A Case Study Of Factors Influencing The Money Market Agrani Bank Limited

CHAPTER ONE INTRODUCTION

Introduction:In today's fast growing world, business is more competitive. Banking is an essential

industry. We often seek different credit lines such as Health line, Education line,

Professionals line, Marriage line, Travel line, festival line, and some other retail loans. It

also provides different types of incoming and outgoing deposits, checking account, ATM

cards etc. Bank also provides financial advice on how and where to invest our savings. It

also helps us in foreign trade. Banking industry is composed of thousand of firms

worldwide.

The role of Business Administration is increasing day by day. Every organization is

concerned about the competency of their executive. To execute the duty and

responsibility in efficient way and to cope with the technological advances in industrial

and commercial development in this fast growing global environment, the ability and

capability of the executive must be enhanced. The purpose of this program is to prepare

students in such a manner so as to enable them to meet any challenging situation and to

work with competence in the competitive business environment. Bank is the core of the

modern economy. Banking industry is moving faster and changing rapidly by offering

new services continuously and consolidating into much large and complex business

adopting new technologies that seem to change faster than most of us can comprehend

and facing a new and changing set of rules to regulate and supervise the banks that serve

their citizen.

Currently there are four state owned commercial banks are operating in Bangladesh.

Agrani Bank Ltd. is one of the most successful nationalized commercial banks among

them.

Profile of Agrani Bank:Agrani Bank Limited, a leading commercial bank with 867 outlets strategically located

in almost all the commercial areas throughout Bangladesh, overseas Exchange Houses

and hundreds of overseas Correspondents, came into being as a Public Limited Company

on May 17, 2007 with a view to take over the business, assets, liabilities, rights and

obligations of the Agrani Bank which emerged as a nationalized commercial bank in

1972 immediately after the emergence of Bangladesh as an independent state. Agrani

Bank Limited started functioning as a going concern basis through a Vendors Agreement

signed between the ministry of finance, Government of the People's Republic of

Bangladesh on behalf of the former Agrani Bank and the Board of Directors of Agrani

Bank Limited on November 15, 2007 with retrospective effect from 01 July, 2007.

Agrani Bank Limited is governed by a Board of Directors consisting of 13(thirteen)

members headed by a chairman. The Bank is headed by the Managing Director & Chief

Executive Officer; Managing Director is assisted by Deputy Managing Directors and

General Managers. The bank has 7 Circle offices, 30 Divisions in head office, 52 zonal

offices and 867 branches including 10 corporate and 40 AD( authorized dealer) branches.

The corporate and AD branches are authorized to deal in Foreign exchange business. The

authorized capital of the Bank is Tk. 800 crore.

1.3 Objectives of the Study:The study has some objectives. They are

The report is aimed at studying and understanding the various products offered by

the Bank's each Department to its clients as well as the several activities carried

out to achieve the departmental objectives.

To know about the influencing of money market in Agrani Bank.

To know about L/C document handling i.e. settlement procedure of L/C

To know about the import L/C opening procedure.

To know about the remit of funds.

The report also studies how AGRANI BANK LIMITED maintaining growth in

overall banking activities.

This internship report also aims to analyze the performance of the branch as well

as AGRANI BANK LIMITED as a whole.

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CHAPTER TWO BACKGROUND OF AGRANI BANK

Methodology:Certain methods and techniques were utilized to collect data for this report. Both primary

and secondary sources were chosen as effective means of collecting data relevant for this

report.

Interview was the basic technique that was employed to collect primary data from people

within the organization. For the procedure of different banking operations, I had observed

the operations and worked with the officers at the same time.

On the other hand, secondary sources were used to collect data regarding the company's

performance. Publications and database within the organization helped me to gather data

not only about the organization. In addition, further more the secondary sources of

information are the different annual report kept in the banks.

Scope of the Study:This is a competitive world no doubt about that. The days to come would be more

competitive. The present study which is assigned for in Agrani Bangla-Bank Limited is

both if theoretical and practical one. It covers different aspects of Foreign Exchange

activities and of a commercial bank's like AGRANI BANK LIMITED, Panthapath

branch. In addition to above areas the study covers the overall banking in AGRANI

BANK LIMITED. Without concept of general banking, other activities i.e. foreign trade

is difficult to understand.

2.1 Agrani Bank at a Glance: Agrani Bank LimitedType: 100% State Owned commercial Bank

Founded: Dhaka, Bangladesh as a nationalized commercial bank (1972)

Headquarters: Dilkusha Commercial Area, Dhaka, Bangladesh

Circle Offices: 7

Division: 30

Zonal Offices: 52

Branches: 867

Corporate Offices: 7

AD Offices: 40Industry: Banking

Products: Deposits, ATM card, Online banking, Advances, Agrani Bank Shilpa

Unnayan Bond.

Slogan : Committed to serve the Nation

Website : www.Agranibank.org.com

Agrani Bank Limited is a scheduled 100% state owned commercial bank. AGRANI

BANK LIMITED emerged as nationalized commercial bank in 1972 immediately after

the emergence of Bangladesh as an independent state. As part of the plan of the

government’s long term financial sector reformation and modernization it has been

incorporated as a public limited company on 17 may, 2007 and acquired all assets,

liabilities, rights and obligations of the former Agrani Bank. This has offered the bank new

opportunity and the possibility for shaping its’ future with greater autonomy and flexibility.

The bank continued to grow steadily in all major areas. Deposits increased by 8 percent

in 2008 and reached at Tk. 146.81 billion from Tk 135.92 billion in 2007. The banks

profit continued to grow. The operating profit rose by 20 percent to Tk 6.33 billion in

2008 from Tk 5.26 billion in 2007, due to which capital shortfall has been reduced in

2007. AGRANI BANK LIMITED commenced formal operation on May17, 1972.

Agrani Bank Limited has over 234 ATM’s installed all over Bangladesh, making it the

largest network by a large margin. Banks that have signed agreements to use Agrani

Bank Limited’s ATM network:

Bank Asia

Islami Bank BD Limited(IBBL)

Social Investment Bank Limited(SIBL)

Dhaka Bank Limited

AB Bank Limited

Prime Bank

United Commercial Bank Limited (UCBL)

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Southeast Bank Limited (SEBL)

Vision of Agrani Bank Limited:To become a leading bank of Bangladesh operating at international level of efficiency,

quality and customer service.

Mission of the bank:We will go operating ethically and fairly within the stringent framework set by our

regulators. We will go fusing ideas and lessons from best practice to explore new avenues

to stay stronger and more efficient and competitive as well. We will apply advance

information and communication technology for the benefit of our customers and

employees. We will invest to strengthen the future of the bank.

Motto of the Bank:To adopt and adapt modern approaches to stand supreme in the banking arena of

Bangladsh.

Credo of the Bank: Believing in integrity, transparency and accountability, along with professional skill that

will provide high standard of service to all customers and stakeholders.

Management:The management of the bank is vested in a 7-member board of directors appointed by the

government. The managing director is the chief executive and he is assisted by deputy

managing director, six general managers and other senior executives. The general

managers are in charge of the bank's branches in seven administrative divisions of the

country namely Dhaka, Chittagong, Rajshahi, Khulna, Sylhet, Barisal and Rangpur. The

bank has 22 departments at its head office, including a training institute at Dhaka. Total

number of employees of the bank was 13269. Agrani Bank had 246 branches, of which

37 were temporarily closed. The bank has now 867 branches of which 7 circle offices, 30

division, 52 zonal offices, 7 corporate offices and 40 authorized dealer offices.

Management Setup: SETUP

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Name DesignationDr. Khondoker Bazlul Hoque Chairman Mr. Ranjit Kumar Chakraborty DirectorMr. Shekhar Dutta DirectorMr. Nagibul Islam Dipu DirectorMr. Md. Ekramul Hakim Company SecretaryMr. Lian Kim Seng Company SecretaryMr. Nik Hisham Nik Company SecretaryMd. Abul Bashar CEO and DirectorMd. Monir Uddin General ManagerMd. Enamul Hoque General ManagerMd.Omar Farooque General ManagerMd. Khalilur Rahman General ManagerMd. Khurshed Hossain General ManagerMd. Sarwar Jahan Deputy General ManagerMrs.Aqiqunnessa Deputy General ManagerMd. Mijanur Rabbi Deputy General ManagerMd. Abdur Rashid Deputy General ManagerA.S.M. Rafique Deputy General Manager

Functions:

In addition to traditional deposit taking in various accounts and providing loans to almost

all sectors of the economy, the bank offers many other services through its schemes of

school banking, inland traveler’s cheques, pension funds, industrial development bond

and inland remittance. The bank operates some income generating and economic

development projects such as the Productive Employment Project, Netrokona Integrated

Agri-product and Water Management Project, IFAD Project for poverty Alleviation

through Employment Creation, Kurigram Poverty Alleviation Project, Crop

Intensification Project, National Micro Irrigation Development Project, Micro

Entrepreneurship Development Project, and Agricultural Diversification and

Intensification Project. The bank participates actively in foreign exchange business

including overseas remittance services. The total volume of foreign exchange business

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handled by the bank in servicing imports and exports and remittances during 2008-2009

amounted to Tk 211750 million compared to only Tk 310 million in 1972-73. At present,

the bank has correspondent relationship with 903 foreign banks/bank offices throughout

the world. The company has subsidiaries in Singapore and Malaysia.

