 54,469.40 66,513.90 58,224.10 58,351.40 56,321.08

(TK. In millions)
Table 10: 5 Years foreign remittance of NBL (Source: NBL annual report 2015)

Foreign Remittance
70000
60000
50000
FR
40000 Year

30000
20000
10000
0
1 2 3 4 5

Figure 08: Trend Line for Foreign Remittance

Analysis: Realizing the hurdles that the expatriate Bangladeshis were facing in
sending their hard earned money to their home, NBL, since inception emphasized on the
necessity to take measure to facilitate the wage-earners. With this notion arrangements
have been made with exchange houses in different countries and established subsidiaries
abroad in places with high concentration of Bangladeshi expatriates.
In 1993 the Bank became the agent of Western Union Money Transfer, a global leader in
money transfer services and remained lone agent till 2002. Furthermore, NBL entered into a
deal with ASA, a leading NGO, Social Islamic Bank Ltd. (SIBL) and Eastern Bank Ltd.
(EBL) for making payments of inward remittances on behalf of NBL.
To ease the system for the remitter in abroad and the beneficiary at home, NBL has been
working relentlessly upgrading different products and technology including ‘NBL
Quick Pay’, Online Banking, EFT and other automated devices for uninterrupted
speedy payments of inward foreign remittance ensuring safety. All these are a
breakthrough which encouraged the wage earners and made them con dent to use our
channel.
By now, the bank made drawing arrangements with 52 exchange companies located
in 17 countries including Kuwait, Qatar, Bahrain, Saudi Arabia, the UAE, Switzerland,
the UK, Italy, Canada, the USA, Greece, Jordan etc, and established fully owned subsidiaries
in Singapore, Malaysia, Maldives, USA, Greece and partially (25% equity) owned Exchange
Company in Oman.
In 2015, foreign remittance brought through the channels of National Bank Limited was
USD 722.07 million, out of which 51.53% is made through NBL’s subsidiaries as detailed
hereunder.