Financial Highlight of Agrani Bank Limited:

Financial highlights of AGRANI BANK LIMITED for last two years are given below:

Highlights on the overall activities of the Bank for the years 2009 and 2008

Serial

No.Particulars

2008 Taka

(In million)

2009 Taka

(In million)

01 Authorized capital 8000 8000

02 Paid up capital 2480 2480

03 Reserve Fund 160 740

04 Retained Profit 700 2770

05 Total Equity 3340 6420

06 Total Deposit 135920 146810

07 Total Loans and advances 118490 113360

08 Interest Suspense and Penal interest 9500 6720

09 Provisions for Loans and Advances 13900 11530

10 Net Loans and Advances 95090 95110

11 Investments 21900 29330

12 Export business 48920 49540

13 Import Business 113430 109520

14 Remittances 42810 52690

15 Guarantee Business 1050 1120

16 Total Income 13680 14980

17 Total Expenditure 8420 8650

19 Fixed Assets 2220 2110

18 Total Assets 186280 187320

17 Net profit after provision, amortization and tax 860 2650

18 Operating Profit 5260 6330

19 Returning on Equity (ROE) 29.55% 41.28%

20 Return on asset (ROA) .92% 1.41%

21 Net interest margin in percent 3.69% 4.24%

22 Earnings per share 34.56% 106.52%

Products of Agrani Bank Limited: Deposits, ATM card, Online banking

Agrani Bank Shilpa Unnayan Bond

Advances: General Credit, SME , Industrial Credit, Rural Credit , Export Finance

Import Finance

Other Banking Product.

ATM Card:Account Holders of Agrani Bank Limited can now avoid the risk of carrying cash by

subscribing to our Automated Teller Machine (ATM) Service. ATM Card Holders can

draw cash from any ATM location and also enjoy other services like paying variety

utility bills like those of BTTB, AKTEL and Grameen Phone through ATM service. The

service is open round the clock in all the days including holidays.

The ATM cardholder can enquire about the balance of his/her ATM Account from any

outlet at any moment. Cash withdrawal of TK. 500, to TK 10,000 can be made from

ATMs. Maximum cash withdrawal limit is TK 10,000 at a time and TK 20,000 in a day.

Maximum 10 transactions can be made in a day.

Agrani Bank Limited's ATM Account Holders can enjoy the services from the following

outlets under a "shared network arrangement" with other Banks.

Online Banking:

AGRANI BANK LIMITED truly On-Line Banking is a fully automated real-time,

anywhere, any way banking service which covers: 24 hours a day and 365 days a year un-

interrupted banking services. AGRANI BANK LIMITED has selected all the necessary

items for truly on-line Banking.

The truly on-line banking will officially be inaugurated on 3rd January, 2005. In this

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unique real-time, any-where, any-way banking program of AGRANI BANK

LIMITED, the valued customers and trusted partners will enjoy a full range of modern

banking services at desired speed, absolute accuracy and competitive Price. AGRANI

BANK LIMITED is fully aware of the confidentiality and security of your personal

and account's information stored into our computer systems. The confidentiality and

security of your data is achieved by establishing four layers of security - at

application, network, database and operating system levels.

Agrani Bank Shilpa Unnayan Bond:Agrani Bank Shilpa Unnayan Bonds of TK 50,000 TK 100,000 & TK 500,000

denominations were introduced in July 1999 with a view to accumulating a fund of Taka

500 crore to finance industrialization. Purchaser of this Bond can separately withdraw the

accumulated interest of six months. The purchaser enjoys a lot of Tax benefits.

Agrani Bank Shilpa Unnayan Bond for 5 years 10%

Agrani Bank Shilpa Unnayan Bond for 7 years 11%

General Credit:Agrani Bank Limited delivers credit facilities to any businessman or trader engaged in

any commercial activity having productive purposes that should contribute to economic

growth of the country. Loan pricing system is customer friendly and prime customers

enjoy rebates in repayment of loans.

Industrial Credit:The Bank extends loans to big entrepreneurs and also to small and medium industrial

ventures to boost up overall investment in the industrial sector of the country. The Bank

offers financing on easy terms to the following "Thrust Sectors":

i. Agro-based industries

ii. Computer Software & IT

iii. Artificial flower

iv. Electronics

v. Frozen food

vi. Export oriented non- traditional agro product

vii. Gift item

viii. Export oriented leather goods

ix. Oil & Gas

x. Jewelry and Diamond cutting & polishing

xi. Textile industry

xii. Silk worm cultivation & silk industry etc.

xiii. Agrani Bank Ltd. provides credits also to the following sectors:

i. Fisheries

ii. Fish Processing

iii. Cold Storage

iv. Ice factory

v. Food & allied

vi. Dairy

vii. Poultry

viii. Rice Mills etc.

Rural Credit:

After the nationalization in 1972 and the Bank's involvement in financing agricultural

sector in 1977, Agrani Bank Limited has been reinforcing efforts of the government to

meet its strategic objective of increasing production, output and employment through

undertaking different agricultural credit programmes / projects. Some of these

programmes / projects are outlined below for understanding the role of Agrani Bank

Limited in increasing agricultural production & poverty alleviations:

Crop loan programme

Crop Diversification Project:

Shrimp Culture Programme ( General):

Semi -intensive shrimp culture programme:

Fisheries Financing Programme

Credit for Irrigation Equipment:

Agricultural Equipment Project:

Credit Scheme for Bananas Cultivation:

Credit to Salt Growers:

Daridra Bimochon Karmasuchi (DABIK)

Productive Employment Project (PEP):

Marginal and Small Farm Systems Crop Intensification Project ( MSFSCIP ) -IFAD Loan no.-194-BD

Swanirvar Credit Programme:

Financing in small scale cottage industries:

Rural Finance Project ( RFP)

Shoshya Gudam Rin Prokalpa :

Small Enterprises Development Project (SEDP, BGD-041):

Self Employment Programme for the Unemployed Youth

Financing NGOs for On-lending to rural poor

Netrakona Integrated Agricultural Production and Water Management Project

Credit for Rural Transport

Agrani Bank Ltd. Foreign Exchange Corporate Branch: BRANCH

Foreign Exchange Corporate is located at DIT Avenue, a commercial area in

Motijheel. All kinds of banking operations are done by Agrani Bank Ltd, Foreign

Exchange Corporate Branch. General banking, foreign Exchange and credit departments

provide high class services to their clients. Agrani Bank Ltd. Foreign Exchange

Corporate Branch is one of the highest profits earning branch of Foreign Exchange

Corporate area.

Performance of Foreign Exchange Corporate Branch:

The financial performance from 2008 to 2009 of the Agrani Bank Ltd. Foreign

Exchange Corporate branch is given in the following charts:

Operating Profit:

Foreign Exchange Corporate Branch earns TK. 5597000 in January, 2008 and TK. 10912000

in January, 2009. All the details are given below:

YEAR PROFIT 08 (TK.) PROFIT 09 (TK.)

January 5597 10912

February 5390 9729March 8540 11472

April 3427 10328

May 9230 11788

June 10020 11925

July 10488 13640

August 9125 10052September 8158 9897October 7228 11085

November 1 8918 11053

December 9193 10935

Figure in Thousand

Amount (Tk)

6% 6%9%

4%

9%

10%10%10%

9%

8%

9%10%

Above information are shown below in chart

Current Deposit:Current Deposit from 2008 to 2009 is given in the following table:

Year CD 2008 CD 2009Jan 92.56 119.76Feb 99.11 115.24

March 96.22 117.78April 106.73 145.77May 117.16 129.45June 110.31 225.11July 77.95 209.58Aug 95.33 215.73Sep 125.22 229.99Oct 92.29 190.29Nov 87.51 151.28Dec 151.15 134.59

Profit 08 Profit 09

Profit 09

Current Deposit

0

50

100

150

200

250

300

350

400

Month

Am

ount

s in

Tk.

Series2Series1

Above information are shown below in chart:

Saving Deposit:

Saving Deposit from 2008 to 2009 are given in the following table:

Year SD 2008 SD 2009Jan 104.27 175.07Feb 108.83 152.02

March 103.48 155.55April 109.5 170.11May 112.1 180.95June 127.25 207.3July 120.97 194.22Aug 118.26 218.62Sep 123.92 209.62Oct 125.65 251.93Nov 136.42 229.11Dec 146.95 247.33

Saving Deposit

0

50

100

150

200

250

300

Month

Am

ount

(Tk)

Series1Series2

Above information are shown below in chart

In the above chart it is observed that Savings deposit increased in 2009 as compared

to 2008.

Short Term Deposit:

Short Term Deposit from 2008 to 2009 are given in the following table:

Year Std 2008 Std 2009Jan 354.89 397Feb 441.22 403.91

March 392.36 462.25April 179.72 361.89May 349.32 358.68June 295.32 333.45

July 224.45 338.32

Aug 283.09 355.9

Sept 263.3 370.83

Oct 265.92 361.88

Nov 38.55 325.5

Dec 345.81 377.06

CHAPTER THREE LITERATURE REVIEW

Overture:In international trade, because of distance involved, buyers and sellers do not know each

other. Besides both these parties are subject to rules and regulations of their

respective countries it is difficult for them to appreciate each other integrity and

creditworthiness, and apart from this, it is also difficult to know various regulations

prevailing in their respective countries regarding imports and exports. Thus the buyer

wants to be assured of goods and seller to be assured of payments, Commercial

Banks, therefore assure these things to happen simultaneously by opening Letter of

Credit guaranteeing payment to seller and goods to buyer. By opening a letter of

credit on behalf of' a seller, commercial bank undertakes to make payment to a seller

subject to submission of documents drawn in strict compliance with letter of credit

terms giving title to goods to the buyer. Thus, letter of credit is a conditional

guarantee.

Different Modes of International Trade Payments:In international trade methods of payment could take any of the following forms: I.

Cash in advance

1. Cash in advance

2. Open account

3. Collection

4. Documentary credit

The first three are the traditional trade payment methods and under documentary

credit, the bank assures payment subject to the completion of documentary condition.

Cash in Advance:

Under this system the buyer puts funds at the disposal of the seller prior to shipment of

goods and provision of services, i.e. this may done by cheque, draft or TT favoring the

exporter.

Open Account:

An open account method is an arrangement between the buyer and whereby the goods

are manufactured and delivered before payment is made. Unlike cash in advance

method, the open account payment is obviously more advantageous to the buyer as he

pays for the goods only after receiving them and satisfying him about delivery time,

quantity and quality.

Collection:

Collection is a method under which goods are shipped and the bill of exchange (draft)

is drawn by the Seller on the buyer. The documents are sent to the bank with clear

instruction for collection through one of its correspondent bank located in the buyer's

country. The documents are to be delivered only after the payment has been made or

draft is accepted. There are two examples of collection method are D/P and D/A bills.

Documents against Payment (D/P Bill):

This is one of the most widely used methods of trade payment. The seller ship the

goods and draw a sight bill of exchange (draft) on the buyer and the is presented to the

drawee (buyer or importer) along with shipping documents for payment. Drawee pays

the draft and takes delivery of documents.

Documents against Acceptance (D/A 13111):

In this method usance bill of exchange is drawn on the buyer by the seller which is

presented to the drawee for acceptance by a bank on his own country (collecting

bank). Drawee accepts draft and fix up a date of payment (date of maturity). The

collection system is less risky for the seller as compared to open account trading, but

the seller is still dependent on the buyer to take delivery of documents and pay or

accept the Draft(s).

Clean collection:

Another variant of collection is clean collection under which the seller draws only a

draft on the buyer for the value of goods/services and presents the draft to his bank

which sends the draft along with a collection letter to a correspondent bank usually in the

buyer's Country.

Documentary Credit:

In international trade the seller wants to make sure that the buyer is able to pay in time

once the goods have been shipped and that risk of non-payment is minimized. He

therefore, wants to find out bow a third party i.e. the bank can help him in the

practical arrangements for these transactions. Similarly, the buyer is interested that he

gets possession of goods before he pays for them and he is able to make sure that

the goods are exactly those he ordered.

Definition of Letter of Credit:Letter of credit (L/C) can be defined as a Credit Contract where the buyer's bank is

committed (on behalf of the buyer) to place an agreed amount of money at the seller's

disposal under some agreed conditions. Since the agreed conditions include, amongst

other things, the presentation of some specified documents, the letter of credit is

called Documentary Letter of Credit.

Different Types of Letter of Credit:Letter of Credit is an important instrument in the business world. On the basis of

different criteria it may classify in the following way. Based on Revocability:

Revocable Credit

Irrevocable Credit

Confirmed Irrevocable Credit

Revocable Credit:

This type of credit can be revoked or cancel at any time without the constant of, or

notice of the beneficiary. As per Article of UCPDC600 "A revocable credit may be

define Revocable credit gives the buyer maximum flexible, as it can be amended or

cancelled without prior notice to the seller up to the moment of payment by the issuing

bank at which the issuing bank has made the credit available. In modem banking,

the use of revocable credit is not widely spread.

Irrevocable Credit:

The irrevocable credit is a commonly used type of documentary credit. The Credit

which cannot be revoked varied or changed/amended without the consent of all

parties-seller (beneficiary), Issuing Bank and Confirming Bank (in case of confirmed

L/C). As per UCPDC 600, an Irrevocable Credit constitutes a definite undertaking of

the issuing bank, provided that the terms and conditions of the credit are complied with.

Irrevocable Credit may be confirmed or unconfirmed.

Confirmed credit gives the seller double assurance of payment. Under

confirmed credit, the seller has not only get the undertaking of issuing bank; but

also enjoy the protection/assurance from a bank in his own country with definite

undertaking for payment and acceptance.

On the Basis of payment Criteria:

Sight payment L/C

Deferred Payment L/C

Sight Payment L/C:

This type of L/C is based upon payment on presentation of documents. When the L/C

bears a clause of payment at sight then the L/C is called sight payment L/C. It is settle

by sight bill- a bill which is payable on demand or at sight or on presentation and

when no time for payment is specified in it. Sight bill also called D.P. Bill i.e.

Document against Payment.

Deferred Payment L/C:

When the payment of L/C is to be made after a specified period of time of shipment

then the L/C is called deferred payment L/C. A clause of payment, i.e. payment at 90

days sight, must be included on L/C. It is settled by a time bill which is payment at

determined future time. It is also term as D.A Bill i.e. Document against Acceptance. In

D.A Bill. The documents of the bill are delivered to the drawee of the bill on

acceptance and payment is made afterwards per terms of the bill by the drawee.

On The Basis of Destination Criteria:

Inland L/C

Foreign L/C

Inland L/C:

When the L/C applicant & beneficiary from same country and goods handled with in

country then the L/C is called Inland L/C.

Foreign L/C:

Parties of L/C specially applicant and beneficiary of two different countries deals each

other through L/C, this type of L/C is called foreign L/C.

Revolving Credit:

A Revolving Credit is one where, under the terms and conditions thereof, the amount

of the Credit is renewed or reinstated without specific amendment to the credit being

needed. Revolving credit may be revocable or irrevocable.

Transferable Credit:

A transferable is one which can be transferred by the original beneficiary to one or more

parties. In transferable credit, the beneficiary becomes the middlemen and transferee

becomes the actual supplier of the goods. It is normally used when the first

beneficiary does not Supply the merchandise himself, but is a middleman and thus

wishes to transfer part, or all, of his sights and obligations to the actual supplier(s) as

second beneficiary (s). This type of credit can only be transferred once.

Back to Back Credit:

One credit backs by another. It may so happen that the beneficiary/seller of an L/C is

unable to supply the goods direct as specified in the Credit as a result of which he

needs to purchase the same goods and make payment to another supplier by opening a

second letter of credit. In this case, the second credit called a “Back to Back Credit".

Under Back to Back concept, the mother L/C stands as security for opening of second

credit, i.e. Back to Back Credit. Back to Back credit are opened in conformity to the

terms and conditions as stipulated in mother credit except the price of the goods,

shipment period and validity of L/C . In Back to Back credit the negotiated price is

quoted.

Red clause Credit:

A Red Clause Credit is a credit with special clause incorporated into it that authorizes

the advising bank or conforming bank to make advances to the beneficiary before

presentation of documents. The clause is incorporated at the specific request of the

applicant, and the wording is dependent upon his requirements. It is so called because

the clause was originally written in red ink to draw attention to the unique nature of this credit.

Under the above mentioned clause, the opening bank is liable for the pre-shipment

advances made by the negotiated bank, in case the beneficiary fails to repay or deliver

the documents for negotiation.

Green Clause Credit:

A Green Clause Credit is a credit with a special clause incorporated into it that which

not only authorizes the advising bank to grant pre-shipment advances but also storage

cost for storing the goods prior to shipment. It is useful in situation where shipping

space is not readily available, i.e. some African countries. It is so called because the

clause was written in green ink to draw attention to the unique nature of this Credit. At

present this type of Credit is not in use.

Standby Letter of Credit:

The standby letter of credit is very similar in nature to guarantee. The beneficiary can

claim payment in the event that the principal does not comply with its obligations to the

beneficiary. Payment can usually be realized against presentation of a sight draft and

written statement that the principal has failed to fulfill his obligations.

Parties to a Letter of Credit:There are a number of parties involved in an L/C and the rights & obligations of the

different involved parties also differ from each other.

The involved parties can be named below

Importer/buyer/applicant;

Opening/issuing bank;

Exporter/seller/beneficiary;

Advising /notifying bank;

Confirming bank;

Negotiating bank;

Paying/reimbursing bank;

The transferring bank, if any.

Importer/Buyer is the people who request/instructs the opening bank to open an L/C.

He is also called opener or applicant of the credit.

Opening/Issuing Bank is the bank which opens /issues an L/C on behalf of the

importer. It is also called the importer's /buyer's bank.

Exporter/Seller/Beneficiary is the party in whose favor the L/C is established.

Advising/Notifying Bank is the bank through which the L/C is advised to the

exporter. It is a bank situated in the exporting country and it may be a branch of the

opening bank or a correspondent bank.

Confirming Bank is a bank which adds its confirmation to the credit and it is done at

the request of the issuing bank. The confirming bank may or may not be the advising

bank.

Negotiating Bank is the bank which negotiates the bill and pays the amount to the

beneficiary. It has to carefully scrutinize the documentary credit before negotiation in

order to see whether the documents apparently are in order or not. The advising bank

and negotiating bank may or may not be one and the same. Sometimes it can also

be the confirming bank.

Paying/Reimbursing Bank is the bank or whom the bill will be drawn. It is

nominated in the credit to make payments against stipulated documents complying

with the terms and conditions of the credit. It may be or may not be the issuing bank.

Transferring Bank is the bank, which will transfer the L/C, being instructed by the

original beneficiary.

3.6 Operation of Documentary Letter of Credit: LETTER OF CREDIT

The following five major steps are involved in the operation of a documentary letter of

credit:

Issuing

Advising

Amendment (if necessary)

Presentation and

Settlement

Issuing a Letter of Credit:

Before issuing an L/C, the buyer and seller located in different countries, concludes

`sales contract' providing for payment by documentary credit. As per requirement of

the seller, the buyer then instructs the bank- to issue a credit in favor of seller

(beneficiary). Instruction / Application for issuing a credit should be made by the

buyer (importer) in the issuing bank's standard form.

Advising a Letter of Credit:

Advising through a bank is a proof of apparent authenticity of the credit to the seller.

The process of advising a credit consists of forwarding the original credit to the

beneficiary to whom it is addressed. Before forwarding, the advising bank has to

verify the signature(s) of the officer(s) of the opening bank and insure that the

terms and conditions of the credit are not in violation of the existing exchange

control regulations and other regulations relating to export.

Amendment of Credit:

Parties involved in an L/C, particularly the seller and the buyer can not always satisfy

the terms and conditions in full as expected due to some obvious and genuine reasons.

In such a situation, the credit should be amended.

In case of revocable credit, it can be amended or canceled by the issuing bank at any

time and without prior notice to the beneficiary. But in case of irrevocable credit, it can

neither be amended nor canceled without the agreement of the issuing bank, the

confirming bank (if any) and the beneficiary.

UCPDC 600 regarding amendment to a Credit:

Article 10(a): Except as otherwise provided by article 38, a credit can neither be

amended nor cancelled without the arrangement of the issuing bank, the confirming

bank, if any, and the beneficiary.

Article 10(b): An issuing bank is irrevocably bound by an amendment as of the time it

issues the amendment. A confirming bank may extend its confirmation to an amendment

and it will be irrevocably bound as of the time it advises the amendment. A confirming

may, however, choose to advise an amendment without extending its confirmation and,

if so, it must the issuing bank without delay and inform the beneficiary in its advice.

Article 10 (c): The terms and conditions of the original credit (or a credit incorporating

previously accepted amendments) will remain in force for the beneficiary until the

beneficiary communicates its acceptance of the amendment to the bank that advises

such amendment. The beneficiary should give notification of acceptance or rejection of

an amendment. If the beneficiary fails to give such notification, a presentation that

complies with the credit and to any acceptance by the beneficiary of such

amendment(s). As of that moment the credit will be amended.

Article 10(e): Partial acceptance of an amendment is not allowed and will be deemed

to be notification of rejection of the amendment.

Presentation of Documents:

The seller being satisfied with the terms and conditions of the credit proceeds to

dispatch the required goods to the buyer and after that, has to present the documents

evidencing dispatching of goods to the negotiating bank on or before the stipulated

expiry date of .he credit. After receiving all the documents, the negotiating bank then

checks the documents against the credit. If the documents are found if order, the bank

will pay, accept the documents and if they are found as per credit requirements, either

(a) Effects payments, or

(b) Reimburses in the pre-agreed manner Settlement:

Settlement means fulfilling the commitment of issuing bank in regard to effecting

payment subject to satisfying the credit terms fully. This settlement may be done

under three separate arrangements as stipulated in the credit. These are:

(a) Settlement by Payment: The seller presents the documents to the paying bank

and the bank scrutinizes the documents. 1f satisfied, the paying bank makes payment to

the beneficiary and in case this bank is other than the issuing bank, then sends the

documents to the issuing bank. If the issuing bank is satisfies with the requirements,

payment is obtained by the paying bank from the issuing bank.

(b) Settlement by Acceptance: Under this arrangement, the seller submits the

documents evidencing the shipment to the accepting bank accompanied by the draft

drawn on the bank (where credit is available) as the specified tenor. After being

satisfied with the documents, the bank accepts the documents and the draft and if it is a

bank other than the issuing bank, then sends the documents to the issuing bank

stating that it has accepted the draft and at maturity the reimbursement will be

obtained in the pre-agreed manner.

(c) Settlement by Negotiation: The settlement procedure starts with the submission

of documents by the seller to the negotiating bank accompanied by a draft drawn on

the buyer or any other drawee, at sight or at a tenor, as specified in the credit. After

scrutinizing that the documents meet the credit requirements, the bank may negotiate the

draft. This bank, if other than the issuing bank, then sends the documents and the draft

to the issuing bank. As usual, reimbursement will be obtained in the pre-agreed

manner.

Agency Arrangement:Agency arrangement is the establishment of correspondent relationship between two

separate banks to canalized transitions between the designated banks for promoting

mutually beneficial business relationship.

Establishing Agency Arrangements

This is usually done by letter. The first letter can be initiated by the bank based on the

need to have a relationship with an institutional in a particular country. Likewise Agrani

bangle-Bank Limited approached by another bank to route their business in Bangladesh.

Where there is an already existing arrangement, AGRANI BANK LIMITED may

have to formalize relations through exchange of letters. The gist of the letter should

simply state that you want to formalize/set up agency arrangements with the bank

concerned, list the branches to be included, give full mailing address, advise whose test

keys are to be used give details of main FC accounts with names of correspondent

Banks where account is held, type of arrangements (L/C advising, guarantees etc.).

On being formally approached by a bank for the counter party in turn obtains a list of

correspondents of that bank in the region of operation. Then an analysis is done on the

basis of latest Annual Report/Balance Sheet of the intending correspondent with regard

to its financial position (capital, assets and profitability). The creditability is also judged

by obtaining confidential opinion/report through its foreign correspondent or through

the correspondent of the bank.

If the information’s mentioned above are satisfactory, agency arrangement/

correspondent relationship is established between the two banks with an exchange of

keys, authorized signatory booklet BK.E (Bilateral Key Exchange).

Test Keys

AGRANI BANK LIMITED has their own test keys for their branches, and if they

wish to issue these to correspondent banks/branches, it can also be so generated.

Several correspondent banks are using our test keys.

Usually however, AGRANI BANK LIMITED advises correspondent banks that

AGRANI BANK LIMITED desires to use the correspondent bank's test key and ask

them to send the test to AGRANI BANK LIMITED head office or send them

directly to UBE3L branches at mailing address provided. With the establishment of

SWIFT the existing test key are being replaced by BKE with correspondent banks.

Foreign Currency Accounts of Authorized Dealer:In order to be executing foreign exchange transaction, the authorized dealers in foreign

exchange maintain branches, normally in current accounts, in the form of foreign

currencies with the overseas branches/correspondent banks. The foreign currency

account maintained by the authorized dealers in foreign exchange with the foreign

banks/correspondents is called Nostro Accounts.

When we talk about `Nostro', we should also be familiar with the relevant terms

'Vostro' and 'Loro'. All are Italian words which literally mean `our' `your' and

`their' respectively.

Current accounts of foreign banks with their correspondents in the latter's currency is

called Vostro Accounts. What is Nostro account for a bank in particular country is a

Vostro Account for the bank abroad maintaining the account. So taka account of an

overseas correspondent of a bank in Bangladesh is Vostro Account for the latter

which is Nostro Account for the former. Loro accounts are (other banks) current

account which the banks maintain with banks abroad in behalf of their clients. These

may be inter-bank entries, whereby a transfer in foreign currency is made by one bank

to another for an account of third bank. For example, Standard Chartered Bank New

York may remit to Agrani Bank Limited, Dhaka for the credit to the account of

American express bank maintained with them. Therefore the foreign currency account

maintained by our correspondent abroad in the name of third party may be termed as

Loro Accounts, meaning their account with you.

CHAPTER FOUR FOREIGN EXCHANGE DIVISION OF AGRANI BANK LIMITED LITERATURE REVIEW

However the most important accounts for the authorized dealers in foreign exchange in

Bangladesh are Nostro Accounts. They keep their balances in these Nostro Accounts

for executing day by day transaction.

Book Keeping and Reconciliation of Nostro Account:

For the purpose of book-keeping & reconciliation of accounts of the banks marinating

Nostro Accounts abroad, it is required to maintained proforma account in the general

ledger under the heading of each foreign correspondent. The proforma account is also

termed as SHADOW account or MIRROR account as the entries made in the books of

the foreign correspondent are reflected in the proforma account of the bank.

Reporting to Bangladesh Bank

Authorized dealer in Bangladesh are required to exchange control department.

Bangladesh Bank, head office, Dhaka within I S days of opening of the 'Nostro

Account with the following particulars.

Name of the currency in which the account is opened

Name and address of the foreign bank/correspondent with whom the

account is opened

Date of opening of the account.

Foreign Exchange:Foreign exchange is the mechanism by which the currency of one country gets converted

into the currency to another country. Foreign Currency is any currency other than

domestic currency. The term, foreign exchange has different connotations in

different contexts. Sometimes it is referred to as the process of conversion of one

currency into another, sometimes as the process of transferring money from one

country to another. In Bangladesh it has a legal definition too. In terms of section 2(u)

of the F.E.R Act, 1947, as adapted in Bangladesh, 'foreign exchange' means foreign

currency and includes instruments expressed in foreign exchange, all deposits credits.

and balances payable in 4'oreian currency as well as foreign currency instruments such as

draft, tt, bills o` exchange, promissory note and letter of credit payable if, any foreign

currency. Bangladesh earns foreign exchange mainly through export of' goods and

services. Foreign exchange business has been identified as one of the key areas!’ or

development of 'the bank's business.

Foreign take place in following three ways in AGRANI BANK LIMITED:

Import.

Export

Remittance

Import:Imports are purchase of foreign goods or services by Consumers, Firms, Companies,

Government, Semi government Organization in Bangladesh.

Import Procedures/ Formalities (Steps Involved) in AGRANI BANK LIMITED

T o carry on the business of import by AGRANI BANK LIMITED, the first thing one

need is registration with the licensing authority of the area. 'To get this registration the

interested person/institution submits, the application along with the following

papers/documents directly to the Chief Controller of Imports and Exports or respective

zonal offices of CCI & E.

Income tax registration certificate.

Nationality certificate.

Certificate from Chamber of Commerce and Industry or Registered

Trade Association.

Bank solvency certificate

Copy of trade license.

And any other document if required by CCI & E.On receiving application the respective C ('1 & F offices will scrutinize the documents

and conduct physical verification (if' feel necessary) and issue Demand Notice to the

prospective importers to Furnish the following papers/documents through Agrani Bangla

Bank Limited:

Original copy of Treasury chalan deposited as IRC fees.

Asset certificate.

Affidavit from 1st class Magistrate.

Rent receipt.

2 passport size photograph.

Partnership deed in case of partnership firms.

Certificate of Registration, Memorandum and Articles of Association in

case of limited company.

AGRANI BANK LIMITED will scrutinize the papers/ documents and verify the

signature of the applicant. After securitization and verification, AGRANI BANK

LIMITED, forward the same to the respective CCI & E office with, forwarding 'Schedule

in duplicate through bank's representative. The CCI & E office wi1l acknowledge on

duplicate copy of the forwarding schedule and return back the same to the bank

representative.

Agrani Bank Limited Supply the Following Documents/Papers

Letter of-credit application form

Letter of credit authorization form.

Import form.

Charge documents paper.

With the above essentials bank will do the following:

Landed cost analysis

Present market position of the goods to be imported

Credit information bureau report from Bangladesh Bank

The L/C Application for Support:

To open a L/C the application must submit an application to the bank's printed format

called L/C application form. The application form must be completed and filled in and

signed by the authorized person of the importer giving the following details:

Full name and address of the importer and exporter.

L/C value for USD, which must not exceed the LCA value.

Brief description of the goods with its unit price, quantity, quality

etc.

Origin of the goods, port of destination, port of loading etc.

Mode of advising L/C.

Opening of L/C under UCPDC published no 600 ICC revisions

2007.

LCA number.

Mode of shipment.

Insurance cover note.

Whether shipment/ Transshipment allowed.

Last date of shipment and negotiation.

Special instruction if any.

Lodgment of Documents

Lodgment means retirement of funds. Usually payment is made within seven days after

the documents have been received. If the payment is become deferred, the negotiations`,

bank may claim interest for making delay. Lodgment constitute the to followings.

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

requisition is sent to the International Department.

Preparing sale memo: A sale memo is made at B.C rate to the customer. As the T.T &

O.D rate is paid to the ID, the difference between these two rates is exchange trading.

Finally, an Inter Branch Exchange Trading Credit Advice is sent to ID).

Creation of PAD liability: AGRANI BANK LIMITED lodges the converted the bill

amount at BC (Bills (-collection) rate prevailing on the date of lodgment to PAD A/C and

an IBETCA prepared at the converted bill amount at T.T clear rate is sent to ID. PAD Al:'

should be adjusted within 21 days.

Payment instruction: Payment instruction is given to the reimbursement bank to debit

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

Payment Intimation to the Negotiating Bank: A Intimation is sent negotiating batik

ensuring that payment has been made.

Accounting Treatment

Then the telex charge, service charge, and interest (if any) are debited to the PAD A/C.

Income A/C Cr. (Service charge& Telex charge)

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

Register

Intimation to the applicant

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

intimations for retirement of concerned import document. A letter of intimation regarding

receipt of the documents should be sent to the applicant with a request to hake delivery of

the documents on settlement of all dues against it.

Retirement of Documents:

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

against full payment with up to date interest and charges payable. AGRANI BANK

LIMITED prepares cost memo in printed form on account of the concerned party giving

details head of charges payable.

L/C Practiced In Agrani Bank Limited Foreign Exchange Corporate Branch

Opening of Letter of 'Credit:

At the request (.)!' the applicant (importer), AGRANI BANK LIMITED open an L/C in

favor of' the Beneficiary (exporter). The bank which open or issue L/C is called L/C

opening or issuing Bank.\

Required Information:

Issuing an L/C hank required following information:

Full particulars of the Bank account of having same bank.

Name of business (proprietorship, partnership or limited company).

Historical background of' the individual or institution. 4. Amount of limit

required.

Modes of payment.

Statement of assets & liabilities.

Trade license & import registration number with renewal date.

Balance of fund in bank account.

Profi0rnm invoice/indent.

TIN, VAT

Insurance cover note.

Sales agreement.

Documents/Papers Supplied by Bank:

Bank supply the following documents/ papers:

Letter of Credit/ documentary credit application form.

Letter of credit authorization form.

Continuation of documentary credit application.

Undertaking for fluctuation of foreign currency.

Undertaking for waiver of non-delivery clause in the insurance cover note.

Undertaking for war.

Import form (IMP form).

Charge documents paper.

Promissory note

Letter of arrangement

Letter of disbursement of loan

Letter of revival

Letter Of continuity.

Letter of guarantee.

General letter of TR

Letter of hypothecation.

Letter of supplementary agreement.

Application Checking:

Before opening an L/C, the issuing bank must check the following:

L/C application properly stamped_ signature verified and margin approved and properly retained.

Indent/Proforma Invoice signed by the Importer and Indentor/Supplier. Ensure that the relevant particulars of 1,/C application correspond with those

stipulated in /Proforma invoice. Validity of I.CA entitlements of goods, amount etc. confirms to the L/C

application. Conversion and rate of exchange correctly applied. Charges like commission, F.C.C., postage, telex charge, if any, recovered.

With the above essentials bank does the followings:

Landed cost analysis.

Present market position of the goods to be imported

Credit Information Bureau report from Bangladesh Bank.

Collect credit report about beneficiary.

Credit Report about Beneficiary:

Credit report is a confidential report about the exporter that is collected from

information Services Company or other reliable sources such as foreign correspondent

bank. It is required before L/C opening. It is collected for confirmation about honesty

and reliability of exporter. A typical credit report includes the company's name &

address, starting year, history, authorized capital and paid up capital, financial strength

and composite appraisal. The financial strength is an indication of the tangible net worth

and the composite appraisal condition is linked to the level of risk and , is an overall

evaluation of credit worthiness.

Composite appraisal takes into the account the financial condition and several factors

such as trade reference history, legal structure, management experience and any adverse

listing.Contents of a Letter of Credit:

A Letter of Credit generally contains the followings:

Date of' Issue

Letter of-Credit No.

Amount (generally in USD)

Name of issuing, Bank

Name of Advising Bank

Name & Address of Applicant

Name & Address of Beneficiary

Last date of shipment.

Date of Expire

Name of the port of beneficiary.

Designation

Country of 4?rigin

Description of Merchandise.

Terms and condition

Addition terms and conditions

Reimbursement.

Copies Requires of a Letter of Credit:

Letter of Credit 'is an important a document to all related party and authority. So

issuing bank required is generate 7 copies of a foreign L/C and 5 copies of a(ocal

L/C. These are the following:

Copy, for Advising Bank

Copy for Beneficiary

Copy for Applicant

Copy for Head Office

Copy for PSI (Pre-shipment Inspection Company)

Copy for CCI & E (Chief Controller of import & Export)

Copy for own record.

In case of inland L/C copses of PSI & CCI & [: are not required.]Advising Letter of Credit:

Advising through a bank is a proof of apparent authenticity of the credit to the seller.

The process of advising a credit consists of forwarding the original credit to the

beneficiary to whom it is addressed. Before forwarding, the advising bank has to verify

the signature(s) of the officer(s) of the opening bank and insure that terms and

conditions of the credit are not in violation of the existing exchange control regulations

and other regulations relation to export. In such act of -advising, does not undertake any

liable.

Amendments to Letter of Credit:

After issuance and advising a letter of credit, it may be left necessary to delete, add or

after sonic of the clauses oft-he Credit. A1l these modifications are communicated to the

beneficiary through the same Advising Bank of the Credit. Such modifications to a Credit

are termed as amendment to a letter of credit.

L/C amendments are to be communicated by telex, SWIFT or mail. if there is more than

one amendment to a letter of credit, all the amendment must bear the consecutive

serial number so that the missing of any amendment can be identified by the advising

bank or by the beneficiary.

The following clauses L/C are generally amended:

Increase decrease value of L/C` and increase/ decrease of quantity of goods.

Extension of shipment/ negotiation period.

Terms delivery i.e. FOB, C'FR, CIF etc.

Mode of shipment

Inspection clause

Name and address of the supplier

Name of the reimbursing bank

Name of the shipping line. etc.

Cable/Telex/Fax/Letter of Credit:

In international trade receipt of L/C by cable/telex/tax is preferred by all. In that case the

whole telex of T/C is to be transmitted by telex cable/fax to the advising bank by the

opening bank. If the importer desires that the L/C is to advised by a short cable, then a short

coded is sent incorporating principle terms of the L/C, the cable must conclude with 0,;:.

words ",airmailing details".

Accounting Procedure at the Time of L/C Opening:

As soon as L/C is opened, bank accepts a liability on behalf of the importer to make

payment against the credit, provided that the shipment is made within the period a and

that the stipulated documents are presented and other terms and conditions as per L/C arc

complied with. Naturally, bank has to pass an entry in L/C Liability Ledger and also in

the General ledger to show its actual liability accepted on I./C.

Contingent liability voucher

Customer’s Liability on I,/C------------------Dr.Bank’s Liability on L/C -----------------------------Cr.

Margin & Bank charges

Margin, commission, postages and cable charges are covered from the party

by passing entries as under:

Applicant A/c -------------------------------- Dr.

Margin ---------------------------------------- Cr.

Commission ---------------------------------- Cr.

Vat -------------------------------------------- C r.

Telex ----------------------------------------- Cr.

FCC ------------------------------------------ Cr.

Stamp in hand ------------------------------ Cr.

Other fess & commission ----------------- Cr.

Margin voucher should be posted in the margin deposit register party-wise,

incorporating L/C number. L/C commission and other charges are realized from the

party before opening L/C. National amount may be realized as FCC(foreign

correspondent's charges). FCC includes the advising, postages, cable charges, the

foreign bark charges.

Shipping documents:

Five vital documents consist in an L/C document. These are as Commercial invoice

Bill of Exchange

Bill of Lading

Packing List

Certificate of origin.

Moreover, beneficiary must send shipping advice to the L/C opening bank with in five

working days of shipments.

Commercial Invoice:

The invoice prepared relating to shipment of the goods is commonly identified as

commercial invoice. Commercial invoice is an integral part of the shipping document

prepared by the seller s per terms of the credit. This incorporates the description and

price of goods quantity, quality, name of the buyer, origin, credit and contract

number, name of the vessel, date of shipment, shipping marks, number of packages. This

also may be considered as a seller's bill. This is submitted in number of copies as is

asked by the credit and copies are also needed for custom.

Bill of Exchange:A bill of exchange is an instrument in writing containing an unconditional order, sinned by

the maker. Directing a certain person to pay on demand or at a fixed determinable

future time a certain sum of money only to, or to the order of a certain person, or to the

bearers of the instrument.( Negotiable Instrument Act. 1881, Section

Bill of Lading:

It is a transport document. The Bill of Lading gives proof of shipment/carriage of goods

from port of Lading /place of receipt to port of discharge/place of destination. The bill of

Lading would carry the following information: It must be issued by a ‘named carrier or his agent'.

Description of goods consistent with that in the

credit.

Identifying marks and numbers.

The name of the carrying vessel.

Indication of dispatch or loading and the place of final destination.

The names of' shipper, consignee and the name & address of any

`notify' party.

Whether Freight has been paid or is still

to be paid.

Date of issuing.

3. Packing List:This enlists full particulars of the goods as number of cartoons, bags, pieces, net and

gross weight, shipping marks.

4. Certificate of origin: This certifies his country of origin that manufactured of produced the goods. An

approved chamber of commerce of the exporter's country generally issues the certificate

or as has been stipulated in the credit terms.

5. Inspection certificate: An inspection prior to shipment is conducted by an independent body which confirms

by certifying that the quantity and price and/ other aspects of the goods as have been

specified in the contract. The inspection agency is nominated by the buyer or L/C

opening or as per rule of the importer's country.

When the draft is returned by the drawee (importer) having been duly accepted by

him, the following retirement procedure is followed:

The maturity date of the bill is to be worked out and noted in the

PAD/be registered and also in due date dairy.

The foreign correspondent should be advised the due date of maturity

and be authorized to debit the Nostro account of Authorized Dealer or

to claim reimbursement on due date as per terms of L/C from the

reimbursing bank.

In case of D.A bill, all documents excepted draft are delivered to the

importer against a simple receipt.

The invoice is marked "Documents Delivered against Acceptance and

remittance of Will be effected on due date.

Clearance in absence of shipping documents:

Shipping Guarantee:

It is a guarantee- Cum-indemnity issued by the bank in favor of the shipping company on

prescribed from provided by the shipping company. When shipping documents against

Sales / Purchase Contract

L/C are not received by the bank but goods have arrived at port needing

immediate clearance if the consignment to avoid demurrage, this guarantee is issued. The

shipping company shall release goods to the importer on production of this guarantee.

Procedure for issue of guarantee:

Importer should submit the following documents to the bank for issue of the guarantee.

Counter guarantee signed documents to the bank for issue of the guarantee.

Copy of invoice.

Non-negotiable copy of bill of lading/Airway bill etc.

Deposit of' It30% margin n invoice value.

On receipt of the above documents and margin, the bank will give endorsement on the

shipping guarantee at the end of the following way:

"The above indemnity is countersigned on condition that the bank's liability

hereunder shall not exceed Tk.... and the bank will be finally discharged and

released from its liability if a claim hereunder is not lodged with the bank by..."

Document Retirement:

After retirement' of documents by the importer, the bank will put endorsement on the draft

starting -Received Payment" under seal and signature of the bank's authorized officer. The

invoice is certified as "certify invoice value". The E3/L, is endorsing in favor of the importer.

The draft together will all the other shipping documents are delivered to the importer showing the details of' charges debited to the importer's account along with the Customs Purpose copy of Import License / LCAF retained earlier.

Mechanism of L/C

Importer Exporter

Mak

es p

aym

ent a

gain

st d

ocum

ents

(9)

Pres

ents

doc

umen

ts (8

)

App

lies i

n w

ritin

g to

issu

e L/

C (1

)

Adv

isin

g / C

onfir

min

g L/

C (3

)

Subm

its d

ocum

ents

(4)

Pays or Reimburses

Forwards Documents (6)

Makes payments (7)

Instructs to pay or reimburse

ORM

akes

pay

men

ts b

y ne

gotia

ting

docu

men

ts

(5)

Advising/Negotiating Bank

Issuing Bank

Paying / Reimbursing

Bank

Back to Back L/C

One credit backs by another. It may so happen that the beneficiary/seller of an

L/C is unable to supply the goods direct as specified in the Credit as a result of which

he needs to purchase the same goods and make payment to another supplier by

opening a second letter of credit. In this case, the second credit called a "Back to

Back Credit". A Back-to-Back mechanism involves two separate L/Cs. One is

master Export LIC and another is Back-to-flack L/C. On the strength of Master

Export L/C bank issues bank to Back I,/C. Back-to-Back L/C is commonly

known as Buying L/C. On the contrary, Master Export L/C is known as Selling

L/C.

Export Procedure:The imports and exports trade of our country is regulated by the Imports and Exports

(Control) i1.cL 1950. No person who has been granted registration by the Chief

Controller of Imports & Exports shall indent, import or export anti thing into or out of

Bangladesh except in cases of exemption issued by the government. If any person

contravenes any provision of the Act or any order made under this Act is punishable with

imprisonment for a term, which may extend to one year or with fine or both.

There are a number of` formalities which an exporter has to fulfill before and after

shipment of goods. These formalities or procedures are enumerated as follows:

Registration of Exporters:

The exports from-, Bangladesh are subject to export trade control exercised by the

Ministry of Commerce through Chief' Controller of Imports and Exports (CCI & E). No

exporter is allowed to export any commodity permissible for export from Bangladesh

unless he is registered with CCI & E and holds valid Export Registration Certificate

(ERC) is required to be renewed every year. The ERC number is to be incorporated on

EXP forms and other papers connected with exports.

Procedure for obtaining Export Registration Certificate

For obtaining export Registration Certificate (ERC ), intending Bangladeshi Exporters

are required to apply to the Controller/Joint Controller/ Deputy Controller/Assistant;

Controller of' Imports and Exports, Dhaka/ Chittagong/ Rajshahi /Khulna/Mymensingh/Sylhet/

Comilla/Barisal/Pabna//Bogra//Rangpur/Rangpur/Dinajpur, as the case may be, in the

prescribed form along with the following documents-.

Nationality and Assets Certificate of the Proprietor /Directors;

Registered Partnership Deed in case of Partnership concerns;

Memorandum and Articles of Association and Incorporation Certificate

in case of Limited Company;

Bank Certificate

Income Tax Certificate (TIN),

Copy of Valid '.Trade License:

Copy of Rent Receipt of-the Business Premises,

Membership Certificate of a Trade Association:

Affidavit from a 1st class magistrate;

Any other certificate required in the Policy etc.

Registration/ Renewal

On receipt of necessary advice from the offices of the Control/Joint Controller Deputy Controller/Assistant Controller of Imports and Exports, applicants for Exports Registration. Certificates are required to deposit requisite Registration Fee to the Government Head of Account "42- Trade and Commerce - Fees realized under the imports and Exports Control Act. 1950" through Bangladesh Bank Government Treasury/Sonali Bank. Copies of Treasury Chalans showing payment of' fees should be sent to the concerned offices of the Chief Controller of Imports and Exports for enabling them to issue Export Registration Certificate. Once registered, exporters are to make annual payments for having their export Re-gist ration Certificate renewed.Securing the Order: Upon registration, the exporter may proceed to secure the export order. He can do this

by contracting the buyers directly through correspondence. Some buyers '.)f goods like

jute and jute goods maintain liaison office, representatives or local agents who can be

contracted to secure a deal. Sometimes, TCB BJMC and BJEC secure bulk contracts

and pass or allocate the contracts to the actual exporters. To locate the foreign buyers,

fl-Ac exporter may contract the local Chamber of Commerce of potential buyers. The

Export Promotion Bureau and the Bangladeshi missions abroad are also good sources

for securing information on the prospective foreign buyers.

Signing the contract:The following are the points which need to be borne in wind while making a contract.

Description of the commodity.

Quantity of the commodity.

Price of the commodity.

Shipment.

Insurance and marks.

Inspection.

Arbitration.

Receiving the Letter of Credit

The followings are the main points to be looked into –

The terms of the L/C are in conformity with those of the contract.

The L/C is an irrevocable one, preferably confirmed by the advising bank.

The L/C allows sufficient time for shipment and a reasonable time for

negotiation.

If the exporter wants the letters of credit to be transferable, divisible

inadvisable, he should ensure that these stipulations are specifically mentioned in the

L/C.

Remittance:Foreign remittance refers to the transfer of fund from one country to another either through

the office channel 'i.e. banking channel, Post office or the informal channel. In

Bangladesh still informal market is playing a significant role. However, we shall limit our

discussion within the official channel. Inward and outward '1'.T, M.T and draft are the

main component, of foreign exchange remittance.

Foreign exchange earnings are very low as export earnings are very limited while

import spending are huge which makes the balance of' trade position in a chronic deficit

situation. 'Foreign remittance is very important for the country as valuable foreign

exchange is involved in the transfer mechanism. From the year 1990, financial

liberalization has concern started which side is going on. Due to liberalization,

restrictions on foreign remittance become case. Bangladeshi taka. is convertible for current

account transactions on March 24, 1994 with the view to achieve better exchange ate

management system. And from April 1994 Bangladesh Government has accepted the

status of Article VIII of international monetary fund.

Foreign remittance has two wings i.e. inward and outward remittance. This can be

shown below:

Foreign

Remittance

Foreign Inward Remittance Foreign Outward Remittance

AGRANI BANK LIMITED provides premium quality service for repatriation and

collection of remittance with the help of its first class correspondents and trained

personnel. By introducing or-line banking service and becoming a SWIFT Alliance

Access Member, which enable its branches to send and receive payment instruction

directly, that helps provide premium services. Remittance services provided by

AGRANI BANK LIMITED are:

Inward Remittance: Draft, TT

Outward Remittance: TC and Cash (FC)

Any Person can remit by the following two ways:

Foreign "Remittance through Exchange House:

Agrani Exchange House Private Limited.

(An Exchange House 100% owned by Agrani Bank Limited)

Hundreds of Bangladeshi expatriates are engaged in a variety of professions in

Singapore. Most of them have to remit money to their families as well as their kith and

kin in Bangladesh. Only a meager amount of their remittance used to reach Bangladesh

through banking channels before Exchange House of Agrani Bank started operation on

the 24th of August, 2002. Many illiterate and gullible Bangladeshi guest workers fell

prey to 'Hoondi' syndicates (unauthorized/unscrupulous intermediaries). 'Hoondi'

vendors, in the name of remitting money to Bangladesh through non-banking channels

under various tricky ploys, fleeced many Bangladeshi brothers and left them bereft of

their hard earning savings.

Instructed by the Government of the People's Republic of Bangladesh Agrani Bank

Limited opened the Exchange House to help Bangladeshi professionals and guest

workers in Singapore remit their money to any Branch of any Bank in Bangladesh

within the shortest possible time. There has been overwhelming response from

Bangladeshi expatriates as well as other remitters in Singapore immediately after its

opening. The Exchange House of Agrani Bank remains open till late in the evening

every day.

Besides remitting money any Bangladeshi Wage Earner staying in Singapore can also

open NFCD Account and FC Account and purchase Wage Earners' Bonds through

assistance from our Agrani Exchange House.

Agrani Remitance House Sdn Bhd Malaysia

(A Subsidiary of Agrani Bank Limited Bangladesh)

Thousands of Bangladeshi expatriates are engaged in a variety of professions in

Malaysia. Most of them have to remit money to their families as well as their kith and kin

in Bangladesh. Only a meager amount of their remittance used to reach Bangladesh

through Banking channels before our Remittance house started operation on the 27th

October 2005.

Many illiterate and gullible Bangladeshi guest workers fell prey to ' Hoondi' syndicates

(unauthorized/unscrupulous intermediaries). ' Hoondi' vendors, in the name of remitting

money to Bangladesh through non-banking channels under various tricky ploys, fleeced

many Bangladeshi brothers and left them bereft of their hard earned savings.

Instructed by the Government of the People's Republic of Bangladesh Agrani Bank

Limited opened the Agrani Remittance House Sdn. Bhd (As the subsidiary co.) in

Malaysia to help Bangladeshi professionals and guest workers to remit their money to

any Branch of any Bank in Bangladesh within the shortest possible time. There has been

overwhelming response from Bangladeshi expatriates as well as other remitters in

Malaysia immediately after its opening. Our Remittance House remains open till late in

the evening every day.

Besides remitting money any Bangladeshi Wage Earner staying in Malaysia can also

open NFCD Account, FC Account and purchase Wage Earners' Development. Bonds

through assistance from our Agrani Remittance House Sdn. Bhd. Malaysia.

To remit money to Bangladesh By AGRANI BANK LIMITED:

Step in to your bank.

Go to the "Customer Transfer" desk.

Tell the bank-officer that you want to send money to Bangladesh through

AGRANI BANK LIMITED (SWIFT BIC AGRANI BANK LIMITED

BD DH).

Give the following SSI of AGRANI BANK LIMITED to bank-officer who needs this to

remit the money prompt)

Flexible way of remittance money:

AGRANI BANK LIMITED introduces flexible ways of remitting money to Bangladesh

using its

Remittance to the Remitter’s Account

This is the most flexible system 16- the remitter. To avail this service you need to open

one account for yourself and another account for your beneficiary with any branch

of AGRANI BANK LIMITED. All the necessary information for opening account are

available in this web site. Kindly print or down load the forms and after filled-in please

send to any branch of AGRANI BANK LIMITED. The addresses of the AGRANI

BANK LIMITED branches are also available in this web site. Now as usual, you can

remit money to your own account any time from any bank in the world. Please follow

the procedure mentioned in "What to do to remit money to Bangladesh". Once you send

money to your account with AGRANI BANK LIMITED„ your money will grow with us.

You can open FDR From your account, pay bills / loan installments, or provide standing

instruction to transfer a fixed amount of money in a particular day of' a specified period

(say month, quarter, year etc.) to your beneficiary’s account. We can also monitor, our

all accounts regularly including checking of our account statements. All these can be

performed by you sitting abroad at any time through internet.

Agrani E-cash ATM Card helps you avoid risk or carrying cash and draw cash from 40

different Auto Teller Machines located at different places.

CHAPTER FIVE FOREIGN EXCHANGE PERFORMANCE ANALYSIS

Historical Performance of Agrani Bank Limited:Figure in Million Tk. Sl. No. Particulars 2006 2007 2008 2009

01. Authorized Capital 8000 8000 8000 800002. Paid-up Capital 2480 2480 2480 2480

03. Reserve Fund 340 290 160 740

04. Deposits 130840 105870 135920 146810

05. Investment 24330 22310 21900 2933006 Import 51190 115020 113430 109520

07 Export 41710 51710 48920 49540

08. Profit before Tax and Provision

2140 3580 2480 2530

9. Profit after Tax and Provision 1630 1940 860 265010. Total Assets 155530 154080 186280 18732010. Earnings per Share 34.56 106.52

11. Number of Employees 11938 11793 11345 10988

12. Number of Branches 864 866 866 867

Foreign Exchange Performance over Time:To analyze the performance of AGRANI BANK LIMITED in foreign exchange business I have established some assumptions-

5.2.1 ASSUMPTIONS TO THE ANALYSIS

It is assumed that the reported financial data are free from error & bias because there were no scopes of the study is to verify the data

All the analysis & findings are valid up to 2008 because the other data are not available

The data shown of 2009 are estimated figures I have selected banks with the following classification criterion Nationalized Commercial Bank(State Owned Bank) Private commercial banks (PCB)

The banks selected are assumed to be the representatives of banking sector of our country.

5.2.2 LIST OF BANKS SELECTED FOR COMPARISON

State Owned Banks: Sonali Bank LimitedJanata Bank Limited

Private commercial banks: Bank Asia LimitedOne Bank LimitedNCC Bank LimitedPubali Bank LimitedStandard Bank LimitedThe City Bank LimitedIFIC Bank LimitedDBBL Bank LimitedUttara Bank LimitedDhaka Bank LimitedNational Bank LimitedAB Bank LimitedDhaka Bank Ltd.National Bank Ltd.AB Bank Ltd.

However, the whole analysis is based on comparison & relationships between these banks & Agrani Bank Limited Ltd. The derived comparative results may vary if other banks are selected.

5.2.3 GROWTH STATISTICS IN FOREIGN EXCHANGE BUSINESS

Here is the growth statistics of the banking sector (selected banks). The figures of 2008 are estimated by the individual banks.

Growth statistics in Foreign exchange business2004 2005 2006 2007 2008 2009

Agrani Bank Limited

Import 29.85% 55.49% -1.40% -3.57% 16.07%Export -0.62% 19.34% -5.70% 1.25% 2.85%Remittance -6.57% 12.04% 8.20% 18.75% 6.48%

All Banks

Import 17.95% 20.06% 1.05% 26.66% 13.14%Export 19.89% 23.33% 2.51% 12.76% 11.70%Remittance 33.16% 33.37% 14.86% 21.95% 20.67%

Comments:In the above table we see that the growth of Import in foreign exchange sector is negative in 2007 and 2008 and the export of 2007 is negative and also lower in 2008 of Agrani Bank Limited and in the selected banks in 2007 the export and import both was lower in 2007. This is because of the macroeconomic variables like political turmoil, global economic situations etc.

5.2.4 AGGREGATE PERFORMANCE OF THE SELECTED BANKS

Aggregate Performance Of Selected Banks

0

200,000

400,000

600,000

800,000

1,000,000

Tk .

in M

illio

n

Export 399,684 487,143 609,348 615,816 839,677 950,043

Import 320,708 400,356 522,171 535,632 613,988 685,825

Remittance 38,747 57,974 87,006 102,195 130,940 158,005

2004 2005 2006 2007 2008 2009

Comment:Here we see that downturn from 2006 to 2007 and thereafter it was rising. This is because of political & other macroeconomic variables.

5.2.5 SECTOR WISE COMPARISON

The sector wise comparison reveals that

Agrani Bank Limited is lagging behind compared to the other banks in foreign exchange business. But the bank has a consistent performance with the trend of industry’s performance

The remittance business for Agrani Bank Limited is significantly lower than the other local competitors.

This can be a cause of customer focus /market segment of the bank The bank has a huge amount of loan incentives for export & import business

compared to other performances in foreign exchange activities

Export Compared To Selected Banks

020,00040,00060,00080,000

100,000TK

. in

Cror

e

All Selected baks 48,714 60,935 61,582 83,968 95,004

Agrani BankLimited

4,171 5,171 4,892 4,954 5,095

2005 2006 2007 2008 2009

Comments:Export operation of AGRANI BANK LIMITED is significantly lower than other counterparts but consistent with the ups & downs.

Import Compared To Al Selected Banks

0

20000

40000

60000

80000

100000

Tk. i

n Cr

ore

All Banks 48714 60935 61582 83968 95004

Agrani BankLimited

5119 11502 11343 10952 12781

2005 2006 2007 2008 2009

Comments:Import operation of AGRANI BANK LIMITED is also significantly lower than other counterparts but consistent with the ups & downs.

Remittance Compared To All Selected banks

0

40,000

80,000

120,000

160,000

200,000Tk

. in

Mill

ion

All Banks 57,974 87,006 102,195 130,940 158,005

Agrani BankLimited

34,570 39,300 42,810 52,690 56,104

2005 2006 2007 2008 2009

Comments:Remittance operation of AGRANI BANK LIMITED is significantly lower than other counterparts and inconsistent with the ups & downs. They are much weaker in the remittance business.

5.2.6 REGRESSION ANALYSIS OF AGRANI BANK LIMITEDS

Interpretation: By coefficient of correlation (R), we can measure association between export and profit after tax or import and profit after tax. Basically it provides the direction either positive or negative of the correlation. The advantage of the coefficient of correlation is that it provides a measure of the strength of the correlation & it gives the true direction of the correlation (+ or -) but only the square root of the strength of the correlation. As we know, the value -1 represents a perfect negative correlation that means when one

increases, the other decreases in exactly the same proportion. The value +1 represents when one

increases, the other increases in exactly the same proportion. The value 0 represents a lack of

correlation. Here correlation coefficient (R) of import & profit is 0.110

2006 2007 2008 2009Import 11,502 11,343 10,952 12,781Export 5,171 4,892 4,954 5,095Profit after Tax and Provision

1960 860 2650 2265

This clearly indicated the movement direction of the two variables. R between import and profit

is 0.110 which indicates very weekly positive relationship that means

If import business increases Tk. 1 then profit after tax will be increased by Tk. 0.11

R2 value of 0.012indicates that about 1.2% of variations in the AGRANI BANK

LIMITED profits can be explained by its import operations

Finally the results are significant at 89.0 % significance level

Interpretation: R, among Profit, Export, and Import is 0.42 which is moderately positively correlated says that

If import & export business increases Tk. 1 then profit after tax will be increased by Tk. 0..42

R2 value of 0.173 indicates that about 17.3% of variations in the AGRANI BANK LIMITED’s profits can be explained by its combined operations of import & export

Finally the results are significant at 20.9 % significance level

Note: The above calculation was done by using Minitab & Ms-excel(Amount in Crore)Interpretation: Stability in foreign exchange business is influenced by several international and domestic

factors. Factors that influenced in foreign exchange businesses are – exchange rate,

bargaining power of exporter and importer, country’s political disturbance,

competitiveness of banking sector and other macro economic factors. For measuring

stability of export and import business of Agrani Bank Limited, we have calculated

Standard deviation (SD) and Coefficient of variation (CV) which is relative measures of

standard deviation.

Here we see,

Standard deviation in import business of AGRANI BANK LIMITED is Tk. 792 Crore

and Coefficient of Variation is 6.8%.

On the other hand export business standard deviation is Tk. 128 Crore with CV of 2.54%.

So we can say that the export import operation is not stable for the bank at a satisfactory

level

Problems in Foreign Exchange Business for the Bank:

Most of the activities are done by manually and lack of the efficiencies among the employees.

Lack of latest or improved technologies and skilled manpower for operating foreign exchange business.

Lack of sophisticated software for banking solution is a great problem in modern banking era.

AGRANI BANK LIMITED makes a positive impact in the economy by their

Foreign Trade which helps our country to grow.

Many of customers do riot have clear idea about the procedures of opening

L/C.

AGRANI BANK LIMITED lacks good number of quality customer.

It is observed that there is lack of motivational activities

Working environment is not sound one, Most of' the officers are working

under pressure and mentally depressed.

Overall Summary of the Findings:

Agrani Bank Limited is a scheduled public bank established on 1972. Within this period

of time the bank has been able to prove itself as one of the most progressive and dynamic

banks in the country.

In my internship period, I have worked in different desks in this bank and I have prepared

my especially on Factors Influencing the Money Market: A Case Study of Agrani Bank

Limited. Also I had to given highlight in a specific department and identify the most

important factors, which influence the prescribed generation. So the internship report

contains the activities of Agrani Bank Limited, Panthapath branch on the following

guidelines: Factors Influencing the Money Market.

In general banking section I work in accounting opening section .I also work in FDR and

cash section’s tried to find out their process of work. I have prepared this report based on

practical fieldwork, personal contact with the top executives of ABL and officers of

CHAPTER SIX CONCLUSION AND RECOMMENDATIONS

different stages of the bank with the involvement of regulatory guidelines provided by

central bank. Different data used in this report have been collected from different primary

and secondary sources.

Finally, As an ABL, special banking system is a separate bank, all the people in general

have right to know how well their money is utilized through banking services by the

special activities in the banking world in our country or foreign country. The profit &

profitability of ABL depends on the degree, to which it’s financial health or managerial

activities through the targets in all respects, which is fixed up for the particular period of

time. Until now there has not been any comprehensive study on the profit & profitability

trend of ABL in Bangladesh. Very few researches have been conducted on this field of

ABL in Bangladesh. Keeping this in mind an important attempt has been taken in this

study to measure the profit & profitability trend of ABL in Bangladesh.

Conclusion:This report has been prepared as an effort to analysis ABL and constituencies gain a

better understanding of the money influencing factors that influence money performances

in market. This report examines as an example ABL and the long-term relationship. The

information highlights the strong linkage between the money in stock market.

By analyzing the annual report 2009 in Agrani bank, a brief discussion in my report is

(1) The money supply, the proportion of non-tradable shares, and the ROE/profit margin

on net assets have most significant impacts on the choice of consideration. And different

factors have different impacts on the probability of consideration choice. Each choice

results from integrated effects of all factors.

(2) One stock’s market performance and whole capital market’s performance do not have

significant impacts on certain listed company’s consideration. Their impacts mainly focus

on the company’s situation and macro environment.

(3) Macro economic factors have certain effects on the choice of consideration, whether

the market participators realize it or not, and the effects are objective and should not be

neglected.

We can further draw these conclusions:

4) The proportion of non-tradable shares is an important influencing factor that affects

the distribution of shareholders’ interests. Although its influences disappear on the

surface, as the non-tradable shares reform is closed, it is evolved into the quantity and

proportion of newly tradable shares. Therefore, we can still take this factor as the basis

for protecting interests of small and medium shareholders.

5) Listed company’s condition is still an important influencing factor. Better conditions

and higher ROE/profit margin on net assets mean small and medium shareholders can

obtain relatively direct interests. In re-distributing interests, such as consideration

payment, the trend to be lower is rational.

6) Macro factors, especially money supply, have great impacts on shareholders’

behaviors. According to studies above, tight monetary policy is still appropriate. At

present, an appropriate tight monetary policy can help to create a favorable macro

environment for China’s capital market.

Recommendations:Though out my internship I discovered that ABL have the opportunity to improve in the

followings sector:

1. Market Promotion: In today’s business, promotional activities is one of the most

import tasks for improvement of the business. ABL does not concentrate much

about this. Hence the firm could be benefited if it invests in the market

promotional activities.

2. Provide Lease To Financial Institution: Over time it has been shown that the

overdue rate is minimum in case of financial institutions. Therefore ABL could

reduced its overdue rate if focus mostly on the providing lease to the financial

institutions.

3. Branch Proliferation: ABL has only three branches; two in Dhaka, one in

Chittagong. It would be benefited if it opens branches in the other places like

Norshingdi, Jessore, Khulna etc as there are huge opportunities of business.

4. Employee’s Incentives: The bank may increase the efficiency of its personnel by

increasing incentives, training etc.

5. Information System and Network: ABL could improve it information

technology by employing the high technology based information system and

networks.

6. Growth Rate: The growth rate of ABL recently plummets due to low retention

could improve its growth rate by reinvesting more from its earnings.

7. Diversify the source of fund: ABL basically depends on the money market

borrowing, call money for source of fund. Rather ABL should concentrate in

collecting deposit from depositors as sound source. When other financial

institutions are looking for new ways to collect deposit, ABL concentrates in

borrowing fund from other banks. Borrowings from the money market increase

the cost of fund.

Separate HR Department:

ABL has no separate HR Department. One of its senior officers performs HR

Management duty for one year tenure along with regular duty. This method

doesn’t provide proper motivation mechanism to employees. So that its employee

turnover rate is high at lower level. ABL should maintain separate HR

Department as early as possible.

Publishing the basic data of the company.

Preparation of monthly rental list

Preservation of rental check.

Collection of dishonored check from the concerned banks

Preparation of dishonored statements

Passing the dishonored statement to the monitoring department.

Collection of bank statement from the concerned banks

For the customers who have applied for rescheduling the accounts and finance

department calculate the rescheduled amount for the client

Calculation and checking the relevant documents to match the rental list before

issuing a closer memo

Preparing the monthly salary statements for the employees

Income taxes are paid through this department

Arrange fund for the company through call money and credit line agreement with

different bank.

Keep the activities on track so that nothing deviates from the rules and regulation

of the Bangladesh Bank

Prepare Balance Sheet, Income Statement, Cash Flow statement for half yearly

and annual report

REFERENCESBOOKS:

Annual Report of ABL Limited 2009.

Several Booklets from ABL

Several Newsletters from ABL

ABL Web site.

Several Reports from ABL Library.INTERNET & WEB ADDRESS:

http://en.wikipedia.org/wiki/Leasing

http:// www.agranibank.org

http:// www.google.com

http://www.google.com/

http://www.agranibank.org/

http://en.wikipedia.org/wiki/Leasing

A Case Study Of Factors Influencing The Money Market Agrani Bank Limited

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